SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (this "Agreement") effective as of August 14,
1 9 97, is by and between CARALOE, INC., a Texas corporation
("Seller"), and MANNATECH, INC., a Texas corporation ("Buyer"),
WITNESSETH:
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, bulk aloe xxxx mucilaginous polysaccharide
(hereinafter referred to under the product name of "MANAPOL[R][R]
powder") in the quantities, at the price, and upon the terms and
conditions hereinafter set forth; and
WHEREAS, simultaneously with the execution of this Agreement,
Seller and Buyer are entering into a Trademark License Agreement of
even date herewith (the "License Agreement") pursuant to which, among
other things, Seller is granting to Buyer a license to use the
product name MANAPOL[R] in connection with the labeling, advertising
and sale of products manufactured by or for Buyer that contain
MANAPOL[R] powder; as one of the ingredients in products manufactured
by or for Buyer also containing other ingredients and substances (the
"Manufactured Products").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto agree
as follows:
1. Term. The term of this Agreement shall commence on August 15,
1997, and shall end at midnight on August 14, 2000, unless further
extended or sooner terminated as provided herein (such term, as
extended, herein called the "Term"). The Term (including each one-
year extension of the Term) shall be extended automatically for an
additional one-year period, provided that, at least thirty (30) days
prior to the end of the Term, Seller and Buyer mutually agree in
writing on the quantity and price of MANAPOL[R] to be sold by Seller
and purchased by Buyer hereunder during such additional one-year
period. At least sixty (60) days prior to the end of the Term,
Seller and Buyer shall commence good faith negotiations to determine
and agree upon such quantity and price for such additional one-year
period. If the parties are unable to so agree on such quantity and
price, this Agreement shall terminate effective at the end of the
current Term. Nothing contained in this Paragraph 1 shall be deemed
to (i) obligate the parties to agree upon such quantity and price,
(ii) obligate a party to negotiate with the other party regarding
such quantity and price if such other party is then in breach of or
in default under this Agreement or the License Agreement or (iii)
limit the rights to the parties under Paragraph 8 hereof. This
Agreement shall terminate automatically upon the expiration or
termination of the License Agreement.
2. Sale and Purchase License.
(a) Subject to the terms and conditions of this Agreement,
Seller shall sell to Buyer, and Buyer shall purchase from Seller, not
less than 300 kilograms per month.
(b) Buyer agrees that all MANAPOL[R] powder purchased by it
hereunder shall be used only (i) as an additive in human or animal
health food products (in capsule or liquid form) manufactured by or
for Buyer that are intended for sale to the ultimate consumer in the
United States or elsewhere and subject to compliance with Buyer s
obligations under the License Agreement, including without limitation
Buyers obligations under Article III thereof. Such food products
are herein called "Buyer Products".
3. Quality. Seller warrants to Buyer that all MANAPOL[R] powder
sold by Seller pursuant to this Agreement will conform to the quality
specifications set forth in Exhibit A to this Agreement. EXCEPT AS
PROVIDED IN THIS PARAGRAPH 3, THERE ARE NO WARRANTIES OR
REPRESENTATIONS OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS AND FITNESS FOR A
PARTICULAR PURPOSE, MADE WITH RESPECT TO THE MANAPOL[R] POWDER TO BE
SOLD HEREUNDER, AND NONE SHALL BE IMPLIED BY LAW. THE FOREGOING
NOTWITHSTANDING, SELLER DOES REPRESENT THAT THE MANAPOL[R] POWDER
DOES MEET THE SPECIFICATIONS OUTLINED ON EXHIBIT A AND THAT IT IS A
FOOD SUPPLEMENT UNDER THE FDA RULES AND REGULATIONS.
4. Insurance. Xxxxxxxxxx shall maintain insurance during the
term of this Agreement, and any extensions thereof, with not less
than the same coverage, endorsements, limits and notice of
cancellation as shown in the insurance certificate attached hereto as
Exhibit X. Xxxxxxxxxx shall, within thirty (30) days after this
Agreement is executed by both Parties, provide Mannatech with a copy
of its insurance certificate naming Mannatech as an additional
insured and listing the coverage, endorsements, limits, and notice of
cancellation provisions. Xxxxxxxxxx shall not cancel or materially
alter such policy without providing at least thirty (30) days prior
written notice to all named insured. Failure by Xxxxxxxxxx to
maintain insurance coverage in accordance with this Article 4 shall
constitute a material breach of this Agreement. It is understood and
agreed that the furnishing of such insurance certificate will not
relieve Xxxxxxxxxx of its other respective obligations under this
Agreement.
5. Deliveries. Buyer shall instruct Seller from time to time
during the Term, by placing a purchase order with Seller reasonably
in advance of the date Buyer desires MANAPOL[R] powder to be
delivered to it hereunder, (i) as to the quantities of MANAPOL[R]
powder to be delivered to Buyer, (ii) as to the specific date of
delivery, (iii) as to the specific location of delivery and (iv) as
to the carrier or particular type of carrier for such delivery.
During the Term, Buyer shall provide Seller (a) on a quarterly basis
commencing on August 15, a binding forecast of Buyer's minimum and
maximum aggregate delivery requirements for MANAPOL[R] powder for
such period, and (b) on a yearly basis a good faith forecast
acceptable to Seller (which shall be binding on Buyer) of Buyer's
minimum and maximum delivery requirements for MANAPOL[R] powder for
each month of the next twelve (12) month period. The quantities of
MANAPOL[R] powder ordered by Buyer pursuant to this Agreement from
time to time shall be spaced in a reasonable manner, and Buyer shall
order such quantities in accordance with Buyer's binding forecasts.
In no event shall Seller be required to deliver to Buyer in any
three-month period a quantity of MANAPOL[R] powder in excess of 125%
of the maximum delivery requirement for such period set forth in the
binding forecast for such period accepted by Seller. In no event
shall Mannatech be required to purchase more than 300 kilos of
Manapol[R] powder per month, unless a higher minimum monthly amount
has been projected by Seller pursuant to 5(a). Deliveries of
MANAPOL[R] powder shall be made by Seller under normal trade
conditions in the usual and customary manner being utilized by Seller
at the time and location of the particular delivery. The MANAPOL[R]
powder delivered to Buyer hereunder shall be packaged in five (5)
kilogram or fifteen (15) kilogram containers. All deliveries of
MANAPOL[R] powder to Buyer hereunder shall be made by Seller F.O.B.
at the facilities of Seller or its affiliates located in Irving,
Texas.
6. Price. All MANAPOL[R] powder to be purchased by Buyer under
this Agreement shall be purchased by it, during the first year of the
Term, at a price as outlined in Attachment B, and during each year
(if any) of the Term, at the price per kilogram agreed upon by the
parties for such additional year pursuant to the provisions of
Paragraph 1 hereof. Buyer shall bear all freight, insurance and
similar costs, and all sales taxes, with respect to such purchases.
The purchase price of MANAPOL[R] powder, together with all related
freight, insurance and similar costs, and sales taxes, shall be paid
by Buyer to Seller within thirty (30) days after the date of invoice.
7. Confidentiality. In the performance of Seller's obligations
pursuant to this Agreement or the License Agreement, Buyer may
acquire from Seller or its affiliates technical, commercial,
operating or other proprietary information relative to the business
or operations of Seller or its affiliates (the "Confidential
Information"). Buyer shall maintain the confidentiality, and take
all necessary precautions to safeguard the secrecy, of any and all
Confidential Information it may acquire from Seller or its
affiliates. Buyer shall not use any of such Confidential Information
for its own benefit or for the benefit of anyone else. Buyer shall
not publicly disclose the existence of this Agreement or the terms
hereof without the prior written consent of Seller.
8. Force Majeure. Seller shall not have any liability hereunder
if it shall be prevented from performing any of its obligations
hereunder by reason of any factor beyond its control, including,
without limitation, fire, explosion, accident, riot, flood, drought,
storm, earthquake, lightning, frost, civil commotion, sabotage,
vandalism, smoke, hail, embargo, act of God or the public enemy,
other casualty, strike or lockout, or interference, prohibition or
restriction imposed by any government or any officer or agent thereof
("Force Majeure"), and Seller's obligations, so far as may be
necessary, shall be suspended during the period of such Force Majeure
and shall be cancelled in respect of such quantities of MANAPOL[R]
powder as would have been sold hereunder but for such suspension.
Seller shall give to Buyer prompt notice of any such Force Majeure,
the date of commencement thereof and its probable duration and shall
give a further notice in like manner upon the termination thereof.
Each party hereto shall endeavor with due diligence to resume
compliance with its obligations hereunder at the earliest date and
shall do all that it reasonably can to overcome or mitigate the
effects of any such Force Majeure upon its obligations under this
Agreement.
9. Rights Upon Default.
(a) Seller's Rights Upon Default. If Buyer (i) fails to purchase
the quantities of MANAPOL[R] powder specified for purchase by Buyer
hereunder, (ii) fails to make a payment hereunder when due or (iii)
otherwise breaches any term of this Agreement, and such failure or
breach is not cured to Seller's reasonable satisfaction within five
(5) days (in the case of a failure to make a payment) or thirty (30)
days (in any other case) after receipt of notice thereof by Buyer, or
if Buyer fails to perform or observe any covenant or condition on its
part to be performed when required to be performed or observed, and
such failure continues after the applicable grace period, if any,
specified in the Agreement, Seller may refuse to make further
deliveries hereunder and may terminate this Agreement upon notice to
Buyer and, in addition, shall have such other rights and remedies,
including the right to recover damages, as are available to Seller
under applicable law or otherwise. If Buyer becomes bankrupt or
insolvent, or if a petition in bankruptcy is filed by or against it,
or if a receiver is appointed for it or its properties, Seller may
refuse to make further deliveries hereunder and may terminate this
Agreement upon notice to Buyer, without prejudice to any rights of
Seller existing hereunder or under applicable law or otherwise. Any
subsequent shipment of MANAPOL[R] powder by Seller after a failure by
Buyer to make any payment hereunder, or after any other default by
Buyer hereunder, shall not constitute a waiver of any rights of
Seller arising out of such prior default; nor shall Seller's failure
to insist upon strict performance of any provision of this Agreement
be deemed a waiver by Seller of any of its rights or remedies
hereunder or under applicable law or a waiver by Seller of any
subsequent default by Buyer in the performance of or compliance with
any of the terms of this Agreement.
(b) Buyer's Rights Upon Default. If Seller fails in any material
respect to perform its obligations hereunder, and such failure is not
cured to Buyer's reasonable satisfaction within 30 days after receipt
of notice thereof by Seller, Buyer shall have the right to refuse to
accept further deliveries hereunder and to terminate this Agreement
upon notice to Seller and, in addition, shall have such other rights
and remedies, including the right to recover damages, as are
available to Buyer under applicable law or otherwise. Any subsequent
acceptance of delivery of MANAPOL[R] powder by Buyer after any
default by Seller under this Agreement shall not constitute a waiver
of any rights of Buyer arising out of such prior default; nor shall
Buyer's failure to insist upon strict performance of any provision of
this Agreement be deemed a waiver by Buyer of any of its rights or
remedies hereunder or under applicable law or a waiver by Buyer of
any subsequent default by Seller in the performance of or compliance
with any of the terms of this Agreement.
10. Disclaimer and Indemnity. Buyer shall assume all financial
and other obligations for Buyer Products, and Seller shall not incur
any liability or responsibility to Buyer or to third parties arising
out of or connected in any manner with Buyer Products. In no event
shall Seller be liable for lost profits, special damages,
consequential damages or contingent liabilities arising out of or
connected in any manner with this Agreement or Buyer Products. Buyer
shall defend, indemnify and hold harmless Seller and its affiliates,
and their respective officers, directors, employees and agents, from
and against all claims, liabilities, demands, damages, expenses and
losses (including reasonable attorneys' fees and expenses) arising
out of or connected with (i) any manufacture, use, sale or other
disposition of Buyer Products, or any other products of Buyer, by
Buyer or any other party and (ii) any breach by Buyer of any of its
obligations under this Agreement.
11. Equitable Relief. A breach by Buyer of the provisions of
Paragraph 2(b) shall cause Seller to suffer irreparable harm and, in
such event, Seller shall be entitled, as a matter of right, to a
restraining order and other injunctive relief from any court of
competent jurisdiction, restraining any further violation thereof by
Buyer, its officers, agents, servants, employees and those persons in
active concert or participation with them. The right to a
restraining order or other injunctive relief shall be supplemental to
any other right or remedy Seller may have, including, without
limitation, the recovery of damages for the breach of such provisions
or of any other provisions of this Agreement.
12. Survival. The expiration or termination of the Term shall not
impair the rights or obligations of either party hereto which shall
have accrued hereunder prior to such expiration or termination. The
provisions of Paragraphs 2(b), 3, 7, 9, 10 and 11 hereof, and the
rights and obligations of the parties thereunder, shall survive the
expiration or termination of the Term.
13. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of
Texas.
14. Succession. Neither party hereto may assign or otherwise
transfer this Agreement or any of its rights or obligations hereunder
(including, without limitation, by merger or consolidation) without
the prior written consent of the other party; provided, however, that
Seller may assign any of its rights or obligations hereunder to any
affiliate of Seller. Subject to the immediately preceding sentence,
this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
15. Entire Agreement. This Agreement and the License Agreement
constitute the entire agreement between the parties hereto relating
to the matters covered hereby The terms of this Agreement shall
prevail over any inconsistent terms contained in any purchase order
issued by Buyer and acknowledgment or acceptance thereof issued by
Seller. No modification, waiver or discharge of this Agreement or
any of its terms shall be binding unless in writing and signed by the
party against which the modification, waiver or discharge is sought
to be enforced. This Agreement is separate from and, except for the
License Agreement, unrelated to any other agreement between the
parties hereto and has been entered into for separate and independent
consideration, the sufficiency of which is hereby acknowledged by the
parties.
16. Notices. All notices and other communications with respect to
this Agreement shall be in writing and shall be deemed to have been
duly given when delivered personally or when duly deposited in the
mails, first class mail, postage prepaid, to the address set forth
below, or such other address hereafter specified in like manner by
one party to the other:
If to Seller: Caraloe, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: President
If to Buyer: Mannatech, Inc.
000 X. Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
17. Interpretation. In the event that any provision of this
Agreement is illegal, invalid or unenforceable as written but may be
rendered legal, valid and enforceable by limitation thereof, then
such provision shall be deemed to be legal, valid and enforceable to
the maximum extent permitted by applicable law. The illegality,
invalidity or unenforceability in its entirety of any provision
hereof will not affect the legality, validity or enforceability of
the remaining provisions of this Agreement.
18. No Inconsistent Actions. Each party hereto agrees that
it will not voluntarily undertake any action or course of action
inconsistent with the provisions or intent of this Agreement and,
subject to the provisions of Paragraph 7 hereof, will promptly do all
acts and take all measures as may be appropriate to comply with the
terms, conditions and provisions of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized officers as of the day and year
first above written.
CARALOE, INC.
By: __/s/________________________
Name:___________________________
Title:____________________________
MANNATECH, INC.
By:____/s/_________________________
Name:___________________________
Title:____________________________
EXHIBIT A
To that certain Trademark License and Supply Agreement
dated August 14, 1997 by and between Caraloe, Inc. and Mannatech, Inc.
MANAPOL[R] POWDER PRODUCT SPECIFICATION
Source:
Freeze dried powder produced
from inner gel of Aloe xxxx X.
Processing:
Patented: U.S. and other patents.
Product Specifications:
Appearance Fine white to beige powder
Complex carbohydrates > = 30% of soluble fraction
Moisture < = 14%
Residue on ignition < = 16%
Microbiological purity Meets U.S.P. specifications
Gel Points approximately 240 mg/oz
Viscosity (cP) @ 4 mg/ml approximately 40
Total acid value
(as malic acid) approximately 0.7% by AOAC method
Fiber content (>5 m) < = 60%
Manapol[R] Powder
Monthly Quantity Price/Kg
200 to 300 Kg $1,225/Kg
301 to 400 Kg 1,200/Kg
401 to 500 Kg 1,150/Kg
501 to 600 Kg 1,125/Kg
601 to 700 Kg 1,100/Kg
The above pricing will be re-evaluated in May, 1998 or when monthly
purchases exceed 700 kilograms.
