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TRADEMARK LICENSE AND SUPPLY AGREEMENT
THIS TRADEMARK LICENSE AND SUPPLY
AGREEMENT (this Supply Agreement ) is dated this 25th day of January 2007 (the Effective Date ) and is between CARRINGTON LABORATORIES, INC. ( CARRINGTON ), a Texas corporation with its principal place of business
located at 2001 Walnut Hill Lane, Irving Texas 75038, and MANNATECH, INCORPORATED ( MANNATECH ), a Texas corporation with its principal place of business located at 600 S. Royal Lane, Suite 200, Coppell, Texas 75019. Collectively,
CARRINGTON AND MANNATECH are hereinafter referred to as Parties.
WHEREAS, CARRINGTON desires to sell to MANNATECH and MANNATECH desires to purchase from CARRINGTON, a bulk aloe vera mucilaginous polysaccharide
(hereinafter referred to under the product name of Manapol powder ) in quantities, at the price and upon the terms and conditions set forth herein; and
WHEREAS, CARRINGTON claims the ownership of the trademark Manapol ;
WHEREAS, MANNATECH is desirous of
obtaining from CARRINGTON, and CARRINGTON is willing to grant to MANNATECH, a license to use the product name Manapol powder (the Mark ) in connection with the advertising and sale of products manufactured by or for MANNATECH that
contain Manapol (herein the Manufactured Products );
WHEREAS, CARRINGTON and MANNATECH are mutually desirous of insuring
the consistent quality of all products sold in connection with the Mark; and
WHEREAS, the Parties desire to memorialize in this Agreement
the arrangement between the Parties pursuant to which MANNATECH shall purchase Manapol powder directly from CARRINGTON at the prices set forth herein for the exclusive purpose of manufacturing the Manufactured Products.
NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements contained herein, the Parties hereto agree as follows.
The term of this Supply Agreement shall be
for a period of thirty six (36) months from December 31, 2006 to December 31, 2009 (the Term ) unless further extended or sooner terminated as provided herein. The Term may be extended by the Parties for an additional one
(1) year period (the Extension Period ), provided that, at least sixty (60) days prior to the end of the Term, the Parties mutually agree in writing on the quantity and price of Manapol powder to be sold by CARRINGTON and
purchased by MANNATECH hereunder during such Extension Period. At least one hundred and twenty (120) days prior to the end of the Term, the Parties shall commence good faith negotiations to determine and agree upon the quantity and price of
Manapol powder to be purchased for the Extension Period. If the Parties are unable to so agree on the quantity and price, this Supply Agreement shall terminate effective at the end of the initial Term. Nothing contained in this Paragraph 1
shall be deemed to (i) obligate the Parties to agree upon the quantity
and price; (ii) obligate a party to negotiate with the other party regarding the quantity or price
if the other party is then in default under this Supply Agreement or the License Agreement; or (iii) limit the rights of either party under Paragraph 14 herein.
Subject to Paragraphs 2.1 and 4, for
each calendar month during the Term, MANNATECH shall provide CARRINGTON with a non-binding twelve (12) month rolling forecast of the minimum and target aggregate quantities of Manapol powder (the Forecast ). The first Forecast
shall be provided by MANNATECH no later than the first day of the Term, with subsequent Forecast updates due on or before the fifteenth (15th) of each month thereafter throughout the Term (including any extension period). The Parties acknowledge and agree that the Forecast is for the sole purpose of permitting the Parties to plan scale-up activities and
future purchases of Manapol powder and shall not constitute an obligation of MANNATECH to purchase the quantities of Manapol powder indicated in any Forecast.
The price per kilogram payable by
MANNATECH to CARRINGTON for Manapol powder shall be based on a twelve month schedule and subject to
a minimum monthly quantity of Manapol powder purchased by MANNATECH during a calendar month and shall be as set forth under the terms of this Supply Agreement. The Parties agree that the quantity of 2006 purchases of Manapol powder made
subsequent to November 17, 2006 which exceed 900 kilograms in the aggregate shall reduce the aggregate minimum guaranteed purchase quantity for 2007 according to the mutually agreed-upon schedule as set forth in Exhibit B, which is attached
hereto and incorporated by reference herein.
MANNATECH, shall bear all, insurance and similar costs, and all sales taxes, with respect to
such purchases. The purchase price of Manapol powder, together with all related freight,
insurance and similar costs, and sales taxes, shall be paid by MANNATECH as appropriate to CARRINGTON, subject to Section 2.7, within thirty (30) days after the date of invoice
MANNATECH shall instruct
CARRINGTON from time to time during the Term, by placing a purchase order with CARRINGTON reasonably in advance of the date it desires Manapol
powder to be delivered to it hereunder, as to (a) the quantities of Manapol
powder to be delivered (b) the specific date of delivery, (c) the specific location of delivery and (d) the particular carrier or particular type of carrier for such
delivery. In no event shall CARRINGTON be required to deliver to MANNATECH in any consecutive three-month period a quantity of Manapol powder in excess of 125% of the maximum delivery requirement for such period set forth in the non-binding Forecast for such period accepted by CARRINGTON. The quantities of Manapol powder ordered pursuant to this Supply Agreement from time to time shall be spaced in a reasonable
manner. Deliveries of Manapol powder shall be made by CARRINGTON under normal trade
conditions in the usual and customary manner being utilized by CARRINGTON at the time and location(s) for the particular delivery. The Manapol
powder delivered hereunder shall be packaged in five (5) kilogram containers. All deliveries of Manapol powder hereunder shall be made by CARRINGTON, delivered duty paid, to MANNATECH, Coppell, TX; all other destinations Ex Works,
Irving, TX (Incoterms 2000). The Parties agree that retained samples of the Manapol powder will be provided to MANNATECH for testing on a mutually agreeable basis.
to violate this provision, MANNATECH shall have the right to terminate this Supply Agreement and such
termination shall be effective upon receipt by CARRINGTON.
CARRINGTON hereby grants
to MANNATECH the non-transferable, non-exclusive right and royalty-free license to use the Mark in connection with the labeling, advertising and sale of the Manufactured Products sold by MANNATECH during the Term of this Supply Agreement. During the
Term of this Supply Agreement, MANNATECH shall have (a) the non-exclusive right to use the Mark in connection with the Manufactured Products that are intended for sale to the ultimate consumer in the United States, Canada, Mexico, and South
Africa; and (b) the non-exclusive right to use the Mark in connection with the Manufactured Products that are intended for sale to the ultimate consumer in places other than the United States, Canada, Mexico, and South Africa that are
specifically and mutually agreed upon from time to time and listed in Exhibit A hereto. The countries in Exhibit A may be removed by CARRINGTON upon ninety (90) days prior written notice from CARRINGTON to MANNATECH that an
exclusive Trademark License Agreement has been executed for that country. In that event, MANNATECH shall no longer be allowed to use the Mark within the country removed by CARRINGTON after its existing supplies have been exhausted. Relative to
Japan, MANNATECH may use the Mark on a non-exclusive basis under the same conditions as those countries listed in this Paragraph 7.1 and Exhibit A except that no drink may be sold using Manapol powder or the Mark in Japan.
progress of the application, including but not limited to sending CARRINGTON copies of all
communications or notes to or from the FDA or USDA, as applicable.
Further, CARRINGTON warrants and represents that its facilities have been adequately designed, qualified, and maintained and that it has any and all appropriate licenses, permits, and authorizations from all
applicable federal, state, and local authorities such that it may carry out its obligations under this Supply Agreement.
AT ITS SOLE EXPENSE, OF ADDITIONAL QUANTITIES OF CONFORMING MANAPOL POWDER IN REPLACEMENT OF ANY
NON-CONFORMING MANAPOL POWDER; OR (B) THE REFUND OF THE CONTRACT PRICE FOR THE MANAPOL POWDER COVERED BY THE WARRANTY. UPON RECEIPT OF NOTICE FROM MANNATECH OF NON-CONFORMING GOODS, CARRINGTON SHALL, WITHIN TWO (2) BUSINESS DAYS,
PROVIDE MANNATECH WITH A DELIVERY SCHEDULE REPRESENTING CARRINGTON S BEST ESTIMATE OF THE DATES BY WHICH IT CAN PROVIDE CONFORMING GOODS. MANNATECH SHALL HAVE TEN (10) BUSINESS DAYS FOLLOWING RECEIPT OF SUCH DELIVERY SCHEDULE TO NOTIFY
CARRINGTON OF ITS ELECTION TO EITHER ACCEPT THE DELIVERY SCHEDULE OR ELECT TO RECEIVE A REFUND OF THE CONTRACT PRICE FOR THE NON-CONFORMING GOODS. IF A REFUND IS ELECTED BY MANNATECH, PAYMENT IN FULL SHALL BE MADE BY CARRINGTON TO MANNATECH WITHIN
TEN (10) DAYS OF CARRINGTON S RECEIPT OF MANNATECH S NOTICE OF ELECTION OF REFUND. FAILURE BY MANNATECH TO TIMELY RESPOND TO ITS OPTION TO ELECT A REFUND WILL BE DEEMED ACCEPTANCE OF THE DELIVERY SCHEDULE. IF CARRINGTON FAILS TO
TIMELY SUPPLY THE CONFORMING GOODS IN ACCORDANCE WITH THE SCHEDULE PROVIDED TO AND ACCEPTED BY MANNATECH OR IF CARRINGTON FAILS TO TIMELY REMIT ANY REFUND DUE HEREUNDER, THEN SUCH FAILURE SHALL BE DEEMED A MATERIAL BREACH OF THIS SUPPLY AGREEMENT
AND SHALL BE SUBJECT TO TERMINATION IN ACCORDANCE WITH PARAGRAPH 16.2.
Shipments of Manapol powder not meeting the applicable quality
specifications may, at CARRINGTON S option and expense, be returned to CARRINGTON or destroyed by MANNATECH. If CARRINGTON is unable to produce conforming Manapol powder, any sums actually paid therefore will be promptly refunded within
ten (10) days after MANNATECH S receipt of such notice.
During the Term (including any
extension) of this Supply Agreement, CARRINGTON shall have obtained (prior to commencement) and shall continuously maintain the insurance coverage described in this Paragraph at its sole cost and expense. CARRINGTON shall provide to MANNATECH
certificates of insurance evidencing such coverage. Each of the policies shall include MANNATECH as an additional insured. CARRINGTON will provide MANNATECH with at least thirty (30) days prior written notice of renewal, cancellation or
in coverage. CARRINGTON shall notify MANNATECH of all legal actions or proceedings instituted by or
against CARRINGTON reasonably likely to adversely affect CARRINGTON S performance of its obligations under the Agreement. Failure by CARRINGTON to maintain insurance coverage according to this Paragraph 9 shall constitute a material breach of
this Supply Agreement. It is understood and agreed that the furnishing of such insurance certificate will not relieve CARRINGTON of its other respective obligations under this Supply Agreement. CARRINGTON shall obtain and maintain product liability
coverage in an amount of not less than Ten Million and Dollars ($10,000,000.00) written on a claims made basis.
CARRINGTON and MANNATECH
hereby agree in good faith to conduct future negotiations regarding the supply by CARRINGTON to MANNATECH of additional bulk raw material or finished products.
CARRINGTON and MANNATECH agree
that if additional parties are added to this Supply Agreement, including but not limited to contract manufacturing vendors of MANNATECH, such additional parties will be subject to all of the same terms and conditions of this Supply Agreement.
obtains or has obtained or at which it sells or has sold its products or services; manufacturing and
sales costs; lists or other written records used in MANNATECH s business; compensation paid to its Associates, details of training methods, new products or new uses for old products, merchandising or sales techniques, contracts and licenses,
business systems, computer programs, or any other confidential information of, about, or concerning the business of MANNATECH; its manner of operation or other confidential data of any kind, nature or description.
Neither party shall be responsible
for damages caused by its delay or failure to perform, in whole or in part, its obligations under this Supply Agreement or by its non-compliance with any of the terms of this Supply Agreement to the extent such delay, failure or non-compliance is
due or attributable to flood, extreme weather, fire, hurricane, tornado or other natural calamity; acts of God; any law, order, action or request from the United States government or any other government having jurisdiction over the Manapol
powder or other Manapol products, or any act of any governmental department or agency, or of any civil or military authority; war; national emergency; insurrection, riot or civil unrest; any terrorist attack or governmental response thereto;
any strike, work stoppage or other labor difficulty; any product shortage; or any national or regional economic event not within its control. In case of any such force majeure event, the party incurring the force majeure event shall give the other
party written notice within five (5) business days of the force majeure event, and thereafter such noticing party s obligations hereunder shall be suspended and discharged to the extent and for the duration of such force majeure event;
provided, however, that the noticing party shall use its best efforts to mitigate the effects of such force majeure event. Upon expiration, settlement or other resolution of the force majeure event, the noticing party shall resume performance in
full hereunder but shall not be required to make up for any suspended or discharged obligations. In the event CARRINGTON S obligations hereunder
are suspended or discharged due to any force majeure event, MANNATECH may enter into other reasonable
arrangements with other suppliers or distributors to satisfy its requirements hereunder. Further, the Parties agree that MANNATECH shall receive a credit against its volume commitments in an amount equal to the volume of replacement product
purchased from any such other supplier or distributor during the force majeure period.
of any of the events specified below, MANNATECH shall be in default of this Supply Agreement and CARRINGTON shall have the right to terminate this Supply Agreement upon either thirty (30) days prior written notice for a non-monetary default or
in the case of a monetary default, ten (10) days prior written notice (each a Cure Period ) to MANNATECH, specifying the default of this Supply Agreement which shall constitute good cause for termination and providing MANNATECH with
the applicable Cure Period to cure the default giving rise to the good cause for termination. The termination shall be effective upon the expiration of the applicable Cure Period if MANNATECH fails to cure the default. It shall be a breach of this
Supply Agreement and constitute good cause for termination of the Supply Agreement if MANNATECH:
Notwithstanding anything contained herein to the contrary, CARRINGTON shall not have the right to terminate this Supply Agreement if the corrective action necessary to cure such breach cannot be completed within the
Cure Period; provided, however, that MANNATECH (i) has, within the Cure Period, initiated the necessary action required to cure such breach; and (ii) shall thereafter earnestly and continuously proceed to complete the corrective action