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Exhibit 99.1
*** Indicates omitted material that is the
subject of a confidential treatment request filed separately with
the Commission.
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."
Recitals
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.
Agreement
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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.
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2.1
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Subject to the terms and conditions of this
Supply Agreement, CARRINGTON shall sell to MANNATECH and MANNATECH
shall purchase from CARRINGTON, not less than *** kilograms
of Manapol® per month during the first twenty-four
(24) months of the Term. With respect to the final twelve 12
month period of the Term, the Parties shall commence negotiations
regarding the volume commitment no later than ninety (90) days
prior to the end of the first twenty-four (24) months of the
Term. Further, the Parties acknowledge and agree that any purchase
by Mannatech from Carrington of Manapol® powder or other aloe
based bulk raw material product shall satisfy the volume purchase
commitments set forth in this Supply Agreement.
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2.2
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In the event that MANNATECH reasonably
anticipates that it shall require more than 115 kilograms more
Manapol® powder than its prior monthly order, CARRINGTON will
exert commercially reasonable efforts to deliver such order;
however, Carrington shall guarantee delivery of such increase if
MANNATECH provides CARRINGTON at least ninety (90) days’
prior written notice thereof.
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2.3
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MANNATECH agrees that all Manapol® powder
shall be used only as an additive in human or animal health food
products (in capsule, powder, tablet, liquid, gel, lotion or cream
form) manufactured by or for MANNATECH and intended for sale to the
ultimate consumer in the United States or any other of
MANNATECH’S countries of operation set forth in either
Paragraph 7 or Exhibit A, which is attached hereto and incorporated
by reference herein, of this Supply Agreement.
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2.4
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MANNATECH shall not combine Manapol® powder
with any product or substance in any manner which would violate any
laws, rules or regulations of any state, federal or other
governmental body in which the Manufactured Products are sold.
MANNATECH shall not combine Manapol® powder with any other
substance in a Manufactured Product that is to be advertised or
sold for use or consumption by humans or animals if the approval of
the U.S. Food and Drug Administration (the "FDA") or the U.S.
Department of Agriculture ("USDA") for such use or consumption is
required and has not been obtained.
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2.5
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Beginning on the first day of the Term, unless
otherwise specified by the Parties and except as provided for in
section 4 herein, MANNATECH agrees to purchase directly from
CARRINGTON all quantities of Manapol ® powder required to
manufacture the Manufactured Products. CARRINGTON agrees that all
purchases of Manapol® powder by MANNATECH pursuant to this
Supply Agreement shall be credited on a monthly basis against any
minimum purchase requirements by MANNATECH as set forth in this
Supply Agreement.
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2.6
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CARRINGTON shall, as an inventory buffer to
account for increased demand, maintain a safety stock level of
Manapol® powder in an amount equal to twenty-five percent
(25%) of the minimum monthly requirement set forth in
Paragraphs 2.1 and 4 herein. This inventory buffer must be
replenished so that the Manapol® powder inventory is maintained
in the U.S. at this pre-determined safety stock level throughout
the Term of this Supply Agreement. Notwithstanding the foregoing,
MANNATECH shall have no liability or other responsibility
whatsoever for loss or damage incurred by CARRINGTON with respect
to inventory maintenance decisions, including but not limited to
loss or damage which may result from changes in marketing or sales
plans, projections, or the non-binding forecast as described in
Paragraph 3, below.
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2.7
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All sales to MANNATECH under this Supply
Agreement shall be subject to payment terms of 1% - 10 days, net 30
days. The cash discount of 1% is allowed on invoices paid within
ten (10) days of date of invoice. Where cash discount for
prompt payment is not taken, the net total amount of invoice is due
30 days from date of invoice.
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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 (15 th ) 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.
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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
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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.
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6.1
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MANNATECH agrees that any purchases of
Manapol ® powder from CARRINGTON pursuant to the terms of this Supply
Agreement shall be used exclusively in connection with the
production of the Manufactured Products by or for MANNATECH.
Without limitation, MANNATECH agrees that it shall not sell
Manapol ® powder purchased pursuant to the terms of this Supply Agreement
in bulk or otherwise, or use any purchases of Manapol
® powder
purchased pursuant to the terms of this Supply Agreement in
connection with the production of products on behalf of any other
party.
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6.2
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CARRINGTON and MANNATECH agree that the Supply
Agreement shall be exclusive to the extent that CARRINGTON may not
sell or distribute Manapol® powder or other Manapol®
products in bulk or wholesale form for sale or otherwise, to anyone
whom MANNATECH has by written notice to CARRINGTON identified as
(and who is), an independent Associate of MANNATECH ("Associate"),
or whom CARRINGTON knows or should have known to be an Associate of
MANNATECH. For the purposes of this Agreement, an Associate is an
individual or business entity which has been assigned a MANNATECH
account number, is bound by MANNATECH’S Associate Agreement
and the terms and conditions related thereto, and which has placed
at least one order for MANNATECH products during the prior twelve
(12) month period. For purposes of this Paragraph 6.2 and its
Subparagraphs, the words "bulk" or "wholesale" shall refer only to
a sale of one (1) kilogram or more of Manapol® raw
material.
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6.2.1
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For a period of at least five (5) years
from the date of shipment (or for such longer period if requested
by MANNATECH), CARRINGTON agrees to keep complete records of the
manufacture and storage for, and the shipment, and sale of the
Manapol® powder to, MANNATECH and, upon ten (10) days’
prior written request by MANNATECH, to make these records available
to MANNATECH for its review and inspection.
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6.2.2
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CARRINGTON agrees to discontinue making bulk or
wholesale sales or distributions of Manapol® raw material to
any Associate within thirty (30) days after receipt of written
notice from MANNATECH identifying such Associate. If CARRINGTON
fails to comply with such notice and/or otherwise
continues
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7.1
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Grant of License; Use of Mark.
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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.
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7.1.1
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MANNATECH shall not have the right to grant
sublicenses without the written permission of CARRINGTON with
respect to the license granted herein; however, MANNATECH may
engage a third party to make and affix labels for the Manufactured
Products in compliance with this Supply Agreement and/or to
distribute and sell the Manufactured Products in compliance with
the terms and conditions of this Supply Agreement, in which event
MANNATECH will be expressly obligated to ensure full compliance by
such third parties with all terms and conditions of this Supply
Agreement.
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7.1.2
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MANNATECH shall not represent in any manner that
it owns any right, title or interest in or to the Mark. MANNATECH
acknowledges that its use of the Mark shall inure to the benefit of
CARRINGTON and shall not create in MANNATECH’S favor any
right, title or interest in or to the Mark.
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7.1.3
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Upon the expiration or termination of this
Agreement, MANNATECH will cease and desist from all use of the Mark
in any manner and will not adopt or use, without CARRINGTON’S
prior written consent, any work or mark which is confusingly or
deceptively similar to the Mark, except that MANNATECH may continue
to use the Mark under the terms and conditions of this Supply
Agreement in connection with any remaining supplies of Manapol®
powder for the lesser of (a) a period of ninety (90) days
from the date of such expiration or termination; or (b) until
such supplies are exhausted by MANNATECH.
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7.1.4
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The Manufactured Products shall be manufactured,
packaged, labeled, advertised, marketed and sold in compliance with
(i) the Federal Food, Drug and Cosmetic Act and the rules and
regulations promulgated thereunder, if sold for use within the
United States, and (ii) all other applicable laws, rules and
regulations if sold for use outside the United States.
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7.1.5
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MANNATECH shall not use the Mark except as
specifically set forth herein. Without limiting the generality of
the preceding sentence, MANNATECH shall not use the Mark in
connection with the sale or advertising of any products other than
the Manufactured Products. Any use of the trademark,
"Manapol®," pursuant to this Supply Agreement is non-exclusive.
Whenever the Licensee uses the trademark, "Manapol®," it shall
take all reasonable measures to assure that there is no confusion
of ownership of the Mark or the substance which it
identifies.
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7.1.6
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CARRINGTON shall not acquire any right under this
Agreement to use, and shall not use, the name "Mannatech™,"
"Mannatech™, Incorporated," or "Ambrotose®" (either alone
or in conjunction with or as a part of any other word or name) or
any other trademarks, trade names, service marks, fanciful
characters or designs of MANNATECH or any of its affiliates in any
advertising, publicity or promotion or other materials or uses, or
to express or imply any endorsement of CARRINGTON’S products
or services, or in any manner or for any purpose whatsoever,
without the prior written consent of MANNATECH expressly
authorizing such use. The provisions of this Subparagraph shall
survive termination or expiration of this Supply Agreement or any
determination that this Supply Agreement or any portion of it is
void or voidable. At CARRINGTON’S request and sole
discretion, option and expense, MANNATECH shall take whatever
action is reasonably necessary to assist CARRINGTON or its assigns
in perfecting, protecting or enforcing CARRINGTON’S rights in
and to the Mark. MANNATECH understands that CARRINGTON or its
assigns may rely solely on MANNATECH’S use of the Mark to
maintain registration with the United States Patent and Trademark
Office.
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7.2
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Labels and Advertising .
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7.2.1
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All labels and advertising relating to the
Manufactured Products offered in connection with the Mark must
strictly comply with all applicable rules and regulations of the
FDA if sold for use within the United States, and all other
applicable laws, rules and regulations wherever sold.
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7.2.2
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If MANNATECH uses the Mark in its labels,
packaging, advertising and promotional materials for the
Manufactured Products, MANNATECH shall also indicate that such Mark
is the registered trademark of Licensor and shall take all
commercially reasonable measures to assure that there is no
confusion of ownership of the Mark.
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7.2.3
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MANNATECH agrees not to make, and to use
commercially reasonable efforts to ensure that its Associates,
agents or distributors do not make any claims regarding any
properties or results relating to Manapol ® powder or any Manufactured
Product which would violate any applicable law.
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7.2.4
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MANNATECH shall take all steps reasonably
necessary to ensure that its distributors and any other parties to
whom it sells any of the Manufactured Products for resale do not
re-label, repackage, advertise, sell or attempt to sell
Manapol® powder or any of the Manufactured Products in a manner
that would violate this Supply Agreement.
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7.2.5
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If MANNATECH desires to seek FDA or USDA approval
as to any specific claims with respect to Manapol® powder or
any Manufactured Product, MANNATECH herby agrees to (i) notify
CARRINGTON of the claims and the application prior to filing; and
(ii) to keep CARRINGTON informed as to the
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7.2.6
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If CARRINGTON so requests and upon sixty
(60) business days’ prior written notice from CARRINGTON
to MANNATECH, MANNATECH shall not use any label, advertisement or
marketing material that contains the Mark unless such label,
advertisement or marketing material has first been submitted to and
approved by CARRINGTON; provided, however, such approval
requirement shall not apply to any such label, advertisement, or
other marketing material that has been previously approved by
CARRINGTON. CARRINGTON shall not unreasonably withhold its approval
of any such label, advertisement or marketing material. If
CARRINGTON does not notify MANNATECH that CARRINGTON disapproves
the label, advertisement or marketing material within fifteen
(15) days from the date CARRINGTON receives the materials,
then MANNATECH may commence using the materials. However,
CARRINGTON may still disapprove such label, advertisement, or
marketing material by notice to MANNATECH, and MANNATECH must then
cease using such materials upon receipt of such notice. If
CARRINGTON disapproves the label, advertisement, or marketing
material after said fifteen (15) days, then CARRINGTON shall
reimburse MANNATECH for its actual costs for producing any unused
materials and for any unavoidable contractual obligations to
distribute such materials. MANNATECH shall not use any labels,
advertisement, or marketing material that CARRINGTON has
disapproved.
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8.
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Representations and Warranties; Non-conforming
Goods; Quality Control.
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8.1
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CARRINGTON warrants and represents to MANNATECH
that it has established procedures for the manufacture and supply
of the Manapol® powder and that all Manapol® powder sold by
CARRINGTON pursuant to this Supply Agreement will:
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(i)
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conform to the quality specifications set forth
in Exhibit C to this Supply Agreement, which is attached
hereto and incorporated by reference herein , and that
Manapol® powder is a food supplement under the FDA’s
rules and regulations;
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(ii)
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have been formulated, manufactured, stored,
tested, labeled, and shipped in accordance with current good
manufacturing practices as promulgated by the FDA and all other
applicable laws and regulations; and
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(iii)
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not be (a) adulterated or
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