Exhibit 10.10
SUPPLY AGREEMENT
This Supply Agreement (“Supply
Agreement”) is effective as of December 1, 2003 and is
between CARALOE, INC., a Texas corporation (“CARALOE”)
with its principal place of business located at 2001 Walnut Hill
Lane, Irving Texas 75038, MANNATECH, INC. a Texas corporation
(“MANNATECH”) with its principal place of business
located at 600 S. Royal Lane, Suite 200, Coppell, Texas 75019 and
its manufacturer (the “Manufacturer”) (The name
of the manufacturer has been omitted pursuant to a request for
confidential treatment and the material has been filed with the
Commission separately) . CARALOE, MANNATECH AND its
Manufacturer are hereinafter referred to as
“Parties”.
WITNESSETH:
WHEREAS, CARALOE desires to sell to
MANNATECH and MANNATECH desires to purchase from CARALOE, 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, contemporaneously with the
execution of this Agreement, CARALOE and MANNATECH are entering
into a Trademark License Agreement of even date herewith (the
“License Agreement”) pursuant to which, among other
things, CARALOE is granting to MANNATECH a license to use the
product name Manapol ® in connection with the labeling, advertising and
sale of products manufactured by or for MANNATECH that contain
Manapol ® powder; as one of the ingredients in products
manufactured by or for MANNATECH also containing other ingredients
and substances (the “Manufactured Products”);
and
WHEREAS, MANNATECH and its
Manufacturer are parties to that certain Manufacturing Agreement
dated April 22, 1998 (the “Manufacturing Agreement”),
pursuant to which the Manufacturer has agreed to manufacture,
produce and bulk package for MANNATECH the nutritional products
described in the Manufacturing Agreement; and
WHEREAS, the Parties desire to
memorialize in this Agreement the arrangement among the Parties
pursuant to which its Manufacturer shall purchase Manapol
®
powder directly from CARALOE at the
prices set forth herein for the exclusive purpose of manufacturing
the Manufactured Products for MANNATECH;
NOW, THEREFORE, in consideration of
the premises and mutual covenants and agreements contained herein,
the Parties hereto agree as follows:
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1.
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Term .
The term of this Supply Agreement shall be for a period of twelve
(12) months from December 1, 2003 to November 30, 2004 (the
“Term”) 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 (1)
year period, provided that, at least thirty (30) days prior to the
end of the Term, MANNATECH and CARALOE mutually agree in writing on
the quantity and price of Manapol ® powder to be sold by CARALOE and purchased by
MANNATECH hereunder during such additional one-year period. At
least sixty (60) days prior to the end of the Term, CARALOE and
MANNATECH shall commence good faith negotiations to determine and
agree upon such quantity and price for such additional one-year
period. If MANNATECH and CARALOE are unable to so agree on such
quantity and price, this Supply Agreement shall terminate effective
at the end of the then-current Term. Nothing contained in this
Paragraph 1 shall be deemed to (i.) obligate MANNATECH and CARALOE
to agree upon such quantity and price, (ii.) obligate a party to
negotiate with the other party regarding such quantity and price is
such other part is then in breach of or in default under this
Supply Agreement or the License Agreement or (iii) limit the rights
of MANNATECH and CARALOE under Paragraph 14 hereof. This Supply
Agreement shall terminate automatically upon the expiration or
termination of the License Agreement.
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2.1
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Subject to the
terms and conditions of this Supply Agreement, CARALOE shall sell
to MANNATECH and MANNATECH shall purchase from CARALOE, not less
than 250 kilograms of Manapol ® per month during the Term. CARALOE agrees that
MANNATECH may increase or decrease its monthly orders,
incrementally, in amounts not to exceed 200 Kg difference from the
prior month’s order, subject to ninety (90) days prior
written notice to CARALOE. In the event that MANNATECH reasonably
anticipates that it shall require more than 200 Kg more
Manapol ® than its prior monthly order, CARALOE will
exert its best reasonable effort to deliver but will guarantee
delivery if MANNATECH gives CARALOE at least 180 days prior written
notice thereof.
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1
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2.2
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MANNATECH and
its Manufacturer agree that all Manapol ® powder purchased by it hereunder shall be used
only as an additive in human or animal health food products (in
capsule, powder tablet or liquid form) manufactured by or for
MANNATECH that are intended for sale to the ultimate consumer in
the United States or any other of MANNATECH’S countries of
operation in which it conducts business and subject to compliance
with MANNATECH’S obligations under the License Agreement,
including without limitation MANNATECH’S obligations under
Article III thereof.
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2.3
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Beginning on
the date hereof, unless otherwise specified by MANNATECH, and its
Manufacturer agrees to purchase directly from CARALOE all
quantities of Manapol ® powder that it requires to manufacture
Manufactured Products for MANNATECH under the terms of the
Manufacturing Agreement. CARALOE agrees that all purchases by its
Manufacturer 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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2.4
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All sales of
Manapol ® powder, whether to MANNATECH or its
Manufacturer, shall be subject to payment terms of 1%—10
days, net 30 days. The cash discount of 1% is allowed on invoices
paid within 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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3.
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Forecast . For each calendar year during the Term,
MANNATECH shall provide CARALOE and its Manufacturer (a) on a
quarterly basis commencing on the date hereof, a binding forecast
of the minimum and maximum aggregate quantities of Manapol
®
powder to be ordered during such
period by either its Manufacturer or MANNATECH, and (b) a good
faith forecast (which shall be binding on MANNATECH) of the minimum
and maximum aggregate quantities of Manapol
®
powder to be ordered during such
year by either MANNATECH or its Manufacturer (the
“Forecast”). The annual Forecast shall be provided to
CARALOE by October 15 th of each year during the Term.
MANNATECH shall be permitted to adjust the forecast by the
fifteenth (15 th ) day following the end of each of
the first three (3) calendar quarters during each year of the
Term.
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4.
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Purchase
Data and Inventory Report . Within five (5) days following the end of each
month during the Term, (a) its Manufacturer shall provide to
MANNATECH a report reflecting its collective purchases of
Manapol ® powder during the month then ended, together
with its inventory level of Manapol ® power as of the end of such month, and (b)
CARALOE shall provide to MANNATECH a report reflecting its and its
Manufacturer purchases of Manapol ® powder during the month then ended.
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5.
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Quarterly
Purchase Report . Within
five (5) days following the receipt of the reports from each of its
Manufacturer and CARALOE pursuant to Section 4 above for each month
of the calendar quarter then ending, MANNATECH shall provide to
CARALOE a report with respect to the previous quarter reflecting
the collective purchases of Manapol ® powder during such quarter, together with a
comparison of such purchases against purchase requirements set
forth in this Supply Agreement and the Forecast.
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6.1
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The price per
kilogram payable by its Manufacturer to CARALOE for Manapol
®
powder shall be dependent on the
total quantity of Manapol ® powder purchased collectively by MANNATECH and
its Manufacturer during a calendar month and shall be as set forth
under the terms of this Supply Agreement.
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QUANTITY
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PURCHASED PRICING/KG
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(This pricing structure has
been omitted pursuant to a request for confidential treatment and
the material has been filed with the Commission
separately.)
Its Manufacturer shall receive a
rebate per kilogram, paid quarterly, on each kilogram of
Manapol ® powder in excess of 800 kg
purchased during a calendar month.
2
MANNATECH and/or its Manufacturer,
as appropriate, shall bear all freight, 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 and/or its Manufacturer, as appropriate to
CARALOE within thirty (30) days after the date of
invoice.
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7.
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Orders;
Deliveries . MANNATECH or
its Manufacturer shall each instruct CARALOE from time to time
during the Term, by placing a purchase order with CARALOE
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 CARALOE be required to
deliver to MANNATECH and/or its Manufacturer in any three-month
period a quantity of Manapol ® powder in excess of 125% of the
maximum delivery requirement for such period set forth in the
binding Forecast for such period accepted by CARALOE. The
quantities of Manapol ® powder ordered pursuant to this
Supply Agreement from time to time shall be spaced in a reasonable
manner, and MANNATECH or its Manufacturer shall each order such
quantities in accordance with the Forecast. Deliveries of
Manapol ® powder shall be made by CARALOE
under normal trade conditions in the usual and customary manner
being utilized by CARALOE at the time and locations of 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
CARALOE F.O.B. at the facilities of CARALOE or its affiliates
located in Irving, Texas.
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8.1
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MANNATECH’S Manufacturer agrees that any
purchases of Manapol ® powder from CARALOE pursuant to the
terms of this Supply Agreement shall be used exclusively in
connection with the production of products for MANNATECH pursuant
to the terms of the Manufacturing Agreement. Without limitation,
its Manufacturer 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 other than
MANNATECH.
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8.2
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CARALOE and
MANNATECH agree that the Supply and License Agreements shall be
exclusive to the extent that CARALOE may not sell or distribute
Manapol ® in bulk or wholesale form for sale
or otherwise, to anyone whom MANNATECH has by written notice to
CARALOE identified as (and who is), an Independent Associate of
MANNATECH (“Associate”), or whom CARALOE 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 8.2, 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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8.3
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CARALOE 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.
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9.
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Quality . CARALOE warrants to MANNATECH and its
Manufacturer that all Manapol ® powder sold by CARALOE pursuant to
this Supply Agreement will conform to the quality specifications
set forth in Exhibit A to this Supply Agreement. EXCEPT
AS PROVIDED IN THIS PARAGRAPH 9, 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
®
POWDER TO BE SOLD
HEREUNDER, AND NONE SHALL BE IMPLIED BY LAW. THE FOREGOING
NOTWITHSTANDING, CARALOE DOES REPRESENT THAT THE MANAPOL
®
POWDER DOES MEET THE
SPECIFICATIONS OUTLINED ON EXHIBIT A AND THAT IT IS A FOOD
SUPPLEMENT UNDER THE FOOD & DRUG ADMINISTRATION’S RULES
AND REGULATIONS.
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3
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10.
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Insurance . CAROLOE shall maintain comprehensive insurance
coverage during the term of the Supply Agreement, and any
extensions thereof, with not less than the same coverage,
endorsements, limits and notice of cancellation as shown in the
insurance certificate. CARALOE shall, within thirty (30) days after
this Supply Agreement is executed by all Parties, provide MANNATECH
and its Manufacturer with a copy of its insurance certificate
naming MANNATECH and its Manufacturer as an additional insured and
listing the coverage, endorsements, limits, and notice of
cancellation provisions. CARALOE will not cancel or materially
alter such policy without providing at least thirty (30) days prior
written notice to all named insured. Failure by CARALOE to maintain
insurance coverage according to this article 10 shall constitute a
material breach of this Supply Agreement. It is understood and
agreed that the furnishing of such insurance certificate will not
relieve CARALOE of its other respective obligations under this
Supply Agreement.
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11.
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Confidential
Information .
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11.1
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CARALOE
recognizes and acknowledges that MANNATECH’S trade name(s),
trademarks, copyrights, patents, marketing plans, identity of and
related information regarding its Associates, product formulations
and other proprietary product information and any information
relating to the management/operations of MANNATECH are valuable
assets belonging to MANNATECH and as such are the sole property and
may constitute trade secrets of MANNATECH. Prior to and during the
performance of the Supply and License Agreements, CARALOE may have
or had access to certain confidential information pertaining to
MANNATECH. C
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