TRADEMARK LICENSE AND SUPPLY AGREEMENTTrademark License Agreement |
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EXHIBIT 99.1
*** Indicates omitted material that is the subject of a
confidential
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[R]
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[R];
WHEREAS, MANNATECH is desirous of obtaining from CARRINGTON,
and
CARRINGTON is willing to grant to MANNATECH, a license to use the
product
name Manapol[R] powder (the "Mark") in connection with the
advertising and
sale of products manufactured by or for MANNATECH that contain
Manapol[R]
(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[R] 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
---------
1. Term.
----
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[R] 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[R]
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.
2. Sale and Purchase.
-----------------
2.1 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[R] 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[R] powder or other aloe based bulk raw
material product shall satisfy the volume purchase commitments
set
forth in this Supply Agreement.
2.2 In the event that MANNATECH reasonably anticipates that it
shall
require more than 115 kilograms more Manapol[R] 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.
2.3 MANNATECH agrees that all Manapol[R] 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.
2.4 MANNATECH shall not combine Manapol[R] 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[R] 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.
2.5 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[R] powder required to manufacture the
Manufactured Products. CARRINGTON agrees that all purchases of
Manapol[R] 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.
2.6 CARRINGTON shall, as an inventory buffer to account for
increased
demand, maintain a safety stock level of Manapol[R] 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[R]
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.
2.7 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.
3. Forecast.
--------
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[R] 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[R] powder and shall not constitute
an
obligation of MANNATECH to purchase the quantities of Manapol[R]
powder
indicated in any Forecast.
4. Pricing.
-------
The price per kilogram payable by MANNATECH to CARRINGTON for
Manapol[R] powder shall be based on a twelve month schedule and
subject
to a minimum monthly quantity of Manapol[R] 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 [R] 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[R] 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
5. Orders; Deliveries.
------------------
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[R] powder to be delivered to it
hereunder,
as to (a) the quantities of Manapol[R] 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[R] 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[R] powder
ordered
pursuant to this Supply Agreement from time to time shall be spaced
in
a reasonable manner. Deliveries of Manapol[R] 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[R] powder delivered hereunder
shall
be packaged in five (5) kilogram containers. All deliveries of
Manapol[R] 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[R] powder will be provided to MANNATECH for testing
on a
mutually agreeable basis.
6. Exclusivity.
-----------
6.1 MANNATECH agrees that any purchases of Manapol[R] 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[R] powder
purchased pursuant to the terms of this Supply Agreement in
bulk
or otherwise, or use any purchases of Manapol[R] powder
purchased
pursuant to the terms of this Supply Agreement in connection
with
the production of products on behalf of any other party.
6.2 CARRINGTON and MANNATECH agree that the Supply Agreement shall
be
exclusive to the extent that CARRINGTON may not sell or
distribute
Manapol[R] powder or other Manapol[R] 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[R] raw material.
6.2.1 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[R]
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.
6.2.2 CARRINGTON agrees to discontinue making bulk or wholesale
sales or distributions of Manapol[R] 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
to violate this provision, MANNATECH shall have the right to
terminate this Supply Agreement and such termination shall be
effective upon receipt by CARRINGTON.
7. Trademark License.
-----------------
7.1 Grant of License; Use of Mark.
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[R] powder or the
Mark
in Japan.
7.1.1 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.
7.1.2 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.
7.1.3 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[R] 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.
7.1.4 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.
7.1.5 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[R],"
pursuant to this Supply Agreement is non-exclusive. Whenever
the Licensee uses the trademark, "Manapol[R]," it shall take
all reasonable measures to assure that there is no confusion of
ownership of the Mark or the substance which it identifies.
7.1.6 CARRINGTON shall not acquire any right under this
Agreement
to use, and shall not use, the name "Mannatech[TM],"
"Mannatech[TM], Incorporated," or "Ambrotose[R]" (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.
7.1.7 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.
7.2 Labels and Advertising.
7.2.1 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.
7.2.2 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.
7.2.3 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[R] powder or any Manufactured
Product which would violate any applicable law.
7.2.4 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[R] powder
or any of the Manufactured Products in a manner that would
violate this Supply Agreement.
7.2.5 If MANNATECH desires to seek FDA or USDA approval as to
any
specific claims with respect to Manapol[R] 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 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.
7.2.6 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.
8. Representations and Warranties; Non-conforming Goods; Quality
Control.
---------------------------------------------------------------------
8.1 CARRINGTON warrants and represents to MANNATECH that it has
established procedures for the manufacture and supply of the
Manapol[R] powder and that all Manapol[R] powder sold by
CARRINGTON
pursuant to this Supply Agreement will:
(i) 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[R] powder
is a food supplement under the FDA's rules and regulations;
(ii) have






