Exhibit 10.19

*** Indicates omitted material that is the subject of a confidential treatment
request filed separately with the Commission.

COMMERCIAL LICENSING & ROYALTY AGREEMENT

by and between

Mannatech, Incorporated (“Mannatech”), a Texas (USA) corporation

and

Wellness Enterprises, LLC (“Wellness”), a Delaware (USA) company

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TABLE OF CONTENTS

 

1.

   DEFINITIONS    1

2.

   SUPPLY OF MANNATECH MATERIALS    4

3.

   WATER TECHNOLOGY    4    3.1    Technology    4    3.2    Product
Specifications per Country.    4    3.3    Mannatech Representative in Facility
   4    3.4    Time Schedule    5    3.5    Supply of Raw Materials for Product
   5    3.6    Licenses and Permits    5    3.7    Health and Safety    5

4.

   TRANSPORTATION OF PRODUCT AND DEFECTS    6    4.1    Shipping Instructions   
6    4.2    Risk of Loss    6

5.

   QUALITY ASSURANCE AND REGULATORY    6    5.1    Specifications    6    5.2   
Regulatory Responsibilities    6    5.3    Regulatory Requirements    6    5.4
   Regulatory Agency Inspections and Interactions    6    5.5    Storage
Requirements    7    5.6    Nonconforming Materials    7    5.7    Quality Tests
and Checks    7    5.8    Production Codes and Records    7    5.9    Training
   7    5.10    Inspections and Audits    7    5.11    Retention of Records and
Samples    7    5.12    Government Inspections and Seizures    8    5.13   
Legal/and Regulatory Filings and Requests    8    5.14    Quality
Responsibilities    8    5.15    Lot Documentation    8    5.16    Lot and Batch
Release    8    5.17    Laboratory Services    8    5.18    Use of
Subcontractors    8    5.19    Reprocessing    8    5.20    Product Complaints,
Adverse Events, and Product Recalls    9

6.

   PRICE, TERMS OF PAYMENT, ROYALTIES & LICENSE    9    6.1    Payment Terms   
9    6.2    Taxes    9    6.3    Invoicing of Product    9    6.4    Invoice
Disputes    9    6.5    Financial Recordkeeping    10    6.6    Initial Price
and Annual Price Adjustments    10    6.7    Estimates/Forecasting    10    6.8
   Orders    10       6.8.1    Initial Order    10       6.8.2    Purchase
Orders    10    6.9    Royalties    11       6.9.1    Payment of Royalties    11

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   6.10    License of Haru Naito’s Story    11

7.

   INTELLECTUAL PROPERTY    11    7.1    Protection of Technology    11    7.2
   Confidentiality    12    7.3    Rights to Mannatech Technology and Mannatech
Materials    12    7.4    Title to Inventions    12    7.5    Notice of
Infringement    12    7.6    Notice of Infringement by One or Both Parties    12
   7.7    Wellness Intellectual Property Representations    13    7.8   
Survival    13    7.9    Trademarks and Tradenames    13

8.

   FORCE MAJEURE    14    8.1    Force Majeure    14    8.2    Term of Force
Majeure    14

9.

   REPRESENTATIONS AND WARRANTIES    15    9.1    Mannatech Representations and
Warranties    15    9.2    Wellness Representations and Warranties    15      
9.2.1    Production    15       9.2.2    Organization    15       9.2.3   
Wellness Authorization and Agreement    15       9.2.4    No Consent    15      
9.2.5    Insurance    15          9.2.5.1    Commercial General Liability    16
         9.2.5.2    Auto Liability    16          9.2.5.3    Worker’s
Compensation    16          9.2.5.4    Commercial Umbrella Liability    16      
   9.2.5.5    Insurance to Wellness    16       9.2.6    Validity and
Enforceability    16       9.2.7    No Breach    16       9.2.8    Compliance
with Laws    17    9.3    Notice of Material Events    17    9.4    Survival   
17

10.

   DISCLAIMER; LIMITATION OF LIABILITY    17

11.

   INDEMNIFICATION    18    11.1    Wellness’ Indemnification of Mannatech    18
   11.2    Indemnification Procedure    18    11.3    Survival    19

12.

   CONFIDENTIALITY OBLIGATIONS    19    12.1    Parties Confidential Information
   19    12.2    Exclusions from Confidential Information    19    12.3    Term
of Confidentiality    20    12.4    Necessary Disclosures    20    12.5   
Limited Disclosure    20    12.6    Press Releases    20    12.7    Remedies   
21

13.

   TERM AND TERMINATION    21    13.1    Term    21    13.2    Termination with
Cause    21       13.2.1    Material Breach    21

 

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      13.2.2    Inaccurate Warranty    21       13.2.3    Termination Upon
Insolvency or Sale of the Ass    21    13.3    Termination Date    22    13.4   
Termination by Mannatech    22       13.4.1    Breach    22

 

      13.4.2    Failure to Meet Quality Control Standards    22       13.4.3   
Illegality    22       13.4.4    Fair Trade Practices    22       13.4.5   
Termination Due to Regulatory Requirements    22       13.4.6    Termination for
Failure to Meet Mannatech’s Production Requirements    23    13.5    Obligations
of Mannatech upon Termination for Withdrawal from Commercial Product Sale    23
   13.6    Obligations of Wellness upon Termination for Breach    23      
13.6.1    Obligations of Wellness upon Termination for Breach    23    13.7   
Termination of the Agreement with or without Cause    23    13.8   
Infeasibility/Replacement    23    13.9    Termination by Wellness    23      
13.9.1    Breach    23       13.9.2    Fair Trade Practices    23

14.

   MISCELLANEOUS    24    14.1    Assignment    24    14.2    Information
Sharing    24    14.3    Information in Support of this Agreement    24    14.4
   Governing Law    24    14.5    Notices    24    14.6    Waiver    25    14.7
   Severability    25    14.8    No Implied Licenses    25    14.9   
Independent Contractors    25    14.10    Compliance With Laws    25    14.11   
Entire Agreement    25    14.12    Counterparts    26    14.13    Schedules and
Attachments    26    14.14    Independent Judgment    26    14.15    Ambiguities
   26    14.16    Approval    26    14.17    Condition Precedent.    26

 

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COMMERCIAL LICENSING & ROYALTY AGREEMENT

This Commercial Supply Agreement (“Agreement”) effective as of the Effective
Date defined herein (“Effective Date”) by and between Mannatech, Incorporated
(“Mannatech”), a Texas (USA) corporation, with its primary place of business
located at 600 S. Royal Lane, Suite 200, Coppell, Texas 75019, and Wellness
Enterprises, LLC (“Wellness”), a Delaware (USA) company, with its primary place
of business located at 418 SW 140th Terrace, Newberry, Florida 32669,
hereinafter collectively referred to as the “Parties”.

RECITALS

WHEREAS, Mannatech develops and sells proprietary nutritional supplements and
topical products through a network marketing system throughout the United
States, Canada, Australia, New Zealand, the United Kingdom, Denmark, S. Korea,
Taiwan and Japan by distributors referred to as Independent Associates
(“Associates”);

WHEREAS, Mannatech desires to enter into this Agreement to obtain commercial
manufacture of an exclusive line of skin care products by which Wellness will
license its proprietary Tensa Water (the “Water Technology”) for the development
of a proprietary skin care line as set forth in Attachment 1 – “Product” to be
manufactured and supplied by Fine Chemetics Ltd. (“FCL”) using FCL’s existing
technology and may use Mannatech’s existing glyconutrient formulations (defined
herein as “Product”) for Mannatech;

WHEREAS, Wellness has represented that it will license to Mannatech Haru Naito’s
personal story and the story surrounding the discovery of the Water Technology
(collectively, the “Story”) and further that Wellness possesses the right and
title to license the Story to Mannatech;

WHEREAS, Wellness has represented that its Water Technology is specially
processed and hyper -enhanced and is proprietary in nature and that it further
has all right, title and license in such technology;.

WHEREAS, Wellness has represented that it presently has the ability to supply
the Water Technology in the quantities needed and in accordance Mannatech’s
quality control specifications; attached hereto as Attachment “2”;

WHEREAS, Wellness has represented that it presently has the ability to develop
the Water Technology in the quantities needed and in accordance Mannatech’s
quality control specifications; attached hereto;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter contained, and for good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged, the
Parties agree as follows:

1. DEFINITIONS

For the purposes of the Agreement, the following words and phrases shall be
defined as follows:

1.1 “Affiliate” means any corporation, company, joint venture, partnership or
other entity, which, directly or indirectly, is controlled by, or is under
common control with a Party to this Agreement. “Control” means the ownership of
more than fifty percent (50%) of the issued share capital or business assets of
another entity, the power to exercise more than fifty percent (50%) of the
voting rights of another entity, the

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power to appoint more than fifty percent (50%) of the Board of Directors of
another entity, or the right to control the affairs of another entity. Each
Party acknowledges that the direct or indirect ownership of a lesser percentage
of such shares shall not necessarily preclude the existence of control.

1.2 “Agreement” means this Commercial License and Royalty Agreement between
Wellness and Mannatech and the Attachments attached hereto for the commercial
development, licensing and supply of Product and its related Story.

1.3 “Batch” means a specific quantity of an ingredient that is intended to meet
specifications for identity, purity, quality, strength, and composition and is
produced during a specified time period according to a single manufacturing
record during the same cycle of manufacture.

1.4 “Bill of Materials” means a list of raw materials that are specific and
identifiable for the manufacture of the Product.

1.5 “GMP” means all requirements imposed on a licensed manufacturer and
distributor of cosmetics in Japan under the Pharmaceutical Affairs Law (Law
No. 145 of 1960) and related regulations, including, without limitation,
(i) Article 13 of the Pharmacy, Etc. Structure and Facilities Regulations
(providing standards for the structure and facilities of places of manufacture
of ordinary cosmetics), (ii) Chapter III of the Ministerial Ordinance Concerning
Quality Control Standards for Pharmaceuticals, Quasi-Pharmaceuticals, Cosmetics
and Medical Equipment, (iii) Article 3 of the Ministerial Ordinance Concerning
Post-Manufacture / Sale Safety Control Standards for Pharmaceuticals,
Quasi-Pharmaceuticals, Cosmetics and Medical Equipment, (iv) the “Negative /
Positive List” of Cosmetics Standards under Ministry of Health Labor & Welfare
Notification No. 331 of September 29, 2000, and (v) labeling standards
concerning the ingredients and shelf life of cosmetics as contained in Ministry
of Health Labor & Welfare Notification No. 332 of September 29, 2000 and
Ministry of Health Labor & Welfare Notification No. 66 of September 26, 1980, as
the same may be amended or re-enacted from time to time. Wellness’ operational
quality standards are defined in internal GMP documents.

1.6 “Change Control” means a process defined in a standard operating procedure
(“SOP”) agreed to and followed by Wellness in accordance with Mannatech’s
requirements to identify, review, track, approve and implement changes to a
production process, raw materials, quality control, quality assurance,
documentation, equipment, responsible personnel, packaging, specifications,
software/hardware, and other systems used in the manufacture of Product, which
may be provided to Mannatech by Wellness from time to time.

1.7 “Mannatech Materials” means any and all materials, including the
specifications, know-how or other suggestions for improving the processing and
Product packaging and shipping in which Mannatech provides know-how and/or has
intellectual property rights, including, but not limited to patent rights, trade
secret rights and copyrights, or which Mannatech is otherwise authorized to use.

1.8 “Mannatech Technology” means all technical and other information and
know-how not known to WELLNESS prior to the commencement of this Agreement
relating to Mannatech and its current and projected operation, including without
limitation those Specifications relating to the Processes and the Product that
may be supplied by Mannatech to Wellness from time to time.

1.9 “Mannatech Tests” means the tests to be carried out by Mannatech or by a
third party as directed by Mannatech, on the Product during or following
production of such Product.

 

1.10 “Delivery Point” means the location as designated by Mannatech in each
purchase order for Water Technology.

 

2

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1.11 “Effective Date” means the date on which this Agreement is executed and all
the conditions precedent are met.

1.12 “Facility” means Wellness’ enhanced water production facility located in
Oneonta, NY.

1.13 “Initial Term” means the period commencing with the Effective Date and
expiring at the end of two (2) full calendar years.

1.14 “Lot” or “Lots” means a Batch, or specifically identified portion of a
Batch, intended to have uniform identity, purity, quality, strength and
composition.

1.15 “Manufacturer” means FCL or a third-party firm that FCL shall contract with
and oversee the manufacturing and packaging of the final Product or any other
manufacturer selected by Mannatech in its sole discretion to manufacture and
package the Product.

1.16 “Parties” means Wellness, Mannatech and their Affiliates and Companies.

1.17 “Price” means for any particular unit of Water Technology, the price as set
forth herein.

1.18 “Processes” means the methods for developing the Product, including any
improvements thereto from time to time, the details of which are contained in
Wellness’ standard operating procedures.

1.19 “Product” means any proprietary cosmetics, body care products, skin care
products, including but not limited to cleansers, lotions and creams, evidence
and specifications, developed by Wellness using Water Technology, FCL
proprietary technology, incorporated herein as Attachment 1 and agreed to in
advance by Mannatech.

1.20 “Recall” means an instance where: (i) a request, directive or order of any
government authority is received by Wellness or Mannatech that Product be
recalled; (ii) a court of competent jurisdiction orders such a Recall; or
(iii) Mannatech reasonably determines that Product should be recalled due to
evident facts which would otherwise lead to actions referred to under (i) and/or
(ii).

1.21 “Services” means any and all of the work to be performed by Wellness
pursuant to this Agreement.

1.22 “Specifications” means the technical criteria in process tests, and Product
Tests and any additional or supplemental specifications and conditions from time
to time agreed in writing between Wellness and Mannatech. All Specifications to
be contained in the Product Specification attached.

1.23 “Territory” shall mean Japan, Taiwan, S. Korea and future markets as may be
agreed to between the Parties by separate written agreement from time-to-time.
The Parties agree that Mannatech will have right of first refusal to licensing
Water Technology for use in skin care products for the network marketing and
direct selling industry in those non-licensed countries in which Mannatech
currently sells its products.

1.24 “Testing Laboratory” means any third party selected by Mannatech to carry
out tests that are not otherwise performed by FCL or which are required by
Mannatech.

Unless the content requires otherwise, words and phrases as defined above shall
bear the same meaning in any other part of this Agreement. References to the
singular number include the plural and vice versa, references to clauses are
references to clauses of this Agreement.

 

3

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2. SUPPLY OF MANNATECH MATERIALS The Parties understand and agree that Mannatech
will not supply any of its technology to Wellness under the terms of this
Agreement.

3. WATER TECHNOLOGY

3.1 Technology.

3.1.1 Wellness represents that is currently owns all technology and intellectual
property, and pieces of equipment dedicated to the supply of its Water
Technology (for patents, copyrights, trademarks, proprietary formulations, vats,
processing tanks, processing facilities, freezers, refrigerators, and storage
containers) that may be required to perform its obligations under this
Agreement.

3.1 2. Subject to 3.3 hereof, the Water Technology shall be supplied and
licensed by Wellness for the exclusive use and benefit of Mannatech in the
Product formulations represented in Appendix 1. Wellness shall not make or enter
into an agreement to make these product formulations for itself or any third
party in the licensed territory throughout the term of this Agreement or any
extension thereof. Mannatech acknowledges that Wellness is the business of
producing Water Technology for skin and body care products, which may perform
similar functions to those of the unique Product being licensed to Mannatech
without being the same formulation. Such products shall not be deemed to violate
this section 3.1.2 merely because they contain the Water Technology unless they
consist of the same formulations

3.1.3 Mannatech shall retain exclusive rights to the Water Technology for the
purposes of production of the Product developed by Wellness throughout the
Territory provided Mannatech places a minimum order of 800 gallons of Water
Technology per month (“Minimum Order”) beginning in April 2006 through December
2006. In January 2007, all purchase obligations of the Water Technology will be
suspended until such time that the Parties can account for balance on hand and
project amounts (if any) required for the next year of the Term. If, at the end
of year 1, Mannatech’s inventory of the Water Technology exceeds its projected
requirements for the second year of the Initial Term, Wellness agrees it will
adjust the Minimum Order and continue the exclusive License. The Parties agree
to cooperate fully in the event an adjustment to the Minimum Order is requested
by Mannatech. The Parties agree that so long as Mannatech places such Minimum
Order in April through December 2006, it will retain an exclusive license to the
Product throughout the Territory.

3.2 Product Specifications per Country. Wellness acknowledges that Mannatech is
a multi-national nutritional supplement company that must comply with the
cosmetics and skin care laws and regulations of each country (present and
future) in which it conducts business, which regulations may change from time to
time. Wellness shall comply with the GMP (if any) with respect to Water
Technology manufactured for inclusion in the Product in the Territory and any
variations to the specifications, marking, packaging, labeling, and the like as
may be presented from time-to-time by Mannatech to meet or exceed the applicable
cosmetic and skin care laws and regulations of each country where the Product is
sold.

3.3 Mannatech Representative in Facility. Mannatech will have the right to have
a representative in Wellness’ Facility provided that the Mannatech
representatives shall not be in attendance on a fulltime basis. Mannatech shall
have no more than one (1) person on site at any time unless mutually agreed to
by the Parties. Mannatech shall give Wellness reasonable notice as to the
scheduling of Mannatech personnel in the Facility. Wellness retains the right to
limit access should risk be posed to existing operations, such access not to be
unreasonably denied. The Parties shall work together to maintain confidentiality
and the confidentiality of other and to keep strictly confidential any
information received, learned or viewed while

 

4

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in the Facility or the others’ premises. While in the Facility, Mannatech
employee shall be primarily observing and providing advice, and shall have no
direct control or decision-making authority over Wellness employees or their
activities. Mannatech agrees that Wellness may request individual Mannatech
employees to enter into confidentiality agreements according to their own
confidentiality terms and conditions, individually and on behalf of Mannatech,
subject to prior review by Mannatech’s Legal Department. Mannatech shall be
responsible for all costs associated with this Section 3 including but not
limited to meals, transportation, accommodation and office support services as
may be incurred while Mannatech personnel are located at the Facility.

3.4 Time Schedule. The time schedule for delivery of Water Technology to FCL
shall be included in each purchase order from Mannatech.

3.5 Supply of Raw Materials for Product. All cleaning equipment, processing
stations, vats, processing equipment, storage, freezers, storage facilities,
docks and the like required to manufacture, store and deliver the Water
Technology shall be under the control of Wellness or its Affiliates in
sufficient quantities or availability to fulfill its Minimum Order obligations.
Mannatech agrees to provide reasonable notice to Wellness in the event it
anticipates demand for the Water Technology will significantly increase over the
Minimum Order obligations.

3.6 Licenses and Permits.

3.6.1 Wellness shall be responsible for using commercially reasonable efforts to
obtain all licenses and permits required by law in order for Wellness to meet
its obligations under this Agreement. Wellness shall supply Mannatech with all
governmental permits and licenses applications, including but not limited to
environmental permits, necessary for its production and delivery, F.O.B.
Delivery Point, of Water Technology in accordance with this Agreement. Upon
written prior approval by Mannatech, Mannatech will reimburse Wellness for
reasonable costs for governmental permits and licenses necessary for Wellness
delivery of Water Technology in accordance with this Agreement. Wellness agrees
to provide Mannatech, via overnight delivery, with copies of all governmental
permits and licenses necessary for its production delivery of its Water
Technology in accordance with this Agreement upon request by Mannatech.

3.6.2 The Parties agree that this Agreement is contingent upon FCL providing
Mannatech with certification from the Japanese Ministry of Health that the
Product(s) developed, produced and manufactured for Mannatech are
preservative-free skin care products (the “Certification”) In the event FCL
fails to produce the Certification within a reasonable amount of time after
execution hereof, such time frame at Mannatech’s sole discretion and to
Mannatech’s satisfaction, this Agreement shall be null and void.

3.7 Health and Safety. Upon Mannatech’s request, Wellness shall provide to
Mannatech all required Material Safety Data Sheets (MSDS) or equivalents for
Water Technology supplied to Mannatech (if applicable). The Parties agree to
coordinate with one another to develop specifications acceptable to Mannatech’s
Quality Assurance Department, the approval of which shall not be unreasonably
withheld. If required by Japanese law or the respective laws, rules and
regulations of the Territory, Wellness will manufacture its Water Technology in
accordance with Pharmaceutical Affairs Law (Law No. 145 of 1960), the GMP, and
all other health and safety laws and regulations applicable to the Product or
any material in question having regard to the location at which it is produced
or to which is will be delivered, used or consumed.

 

5

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4. TRANSPORTATION OF PRODUCT AND DEFECTS

4.1 Shipping Instructions. Wellness shall arrange the transportation of Water
Technology by ocean cargo from its premises to FCL (Delivery Point) indicated in
the purchase order by Mannatech together with insurance to cover the Water
Technology in transit, at its invoiced value.

4.2 Risk of Loss. Risk in and title to Water Technology shall pass on delivery
to the shipping agents F.O.B. Delivery Point, as set-forth in each purchase
order. All ocean freight, insurance, handling and forwarding agent’s fees,
taxes, storage and all other charges applicable to the Water Technology, if any,
shall be the responsibility of Wellness. The foregoing notwithstanding, Wellness
warrants and represents that the Water Technology will comply with the
Specifications and will retain its preservative-free characteristics through
final delivery to FCL.

5. QUALITY ASSURANCE AND REGULATORY

5.1 Specifications. The Specifications may be modified or changed only by Change
Control, which modification or change shall address any related price increases
or decreases arising from such modification or change. The Specifications
contained in Attachment 2 herein represent the current Specifications for the
Product.

5.2 Regulatory Responsibilities. A Mannatech official will be the primary
contact person for regulatory authorities, except during facility inspections
where Wellness official will be the primary contact.

5.3 Regulatory Requirements. Wellness shall comply with the regulatory
requirements applicable to the manufacture of its Water Technology. If Mannatech
requests Wellness to comply with any other regulatory or statutory requirements
of any foreign government body, Wellness shall use all reasonable commercial
endeavors to do so, provided that:

 

  5.3.1 Mannatech shall be responsible for informing Wellness in writing of the
precise foreign requirements that Mannatech is requesting them to observe;

 

  5.3.2 Such foreign requirements do not conflict with any applicable laws of
the United States of America or any of the States;

 

  5.3.3 Wellness shall use reasonable commercial efforts to ensure that any
written information complies with the applicable requirements of any foreign
jurisdiction; and

 

  5.3.4 All reasonable costs and expenses incurred by Wellness in complying with
such foreign requirement shall be negotiated between the Parties. Mannatech
shall provide prior written consent of the expenditures prior to Wellness
executing Mannatech’s request.

5.4 Regulatory Agency Inspections and Interactions. Wellness agrees to inform
Mannatech of any regulatory inspection and/or communications that might, in its
best judgment, affect the manufacture of the Water Technology. In the event of
an inspection by any government agency that affects the Water Technology,
Mannatech shall be immediately informed of the issuance of the notice inspection
or the presence of an inspector. Mannatech shall have the right to attend the
inspection at the Facility. In the event there are written observations by any
agency that involve any of the Product Substances or the Product, Mannatech
shall have the opportunity to review and have input to the response. Wellness
shall be responsible for responding to any notices of deficiencies and
observations. If Mannatech elects to provide input to the response, that input
shall be provided by Mannatech to Wellness as promptly as practicable.

 

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5.5 Storage Requirements. Wellness shall cause all Mannatech Materials and its
Water Technology to be stored in accordance with the Specifications, rules, laws
and regulations, where they apply.

5.6 Nonconforming Materials. Wellness shall not knowingly use any materials that
do not comply with the Specifications. Wellness shall promptly contact Mannatech
in the event that Wellness anticipates making changes to the Water Technology or
in the event they consider any such material to be nonconforming or
unacceptable. If Wellness uses any nonconforming material without prior written
approval by Mannatech, Wellness shall be responsible for all losses, costs and
expenses suffered or incurred by Mannatech as a result of such use and any
expenses incurred by Wellness in the correction thereof, provided that such
nonconformance did not arise due to the scheduling of planned manufacturing that
was postponed or cancelled by Mannatech.

5.7 Quality Tests and Checks. In accordance with paragraph 3.7 hereof, Wellness
shall perform all in-process and tests required of its Water Technology or
checks required by the Specifications, if applicable. For purposes of this
Agreement, such tests shall be considered routine and shall, where internal
testing is required, be performed by FCL at its facilities. All tests and test
results shall be performed, documented and summarized by Wellness in accordance
with the Specifications. Test results shall be reviewed by Wellness prior to
release of test results to Mannatech.

5.8 Production Codes and Records. Wellness shall maintain detailed records on
the Water Technology material usage, including, but not limited to, Raw
Materials, batch records, quality control reports, test data, including
technical, analytical, quantitative, and qualitative test results in connection
with the supply of the Water Technology. Records shall be maintained according
to requirements such that Wellness shall be capable of responding to inquiries
by Mannatech within twenty-four (24) hours of notification.

5.9 Training. Where necessary, Wellness shall educate and train those employees
and subcontractors of applicable requirements responsible for performing the
Services provided under this Agreement.

5.10 Inspections and Audits. Subject to 3.3 hereof, Mannatech, or a designated
representative shall have access to the Facility, for the purpose of conducting
inspections, performing quality control audits or witnessing the storage or
transportation of the Water Technology or materials related to or used in the
qualification and development of Products. Mannatech shall have access to the
results of any tests performed by Wellness or at its direction. Wellness shall
use commercially reasonable efforts to ensure that Mannatech has similar access
to the facilities, data and records of its suppliers or manufacturers. Such
inspections do not relieve Wellness of any of its obligations under this
Agreement or create new obligations on the part of Mannatech. Inspections and
audits by Mannatech personnel hereunder shall be conducted upon reasonable
notice, during normal business hours and in compliance with the confidentiality
provisions set out in Section 12 hereof and Wellness’ rules and regulations
relating to facility security, health and safety and confidentiality. Mannatech
shall be entitled to one (1) audit per year at no charge to Mannatech.

 

  5.10.1 Additional audits shall be performed at Wellness’ expense in the event
of (a) recurring Water Technology failure, (b) notification of non-compliance by
regulatory authorities, (c) review of any significant items identified in an
annual audit for which confirmation of conformance is required.

5.11 Retention of Records and Samples. Wellness shall for the duration required
by any governing regulatory agency, or as specified otherwise by Mannatech in
writing, whichever is longer, retain, and upon request by Mannatech make
available to Mannatech, (a) copies of the Batch Records, quality control records
maintained in accordance with Section 5.13 and otherwise in relation to the
Water Technology (b) copies of testing results of all the tests performed in
relation to the Services or the Water Technology.

 

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At the termination of this Agreement, Mannatech shall, upon the written request
of Wellness, return all copies of all documents, writings, invoices, test
reports, and other memos which are the property of Wellness and which have been
shared with Mannatech. The foregoing notwithstanding, Mannatech will be
permitted to retain batch records for a period of time in accordance with its
own policies and procedures and upon expiration of such time period shall return
the records to Wellness.

5.12 Government Inspections and Seizures. If the any federal, state or local
governmental authority makes an inspection of that portion of Wellness’ premises
used to manufacture the Water Technology or Water Technology, Wellness shall
immediately notify Mannatech thereof. The seized party shall promptly send
retained samples of the seized Water Technology by such authority and duplicate
reports relating to such inspections to Mannatech, provided such action does not
violate any applicable federal, state or local governmental authority.

5.13 Legal/and Regulatory Filings and Requests. Wellness and Mannatech shall
cooperate and be diligent in responding to all requests for information from,
and on making all required filings with, regulatory authorities having
jurisdiction to make such requests or require such filings. Wellness shall
obtain and comply with all licenses, consents, permits and regulations which may
from time to time be required by appropriate legal and regulatory authorities
with respect to the performance of its obligations hereunder.

5.14 Quality Responsibilities. Wellness will ensure that the manufacture of its
Water Technology is performed in accordance with all applicable requirements and
internal Wellness procedures and practices. Wellness shall ensure that it
maintains its facilities to comply with all laws, rules and regulations.
Mannatech and Wellness will each designate contact persons relating to
manufacture and quality control of the Water Technology.

5.15 Lot Documentation. Wellness shall keep such documentation as described in
their internal procedures to adequately conform to applicable requirements. Each
shipment of Water Technology as designated by Wellness to FCL or to the
destination as instructed by FCL shall be accompanied by documentation
(Certificate of Analysis). Wellness will designate internally its own Lot
numbers for the Water Technology produced pursuant to the Agreement.

5.16 Lot and Batch Release. Wellness shall test the Water Technology against the
Specifications described in the product specification. Wellness Quality
Assurance shall be responsible for review of the Water Technology batch record
and approval and release of the Water Technology. Upon Lot approval by Wellness,
a Certificate of Analysis for each Lot shall be sent by Wellness to Mannatech.

5.17 Laboratory Services. Wellness shall test the Water Technology against the
pre-determined release Specification. Wellness Quality Assurance shall be
responsible for review of the batch record and approval and release of the Water
Technology. Upon Lot approval by Wellness, a Certificate of Analysis for each
Lot shall be sent by Wellness to Mannatech.

5.18 Use of Subcontractors. In the event that Wellness proposes use of
subcontractors for particular laboratory services, Mannatech may require access
to these subcontractors for audit purposes. A Wellness representative may
accompany Mannatech on such audits. Any subcontractors shall be subject to the
confidentiality and other provisions set forth herein.

5.19 Reprocessing. Reworking or reprocessing of Batches or Lots will only be
acceptable only if approved by Mannatech QA.

 

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5.20 Product Complaints, Adverse Events, and Product Recalls. Wellness shall
have responsibility for handling of complaints and adverse events related to its
Water Technology. Wellness shall provide technical support as needed in the
investigation of these events inasmuch as they relate to the Water Technology
manufactured at Wellness’ sole expense. In the event of a Recall of Product,
Mannatech shall be responsible for the coordination of all Recall activities and
have sole decision regarding Recall of Product. For each Recall event, and where
the Recall is caused by Wellness’ gross negligence or willful misconduct or its
material breach of this Agreement, prior to any reimbursement, Mannatech shall
provide Wellness with supporting documentation of all reimbursable costs and
expenses, respectively. Wellness’ sole responsibility, as it relates to the
costs of such Recall, shall be fully reimbursement to Mannatech for all costs
incurred for each Recall event.

5.20.1 If the Recall is not caused by Wellness’ gross negligence, willful
misconduct or material breach under this Agreement, Mannatech shall pay all of
the costs and expenses of whatever nature for such Recall, and Wellness shall
have no responsibility to replace any of the recalled Product Lots at its own
expense.

5.20.2 Mannatech shall provide Wellness with notice describing in reasonable
detail any Recall. If Wellness does not believe its actions or inactions caused
the Recall, then the Parties shall meet to determine in good faith which Party
should be liable for the Recall. Any situation un-resolvable within thirty
(30) days of the date of Recall will then be forwarded to senior management
sponsors of each Party for resolution. If resolution is not resolvable within
thirty (30) days of such date, then each Party agrees to the following: (a) each
Party shall select an independent consultant or laboratory; (b) the consultant
or laboratory selected by each Party shall mutually select a third independent
consultant or laboratory (the “Deciding Laboratory”) and (c) the Deciding
Laboratory shall review all relevant data and determine which Party’s action or
inaction resulted in the need for a Recall. Mannatech shall provide Wellness
with the right to audit documents relating to direct costs incurred in
connection with a Recall subject to audit provisions in Section 5 of this
Agreement.

6. PRICE, TERMS OF PAYMENT, ROYALTIES & LICENSE

6.1 Payment Terms. Mannatech will purchase from Wellness its Water Technology at
$.0161per ml. Pricing shall include the cost of transportation via sea cargo
ship from Wellness’ production operation to the Manufacturer. Payment terms are
50% down payment at the time of issuance of the P.O. and the balance of 50% net
30 days delivery to Manufacturer. Invoicing and payment shall be made in U.S.
Dollars (USD).

6.2 Taxes. The price set forth in Section 6.1 is exclusive of sales taxes or any
other applicable taxes, levies, duties and fees imposed by or under the
authority of any government or public authority, which shall be paid by
Mannatech, either directly or as invoiced by Wellness. Mannatech, however, is
not responsible for taxes based on the income of Wellness.

6.3 Invoicing of Product. The Water Technology shall be invoiced per purchase
order.

6.4 Invoice Disputes. In the event that Mannatech in good faith believes there
is a dispute concerning the applicability or accuracy of any invoice amount,
Mannatech will notify Wellness immediately in writing of the nature of such
dispute, and will provide detailed written support for such disputed invoice
amount, within ten (10) business days from the receipt of the invoice. In such
an event, the Parties shall resolve such disputed amounts within thirty
(30) days from the receipt by Wellness of Mannatech’s written notice of the
disputed amount and Mannatech may withhold fifty percent (50%) of the payment of
such disputed amount for such thirty (30) day period which withholding shall not
be considered as a breach, or default or as grounds for termination under this
Agreement.

 

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6.5 Financial Recordkeeping. Wellness shall maintain financial records relating
to the terms of this Agreement and agrees that such records may be audited by an
independent public accountant selected by Mannatech and at Mannatech’s expense,
during normal business hours within a three-month period following the initial
Price calculation and subsequent price adjustments. In addition, within the term
of this Agreement, Mannatech’s independent public accountant may inspect
Wellness’ time sheet records for the preceding year for the purpose of
determining costs paid in addition to the price to Wellness by Mannatech. The
independent public accountant shall keep confidential any information obtained
during such inspection and shall report to Mannatech only the correctness of the
information given by Wellness.

6.6 Initial Price and Annual Price Adjustments. The Initial Price for the
first-year of Water Technology is $.0161 per ml. Every year thereafter, the
Price shall be negotiated between the Parties, but in no event shall the price
increase more that five percent (5%) per annum unless Wellness can demonstrate
that real costs have increased beyond the five percent (5%) per annum level. The
Initial Price shall remain valid for one year from the Effective Date. Two
(2) months prior to the anniversary date of the Effective Date and every twelve
(12) month period thereafter, the Price shall be negotiated. Annual price
adjustments shall be effective on the anniversary date of the Effective Date.
Wellness shall maintain financial records relating to any increases in the cost
to manufacture Water Technology and agrees that such records may be audited by
an independent public accountant selected by Mannatech during normal business
hours within a three (3) month period following the initial Price calculation
and subsequent Price adjustments.

6.7 Estimates/Forecasting. On an annual basis, Mannatech and Wellness shall meet
and discuss Mannatech’s forecasted contract requirements for the Water
Technology. Mannatech shall provide Wellness with an estimate of the quantity of
the Water Technology that Mannatech anticipates may be required from Wellness
during the following year of the Term. The Parties acknowledge that this
estimate is for planning purposes only and does not constitute a commitment to
manufacture and supply by Wellness or a commitment by Mannatech to take delivery
of such quantities.

6.8 Orders.

 

  6.8.1 Initial Order. Upon satisfaction of the condition precedent in paragraph
3.6.2 hereof, Mannatech will place an initial order of 1,606 gallons of Water
Technology for the initial run (the “Initial Order”). After the Initial Order,
Mannatech will be under no obligation to place subsequent minimum orders except
to maintain exclusivity as indicated in 3.1.3. Beyond this initial order,
minimum monthly quantities shall begin in April, 2006.

 

  6.8.2 Purchase Orders. Purchase orders for Water Technology shall be the sole
firm commitment by Mannatech to purchase a designated amount with the exception
of minimum monthly amounts as indicated in paragraph 3.1.3. If, following
acceptance of a firm order from Mannatech, Wellness indicates that it will not
be able to supply Mannatech with all or any portion of Mannatech’s firm orders
for that have been accepted by Wellness for its Water Technology the Parties
shall meet and in good faith attempt to reach a resolution to the respective
parties’ capacity shortfall. Wellness shall use commercially reasonable efforts
to deliver the shortfall in future months; however, if Wellness is able to
demonstrate technical or scientific reasons for the shortfall and Mannatech
accepts those reasons, such shortfall shall be excused. However, subject to
Force Majeure and excused shortfall above, Mannatech will not forward Wellness
shortfall into subsequent periods if orders by Mannatech are approaching market
capacity. Subject to the above understanding by Mannatech, if Wellness is unable
to meet Mannatech’s firm orders, the Parties agree to formulate a strategic plan
to increase the capacity of the Wellness facility to the benefit of all Parties.

 

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6.9 Royalties. Mannatech will pay Wellness a royalty of four percent (4%) on the
total cost of skin care products listed on Attachment 1 sold (“TCOGS”) inclusive
of packaging for each of the Products sold by Mannatech. Specifically excluded
from the Royalty payable on TCOGS will be the cost of the Water Technology,
shipping, handling, taxes, tariffs, duties, storage and any markup for
distribution. For purposes of this Agreement, goods shall be deemed sold only if
Mannatech has received payment for the Product from a Purchaser. Wellness shall
not be entitled to receive Royalties for any Products donated by Mannatech,
distributed gratuitously by Mannatech in an effort to promote sales or for those
Products reserved for internal purposes or use.

 

  6.9.1 Payment of Royalties. At the end of each quarter and by the last day of
each month after the end of the prior quarter, Mannatech shall compute the total
number of Products sold during the prior quarter and, on making that
determination, shall remit promptly the Royalty payment and a copy of the
compensation statement (“Statement”) thirty (30) days after the computation date
and on a quarterly basis, throughout the Term of this Agreement to Wellness. If
Wellness, for any reason, objects to any Statement submitted by Mannatech,
Wellness shall set forth the objection with specificity in writing and submit it
to Mannatech within thirty (30) days from the date of the Statement. Any
objection Wellness may have to any Statement shall be deemed waived unless it is
transmitted in accordance with the terms of this paragraph.

6.10 License of Haru Naito’s Story. Wellness warrants and represents that it has
full title and right to license Haru Naito’s Story. Subject to the terms and
conditions specified in this Agreement, Wellness hereby grants to Mannatech a
royalty free, non-exclusive and revocable right to use the Story in connection
with the promotion of the Product. During the Term of this Agreement, Wellness
agrees that it will not license the Story for use in promoting skin care
products within the licensed Territory to any other network marketing,
multi-level marketing, or direct sales marketing company engaged in the same or
similar business as Mannatech. Mannatech shall have the right to use the Story,
and Haru Naito’s name, voice, likeness, and similar characteristics for the
purposes of advertising and promoting the Product in the Territory. During the
term of this Agreement, Mannatech shall be the sole owner and have use and
control of all promotional materials and trade literature (“Promotional
Materials”) produced for Mannatech in which the Story is featured and such
Promotional Materials shall be reviewed for compliance with applicable laws,
rules and regulations in accordance with Mannatech’s policies and procedures.
Mannatech shall be free to dispose of and treat in any way all Promotional
Materials, including but not limited to selling, advertising, distributing, and
permitting use in other mediums without prior approval of Wellness.
Notwithstanding the above, Wellness shall have final editorial approval of any
promotional materials that are produced regarding Haru Naito’s story; whether it
be written, printed, internet, video or audio. Wellness understands and agrees
that Mannatech is involved in multi-level marketing and sells its products
through its Associates acting as independent contractors. As such, Mannatech has
no control in the operation of such independent contractors’ businesses other
than the Associates having a contractual obligation to abide by Mannatech’s
Associate Policies & Procedures. Mannatech will use its best efforts to ensure
its Associates do not use the Promotional Materials in the promotion of their
Mannatech business in a manner which would violate its Policies and Procedures;
however, such unapproved use by Associates shall not be considered a breach of
this agreement

7. INTELLECTUAL PROPERTY

7.1 Protection of Technology. Wellness acknowledges that Mannatech Technology
and Mannatech Materials may be provided subject to the confidentiality
provisions of Section 12, and Wellness agrees to keep such Mannatech Technology
and Mannatech Materials secret and confidential, to respect Mannatech’s
proprietary rights therein and not at any time for any reason whatsoever to
disclose or permit Mannatech Technology and Mannatech Materials to be disclosed
to any third party, including Affiliates of Wellness, except as expressly
provided herein.

 

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7.2 Confidentiality. Wellness agrees that all its employees, consultants and
contractors having access to confidential Mannatech Technology and Mannatech
Materials, shall be subject to the same confidentiality obligations as the
principals pursuant to the confidentiality provisions of Section 12 and shall
enter into secrecy agreements in support of such obligations. Insofar as this is
not reasonably practicable, Wellness shall take all reasonable steps to ensure
that any such employees, consultants and contractors are made aware of such
confidentiality obligations.

7.3 Rights to Mannatech Technology and Mannatech Materials. Wellness shall not
by virtue of this Agreement at any time have or request to have any right,
title, license or interest in or to the Mannatech Technology or Mannatech
Materials, know-how, specifications, Associate information, downline
information, software, business plans, marketing plans, advertising plans,
copyrighted material, patents or patent application, trademark or trademark
applications, or any other intangible rights or any other intellectual property
rights of whatever nature relating to the Product or Product Specifications,
suppliers, manufacturers, or otherwise which are vested in Mannatech or to which
Mannatech is otherwise entitled. No rights are granted to Wellness except as
expressly provided herein, and no rights in addition thereto shall be deemed to
have arisen or been implied by way of estoppel or otherwise. Nothing herein
shall be construed as preventing Mannatech from developing its own product
formulations.

7.4 Title to Inventions. Title to all inventions (whether or not patentable)
conceived or reduced to practice and arising out of the Services performed under
this Agreement shall be as follows:

 

  7.4.1 Mannatech will be the sole owner of intellectual property rights in any
invention of which only Mannatech’s and its Affiliates’ employees and
third-party contractors are inventors.

 

  7.4.2 Wellness and FCL as they may determine or their rights otherwise appear,
shall own the intellectual property rights of all inventions of which Wellness
and/or FCL (and their Affiliates’ employees and third party contractors) are
inventors or of which both Wellness and/or FCL and their Affiliates’ employees
are inventors. Any assignments or other documents necessary to accomplish the
foregoing are hereby made and each Party will execute such further documents as
may be reasonably requested by the other with respect thereto.

 

  7.4.3 Wellness further agrees to provide Mannatech reasonable notice of any
inventions conceived, developed, discovered or reduced to practice by Wellness’
employees, and/or third-party contractors, or its Affiliates and/or employees of
its Affiliates, arising out of the services under this Agreement.

 

  7.4.4 The cost for filing patent applications that are jointly owned shall be
shared equally by the Parties and Mannatech shall be responsible for managing
the patent applications directed to any joint inventions.

7.5 Notice of Infringement. Wellness shall promptly notify Mannatech of its
knowledge of any potential infringement of Mannatech Technology and Mannatech
Materials by a third party. Each Party agrees to render such reasonable
assistance as the enforcing Party may request at the expense of the enforcing
Party.

7.6 Notice of Infringement by One or Both Parties. Each Party shall promptly
notify the other of its knowledge of any potential claim of infringement,
whether threatened or not, of any intellectual property, including, without
limitation, patents, trademarks and copyrights, owned or under the control of a
third party.

 

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Each Party has the right, but not the obligation, to take reasonable legal
action necessary against such infringement of third party intellectual property
related to the Product. Each Party agrees to render such reasonable assistance
as the enforcing Party may request at the expense of the enforcing Party.
Wellness shall be solely responsible for all costs of defense for any claim of
infringement, including without limitations, attorney’s fees, court costs,
travel and related expenses, expert fees, and the like in connection with any
claims with respect to Wellness proprietary ingredients.

7.7 Wellness Intellectual Property Representations. Wellness represents and
warrants that as of the Effective Date of this Agreement it has no knowledge of
any patent or any other third party intellectual property right that would be
infringed by the Water Technology or Product in the exercise or practice of this
Agreement. Wellness shall have a continuing duty to inform Mannatech if it
receives any information regarding: (i) the publication or issuance of any
patent; or (ii) litigation, pending or threatened, relating to Water Technology
and/or Product.

7.8 Survival. The obligations, rights and acknowledgments of the Parties under
Section 7 shall survive ten (10) years or the life of the relevant patents,
whichever is longer, the termination for whatever reason of the Agreement.

7.9 Trademarks and Tradenames. The Parties recognize that the name and/or
respective marks of the other are valuable and that all goodwill associated with
use of such names and marks shall inure to the benefit of the other. Mannatech
shall have the right to terminate this Agreement immediately in the event that
Wellness acts in a manner that would negatively impact the reputation of
Mannatech and/or of its name or marks (“Mannatech Marks”) and/or would infringe
or dilute the value of Mannatech’s marks or which is not in compliance with
applicable law in the United States or any other country in which Mannatech
conducts business as the case may be. Likewise, Wellness shall have the right to
terminate this Agreement immediately in the event that Mannatech acts in a
manner that would negatively impact the reputation of Wellness and/or of its
name or marks (“Wellness Marks”) and/or would infringe or dilute the value of’
Wellness’ marks or which is not in compliance with applicable law in the United
States or any other country in which Wellness conducts business as the case may
be.

 

  7.9.1 Mannatech shall be the sole owner and shall have perpetual use and
control of all Promotional Materials produced for Mannatech bearing its trade
name and/or Mannatech Marks related to the Product. Mannatech shall be free to
dispose of and treat in any way all Promotional Materials under this Agreement,
including but not limited to selling, advertising, distributing, and permitting
their use in other mediums, whether for profit or otherwise. and Wellness has
right or license to use any of the trademarks or tradenames owned by, licensed
to or associated with the Mannatech Marks during the Term without prior written
approval and express permission from Mannatech, such approval and permission is
within the sole discretion of Mannatech and may be withheld at any time.

 

  7.9.2 Quality Control. Wellness shall use the Mannatech Marks only in
connection with Products provided in accordance with the standards of quality
in: materials, design, performance, workmanship, use, advertising and promotion
as set forth by Mannatech. Mannatech’s tradename and trademarks are an extremely
valuable asset and breach of this section shall cause irreparable damage to
Mannatech and its goodwill; as such, Mannatech shall have the right to
immediately terminate this Agreement if any Product fails to comply with
Mannatech’s standards of quality in: materials, design, performance,
workmanship, use, advertising or promotion. Wellness shall comply with the same
conditions with respect to the style, appearance and manner of use of the
trademark as set forth by Mannatech. All such marketing materials that use the
Mannatech Marks, at Mannatech option, will be subject to prepublication review
and approval with respect to, but not limited to, context, style, appearance,
composition, timing and media.

 

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  7.9.3 Protection of Trademarks. Wellness admits the validity of and agrees not
to challenge the Mannatech Marks. Wellness also agrees that any and all rights
that may be acquired by the use of the Mannatech Marks by Wellness shall inure
to the sole benefit of Mannatech. Wellness agrees not to assist others to
contest the registration of any Mannatech trademark or to take any action or
assist any others to take any action which would impair the value of the
Mannatech Marks or the business, assets, or goodwill associated therewith or
appurtenant thereto. Mannatech admits the validity of and agrees not to
challenge the Wellness Marks. Mannatech also agrees that any and all rights that
may be acquired by the use of the Wellness Marks by Mannatech shall inure to the
sole benefit of Mannatech. Mannatech agrees not to assist others to contest the
registration of any Wellness trademark or to take any action or assist any
others to take any action which would impair the value of the Wellness Marks or
the business, assets, or goodwill associated therewith or appurtenant thereto.

 

  7.9.4 Mannatech expressly reserves the sole and exclusive ownership of the
trademark “Mannatech”. Wellness agrees not to use any of Mannatech’s trademarks
or any combination thereof, with or without any other words, logos, or images,
as part of its corporate name, or for the purpose of advertising its business,
without the prior written consent of Mannatech. Further, Wellness shall not
market or make available any other products to Mannatech Associates without
first receiving prior written approval from a designated officer of Mannatech.
On the termination of this Agreement, or on the request of Mannatech, Wellness
shall immediately and completely discontinue all use of the Mannatech Marks.
Mannatech agrees not to use any of Wellness’ trademarks or any combination
thereof, with or without any other words, logos, or images, as part of its
corporate name, or for the purpose of advertising its business, without the
prior written consent of Wellness. On the termination of this Agreement,
Mannatech shall immediately and completely discontinue all use of the Wellness’
Marks, Haru Naito’s Story or the claims associated with the Water Technology.

8. FORCE MAJEURE

8.1 Force Majeure. “Force Majeure” shall mean any cause beyond the reasonable
control of the Party affected which prevents or delays the development,
manufacture, sale or shipment of the Water Technology by Wellness (as the case
may be) or its Affiliates to Mannatech or its assigns , or the acceptance
thereof by Mannatech, including but not limited to any act of God; fire;
casualty; flood; war; strike, lockout or other labor dispute; failure of public
utilities; injunction, act, exercise, assertion or requirement of a governmental
authority (whether federal, state, local or foreign); accident; epidemic;
destruction of production or transportation facilities; riot or insurrection;
inability to procure materials, equipment or energy sufficient to meet
manufacturing needs; failure of third parties to supply essential raw materials.

8.2 Term of Force Majeure. In the event that any Party is prevented or delayed
from performing any of its obligations under this Agreement (except for the
payment of money) due to Force Majeure, such Party shall give notice thereof to
the other Party advising of the anticipated period for which it is estimated
that such prevention or delay will continue. Upon receipt of such notice, the
non-performing Party shall be excused from performance from the date of such
notice for so long as such cause of the prevention or delay shall continue due
to such Force Majeure. All such periods of prevention or delay shall extend the
Term of this Agreement for a total period equal to the sum of all periods of
prevention or delay caused by such events. The non-performing Party shall keep
the other Party informed on a timely basis of developments

 

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during any such period of prevention or delay. If any delay due to Force Majeure
exceeds two (2) months, the other Party may terminate this Agreement according
to the terms. In no event shall a Force Majeure be considered a breach, material
or otherwise, to this Agreement.

9. REPRESENTATIONS AND WARRANTIES

9.1 Mannatech Representations and Warranties. The following representations and
warranties are made by Mannatech and are true and correct and shall remain true
and correct during the term of this Agreement:

9.1.1 Mannatech is a corporation, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, and has full
power and authority to carry on its business where and as now conducted, and has
the legal right and authority to execute and deliver this Agreement and to
perform its obligations hereunder.

9.1.2 Mannatech has not previously granted, and during the term of this
Agreement will not make any commitment of, or grant any rights that are
inconsistent in any material way with terms of this Agreement.

9.2 Wellness Representations and Warranties. The following representations and
warranties are made by Wellness and are true and correct and shall remain true
and correct during the term of this Agreement and have been made to induce
Mannatech to enter into this Agreement.

 

  9.2.1 Production. Subject to 3.7 hereof; Wellness warrants that the Water
Technology conforms to the Specifications, quality control and to be free from
contaminants, as may be modified by Mannatech from time to time, at Mannatech’s
exclusive and sole discretion.

 

  9.2.2 Organization. Wellness is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware or as to the region
in which it does business and has full power and authority to carry on business
as now being conducted.

 

  9.2.3 Wellness Authorization and Agreement. The execution, delivery and
performance of this Agreement by Wellness has been authorized by all necessary
corporate action on its part. The consummation of the transactions contemplated
by this Agreement will not result in the breach of, or constitute a default
under, any indenture, mortgage, note, agreement or other financing agreement to
which either is a party or to which it or its properties or rights are subject
and will not be in violation of the rights of any other party.

 

  9.2.4 No Consent. No consent of any party and no consent, license, approval or
authorization of, or exemption by, or registration or declaration with, any
governmental authority, bureau or agency is required in connection with the
execution, delivery, validity or enforceability of this Agreement with respect
to Wellness and the consummation of the transactions contemplated hereby.

 

  9.2.5 Insurance. It is expressly understood and agreed by and between the
parties hereto that this Agreement does not take effect until Wellness delivers
to Mannatech satisfactory and acceptable evidence of insurance coverages as
specified below. Such policies shall name Mannatech, and its subsidiaries as
additional insureds on a primary basis, and shall include a severability of
interest provision. The certificate of insurance pertaining to general liability
coverage shall specifically state that Mannatech, its subsidiaries and its
affiliates are named as an additional insured on a primary basis and that to the
extent permissible by law the insurer has insured Wellness for all risks and
liabilities assumed by Wellness pursuant to

 

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       paragraph 10. Such evidence of insurance shall specify the date when such
insurance expires. Wellness further agrees that all insurance coverages will not
be canceled without giving Mannatech thirty (30) days advance written notice. In
the event such notice of cancellation is given, within said 30 day period prior
to cancellation, new insurance acceptable to Mannatech must be obtained and
delivered to Mannatech or Wellness shall have committed a material breach of
this Agreement. Any breach of infraction by Wellness of the aforesaid
requirements shall result in the immediate termination, or at the option of
Mannatech, suspension of all authorized purchases of Product without penalty or
additional expense to Mannatech. Wellness shall provide insurance coverages
applicable to the work with the following minimum limits for the duration of
this contract and, except for the Workers’ Compensation coverage, with Mannatech
and its subsidiaries and their affiliates named as additional insureds on a
primary basis.

 

  9.2.5.1 Commercial General Liability. $1,000,000 USD Combined Single Limit for
Bodily Injury and Property Damage including product liability.

 

  9.2.5.2 Auto Liability. $1,000,000 USD Combined Single Limit for Bodily Injury
and Property Damage. Policy shall include owned and blanket non-owned vehicles
and hired coverage.

 

  9.2.5.3 Worker’s Compensation. Statutory Limits and Employer’s Liability
insurance with limits of not less than $500,000 USD per accident or disease.

 

  9.2.5.4 Commercial Umbrella Liability. Limit of not less than $2,000,000 USD
per occurrence and excess of GL, AL and EL.

 

  9.2.5.5 Insurance to Wellness: Mannatech shall provide insurance coverages
applicable to its obligations under this contract with Wellness and its
subsidiaries and their affiliates named as additional insured’s on a primary
basis as above provided at 9.2.5.1 – 9.2.5.4

 

  9.2.6 Validity and Enforceability. This Agreement is valid and enforceable
against Wellness in accordance with its terms, except as enforcement may be
limited by applicable bankruptcy, insolvency or other laws affecting the rights
of creditors generally. The execution, delivery and performance of this
Agreement by Wellness does not violate any law or rule or regulation or give
rise to a cause of action in favor of any person which will result in any
liability to any of the Parties.

 

  9.2.7 No Breach. Neither the execution or delivery of this Agreement, nor the
consummation of the transactions contemplated hereby will: (i) violate any
provision of the Articles of Incorporation or By-Laws of Wellness; (ii) violate,
conflict with or result in the breach or termination of, or otherwise give any
other contracting party the right to terminate or constitute a default (by way
of substitution, novation or otherwise) under the terms of any mortgage, lease,
bond, indenture, agreement, franchise or other instrument or obligation to which
Wellness is a party or by which it may be bound or by which any of the property
or assets of Wellness may be bound or materially affected; (iii) result in the
creation of any lien, charge or encumbrance upon the assets or properties of
Wellness as it relates to its business or the pending business of Mannatech;
(iv) violate any judgment, order, injunction, decree or award of any court,
arbitrator, administrative agency or governmental body against, or binding upon
Wellness or upon the property, assets or business of Wellness; or (v) constitute
a violation by Wellness of any law or regulation of any jurisdiction as such law
or regulation relates to it or to the property or business of Wellness.

 

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  9.2.8 Compliance with Laws. The business and operations of Wellness and any of
its affiliates and subsidiaries, if any, have not been, and are not, conducted
in violation of any applicable judgment, order, injunction, award, tariff or
decree. Wellness has not received notice of, nor does it have any knowledge of
or any reasonable grounds to know after due inquiry that the business and its
operations have not been and are not conducted in violation of any Federal,
state or local law, ordinance, regulations, or any other requirement of any
governmental body, court or arbitrator applicable to Wellness or pursuant to
which it conducts business and operations. Wellness has all permits, licenses,
orders, authorizations or approvals of any Federal, state, local or foreign
governmental or regulatory body to carry on business in the places and in the
manner now and heretofore conducted, and all such licenses, authorizations and
permits are in full force and effect. Wellness has neither received notice of
nor has any knowledge of or any reasonable grounds to know after due inquiry
that the business and operations of Wellness have not and are not conducted in
material violation of any such licenses, authorizations and permits, and no
proceeding is pending or threatened to revoke or limit any such license,
authorizations or permits.

9.3 Notice of Material Events. Wellness hereby agrees to notify Mannatech
promptly of any actual or anticipated events that are reasonably likely to have
a material adverse effect on the Product or on Wellness’ ability to provide
Water Technology to produce Product in accordance with the provisions set forth
herein, including any labor difficulties, strikes, shortages in materials, plant
closings and other interruptions in activity. Wellness shall promptly notify
Mannatech of notice by government agencies, and if such notice relates
specifically to a Product, provide copies of such notice along with a copy of
Wellness’ response to such notice for Mannatech’s review prior to sending it to
any government agency.

9.4 Survival. The warranties of the Parties under this Section 9 shall survive
the termination for whatever reason of this Agreement.

10. DISCLAIMER; LIMITATION OF LIABILITY

NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, NO WARRANTIES ARE
GIVEN IN RESPECT OF THE SUCCESSFUL SALE OF ANY PRODUCT, OR THE SUITABILITY OF
ANY PRODUCT PRODUCED UNDER THIS AGREEMENT FOR ANY PARTICULAR PURPOSE OR USE
UNDER ANY CONDITIONS. ANY IMPLICATION OF SUCH WARRANTY IS HEREBY EXCLUDED.

EXCEPT AS OTHERWISE PROVIDED HEREIN IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
THE INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OF THE
OTHER PARTY, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, ARISING OUT OF THE
PERFORMANCE OF, OR THE FAILURE TO PERFORM, ANY OBLIGATION(S) SET FORTH HEREIN.

EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, IN NO EVENT SHALL
EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY LOSS OF PROFITS, LOSS OF USE,
INTERRUPTION OF BUSINESS, OR ANY INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, THE LIABILITY FOR ANY
LOSS OR DAMAGE SUFFERED BY WELLNESS AS A DIRECT RESULT OF ANY MATERIAL

 

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BREACH OF THIS AGREEMENT (INCLUDING MISREPRESENTATION AND NEGLIGENCE) IN RESPECT
OF THE MANUFACTURE AND DELIVERY OF PRODUCT BY MANNATECH SHALL BE LIMITED TO THE
PAYMENT OF ACTUAL DAMAGES BASED ON A PURCHASE ORDER, PROVIDED THAT, HOWEVER, ANY
REMEDY FOR BREACH OF CONFIDENTIAL INFORMATION SHALL BE GOVERNED BY SECTION 10.

11. INDEMNIFICATION

11.1 Wellness’ Indemnification of Mannatech. Wellness shall, defend, indemnify
and hold Mannatech harmless from and against any and all claims, actions,
losses, damages, expenses (including court costs and attorney’s fees) arising
out of any act or omission by Wellness in favor of Mannatech and its Affiliates
and their directors, officers, employees and agents harmless from and against
any and all liabilities in relation to the use, processing, storage or sale of
the Water Technology or Product that may be incurred by Mannatech arising out
of:

 

  11.1.1 Any claim, action or proceeding brought by any governmental or
regulatory authority arising out of or resulting from Wellness’ failure to
perform its obligations in accordance with the requirements of this Agreement;
or

 

  11.1.2 Breach by Wellness of any of its obligations, representations or
warranties under this Agreement; or

11.2 Indemnification Procedure. Mannatech agrees to inform Wellness promptly of
any claim, action, loss, damage, expense or liability suffered by it for any
breach of this Agreement on the part of Wellness asserted by Mannatech or a
third party. If the manufacture, sale or use of the Water Technology pursuant to
this Agreement or any alleged or potential infringement of Water Technology or
other breach of this Agreement results in any claim, suit or proceeding by any
third party against Mannatech (or its Affiliates) for which Mannatech asserts a
claim to indemnification hereunder, Mannatech shall promptly notify Wellness in
writing setting forth the facts of such claim in reasonable detail. Wellness
(the “Indemnitor”) shall have the right and obligation to defend of any such
claim, suit or proceeding, at its own expense, shall engage counsel reasonably
satisfactory to Mannatech to assume the investigation and defense of the claim;
provided, however: (i) the Indemnitor shall not enter into any settlement that
makes any admission or concession in relation to the Product or the Confidential
Information of the indemnified Party, without the prior written consent of the
Mannatech (“Indemnitee”); and (ii) if the Indemnitor fails to timely assume such
defense, the Indemnitee shall have the right to assume and control the defense.
The Indemnitor shall keep the Indemnitee reasonably informed of all material
developments in connection with any such claim, suit or proceeding. The
Indemnitee agrees to render such reasonable assistance as the Indemnitor may
request, at the full cost and expense of the Indemnitor. The Indemnitee may
participate in any such proceeding by counsel of its own choice at its own
expense. The Indemnitor shall not settle any claim, action or proceeding for
which indemnification is or may be sought without the Indemnitee’s prior written
approval, which shall not be unreasonably withheld or delayed.

This indemnification shall not apply: (i) if Indemnitee fails to give the
Indemnitor prompt notice of claim as required above and such failure materially
prejudices the Indemnitor; or (ii) unless the Indemnitor is given the
opportunity to approve any settlement, which approval shall not be unreasonably
withheld. Furthermore, the Indemnitor shall only be responsible for the legal
fees and litigation expenses of the attorneys it designates to assume control of
the litigation. In no event shall the Indemnitor assume responsibility for legal
fees and litigation expenses of attorneys hired by Mannatech to defend any claim
covered hereunder, unless the Indemnitor fails to perform its obligations
hereunder.

 

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11.3 Survival. The obligations and rights of the Parties under this Section 11
shall survive the termination for whatever reason of the Agreement for a period
of ten (10) years.

12. CONFIDENTIALITY OBLIGATIONS

12.1 Parties Confidential Information. The Parties recognize and acknowledge
that Mannatech and Wellness have invested and continue to invest in protecting
that their respective Intellectual Property and the validity and enforceability
thereof, which are valuable assets belonging to each respective party and as
such are the sole property of Mannatech (hereinafter referred to as “Mannatech
Confidential Information”) and Wellness (hereinafter referred to as “Wellness
Confidential Information”) respectively. Prior to and during the performance of
this Agreement, Wellness may have or had access to certain Mannatech
Confidential Information and Mannatech may have or had access to certain
Wellness Confidential Information. Mannatech shall not at any time, during or
after the performance of this Agreement, in any manner, either directly or
indirectly, use, divulge, disclose, or communicate to any person, firm or
corporation, any confidential information of any kind, nature, or description
concerning any matters affecting or relating to the business of the . Wellness
Confidential Information, whether in written, electronic or other form includes
but is not limited to: pending trade name(s) and trademarks, processes, patent
applications, invention disclosures, research and development, formulations,
proprietary ingredients, trade secrets, marketing plans, and any other related
proprietary product or business information. Wellness shall not at any time,
during or after the performance of this Agreement, in any manner, either
directly or indirectly, use, divulge, disclose, or communicate to any person,
firm or corporation, any confidential information of any kind, nature, or
description concerning any matters affecting or relating to the business of the
Mannatech. Mannatech Confidential Information, whether in written, electronic or
other form includes but is not limited to: trade name(s), trademarks,
copyrights, patents, patent applications, invention disclosures, research and
development, 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; Mannatech
genealogies (being the information held by Mannatech in connection with any
current or former Associate) related to its Associates including without
limitation its relationship with each of its Associates, the Associate’s name,
upline and downline, charts, data reports, proprietary product information which
may from time-to-time be made known to Mannatech, the names or practices of
Mannatech’s customers or Associates; Mannatech’s marketing methods and related
data; the names of Mannatech’s vendors or suppliers; costs of materials; costs
of its products generally, the prices Mannatech 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 and the like.

12.2 Exclusions from Confidential Information. Notwithstanding the above,
Confidential Information shall not include any information that:

 

  12.2.1 is or has become readily publicly available or in the public domain
without restriction through no fault of the Recipient or its employees or
agents; or

 

  12.2.2 is received at any time from a third party lawfully empowered to
disclose such information without restriction and without breach of a
non-disclosure obligation to Discloser; or

 

  12.2.3 is shown through proper documentation to have been developed
independently by Recipient without use of the Confidential Information and
without use of reverse engineering of same; or

 

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  12.2.4 was already known to Recipient without restriction at the time of such
disclosure; or

 

  12.2.5 is readily discernible from publicly-available products or literature;
or

 

  12.2.6 is approved for disclosure by prior written permission of Discloser.

The Parties further acknowledge and agree that all Confidential Information
developed by Wellness for Mannatech in connection with this Agreement shall be
deemed Confidential Information of Mannatech and exceptions contained in
Sections 12.2.1 and 12.2.2 above shall not be applicable thereto.

12.3 Term of Confidentiality. The Parties agree that for the term of the
Agreement, and for ten (10) years following termination of this Agreement, each
Party shall maintain in confidence all Confidential Information disclosed and
identified as being Confidential by the other Party pursuant to this Agreement
and shall not, except as contemplated by this Agreement, use such Confidential
Information’ for its benefit or the benefit of others, without the consent of
the disclosing Party. Documents made available to the non-disclosing shall
remain the property of the disclosing Party and shall be returned upon written
request, except that one copy of all such information may be retained for legal
archival purpose by the non-disclosing Party.

12.4 Necessary Disclosures. Each Party hereto may use or disclose Confidential
Information disclosed to it by the other Party only to the extent such use or
disclosure is reasonably necessary and permitted in the exercise of such rights
granted hereunder (i) in filing or prosecuting patent applications, or
prosecuting or defending litigation, (ii) complying with applicable governmental
regulations or court order, (iii) submitting information to IRS, SEC or other
governmental authorities, (iv) conducting clinical trials, (v) making a
permitted sublicense or otherwise exercising license rights expressly granted by
the other Party to it pursuant to the terms of this Agreement; or (vi) obtaining
raw materials or equipment necessary to perform this Agreement; provided,
however, that if a Party is required to make any such disclosure of another
Party’s Confidential Information as set forth herein, such Party will give
reasonable advance notice to the other Party of such disclosure and will use its
reasonable best efforts to secure confidential treatment of such information in
consultation with the other Party prior to its disclosure (whether through
protective orders or otherwise) and disclose only the minimum necessary to
comply with such requirements.

12.5 Limited Disclosure. Notwithstanding anything herein to the contrary, either
Party shall be permitted to disclose Confidential Information to the extent
reasonably necessary (i) to such Party’s attorneys, accountants and other
professional advisors under an obligation of confidentiality to such Party,
(ii) existing and prospective banks and other financial institutions, investors
and other entities for the purpose of raising capital or borrowing money,
establishing a collaborative arrangement for research and development marketing
or other purpose or maintaining compliance with agreements, arrangements and
undertakings relating thereto, if such person or entity agrees to maintain the
confidentiality of such Confidential Information pursuant to a written agreement
having terms substantially equivalent to the confidentiality obligations
provided herein and (iii) to any person or entity who proposes to purchase or
otherwise succeed (by merger, operation of law or otherwise) to all of such
Party’s right, title and interest in, to and under this Agreement, if such
person or entity agrees to maintain the confidentiality of such Confidential
Information pursuant to a written agreement having terms substantially
equivalent or the confidentiality obligations provided herein.

12.6 Press Releases. All press releases or other communications with the media,
and all other public disclosures related to this Agreement, are subject to
approval in advance by the Parties and such approval shall not be unreasonably
withheld or delayed. Press releases required by the Securities and Exchange
Commission shall, to the extent possible, be delivered to Wellness for review.

 

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12.7 Remedies. The Parties acknowledge that monetary damages may not be an
adequate remedy for breach of the confidentiality obligations of this Agreement
and that any breach of such obligations may cause irreparable injury to the
non-breaching Party. If a Party is in breach, or threatens to commit a breach,
of its confidentiality obligations under this Section 12, the non-breaching
Party will have the right and remedy, which right and remedy will be in addition
to and not in lieu of any other rights and remedies available to the
non-breaching Party at law or in equity, to have such confidentiality
obligations specifically enforced by any court having equity jurisdiction
without the need to post a bond or any other security, or to prove any amount of
actual damage, or that money damages would not provide an adequate remedy.

13. TERM AND TERMINATION

13.1 Term. Except as set forth to the contrary below, the term of this Agreement
shall be for the Initial Term.

This Agreement shall renew automatically in consecutive one (1) year terms
thereafter, unless:

 

  13.1.1 Mannatech provides at least six (6) months prior notification of its
intention to terminate, or

 

  13.1.2 Wellness provides at least six (6) months prior notification of its
intention to terminate.

13.2 Termination with Cause. Either Party may terminate the Agreement forthwith
by notice in writing to the other upon the occurrence of any of the following
events:

 

  13.2.1 Material Breach. If the other Party commits a material breach of any
provision of this Agreement and if such breach is not cured within ninety
(90) calendar days after receipt of written notice thereof by the breaching
Party.

 

  13.2.2 Inaccurate Warranty. If, when made, any representation or warranty is
inaccurate in any material respect, the other Party has the option to terminate.

 

  13.2.3 Termination Upon Insolvency or Sale of the Assets. To the extent
permitted by Federal and State Bankruptcy laws, the other party may terminate
this agreement, if:

 

  (a) the other Party ceases for any reason to carry on business or convenes a
meeting of its creditors or has a receiver or manager appointed in respect of
all or any part of its assets or is the subject of an application for an
administrative order or of any proposal for a voluntary arrangement or enters
into liquidation (whether compulsorily or voluntarily) or undergoes any
analogous act or proceedings, which is not remedied within sixty (60) days’
written notice; or

 

  (b) a court having jurisdiction in the premises enters a decree or order for
relief in respect of the other Party in any involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidation, assignee, custodian, trustee or
sequestrator (or similar official) of the other Party or for any substantial
part of its property, or ordering the winding-up or liquidation of its affairs,
which decree or order for relief remains unstayed and in effect for more than
sixty (60) days; or

 

  (c) the other Party commences a voluntary case under any applicable bankruptcy
insolvency or other similar law now or hereafter in effect, or consents to the
entry of any order for relief in an involuntary case under any such law, or
consents to the

 

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       appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian or sequestrator (or similar official) of the other Party or
for any substantial part of its property, or makes any general assignment for
the benefit of creditors, or fails generally to pay its debts as they become
due; or

 

  (d) any order, judgment or decree is entered in any proceeding against the
other Party decreeing the dissolution of the other Party and such order,
judgment or decree remains unstayed and in effect for more than sixty (60) days;
or

 

  (e) any other event causing the dissolution and/or liquidation of the other
Party shall occur.

13.3 Termination Date. The Termination Date shall be the date on which notice of
termination is received by the affected Party.

13.4 Termination by Mannatech. Mannatech will have just cause to terminate this
Agreement immediately upon written notice to Wellness or to refuse to renew this
Agreement, without judicial or administrative notice or resolution, upon the
occurrence of any termination event specified below or elsewhere in this
Agreement:

 

  13.4.1 Breach. Wellness or any of its employees breach any obligation under
this Agreement and fails to cure the breach to Mannatech’s satisfaction within
thirty (30) days after Mannatech demands its cure in writing.

 

  13.4.2 Failure to Meet Quality Control Standards. Subject to 3.1.3; the Water
Technology fails to meet the Quality Control Standards provided by Mannatech in
the form of Product Specifications, as set forth in Attachment 2 or as Mannatech
may provide to Wellness from time to time, Mannatech shall be entitled to
immediately terminate this Agreement.

 

  13.4.3 Illegality. If, continued use of the Water Technology would result in
harm to its consumers, give rise to a regulatory investigation or is otherwise
determined to be illegal or unsafe for use anywhere in the Territory.

 

  13.4.4 Fair Trade Practices. Wellness shall at all times comply with
international fair trade practices. Mannatech shall have the right to terminate
this Agreement upon seven (7) days prior written notice to Wellness or its
representatives in the event that Wellness, its officers, executives, partners,
directors, principals, employees, attorneys or agents, does any of the
following: engages in illegal, immoral, or criminal conduct resulting in a
criminal indictment with a substantial likelihood of conviction; misrepresents
or conceals anything in its background that could be detrimental to the value of
Mannatech’s goodwill, name, reputation or stock; engages in any conduct contrary
to the best interests of Mannatech; engages in conduct that offends the
sensitivities of a significant portion of the population, including, without
limitations, use of child labor, acts contrary to international standards for
the treatment of employees or the environment, abrogates the rights of employees
to congregate and the like; or engages in conduct that could bring Mannatech
into public disrepute.

 

  13.4.5 Termination Due to Regulatory Requirements. Mannatech may terminate
this Agreement in the event that government regulatory requirements, or
Mannatech’s Specifications, including but not limited to quality assurance, good
manufacturing practices and legality for sale, are not met regarding Product and
manufacturing, such determination at Mannatech’s sole discretion.

 

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  13.4.6 Termination for Failure to Meet Mannatech’s Production Requirements.
Mannatech may terminate this Agreement if Wellness is unable to meet Mannatech’s
minimum production requirements of the Water Technology or if Wellness is unable
to meet Mannatech’s reasonable future requirements.

13.5 Obligations of Mannatech upon Termination for Withdrawal from Commercial
Product Sale. In the event this Agreement is terminated by Mannatech, Mannatech
shall be solely responsible for payment of outstanding invoices for Water
Technology delivered and accepted by Mannatech. In the event of termination,
Mannatech will have no further obligation with respect to this Agreement and
Wellness will immediately return to Mannatech all Mannatech Technology and
Mannatech Materials.

13.6 Obligations of Wellness upon Termination for Breach

 

  13.6.1 Obligations of Wellness upon Termination for Breach. In the event this
Agreement is terminated by Mannatech for breach by Wellness, Wellness shall
return to Mannatech all Mannatech Materials and Mannatech Technology and all
work-in-process commenced by Wellness. Mannatech shall have no further
obligation of any kind to Wellness except as follows: Mannatech shall pay the
Price for Water Technology delivered and accepted by Mannatech.

13.7 Termination of the Agreement with or without Cause. Termination shall not
release either Party hereto from any liability which, at the time of such
termination, has already accrued to the other Party or which is attributable to
a period prior to such termination, nor preclude either Party from pursuing any
rights, indemnities and remedies it may have herein or at law or in equity with
respect to any breach of the agreement. All provisions that are expressed to
survive the agreement shall remain in full force and effect.

13.8 Infeasibility/Replacement. If Mannatech reasonably and in good faith
determines that Water Technology and/or the Product is technically or
commercially not feasible, Mannatech shall have the option to specify a
replacement product reasonably acceptable to the Parties within thirty (30) days
after providing written notice of such determination.

13.9 Termination by Wellness. Wellness will have just cause to terminate this
Agreement immediately upon written notice to Mannatech or to refuse to renew
this Agreement, without judicial or administrative notice or resolution, upon
the occurrence of any termination event specified below or elsewhere in this
Agreement:

 

  13.9.1 Breach. Mannatech or any of its employees breach any obligation under
this Agreement and fails to cure the breach to Wellness’ satisfaction within
thirty (30) days after Wellness demands its cure in writing.

 

  13.9.2 Fair Trade Practices. Mannatech shall at all times comply with
international fair trade practices. Wellness shall have the right to terminate
this Agreement upon seven (7) days prior written notice to Mannatech or its
representatives in the event that Mannatech, its officers, executives, partners,
directors, principals, employees, attorneys or agents, does any of the
following: engages in illegal, immoral, or criminal conduct resulting in a
criminal indictment with a substantial likelihood of conviction; misrepresents
or conceals anything in its background that could be detrimental to the value of
Wellness’ goodwill, name, reputation or stock; engages in any conduct contrary
to the best interests of Wellness;

 

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       engages in conduct that offends the sensitivities of a significant
portion of the population, including, without limitations, use of child labor,
acts contrary to international standards for the treatment of employees or the
environment, abrogates the rights of employees to congregate and the like; or
engages in conduct that could bring Wellness into public disrepute.

14. MISCELLANEOUS

14.1 Assignment. Wellness shall not assign or transfer this Agreement without
the express, written consent of Mannatech, which consent shall not be
unreasonably withheld. In the event of an unapproved assignment, Mannatech may,
at its option, terminate this Agreement or treat such attempted assignment as
having no force or effect. Assignments to Affiliates are expressly permitted
without the other Party’s consent, so long as such Affiliate expressly agrees in
writing, with copy to Mannatech, to be bound by the terms and conditions of this
Agreement. Wellness shall remain liable to Mannatech for all actions of the
third party. Mannatech may assign its rights and responsibilities under this
Agreement to a subsidiary or other corporation owned by Mannatech, without prior
notice to Wellness. In such an event, all of the terms and provisions of this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by
the respective heirs, representatives, successors (including, without
limitation, any successor as a result of a merger or similar reorganization) and
assigns of Mannatech. Mannatech will notify Wellness as soon as practicable
after the assignment.

14.2 Information Sharing. The Parties will share information necessary or
helpful in accomplishing the purpose of the Agreement, including process
information, yield, and output data, forecasts, general market conditions and
technology. Each Party will limit the dissemination of information stemming from
the others to those persons within the Party’s organization who need to know
such information in order to accomplish the purpose of the Agreement. Any
Confidential Information provided will be subject to the confidentiality
obligations set forth in Section 12.

14.3 Information in Support of this Agreement. The Parties will share
information necessary or helpful in accomplishing the purpose of the Agreement,
including information relating to changes in the Parties’ business entity
structure, business control, suits, judgments and notices. Any Confidential
Information provided will be subject to the confidentiality obligations set
forth in Section 12.

14.4 Governing Law. The laws of the State of Texas shall govern the
construction, validity and performance of the Agreement. Any law suits brought
by Mannatech herein shall be brought in the state or federal courts located in
Dallas, Texas in the State of Texas and any law suits brought by Wellness shall
be brought in the state or federal courts located in the Northern District of
the State of Texas, the Parties hereto waive any claim or defense that such
forum is not convenient or proper. The Parties agree that such court shall have
personal jurisdiction over it and consents to service of process by any means
authorized by Texas law.

14.5 Notices. All notices, requests, demands or other communications to or upon
the respective parties hereto shall be deemed to have been given or made when
deposited in the mail, registered mail or certified, return receipt requested,
postage prepaid, or overnight courier or by facsimile transmission, the receipt
of which is confirmed by telephone, addressed to the respective Party to the
following address (or to such other person or address as is specified elsewhere
in this Agreement for specific purposes):

In the case of Mannatech, addressed to:

Mannatech Incorporated

Attn: Bettina Simon, Senior Vice-President and General Counsel

600 South Royal Lane, Suite 200 Coppell, Texas 75019

Tel: 972-471-4700

Fax: 972-471-7387

 

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In the case of Wellness, addressed to:

Wellness Enterprises, LLC

Attn: David Fowler, CEO

399 County Highway 58,

Oneonta, NY 13820

Tel: 352-376-6142

Fax: 352-375-7065

or to such other destination as either Party hereto may hereafter notify to the
other in accordance with the provisions of this clause.

14.6 Waiver. A waiver by either Party of any of the terms and conditions of this
Agreement in any instance shall not be deemed or construed to be a waiver of
such term or condition for the future.

14.7 Severability. If and to the extent that any court of competent jurisdiction
holds any provision or part of this Agreement to be invalid or unenforceable,
such holding shall in no way affect the validity of the remainder of this
Agreement. Each such term, condition, covenant or provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by applicable
law. The Parties shall cooperate in amending this Agreement in such an event in
order to overcome any difficulties thereby occasioned. Notwithstanding the
foregoing, if such term, condition, covenant or provision or such application is
fundamental to the expectations or rights of either Party herein, and no
amendment to give equivalent effect is possible, then such Party may forthwith
terminate this Agreement.

14.8 No Implied Licenses. Only the licenses or rights granted pursuant to the
express terms of this Agreement shall be of any legal force or effect. No other
license rights shall be created by implication, estoppel or otherwise.

14.9 Independent Contractors. The relationship of the Parties hereto is that of
independent contractors. The Parties hereto are not deemed to be agents,
partners or joint ventures of the other for any purpose as a result of this
Agreement or the transactions contemplated hereby.

14.10 Compliance With Laws. In exercising their rights under this Agreement, the
Parties shall fully comply in all material respects with the requirements of any
and all applicable laws, regulations, rules and orders of any governmental body
having jurisdiction over the exercise of rights under this Agreement, including,
without limitation, those applicable to the discovery, development, manufacture,
distribution, import and export and sale of products pursuant to this Agreement.

14.11 Entire Agreement. This Agreement contains the entire understanding of the
Parties, superseding in all respects any and all prior oral or written
agreements or understandings pertaining to the subject matter hereof. This
Agreement can be amended, modified or supplemented only by an agreement in
writing, which is signed by the Parties. Unless otherwise agreed in writing, the
terms and provisions of this Agreement shall be controlling to the exclusion of
all terms and conditions of any purchase order, except as to quantity, delivery
schedule, and shipping point.

 

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14.12 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

14.13 Schedules and Attachments. The schedules and attachments attached to or to
be attached to this Agreement shall form an integral part of the same.

14.14 Independent Judgment. The Parties acknowledge that: (a) they have read
this Agreement; (b) they understand the terms and conditions of this Agreement;
(c) they have had the opportunity to seek legal counsel and advice; (d) they are
of equal bargaining power; and (e) they have relied on their own judgment in
entering into this Agreement, as such, none of the sections, paragraphs or
clauses contained herein may be construed to the disadvantage of a party because
that party was responsible for its preparation.

14.15 Ambiguities. The Parties hereto mutually acknowledge that each of them has
reviewed this Agreement in its entirety and that the normal rule of construction
to the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation or application of this Agreement.

14.16 Approval. This Agreement is subject to approval by the Board of Directors
of Mannatech, Inc., and the Board of Directors of Wellness Enterprises, LLC.

14.17 Condition Precedent. This Agreement is subject to the execution of an
Agreement between Mannatech and FCL for the manufacture of skin care products
and further subject to completion of agreed upon “specifications” listed on
Attachment 2 and incorporated herein.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized officers.

 

Mannatech Incorporated   By:  

/s/ Sam Caster

  Date: February 1, 2006   Sam Caster   Its:   Chairman and Chief Executive
Officer   Wellness Enterprises, LLC   By:  

/s/ David E. Fowler

  Date: February 1, 2006   David E. Fowler   Its:   President and Chief
Executive Officer  

 

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Attachment 1

“Wellness Product Development”

Optimal Face Cleansing Cream

Optimal Skin Lotion

Optimal Skin Serum

Optimal Eye Cream

Optimal Aftershave Milk

 

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Attachment 2

“Specifications”

***

 

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