Exhibit 10.1

 

PURCHASE AGREEMENT

 

This Agreement made and entered into this 11th day of August, 2004 by and
between Mannatech™ Incorporated (“Buyer”), a Texas (USA) corporation with its
principle place of business located at 600 S. Royal Lane, Suite 200, Coppell,
Texas 75019 and Marinova Pty. Limited (“Seller”) with its principle place of
business located at Level 7, 39 Murray Street, Hobart, TAS 7000 Australia,
hereinafter collectively referred to as the “Parties”.

 

RECITALS

 

WHEREAS, Buyer 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 and Japan by
distributors referred to as Independent Associates (“Associates”);

 

WHEREAS, Seller desires to sell the Products (as defined below) exclusively to
Buyer within the Territory (as defined below) and during the Term (as defined
below), and Buyer desires to be the exclusive Buyer of the Products within the
Territory and during the Term of bioactive fractions from the brown seaweed,
Undaria pinnatifida (“Product”);

 

WHEREAS, Seller has represented that it presently has the ability to harvest,
manufacture, store and deliver the Product in the quantities as specified herein
in Exhibit A and in accordance with the quality control and Product
specifications that Buyer and Seller will agree upon, 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.

 

As used in this Agreement, the following terms shall have the meanings set forth
below:

 

  1.1 “Effective Date” means the date of authorization by the Board of Directors
of Buyer.

 

  1.2 “Product” means the bioactive fractions of Galacto Fucan Sulphate (GFS™)
glyconutrient harvested, purified and packaged from Undaria pinnatifida with
specifications agreed upon between the Seller and Buyer suitable for use in the
proprietary nutritional supplements and topical products of Buyer.

 

  1.3 “Primary Term” shall refer to the Term as set forth in Section 2.2,
hereinbelow.

 

  1.4 “Secondary Term” shall refer to a 365 day period commencing on, and on
each anniversary of the Effective Date after the end of the Primary Term.

 

  1.5 “Territory” means: worldwide

 

2. Effective Date and Term.

 

  2.1 Pre-Payment. Buyer to make a prepayment of four hundred and fifty thousand
United States Dollars, ($450,000 U.S.D.), which shall be charged against the
first year (2005) purchase requirement, in five (5) monthly payments of ninety
thousand ($90,000 U.S.D. per month) commencing on August 15, 2004. In exchange
for the Pre-Payment, Seller agrees as follows:

 

  2.1.1 Inspection of Manufacturing and Storage Facilities. Buyer will send, and
Seller agrees to permit Buyer’s designated representatives, to visit, inspect
and approve during business hours the harvest, manufacture, storage any and all
required facilities used to harvest, process, manufacture and/or store the
Product.

 

  2.1.2 Agreement on Specifications. The Seller and Buyer shall work together to
develop the Product, the Product specifications and the quality control
requirements for the Product, for use in Buyer’s proprietary nutritional
supplement products, including without limitations: concentration, appearance,
mouth feel, smell, texture, dissolution, availability as a nutritional effective
amount of the one or more glyconutrients, microbiology, method of manufacture,
stability, toxin levels (if any), and the like.

 

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  2.2 Term. The Term of this Agreement shall be for five (5) years (“Primary
Term”), unless earlier terminated as set forth herein.

 

  2.3 Renewal. Upon the expiration of the Primary Term specified in Section 2.2,
this Agreement may be renewed for successive periods of one (1) year (“Secondary
Term”), unless either Party gives written notice of non-renewal to the other
Party at least sixty (60) days before the then-current expiration date, in which
case this Agreement will terminate as of the end of the second month after the
written notice of non-renewal was given.

 

  2.4 Expansion of Territory. The expansion of the Territory to include other
parts of the world may be negotiated between Seller and Buyer.

 

  2.5 Effective Date of this Agreement. This Agreement shall become binding as
to Buyer for execution, delivery and performance on the date of authorization of
this Agreement by the Board of Directors of Buyer.

 

  2.6 End of Term Notice. At least thirty (30) days prior to the end of the
Term, Buyer and Seller will mutually agree in writing on the quantity and price
of the Product to be sold by Seller and purchased by Buyer hereunder during such
additional one-year period. At least sixty (60) days prior to the end of the
Term, Seller and Buyer shall commence good faith negotiations to determine and
agree upon such quantity and price for such additional one-year period. If Buyer
and Seller are unable to so agree on such quantity and price, this Agreement
shall terminate effective at the end of the then-current Term. Nothing contained
in this Paragraph shall be deemed to: (i) obligate Buyer and Seller to agree
upon such quantity and price; (ii) obligate a party to negotiate with the other
party regarding such quantity and price if such other party is then in breach of
or in default under this Agreement; or (iii) limit the rights of Buyer and
Seller under Paragraph 13 hereof.

 

3. Product.

 

  3.1 Product. Seller shall sell Product to Buyer that shall meet or exceed the
Product specifications agreed upon between the Parties and as shall be modified
in writing from time to time by the Buyer.

 

  3.2 Validation of Claims. Contemporaneously with such development of the
Product, Seller shall provide to Buyer all required scientific data to
substantiate product claims (if any). Seller and Buyer shall cooperate in all
aspects as contemplated hereunder to ensure that the Product(s) comport with any
and all regulatory guidelines in place by governmental authorities during the
term of this Agreement.

 

  3.3 Specifications.

 

  3.3.1 Initial Specifications. As consideration for the Pre-payment, the Seller
shall use its best efforts to develop a Product that meets the Buyer’s
requirements for its proprietary nutritional supplements and topical products.
Buyer agrees to work with the Seller on the initial Product specifications.

 

  3.3.2 Product to Meet or Exceed Specifications. The Product shall meet or
exceed the specifications as provided by Buyer to Seller, from time to time (the
“Specifications”). Such Specifications to be provided to Buyer by Seller and may
be amended by Buyer and Seller only by mutual written consent, from time to
time, subject to variance within ranges of contents and other factors. From time
to time, Buyer and Seller shall agree on updated specifications including
particle size and packaging preferences. Upon agreement on the specifications,
packaging and powder specifications shall be included in the price set forth in
Exhibit A.

 

  3.3.3 Specification Documentation. Seller shall also provide formulation
documentation for those countries outside of the United States in which Buyer
conducts business and sells the Product. Such documentation shall include, but
is not necessarily limited to, raw material specifications, certificates of
analysis, manufacturing processing (e.g., to determine whether specific raw
materials are allowable), and amounts of ingredients (e.g., to determine whether
the ingredient in the formulation is within upper and lower limits allowable in
the specified country).

 

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4. Quality Control.

 

  4.1 Quality Control Costs. Seller shall bear all responsibility for product
and quality control, including, without limitation, costs, testing, written and
electronic documentation and compliance with Product specifications and quality
control requirements that Seller and Buyer will agree upon for all Products, and
as shall be provided by Buyer to Seller from time to time.

 

  4.2 Quality Control Representations. Seller represents and warrants that it
has established procedures for the manufacture and supply of the Products.
Seller agrees that all Products manufactured, packaged, labeled, supplied and
delivered to Buyer (or its designee), will be manufactured in a professional,
clean, safe and sanitary manner, in accordance with good manufacturing practices
and the specifications established provided by Buyer to Seller from time to
time.

 

  4.3 Buyer Right to Inspect. Buyer has the right to inspect and test all
Product as contemplated herein, to the extent practicable, at all places and
times, including the period of manufacture, and in any event prior to acceptance
thereof. Buyer shall perform inspections and tests for quality assurance in a
manner that will not unduly delay the production of the Product.

 

  4.4 Replacement of Nonconforming Product. Buyer may require repair,
reformulation or replacement of nonconforming Product, those constituting,
without limitation of the foregoing, unacceptable formulation(s), scientific
validation, safety, efficacy, shelf life and nonconformity with applicable
governmental regulations. Buyer reserves the right to run adequate tests to
determine whether the Product conforms to the specifications as contemplated
hereby. Use of a portion of the Product shall not constitute acceptance thereof.

 

  4.5 Records and Audit. Appropriate records maintained by Seller with respect
to the supply of Product shall be available at all reasonable times for
inspection and verification by Buyer or any of its designated agents or
representatives. Buyer reserves the right, at any time, to examine Seller’s
books and records related to the Product at Buyer’s expense, and Seller shall
cooperate with any person making such examination on behalf of Buyer.

 

5. Orders, Price and Payment.

 

  5.1 Minimums. The Seller has agreed to sell to Buyer and Buyer has agreed to
purchase from Seller the minimums at the price set forth in Exhibit A (the
“Purchase Price”) during each year of the Term. The Seller agrees to produce and
sell such minimums to the Buyer. Unless otherwise provided herein, the Purchase
Price does not include any foreign, federal, state or local sales, value added,
use or other taxes, all of which shall be borne by Buyer.

 

  5.2 Payment. Seller shall submit invoices to Buyer for the balance due on the
Products when quantities of the Products are available for shipment to Buyer.
Seller’s invoices are due on receipt (net 45) to be paid in United States
Dollars (U.S.D.) to the bank account nominated by the Seller.

 

  5.3 Supply Requirements. Buyer shall provide written supply requirements to
Seller for each ensuing twelve (12) month period no later than July 1 of each
year.

 

  5.4 Price. The price per kilogram of 10% GFS shall be as set forth in Exhibit
A. As set forth in Section 2.2, the price for 10% GFS for any Secondary Term
shall be reviewed and subject to good faith negotiations upon termination of the
Primary Term.

 

6. Delivery & Shipment.

 

  6.1 Delivery. Delivery dates and quantities of the Products shall be as set
forth in Purchase Order(s), but at least quarterly. Seller shall provide Buyer
with sufficient quantity for Seller’s batch processing, as acknowledged and
approved by Seller. All quantities of the Products purchased by Buyer hereunder
shall be shipped to the Point of Delivery as set forth in Exhibit A.

 

  6.2 Seller Responsibilities. Seller shall be responsible for all shipping,
delivery, transportation, insurance, brokerage, handling, import duty, export
fees, any taxes, any governmental charges, regulatory fees, demurrage, and other
costs that Seller may incur in delivering the Products to Buyer’s Dock from
Seller’s place of manufacture or distribution center. Seller shall be
responsible for all customs costs and proceedings at Seller’s sole expense.

 

  6.3 Seller Supplies. Seller shall hold back sufficient stock of Product to
ensure continuous supply to meet Buyer’s requirements.

 

  6.4 Buyer Responsibilities. Risk of loss associated with the shipments shall
pass to Buyer when Seller delivers the shipments to a commercial carrier, if
any, at the Point of Delivery.

 

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  6.5 Transfer of Title. Title to Product shall not transfer to Buyer until the
following conditions have been met: (1) the Product has cleared all customs,
including without limitation, Australian and United States customs; (2) the
Product is delivered to Buyer at the location set forth in Exhibit A; (3) the
Product has been inspected by Buyer; (4) the entire lot of the Product meets or
exceeds the agreed upon specifications; and (5) the entire lot of the Product
has been approval by Buyer. Upon acceptance, Buyer shall be able to use or sell
the Product without limitation.

 

  6.6 Cancellation by Buyer. Upon written notice to Seller, Buyer may cancel any
order, in whole or in part, that Seller has previously accepted but not yet
shipped to Buyer.

 

7. Exclusivity.

 

  7.1 Buyer Exclusivity. Buyer shall have an exclusive for all GFS product
ranges (all concentrations) provided the Minimums set forth in Section 5.1 are
met. Seller shall not directly or indirectly develop, manufacture or market an
“equivalent or derivative product” for any other multi-level marketing,
direct-sales or similar company or any other form of retail distribution using
the Product for a period of three (3) years, after the third year Buyer shall
maintain exclusivity if Buyer purchases a minimum of 20,000 kilograms. For the
purpose of this Agreement, “equivalent or derivative product” means any product
formulated by Seller that substantially replicates the Product as to the
combination of specific ingredients, nutrients, and functional features.

 

  7.2 Seller Negotiations. Upon execution of this Agreement, Seller shall
terminate any and all current dealings, business, negotiations and the like,
with any and all other companies intending to market any other products
containing GFS in the nutritional and dietary supplement fields and Buyer shall
have an exclusive worldwide right to market the Product.

 

8. Intellectual Property.

 

  8.1 Marks. The Parties recognize that the name and/or respective marks of the
other are valuable, valid and that all goodwill associated with use of such
names and marks shall inure to the benefit of the respective mark owner, whether
the mark is registered, pending or protected under common law or any equivalent
thereof. Buyer shall have the right to terminate this Agreement immediately in
the event that Seller acts in a manner which would negatively impact the
reputation or goodwill of Buyer and/or of its name or marks (“Buyer Marks”)
and/or would infringe or dilute the value of Buyer’s marks or which is not in
compliance with applicable law in the United States or any other country in
which Buyer conducts business as the case may be.

 

  8.2 Seller Representations. Seller represents and warrants that the Product
does not infringe the intellectual property of any third-party.

 

  8.3 Seller Acquisition of Additional Rights. In the event that and
thirty-party intellectual property is needed, Seller shall use best efforts to
identify and secure any additional approvals or permissions required in
connection with the production, manufacture, use or exploitation of the Product,
at Seller’s sole expense.

 

  8.4 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. 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. Seller 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.

 

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9. Confidential Information.

 

  9.1 Buyer’s Confidential Information. Seller recognizes and acknowledges that
Buyer has invested and continues to invest in protecting Buyer’s Intellectual
Property and the validity and enforceability thereof, which are valuable assets
belonging to Buyer and as such are the sole property of Buyer (hereinafter
referred to as “Buyer Confidential Information”). Prior to and during the
performance of this Agreement, Seller may have or had access to certain Buyer
Confidential Information. Seller 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 Buyer or Buyer Confidential
Information. Buyer 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 Buyer; Buyer
genealogies (being the information held by Buyer in connection with any current
or former Associate of Buyer) 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 Seller, the names or practices of any of
Buyer’s customers or Associates; Buyer’s marketing methods and related data; the
names of Buyer’s vendors or suppliers; costs of materials; costs of its products
generally, the prices Buyer 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 Buyer’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 Buyer; its manner of operation or other confidential
data of any kind, nature or description and the like.

 

  9.2 Use of Buyer’s Confidential Information. Seller shall only use Buyer
Confidential Information in conjunction with this agreement and shall return
copies of any written, electronic Buyer or other Confidential Information in
Seller’s possession to Buyer forthwith upon written demand or upon termination
of this Sale and License Agreement for whatever reason.

 

  9.3 Notwithstanding anything to the contrary contained in this Agreement:

 

  9.3.1 Seller shall have no obligation to maintain in confidence or return to
Buyer any information: (i) that was known to Seller prior to its disclosure to
Seller by Buyer or any of its current or former Associates and that did not
become known to Seller through disclosure by a person who was then known
actually by Seller to have obtained such information or made such disclosure in
violation of any obligation to Buyer; (ii) that is now in or hereafter enters
the public domain other than due to a breach by Seller of this section 10; (iii)
that is disclosed to Seller by a third party who is not actually known by Seller
to have obtained or disclosed such information in violation of any obligation to
Buyer; or (iv) that is independently developed by Seller without the aid,
application or use of any Buyer Confidential Information disclosed to Seller;
and

 

  9.3.2 Seller may make any disclosure of Buyer Confidential Information: (i)
that is necessary or appropriate to make in order to carry out its obligations
under any written agreement with Buyer; (ii) that it is required or permitted to
make pursuant to any written consent of or written agreement with Buyer; or
(iii) that it is required to make by law by a court, tribunal or otherwise with
competent and enforceable jurisdiction.

 

  9.4 Confidentiality of Seller’s Agents, Consultants and Contractors. Seller
agrees that all its consultants and contractors having access to Buyer
Confidential Information, shall be subject to the same confidentiality
obligations as the principals, it’s agents and assigns pursuant and shall enter
into written secrecy agreements in support of such obligations. Insofar as this
is not reasonably practicable, Supplier shall take all reasonable steps to
ensure that any such agents, consultants and contractors are made aware of such
confidentiality obligations. Seller shall be jointly and severably responsible
for any and all breaches of confidentiality by any such consultants and
contractors.

 

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  9.5 Seller’s Confidential Information. Buyer recognizes and acknowledges that
Seller’s trade name(s), trademarks, copyrights, patents, marketing plans,
product formulations, know-how, compounds, products, processes, designs,
production methods and techniques and other proprietary product information and
any information relating to the management/operations of Seller are valuable
assets and confidential information belonging to Seller and as such are the sole
property of Seller and may constitute trade secrets of Seller. Prior to and
during the performance of this Agreement, Buyer may have or had access to
certain confidential information pertaining to Seller. Buyer agrees that it will
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 Seller (hereinafter referred to as “Seller Confidential
Information”). Seller Confidential Information includes but is not limited to:
the names or practices of any of Seller’s customers; Seller’s marketing methods
and related data; the names of Seller’s vendors or suppliers; costs of
materials; costs of its products generally, the prices Seller 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 Seller’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 Seller; its
manner of operation or other confidential data of any kind, nature or
description.

 

  9.6 Use of Seller’s Confidential Information. Buyer agrees to use the Seller
Confidential Information only for Seller business and return copies of any
written Seller Confidential Information in its possession to Seller forthwith
upon written demand and upon termination of this Agreement for whatever reason.

 

  9.7 Notwithstanding anything to the contrary contained in this Agreement,

 

  9.7.1 Buyer shall have no obligation to maintain in confidence or return to
Seller any information: (i) that was known to Buyer prior to its disclosure to
Buyer by Seller that did not become known to Buyer through disclosure by a
person who was then known actually by Buyer to have obtained such information or
made such disclosure in violation of any obligation to Seller; (ii) that is now
in or hereafter enters the public domain other than due to a breach by Buyer of
this section 10; (iii) that is disclosed to Buyer by a third party who is not
actually known by Buyer to have obtained or disclosed such information in
violation of any obligation to Seller; or (iv) that is independently developed
by Buyer without the aid, application or use of any Seller Confidential
information disclosed to Buyer; and

 

  9.7.2 Buyer may make any disclosure of Seller Confidential Information: (i)
that it is necessary or appropriate to make in order to carry out its
obligations under any written agreement with Seller; (ii) that it is required or
permitted to make pursuant to any written consent of or written agreement with
Seller; or (iii) that it is required by law to make.

 

10. Indemnification.

 

  10.1 SELLER HEREBY AGREES TO INDEMNIFY, SAVE AND HOLD BUYER HARMLESS IN
RESPECT OF ALL CAUSES OF ACTION, LIABILITIES, COSTS, CHARGES AND EXPENSES, LOSS
AND DAMAGE (INCLUDING CONSEQUENTIAL LOSS) SUFFERED OR INCURRED BY BUYER
(INCLUDING LEGAL FEES) ARISING FROM ANY WILLFUL OR GROSSLY NEGLIGENT ACT OR
OMISSION OF SELLER OR ITS EMPLOYEES, SERVANTS AND AGENTS AND ARISING FROM
CONTRAVENTION BY SELLER OF ANY OF ITS EMPLOYEES, SERVANTS, AND AGENTS OF ANY OF
THE TERMS AND CONDITIONS IMPOSED ON SELLER PURSUANT TO THIS AGREEMENT. THIS
SECTION WILL NOT BE CONSTRUED TO LIMIT OR EXCLUDE ANY OTHER CLAIMS OR REMEDIES
THAT BUYER MAY ASSERT UNDER THIS AGREEMENT OR BY LAW.

 

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  10.2 SELLER HEREBY AGREES TO INDEMNIFY, SAVE AND HOLD BUYER HARMLESS IN
RESPECT OF ALL CAUSES OF ACTION, LIABILITIES, COSTS, CHARGES AND EXPENSES, LOSS
AND DAMAGE (INCLUDING CONSEQUENTIAL LOSS) SUFFERED OR INCURRED BY BUYER
(INCLUDING LEGAL FEES) ARISING FROM THE INFRINGEMENT OF ANY AND ALL THIRD PARTY
INTELLECTUAL PROPERTY.

 

11. Representations and Warranties.

 

The following representations and warranties are made by Seller and are true and
correct and shall remain true and correct during the term of this Agreement and
have been made to induce Buyer to enter into this Agreement.

 

  11.1 Production. Seller warrants that the Products conform to the
specifications, quality control and to be free from contaminants within standard
limits for each of the Territories. If Buyer is asked to provide a warranty as
to shelf-life, such warranty shall only be made upon successful testing as to
shelf life and shall in any event not exceed a twelve (12) month period.

 

  11.2 Organization. Each of Buyer and Seller is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation as to the United States or as to the region in which it does
business and has full power and authority to carry on its business as now being
conducted.

 

  11.3 Seller Authorization and Agreement. The execution, delivery and
performance of this Agreement by Seller and Buyer have been authorized by all
necessary corporate action, except as required by Section 2.5. 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 Seller or Buyer is a party or to which the
properties or rights of the Seller or Buyer are subject and will not be in
violation of the rights of any other party

 

  11.4 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 Seller and the consummation of the transactions contemplated hereby.

 

  11.5 Insurance. The Seller warrants that it has in place the following
insurances and that if requested by the Buyer, satisfactory and acceptable
evidence of such policies will be provided. The Seller agrees to nominate the
Buyer and its subsidiaries as interested parties on each of the relevant
policies within 30 days if such request is made.

 

  11.5.1 General and Public Liability. AUD$5,000,000 Combined Single Limit for
Bodily Injury and Property Damage, including Product Liability applicable to
Australia and New Zealand.

 

  11.5.2 Auto Liability. AUD$30,000,000 Combined Single Limit for Bodily Injury
and Property Damage. Policy shall include owned and blanket non-owned vehicles
and hired coverage.

 

  11.5.3 Worker’s Compensation. Seller shall have and keep at all times a full
statutory policy.

 

  11.5.4 Commercial Umbrella Liability. If requested, the Buyer will assist the
Seller in obtaining other insurances as considered necessary, including Public
and Product Liability coverage in countries other than Australia and New
Zealand.

 

  11.6 Validity and Enforceability. This Agreement is valid and enforceable
against Seller and Buyer 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 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.

 

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  11.7 No Breach. Neither the execution and 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 either the Buyer or
Seller; (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 either Seller or Buyer is a party or by which
it may be bound or by which any of the property or assets of either Seller or
Buyer may be bound or materially affected; (iii) result in the creation of any
lien, charge or encumbrance upon the assets or properties of either the Seller
or Buyer as it relates to its business or the pending businesses of either
Party; (iv) violate any judgment, order, injunction, decree or award of any
court, arbitrator, administrative agency or governmental body against, or
binding upon either Seller or Buyer or upon the property, assets or business of
Seller or Buyer; or (v) constitute a violation by either Seller or Buyer of any
law or regulation of any jurisdiction as such law or regulation relates to it or
to the property or business of Seller or Buyer, as applicable.

 

  11.8 Compliance with Laws. The business and operations of each Party and any
of their other affiliates and subsidiaries, if any, have not been, and are not,
conducted in violation of any applicable judgment, order, injunction, award,
tariff or decree. Neither Seller nor Buyer has received notice of, nor have any
knowledge of or any reasonable grounds to know after due inquiry that its
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 either
Party or pursuant to which either the Seller or Buyer conducts its business and
operations. Both Parties have all permits, licenses, orders, authorizations or
approvals of any Federal, state, local or foreign governmental or regulatory
body to carry on its business in the places and in the manner now and heretofore
conducted, and all such licenses, authorizations any permits are in full force
and effect. Neither Party has received notice of nor has any knowledge of or any
reasonable grounds to know after due inquiry that its business and operations
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.

 

  11.9 Suppliers and Customers. Each Party hereby represents and warrants that
its relationship with its suppliers and customers is generally good. No material
customer or supplier has cancelled or otherwise terminated, or threatened to
cancel or otherwise terminate its relationship with either Party or has actually
notified that it will decrease its services or supplies to either Party.

 

12. Termination.

 

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

 

  12.1.1 Breach. Buyer or any of its employees (i) breaches any obligation under
the terms of this Agreement or (ii) breaches any other obligation under this
Agreement and fails to cure the breach within 90 days after Seller demands its
cure in writing.

 

  12.1.2 Normal Business. Buyer ceases to conduct business in the normal course,
becomes insolvent, enters into suspension of payments, moratorium,
reorganization or bankruptcy, makes a general assignment for the benefit of
creditors, admits in writing its inability to pay debts as they mature, suffers
or permits the appointment of a receiver for its business or assets, or avails
itself of or becomes subject to any other judicial or administrative proceeding
that relates to insolvency or protection of creditors’ rights.

 

  12.2 Termination by Buyer. Buyer will have just cause to terminate this
Agreement immediately upon written notice to Seller 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:

 

  12.2.1 Failure to Agree on Specifications. This Agreement shall terminate
immediately if the Buyer and Seller fail to agree to the specifications or
quality control requirements for the Product, such agreement shall not be
unreasonably withheld.

 

8

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  12.2.2 Breach. Seller or any of its employees breaches any obligation under
this Agreement and fails to cure the breach to Buyer’s satisfaction within
ninety (90) days after Buyer demands its cure in writing.

 

  12.2.3 Normal Business. Seller ceases to conduct business in the normal
course, becomes insolvent, enters into suspension of payments, moratorium,
reorganization or bankruptcy, makes a general assignment for the benefit of
creditors, admits in writing its inability to pay debts as they mature, suffers
or permits the appointment of a receiver for its business or assets, or avails
itself of or becomes subject to any other judicial or administrative proceeding
that relates to insolvency or protection of creditors’ rights.

 

  12.2.4 Failure to Meet Quality Control Standards. The Products fail to meet
the Quality Control Standards provided by Buyer to Seller in the form of product
specifications or as Buyer may provide to Seller from time to time. Seller shall
have fifteen (15) days to cure any breach.

 

  12.2.5 Illegality. If, in the Buyer’s sole discretion, continued use of the
Product would result in harm to its consumers, give rise to a regulatory
investigation or is otherwise determined to be illegal or unsafe for human
consumption anywhere in the Territory.

 

  12.2.6 Insolvency. The institution by Seller of insolvency, receivership or
bankruptcy proceedings or any other material proceedings for the settlement of
its debts, including, without limitation, a reorganization, a compromise, an
arrangement or assignment for the benefit of its creditors; the institution of
such proceedings against the Seller and Seller has failed to resolve in its
favor within twenty (20) calendar days after appropriate services of process.

 

  12.2.7 General Assignment. The Seller makes a general assignment for the
benefit of creditors, Seller’s dissolution or ceasing to do business in the
normal course; Seller has a substantial part of its assets seized.

 

  12.2.8 Fair Trade Practices. The Seller shall at all times comply with
international fair trade practices. Buyer shall have the right to terminate this
Agreement upon seven (7) days prior written notice to Seller or representative
in the event that Seller, its officers, executives, partners, directors,
principals, employees, attorneys or agents, does any of the following: (i)
engages in illegal, immoral, or criminal conduct resulting in a criminal
indictment with a substantial likelihood of conviction; (ii) misrepresents or
conceals anything in its background that could be detrimental to the value of
Buyer’s goodwill, name, reputation or stock; (iii) engages in conduct contrary
to the best interests of Buyer; (iv) engages in conduct that offends the
sensitivities of a 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 (v) engages in any conduct, whether intentional or not, that
may bring Buyer or its Associated into public disrepute.

 

  12.2.9 Termination Due to Regulatory Requirements. Buyer may terminate this
Agreement in the event that government regulatory requirements, state or
federal, or Buyer’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 its sole discretion.

 

  12.2.10 Termination for Failure to Meet Buyer’s Production Requirements. Buyer
may terminate this Agreement if Seller is unable to meet the Buyer’s minimum
production requirements or if Seller is unable to meet the Buyer’s reasonable
future requirements.

 

13. Consequences of Termination.

 

  13.1 Termination Obligations. Without waiving any rights or remedies a party
may have hereunder, upon the expiration or termination of this Agreement, all
rights granted to either party hereunder will immediately cease, and the parties
will: (i) promptly comply with the termination obligations specified below; and
(ii) otherwise cooperate with the other party to terminate relations in an
orderly manner.

 

  13.2 Payments. Buyer shall pay Seller all due and outstanding amounts owed up
to the date of Termination. There shall be no liquidated, consequential or
incidental damages or payments due of any kind.

 

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14. Notice.

 

Any notice or other communications between the Parties hereto shall be
sufficiently given if sent by international delivery or by telecopy, if to Buyer
addressed to it at 600 South Royal Lane, Suite 200 Coppell, Texas 75019, or if
to Seller addressed to it at Level 7, 39 Murray Street, Hobart, TAS 7000
Australia or to other such addresses hereafter designated in writing by one
party to the other. Such notice or other communications shall, if sent by
telecopy, be deemed to be given upon receipt of the confirmation of its proper
transmission and if outside the hours of 9:00 a.m. to 5:00 p.m. on any business
day in the jurisdiction of the addressee, shall be deemed to be given at 9:00
a.m. on the next business day. Notices sent by international delivery shall be
deemed to be received (3) days after the date of forwarding the same. For the
purposes of this Agreement, “business day” shall refer to a day in which trading
banks are open for business.

 

15. Attorney’s Fees.

 

In the event any party hereto shall institute an action, including arbitration
pursuant to Section 19 of this Agreement, to enforce any rights hereunder, the
prevailing party in such action shall be entitled, in addition to any other
relief granted, to reasonable attorneys’ fees and costs.

 

16. Severability.

 

Any portion of this Agreement which may be prohibited or unenforceable in any
applicable jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability, but shall not invalidate the
remaining portions of such provisions or the other provisions hereof or affect
any such provisions or portion thereof in any other jurisdiction.

 

17. Modification.

 

This Agreement and the Exhibits attached hereto may be revised from time to time
and can be modified by mutual written agreement of the Parties.

 

18. Waivers.

 

Any failure by any of the Parties to comply with any of the obligations,
agreements or conditions set forth in this Agreement may be waived by the other
party, but any such waiver will not be deemed a waiver of any other obligations,
agreement or conditions contained herein.

 

19. Arbitration.

 

Any controversy or claim arising out of or relating to this Agreement or the
existence, validity, breach or termination thereof, whether during or after its
term, will be finally settled by compulsory arbitration in accordance with the
Commercial Arbitration Rules and Supplementary Procedures for Commercial
Arbitration of the American Arbitration Association (“AAA”); provided, however,
that in the event of any such controversy or claim: (i) neither party will
initiate arbitration within the first thirty (30) days after the aggrieved party
first notifies the other party of the controversy or claim; and (ii) during such
thirty (30) day period, the chief executive officers of both parties convene at
least once in Dallas, Texas, to endeavor in good faith to amicably resolve the
controversy or claim.

 

To initiate arbitration, either party will file the appropriate notice at the
appropriate Regional Office of the AAA. The arbitration proceeding will take
place during a period not exceeding three (3) days. The arbitration panel will
consist of three (3) arbitrators, one arbitrator appointed by each party and a
third neutral arbitrator appointed by the AAA. Any communication between a party
and any arbitrator will be directed to the AAA for transmittal to the
arbitrator.

 

The arbitral award will be the exclusive remedy of the parties for all claims,
counterclaims, issues or accountings presented or plead to the arbitrators. The
award will (i) be granted and paid in U.S. Dollars exclusive of any tax,
deduction or offset and (ii) include interest from the date of breach or other
violation of the Agreement until the award is fully paid, computed at the
then-prevailing LIBOR rate. Judgment upon the arbitral award may be entered in
any court that has jurisdiction thereof. Any additional costs, fees or expenses
incurred in enforcing the arbitral award will be charged against the party that
resists its enforcement.

 

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20. Counterparts.

This Agreement may be executed in one or more counterparts, each of which will
be deemed an original but all of which together will constitute one and the same
document.

 

21. Compliance.

 

Each party will comply with all laws relating to the performance of this
Agreement including federal and state laws, rules and regulations and represents
and warrants that execution of this Agreement and performance of its obligations
under this Agreement does not and will not breach any other agreement to which
it is or will be a party, including but not limited to any agreements with its
customers or third-parties.

 

22. No Agency.

 

Neither party shall purport or shall be deemed an agent, employee, partner, or
joint venture with the other party.

 

23. Governing Law.

 

The Parties hereto agree that this Agreement shall be enforced and governed by
the laws of the State of Texas without regard to the conflicts of law
principals. Each party consents to personal jurisdiction in Dallas County,
Texas, for any action to enforce arbitration including any further rules
provided for emergency or extraordinary relief, as to this Agreement.

 

24. Authority.

 

The Parties represent that they have full capacity and authority to grant all
rights and assume all obligations they have granted and assumed under this
Agreement.

 

25. Assignment.

 

This Agreement and the rights hereunder may not be assigned by any party (except
by operation of law) without prior written consent of the other party, but,
subject to the foregoing limitation, this Agreement shall be binding and inure
to the benefit of the respective successors, assigns, and legal representatives
of the Parties.

 

26. Force Majeure.

 

Neither party shall be liable for any failure, inability or delay to perform
hereunder, if such failure, inability or delay is due to war, strike or other
labor stoppage or slowdown, flood, fire, explosion or accident, transportation
stoppage, materials shortage, government law, order or regulation or energy
allocation or shortage; in which case Buyer shall under no circumstances be
relieved of the obligation to pay amounts then due to Seller. If delay or
failure caused by such force majeure condition shall continue for more than
ninety (90) days, either party shall have the right, at its sole discretion, to
terminate this Agreement, by giving notice to the other of its election to
terminate. For the purposes of this Agreement, the term “force majeure” shall
mean any event beyond the control of the parties, including, without limitation,
fire, flood, riots, strikes, epidemics, war (declared or undeclared and
including the continuation, expansion or new outbreak of any war or conflict now
in effect), terrorist acts, export controls, embargoes, changes in government
and governmental actions or decrees, including without limitations regulatory
interventions, regulatory approvals and the like.

 

27. Captions.

 

The headings of the sections in this Agreement are intended solely for
convenience of reference and are not intended and shall not be deemed for any
purpose whatsoever to modify or explain or place constriction upon any of the
provisions of this Agreement.

 

28. Incorporation of Recitals.

 

The recitals of this Agreement shall be construed and interpreted as comprising
an essential portion of this Agreement.

 

29. Schedules and Attachments.

 

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

 

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30. Non-Competition.

 

During the term of this Agreement, neither Seller, nor any of its
sub-distributors, sales representatives, their agents, assigns, executives or
anyone in privity therewith, shall serve as manufacturer, distributor, marketing
or sales representative in connection with any product that is directly or
indirectly competitive with the product or products that Buyer is distributing,
promoting, or selling on behalf of Buyer without first obtaining Buyer’s written
consent.

 

31. 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.

 

32. Publicity of Agreement.

 

This Agreement is confidential. Neither party shall engage in any type of
publicity in any way connected with this Agreement without the other party’s
prior written approval, which approval shall not be unreasonably withheld.
However, approval to disclose is hereby given by both parties to the extent
required for compliance with any governmental rule, regulation or other
requirement. In the event of any disclosure, the publishing party shall furnish
a copy of such disclosure to the other party.

 

33. Entire Agreement.

 

Subject to the Buyer agreeing to product and quality control specifications,
this Agreement constitutes the entire agreement between the Parties hereto
pertaining to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understanding of the Parties, and there are no
representations, warranties, or other agreements between the Parties in
connection with the subject matter hereof except as specifically set forth
herein. No supplement, modification, amendment, waiver or termination of this
Agreement shall be binding unless executed in writing by the Parties hereto. In
the event of any inconsistency between the terms of the Purchase Order and this
Agreement, the terms of this Agreement shall prevail.

 

IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date
first written above.

 

Mannatech™ Incorporated         By:   /s/    Sam Caster               Date:  

August 11, 2004

   

Sam Caster

           

Its:

 

Chairman and Chief Executive Officer

            Marinova Pty Limited         By:   /s/    Paul Garrott              
Date:  

August 12, 2004

   

Paul Garrott

           

Its:

 

Managing Director

           

 

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EXHIBIT “A”

 

PRODUCT AMOUNT AND PRICE

 

I) Yearly Minimum Purchase Amount and Price, Primary Term:

 

For each of the first three years of this Agreement (2005, 2006, 2007) Buyer
shall purchase 20,000 kilograms of 10% GFS product at the price set forth below
(depending on the method of freight) for use in dietary supplements based on
agreed upon specifications.

 

Alternatively, in each of the first three years (2005, 2006, 2007) the Buyer may
purchase a combination of 10% to 75% GFS, the total monetary value of which will
be at least equal to the monetary value of 20,000 kilos of 10% GFS.

 

The purchase price for 75% GFS shall be determined by mutual agreement between
the Buyer and Seller for use in dietary supplements based on agreed upon
specifications.

 

Year

--------------------------------------------------------------------------------

 

Minimum

Purchase

Kilograms

--------------------------------------------------------------------------------

 

USD Price per Kilogram

Sea Freight

(Point of Delivery: Los Angeles)

(10% GFS)

--------------------------------------------------------------------------------

 

USD Price per Kilogram

Air Freight

(Point of Delivery: Dallas)

(10% GFS)

--------------------------------------------------------------------------------

2005   20,000   $198.50   $200.50 2006   20,000   $176.00   $178.00 2007  
20,000   $176.00   $178.00 2008   none   $176.00   $178.00 2009   none   $176.00
  $178.00

 

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