Product Development And Distribution Agreement

PRODUCT DEVELOPMENT AND DISTRIBUTION AGREEMENT


This Product Development and Distribution Agreement is made effective as of the 15th day of September 1997, by and between New Era Nutrition Inc. of Alberta, Canada (hereinafter referred to as "New Era") and Mannatech Incorporated of Texas, USA (hereinafter referred to as "Mannatech").


WITNESSETH:


WHEREAS, New Era is engaged in the research, development, manufacture and sale of functional foods and nutraceuticals, and possesses particular technology or know how which it is applying to develop products under its brand and for third parties;


AND WHEREAS, Mannatech is a marketer and distributor of nutraceutical products through a multi-level distribution, network;


AND WHEREAS, Mannatech is desirous to engage New Era to develop nutraceutical food bars which Mannatech will market and distribute in accordance with its methodology of product distribution in domestic and world markets;


NOW THEREFORE, New Era and Mannatech intending to become legally bound and in consideration of their mutual covenants and promises herein contained agree as follows:


1. Subject to and in accordance with the terms and conditions hereof, Mannatech hereby engages New Era to formulate and develop prototype nutraceutical food bars which Mannatech intends to exclusively market and distribute ("Mannatech Bars").


2. Each of Mannatech and New Era have a vested interest to support the commercial success of Mannatech Bars. Each parry shall reasonably cooperate with the other and shall apply reasonable efforts as applicable, to assure tide success of Mannatech Bars through the cycle of product development, manufacture, marketing, merchandising and sale.


3. In accordance with the provisions of this Agreement. Mannatech may from time to time, request New Era to perform specific product development as set out in a proposed written work order ("Proposed Work Order"). The Proposed Work Order shall contain complete guidelines and specifications for product development, as the parties may reasonably require in order for New Era to assess technical and market feasibility including: target consumer(s), intended price, proposed launch date, jurisdictional and regulatory restrictions, ingredient contents and restrictions, nutritional specifications, organoleptic criteria, shelf life, manufacturing process and preferred manufacturer.


4. (a) If New Era agrees to proceed, the parties shall negotiate the terms of the Work Order including: the projected cost and time for development work, as well as other technical and business aspects as the parties determine at such time ("Work Order").


(b) Any subsequent changes to the Work Order shall be in writing and shall be in the form of a Change Order ("Change Order"). Any and all services to be performed and products to be developed pursuant to the Work Order and each Change Order shall constitute the work to be performed under this Agreement (the "Work"). Any Change Order which increases the Work by more than 10% shall require written approval of both parties. Mannatech shall compensate New Era for any Work in excess of the Work Order at a rate of $150.00 per hour.


(c) In respect of each Work Order, New Era and Mannatech will each identify to the other a technical representative who will have the primary responsibility to coordinate all product development issues between the parties during the course of the Work.


(d) Completion of a Work Order to Mannatech's reasonable satisfaction, shall be evidenced by the provision of completed reasonably acceptable prototype sample(s) supported by nutritional laboratory analysis which are consistent with the Work Order or any Change Order(s).


5. (a) During the term of this Agreement or any license between the parties, provided Mannatech is not in default of a material obligation of this Agreement or the license at issue (provided (30) days have lapsed without such default being cured after receipt of a written notice of such default stating with specificity the nature, extent and cure required regarding such default) New Era shall not directly or indirectly develop, manufacture or market an "equivalent or derivative product" means any other multi-level marketing company or any other form of retail distribution. For the purpose of this Agreement "equivalent or derivative product" means any bar formulated by New Era which substantially replicates the Mannatech Bars as to the combination of specific macro and micro nutrients and claims regarding such micro nutrients, stated functional features, esthetic and organoleptic features, with or without Mannatech's proprietary ingredients, an/or formulations. Nothing in this Agreement is intended to prevent New Era from developing, manufacturing or marketing any other type of bar.


(b) During the term of this Agreement or any license between the parties, provided New Era is not in default of a material obligation of this Agreement or the license at issue (provided (30) days have lapsed without such default being cured after receipt of a written notice of such default stating with specificity the nature, extent and cure required regarding such default), Mannatech shall not directly or indirectly develop, manufacture, acquire for distribution or market any type of bar including food bar, vitamin bar or nutraceutical bar derived from any entity other than New Era.


6. Prior to the sale of each Mannatech Bar developed pursuant to this Agreement, the parties shall enter a licensing agreement with terms in form and substance similar to that set forth in Exhibit "A". The license agreement may include additional commercial terms hereafter agreed to by the parties in respect of each Work Order ("License Agreement"). Each License Agreement which is executed by New Era and Mannatech shall be attached as an Appendix "A" hereto and shall form a part of this Agreement. Mannatech shall not assign or transfer any License Agreement entered pursuant to this Agreement, without the


prior written consent of New Era, except to an affiliate or subsidiary, provided such affiliate or subsidiary becomes a party to this Agreement and provided Mannatech remains primarily and jointly liable and responsible for the performance of all its obligations and those of its transferee or assignee.


7. (a) Mannatech acknowledges the proprietary nature of the technology and know how applied by New Era in the development of Mannatech Bars from time to time under this Agreement ("New Era Technology"). New Era retains ownership to all intellectual property regarding New Era Technology which includes the recipe, formulation, development, manufacture, technology, know how and process of the Mannatech Bars. Mannatech shall not directly or through others, for a period of one year following the expiration of this Product Development and Distribution Agreement and any License incident thereto, attempt to alter any Mannatech Bars, without the prior written consent of New Era. So long as the provisions of the Product Development and Distribution Agreement and any License Agreement incident thereto are observed, nothing contained herein shall be deemed to preclude Mannatech from developing its own bar product which is not based on New Era Technology, provided the Product Development and Distribution Agreement &id any License Agreement incident thereto have been lawfully terminated or have expired. (b) All technology which is possessed or entitled to be possessed by Mannatech prior to the date of this Agreement (hereinafter "Mannatech Technology"), as evidenced by its books and records, shall remain the sole property of Mannatech. No license or other right to such technology is granted therein by this Agreement. Mannatech retains ownership to all intellectual property in the Mannatech Technology including formulations, manufacturing processes, technology. and know how as well as Mannatech's proprietary Ambrotose-TM- and its Metabolically Formulated Dietary Supplement Profile products.


(c) Mannatech agrees that it will not attempt to interfere, circumvent or usurp New Era in its contractual negotiations or relations with third parties in regards to product development or manufacturing.


(d) Any products developed and/or sold by Mannatech in contravention of the Product Development and Distribution Agreement and any License Agreement incident thereto, shall be deemed to be the property of and for the benefit of New Era. If requested Mannatech shall assign, and shall require those over who it has control to assign, any and all rights determined to conflict or be inconsistent with New Era's ownership according hereto. The provisions herein shall survive expiration or termination of this Agreement.


8. The parties agree to maintain information confidential in accordance with the provisions in this Agreement and the Secrecy Agreement set out in Appendix "B" attached hereto and forming a part of this Agreement. Either party may propose to the other such additional provisions as it may reasonably require for the protection of its confidential information, which the parties shall deal with in good faith. The provisions herein shall survive expiration or termination of this Agreement.


9. During the term of this Agreement or any License hereunder, New Era shall offer Mannatech a first right to distribute any new nutraceutical bar formulations which New Era intends to offer to third parties for multi-level marketing. Mannatech shall offer New Era a first right to conduct research and development, to formulate, provide and manufacture nutraceutical bar products which it intends to sell. In respect of each offer provided pursuant to this paragraph, the receiving parry shall provide a complete written proposal within 30 days of receipt of each such offer, which the offering party shall have the absolute discretion to accept of reject. All information exchanged hereunder shill be kept confidential and shall not be used for any other purpose. Any offer hereunder not accepted within 30 days after submission shall be deemed rejected.


10. In accordance with the terms and provisions of this Agreement, at the termination of this Agreement or any License incidental thereto (or any renewal or extension thereof) provided such termination was not the result of a breach by Mannatech, Mannatech shall have the right and ability to make bar and food products, particularly using its proprietary ingredients and formulae, so long as it does not employ any of the Intellectual Property or other proprietary property of New Era.


11. For any work performed in Canada, New Era shall at its discretion attempt to secure research and development assistance by grant, matching funds or strategic relationship from government, academic or scientific institutions, or industry agency, as may be applicable and in amounts and with conditions or terms agreed to by the parties, provided that the same shall not negatively affect any rights of Mannatech hereunder.


12. Subject to earlier payment terms imposed by third parties, all payments shall be paid by wire transfer or certified check within twenty (20) days after receipt of an invoice. Invoices shall be accompanied by supporting documentation.


13. Any reference to either New Era or Mannatech is deemed to include subsidiary and affiliated companies. This Agreement shall be binding upon the parties hereto and upon their respective officers, executors, administrators, legal representatives, successors and assigns. This Agreement may no ...