DISTRIBUTION AGREEMENTDistribution Agreement |
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SKINVISIBLE INC | SKINVISIBLE PHARMACEUTICALS, INC | DERMAL DEFENSE, INC. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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Certain portions of the below Distribution Agreement have been redacted based on a request for confidential treatment and those portions have been filed separately with the Securities and Exchange Commission.
DISTRIBUTION AGREEMENT
THIS AGREEMENT made as of the 21st day of February, 2005. ("Effective Date")
BETWEEN:
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SKINVISIBLE PHARMACEUTICALS, INC., a company incorporated under the laws of the State of Nevada having its principal place of business located at Unit #10 - 6320 South Sandhill Road, Las Vegas, Nevada, 89120 (“Skinvisible”); |
AND:
DERMAL DEFENSE, INC., a company incorporated under the laws of the State of Michigan having its principal place of business located at 2447 Cumberland Drive, Whitelake, MI 48383 (the “Distributor”).
WHEREAS:
A. Skinvisible is in the business of developing polymer-based delivery systems and related technologies for combining hydrophilic and hydrophobic polymer emulsions and licensing its technologies and/or selling its polymer delivery systems to established brand manufacturers and providers of topical prescription and over-the-counter cosmetic and skin-care Product.
B. The Distributor is engaging in the business of marketing and distributing skin-care Product.
C. Skinvisible and the Distributor have agreed to enter into this Agreement, whereby the Distributor will have the exclusive right to distribute, market, sell and promote the Product throughout the Territory.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein set forth and other good and valuable consideration, the parties agree as follows:
I. DEFINITIONS
In this Agreement, the following terms have the following meanings:
1.1 “Customers” means, at any time and from time to time, the customers of the Distributor in respect of the Product.
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1.2 “Confidential Information” means any and all technical or business information, data, designs, concepts, ideas, Product, processes, methods, techniques, specifications, formulas, compositions, samples, know-how, trade secrets, and improvements of a confidential or proprietary nature, whether in tangible form or not, which relate to the Product, or the development, manufacture, end-use, or commercialization thereof, and were disclosed by one party to the other party under this Agreement. As used herein, “Confidential Information” shall not include information a party can demonstrate through its records:
(a) is, at the time of disclosure, available to the general public;
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(b) |
becomes at a later date available to the general public through no fault of the receiving party, and then only after said later date; |
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(c) |
was already in the possession of the receiving party without restriction prior to the date of disclosure; |
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(d) |
is disclosed to the party without secrecy obligations by a third party who had a lawful right to disclose it; or |
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(e) |
is independently developed by personnel of the receiving party who had no direct or indirect access to the Confidential Information of the disclosing party. |
1.3 "Formula" shall mean the specific ingredients, composition, and process for preparing the Product (as defined below).
1.4 "Patents" shall mean U.S. Patent No. 6,582,683 issued on June 24, 2003 for "Dermal Barrier Composition"; U.S.S.N. 09/933,275 filed on August 20, 2001 and U.S.S.N. 10/154,723 filed on May 23, 2002, both for "Topical Composition, Topical Composition Precursor, and Methods for Manufacturing and Using the Same"; Canadian Application No. 2,457,124 filed on August 16, 2002 for "Topical Composition, Topical Composition Precursor, and Methods for Manufacturing and Using the Same"; PCT Application No. US02/26301 filed on August 16, 2002 for purposes of the countries designated therein that are within the Territory; and all divisions, continuations, continuation-in-parts, reissues, reexamination applications, extensions, foreign equivalents within the Territory, and patents issuing therefrom which are owned or controlled by Skinvisible pertaining to the Product, Confidential Information, and Improvement Inventions.
1.5 "Product" means Skinvisible's proprietary antimicrobial hand sanitizer product incorporating 1% Triclosan as an active ingredient, and further identified in Appendix A.
1.6 "Product Specifications" shall mean the specifications for the Product that will likely be needed to meet customer and regulatory requirements. These Product Specifications shall not be modified without the express, written agreement of the parties.
1.7 "Territory" means those countries identified in Schedule C.
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II. APPOINTMENT, TERRITORY AND PRODUCT
2.1 Subject to the terms hereof, Skinvisible hereby appoints the Distributor and grants to the Distributor the exclusive right to distribute, sell, market and promote the Product within the Territory. For greater certainty, while this Agreement shall remain in effect, except for sub-distributors appointed by the Distributor and consented to in writing by Skinvisible, no person, firm or corporation will be granted the right to distribute, sell, market or promote the Product within the Territory other than the Distributor.
2.2 The Distributor shall not be entitled to appoint sub-distributors to distribute, market, sell, or promote the Product within the Territory without the prior express written consent of Skinvisible, pursuant to Article VIII, which shall not be unreasonably withheld.
2.3 The Distributor shall be restricted from integrating the Product into the manufacture and production of finished Product to be distributed, sold, marketed and promoted by or on behalf of the Distributor or its permitted agents, associates, affiliates, or sub-distributors. However, the Product may be sold under a "private" label by the Distributors or its permitted agents, associates, affiliates, or sub-distributors, provided that all packaging costs are paid in advance to Skinvisible.
2.4 Distributor recognizes that Skinvisible is in the business of developing, marketing, selling, and distributing its polymer-based delivery systems and related technologies (including Product), and developing end-use applications therefore, on worldwide bases. For so long as Distributor retains its exclusive distribution rights for the Product granted under Section 2.1 of this Agreement, Skinvisible shall refrain from selling the Product to customers within the Territory, or engaging any third party as a distributor of the Product within the Territory.
III. DISTRIBUTOR NOT MADE AGENT OR LEGAL REPRESENTATIVE
This Agreement does not render Distributor an agent or legal representative of Skinvisible for any purpose whatsoever. The Distributor is not granted any right or authority to assume or to create any obligation or responsibility, express or implied, on behalf of or in the name of Skinvisible or to bind Skinvisible in any manner or thing whatsoever.
IV. PRICING AND PAYMENT
4.1 Product shall be sold to the Distributor by Skinvisible at the pre-determined prices set forth in Schedule B hereto. Any change in the price of Product shall not affect orders by the Distributor that were accepted by Skinvisible prior to such change. As business conditions warrant, Skinvisible shall have the unrestricted right to change the price of the Product, provided that the increase is directly attributable to higher costs of raw materials, other manufacturing costs, or an increase in the Cost of Living Index, and that Skinvisible provides Distributor sixty (60) days prior written notice of any such price increase before it becomes effective.
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4.2 The Distributor shall pay for all orders for Product by electronic bank transfer, certified check or bank draft in favor of Skinvisible
4.3 Except as provided in Section 5.5(b), the purchase price for each order of Product must be paid by the Distributor prior to shipment of the Product and the Distributor shall incur all shipping and packaging costs.
4.4 The Distributor shall pay Skinvisible an up-front license fee in the amount of $1,000,000 USD for the exclusive right to distribute, sell, market and promote the Product within the Territory. Skinvisible acknowledges receipt of a $250,000 nonrefundable deposit applicable toward this up-front license fee. The remaining $750,000 USD is payable under the following schedule until Skinvisible has received the $750,000:
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Date of Payment |
Amount of Payment |
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June 30, 2004 |
$75,000 or 5% of gross revenues generated by Distributor from sales of the Product in the Territory in the prior quarter, whichever is greater |
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September 30, 2004 |
$75,000 or 5% of gross revenues generated by Distributor from sales of the Product in the Territory in the prior quarter, whichever is greater |
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December 31, 2004 |
$75,000 or 5% of gross revenues generated by Distributor from sales of the Product in the Territory in the prior quarter, whichever is greater |
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March 31, 2005 |
$75,000 or 5% of gross revenues generated by Distributor from sales of the Product in the Territory in the prior quarter, whichever is greater |
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June 30, 2005 |
$75,000 or 5% of gross revenues generated by Distributor from sales of the Product in the Territory in the prior quarter, whichever is greater |
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September 30, 2005 |
$75,000 or 5% of gross revenues generated by Distributor from sales of the Product in the Territory in the prior quarter, whichever is greater |
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December 31, 2005 |
$75,000 or 5% of gross revenues generated by Distributor from sales of the Product in the Territory in the prior quarter, whichever is greater |
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March 31, 2006 |
$75,000 or 5% of gross revenues generated by Distributor from sales of the Product in the Territory in the prior quarter, whichever is greater |
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June 30, 2006 |
$75,000 or 5% of gross revenues generated by Distributor from sales of the Product in the Territory in the prior quarter, whichever is greater |
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September 30, 2006 |
$75,000 or 5% of gross revenues generated by Distributor from sales of the Product in the Territory in the prior quarter, whichever is greater |
Under no circumstances shall the installments towards such up-front license fee exceed in the aggregate $750,000.
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(a) |
Payments made under this Section 4.4 are separate and in addition to payments to be made under Section 4.1 for the Product and the running royalties due under Section 4.5. |
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(b) |
In the event that payments are not made as set forth in this Section 4.4 and the parties are unable to agree to a revised schedule of payments within thirty (30) |
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days of the date for payment, then Skinvisible may in its sole discretion terminate the Agreement or any provision therein and retain, without any claim or demand from the Distributor, all monies previously paid. |
4.5 The Distributor shall pay quarterly to Skinvisible a running royalty fee in order to maintain the exclusivity granted herein no later than thirty (30) days after the end of each quarter. The amount of the royalty shall be calculated as follows:
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Quarter Ended
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Amount of Payment |
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June 30, 2004 |
$5,000 or 5% of gross revenues generated by Distributor from sales of the Product in the Territory in the quarter, whichever is greater |
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September 30, 2004 |
$10,000 or 5% of gross revenues generated by Distributor from sales of the Product in the Territory in the quarter, whichever is greater |
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December 31, 2004 |
$15,000 or 5% of gross revenues generated by Distributor from sales of the Product in the Territory in the quarter, whichever is greater |
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March 31, 2005 and subsequent Year Quarters |
$20,000 or 5% of gross revenues generated by Distributor from sales of the Product in the Territory in the quarter, whichever is greater |
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(a) |
In the event that payments are not made as set forth in section 4.2, then Skinvisible shall give the Distributor a written notice of default. If payment is not received within thirty (30) days following receipt of the notice of default, then Skinvisible may in its sole discretion terminate the Agreement or any provision therein and retain, without claim or demand from the Distributor, all monies previously paid. |
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(b) |
The Distributor shall provide to Skinvisible documentation including, but not limited to, receipts, invoices, or other documentation that shall reasonably allow Skinvisible to confirm the accuracy of the royalty payment made. |
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(c) |
Skinvisible shall be entitled to audit the accuracy of the royalty payments made by the Distributor. Skinvisible shall incur the expense of the audit only if it is determined that Skinvisible received ninety percent (90%) or more of the audited amount and in all other circumstances the Distributor shall incur the expense of the audit. The existence of an audit for any quarterly payment does not suspend or relieve the Distributor from their obligation to make a royalty payment within thirty (30) days after the end of each quarter. |
4.6 All payments by the Distributor to Skinvisible to be made hereunder shall be in United States dollars.
V. TERMS AND CONDITIONS OF PRODUCT ORDERS
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5.1 The Distributor shall submit a written purchase order to Skinvisible specifying the amount of Product required. Skinvisible agrees to provide an acceptance of an order within three (3) business days after receiving a written purchase order from the Distributor.
5.2 All of the Product ordered by the Distributor shall be shipped within three (3) weeks from the date the acceptance of an order has been delivered to the Distributor and shall carry an expiration date of three (3) years from the date of shipment. Deli
