DISTRIBUTION
AGREEMENT
THIS AGREEMENT
made as of the 4th day of May, 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 ”);
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AND:
SAFE4HOURS, INC. , a company incorporated under the laws of the
State of Nevada having its principal place of business located at
---202 N. Carson Street, Carson City, Nevada 89701 (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.
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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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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was already in
the possession of the receiving party without restriction prior to
the date of disclosure;
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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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is
independently developed by personnel of the receiving party who had
no direct or indirect access to the Confidential Information of the
disclosing party.
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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"; PCT Application No. US02/26301 filed on August 16,
2002 for purposes of the countries designated therein that are
within the Territory namely Asia, Australia, Europe, India, Japan
and S. Korea; and all divisions, continuations,
continuation-in-parts, reissues, reexamination applications,
extensions, foreign equivalents within the Territory, and patents
issuing there-from 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.
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"Territory" means all the countries of the world except
Canada, USA and Mexico.
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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
*
4.3 *
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
* The
confidential portion has been omitted and filed separately with the
Commission
Territory.
Skinvisible acknowledges receipt of a $25,000 nonrefundable deposit
applicable toward this up-front license fee. *
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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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September 30,
2005 and subsequent first Year Quarters
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$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,
2006 and subsequent second Year Quarters
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$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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September 30,
2007 and subsequent Quarters Thereafter
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$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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4.6
All payments by the Distributor to Skinvisible to be made
hereunder shall be in United States dollars.
* The
confidential portion has been omitted and filed separately with the
Commission
V.
TERMS AND CONDITIONS OF
PRODUCT ORDERS
5.1
*
5.2
*
5.3
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5.4
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5.5
*
5.6
*
* The
confidential portion has been omitted and filed separately with the
Commission
* The
confidential portion has been omitted and filed separately with the
Commission
5.7
*
VI.
OBLIGATIONS OF
SKINVISIBLE
6.1
*
6.2
*
VII.
RIGHT TO
MANUFACTURE
7.1 Distributor
shall have the right to manufacture the Product covered by this
Agreement, instead of sourcing it from Skinvisible, provided that:
(a) Distributor makes the Product strictly in accordance with the
Formula, and that it achieves the Product Specifications; (b)
Distributor
* The
confidential portion has been omitted and filed separately with the
Commission
sources the "M1
Polymer" ingredient for the Product from Skinvisible; (c)
Distributor applies Skinvisible's INVISICARE Trademark in a
prominent fashion to all packaging, labels, tags, advertising, and
promotional materials associated with the Products; and (d)
Distributor pays Skinvisible the license fees and royalties due
pursuant to Sections 4.4 and 4.5. Distributor shall notify
Skinvisible ninety (90) days prior to its commencement of the
manufacture of Product under this Section 7.1.
7.2
Should Distributor decide to manufacture Product under this
Agreement, Skinvisible shall disclose to Distributor as soon
reasonably practicable the Formula, Product Specification, and
manufacturing know-how in sufficient detail (using reasonable
commercial efforts) to enable Distributor to make the Products.
This information shall be treated as Skinvisible's Confidential
Information pursuant to Article X. Notwithstanding the foregoing,
Skinvisible shall not be required to disclose any specific
information to Distributor in the event that any agreement with a
third party would preclude Skinvisible from doing so.
7.3
Distributor shall bear all costs associated with the: (a)
disclosure of the Formula, Product Specifications, manufacturing
know-how; (b) adapting such information or technology for its use
by Distributor; (c) any necessary training; and (d) any
documentation done for Distributor's internal purposes.
7.4
Distributor and Skinvisible shall negotiate in good faith a
separate agreement for supplying the M1 Polymer to Distributor for
incorporation into the Product to be manufactured by Distributor,
including the purchase price for such M1 Polymer.
7.5
Distributor shall permit duly authorized representatives of
Skinvisible, at reasonable times, upon reasonable nature, and in
the company of Distributor's employees to enter any facility where
the Product is being manufactured for the purpose of: (a)
inspecting those portions of the facility used in the manufacture,
handling, or storage of the Product; (b) inspecting the
manufacture, handling, and storage of the Product; and (c) ensuring
that the provisions of this Agreement are being complied with by
Distributor. Such representatives shall comply with all of
Distributor's plant safety and other rules and regulations while at
the facility.
8.1
In the event that Distributor determines that commercial
exploitation of the Product within the Territory requires the
appointment of sub-distributors through which the Product may be
sold, then Distributor shall identify such sub-distributors to
Skinvisible, and seek Skinvisible’s prior written approval of
them, which shall not be unreasonably withheld, before appointing
any such sub-distributors under this Agreement.
8.2
Any sub-distributor approved in writing by Skinvisible shall have
the right during the continuance of this Agreement to use
Skinvisible’s Trademark, Patents, and other intellectual
property rights licensed under this Agreement for the sole purpose
of promoting the sales of the Product throughout the Territory
under the same terms and conditions imposed upon Distributor under
this Agreement.
IX.
IMPROVEMENT
INVENTIONS
9.1
Distributor shall have no right to make any modifications or
improvements to the Product without Skinvisible's prior, written
permission. In the event that Distributor does conceive, develop,
or reduce to
