LICENSING AND DISTRIBUTION AGREEMENTDistribution Agreement |
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LICENSING AND DISTRIBUTION AGREEMENT
Agreement
made this 6
th
day
of June, 2007, between Laboratoires Carilène S.A.S a
corporation existing under the laws of France, and having its
principal place of business at 7, rue du Chant des Oiseaux, 78360
Montesson-France (hereinafter referred to as
“Supplier”), and
Auriga Laboratories, Inc., existing
under the laws of the State of Delaware, U.S.A, having
its principal place of business at 2029 Century Park East, Suite
1130, Los Angeles, CA 90067 U.S.A.
(hereinafter referred to as “Buyer”).
WITNESSETH :
WHEREAS, The
Supplier desires to sell and the Buyer desires to buy the Product
defined below and described in Exhibit C hereto; and
WHEREAS, The
Supplier
is willing to furnish all of Buyer’s requirements for the
Product and Buyer is willing to purchase all of its requirements
for the Product from Supplier, subject to Supplier’s ability
to meet Buyer’s demand for the Product; and
WHEREAS, The Buyer shall be the exclusive distributor of the
Product in the Territory. Supplier
is the exclusive owner of an invention relating to the use in
treatment for alopecia and the subject of United States Patent No.
6,001,378 and subject to a PCT filing number PCT/FR97/00141 filed
January 24, 1997, as listed in Exhibit D attached hereto, and all
claims therein, that covers the Product (hereinafter called the
“Invention’); and
WHEREAS, The
Supplier
will transfer to the Buyer the Information, as well as scientific
and marketing data which are essential to the manufacture and
commercial exploitation of the Product.
NOW THEREFORE, this
Agreement witnesses that for and in consideration of the respective
covenants and agreements herein contained, it is agreed by and
between the parties as follows:
ARTICLE 1
DEFINITIONS
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1.1.
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Definitions.
For the purpose of this Agreement or any amendment thereto, the
following terms shall have the following meanings,
respectively :
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1.1.1.
“Product(s)” shall mean combinations, in
particular for use as the active principle in a cosmetic and
particularly dermatological composition, containing
peroxidised lipids and organosilicon compounds containing
them, as well as their applications, including but not limited
to the combination known in Europe as “Silicium 44
Lotion” and “Silicium 44 Shampoo” as covered
by the Patent and all other Supplier intellectual property
rights and as further described in Exhibit C and covered by
the Patent listed in Exhibit D. Product shall include all
successor products and all line extensions, upgrades, new
formulations and the like. Product shall also include sample
packages as mutually agreed to between the parties from time
to time.
1.1.2.
“Territory” shall mean the United States of
America and its possessions and territories
1.1.3.
“Information” shall mean all trade secrets, data,
information and know-how related to the Invention, Product and
the Patent.
1.1.4.
“Patent” means the U.S.A. Patent No. 6,001,378, as
described above and further described in Exhibit D, including
all divisionals, reissuances, reexaminations, foreign
counterparts and the like.
1.1.5
Transfer price shall mean the price in EURO, paid by the Buyer
to Supplier for the Product as described below in Article
5.4
1.1.6
“FCA” shall have the meaning ascribed thereto in
INCOTERMS 2000 of the International Chamber of Commerce,
meaning, among other things, that Supplier shall deliver the
goods cleared for export, at Supplier’s expense, and
Buyer shall clear, at its expense, the goods for import into
the Territory.
1.1.7
“Quality Assurance Agreement”: The Quality
Assurance Agreement shall ensure all applicable governing
laws, rules and regulations including but not limited to those
relating to Good Manufacturing Practices (GMPs) and under the
European guide line of registration of Cosmetic file (see
appendix).
1.1.8
“Manufacturing Package” means all Information and
instructions necessary to enable a third party to manufacture
the Product if permitted pursuant to this
Agreement.
1.1.9
“Net Sales” means all amounts actually received by
the Buyer as a results of its sales of Products less all the
deductions for discounts, products
Rebates, forces or mandated wholesales/distributors fees, rebates
to other government agencies or purchasing associations, returns,
charges back and imported fess. These rebates cannot exceed 15% of
gross sales.
ARTICLE 2
REQUIREMENTS AND EXCLUSIVITY
2.1. License. Except
as otherwise explicitly provided for in this Article 2, Supplier
hereby grants to Buyer the exclusive (even as to Supplier) right,
under all applicable worldwide intellectual property rights, to
sell, market, distribute, sublicense and exploit the Product in the
Territory under The trade name of Silicium 44 (Lotion and Shampoo).
Except as otherwise explicitly provided for in this Article 2,
Buyer is also hereby granted an exclusive right and license, under
all applicable worldwide proprietary rights, to make, have made,
use, sell, have sold, market, distribute, sublicense and
manufacture the Product, but only if and when expressly authorized
under the terms and conditions of this Agreement.
2.2
Sale of Requirements .
During the term of this Agreement, Supplier agrees to sell to Buyer
all of Buyer’s requirements of the Product in accordance with
the terms of this Agreement. If Supplier is unable to supply all of
Buyer’s requirements, Supplier shall, as Buyer’s sole
remedy, use commercially reasonable efforts to provide Buyer, at
prices at or lower than those set forth in this Agreement, with the
Product from other sources to avoid out-of-stock situations.
Notwithstanding the foregoing, if Supplier is unable to supply
Buyer’s requirements two (2) or more times during a ninety
(90) day period, then Buyer shall have the right to require
qualification of a second manufacturer, of Buyer’s choice, to
manufacture the Product for Buyer by using the Manufacturing
Package. Such additional manufacturer shall be subject to the
confidentiality restrictions set forth herein.
2.2.1 Purchase of Requirements .
During the term of this Agreement, Buyer agrees to buy from
Supplier all of Buyer’s requirements for the Product in
accordance with the terms of this Agreement.
2.3 .
Exclusivity .
During the term of this Agreement, except with respect to, Supplier
agrees not to distribute or sell the Product directly or indirectly
to any other party for the purpose of use or sale in the Territory
in accordance with Article 2.1. If during the Term of the
Agreement, Buyer at any time notifies Supplier that a party is
distributing or selling Product in the Territory Supplier agrees
that it will take all action necessary to immediately halt all
sales (direct and indirect) of Product to such party that is
distributing or selling in the Territory providing that the source
of the product is identified to be the Supplier. In the event any
damages are recovered as a result of Supplier’s actions,
after reimbursing Supplier its reasonable costs to take such
action, all remaining proceeds shall belong to Buyer, subject to
the royalty set forth in Article 5.3 If the source of the Product
is other than Supplier, then Buyer shall have the right, by virtue
of the exclusive license granted in Article 2.1, to take action
against such third party, and all proceeds of any such action shall
belong solely to Buyer, subject to the royalty set forth in Article
5.3.
2.4. No Sales Outside the Territory .
Buyer shall not, without the prior written approval of Supplier (to
be granted or withheld in Supplier’s sole and absolute
discretion), directly or indirectly sell Product outside the
Territory, advertise, promote or solicit customers for Product
outside the Territory, establish any office outside the Territory
through which orders are solicited or establish any depot at which
inventories of Product are stored outside the
Territory.
2.5
Right of First Refusal .
In the event Supplier decides to grant an exclusive right to
distribute and sell any further Supplier products in the Territory,
and such products are not included under the definition of Products
set forth in this Agreement, Supplier shall provide Buyer the first
opportunity to obtain such exclusive right for such products upon
mutually agreed upon terms and conditions. Upon receiving
information regarding new Products, Buyers shall have 90 days to
exercise right of first refusal.
ARTICLE 3
REPRESENTATIONS
3.1. Representations of Supplier .
The Supplier represents that:
3.1.1. Supplier
is the exclusive owner of all rights, title and interest in and to
the Invention, Patent, and Information, and has the right to grant
to Buyer the rights and licenses set forth in this Agreement. The
Invention and Products are completely safe for human use and does
not have any direct or indirect adverse health
effects.
3.1.2. As
of the date of this Agreement, other than the Patent, Supplier has
not filed, or caused to be filed in the U.S., patent applications,
or obtained in its name or caused to obtain in the name of others,
any other patent based on or relating to the Invention, Information
or devices or methods similar to the Invention.
3.1.3. Supplier
has, and will continue to, comply with all applicable laws, rules
and regulations with respect to the development, manufacture, sale,
use and distribution of the Product
(“Laws”).
3.2. Information .
Supplier shall furnish to Buyer, or its nominees, any Information
reasonably required (as determined by Supplier and Buyer) by Buyer
to commercialise and exploit the use of the Invention and the
Products permitted under this Agreement, including without
limitation the clinical data and related materials that were
conducted on the Invention and/or Products.
3.3. Buyer
represents that Buyer (i) will adhere to all applicable laws, rules
and regulations, relating to the sale of Product in the Territory;
and (ii) will store the Product in appropriate conditions and
facilities (as instructed by Supplier).
ARTICLE 4
GENERAL OBLIGATIONS
4.1. Buyer’s Obligations .
Marketing and distribution .
In addition to any and all other obligations and liabilities of
Buyer as provided in this Agreement, Buyer or Buyers successors
shall use commercially reasonable efforts to promote and market the
Product for sale according to the business plan covering the first
3 years communicated to Supplier.
4.2
Supplier’s Obligations.
4.2.1. Lead time :
Lead time for Products ordered hereunder shall be 16 weeks for the
first order after reception of the final art work data signed by
both supplier and buyer, and then 16 weeks after receipt of all
other orders. Shipment time by ocean shall be 4/5 weeks; by
air-freight shall be 1 week. Shipment time shall be added to lead
time for purposes of scheduling delivery. 50% of total billing for
the first order only, will be paid by money bank transfer at order
time.
4.2.2. Supplier
shall provide Buyer with a Certificate of Analysis for batches of
Product by facsimile three (3) working days prior to shipment.
Original copies of the Certificates of Analysis shall be sent
regular mail.
4.2.3. Supplier
shall provide Buyer with a copy of the bill of lading by facsimile
upon shipment.
4.3
Manufacturing Rights .
In the event Supplier admits in writing its inability to pay its
debts generally as they become due, files an assignment or a
petition in bankruptcy, as the case may be, or a petition to take
advantage of any insolvency statute, makes a general assignment for
the benefit of its creditors, consents to the appointment of a
receiver of itself or of the whole or any substantial part of its
property, undertakes its liquidation, winding-up or dissolution, or
enters into an arrangement or composition with or for the benefit
or creditors generally occurring in circumstances in which it is
unable to meet its obligations as they fall due, then Buyer shall
have a non-exclusive right and license to use the Manufacturing
Package and to select a third party to manufacture the Product for
continued distribution in the Territory. In the event Buyer
exercises its rights under this Section 4.3, all royalties payable
hereunder shall remain unchanged. Supplier shall place the
Manufacturing Package in escrow pursuant to a mutually agreed upon
escrow agreement that enables release of the Manufacturing Package
upon written notice of the occurrence of any of the foregoing
release conditions. When Supplier recovers it’s total ability
to run it’s business normally, the Buyer’s
manufacturing rights under this Section 4.3 shall terminate and the
provisions, terms and conditions of this Agreement shall be in full
force and effect.
ARTICLE 5
PRICE AND TERMS
5.1.
Payments :
In consideration of the exclusive license granted in Article 2.1,
upon receipt of Product pursuant to orders by Buyer, Buyer shall
pay to Supplier a non refundable premium of USD $1.5 million in
accordance with the following payment schedule:
(i)
US$ 250 000 upon the commercial launch of the product in
the US
(ii)
US$ 500 000 on or before the 90
th day
after commercial launch of the product in the US
(iii)
US$ 750 000 upon the earlier twelve month after the
commercial launch of the Product or at the time that Buyer
achieves £ 5 000 000 of net Sales in the first
year.
5.2
The transfer price of the two presentations, SILICIUM (Lotion
& Shampoo) are defined as below and calculated in a USA$
with a fix exchange rate as specified in the article
5.4
(i).
EURO
3.80 per bottle of Silicium 44 Lotion,
(ii).
EURO
2.80 per bottle of Silicium 44 Shampoo.
Buyer
shall pay these amounts to Supplier in US Dollars at the then
existing Transfer Price as calculated in Section
5.4.
5.2. Minimum Batch size : The
minimum batch size for
stock
bottles of either the Silicium 44 Lotion or Silicum 44 Shampoo
shall be 50,000 units per product.
5.3
Royalties: Buyer will pay royalties equal to five
per
