This Agreement is made the 11th of November, 1997
BETWEEN
INNOVATIVE TECHNOLOGIES Limited ("IT") a British Company (registered number
2666957) whose principal place of business is at Road ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇; and
DERMA SCIENCES INCORPORATED ("DERMA"), an American Corporation, whose principal
place of business is at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
▇▇▇.
WHEREAS:
A. DERMA is engaged in the marketing, distribution and sale of products for
the treatment of chronic non-healing skin ulcerations such as pressure and
venous ulcers, surgical incisions and ▇▇▇▇▇ ("chronic wounds").
B. IT is engaged in the development and manufacture of products for the
treatment of chronic wounds.
C. DERMA desires to retain IT, and IT desires to be retained by DERMA to
develop and manufacture certain zinc products for the treatment of chronic
wounds.
IT IS AGREED as follows: -
1 RETENTION
1.1 DERMA hereby retains IT and IT hereby agrees to be retained to develop,
manufacture and obtain United States Food and Drug Administration (FDA)
clearance for the three woundcare products ("The Products") which IT is
currently developing and shall continue to develop:-
1.1.1 A zinc-containing alginate;
1.1.2 A zinc-containing intelligent hydrocolloid dressing; and
1.1.3 A zinc-containing flat sheet hydrogel
as specified in Enclosure l.
2 PRODUCT OWNERSHIP
2.1 DERMA shall have title and ownership of the Products together with
associated Intellectual Property Rights.
2.2 Nothing in the Agreement shall constitute IT as owner, part owner or
licensee.
2.3 Notwithstanding this, IT shall have the right to manufacture, use and
sell the Products, subject to the terms herein.
3 DEVELOPMENT TIMETABLE
3.1 Development and dispatch of the zinc hydrocolloid and zinc alginate
Products shall be completed before April 30th, 1998.
3.2 Development and dispatch of the flat sheet zinc hydrogel shall be
completed before 31st December, 1998.
4 DEVELOPMENT COSTS
4.1 IT has carried out and continues to carry out work in connection with
the development of the Products, in consideration of which, DERMA
agrees to reimburse IT for the development costs of each individual
Product.
4.2 Commencing on the last day of the month of dispatch of the launch
stock, of each of the Products, DERMA shall make to IT:-
4.2.1 the initial payments as specified in Enclosure 2 for each
individual Product; and
4.2.2 monthly, on the last day of each month thereafter, for a
period of seventeen (17) months, seventeen (17) equal
payments, as specified in Enclosure 2 for each individual
Product.
5 RIGHT OF MANUFACTURE
5.1 DERMA grants to IT during the term of this Agreement:-
5.1.1 the exclusive right to manufacture the Products; and
5.1.2 the exclusive right to sell and license the Products outside
the United States of America and its possessions.
5.2 In consideration of such grant, IT shall pay to DERMA:-
5.2.1 A proportion of profit in respect of each Product calculated
at fifty per cent (50%) of the gross margin;
5.2.2 Fifty per cent (50%) of any license fees obtained by IT in
consideration of granting a license to sell any of the
Products;
5.2.3 "Gross margin" shall be computed as net sales revenue less
fully allocated standard costs of Products.
6 TRANSFER PRICE, MINIMUM ORDERS AND STANDARD COSTS
6.1 Product transfer prices and minimum order requirements shall be as
specified in Enclosure 3, and are fixed until December 31st 1998.
6.2 Prior to 1st December 1998, and on a yearly basis thereafter, DERMA and
IT shall exchange information relative to their respective average
gross sales margins and average manufacturing costs for the Products
and, if necessary, shall re-negotiate the current transfer prices in
good faith.
6.3 Any suggested review of current transfer prices, which reflects up to a
5% increase or reduction, shall be deemed to be reasonable and
acceptable.
7 TERM AND TERMINATION
7.1 The Agreement shall commence on the date as written on the first page
and shall continue in force until December 31st 2002.
7.2 Either party may terminate this Agreement, at any time, by written
notice to the other party if:-
7.2.1 the other party commits a material breach of this Agreement
and in the case of a breach capable of remedy, has not
remedied the breach within thirty (30) days of receipt of
written notice requiring it to do so: or
7.2.2 the other party becomes insolvent, has a receiver appointed of
the whole or any part of its assets or business, makes any
composition or arrangement with its creditors, takes or
suffers any similar action in consequence of debt, or an order
or resolution is made for its dissolution or liquidation.
7.3 IT may give DERMA sixty (60) days written notice of termination
notwithstanding any other remedy which maybe available to IT if DERMA
makes default in the payment of any money which shall have become due
hereunder for more than thirty (30) days after the due date for
payment.
7.4 Either party may give the other six (6) months written notice of
termination if either party undergoes a change of control and "control"
for this purpose means ownership of more than half the capital,
business or assets of or the power to exercise more than half the
voting rights of or the power to appoint more than half the members of
the Board of Directors of or the right to manage the affairs of a party
and a "change" shall take place where some person other than the person
or persons enjoying such control at the time of the Effective Date
acquire either party whether alone or acting in concert with others.
7.5 Upon termination of this Agreement from any cause, IT will complete all
orders for the Products which it has accepted from DERMA, and DERMA
shall pay for all such Products subject to the terms of this Agreement.
8 PRODUCT ORDERING / SUPPLY AND DELIVERY
8.1 IT shall supply DERMA with the Products for distribution in the United
States of America and it possessions on IT's standard terms of supply
and delivery as specified in Enclosure 4.
9 PAYMENT TERMS AND CONDITIONS
9.1 All invoices and payments made shall be in US dollars.
9.2 DERMA shall be invoiced for the price of the Products on dispatch.
9.3 Terms of payment shall be forty five (45) days from the date of
invoice.
10 WARRANTIES AND INDEMNITIES
10.1 IT warrants that at the time of delivery of the Products to DERMA
that:-
10.1.1 the Products shall be of satisfactory quality, free from
defects and fit for their purpose; and
10.1.2 the Products shall meet the specifications referred to in
Enclosure 1; and
10.2 DERMA warrants that:-
10.2.1 its formulations, packaging and label specifications comply
with all applicable regulatory requirements relating to the
sale or use of the Products established by the United States
Food and Drug Administration (FDA) administration; and
10.2.2 the Products shall not be adulterated or misbranded within the
meaning of the Food, Drug and Cosmetic Act, nor be goods which
may not under the provisions of Section404, 505 or 512 of such
Act be introduced into interstate commerce.
10.2.3 it will comply with all storage, handling and other such
instructions in respect of the Products issued by IT.
10.3 IT shall indemnify and hold harmless DERMA for all claims, demands,
actions, liabilities, losses, damages and reasonable attorneys' fees,
arising from a defect in the design or manufacture by IT of any Product
sold and delivered to DERMA under the terms of this Agreement.
10.4 DERMA shall indemnify and hold harmless IT from all claims arising from
the mishandling or misuse of the Products by DERMA, or its customers,
or arising from DERMA's formulations, packaging or labeling of the
Products.
10.5 Liability for the breach of warranties shall be limited to Product
Liability Insurance cover, which shall be maintained by each party for
an amount not less than two million US dollars ($2,000,000).
11 RIGHT OF FIRST REFUSAL
11.1 IT grants DERMA the right of first refusal, for a period of sixty (60)
days from the date of first offer in writing by IT to become the
distributor for each zinc containing product, and that IT may develop,
in the United States and its possessions. If DERMA declines to exercise
its right of first refusal, IT may offer the product for distribution
by or sale to a third party on terms not better than those offered to
DERMA.
12 [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER
EXCHANGE ACT RULE 24b-2.]
13 FORCE MAJEURE
13.1 If the performance by either party of any of its obligations (other
than the obligation to make payments hereunder) shall be in any way
prevented, interrupted or hindered in consequence of an act of God,
war, civil disturbance, strike, lock-out, cessation of work,
combination of workmen or employees, legislation or restriction of any
governmental or other authority, breakdown or interruption of
transport, force majeure or any other circumstances beyond the control
of such party the obligations of the party concerned shall be wholly or
partially suspended during the continuance and to the extent of such
prevention, interruption or hindrance. If a force majeure situation has
continued for more than one hundred and eighty days (180) days, either
party may terminate this Agreement by notice to the other party.
14 CONFIDENTIALITY AGREEMENT
14.1 All information received by one party from the other concerning
materials, volumes, costs, prices, market information and production
techniques, and the terms and conditions of this Agreement, shall be
regarded as confidential and shall not be disclosed by either IT or
DERMA to third parties, without the prior written consent of the other.
On 15th November 1996 IT and DERMA signed a secrecy agreement. They
agree to observe and continue to be bound by the terms of that
agreement in respect of information disclosed independently of, or
pursuant to, or in relation to, the terms of that agreement.
15 ENTIRE AGREEMENT, VARIATION AND CONFLICT
15.1 This Agreement contains the entire agreement between the parties as at
the date as written on the first page hereof and supersedes all prior
agreements and understandings between the parties whether oral or in
writing in relation to the subject matter herein contained except that
both parties hereto agree to observe and continue to be bound by the
terms of the secrecy agreement dated 15th November 1996.
15.2 Valid amendments to or modifications to this Agreement shall be made in
writing and signed by both parties hereto.
15.3 In the event of any conflict between this Agreement and any other
contract, the terms of this Agreement shall prevail.
16 GOVERNING LAW AND JURISDICTION
16.1 The formation, construction, performance, validity and all aspects
whatsoever of this Agreement and any individual contract for the
purchase of the Products by DERMA made hereunder shall be governed by
and construed in accordance with the laws of the state in which the
defendant, in any proceedings, is domiciled. Any proceedings for the
determination of any question or dispute arising in connection with
this Agreement shall be held in New Jersey if initiated by IT and in
London if initiated by DERMA.
17 NOTICES
17.1 Any notice authorized or required to be given pursuant to this
Agreement shall be in writing and given as follows: -
Attn: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ Attn: ▇▇▇ ▇▇▇▇▇
Chairman Chief Executive Officer
Derma Sciences Incorporated Innovative Technologies Group Plc
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ Road Three
Princeton Industrial Estate
NJ 08540 USA ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇
Facsimile: 001 609 514 0502 Facsimile: 44 1606 86 3600
Any such notice may be given by post or facsimile transmission. To
prove service in the case of a notice given by post it shall be
sufficient to show that the notice was dispatched by airmail recorded
delivery service in a correctly addressed and adequately stamped
envelope and to prove service in the case of a notice given by
facsimile transmission it shall be sufficient to show that it was
dispatched to the correct telephone number with a transmission "OK"
printed message. Service by facsimile shall be deemed to have been
affected 24 (twenty-four) hours after dispatch by facsimile
transmission and service by post shall be deemed to have been affected
seven (7) days after the date of postmark
Signed by: /s/ ▇▇▇ ▇▇▇▇▇ Date: November 25, 1997
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For and on behalf of Innovative Technologies Ltd.
Signed by: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Date: December 1, 1997
------------------------------- ----------------
For and on behalf of Derma Sciences Incorporated
ENCLOSURE 1 - PRODUCTS
Product 1 - Zinc Containing Alginate
Alginate dressings and rope containing the following:-
zinc chloride, at a nominal value 0.06mg/g fibre vitamin B6( pyridoxine
HCL), at a nominal value 0.833 mg/g fibre
Product 2 - Zinc Containing Intelligent Hydrocolloid
Intelligent hydrocolloid dressing containing the following: -
zinc chloride, at a nominal value 0.9 mg/g
pyridoxine HCL, at a nominal value 1.8mg/g
vitamin A palmitate, at a nominal value 0.1242 mg/g
Product 3 - Zinc Containing Flat Sheet Hydrogel
Flat sheet hydrogel containing trace elements of zinc and nutrients.
(To be decided)
ENCLOSURE 2 - PRICES
DEVELOPMENT COSTS
Initial Payment
---------------
Zinc Containing Alginate $4,000
Zinc Containing Hydrocolloid $7,000
Zinc Containing Flat Sheet Hydrogel $4,000
17 Equal Monthly Payments
-------------------------
Zinc Containing Alginate $2,400
Zinc Containing Hydrocolloid $2,600
Zinc Containing Flat Sheet Hydrogel $2,400
ENCLOSURE 3 - PRICES
A zinc-containing alginate
Size Price US$
---- ---------
2" x 2" *
4" x 4" *
16" Rope *
A zinc-containing intelligent hydrocolloid dressing
Size Price US$
---- ---------
3" x 3" *
5" x 5" *
Sacral *
A zinc-containing flat sheet hydrogel
Size Price US$
---- ---------
(To be advised)
The Minimum Order Requirement for each individual Product is five thousand
(5,000) units. Prices FOB port of shipment
-------------------
* [INFORMATION OMITTED AND FILED SEPARATELY WITH THE COMMISSION UNDER
EXCHANGE ACT RULE 24b-2.]
ENCLOSURE 4 - TERMS OF SUPPLY & DELIVERY
DERMA shall submit its artwork to IT, at least 90 days prior to the requested
delivery date.
DERMA agrees to pay for the full costs associated with printing set up utilizing
their artwork and for any subsequent changes to artwork required by DERMA.
DERMA shall submit to IT it's twelve month non-binding rolling forecast
quarterly to IT, on or before the first day of each calendar quarter.
DERMA shall submit it's purchase orders not less than 60 days prior to its
requested delivery date.
DERMA undertakes that any purchase order made for the Products, for any one
particular size or format, will be for a quantity in excess of five thousand
(5,000) units.
IT shall deliver the Products FOB port of shipment, excluding all shipping
costs, import duties, insurance tariffs and custom charges directly or
indirectly involved with so shipping the Products.
DERMA shall inform IT without delay in the event of any complaint in respect of
any of the Products, and DERMA shall provide IT with complete information,
including names and addresses of complainants and all facts concerning the
complaint (including whether the complaint concerns an alleged reaction to the
Product or an alleged defect in the Product). DERMA shall be responsible for
acknowledging, dealing with and investigating any complaint made to it in
respect of the Products. DERMA shall without delay inform IT of any material
developments in respect of either the complaint or DERMA investigation. DERMA
shall be responsible for making any necessary reports on such complaints to the
US Food and Drug Administration ("FDA") and DERMA shall attempt to consult IT on
the content of such reports before submitting them to the FDA. Each of the
parties hereto shall give the other all reasonable assistance if requested by
the other in investigating the complaint or in locating and recovering any
Products alleged to be unsaleable or defective and in preventing their sale to
third parties. Any request by IT as aforesaid shall not of itself be an
admission of liability to DERMA or any other party as to the condition of the
Products
IT hereby undertakes during the term of this Agreement:-
to manufacture and package quantities of Products in conformance with
DERMA's purchase orders subject to the following provisions:-
only to the extent that the purchase order is for a quantity in
excess of five thousand (5,000) units for each individual product
size and format;
only to the extent that they comply with DERMA's most recent
non-binding quarterly forecast provided that DERMA shall accept
such quantities being 5% (five per cent) above or below the
quantity specified in the purchase order;
to use reasonable efforts to manufacture Products ordered by
DERMA that are in quantities in excess of DERMA's most recent
non-binding quarterly forecast provided by DERMA to accept all
DERMA purchase orders that conform with the most recent
non-binding quarterly forecast.
to keep in stock such packaging materials, bearing artwork submitted by
DERMA as needed to package the quantities of Products specified in
DERMA's most recent non-binding quarterly forecast provided that, in
the event of such materials not being used, DERMA shall reimburse IT
for all direct costs reasonably incurred in the procurement of such.
ENCLOSURE 5 - A LIST OF PRODUCTS
Dermagran Ointment Tubes
Dermagran Ointment Jars
Dermagran Spray
Dermagran Hydrogel
Dermagran Hydrophilic Ointment
Barrier Cream
Perineal Cleanser
Derma Wound Cleanser