EXHIBIT 10.25
August 5, 1998
Xx. Xxx Xxxxx
President
National Boston Medical, Inc.
00 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
Re: Allergy Guard/Distribution Agreement
Dear Xxx:
This will confirm the terms and conditions of the distribution agreement reached
by and between National Boston Medical, Inc., (hereinafter "Distributor") and
Virasept Pharmaceuticals, Inc., (hereinafter "Virasept"):
1. Subject to the terms and conditions set forth herein, Virasept hereby
appoints Distributor, and Distributor hereby accepts appointment, as the
exclusive distributor of Allergy Guard(TM) for the United States in the medical,
dental and consumer markets;
2. Nothing herein is intended or shall be construed to grant Distributor any
distribution or other rights in any other territories or markets. In this
regard, Distributor hereby acknowledges that it is not granted any rights of any
kind in any foreign countries or markets, except to the extent that Distributor
timely exercises the option set forth in Paragraph 9 hereof and otherwise fully
and timely complies with the terms and conditions set forth in Paragraph 9 of
this Agreement.
3. Distributor further acknowledges that it is not granted any distribution or
other rights in the United States in the "governmental market" or the
"industrial market". For purposes of this Agreement, the "governmental market"
means any federal, state or local governmental or quasi-governmental agency,
department or instrumentality, including by way of illustration only, the United
States armed services, the Veterans Administration, the Public Health Service,
state, county and local police department, fire departments, ambulance corps and
emergency and rescue squads. For purposes of this Agreement, the "industrial
market" means any companies or industries that utilize latex or other gloves in
the manufacturing, preparation or processing of their end products, including by
way of illustration only, the cosmetic, automotive, airline manufacturing and
food processing industries.
4. Distributor hereby agrees that it shall pay Virasept One Hundred Thousand
Dollars ($100,000) as follows for the exclusive distribution rights set forth in
Paragraph 1 hereof: Fifty Thousand Dollars ($50,000.00) concurrently with the
execution of this Agreement; and Fifty Thousand Dollars ($50,000.000) within
Ninety (90) days of the date hereof. This is a one (1) time payment;
5. Distributor further agrees that concurrently with the execution of this
Agreement, it shall place a firm, irrevocable purchase order with Virasept for
no less than Twenty Thousand (20,000) "units" of Allergy Guard. For purposes of
this Agreement, a "unit" means One (1) two ounce (2 oz.) Tube of Allergy Guard,
Ten (10) unit doses of Allergy Guard or One-Third (1/3) of a sixteen ounce (16
oz.) Tube of Allergy Guard or any combination thereof. Thereafter, Distributor
hereby agrees that it will timely place with Virasept the following minimum
purchase orders of Allergy Guard during the term hereof.
DATE/TIME PERIOD MINIMUM ORDER
I. FIRST YEAR
1st quarter (September 1, 1998 - November 30, 1998) 25,000 units
2nd quarter (December 1, 1998 - February 28, 1999) 50,000 units
3rd quarter (March 1, 1999 - May 30, 1999) 75,000 units
4th quarter (June 1, 1999 - August 31, 1999) 100,000 units
II. SECOND YEAR
1st quarter (September 1, 1999 - November 30, 1999) 105,000 units
2nd quarter (December 1, 1999 - February 28, 2000) 110,000 units
3rd quarter (March 1, 2000 - May 30, 2000) 115,000 units
4th quarter (June 1, 2000 - August 31, 2000) 120,000 units
6. The initial purchase price shall be as follows of the unit dose, two ounce (2
oz.) And sixteen ounce (16 oz.) Tubes of Allergy Guard and are based on the
following minimum size run for each type of packaging:
PACKAGING MINIMUM RUN PURCHASE PRICE
1. Unit Dose 100,000 or more $.032 for each unit dose
250,000 or more individual consideration
2. 2 ounce tube 10,000 or more $2.95
2. 16 ounce tube 5,000 or more $11.25
10,000 or more $11.15
Distributor hereby acknowledges that the initial price of Two Dollars and
Ninety-Five Cents ($2.95) a tube for the two ounce (2 oz.) Tube already
represents a substantial discount from the initial price that Distributor was to
pay for the two ounce (2 oz.) Tube of Allergy Guard and that Distributor shall
not receive any further discount based on increases in the minimum run size of
the two ounce (2 oz.) Tubes of Allergy Guard. However, the parties have agreed
that Distributor will receive a credit within Thirty (30) days of the end of
each contract year for any two ounce (2 oz.) Tubes that Distributor has
purchased in excess of its minimum purchase requirements for the year. The
amount of the credit will be a s follows: Twenty-Five Cents ($.25) a tube for
each two ounce (2 oz.) tube that Distributor has purchased beyond its minimum
purchase requirements for the year; and to the extent that Distributor has
purchased in any contract year more than One Hundred and Twenty-Five Percent
(125%) of its minimum purchase requirements for the year, Thirty-Five Cents
($.35) a tube for each two ounce (2 oz.) tube that Distributor has purchased in
excess of One Hundred and Twenty-Five Percent (125%) of its minimum purchase
requirements for the year.
All prices set forth herein are FOB Elsmford, New York or such other place in
the Northeast that Virasept may designate from time to time if such goods are
manufactured or packaged at a place other than in Elmsford, New York
(hereinafter "Shipping Point"). Distributor shall be responsible for all
loading, shipping, forwarding and handling charges, insurance, taxes, storage
and all other charges after Virasept delivers the goods to the Shipping Point.
The prices set forth herein may be adjusted from time to time by Virasept upon
Forty-Five (45) days notice to reflect any increase incurred by Virasept for raw
materials, packaging, manufacturing or labor; Provided, however, that such
increase shall be presented and to the extent necessary reasonably supporting
documentation provided;
7. The initial order of Allergy Guard shall be paid as follows: One-Half (1/2)
concurrently with the execution of this Agreement and One-Half (1/2) within
Thirty (30) days of the delivery of the initial order to Distributor. All future
orders placed on Distributor shall be paid within Thirty (30) days of delivery;
Provided, however, that if any order is for more than Twenty Thousand (20,000)
units the order shall be paid as follows: One-Half (1/2) at the time the order
is placed and One-Half (1/2) within thirty (30) days of delivery; and Provided,
further that if the purchase order is for more than Forty Thousand (40,000)
units the order shall be paid pursuant to an irrevocable letter of credit or
according to such credit terms as may be established by Virasept from time to
time. In the event that Distributor fails to timely or fully pay for any order
Virasept may, as long as any payment is outstanding, require all future orders
to be paid in full at the time such order is placed or in such other manner of
payment acceptable to Virasept;
8. Distributor hereby agrees on a quarterly basis beginning with the second
(2nd) quarter to provide Virasept with a written market report which shall
include information as to the total sales of Allergy Guard during the quarter, a
breakdown of sales between the medical, dental and consumer markets during the
quarter, a summary of promotional and related activities undertaken by
Distributor during the quarter, an outline of the Distributor's plans for sales
promotion and anticipated sales for the next quarter and such other information
as Virasept may reasonably request from time to time;
9. Virasept hereby grants Distributor an exclusive option for a period of One
Hundred and Twenty (120) days from the date hereof to become the exclusive
distributor of Allergy Guard in the following additional territories: Xxxxx
Xxxxxxx, Xxxxx, Xxxxxx and the Middle East (hereinafter "Additional
Territories"); Provided, however, that in consideration of such option,
Distributor agrees, at its own expense, to diligently pursue regulatory approval
for Allergy Guard in the Additional Territories wher3e such regulatory approval
is required and to keep Virasept fully and timely informed of the status of its
efforts. In order to exercise its option for one or more of the Additional
Territories, Distributor shall provide Virasept with written notification for
each of the Additional Territories it intends to exercise its option for and to
remit with such written notification the monies set forth below for such
territories:
South America $25,000
China $25,000
Canada $15,000
Middle East $10,000
In the event that Distributor shall elect to exercise its option for one or more
of the Additional Territories, the minimum number of units that Distributor
shall be required to purchase as set forth in Paragraph 5 hereof shall be
increased as follows beginning the third (3rd) quarter of this Agreement Five
Percent (5%) for the Middle East, Ten Percent (10%) for Canada, Fifteen Percent
(15%) for South
America and Fifteen Percent (15%) for China. Distributor's option shall
automatically and without further notice terminate if Distributor shall fail to
timely exercise its option or to fully and timely remit the monies set forth
above for each of the Additional Territories;
10. Virasept hereby acknowledges that Distributor is interested in possibly
securing distribution rights to other products of Virasept that are currently
under development, including an anti-bacterial and an anti-microbial, and
Virasept hereby is willing to attempt to negotiate with Distributor the terms of
Distributor's agreement for such products as soon as practicable following the
execution of this Agreement, subject to the understanding that any such
agreement shall provide for substantially increased upfront payments and minimum
purchase orders and possibly milestone payments at agreed upon stages of the
development and testing of these products. In the event that the parties are
unable to negotiate an acceptable agreement within Sixty (60) days of the date
hereof, either party may upon written notice to the other party terminate such
negotiations for these other products, at which time Virasept shall be free to
negotiate with any other party for distribution or other rights for such
products;
11. The parties hereto agree that they have or in the future will receive
information from each other that is confidential or proprietary and they each
covenant and agree to hold such information in confidence and not to divulge or
use any information for any purpose other than its reasonably required to
further the purposes of this Agreement. The provisions of this Paragraph shall
survive the termination or expiration of this Agreement;
12. Distributor hereby agrees to submit all marketing, promotional and
advertising materials to Virasept for its approval, which approval shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing, nothing herein
is intended or shall be construed to relieve Distributor of any liability
relative to its marketing, promotion, distribution or sale of Allergy Guard and
Distributor hereby agrees to indemnify, defend and hold Virasept and its
officers, directors, shareholder, employees, representatives and agents harmless
from and against any and all claims, demands, obligations, liabilities, suits
and costs and expenses of any kind or nature whatsoever, including reasonable
attorneys' fees and costs, that arise out of or result from Distributor's
marketing, promotion, distribution or sale of Allergy Guard. Virasept hereby
agrees to maintain during the term hereof and any renewal thereof product
liability insurance with limits of no less than One Million Dollars ($1,000,000)
per occurrence and Three Million Dollars ($3,000,000) in the aggregate. The
provisions of this Paragraph shall survive the termination or expiration of this
Agreement;
13. The term of this Agreement is for the Two (2) year period beginning
September 1, 1998 and ending August 30, 2000. Distributor shall have the option
to renew this Agreement for continuous Two (2) year periods provided that
Distributor shall have fully and timely satisfied its obligations under the
Agreement, including the minimum purchase requirements set forth in Paragraph 5
hereof. In the event Distributor elects to renew this Agreement, all the terms
and conditions set forth herein shall remain the same except the minimum
purchase requirements set forth in Paragraph 5 hereof shall be increased by
Twenty Percent (20%) over the preceding year's last quarter's minimum purchase
requirements.
14. (a) This Agreement may be terminated immediately by Virasept upon the
happening of any of the following events: (i) if Distributor fails to timely
place the minimum orders or fails to timely pay for the same and such breach is
not cured within Thirty (30) days after notice; (ii) upon a breach or threatened
breach of the confidentiality provision set forth in Paragraph 11 hereof; (iii)
upon any purported assignment or delegation by Distributor of its rights or
obligations under this Agreement; (iv) upon Distributor's failure to comply with
all applicable federal, state, local or international laws governing the
marketing, promotion, distribution or sale of Allergy Guard; or (v) upon any
other breach of the terms or conditions of this Agreement by Distributor if such
breach is not cured to the reasonable satisfaction of Virasept within Thirty
(30) days after notice;
(b) This Agreement may be terminated immediately by Distributor upon the
happening of any of the following events: (i) Virasept fails to timely fill any
orders of Distributor for Allergy and such failure is not cured within Thirty
(30) days after notice, unless such breach is excused by a force majeur event;
(ii) upon a breach or threatened breach by Virasept of the confidentiality
provisions set forth in Paragraph 11 hereof; or (iii) upon any other breach of
the terms or conditions of the Agreement by Virasept if such breach is not cured
to the reasonable satisfaction of Distributor within Thirty (30) days;
(c) This Agreement may also be terminated by Distributor at any time without
cause upon One Hundred and Twenty (120) days prior written notice to Virasept;
Provided, however, that in the event that Distributor terminates this Agreement
pursuant to the terms of this subparagraph, Distributor and its officers,
directors, shareholders, contractors and employees shall not engage, directly or
indirectly, in the design, manufacture, marketing, promotion, distribution or
sale of any "competing product" for a period of One (1) year following
Distributor's termination of this Agreement. For purposes of this Agreement,
"competing product" means any barrier cream, skin protectant or other hand-cream
or lotion that is designed or promoted, in whole or in part, to be used with
latex or other gloves or to reduce the symptoms associated with latex allergy or
contact dermatitis; Provided, however, that nothing herein is intended or shall
be construed to prohibit Distributor from distributing any other barrier cream,
skin protectant or hand-cream or lotion that Distributor can establish it was
distributing as of the date of this Agreement;
15. The parties hereto are independent contracting parties. Nothing herein is
intended or shall be construed to create a joint venture, partnership,
employment or agency relationship between the parties. Distributor shall be
fully responsible for complying, at its own cost, with all applicable federal,
state, local and international laws regarding the marketing, promotion,
distribution or sale of Allergy Guard and for all costs and expenses incurred by
Distributor in the marketing, promotion, distribution or sale of Allergy Guard;
16. Any notices required or permitted to be given hereunder shall be deeme3d
given when delivered by overnight mail by a nationally recognized overnight
courier service with signed receipt or three (3) days after mailing by certified
mail, postage prepaid, with return receipt requested, to the other party at its
principal place of business of such other places as that party may designate by
like notice to the other party;
17. This Agreement shall be binding upon the parties hereto and their successors
and permitted assigns. Distributor may not delegate its duties or assign its
rights hereunder, in whole or part, without the express written consent of
Virasept and any purported delegation or assignment of this Agreement shall be
null and void and shall constitute immediate grounds for the termination of this
Agreement by Virasept; Provided, however, that Distributor may assign its rights
hereunder to a related party in which Distributor is a majority shareholder;
18. This Agreement constitutes the entire agreement and understanding between
the parties hereto with respect to the subject matter hereof and supersedes all
prior discussions, understandings and agreements, whether written or oral,
between the parties. This Agreement may not be modified, amended or changed
except by a subsequent agreement executed by both the parties hereto; and
19. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York. Distributor hereby consents to the jurisdiction
of any state or federal court within the State of New York in any dispute
arising out of or relating to the interpretation or enforcement of this
Agreement.
If this Agreement accurately reflects the agreement we reached and is acceptable
to you, please acknowledge by signing on the space provided below and by
returning a fully signed copy of our agreement to me for my records. Thank you.
Very truly yours,
/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
President
AGREED TO AND ACCEPTED BY:
NATIONAL BOSTON MEDICAL, INC.
/s/ Xxxxxx X. Xxxxx
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By:
Its:
