WINDOWSHOP XX.XXX, LTD.
P.O. Box 7945
Boca Raton, FL 33431
January 5, 2001
Omega 5 Technologies, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Re: Derma Wand Marketing and Royalty Arrangements
Ladies and Gentlemen:
This letter is intended to set forth the terms to which Omega 5 Technologies,
Inc. ("Omega 5") and Windowshop XX.xxx, Ltd. ("Windowshop") have agreed
regarding sales of the Derma Wand product.
1. Marketing and Manufacturing Rights. So long as it shall be in material
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compliance with all of the terms and conditions set forth herein, Windowshop
shall have worldwide nonexclusive rights to manufacture, market and distribute
the Derma Wand, as previously granted pursuant to Section 11 of the Asset
Purchase Agreement dated as of February 11, 2000 between Omega 5 and Windowshop
(the "Purchase Agreement") and as now reaffirmed by this letter agreement.
2. Royalty Rates. Windowshop shall pay Omega 5 royalties on its sales of
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the Derma Wand at the following rates:
Sales in the United States US $5.00/unit
Sales outside the United States US $2.50/unit
If Windowshop determines at any time that it cannot profitably market the
product in the United States at the rate set forth above due to then-existing
market conditions, it may request an interim reduction in such rate. Omega 5
may consider any such request and negotiate an appropriate rate reduction in
good faith with Windowshop.
3. Royalty Payment Terms. Royalties on sales of Xxxxx Xxxxx purchased from
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Omega 5 shall be due on or before shipment of such products by Omega 5.
Royalties on Xxxxx Xxxxx purchased from third-party suppliers shall be due on or
before the 15th day of the month following Windowshop's collections from sales
of such products and shall be accompanied by an appropriate accounting
statement. If Windowshop fails to make any royalty payment when due and such
failure continues for 30 days, Omega 5 may institute such collection efforts as
may be available to it under applicable law.
4. Audit Rights. Windowshop shall maintain and retain complete and accurate
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records of all sales which are subject to payment of royalties hereunder. Omega
5 may cause such records to be audited at its expense not more than twice in any
twelve-month period upon five business days prior notice to Windowshop. If any
such audit shall show underpayment of royalties by more than 10% of the total
amount actually due, then Windowshop shall bear the cost of such audit (up to a
maximum of $3,000) and shall, on the next royalty payment date, pay all
royalties determined by such audit to be due.
5. Communication With Third-Party Suppliers. Omega 5 may, upon five
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business days prior written notice to Windowshop, communicate with any
third-party suppliers engaged by Windowshop to manufacture the Derma Wand solely
in order to assure quality control and confirm quantities of products shipped to
or for the benefit of Windowshop. Omega 5 (i) shall treat all information which
it obtains regarding Windowshop's transactions with such third-party suppliers
(including, without limitation, quantities ordered and shipped and pricing) as
confidential, (ii) shall protect all such information with at least the same
degree of care that it exercises with respect to its own proprietary
information, and (iii) may not use any such information to compete with
Windowshop. Omega 5 shall not unreasonably withhold, delay or condition any
approval that Windowshop may request in connection with such third-party
manufacturing.
6. CSA Certification; Technical Assistance. Omega 5 shall, at its own
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expense, promptly and diligently take all steps necessary to obtain and maintain
CSA and CE certification of Derma Wand units manufactured by itself. In
addition, Omega 5 shall, at Windowshop's request, promptly and diligently take
all necessary steps to obtain and maintain such certifications for Derma Wand
units manufactured by third-party suppliers designated by Windowshop (including,
without limitation, issuing written authorization, in form satisfactory to
Windowshop, to CSA to deal directly with Windowshop with respect to such
certification). Windowshop shall pay or reimburse (as the case may be) the
actual costs incurred by Omega 5 to obtain and maintain such certifications with
respect to Derma Wand units manufactured by third-party suppliers designated by
Windowshop. Omega 5 shall render such additional manufacturing and other
technical assistance as Windowshop or its designated suppliers) may reasonably
require in order to manufacture the Derma Wand properly and efficiently. Omega
5 shall render such assistance without fee or other charge to Windowshop, except
that Windowshop shall pay or reimburse all reasonable and substantiated direct
costs actually incurred by Omega 5 in rendering such assistance.
7. Supply. Omega 5 shall continue to supply such quantities of the Derma
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Wand as Windowshop may order. The purchase price for each unit of the Derma
Wand supplied by Omega 5 shall be the sum of Omega 5's actual landed cost for
all component parts thereof plus Omega 5's actual per-unit labor cost and shall
be payable on or before shipment of such products by Omega 5.
8. Warranty. Omega 5 warrants that each Derma Wand that it supplies to
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Windowshop shall, for a period of one year from the date of shipment, be free of
all defects in material and workmanship and shall conform to the manufacturer's
specifications under normal use and service. The foregoing warranty shall not
extend to the glass bulb incorporated within the product or to products which
have been misused or neglected. The foregoing warranty shall be for the benefit
of Windowshop and all direct and indirect purchasers of the product. As between
the parties, Windowshop shall be responsible for shipping charges to and from
Omega 5's facility in Hamilton, Ontario associated with returns of the product
for repair or replacement under the foregoing warranty.
9. Reversion of Intellectual Property. Windowshop shall, without fee or
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other charge to Omega 5, take all steps that are reasonably necessary to
transfer to Omega 5 all right, title and interest in and to U.S. Patent No.
5,866,082, the trademark DERMA WAND, and all other assets identified as
"Non-Inventory Assets" in the Purchase Agreement. Windowshop shall pay all
filing fees and other reasonable and substantiated direct costs (including
attorneys' fees) actually incurred by Windowshop in transferring such property
to Omega 5. Notwithstanding the transfer of such rights to Omega 5, Windowshop
shall retain nonexclusive rights to the use of such patent and trademark as
necessary to exercise its rights under Section 1 hereof.
10. Effective Date. The arrangements set forth in this letter agreement
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shall become effective as of the date on which this letter is executed on behalf
of Omega 5; provided, however, that the royalty rates set forth in Section 2
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hereof shall apply with respect to all sales of Derma Wands made by Windowshop
from and after December 1, 2000 (except for units purchased from Omega 5 under
the Purchase Agreement, as to which no royalty shall be payable).
11. Time of the Essence. The parties acknowledge that time is of the
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essence with respect to their respective obligations under this letter
agreement.
12. Dissolution of Windowshop. In the event of the dissolution of
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Windowshop, all of its rights and obligations hereunder shall be assumed by
Xxxxx Dome Explorations, Inc., a Nevada corporation.
13. Performance During Pendency of Disputes. The parties shall continue to
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perform their respective obligations and be entitled to their respective rights
hereunder notwithstanding the occurrence of any litigation or other dispute,
subject, however, to any final order of a court of competent jurisdiction.
14. Termination of Purchase Agreement. Upon the signing of this letter
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agreement by the parties, the Purchase Agreement shall be deemed terminated by
mutual agreement of Omega 5 and Windowshop, and neither party shall have any
further rights or obligations thereunder. Notwithstanding such termination, the
provisions of Section 8 (Confidentiality), Section 10 (Indemnification) and
Section 13 ("Miscellaneous") of the Purchase Agreement are incorporated herein
by reference and made a part of this letter agreement as though set forth in
full herein.
If the foregoing accurately describes the agreements we have reached,
please so indicate by signing where indicated below.
Sincerely,
/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
General Manager
THE FOREGOING TERMS ARE ACCEPTED
AND AGREED IN THEIR ENTIRETY:
OMEGA 5 TECHNOLOGIES, INC.
By: /s/ Xxxxxxxxxxx Xxxxxx Date: January 6, 2001
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Xxxxxxxxxxx Xxxxxx, President
Xxxxx Dome Explorations, Inc. hereby acknowledges the provisions of this letter
agreement, including, without limitation, Section 12 hereof, regarding its
assumption of the rights and obligations of Windowshop XX.xxx, Ltd., hereunder
in the event of the latter's dissolution.
XXXXX DOME EXPLORATIONS, INC.
By: /s/ Xxxxxx Xxxxxxx 1/7/01
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Xxxxxx Xxxxxxx, President
