AMENDMENT NO. 3 TO REVENUE SHARING, PARTNERSHIP AND DISTRIBUTION AGREEMENT
AMENDMENT
NO. 3
TO
This
Amendment No. 3 (“Amendment No. 3”) to the Revenue Sharing, Partnership and
Distribution Agreement (“RSPDA”) is entered into by and among Oculus Innovative
Sciences, Inc., a Delaware corporation (“Oculus”), and Vetericyn, Inc.
(“Vetericyn”, and together with Oculus, the “Parties”), a California
corporation, as of June 1, 2010, by and among the Parties.
RECITALS
A. Oculus
and Vetericyn previously entered into that certain Revenue Sharing Distribution
Agreement effective January 26, 2009, as amended by Amendment No. 1 dated
February 24, 2009 and by Amendment No. 2 dated July 24, 2009 (collectively, the
"Agreement").
B. The
Parties wish to modify certain terms of the Agreement on the terms and subject
to the conditions set forth in this Amendment No. 3.
NOW, THEREFORE, in consideration of the
mutual covenants, agreements and representations contained in this Amendment No.
3 and the RSPDA, as previously amended, the Parties hereto agree as
follows:
1. Certain
Sections of the Agreement shall be amended as follows:
(a) Section
1.1 shall be amended in its entirety to read as follows:
“Change
in Control” shall mean (a) any consolidation or merger of either party with or
into any other corporation or other entity or person, or any other corporate
reorganization, in which the stockholders of such party immediately prior to
such consolidation, merger or reorganization, own less than fifty one percent
(51%) of such party's voting power immediately after such consolidation, merger
or reorganization, or any transaction or series of related transactions to which
either is a party in which in excess of fifty percent (50%) of such party's
voting power is transferred; or (ii) a sale, lease or other disposition of all
or substantially all the assets of either party. A "Change in
Control" shall not include transfers of equity or voting power of Distributor
(i) by Xxxxxx X. Xxxxxxxxxx to his heirs or members of the Burlingame family ;
(ii) between Xxxxxx X. Xxxxxxxxxx, his heirs and members of the Burlingame
Family; or (iii) to any legal entity or trust in which Xxxxxx X. Xxxxxxxxxx, his
heirs or members of the Burlingame Family maintain a fifty one percent (51%)
ownership of the voting power, provided, however, that notwithstanding any of
the foregoing transfers, Xxxxxx X. Xxxxxxxxxx, his heirs and members of the
Burlingame family, either individually or through separate legal entities, shall
maintain a fifty one percent (51%) or greater ownership of the voting
power of the Distributor.
1
(b) Section
1.10 shall be amended in its entirety to read as follows:
1.10
“Territory” shall mean the United States of America, Canada, Puerto Rico, the
People’s Republic of China, Hong Kong, Taiwan, Japan, Korea, Singapore and
Mexico. Pricing, payment terms and revenue sharing mechanisms for the United
States, Canada and Puerta Rico shall be defined in Exhibit A of this Agreement.
Pricing, payment terms and revenue sharing mechanisms for all countries in the
Territory, excluding the United States, Canada and Puerto Rico, shall be defined
in Exhibit B to this Agreement. The Territories may be amended, from
time to time, to include new countries upon mutual written agreement by the
Parties by amending Exhibit B.
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(c)
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Section
3.3 Future Manufacturing Rights shall be amended in its entirety to read
as follows:
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3.3 [ ]*
Upon achieving a certificate of compliance under current Good Manufacturing
Practices (“cGMP”) to manufacture final finished medical devices under US Food
and Drug Administration rules, then the Company shall
[ ]* with [ ]* in good faith to
allow the [ ]* to [ ]* of the
[ ]* in addition to its [ ]* and
[ ]* of the [ ]* will
[ ]* a [ ]* within
[ ]* solely to [ ]*.
[ ]* will further [ ]* all
[ ]* and [ ]* for a
[ ]* if deemed necessary by the parties, to
[ ]* and [ ]* the
[ ]* within [ ]*. Any
potential [ ]* that result from the
[ ]* of [ ]*. For
purposes of clarity, [ ]* of [ ]*
will only occur upon written mutual agreement. Notwithstanding the
foregoing, the [ ]* that [ ]* of
[ ]* shall [ ]* within a
reasonable period of time once [ ]* meets
[ ]* with an intended target date of
[ ]* or sooner.
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(d)
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Section
4.5 Branding of Solution shall be amended in its entirety to
read as follows:
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4.5
Branding of
Products. Distributor shall have the right to market and
label the Solutions using the "VETERICYN" brand within the Territories pursuant
to a license of the VETERICYN trademark from Innovacyn, Inc.
*
Confidential material redacted and separately filed with the
Commission
2
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(e)
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Section
5.1 Ownership of Company's IP shall not apply to the VETERICYN trademark
as a result of the transfer of such trademark to Innovacyn,
Inc. Furthermore, the following sentence shall be added to the
end of Section 5.1: “Distributor shall have reasonable access to the
Company’s IP as necessary to carry out its rights and obligations under
this Agreement, but subject to the requirements of this Section 5 and
Section 8.”
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(f)
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Section
9.2 Termination for Cause shall be amended in its entirety to read as
follows:
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9.2 Termination.
For
Cause. Either party will have the right to terminate this
Agreement for cause upon sixty (60) days written notice to the other party of a
material breach of this Agreement by the other party that remains uncured during
such sixty (60) day period. Notwithstanding the foregoing, in the
event that a party is late in making any payment when due, the party which is
due the funds shall have the right to charge interest at the maximum annual
legal rate from the date when due.
(g) A
new Section 10.4 shall be added in its entirety to read as follows:
10.4 Change of Control at
Distributor. This Agreement may be assigned by the Distributor upon
a Change of Control at the Distributor, so long as the assignee agrees in
writing to be bound by the terms of this Agreement. Upon a Change of
Control at the Distributor, the rights and obligations under Sections 3.3 and
10.3 of this Agreement will terminate and no longer be in force and
effect. Upon a Change of Control at the Distributor, the Company may,
at its own discretion and expense, remove any and all manufacturing equipment at
Distributor’s locations(s) that is owned by the Company at any time for any
reason. Upon a Change of Control at the Distributor, on an annual
basis the Distributor will present a written forecast of sales and expenses for
the following twelve (12) months (“Forecast”) for mutual review and approval by
the parties. Upon agreement of the Forecast, any increase in expenses
above and beyond the Forecast on a quarterly basis which results in a decrease
in the profit margin of the Products of twenty (20%) or more will require mutual
written agreement prior to the increased spending.
3
2. Exhibit
A. Exhibit A to the RSPDA is amended in its entirety by the
“Exhibit A to Revenue Sharing Distribution Agreement and to Revenue Sharing,
Partnership and Distribution Agreement, as Revised and Amended June 17, 2010”
which is attached hereto and incorporated herein by this reference.
3. Exhibit
B. The new Exhibit B to the RSPDA is attached hereto and
incorporated herein by this reference
4. Conflict. In
the event of any conflict between the provisions of this Amendment No. 3
(including the revised Exhibit A and Exhibit B) and the provisions of the RSPDA,
as previously amended, the provisions of this Amendment No. 3 shall prevail and
the provisions of the RSPDA, as previously amended, shall be deemed modified by
this Amendment No. 3 as necessary to resolve such conflict.
5. Effect of
Amendment. Except as expressly amended by this Amendment No. 3
and/or by the preceding sentence, the terms and provisions of the RSPDA, as
previously amended, shall continue in full force and effect.
Signature
page follows
4
IN WITNESS WHEREOF, the parties have
executed this Amendment No. 3 to be effective as of June 1,
2010.
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By:
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/s/ Xxx Xxxxxx |
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Name:
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Xxx Xxxxxx |
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Title:
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Chief Operating Officer |
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VETERICYN,
INC.
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By:
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/s/ Xxxxxxx X. Xxxxx |
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Name:
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Xxxxxxx X. Xxxxx |
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Title:
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Chief Financial Officer |
5
EXHIBIT
A
TO
REVENUE SHARING DISTRIBUTION
AGREEMENT
AND TO
REVISED AND AMENDED _June 1,
2010
REVENUE VOLUME, REVENUE
SHARING AND PRICING SCHEDULE
FOR VETERICYN AND
PURACYN
This Revised and Amended
Exhibit A shall supersede and replace all prior versions of Exhibit A to both
the Revenue Sharing Distribution Agreement and the Revenue Sharing, Partnership
and Distribution Agreement.
AVAILABLE
PRODUCTS:
Vetericyn: all
products
Wound
Care OTC (“Puracyn”):
Human
wound care formulation, up to 85 ppm of free available chlorine, both in gel and
liquid form, for the over-the-counter sale. In this Exhibit A, the
“Puracyn” refers to the Oculus wound care OTC product. For purposes
of clarity, Products shall not include prescription indications, including
liquids, gels, ointments or other formulations of this device for sale by or on
the order of a licensed healthcare practitionerWound Care with Preservatives,
OTC
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o
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8
ounce trigger spray or 250 ml
squeezable
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§
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Skin
& Woundcare HydroGel, OTC
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o
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1.5
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NEW
PRODUCTS:
From time to time, the Parties may
introduce new products with Microcyn Technology and/or new
packaging. Any such new products with Microcyn Technology and/or
packaging shall be subject to a similar revenue sharing mechanism as described
below.
1
PRICING:
The
parties agree to work in good faith to set mutually agreeable wholesale, retail
and end purchase price points for the Products.. Unless agreed upon in advance
in writing by the parties, in no event are the Puracyn Product price points to
be less than the Company’s list prices for comparable prescription
products. Unless agreed upon in advance in writing by the parties, in
no event are the Puracyn Product prices sold to distributors to be less than (a)
[ ]* of the Company’s listed prescription prices or (b)
[ ]* per unit.
MINIMUM
SALES REVENUE FOR WOUND CARE OTC PER CONTRACT YEAR (The contract year commences
on the effective date of Agreement through the anniversary date
thereof):
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Year
ending 2011:
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$
[ ]*
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Year
ending 2012:
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$
[ ]*
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Year
ending 2013:
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$
[ ]*
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Year
ending 2014:
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$
[ ]*
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Year
ending 2015:
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$
[ ]*
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Year
ending 2016:
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$
[ ]*
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Year
ending 2017:
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$
[ ]*
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Year
ending 2018:
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$
[ ]*
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Year
ending 2019:
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$
[ ]*
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Year
ending 2020:
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$
[ ]*
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REVENUE
SHARING & PRICING (IN $USD):
Summary
of Revenue Sharing
In
concept, Oculus and Innovacyn, Inc. (“IVC”) will share equally in revenue after
subtracting (1) an agreed upon amount per unit cash payment
to Oculus by IVC (“Oculus Base Price – Vetericyn” and “Oculus Base Price –
Puracyn”), (2) an offseting expense per unit price deduction for IVC (“Vetericyn
Base Price” and “Puracyn Base Price”) and (3) [ ]* for
manufacturing costs, which shall be increased at the end of each year starting
6/1//11 by the increase, if any, in the CPI. However, this revenue
sharing does not start until IVC achieves cumulative and sustained
profitability, which includes the recapture of all losses associated with and
operating expenses incurred between January 1, 2009 and June 30, 2011 ("Ramp Up
Period"). As of June 30, 2011, the Ramp Up Period will end and IVC
will pay Oculus revenue sharing without regard to IVC cumulative
profitability.
*
Confidential material redacted and separately filed with the
Commission
2
DEFINED
TERMS FOR CALCULATIONS
Innovacyn, Inc.
(“IVC”) is the operating unit selling Vetericyn and Puracyn, and is
controlled by the Burlingame family.
Oculus Base Price –
Vetericyn (“OBPV”) is [ ]* per Units Sold,
regardless of unit size. (OBPV is paid regardless of Vetericyn’s
operating results.) In the event that specific products or product
sizes, whether existing or new, are individually priced at a level below
[ ]* NRV, as hereinafter defined, divided by the related
number of units sold and if mutually agreed upon in advance, then OBPV for that
specific product shall be limited to a maximum of [ ]* of
the Net Revenue per unit from sales of that specified product instead
of [ ]* per unit.
Oculus Base Price - Puracyn
(“OBPP”) is [ ]* per Units Sold of liquid Product
and [ ]* per Units Sold of the gel Product,
[ ]* (OBPP is paid regardless of Vetericyn’s operating
results.), provided,
however, that
(a) if
Oculus cost is reduced below [ ]* for liquid and
[ ]* for gel, then the [ ]* and
[ ]* will be reduced as well by a like amount;
and
(b) when
IVC starts bottling and labeling the product, the OBPP will become
[ ]* per Units Sold for both liquid and gel. In the event
that specific products or product sizes, whether existing or new, are
individually priced at a level below [ ]* NRP, as
hereinafter defined divided by the related number of units sold, and if mutually
agreed upon in advance, then OPBP for that specific product shall be limited to
a maximum of [ ]* of the Net Revenue per unit from sales
of that specific product instead of the [ ]* per
unit.
Vetericyn Base Price
(“VBP”) is [ ]* per Units Sold. Commencing October
1, 2011, and annually thereafter during the Term, VBP shall be increased by the
percentage increase, if any, in the Consumer Price Index – All Urban Consumers
(West) over the preceding twelve month period. In the event that
specific products or product sizes, whether existing or new, are individually
priced at a level below [ ]* NRV, as hereinafter defined,
divided by the related number of units sold and if mutually agreed upon in
advance, then VBP for that specific product shall be limited to a maximum of
[ ]* of the Net Revenue per unit from sales
of that specific product instead of [ ]* per
unit.
Puracyn Base Price
(“PBP”) is [ ]* per Units Sold. Commencing October
1, 2011, and annually thereafter during the Term, PBP shall be
increased by the percentage increase, if any, in the Consumer Price Index – All
Urban Consumers (West) over the preceding twelve month period. In the event that
specific products or product sizes, whether existing or new, are individually
priced at a level below [ ]* NRP, as hereinafter defined
divided by the related number of units sold, and if mutually agreed upon in
advance, then PBP for that specific product shall be limited to a maximum of
[ ]* of the Net Revenue per unit from sales of that
specific product instead of the [ ]* per
unit.
* Confidential material redacted
and separately filed with the Commission
3
Net Revenue – Vetericyn
(“NRV”) is gross revenue less (1) discounts, (2)
allowances,(3) shipping costs (including order fulfillment costs) and (4)
markups netted against sales amounts to independent representatives, dealers and
distributors including payments of fees and/or commissions to outside service
company sales partners, unless such markups are
included as expenses.
Net Revenue – Puracyn
(“NRP”) is gross revenue less (1) discounts, (2)
allowances, (3) shipping costs (including order fulfillment costs) and (4)
markups netted against sales amounts to independent representatives, dealers and
distributors including payments of fees and/or commissions to outside service
company sales partners, unless such markups are
included as expenses.
Total Net Revenue
(“TNR”) is Net Revenue – Vetericyn (NRV) plus Net Revenue – Puracyn
(NRP).
Net Average Sales Price -
Vetericyn (“ASPV”) is Net Revenue –Vetericyn (NRV) divided by the number of
Units Sold - Vetericyn. It is calculated on all sales.
Net Average Sales Price -
Puracyn (“ASPP”) is Net Revenue – Puracyn (NRP) divided by the number of
Units Sold - Puracyn. It is calculated on all sales.
Units Sold -
Vetericyn (“USV”) is the number of bottles, tubes or other form of
container sold to customers, excluding the number of sample/promotional units
distributed.
Units
Sold - Puracyn (“USP”) is the number of
bottles, tubes or other form of container shipped to IVC and/or IVC customers,
excluding sample/promotional units distributed. For a period of one year following
execution of this Agreement, reasonable samples may be supplied by Distributor
to customers to build market demand. After that initial one year period,
the parties agree to work in good faith on an ongoing basis to review sampling
programs to ensure maximum market penetration balanced cost
efficiencies.
Cost of Manufacturing -
Vetericyn is expenses directly related to the bottling and/or
manufacturing of Vetericyn products, which includes, but is not limited to, cost
of materials such as bottles, tubes and other containers, labels and solution,
direct labor and benefits, and shipping costs not included as a deduction to
revenue.
Cost of Manufacturing -
Puracyn is amount paid to Oculus from IVC during the time Oculus is
bottling and labeling. Once IVC starts bottling and labeling the
product, it is the expenses directly related to the bottling and/or
manufacturing of Puracyn products, which includes, but is not limited to, cost
of materials such as bottles, tubes and other containers, labels and solution,
direct labor and benefits, and shipping costs not included as an deduction to
revenue.
4
Cost of Manufacturing -
Shared is expenses directly related to the bottling and/or manufacturing
of both Vetericyn and Puracyn products, which includes, but is not limited to,
laboratory and expendable supplies, depreciation, repairs and maintenance, rent
and utilities.
Selling Expenses -
Shared are costs directly related to the sale and distribution of the
Vetericyn and Puracyn products only, which includes, but is not limited to,
salaries and related benefits, commissions and/or bonuses not included as a
deduction of the ASP, supplies, postage, telephone, conferences, advertising,
travel and marketing material. Expenses which are directly related to
or can be properly and reasonably allocated to Vetericyn or Puracyn such as
advertising or trade shows should be indicated accordingly.
General and Administrative
Expenses are costs directly related to the sales and administration of
the Vetericyn and Puracyn products, which includes, but is not limited to,
salaries and benefits, legal fees, supplies, consulting, postage, insurance and
bank charges. Expenses which are directly related to and can
be properly and reasonably allocated to Vetericyn or Puracyn
separately should be indicated accordingly.
Allocation of
Expenses
Allocations
of expenses will be mutually agreed upon on a quarterly basis.
Income
Statements
IVC will
provide monthly income statements to Oculus by the 15th
business day following each month-end and forecasts of revenue and expenses for
the next 12 months by 20th
business day following each quarter-end in the format similar to the attached
spreadsheet example of the revenue sharing formulas and
calculations.
NET
PROFIT AND COST CALCULATIONS
Net Profit (Loss) Before
Oculus Base Price – Vetericyn (“OBPV”) and Oculus Base Price – Puracyn (“OBPP”)
and Revenue Sharing (“NPBOR”) is Net Revenue (“TNR”) minus Cost of Manufacturing –
Vetericyn, Cost of Manufacturing – Puracyn, Cost of Manufacturing - Shared,
Selling Expenses - Shared and General and Administrative Expenses.
Net Profit (Loss) Before
Revenue Sharing (“NPBR”) is equal to Net Profit Before Oculus Base Price
– Vetericyn and Oculus Base Price – Puracyn and Revenue Sharing (“NPBOR”) minus Oculus Base Price –
Vetericyn (“OBPV”) and Oculus Base Price – Puracyn (“OBPP”) unless the Oculus Base Price
for Vetericyn or Puracyn is already deducted as a cost of
manufacturing.
5
Cumulative Net Profit (Loss)
Before Revenue Sharing (“CNPBR”) is the monthly Net Profit Before Revenue
Sharing(“NPBR”) added
together from January 1, 2009 to the latest month end.
Innovacyn Manufacturing Cost
per unit – Puracyn (“IMCP”) represents the direct cost of
manufacturing, bottling and packaging the Wound Care OTC (Puracyn) liquid or
gel, including direct
raw materials and direct labor, and excluding all indirect labor,
overhead costs or allocations, and is
[ ]* per Units Sold of Wound Care OTC
(Puracyn). Commencing 6/1/2011 and annually thereafter, IMCP shall be
increased by the percentage increase, if any, in the Consumer Price Index – All
Urban Consumers (West) over the preceding twelve month period.
Innovacyn Manufacturing Cost
per unit – Vetericyn (“IMCV”) represents the direct cost of
manufacturing, bottling and packaging the Vetericyn liquid or gel, including direct raw
materials and direct labor, and excluding all indirect labor,
overhead costs or allocations, and is [ ]* per Units Sold
of Vetericyn. Commencing 6/1/2011 and annually thereafter, IMCV
shall be increased by the percentage increase, if any, in the Consumer Price
Index – All Urban Consumers (West) over the preceding twelve month
period.
Oculus Variable
Manufacturing Cost (OVMC) per unit – Puracyn (“OVMCP”) is the direct cost
of manufacturing, bottling and packaging the Puracyn liquid or gel, including direct raw
materials and direct labor, and excluding all indirect labor,
overhead costs or allocations, divided by the Units Sold of
Puracyn, which has further not been reimbursed by Innovacyn to Oculus, and is
limited to no more than [ ]* per Units Sold.
Oculus Variable
Manufacturing Cost (OVMC) per unit – Vetericyn (“OVMCV”) is the direct
cost of manufacturing, bottling and packaging the Vetericyn liquid or gel
including direct raw materials and direct labor and excluding all indirect
labor, overhead costs or allocations divided by the Units Sold of Vetericyn,
which has further not been reimbursed by Innovacyn to Oculus, and is limited to
no more than [ ]* per Units Sold.
REVENUE
SHARING CALCULATIONS
Revenue Sharing – Vetericyn
(“RSV”) to each party is
[ ]* of (Average Selling Price – Vetericyn (“ASPV”) minus (Oculus Base Price –
Vetericyn (“OBPV”) plus the Vetericyn Base Price (“VBP”)) minus (the Innovacyn
Manufacturing Cost-Vetericyn (“IMCV”)) minus the unreimbursed Oculus
Variable Manufacturing Cost – Vetericyn (“OMVCV”)))), except that (i) it does not
begin until Cumulative Net Profit Before Revenue Sharing (“CNPBR”) is positive,
and (ii) it applies only in months where Net Profit Before Revenue Sharing
(“NPBR”) is positive.
6
Revenue Sharing – Puracyn
(“RSP”) to each party is [ ]* of Average
Selling Price – Puracyn ("ASPP”) minus (Oculus Base Price –
Puracyn (“OBPP”) plus the Puracyn Base Price (“PBP”)) minus (the Innovacyn
Manufacturing Cost-Puracyn (“IMCP”)) minus the unreimbursed Oculus
Variable Manufacturing Cost – Puracyn (“OMVCP”), except that (i) it does not
begin until Cumulative Net Profit Before Revenue Sharing (“CNPBR”) is positive,
and (ii) it applies only in months where Net Profit Before Revenue Sharing
(“NPBR”) is positive.
Oculus
Shared Revenue – Vetericyn (“OSRV”) is Units Sold Vetericyn
times [ ]* of Average Selling Price - Vetericyn
minus (Oculus Base Price – Vetericyn plus
Vetericyn Base Price) minus (Innovacyn Manufacturing
Cost-Vetericyn minus the unreimbursed Oculus Variable Manufacturing Cost –
Vetericyn), or Oculus Shared Revenue -
Vetericyn = USV x[ ]* x ASPV - (OBPV+VBP) -
(IMCV-OVMCV)
except that:
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1.
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If
Cumulative Net Profit Before Revenue Sharing (“CNPBR”) is zero or
negative, then Oculus Shared Revenue – Vetericyn (“OSRV”) is zero,
or
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2.
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If
Net Profit Before Revenue Sharing (“NPBR”) is zero or negative, then
Oculus Shared Revenue – Vetericyn (“OSRV”) is zero,
or
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3.
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If
Oculus Shared Revenue – Vetericyn (“OSRV”) is greater than Cumulative Net
Profit Before Revenue Sharing (“CNPBR”) for the month, then Oculus Shared
Revenue – Vetericyn (“OSRV”) shall be equal to Cumulative Net Profit
Before Revenue Sharing (“CNPBR”).
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4.
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For
periods beginning after June 30, 2011, Oculus Shared Revenue – Vetericyn
(“OSRV”) will be paid regardless of exceptions 1, 2 & 3 mentioned
above.
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Oculus
Shared Revenue – Puracyn (“OSRP”) is Units Sold - Puracyn
times [ ]* of Averaging Selling Price – Puracyn
minus (Oculus Base Price – Puracyn plus
Puracyn Base Price) minus (Innovacyn Manufacturing Cost- Puracyn
minus the unreimbursed Oculus Variable
Manufacturing Cost - Puracyn), or Oculus Shared Revenue -
Puracyn = USP x [ ]* x ASPP - (OBPP+PBP) -
(IMCP-OVMCP)
,except that:
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1.
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If
Cumulative Net Profit Before Revenue Sharing (“CNPBR”) is zero or
negative, then Oculus Shared Revenue – Puracyn (“OSRP”) is zero,
or
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* Confidential material redacted
and separately filed with the Commission
7
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2.
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If
Net Profit Before Revenue Sharing (“NPBR”) is [ ]*,
then Oculus Shared Revenue – Puracyn (“OSRP”) is
[ ]*, or
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3.
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If
Oculus Shared Revenue – Puracyn (“OSRP”) is greater than Cumulative Net
Profit Before Revenue Sharing (“CNPBR”) for the month, then Oculus Shared
Revenue – Puracyn (“OSRP”) shall be equal to Cumulative Net Profit Before
Revenue Sharing (“CNPBR”).
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4.
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For
periods beginning after June 30, 2011, Oculus Shared Revenue – Puracyn
(“OSRP”) will be paid regardless of exceptions 1, 2 & 3 mentioned
above.
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PRO
FORMA CALCULATIONS:
Attached
to this Exhibit “A” is a schedule which sets forth the expenses
related to the Vetericyn and Puracyn activities of Innovacyn. These
formulas and calculations are supposed to represent those described in this
agreement. If they are different, then they should be reconciled by
both parties with the understanding that the intent is the written language of
Exhibit A shall prevail.
MINIMUM
ORDERS:
Minimum
ordering quantity per purchase order to be placed with Oculus under this
Agreement shall not be less than one full pallet per shipment and may be
comprised of any combination of the product sizes noted above. For
purposes of clarity and in an effort to maximize shipping efficiency, no partial
pallet orders will be acceptable unless pursuant to replacement orders for
warranty replacements.
REVIEW
OF EXHIBIT “A”
The
Parties agree to meet quarterly to review this Exhibit A, as amended, and any
new product offerings in the veterinary market. The Parties further
agree to work in good faith to study best locations for bottling and final
finished manufacturing.
* Confidential material redacted and separately filed with the
Commission
8
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By:
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/s/ Xxxxxx X. Xxxxxx |
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Name:
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Xxxxxx X. Xxxxxx |
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Title:
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Chief Financial Officer |
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Date:
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6/17/2010 |
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VETERICYN,
INC.
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By:
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/s/ Xxxxxxx X. Xxxxx |
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Name:
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Xxxxxxx X. Xxxxx |
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Title:
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Chief Financial Officer |
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Date:
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6/14/2010 |
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INNOVACYN,
INC.
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By:
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/s/ Xxxxxxx X. Xxxxx |
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Name:
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Xxxxxxx X. Xxxxx |
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Title:
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Chief Financial Officer |
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Date:
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6/14/2010 |
EXHIBIT
B
TO
Available
Products:
Vetericyn: all
products
Applicable
Territories:
China
Taiwan
Hong
Kong
Japan
Korea
Singapore
Mexico
Definitions
“Net Revenue” is gross
revenue in the Applicable Territories less (1) discounts, (2) allowances,(3)
shipping costs (including order fulfillment costs) and (4) markups netted
against sales amounts to independent representatives, dealers and distributors
including payments of fees and/or commissions to outside service company sales
partners, unless such markups are included as expenses.
Oculus Base Price -
Vetericyn (“OBPV”) is [ ]* per Units Sold,
[ ]*. (OBPV is paid regardless of Vetericyn’s
operating results.) In the event that specific products or product sizes,
whether existing or new, are individually priced at a level
below [ ]* NRV, as hereinafter defined, divided by
the related number of units sold and if mutually agreed upon in advance, then
OPBV for that specific product shall be limited to a maximum of
[ ]* of the Net Revenue per unit from sales
of that specific product instead of [ ]*
per unit.
Vetericyn Base Price
(“VBP”) is [ ]* per Units Sold. Commencing
October 1, 2011, and annually thereafter during the Term, VBP shall be increased
by the percentage increase, if any, in the Consumer Price Index – All Urban
Consumers (West) over the preceding twelve month period. In the event
that specific products or product sizes, whether existing or new, are
individually priced at a level below [ ]* NRV, as
hereinafter defined, divided by the related number of units sold and if mutually
agreed upon in advance, then VBP for that specific product shall be limited to a
maximum of [ ]* of the Net Revenue per unit from
sales of that specific product instead of [ ]*
per unit.
* Confidential material redacted and separately filed with the
Commission
1
Calculation
of Revenue Sharing:
For the
exclusive right to sell Vetericyn into the Applicable Territories, Innovacyn,
Inc. will pay Oculus [ ]* of the Net Revenue sold to
these Territories after the subtraction of (a) the sum of OBPV plus VBP, and (b)
the number of units sold times [ ]* per
unit. The [ ]* per unit will be increased
by the CPI once at the end of each year starting 3/31/2011. The
payments are due to Oculus within thirty days after the end of each
month.
The
following table represents the Minimum Sales Revenue Per Contract Year per
country for the Vetericyn product in the respective countries:
|
Registration
|
Fiscal Year
|
Fiscal Year
|
Fiscal Year
|
Fiscal Year
|
Fiscal Year
|
|||||||||||||||||
|
COUNTRY
|
Timeframe
|
3/31/2011
|
3/31/2012
|
3/31/2013
|
3/31/2014
|
3/31/2015
|
||||||||||||||||
|
JAPAN
|
12-18
months
|
$ | [ ]* | $ | [ ]* | $ | [ ]* | $ | [ ]* | |||||||||||||
|
KOREA
|
6-12
months
|
$ | [ ]* | $ | [ ]* | $ | [ ]* | $ | [ ]* | |||||||||||||
|
HONG
KONG
|
None
|
$ | [ ]* | $ | [ ]* | $ | [ ]* | $ | [ ]* | $ | [ ]* | |||||||||||
|
CHINA
|
None
|
$ | [ ]* | $ | [ ]* | $ | [ ]* | $ | [ ]* | $ | [ ]* | |||||||||||
|
TAIWAN
|
None
|
$ | [ ]* | $ | [ ]* | $ | [ ]* | $ | [ ]* | $ | [ ]* | |||||||||||
|
SINGAPORE
|
None
|
$ | [ ]* | $ | [ ]* | $ | [ ]* | $ | [ ]* | $ | [ ]* | |||||||||||
|
MEXICO
|
None
|
$ | [ ]* | $ | [ ]* | $ | [ ]* | $ | [ ]* | $ | [ ]* | |||||||||||
|
Total
|
$ | [ ]* | $ | [ ]* | $ | [ ]* | $ | [ ]* | $ | [ ]* | ||||||||||||
Conversion to
Non-Exclusivity for Failure to Meet Minimum Sales Revenue Per Contract
Year. If
Distributor fails to make sales of Available Products in an amount which is
equal to or greater than Minimum Sales Revenue Per Contract Year for sales in
any country included in the Applicable Territories, then Distributor shall have
the option to become a non-exclusive distributor in that country. If at
any time after the first two (2) Contract years, Distributor fails to make sales
of Products in an amount which is equal to at
least [ ]* of the Minimum Sales Revenue Per Contract
Year for sales in any country included in the Applicable Territories for two (2)
consecutive contract years, then Company shall have the option of changing
Distributor’s status to a non-exclusive distributor in that
country.
* Confidential material redacted and separately filed with the
Commission
2
|
By:
|
/s/ Xxxxxx X. Xxxxxx |
|
Name:
|
Xxxxxx X. Xxxxxx |
|
Title:
|
Chief Financial Officer |
|
Date:
|
7/26/2010 |
|
VETERICYN,
INC.
|
|
|
By:
|
/s/ Xxxxxxx X. Xxxxx |
|
Name:
|
Xxxxxxx X. Xxxxx |
|
Title:
|
Chief Financial Officer |
|
Date:
|
July 26,2010 |
|
INNOVACYN,
INC.
|
|
|
By:
|
/s/ Xxxxxx Xxxxxxxxxx |
|
Name:
|
Xxxxxx Xxxxxxxxxx |
|
Title:
|
Executive Vice President |
|
Date:
|
7/26/10 |
3
