LEASE AGREEMENT
THIS AGREEMENT is made this 9th day of January, 2004 between Derma
Sciences, Inc. ("Lessor") and Xxxxxxxx-Xxxxx Corporation ("Lessee").
1. Lease of Equipment. The Lessor leases to the Lessee, for use upon
the premises in Fort Worth, Texas now occupied by the Lessee, the equipment
described in Exhibit A (the "Equipment").
2. Rentals. The Lessee shall pay rentals of $1 per month and other good
and valuable consideration, the receipt of which is hereby acknowledged by
Lessor. The first rental payment is due three (3) months from the commencement
of the Lease term and shall include the three (3) months in arrears plus the
rental payment for the succeeding month. Subsequent rentals, if any, are due on
the same date of each month thereafter during the term of the Lease, each for
the succeeding month.
3. Taxes and Assessments. The Lessee shall assume and pay, in addition
to the sums set forth in Section 2 of this Lease, all taxes and/or assessments
levied on the Equipment or the leasing thereof, whether assessed and billed to
Lessee or Lessor.
4. Warranties. Lessor warrants that it has good title to the Equipment
free and clear of all claims, liens, encumbrances and security interests,
excepting those arising by virtue of agreements currently in force between
Lessor or Lessor's subsidiaries and Laurentian Bank of Canada and/or Xxxxxxx
Xxxxx Business Financial Services, Inc. and those granted in favor of Lessee.
5. Repair and Maintenance. At its expense, the Lessee shall maintain
the Equipment in good working order and repair. All replacement parts will be
paid for by Lessee, but shall become part of the Equipment and shall be the
property of the Lessor.
6. Liens; Assignments; Claims. Lessee shall keep the Equipment free and
clear of all liens, encumbrances and security interests and shall not remove it
from the premises above described or do or permit anything to be done which
might operate to prejudice Lessor's title; shall not transfer, deliver, or
sublet the Equipment to any other person or corporation without prior written
consent of the Lessor; shall not assign any rights hereunder to any other person
or corporation without prior written consent of the Lessor; and shall comply
with all laws, ordinances and regulations applicable to the Equipment and the
use thereof.
7. Risk of Loss. Lessee shall exercise reasonable care to prevent loss or
damage to the Equipment during the term of this Lease; however, all risk of loss
or damage beyond the reasonable control of Lessee shall be borne by Lessor.
Anything hereinafter contained to the contrary notwithstanding, Lessee shall
assume and maintain liability for injuries to persons or property (except injury
or damage to the Equipment beyond the reasonable control of Lessee), as well as
violations of the Occupational Safety
1
and Health Act of 1970, regulations thereunder and similar state statutes and
regulations, resulting from the operation or maintenance of the Equipment.
8. Inspection. Lessee shall permit the Lessor's agents to enter upon
Lessee's premises to inspect the Equipment at all reasonable times.
9. Term and Termination.
(a) The term of the Lease shall commence on the date first above
written. Unless terminated earlier pursuant to Section (b) of this Section
9, this Lease shall continue in full force and effect until April 30, 2004.
(b) Lessor may, at its sole option, terminate this Lease, effective
immediately upon the occurrence of one or more of the following events: (i)
Lessee fails, within 45 days after written notice thereof from Lessor, to
cure any breach of any of its covenants in this Lease; (ii) insolvency or
bankruptcy of the Lessee; (iii) the making by Lessee of an assignment for
the benefit of creditors; (iv) appointment of a trustee or receiver for
Lessee, or for a substantial part of its property, with or without its
consent, or (v) institution by or against Lessee of bankruptcy,
reorganization, arrangement or insolvency proceedings of which Lessee is
the subject.
(c) Upon termination or expiration of this Lease, the Lessee shall
immediately deliver the Equipment to Lessor in substantially the same
operating order and condition as of the date of the commencement of the
Lease term, with exception for the reasonable wear and tear and
depreciation resulting from the authorized and normal use thereof and for
damage beyond the reasonable control of Lessee, as described in Section 7.
(d) On or before five (5) days following expiration or termination of
this Lease, Lessor will accept delivery of and remove the Equipment from
Lessee's premises at Fort Worth, Texas. To avoid confusion and without
limiting the foregoing, Lessor shall be responsible for all costs, risks
and liability associated with disassembly of the Equipment at Lessee's Fort
Worth, Texas premises and with removal and transportation of the Equipment
from such premises.
10. Controlling Law. This Lease Agreement shall be construed in
accordance with the laws of the State of Texas.
[THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK]
2
Derma Sciences, Inc.
By: _______________________________
Title: President and Chief Executive Officer
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Xxxxxxxx-Xxxxx Corporation
By: _______________________________
Title: President, Business-to-Business
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
3
Supply Agreement Exhibit A (Trademark Estate)
Trademark Trademark Type Stock Code Material Description
--------- -------------- ---------- --------------------
SHUR-CONFORM* Common Law 77041 "SHUR-CONFORM* Oil Emulsion Dressings, 3"" X 0"""
XXXX-XXXXXXX* Common Law 77042 "SHUR-CONFORM* Oil Emulsion Dressings, 3"" X 0"""
XXXX-XXXXXXX* Common Law 77043 "SHUR-CONFORM* Oil Emulsion Dressings, 3"" X 16"""
SHUR-CONFORM* Common Law 77044 "SHUR-CONFORM* Oil Emulsion Dressings, 3"" X 8"""
COVERALL* 5 N' 1 Common Law 20017 "COVERALL* 5 'n 1 Border Gauze, Non-Sterile, 6"" X 6"""
COVERALL* 5 N' 1 Common Law 77045 "COVERALL* 5 'n 1 Dressing, Sterile, 4"" X 4"""
COVERALL* 5 N' 1 Common Law 77046 "COVERALL* 5 'n 1 Dressing, Sterile, 6"" X 6"""
COVERALL* 5 N' 1 Common Law 77047 "COVERALL* 5 'n 1 Dressing, Sterile, 6"" X 0"""
XXXX-XXXXX(X) "US Reg. 1,156,937 " 81117 "S101 Shur Strips (1/8"" x 3"")"
SHUR-STRIP(R) "US Reg. 1,156,937 " 81118 "S102 Shur Strips (1/4"" x 3"")"
SHUR-STRIP(R) "US Reg. 1,156,937 " 81119 "S103 Xxxx Xxxxxx (0/0"" x 0 0/0"")"
XXXX-XXXXX(X) "US Reg. 1,156,937 " 81120 "S105 Shur Strips (1/4"" x 4"")"
SHUR-STRIP(R) "US Reg. 1,156,937 " 81121 "S106 Shur Strips (1/2"" x 4"")"
SHUR-STRIP(R) "US Reg. 1,156,937 " 81122 "S107 Shur Strips (1"" x 4"")"
SHUR-STRIP(R) "US Reg. 1,156,937 " 71149 NS101 Nonsterile bulk
SHUR-STRIP(R) "US Reg. 1,156,937 " 71150 NS102 Nonsterile bulk
SHUR-STRIP(R) "US Reg. 1,156,937 " 71151 NS103 Nonsterile bulk
SHUR-STRIP(R) "US Reg. 1,156,937 " 71152 NS105 Nonsterile bulk
SHUR-STRIP(R) "US Reg. 1,156,937 " 71153 NS106 Nonsterile bulk
SHUR-STRIP(R) "US Reg. 1,156,937 " 71154 NS107 Nonsterile bulk
Supply Agreement Exhibit B (Transfer Prices)
Xxxxxxxx- Xxxxxxxx- Xxxxxxxx-
Xxxxx Derma Xxxxx Derma Xxxxx Derma
Stock Inventory Cost Stock Inventory Cost Stock Inventory Cost
Code ($/CASE) Code ($/CASE) Code ($/CASE)
20017 $56.87 81122 $54.56 10503 $44.00
20049 $48.00 99815 $31.77 10505 $63.20
20053 $28.00 99816 $22.30 10506 $43.20
20056 $27.89 99817 $27.30 10507 $90.40
20059 $27.36 99818 $18.33 10539 $38.47
20062 $32.60 99819 $20.17 10549 $59.20
20065 $43.21 99820 $40.52 10559 $16.81
20068 $72.96 99821 $24.72 10560 $21.82
71149 $57.09 99822 $22.59 10561 $14.40
71150 $57.09 99823 $34.41 10563 $14.48
71151 $57.09 13082 $17.28 10564 $16.90
71152 $67.65 13083 $22.56 10565 $23.04
71153 $67.65 20046 $29.76 10567 $16.26
71154 $74.44 10223 $61.60 10568 $15.67
71164 $84.00 10224 $96.00 10569 $46.40
71165 $128.00 10239 $124.80 10570 $64.96
77030 $61.12 10364 $23.12 10578 $50.05
77034 $50.80 20016 $63.83 10579 $53.76
77041 $124.66 20019 $40.11 10580 $53.76
77042 $59.50 20024 $81.35 10590 $31.20
77043 $135.24 20027 $22.68 10599 $17.89
77044 $106.73 20030 $24.68 10600 $30.03
77045 $73.71 20033 $29.11 10607 $38.69
77046 $115.20 20036 $36.71 10611 $91.94
77047 $136.80 20039 $42.16 10614 $34.11
77051 $15.28 20043 $49.85 10617 $62.40
77052 $15.28 10426 $52.00 99988 $38.94
77053 $17.12 10427 $52.00 99989 $51.52
77054 $19.84 10428 $52.00 99990 $58.41
77061 $16.16 10429 $80.00 10619 $45.60
77062 $16.96 10431 $80.00 68799 $26.40
77063 $19.84 10432 $80.00 99970 $9.97
77064 $28.48 10472 $112.00 20071 $50.16
81117 $52.60 10474 $112.00 20074 $43.22
81118 $50.22 10477 $62.40 20077 $74.02
81119 $46.60 10489 $45.60 20082 $67.54
81120 $60.54 10499 $32.80
81121 $71.26 10501 $72.80
Supply Agreement Exhibit C
During
Transition
Period Derma OK'd
Stock Projected OEM & KC
Code Sales(CS) Inventory(CS)
----- --------- -------------
20017 0.0 0.0
20049 65.8 87.7
20053 34.3 45.7
20056 357.0 476.0
20059 165.5 220.7
20062 133.8 178.3
20065 83.5 111.3
20068 351.0 468.0
71149 0.0 0.0
71150 1.0 1.3
71151 0.0 0.0
71152 0.0 0.0
71153 87.5 116.7
71154 1.0 1.3
71164 2.0 2.7
71165 14.3 19.0
77030 31.8 42.3
77034 221.5 295.3
77041 80.8 107.7
77042 142.8 190.3
77043 10.5 14.0
77044 11.3 15.0
77045 68.5 91.3
77046 30.8 41.0
77047 7.8 10.3
77051 709.8 946.3
77052 547.5 730.0
77053 320.0 426.7
77054 55.3 73.7
77061 685.0 913.3
77062 480.3 640.3
77063 319.3 425.7
77064 108.5 144.7
81117 82.3 109.7
81118 360.8 481.0
81119 30.3 40.3
81120 70.0 93.3
81121 229.0 305.3
81122 3.5 4.7
99815 10.8 14.3
99816 0.0 0.0
99817 5.3 7.0
99818 3.3 4.3
99819 0.0 0.0
99820 0.8 1.0
99821 6.0 8.0
99822 164.8 219.7
99823 8.8 11.7
13082 330.0 330.0
13083 0.0 0.0
20046 812.3 837.0
10223 0.0 0.0
10224 0.0 0.0
10239 0.0 0.0
10364 0.0 0.0
20016 0.0 1,000.0
20019 150.0 0.0
20024 1,082.5 0.0
Exhibit C (Projected Volumes) Page 1 of 2
During
Transition
Period Derma OK'd
Stock Projected OEM & KC
Code Sales(CS) Inventory(CS)
----- --------- -------------
20027 150.0 0.0
20030 1,299.0 0.0
20033 0.0 500.0
20036 160.0 350.0
20039 108.3 0.0
20043 129.9 0.0
10426 0.0 63.0
10427 0.0 63.0
10428 126.0 315.0
10429 0.0 252.0
10431 0.0 252.0
10432 0.0 0.0
10472 0.0 0.0
10474 0.0 0.0
10477 0.0 0.0
10489 0.0 0.0
10499 0.0 0.0
10501 0.0 0.0
10503 0.0 0.0
10505 0.0 0.0
10506 0.0 0.0
10507 0.0 0.0
10539 0.0 0.0
10549 0.0 0.0
10559 0.0 0.0
10560 0.0 0.0
10561 0.0 0.0
10563 0.0 0.0
10564 0.0 0.0
10565 0.0 0.0
10567 0.0 0.0
10568 0.0 0.0
10569 0.0 0.0
10570 0.0 0.0
10578 0.0 0.0
10579 0.0 0.0
10580 0.0 0.0
10590 150.0 350.0
10599 150.0 150.0
10600 0.0 0.0
10607 0.0 50.0
10609 0.0 0.0
10611 0.0 10.0
10614 120.0 268.0
10617 30.0 0.0
99987 0.0 0.0
99988 0.0 0.0
99989 30.0 30.0
99990 25.0 25.0
10619 300.0 300.0
68799 400.0 400.0
99970 0.0 0.0
20071 194.9 0.0
20074 0.0 60.0
20077 220.0 0.0
20082 43.3 40.0
TOTAL 12,113.9 13,782.0
Exhibit C (Projected Volumes) Page 2 of 2
Supply Agreement Exhibit D (RM Inventory & Cost)
Ending Inventory 3/29/04 Derma to
Part UM (includes purchases) Cost Ext. Cost take
---- -- ------------------------ ---- --------- --------
0001703274 EA 4990 $0.02 $84.83 Yes
0001735813 RL 97 $44.62 $4,327.91 Yes
016004 LY 2583 $0.07 $173.84 Yes
0160095000 EA 2004 $0.45 $901.80 Yes
0000000000 EA 1269 $0.45 $571.05 Yes
0160109000 EA 2639 $1.01 $2,677.27 Yes
0160110000 EA 6115 $0.62 $3,810.26 Yes
0160111000 EA 5519 $0.44 $2,420.63 Yes
0160112000 EA 838 $1.11 $933.53 Yes
0160778000 EA 2364 $0.88 $2,090.49 Yes
022000 EA 0 $0.01 $0.00 Yes
022975 EA 2717 $0.44 $1,195.48 Yes
000000 XX 000 $0.84 $401.63 Yes
000000 XX 00000 $0.08 $4,895.19 Yes
025900 EA 0 $0.03 $0.00 Yes
0260769000 EA 343 $0.76 $260.92 Yes
0260770000 EA 1185 $0.65 $768.00 Yes
0260771000 EA 353 $0.84 $295.81 Yes
0260813000 EA 610 $0.54 $331.84 Yes
0260865000 EA 1019 $0.46 $469.56 Yes
0260903000 EA 10 $0.73 $7.33 Yes
0260904000 EA 214 $0.58 $123.63 Yes
000000 XX 000 $0.58 $256.94 Yes
000000 XX 000 $0.88 $242.22 Yes
027061 FT 17323 $0.06 $1,122.53 Yes
000000 XX 000 $0.63 $534.89 Yes
000000 XX 000 $0.63 $378.72 Yes
029100 FT 34606 $0.18 $6,312.13 Yes
0000000000 EA 66500 $0.09 $6,197.80 Yes
0000000000 EA 58900 $0.06 $3,551.67 yes
R10238 LB 454 $1.75 $794.50 Yes
R10254 KG 172.5 $50.49 $8,709.49 Yes
R10283 EA 172 $0.59 $101.84 Yes
R10298 EA 72 $0.56 $40.05 Yes
R10306 EA 67300 $0.01 $444.18 Yes
R10324 FT 19980 $0.05 $999.00 Yes
R10342 LY 47193 $0.02 $811.72 Yes
R10343 LY 141001.5 $0.05 $7,120.58 Yes
R10344 LY 143708 $0.09 $12,373.26 Yes
R10345 LY 622 $0.10 $62.82 Yes
R10359 LB 55.1 $44.00 $2,424.40 Yes
R10360 LY 33796 $0.03 $953.05 Yes
R10361 LY 57566 $0.03 $1,963.00 Yes
R10362 LY 66700 $0.05 $3,428.38 Yes
R10363 LY 38180 $0.09 $3,352.20 Yes
R10381 FT 12895 $0.13 $1,663.46 Yes
R10382 FT 3490 $0.11 $369.24 Yes
R10405 LB 7.2 $7.05 $50.74 Yes
R10406 LB 60.4 $6.15 $371.46 Yes
R10407 GL 20.8 $5.38 $111.90 Yes
R10410 FT 139242 $0.01 $1,935.46 Yes
R10430 LB 328 $0.97 $318.16 Yes
R10431 LB 1520 $0.86 $1,307.05 Yes
R10618 LB 40.2 $1.14 $45.68 Yes
R10687 EA 95200 $0.03 $2,760.80 Yes
R10717 EA 348 $0.31 $108.05 Yes
R10731 EA 965 $0.27 $264.41 Yes
R10732 EA 1142 $0.44 $501.68 Yes
R10733 EA 588 $0.65 $379.85 Yes
R10737 FT 1862 $0.25 $459.91 Yes
Exhibit D (RM Volumes Cost) Page 1 of 2
Ending Inventory 3/29/04 Derma to
Part UM (includes purchases) Cost Ext. Cost take
---- -- ------------------------ ---- --------- --------
R10739 FT 5162 $0.05 $237.97 Yes
R10740 FT 5000 $0.05 $231.50 Yes
R10751 EA 347 $0.60 $207.16 Yes
R10755 EA 817 $0.47 $384.40 Yes
R10759 EA 137 $0.41 $56.51 Yes
R10763 EA 562 $0.49 $274.37 Yes
R14086 EA 2435 $0.87 $2,128.92 Yes
R14128 LY 31858 $0.08 $2,389.35 Yes
R14138 EA 907 $0.58 $526.06 Yes
R14139 EA 1104 $0.51 $567.46 Yes
R14140 EA 873 $0.48 $417.29 Yes
R14141 EA 745 $0.44 $330.78 Yes
R14150 FT 151128 $0.05 $7,465.72 Yes
R15395 EA 24900 $0.04 $888.93 Yes
R15816 EA 10890 $0.12 $1,280.66 Yes
R15838 LB 53 $16.96 $898.88 Yes
R15839 KG 30 $56.82 $1,704.55 Yes
R15841 EA 1800 $0.14 $247.50 Yes
R15842 EA 5590 $0.28 $1,565.20 Yes
R15868 FT 27949 $0.04 $1,218.58 Yes
R16062 LB 6.8 $33.16 $225.49 Yes
R16063 GL 3.6 $8.35 $30.06 Yes
R16064 LB 474 $0.73 $345.64 Yes
R16113 LB 37.3 $166.28 $6,202.24 Yes
R16114 LB 129.8 $1.28 $166.20 Yes
R16658 EA 1148 $0.42 $479.29 Yes
R16659 EA 421 $0.51 $213.95 Yes
R16691 FT 80318 $0.04 $3,429.58 Yes
R16692 FT 47634 $0.03 $1,228.96 Yes
R17182 EA 988 $0.45 $447.56 Yes
R17232 FT 68418 $0.08 $5,254.50 Yes
R17493 EA 524 $0.33 $172.87 Yes
R17496 FT 20890 $0.03 $714.44 Yes
R17501 FT 9259 $0.03 $273.14 Yes
R17510 LY 23267 $0.03 $663.11 Yes
R17511 LY 61911 $0.03 $2,043.06 Yes
R17512 LY 51065 $0.05 $2,711.55 Yes
R17526 FT 57572 $0.05 $2,878.60 Yes
R17588 FT 70800 $0.11 $7,788.00 Yes
R17589 EA 241 $0.54 $129.71 Yes
R17590 EA 534 $0.46 $246.71 Yes
R17591 EA 434 $1.45 $629.73 Yes
R17592 EA 842 $0.63 $531.30 Yes
R17593 EA 475 $0.39 $186.63 Yes
R17594 EA 327 $0.47 $153.98 Yes
R17595 EA 98 $0.58 $57.09 Yes
R17596 EA 281 $0.51 $141.99 Yes
R17609 EA 3391 $0.44 $1,492.04 Yes
R17611 EA 550 $0.58 $319.00 Yes
R17786 EA 4731 $0.12 $586.64 Yes
R17788 EA 1016 $0.52 $528.32 Yes
R17789 EA 446 $0.61 $272.10 Yes
R18211 EA 686 $0.30 $207.65 Yes
R18469 EA 40700 $0.985 $40,089.50 Yes
R18471 EA 20000 $1.16 $23,200.00 Yes
R18468 EA 37500 $0.42 $15,750.00 Yes
R18470 EA 5000 $1.62 $8,100.00 Yes
$250,476.63
Exhibit D (RM Volumes Cost) Page 2 of 2
EXHIBIT E
DESCRIPTION OF SERVICES
-----------------------
Order Processing/Customer Service, Invoicing/Accounts Receivable, Rebate
--------------------------------------------------------------------------------
Processing, Partners in Quality:
-------------------------------
o Seller will continue providing these services during the Transition
Period. Except as noted below, all of these services will end upon the
same date. The termination of these services will occur immediately
following a month end.
o For a period of up to one hundred and twenty (120) days following the
transition of the Invoicing, Order Processing, Customer Service and
Partners in Quality functions, Seller shall maintain the collection and
accounts receivable functions.
o When errant orders or returns are received after the customers have
been notified of the change in purchasing instructions, Seller and the
Buyer will work with their respective customers to instruct them as to
how to correct the process of placing orders and processing returns
with their counter part. Buyer and Seller will cooperate to encourage
all current customers to effect the change in ordering pattern.
o All orders that are taken by Seller during the Transition Period will
be consistent with Seller's existing terms and conditions.
o All returns of values less than $10,000 shall be managed using Seller's
existing returns policy. Returns valued at $10,000 or higher shall
require authorization from Buyer. All restocking fees shall belong to
Buyer.
o Seller shall provide data gathered for any Product related complaint to
Buyer. Buyer will be responsible for required regulatory filing.
Warehousing and Order Fulfillment:
---------------------------------
o Seller will provide these services to the Buyer for a period of up to
one hundred and twenty (120) days after the date hereof.
o Warehousing and order fulfillment will only be provided for orders
taken through K-C's order entry process. o Seller will fill all orders
received through its Order Processing System. Buyer will fill all
orders received through its Order Processing System.
o Seller will administer the services in a manner consistent with its
policies.
Management Information Systems:
------------------------------
o Seller will provide these services during the Transition Period.
o Services will be limited to production of those reports that Seller has
normally used in connection with the Activity and also providing the
necessary transfer of data necessary to get all records to the Buyer
for the Buyer's input into Buyer's information systems.
o Seller will cooperate with Buyer to transition these services to the
mutual benefit of both parties and to facilitate the data exchange in
an efficient manner.
o Requests for reports or services outside those already produced in
managing the product line will result in incremental charges to the
Buyer. Such requests will be evaluated by the Seller and a quote for
the cost and timing will be provided to the Buyer.
Remittance of Interim Sales:
---------------------------
K-C will provide Derma with an income statement for the sales of Product within
8 business days of a month's end. The statement will provide Gross Profits
derived by reducing the value of Gross Sales for the month by a Cash Discount
(agreed to be 1% of Gross Sales), Rebates (agreed to be 3% of Gross Sales), Cost
of Goods Sold (at the prices described in Exhibit B) and Distribution Expense
(agreed to be 1.5% of Gross Sales). K-C will pay to Derma the resulting Gross
Profit less the change in receivables occurring in the month. The change in
receivables is agreed to be the Net Sales (defined as Gross Sales less the 1%
Cash Discount and 3% Rebates), for the current month less the Net Sales for the
prior month. The following table is provided for illustration:
-----------------------|-----------------------------------------------------------------------
| January February March April
-----------------------|-----------------------------------------------------------------------
Gross Sales | $ 100,000 $ 90,000 $ 120,000
| $ 1,000 $ 900 $ 1,200
Rebates (3%) | $ 3,000 $ 2,700 $ 3,600
Net Sales | $ 96,000 $ 86,400 $ 115,200
|
COGS | $ 70,000 $ 63,000 $ 84,000
| $ 1,500 $ 1,350 $ 1,800
Gross Profit (24.5%) | $ 24,500 $ 22,050 $ 29,400
-----------------------|-----------------------------------------------------------------------
|
TRANSACTIONS |
------------ |
Created Receivables | $ (96,000) $ (86,400) $ (115,200) -
| $ - $ 96,000 $ 86,400 $ 115,200
Profit Due to Derma | $ 24,500 $ 22,050 $ 29,400 -
=======================|=======================================================================
TOTAL PAYMENT TO DERMA | $ (71,500) $ 31,650 $ 600 $ 115,200
-----------------------------------------------------------------------------------------------
Payment of moneys due shall be made within 30 days of the end of month being
reported.
Should K-C have any uncollected receivables related to sales of Product made
under this agreement as of July 1, 2004, K-C will invoice Derma for the amount
of the uncollected debts. Derma will pay K-C for the invoice within 30 days and
will assume responsibility for the collection of the receivable.