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EXHIBIT 10.170
June 20, 2000
Mr. Kevin Mulvihill
Wilshire Technologies, Inc.
President & Chief Executive Officer
5861 Edison Place
Carlsbad, CA 92008
Via Fax to:
1-760-929-0683
Dear Kevin:
We are pleased to send you this letter of intent which documents our current
understanding, with regard to the glove venture. We look forward to continuing
our discussions toward definitive license and supply agreements (the
"Agreements"). If your understanding is consistent with mine, I would appreciate
you returning a signed copy of this letter by fax. (302-892-0788). We understand
that the Agreements will bind Wilshire and its affiliates and that Wilshire
Mexico will be the entity purchasing our polyurethane product.
1. DuPont will complete development of the initial polyurethane material
("Material") to be utilized in the manufacture of gloves for sale into the
following sub-markets of the clean room non-medical market: (a)
semiconductor, (b) aerospace, (c) diskdrive, (d) flat panel display, (e)
medical electronics, (f) pharmaceutical, and (g) other microelectronic
applications as we shall agree in the definitive Agreements. The foregoing
sub-markets shall be the Wilshire Markets in the Territory identified below.
We expect that an acceptable Material will have been tested and accepted by
the time Agreements have been signed. If a Material is not accepted by 90
days after the signing of the Agreements, the Agreements will terminate with
no liability to either party due to an acceptable Material not having been
developed or accepted.
2. While the primary thrust of our relationship will involve the Wilshire
Markets, DuPont will negotiate in good faith with Wilshire for the inclusion
of additional sub-markets within the Wilshire Markets.
3. Wilshire Mexico shall purchase all of its polyurethane requirements for the
manufacture of gloves for the Wilshire Markets ("Product") from DuPont
during the term of the Agreement and shall not manufacture gloves for sale
in the Wilshire Markets in the Territory from any other polyurethane
material. The price for the Material shall be $5.00 per pound until
quarterly sales exceed six million pairs of gloves. Then the price shall be
$5.50 per pound
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Mr. Kevin Mulvihill - 2 - May 1, 2000
until quarterly sales exceed 12 million pairs of gloves. At that time, the
price will increase to $6.00 per pound effective at the beginning of the
next quarter. All Material shall be invoiced FOB Waynesboro, Virginia and
shall be paid by Wilshire Mexico in U.S. dollars.
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Mr. Kevin Mulvihill - 3 - May 1, 2000
4. We will jointly focus on achieving cost reductions in the glove
manufacturing process and assuming economies of scale result in cost
benefits for Wilshire, we will share the savings in a manner to be defined
in the Agreements.
5. Wilshire shall pay to DuPont a royalty on its gross revenues from sales of
Product equal to 7% of such sales beginning with the first sale and
continuing through the end of calendar year 2001. Beginning on January 1,
2002, the royalty shall be 15% of gross revenues from sales of Product. For
any sales at a price greater than $1.00 to the end-user, Wilshire shall pay
to DuPont an additional royalty equal to 40% of the excess. We understand
that Wilshire intends to sell through distributors as well as directly to
end users. We shall define in the Agreements an acceptable method of
accurately tracking and auditing sales and royalties. This method may
require the cooperation of Wilshire's distributors. Royalty for all sales
beginning with the first sale through calendar year 2001 will be paid in one
lump sum on or before December 20, 2001. All royalties shall be paid by
Wilshire Mexico in U.S. dollars.
6. Wilshire's sales Territory shall be North America, Asia and Japan. DuPont
will grant to Wilshire the exclusive right to the Material for the
manufacture of gloves to be sold in the Territory for two years. The
exclusive right will begin on the first day of the next full calendar
quarter following the first sale in the Territory. The exclusive right in
North America and Asia will be extended on a separate region by separate
region and a year by year basis if annual targets, for the respective
regions, which will be included in the Agreements, are met. The parties will
identify in the Agreements annual targets, which will be included in the
Agreements, which Wilshire must meet in order to continue to sell in the
separate regions of the Territory.
7. Within 60 days after the execution of the Agreement, but no earlier than the
date on which the Parties agree on an acceptable Material, Wilshire will
hire two marketing employees whose sole focus will be on the end use
marketing of gloves with the emphasis on establishing a higher price point
for the new glove. These employees will take direction from Wilshire. DuPont
will pay to Wilshire the lower of either $25,000 or 50% of the total salary
plus benefits of each of the two employees for each of the first two years
of employment.
8. DuPont will have access to Wilshire's production facilities and to glove
samples in order to assist in developing, in its sole discretion,
value-in-use marketing materials and strategies but Wilshire shall be solely
responsible for the success or failure of all decisions made with regard to
use of such materials and strategies, if any. DuPont will provide Wilshire a
non-exclusive trademark license authorizing use of DuPont's logo on gloves
made with Product. Marketing materials will display the logos of both
companies and will be subject to DuPont approval. DuPont will provide
ongoing lab, R&D, engineering and marketing support as we shall define in
the Agreements.
9. If Wilshire has satisfied the targets necessary to maintain an exclusive
region in the sales Territory, DuPont will also grant to Wilshire a right of
first refusal for an exclusive right to sell in such exclusive region any
improved polyurethane product developed by DuPont for use in the manufacture
of gloves for sale in the exclusive Wilshire Markets for so long as Wilshire
maintains the exclusivity.
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Mr. Kevin Mulvihill - 4 - May 1, 2000
10. The Agreements shall not be assignable, including but not limited to a
purchaser of either of the parties' businesses.
11. Wilshire shall issue stock options to DuPont in a separate agreement.
12. Each of us shall bear our own costs in connection with this deal and the
negotiation of any Agreements.
13. This letter shall have a term of 30 days from the date of execution. It is
our present intent to extend this letter if we make satisfactory progress
with the negotiation of the Agreements during the initial 30 day period, but
neither party shall be obligated to agree to any such extension.
14. The parties each agree that they will not make any public announcement or
disclosure of this letter or the anticipated deal, other than as may be
required in the reasonable opinion of its counsel by law or stock exchange
requirements, without the prior written agreement of the parties. During the
period following the initial public disclosure and through the execution of
a Definitive Agreement, the parties agree to notify each other in advance of
any press releases or public announcements concerning the anticipated deal.
Other than paragraphs 12 and 14 this letter does not constitute and shall
not give rise to any legally binding obligations on the part of either Wilshire
or DuPont. Except as may be provided in the Agreements that the parties may
subsequently execute, no course of conduct, action or failure to act relating to
the anticipated deal shall serve as the basis for any legal liability on the
part of the parties. The parties agree that any verbal or oral promises,
statements, or other agreements shall not be binding unless reduced to writing
and signed by both parties.
Very truly yours,
/s/Steven R. McCracken
Steven R. McCracken
President - DuPont Lycra(R)
ACCEPTED:
Wilshire Technologies, Inc.
BY: /s/Kevin Mulvihill Date: 6/26/00
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Title: President & CEO
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