Amendment No. 2 to Distribution Agreement
The
confidential portions of this exhibit have been omitted and filed separately
with the Securities and Exchange Commission pursuant to a confidential treatment
request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as
amended. REDACTED PORTIONS OF THIS EXHIBIT ARE INDICATED BY AN
[###].
Amendment
No. 2 to Distribution Agreement
This
Amendment No. 2 to Distribution Agreement (the “Amendment”)
is entered into as of September 26, 2009 by and between OMP,
Inc., a
Delaware corporation (“OMP”),
and Cellogique
Corporation, a California corporation (“Distributor”). All
capitalized terms used but not otherwise defined herein shall have the meanings
assigned under the Distribution Agreement between OMP and Distributor dated as
of November 10, 2005, as amended October 23, 2006 (the “Original
Agreement” and, collectively with, and as further amended by, this
Amendment, the “Agreement”).
Whereas,
Distributor is the authorized distributor of certain OMP products in the
Territory (as defined in the Original Agreement); and
Whereas,
each of OMP and Distributor wish to amend the pricing, payment and
certain other terms of the Original Agreement.
Now,
Therefore, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties agree
as follows:
1. Amendment
To Forecast
Requirements. Section
4.5 of the Original Agreement shall be amended to read in full as
follows:
(a) “4.5
Forecasts. Distributor
shall provide to OMP on a quarterly basis a twelve (12) month rolling forecast
of Distributor’s projected purchase orders for each Product on the form attached
hereto as Exhibit B. Distributor shall submit forecasts to OMP on March 15 (for
the twelve months commencing April 1), June 15 (for the twelve months commencing
July 1), September 15 (for the twelve months commencing October 1) and December
15 (for the twelve months commencing January 1) of each calendar year. The
forecasts are for planning purposes only and shall not be binding on Distributor
or OMP.”
(b) Exhibit B
to the Original Agreement shall be amended and replaced in full by Exhibit B to
this Amendment.
2. Amendment
to Distributor Expense Provision. Section 4.8 of the Original
Agreement shall be amended to read in full as follows:
“4.8 Distributor
Expenses. Except as otherwise provided in Exhibit A hereto,
Distributor assumes full responsibility for all of its own costs and expenses
incurred in carrying out its obligations under this Agreement, including but not
limited to all rents, salaries, commissions, advertising, translations of
documents and materials, demonstrations, travel and accommodations for the
employees, agents, representatives or other personnel of
Distributor.”
3. Amendment
To Required Periodic Reviews.
(a) Section
4.10 of the Original Agreement shall be amended to read in full as
follows:
“4.10
Bi-Quarterly
Reviews and Reports. Distributor and OMP shall participate in
at least two (2) meetings each calendar quarter to discuss (a): any deviations
from the forecasts for that quarter previously provided to OMP pursuant to
Section 4.5 of the Agreement of which Distributor has become aware, and (b)
plans for any marketing, sales, advertising campaigns, training events or other
promotional activities planned for that quarter as well as any future quarters.
Such meetings shall occur within the first two weeks of each quarter and in the
middle of each quarter, and may be conducted in person or via telephone
conference or other communications equipment by means of which all persons
participating in the meeting can hear each other. Distributor shall also provide
OMP with reports of its activities, competitor activities, other information
regarding the Products and the markets for the Products in the Territory,
business plans for distribution of the Products, and sales achievements and
objectives in such detail and with such frequency as OMP and Distributor shall
mutually agree.”
(b) Section
5.4 of the Original Agreement shall be amended to read in full as
follows:
“5.4 Bi-Quarterly
Review. OMP agrees to participate with Distributor in the bi-quarterly
reviews to be conducted pursuant to Section 4.10 of this
Agreement.”
4. Amendment
to Pricing Terms.
(a) Section
6.7 of the Original Agreement shall be amended to read in full as
follows:
“6.7
Price
Changes; Notification. Prices offered to Distributor shall be
as set forth on the amended Exhibit A hereto. For the two year period commencing
on the date of the Amendment and ending on the second anniversary of such date
(the “Initial
Period”), OMP will not increase the Prices set forth on Exhibit A.
Thereafter, OMP may decrease the prices in Exhibit A at any time, in its sole
discretion. Any increase in Prices occurring after the Initial Period shall be
limited to one increase per year of not more than a [###]* percent ([###]*)
annual increase over the then prevailing Prices; provided, however, that such
limit shall not apply upon mutual agreement of the Parties if a greater increase
is required as a result of increases in OMP’s manufacturing costs or changes in
market conditions. OMP shall give Distributor written notice of any proposed
increase to the Prices at least [###]*
in advance of such increase.”
(b) The last
sentence of Section 7.1 of the Original Agreement shall be amended to read in
full as follows:
“Subject
to the price change limitations contained in Section 6 hereof and any other
provisions thereof, OMP may change the Prices in Exhibit A at any
time.”
2
(c) Exhibit
A to the Original Agreement shall be amended and replaced in full by Exhibit A
to this Amendment.
5. Amendment
To Payment Terms. The first sentence of Section 7.2 of
the Original Agreement shall be amended to read in full as follows:
“7.2
Payment
Terms. OMP shall extend credit, and full payment shall be due
[###]* days from the date of the OMP
invoice.
6. Miscellaneous. Except as specifically
amended by this Amendment, the terms and conditions of the Original Agreement
shall remain in full force and effect. This Amendment may be executed
in counterparts, each of which shall be deemed an original document, and all of
which, together with this writing, shall be deemed one instrument.
[SIGNATURES APPEAR
FOLLOWING
PAGE]
3
In Witness
Whereof, the Parties hereto have executed this Amendment in duplicate
originals by their duly authorized officers or representatives.
|
OMP,
Inc.
|
Cellogique
Corporation
|
|
/s/
Xxxxxxx Xxxx
|
/s/
Xxxxx X. Xxxxxxx
|
|||
|
Name
Xxxxxxx Xxxx
|
Name Xxxxx
X. Xxxxxxx
|
|||
|
Title Chief
Financial Officer
|
Title
President
|
4
EXHIBIT
A
TO
THE DISTRIBUTION AGREEMENT
BETWEEN
OMP, INC.
AND
CELLOGIQUE
CORPORATION
A.
PRODUCTS.
OMP skin
care products subject to this Distribution Agreement include:
Blue
Peel
CLENZIderm
ELASTIderm
Nu-Derm
Obagi-C
Rx
Professional
C
Rosaclear
Tretinoin
B.
TERRITORY.
The
Territory of Distributor shall be the country(ies) of Syria, Egypt, Lebanon,
Jordan, Saudi Arabia, United Arab Emirates, Bahrain, Kuwait, Iraq, Oman, Yemen,
Libya, Tunisia, Morocco, Turkey, Cypress, Iran, Sudan, Algeria, Qatar, and
Israel, including, without limitation, any territories and possessions of any of
the foregoing countries, and any other geographic area designated by OMP and
agreed to by Distributor for the exercise of Distributor’s rights and
obligations in the Agreement.
C.
PRICES AND MARKETING INCENTIVES.
The
prices set forth below shall go into effect immediately upon execution of the
Amendment, and shall also be retroactively applied to all purchase orders
submitted by Distributor to OMP during the three months ended June 30,
2009. All prices in the following table are in U.S.
dollars:
|
Obagi
Product
|
Cellogique
Pricing
|
|||
|
Nu-Derm Products
|
||||
|
Gentle
Cleanser
|
[### | ]* | ||
|
Foaming
Gel
|
[### | ]* | ||
|
Toner
|
[### | ]* | ||
|
Clear
|
[### | ]* | ||
|
ClearFx
|
[### | ]* | ||
|
Exfoderm
|
[### | ]* | ||
|
Exfoderm
Forte
|
[### | ]* | ||
X-0
|
Xxxxx
Product
|
Cellogique
Pricing
|
|||
|
Nu-Derm Products (cont.)
|
||||
|
Blender
|
[### | ]* | ||
|
BlendFx
|
[### | ]* | ||
|
Sunfader
|
[### | ]* | ||
|
Healthy
Skin Protection
|
[### | ]* | ||
|
Physical
UV Block SPF 32
|
[### | ]* | ||
|
Tolereen
|
[### | ]* | ||
|
Comfort
Gel
|
[### | ]* | ||
|
Action
|
[### | ]* | ||
|
Eye
Cream
|
[### | ]* | ||
|
Travel
Set (Normal to Oily)
|
[### | ]* | ||
|
Travel
Set (Normal to Dry)
|
[### | ]* | ||
|
Starter
Set (Normal to Oily)
|
[### | ]* | ||
|
Starter
Set (Normal to Dry)
|
[### | ]* | ||
|
Conditioning
Control Kit
|
||||
|
C
& E Non-Surgical (Travel Size)
|
[### | ]* | ||
|
C
& E Surgical (Travel Size)
|
[### | ]* | ||
|
C
& E Non-Surgical (Full Size)
|
[### | ]* | ||
|
C
& E Surgical (Full Size)
|
[### | ]* | ||
|
Obagi CRx
|
||||
|
Cleansing
Gel
|
[### | ]* | ||
|
Clarifying
Serum
|
[### | ]* | ||
|
Exfoliating
Day Lotion
|
[### | ]* | ||
|
Therapy
Night Cream
|
[### | ]* | ||
|
Sun
Guard SPF 30
|
[### | ]* | ||
|
CRX
Starter Set
|
[### | ]* | ||
|
Professional-C
|
||||
|
Professional-C
5%
|
[### | ]* | ||
|
Professional-C
10%
|
[### | ]* | ||
|
Professional-C
15%
|
[### | ]* | ||
|
Professional-C
20%
|
[### | ]* | ||
|
Elastiderm
|
||||
|
Decolletage
|
[### | ]* | ||
|
Skin
Lightening Complex
|
[### | ]* | ||
|
Wrinkle
Reducing Lotion
|
[### | ]* | ||
|
Elastiderm
Cream
|
[### | ]* | ||
|
Elastiderm
Gel
|
[### | ]* | ||
|
Clenziderm
|
||||
|
Starter
Set (Normal to Dry)
|
[### | ]* | ||
|
Cream
Cleanser
|
[### | ]* | ||
X-0
|
Xxxxx
Product
|
Cellogique
Pricing
|
|||
|
Clenziderm (cont.)
|
||||
|
Therapeutic
Lotion
|
[### | ]* | ||
|
Therapeutic
Moisturizer
|
[### | ]* | ||
|
Starter
Set (Normal to Oily)
|
[### | ]* | ||
|
Daily
Care Foaming Cleanser
|
[### | ]* | ||
|
Pore
Therapy
|
[### | ]* | ||
|
Serum
Gel
|
[### | ]* | ||
|
Blue Peel
|
||||
|
Blue
Peel Kit,
|
[### | ]* | ||
|
Cleanser
|
[### | ]* | ||
|
Rosaclear System
|
||||
|
Gentle
Cleanser
|
[### | ]* | ||
|
Hydrating
Complexion Corrector
|
[### | ]* | ||
|
Skin
Balancing Sun Protection
|
[### | ]* | ||
|
Tretinoin
|
||||
|
Tretinoin
Cream .025% (20 gm)
|
[### | ]* | ||
|
Tretinoin
Cream .05% (20 gm)
|
[### | ]* | ||
|
Tretinoin
Cream .1% (20 gm)
|
[### | ]* | ||
|
Tretinoin
Gel .01 (15 gm)
|
[### | ]* | ||
|
Tretinoin
Gel .025% (15 gm)
|
[### | ]* | ||
Pricing
Protection
If at any
time during the Initial Period, OMP shall sell any of the Products under similar
quantities and delivery conditions to another third-party distributor at a price
below that stated above, OMP shall immediately extend such lower price to
Distributor. Following the Initial Period, OMP will continue to extend the
pricing protection set forth above to Distributor until such time as OMP’s net
sales to Distributor during any given year represent less than [###]* percent
([###]*)
of all of OMP’s international net sales for that year, at which time such
pricing protection shall terminate.
Marketing
Incentives
During
each calendar quarter within the Initial Period, OMP shall provide marketing
incentives to Distributor having a value equal to [###]* percent
([###]*)
of the net invoice prices for all Products purchased by Distributor during the
prior calendar quarter. Such incentives may be provided in the form of payment
or reimbursement of marketing and advertising expenses, provision of
representatives or other personnel for marketing or training events, payment of
travel costs, accommodations and other expenses for such representatives or
personnel, or any other form as OMP and Distributor shall mutually agree (the
“Marketing
Incentives”). The value of any such marketing incentives
provided
A-3
in the
form of personnel, training or other non-cash manner shall be determined by the
mutual agreement of OMP and distributor. In addition, OMP shall provide
Distributor with invoices to document any travel costs, accommodations or other
sums expended by OMP as part of such Marketing Incentives (which shall be
calculated only at OMP’s actual out-of-pocket cost). If, during any particular
calendar quarter, Distributor fails to use the entire value of the Marketing
Incentives allocated to it during that quarter, any excess value shall be
applied to the next calendar quarter and all such excess values shall continue
to accrue until used by Distributor.
Notwithstanding
the foregoing, all invoices submitted by OMP to Distributor shall be paid in
full by Distributor. To receive the Marketing Incentives, Distributor must
submit a detailed memo to OMP setting forth the particular marketing,
advertising or promotional campaign or training event for which it is seeking
assistance, the relevant Product(s) subject to such campaign or
event, the proposed date(s) for such campaign or event, the intended
audience for such campaign or event, a detailed list of the costs associated
with such campaign or event, the percentage of the campaign or event that will
focus on the Products, and any other information reasonably requested by OMP.
Copies of actual advertisements or materials to be used for such campaign or
event shall be attached to the memo. Upon receipt of such memo by OMP, OMP shall
provide Marketing Incentives to Distributor as described above.
Following
the Initial Period, the Parties agree to enter into good faith negotiations with
respect to a marketing incentive program, which shall have such terms and
conditions as the Parties mutually agree upon.
It is
acknowledged and agreed that Distributor has been and shall continue to be
authorized to use any OMP and Obagi logos on its advertising, medical centers
and retail shops throughout the term of this Distribution
Agreement.
Sample
Product
In
addition to the marketing incentives noted above, the Distributor shall be
entitled to receive sample product equal to [###]* percent ([###]*)
of the net purchase price for any given order placed. The expressed purpose of
this product is solely for providing free product sampling to physicians to
promote new accounts, trial and ongoing personal use by physicians and their
staff to the extent applicable. The Distributor agrees that such product will be
used only for such purpose, will be separately tracked and will not be re-sold
by Distributor.
D.
DISTRIBUTOR’S MINIMUM PURCHASE REQUIREMENT.
Distributor’s
Minimum Purchase Requirements shall be [###]* million
in 2010, and shall increase [###]* each
year thereafter ([###]* million
in 2011, [###]* million
in 2012, etc.).
A-4
EXHIBIT
B
TO
THE DISTRIBUTION AGREEMENT
BETWEEN
OBAGI MEDICAL PRODUCTS, INC.
AND
CELLOGIQUE
CORPORATION
Rolling
4-Q Forecast by Units
Distributor’s
Name:__________________________
|
QUARTER
1
|
QUARTER
2
|
QUARTER
3
|
QUARTER
4
|
|||||||||||||
|
Product
|
M
1
|
M2
|
M3
|
Total
|
M1
|
M2
|
M3
|
Total
|
M1
|
M2
|
M3
|
Total
|
M1
|
M2
|
M3
|
Total
|
|
Nu-Derm
|
||||||||||||||||
|
Gentle
Cleanser
|
||||||||||||||||
|
Foaming
Gel
|
||||||||||||||||
|
Toner
|
||||||||||||||||
|
Clear
|
||||||||||||||||
|
ClearFx
|
||||||||||||||||
|
Exfoderm
|
||||||||||||||||
|
Exfoderm
Forte
|
||||||||||||||||
|
Blender
|
||||||||||||||||
|
BlendFx
|
||||||||||||||||
|
Sunfader
|
||||||||||||||||
|
Healthy
Skin Protection
|
||||||||||||||||
|
Physical
UV Block SPF 32
|
||||||||||||||||
|
Tolereen
|
||||||||||||||||
|
Comfort
Gel
|
||||||||||||||||
|
Action
|
||||||||||||||||
|
Eye
Cream
|
||||||||||||||||
|
Travel
Set (Normal to Oily)
|
||||||||||||||||
|
Travel
Set (Normal to Dry)
|
||||||||||||||||
X-0
|
XXXXXXX
0
|
XXXXXXX
0
|
XXXXXXX
0
|
XXXXXXX
0
|
|||||||||||||
|
Product
|
M
1
|
M2
|
M3
|
Total
|
M1
|
M2
|
M3
|
Total
|
M1
|
M2
|
M3
|
Total
|
M1
|
M2
|
M3
|
Total
|
|
Starter
Set (Normal to Oily)
|
||||||||||||||||
|
Starter
Set (Normal to Dry)
|
||||||||||||||||
|
Conditioning
Control Kit
|
||||||||||||||||
|
C
& E Non-Surgical (Travel Size)
|
||||||||||||||||
|
C
& E Surgical (Travel Size)
|
||||||||||||||||
|
C
& E Non-Surgical (Full Size)
|
||||||||||||||||
|
C
& E Surgical (Full Size)
|
||||||||||||||||
|
Obagi CRx
|
||||||||||||||||
|
Cleansing
Gel
|
||||||||||||||||
|
Clarifying
Serum
|
||||||||||||||||
|
Exfoliating
Day Lotion
|
||||||||||||||||
|
Obagi CRx (cont.)
|
||||||||||||||||
|
Therapy
Night Cream
|
||||||||||||||||
|
Sun
Guard SPF 30
|
||||||||||||||||
|
CRX
Starter Set
|
||||||||||||||||
|
Professional-C
|
||||||||||||||||
|
Professional-C
5%
|
||||||||||||||||
|
Professional-C
10%
|
||||||||||||||||
|
Professional-C
15%
|
||||||||||||||||
|
Professional-C
20%
|
||||||||||||||||
|
Elastiderm
|
||||||||||||||||
|
Decolletage
|
||||||||||||||||
|
Skin
Lightening Complex
|
||||||||||||||||
|
Wrinkle
Reducing Lotion
|
||||||||||||||||
|
Elastiderm
Cream
|
||||||||||||||||
|
Elastiderm
Gel
|
||||||||||||||||
|
Clenziderm
|
||||||||||||||||
X-0
|
XXXXXXX
0
|
XXXXXXX
0
|
XXXXXXX
0
|
XXXXXXX
0
|
|||||||||||||
|
Product
|
M
1
|
M2
|
M3
|
Total
|
M1
|
M2
|
M3
|
Total
|
M1
|
M2
|
M3
|
Total
|
M1
|
M2
|
M3
|
Total
|
|
Starter
Set (Normal to Dry)
|
||||||||||||||||
|
Cream
Cleanser
|
||||||||||||||||
|
Therapeutic
Lotion
|
||||||||||||||||
|
Therapeutic
Moisturizer
|
||||||||||||||||
|
Starter
Set (Normal to Oily)
|
||||||||||||||||
|
Daily
Care Foaming Cleanser
|
||||||||||||||||
|
Pore
Therapy
|
||||||||||||||||
|
Serum
Gel
|
||||||||||||||||
|
Blue Peel
|
||||||||||||||||
|
Blue
Peel Kit,
|
||||||||||||||||
|
Cleanser
|
||||||||||||||||
|
Rosaclear System
|
||||||||||||||||
|
Gentle
Cleanser
|
||||||||||||||||
|
Hydrating
Complexion Corrector
|
||||||||||||||||
|
Skin
Balancing Sun Protection
|
||||||||||||||||
|
Tretinoin
|
||||||||||||||||
|
Tretinoin
Cream .025% (20 gm)
|
||||||||||||||||
|
Tretinoin
Cream .05% (20 gm)
|
||||||||||||||||
|
Tretinoin
Cream .1% (20 gm)
|
||||||||||||||||
|
Tretinoin
Gel .01 (15 gm)
|
||||||||||||||||
|
Tretinoin
Gel .025% (15 gm)
|
||||||||||||||||
B-3
