PRODUCT DISTRIBUTION AGREEMENT
This Product Distribution Agreement (hereinafter referred to as "Agreement") is
made by and between Worldwide Product Distribution, Inc., a California
Corporation, doing business as (DBA) Worldwide Products, located and doing
business at 0000 X. Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx (hereinafter
referred to as "Worldwide") and Cellogique Corporation, a California
Corporation, located and doing business at 0000 Xxxx Xxxxx Xxxxxxxxx, Xxxxx 000,
Xxxx Xxxxx, Xxxxxxxxxx (hereinafter referred as "Distributor").
RECITALS
WHEREAS, Worldwide has specific rights in regard to the
Research, Development and Distribution of a particular proprietary skin care
product line referred to as "Obagi Nu-Derm Skin Care" (hereinafter referred
to as "Products"); and,
WHEREAS, Worldwide desires to provide exclusive rights, to
Distributor, for the distribution of Products in particular geographic regions
as outlined herein; and,
WHEREAS, Distributor desires to secure exclusive rights for
the distribution of Products in particular geographic regions as outlined
herein.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL TERMS AND
CONDITIONS CONTAINED HEREIN, THE PARTIES HERETO AGREE AS FOLLOWS:
1. TERM.
1.1 The term of this Agreement will be for a period of thirty (30)
months from the execution date; unless otherwise terminated as outlined in
Section 14, entitled "Termination".
1.2 Immediately following the initial thirty (30) month time period,
and every two years thereafter, and subject to Distributor's compliance with the
terms contained herein, this Agreement will be automatically renewed.
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WORLDWIDE DISTRIBUTOR
2. GEOGRAPHIC REGIONS.
2.1 While this Agreement is in effect, Distributor will have the
exclusive right to distribute the Products in the following
countries/territories: Syria, Egypt, Lebanon, Jordan, Saudi Arabia, United Arab
Emirates, Bahrain, Kuwait, Iraq, Oman, Yemen, Libya, Tunisia, Morocco, Turkey,
Cypress, and Israel.
2.2 Under no circumstances whatsoever will Distributor promote, resell
or distribute Products outside of the geographic regions outlined in this
Section, without the prior written consent of Worldwide.
3. APPROVED MEDICAL PRACTITIONER.
3.1 Distributor will develop, within the first six (6) months of this
Agreement, and, at all times thereafter, maintain a working relationship,
sub-contractual or employment, with a Physician whose name is on, and remains
on, an approved list of physicians of the Obagi Training Center and/or Obagi
Skin Correction Society (hereinafter, collectively, referred to as the "Obagi").
4. MINIMUM QUARTERLY PERFORMANCE. Distributor is required to purchase, on a
quarterly basis from Worldwide, a minimum of [***]Dollars [***] worth of
Products, net of shipping, insurance, and handling charges (hereinafter
referred to as "Performance Threshold").
4.1 This Performance Threshold will become effective on the first day
of the next calendar month immediately following the initial thirty (30) month
period of this Agreement, and continue thereafter on a quarterly basis.
4.2 During the initial thirty (30) month period of this Agreement,
Distributor will be required to purchase, from Worldwide, a minimum of [***]
Dollars [***] worth of Products, net of shipping, insurance and handling
charges (hereinafter referred to as "Net Charges").
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[***] Material has been omitted pursuant to a request for confidential treatment
and such material has been filed separately with the Securities and
Exchange Commission.
4.3 Immediately following the initial thirty (30) month time period,
Worldwide will have the right, but not the obligation, to increase said
Performance Threshold, within six (6) months following the initial thirty
(30) month time period and every two years thereafter, by an amount not to
exceed [***] Percent [***] of the then current Performance Threshold. Unless
amount of product purchased from Worldwide Products, Inc. reaches [***]
dollars per year, at which time performance standard may not exceed [***]
percent increases every two years.
4.4 Worldwide will be required to forward, to Distributor and within
sixty (60) days of the thirty (30) month anniversary date of the execution of
this Agreement, and every two (2) years thereafter, written notification of any
and all increases to Performance Threshold.
5. PURCHASE/DELIVERY OF PRODUCTS.
5.1 Distributor will purchase all Products from Worldwide and from no
other distributor nor manufacturer. Worldwide agrees to sell to Distributor any
and all Products, as reasonably ordered by Distributor, consistent with
Worldwide's ability to stock the same in a timely manner.
5.2 Distributor will assume all ownership rights, and any and all
responsibilities/risks attributed to said ownership rights, immediately upon
transfer of said Products from Worldwide's warehouse to a third party
transportation service.
5.3 As dictated and selected by Distributor, Worldwide will insure
Product shipments. Regardless of whether or not Distributor wishes to insure
said shipments, Distributor will assume all ownership responsibilities as
outlined in Paragraph 5.2, and will indemnify World wide from any and all
losses or liabilities. Distributor acknowledges that Worldwide recommends,
highly, that Distributor insure any and all shipments. Distributor will be
responsible for bulk packaging of the kits for shipment and for all shipping
and insurance costs. In the event of loss or damage during shipment,
Distributor shall make its claims directly to the insurance carrier, and
Distributor shall have no claim against Worldwide. Any replacement order for
Products lost or damaged during shipment shall be treated for all purposes as
if such order were an original order.
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[***] Material has been omitted pursuant to a request for confidential treatment
and such material has been filed separately with the Securities and
Exchange Commission.
5.4 Distributor shall pay the then current per unit purchase prices, as
listed in section 5.8 below, for the geographic regions outlined in Section 2,
entitled "Geographic Regions", for said Products, as well as for any other
product distributed by and purchased from Worldwide.
5.5 Worldwide will have the right, but not the obligation, to, at any
time, increase said per unit purchase prices due only to an increase connected
with increased packaging and manufacturing costs. Worldwide will mail a price
adjustment notice, to Distributor, of said price adjustments at least ninety
(90) days prior to the effective date of said price adjustments.
5.6 Distributor shall submit an order for Products, in writing,
according to the then current policies and procedures being used by Worldwide.
Upon receipt and acceptance of an order, and prior to Products being transferred
to a third party transportation service, Distributor will, via a bank-to-bank
wire transfer or letter of credit, as determined by Worldwide, prepay or assure
payment, in United States Dollars (USD), all balances due Worldwide with respect
to said order. Regardless of the manner of payment approved by Worldwide, with
respect to the ordering of products and subsequent shipments, all invoiced
amounts and/or monies due Worldwide from Distributor, will be paid/satisfied, by
Distributor, within (60)days of the applicable shipment date.
5.7 The maximum allowable product order, to be placed by Distributor at
any one time, will be equivalent to a value of Fifty Thousand Dollars
($50,000.00), net of shipping, handling and insurance charges.
5.8 During the initial period of thirty (30) months, Distributor
will be allowed to purchase the product Kit (consisting of ten items: Program
I Clear, Program I Basic, Program I Tolereen, Program II Clear, Program II
Basic, Program II Sunfader, Action, Sebuleen or Celluleen, Sebuleen Tonique
or Celluleen Tonique, and Eye Cream) for [***] dollars per kit. This is to
aid the Distributor in securing initial sales in the Middle East. After the
initial thirty (30) month period the price will be subject to an increase not
to exceed [***] percent of any WorldWide Products, Inc., price increases in
U.S.A., except for the allowed increases stated above in paragraph 5.5.
5.9 In the case of distributor's need to purchase individual items
listed in the kit and Complex V; his price will be [***] percent of the
current Worldwide Products, Inc. price list, with the exception of Dermasol,
Bacitracin, Body lotion, etc.
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[***] Material has been omitted pursuant to a request for confidential treatment
and such material has been filed separately with the Securities and
Exchange Commission.
6. CONFIDENTIALITY. Distributor will not attempt to exploit any technical,
scientific, proprietary and/or confidential information learned/obtained
from Worldwide and/or any affiliated entities or individuals with respect to
said Products, and/or any other products distributed by Worldwide, currently
or in the future, which would affect, in any manner whatsoever, benefits
received by Worldwide from same.
7. GOOD MANUFACTURING PRACTICES. Worldwide warrants that any and all
Products will be manufactured and packaged utilizing Good Manufacturing
Practices (GMP).
8. INDEMNIFICATION.
8.1 Distributor shall hold Worldwide, Mikuda Company, Zein E. Obagi,
M.D., Xxxxxx X. Xxxxxx, Sc.D., and Xxxxx X. Xxxxxxx, M.D., harmless from any
and all claims, demands, actions, or liabilities, including any and all court
costs and/or attorney's fees, that may arise from the activities
of Distributor, or any and all entities or individuals affiliated with
Distributor, in connection with the promotion, resale and distribution of
Products and any and all related activities, except to the extent of any
defect in the substances comprising the Product itself, with the
understanding that Distributor is not authorized to repackage nor relabel any
Products.
8.2 This indemnification provision shall be fully enforceable,
regardless of whether or not such a demand or claim results in litigation.
8.3 A breach of this Section by Distributor shall be considered a
material breach of this Agreement, and shall give Worldwide the option to
terminate all of Distributor's rights and privileges hereunder forthwith.
Notwithstanding any other language to the contrary in this Agreement,
Distributor's obligations as set forth in this Section shall survive in the
face of all circumstances which may occur following the signing of this
Agreement, including, but not limited to, the termination of this Agreement due
to the fault of either party, the termination of this Agreement due to the
fault of neither party, the termination of this Agreement by mutual consent,
or the termination of this Agreement due to the liquidation/termination of
Distributor. It is agreed between the parties that for the purposes of
protecting Worldwide, this indemnification provision shall be interpreted in
the broadest possible manner.
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9. FINANCE/COLLECTION CHARGES. In the event that Distributor shall fail to
pay the amount due hereunder for period of thirty (30) days after the same
becomes due and payable, interest shall accrue, at the maximum amount allowed
by law, and become payable upon all unpaid balances from the time due until
the time of payment. Further, the Distributor agrees to pay any and all fees
and charges (attorney's fees, cost of suit, etc.) with regard to any
collection activity.
10. EXCULPATION.
10.1 Worldwide warrants that the Products, when used in accordance with
the written labeling appearing on the Products, will perform as stated in
that labeling. The written labeling appearing on each Product sets forth
the intended use of that Product. Worldwide disclaims all implied warranties
of fitness and merchantability, and all other warranties, express or implied
for Products.
10.2 Distributor represents that he has reviewed the labeling of
Products and is aware of each Product's intended use. Distributor is also
aware of the availability of alternative materials and substances. Based upon
this review and Distributor's independent exercise of professional judgment,
Distributor will have sole responsibility for determining whether to promote,
resell and/or distribute a particular product.
11. DISTRIBUTOR'S COMPLIANCE WITH APPLICABLE LAWS.
11.1 Distributor represents and warrants that entry into this contract,
performance hereunder, and any and all activities that the Distributor will
engage in, as a result of this Agreement, shall not be in violation of any
laws of any country, state, province or municipality that may regulate the
Distributor's activities, nor any professional or ethical rules of conduct,
and the Distributor agrees to completely indemnify Worldwide, and any and all
affiliated entities and individuals, and hold Worldwide, and any and all
affiliated entities and individuals, harmless from any liability that may
result from any misrepresentations thereof.
11.2 Distributor represents and warrants that all applicable and
appropriate regulatory filings will be completed for any and all geographic
regions where Distributor will promote, resell and distribute any and all
products purchased from Worldwide. This will include, but not be limited to,
any and all applicable international as well as domestic (United States)
regulations/laws.
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11.3 Distributor agrees that any regulatory filings completed, in
regard to licensing, patent, trademarks and/or other registrations, in any
geographic region, will first be approved by Worldwide and, when applicable
and elected by Worldwide, will include Worldwide's name on said document. In
no way will any ownership rights to any scientific, proprietary and/or
confidential information be relinquished, by Worldwide, to Distributor or any
affiliated entities or individuals.
11.4 Worldwide agrees to make available, to Distributor, any and all
documentation, as deemed appropriate and reasonable by Worldwide, as may be
required for Distributor to respond to requests from regulatory authorities,
and only in regard to the geographic areas outlined in Section 2, entitled
Geographic Regions.
11.5 WorldWide agrees to relabel it U.S. products, in a timely manner,
to allow distributor compliance with different geographic labeling
requirements. Distributor shall pay the extra cost directly related to such
relabeling.
12. ASSIGNMENT/SUBLICENSE. Distributor acknowledges that this Agreement, and
any and all rights and privileges or obligations afforded by this Agreement,
are personal and are not assignable without the prior written consent of
Worldwide. Any such assignment or attempted assignment is null and void and
shall constitute a material breach of this Agreement. This Agreement, and all
rights and obligations hereunder, shall be assignable and delegable by
Worldwide without the prior consent of Distributor. Upon notice of any such
assignment and delegation by Worldwide, Distributor shall accept said
assignee for all purposes in place and instead of Worldwide, and all rights
and obligations shall thereupon become the rights and obligations of assignee.
13. DELAY DUE TO FORCES BEYOND CONTROL OF WORLDWIDE. If delivery of the
Products, in whole or in part, shall be prevented or prohibited for an
unreasonable period of time by causes beyond the control of Worldwide,
including, but not limited to, acts of God, labor disputes, failure of
essential means of transportation, changes in the policy of governmental
authorities, or restrictions imposed by governmental authorities, either
Worldwide or Distributor shall have the right to cancel such product orders
to the extent of such nondelivery by written notice. In such case there shall
be no obligation or liability on the part of either party with respect to
such undelivered Products; provided that any such notice from Distributor
shall not apply to Products which have been prepared to satisfy Distributor's
order prior to actual receipt by Worldwide of such notice from Distributor.
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The parties shall exert their best effort to negotiate a reasonable reduction
in any performance threshold based on the impact of any cause beyond their
control.
14. TERMINATION. Without waiving or affecting any rights Worldwide or
Distributor may be entitled to assert as to the nature of other breaches of
this Agreement by the other party, Worldwide or Distributor will have the
right, but not the obligation, to terminate this Agreement in the following
manner:
14.1 Worldwide will have the right, but not the obligation, to
immediately terminate this Agreement for any one of the following reasons
which shall be considered a material breach:
14.1.a Distributor's failure to comply with Section 6, entitled
"Confidentiality".
14.1.b Distributor's failure to comply with Section 12, entitled
"Assignment/Sublicense".
14.1.c The formal liquidation of and/or bankruptcy filing on
behalf of Distributor.
14.2 The Applicable party will have the right, but not the obligation,
thirty (30) days following receipt of notice (mailed via Certified Mail,
postage paid) and complete corrective action has not been taken by the other
party, to terminate this Agreement for the following issues:
14.2.a Worldwide or Distributor's failure to comply with Section
11, entitled "Distributor's Compliance With Applicable Laws".
14.2.b Worldwide or Distributor's failure to comply with any and
all monetary obligations as specified in this Agreement, particularly those
outlined in Section 4, entitled "Minimum Quarterly Performance".
14.2.c Worldwide or Distributor's failure to comply with Section
3, entitled "Approved Medical Practitioner".
14.2.d Distributor's failure to comply with distribution
restrictions as outlined in Section 2, entitled "Geographic Regions".
15. LEGAL RELATIONSHIP. The parties acknowledge that Distributor is an
independent contractor and this Agreement does not in any manner whatsoever
create a partnership or joint venture, agency or
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employment relationship between the parties hereto. Distributor shall have
no authority to act as an agent, employee or other representative on behalf
of Worldwide and shall not make any representations on behalf of Worldwide or
enter into any agreements on behalf of Worldwide.
16. CONSTRUCTION LIMITATIONS. This Agreement shall be construed and
enforced in accordance with the laws of the State of California. Any action
or proceeding shall be resolved by binding arbitration in accordance with the
rules and regulations of the American Arbitration Association at Los Angeles,
California.
17. ATTORNEY'S FEES. Should either party hereto commence arbitration to
enforce or interpret any provision of the Agreement, the parties agree that
the prevailing party shall be entitled to reasonable attorney's fees and
costs of suit in addition to any other remedy which the court may award in
the same or separate suit maintained for such recovery.
18. BENEFIT.
18.1 This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of Worldwide and Distributor.
19. SEVERABILITY. The provisions of this Agreement are severable, and if
any provision of this Agreement is held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected.
20. GENERAL PROVISIONS.
20.1 The failure of either party to enforce any provision of this
Agreement shall not be construed as waiver of such provision, nor prevent
such party thereafter from enforcing such provision or any other provision
of this Agreement. The rights granted to the parties under this Agreement are
cumulative and the election of one shall not constitute a waiver of a party's
right to assert all or other legal remedies available under the circumstances.
20.2 Section headings used in this Agreement are for reference purposes
only and shall not affect in any way the words used in interpretation of the
provisions of this Agreement. Words used in masculine gender include
feminine and neuter.
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20.3 This Agreement will not be construed to constitute any form of
partnership or joint venture between the parties. Worldwide will have no
responsibility for any liability of the Distributor as the result of this
Agreement. Distributor will have no responsibility for any liability of
Worldwide as the result of this Agreement.
20.4 Each of the parties shall hereafter execute all documents, and do
all acts necessary or reasonable in the opinion of any other party to effect
the provisions of this Agreement.
20.5 Whenever the context so requires, the single number shall include
the plural; the plural shall include the singular; and the masculine gender
shall include the feminine and neuter genders.
20.6 This Agreement (after full execution and delivery) memorializes
and constitutes the entire agreement and understanding, regarding the
distribution of products offered by Worldwide, between the parties, and
supersedes and replaces all prior negotiations, proposed agreements, and
agreements, whether written or unwritten. Modifications may only be made in a
written document format, executed by each of the parties. Further, each of
the parties to this Agreement acknowledges that no other party, nor any agent
or attorney of any other party, has made any promise, representation, or
warranty whatsoever, express or implied, which is not expressly contained in
this Agreement; and each party further acknowledges that it has not executed
this Agreement, on warranty, or on reliance upon any belief as to any fact
not expressly recited herein.
20.7 This Agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same instrument.
20.8 All performances, obligations, and promises contained herein shall
survive the termination of this Agreement for any cause where the survival of
such performances, obligations, or promises is necessary to effectuate the
intent of the parties.
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WORLDWIDE DISTRIBUTOR
**********
**********
INTENDING TO BE LEGALLY BOUND, the parties have executed this Agreement as of
5-21, 1994 at Los Angles, California.
WORLDWIDE PRODUCT DISTRIBUTION, INC., a California Corporation
/s/ Xxxxxx Xxxxxx
--------------------------
XX. XXXXXX XXXXXX, PRESIDENT
--------------------------
Print Name and Title
CELLOGIQUE CORPORATION, a California Corporation
/s/ Xxx Xxxxx
--------------------------
XXX XXXXX MD, PRESIDENT
--------------------------
Print Name and Title
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PRODUCT DISTRIBUTION AGREEMENT
CELLOGIQUE
EXHIBIT "B"
NU-DERM PRICE SUGGESTED RETAIL
PRICE
Action [***] [***]
Basic I [***] [***]
Basic II [***] [***]
Cleanser I [***] [***]
Cleanser II [***] [***]
Clear I [***] [***]
Clear II [***] [***]
Exfoderm [***] [***]
Eye Cream [***] [***]
International Toner I [***] [***]
International Toner II [***] [***]
Sunfader I [***] [***]
Sunfader II [***] [***]
Tolereen [***] [***]
Pre Laser Kits [***] [***]
BLUE PEEL
Blue Peel Kit [***] [***]
Blue Peel Cleanser [***] [***]
PROTOCOLS
Control Kit [***] [***]
Therapeutic Kit [***] [***]
Foaming Gel [***] [***]
Toner [***] [***]
Clear [***] [***]
Blender [***] [***]
Exfoderm [***] [***]
Sunblock [***] [***]
Comfort Gel [***] [***]
Action [***] [***]
Eye Cream [***] [***]
Date: 12-1-99 Date: 12-1-99
--------------- ---------------
/s/ Xxxxxx Xxxx /s/ Xxxxx Xxxxxxx
------------------------ ------------------------------
Xxxxxx Xxxx Xxxxx Xxxxxxx
President, CEO President
OMP, Inc. Cellogique
[***] Material has been omitted pursuant to a request for confidential treatment
and such material has been filed separately with the Securities and
Exchange Commission.
CELLOGIQUE
"EXHIBIT C"
Commencing on the date of the first Obagi Protocols purchase, payment terms
will become Net 90 days. During the first year sales must meet or exceed [***]
net (excluding product additions beyond Obagi Color and Protocols) to
continue "Exhibit B" for one year.
Promotion materials will be billed at net cost of OMP.
/s/ Xxxxxx Xxxx /s/ Xxxxx Xxxxxxx
-------------------------- --------------------------------
Xxxxxx X. Xxxx Xxxxx Xxxxxxx
President, CEO President
Obagi Medical Products. Cellogique Corporation
Dec 1st, 99 Dec 1st, 99
[***] Material has been omitted pursuant to a request for confidential treatment
and such material has been filed separately with the Securities and
Exchange Commission.
CELLOGIQUE
OBAGI COLOR PRICING
APRIL 27, 0000
XXXXX COLORS PRICE
Lip Recovery Stick, (1 shade) [***]
Lip Color, (12 shades) [***]
Eye Color, (5 shades) [***]
Powder Blush, (4 shades) [***]
Mascara, (1 shade) [***]
Shampoo, (Gentle and Deep Cleansing) [***]
Intensive Conditioner [***]
Cream Foundations, (10 shades) [***]
Liquid Foundations, (10 shades) [***]
Color Corrector Wheel [***]
Dated: 01/27/00 Date: 05-10-2000
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/s/ Xxxxxx Xxxx /s/ Xxxxx Xxxxxxx
------------------------ ------------------------------
Xxxxxx Xxxx Xxxxx Xxxxxxx
President, CEO President
OMP, Inc. Cellogique
[***] Material has been omitted pursuant to a request for confidential treatment
and such material has been filed separately with the Securities and
Exchange Commission.
