Exhibit 10.6
DISTRIBUTION
AGREEMENT
THIS DISTRIBUTION AGREEMENT is made
as of the 10 th day of November, 2005 (the
“Effective Date”) by and between OMP, Inc., a
company established and existing under the laws of the State of
Delaware, having its principal place of business at 310 Golden
Shore, Long Beach, California 90802, USA (“OMP”) and
Cellogique Corporation, a corporation organized and validly
existing under the laws of California, having its principal place
of business at 124 Woodland Road, Pittsburgh PA 15232
(“Distributor”). OMP and the Distributor are sometimes
referred to herein as the “Parties” and individually as
“Party.”
RECITALS
WHEREAS, OMP develops and
manufactures certain proprietary skin care products; WHEREAS,
Distributor desires to distribute OMP’s skin care products;
and
WHEREAS, OMP and Distributor deem it
to be in their mutual best interests to enter into an agreement
whereby Distributor shall be appointed as an exclusive distributor
of OMP’s products.
NOW THEREFORE, in consideration of
the terms, conditions and mutual covenants contained herein, the
Parties hereto agree as follows:
1.
DEFINITIONS
For purposes of this Agreement, the
following words shall have the following meanings:
1.1
“Agreement”
means this
Distribution Agreement and all exhibits, schedules and annexes
which are attached to this Agreement from time to time and
form a part hereof.
1.2
“Confidential
Information” is defined in
Section 13.1.
1.3
“Customer”
means any medical
doctor, clinic operated by a medical doctor, and retail pharmacy
purchasing Products in the Territory from Distributor.
1.4
“OMP Marks”
means the
trademarks, trade names, service marks, domain names, and logos of
OMP, and other commercial symbols identifying OMP or its products
or services, including those set forth in Exhibit C, and
similar marks, and those developed in the future.
1.5
“Prices”
mean the prices
payable by Distributor to OMP as consideration for the purchase by
Distributor of the Products, as set forth in
Exhibit A.
1.6
“Products”
mean the OMP skin
care products described in Exhibit A.
1.7
“Proprietary
Information ” is defined in
Section 13.1.
1.8
“Territory”
means the
country(ies) set forth in Exhibit A, including, without
limitation, its territories and possessions and any other
geographic area designated by OMP for the exercise of
Distributor’s rights and obligations in this
Agreement.
1.9
“Trade Secrets”
is defined in
Section 13.1.
2.
APPOINTMENT
2.1
Grant of Rights
. OMP hereby grants to
Distributor, and Distributor hereby accepts, upon the terms and
conditions set forth in this Agreement, the exclusive right to
promote, market, sell, distribute and sub-distribute Products to
Customers located within the Territory.
2.2
Technical and Sales Literature
License . During the term of this
Agreement, and subject to its terms and conditions, OMP grants to
Distributor a nonexclusive, nontransferable, royalty free license,
to use the OMP sales and technical literature and materials to
promote, market, sell and distribute the Products in the
Territory.
2.3
Sales Outside the Territory;
Internet Sales .
Distributor
shall not distribute, sell or otherwise provide the Products
outside the Territory and shall not advertise, promote or solicit
Customers for the Products outside the Territory, unless authorized
in writing by OMP. Distributor may promote and sell Products
using the Internet, provided however, Distributor shall not accept
or fill orders for Products from Customers located outside the
Territory and shall not deliver Product to or for a Customer
outside the Territory. OMP and Distributor shall monitor the
distribution and sale of Products within the Territory to insure
that the Products are not, directly or indirectly, being
redistributed or resold outside the Territory.
2.4
Reserved Rights
. Except as
otherwise set forth in this Agreement, no express or implied right
is granted to Distributor regarding the Products, the OMP technical
and sales literature and the OMP Marks and Distributor acknowledges
that all copyright, patent, trade secret and other intellectual
property rights in and to the Products, OMP technical and sales
literature and the OMP Marks are the sole property of OMP. OMP
reserves all rights not expressly granted herein.
2.5
Sub-Distributors
. A listing of current
sub-distributors engaged in the distribution and sale of the
Company’s products under contract by the Distributor is
included in Exhibit E. Distributor shall not, without the
prior written consent of OMP, which consent shall not be
unreasonably withheld, appoint any new sub-distributors to promote,
market, distribute and sell the Products within the Territory.
Distributor shall submit to OMP, for OMP’s prior approval, a
copy of any written agreement, or the terms and conditions of any
oral agreement, proposed to be entered into between Distributor and
any proposed sub-distributor. Distributor shall require that each
such agreement shall, without limitation: (i) terminate
upon the expiration or earlier termination of this Agreement;
(ii) be expressly subject to this Agreement and any
restrictions regarding the Products, OMP technical and sales
literature, the OMP Marks and other Proprietary Information stated
herein; (iii) provide that the sub-distributor shall have no
claims against OMP or Distributor arising from the expiration or
termination of this Agreement; (iv) require adherence to
internet policies consistent with physician ethics, as well as OMP’s brand
promotion and pricing guidelines, and (v) prohibit the
sub-distributor from appointing further sub-distributors or agents
for the sale of Products or assigning any rights or obligations
under its agreement with Distributor without OMP’s prior
written consent. Distributor shall cause sub-distributors to
communicate directly with Distributor, not OMP.
3.
ADDITIONAL PRODUCTS
3.1
Related Products
. OMP may from time to
time offer products for sale relating to skin care, which are not
listed in Exhibit A (“Related Product(s)”). Such
Related Product(s), new or not, may be incorporated into this
Agreement by written amendment at any time during the term of this
Agreement. If OMP, in its sole discretion, chooses to distribute
such Related Products in the Territory during the term of this
Agreement, OMP shall offer Distributor the exclusive right to
promote, market, sell and distribute such Related Products in the
Territory subject to this Agreement, which offer shall be open for
acceptance for a period no longer than thirty (30) days. The terms
and conditions upon which OMP shall offer to Distributor the rights
to distribute Related Products in the Territory shall be at least
as favorable as the terms and conditions upon which OMP offers such
distribution rights with respect to Related Products to any
third-party distributor(s) outside of the Territory, including, but
not limited to, maximum discounted prices and terms of
payment. In the event that Distributor chooses not to accept
OMP’s offer to include any such Related Products in this
Agreement, OMP may use other persons or entities to act as
distributors of such Related Product(s) to Customers in the
Territory without further obligation to Distributor.
4.
GENERAL OBLIGATIONS OF
DISTRIBUTOR
4.1
Minimum Purchase
Requirement .
During the term
of this Agreement, Distributor shall make the minimum purchases of
the Products from OMP set forth in Exhibit A (“Minimum
Purchase Requirement”). Purchases counted toward the Minimum
Purchase Requirement for any period provided herein shall be based
on OMP’s net invoice prices for the Products which are paid
for prior to the expiration of the applicable period. Distributor
understands and agrees that achievement of Minimum Purchase
Requirement is of the essence of this Agreement and the failure of
Distributor to achieve any of the Minimum Purchase Requirement
conditions in Exhibit A in any one year shall constitute
grounds for the conversion of this contract from exclusive to a
non-exclusive right to the channel and territory (all other
provisions of the contract remaining unchanged), while failure to
achieve the minimums in any two out of three years is grounds for
non-renewal of the contract at the Company’s option as of the
renewal period following such failures. However, notice of
intention not to renew based on performance must be given 60 days
in advance of the new renewal period.
4.2
Promotion and
Marketing .
Distributor
shall use commercially reasonable efforts to further the promotion,
marketing, sale and distribution of the Products in the Territory,
including but not limited to, building brand awareness and value.
OMP may, in its reasonable discretion, prepare promotional programs
for the Products in the Territory and Distributor agrees to
cooperate with OMP in sales or promotional programs prepared by
OMP. Distributor shall not, and shall cause its sub-distributors to
not, make any materially misleading or untrue statements concerning
the Products.
4.3
Competing Products
. During the term of this
Agreement, Distributor shall not, and shall cause its agents and
representatives to not, sell, distribute, market, advertise or
solicit
purchase orders
for any product that OMP deems to be similar to or competitively
positioned against the Products in the Territory.
4.4
Business Plan
. By October 1 of each
calendar year during the term of this Agreement, Distributor shall
submit to OMP a marketing and business plan (“Business
Plan”) for marketing, distribution and sale of the Products
in the Territory for the following calendar year. The Business Plan
shall include a description of the Distributor’s sales
organization, a competitive market analysis, methods of
distribution, a marketing plan, projected quarterly sales by
Product, and other information.
4.5
Forecasts.
Distributor
shall provide to OMP on a quarterly basis a twelve (12) month
rolling forecast of Distributor’s projected purchase orders
on the form attached hereto as Exhibit B. Distributor
shall submit forecasts to OMP on February 1 (for the twelve
(12) months commencing April 1), May 1 (for the twelve
(12) months commencing July 1), August 1 (for the twelve
(12) months commencing October 1), and November 1 (for
the twelve (12) months commencing January 1) of each calendar
year. If the Effective Date falls within a quarter, the first
quarter forecast shall include only the remainder of that quarter.
The forecasts are for planning
purposes only and shall not be binding on Distributor or
OMP.
4.6
Licensed Physician; Sales
Force .
During the term
of this Agreement, Distributor shall retain the services of a
physician licensed and in good standing in the Territory and who is
trained (in accordance with Section 5.2) in the use of the
Products (“Licensed Physician). Within thirty (30) days of
the Effective Date and within forty five (45) days of a change of
Licensed Physician, Distributor shall give OMP written notice of
the name of the Licensed Physician as well as physical evidence of
his or her license and good standing in the Territory. The Licensed
Physician shall advise Customers on the proper use of the Products.
Distributor shall maintain competent and trained personnel for
marketing and distribution of the Products in the
Territory.
4.7
Governmental
Requirements .
Subject to the
terms of this Agreement, Distributor shall (i) comply with all
applicable laws and regulations of the United States and the
Territory, including but not limited to, export laws and
restrictions and regulations of the United States Department of
Commerce or other United States or foreign agency or authority, and
shall not export, or participate in any transaction which
may involve the export or re-export of any Product in
violation of any such restrictions, laws or regulations;
(ii) assist OMP in obtaining any required registrations,
licenses and permits for the Products and the marketing, sale and
distribution of the Products in the Territory by supplying such
documentation or information as may be reasonably requested by
OMP; and (iii) obtain and maintain during the term of this
Agreement all governmental approvals and licenses necessary to
import the Products into the Territory. If any governmental
registration, license or approval for the marketing, sale and
distribution of the Products is required, Distributor shall obtain
OMP written approval prior to commencing any registration or
approval process. Unless otherwise required by applicable law, all
registrations, licenses and approvals for the Products and the
distribution of the Products in the Territory shall be in the name
of and shall be solely owned by OMP. OMP will reimburse Distributor
for any pre-approved and reasonable fees for such registrations,
licenses and approvals that are in OMP’s name or are
transferred to OMP upon termination of the Agreement. Distributor
shall provide OMP with a copy of all registrations, licenses and
approvals obtained or
received for the
Products and distribution of the Products in the Territory within
five (5) business days of Distributor’s receipt of each
such registration, license and approval. In furtherance of, but
without limiting, the foregoing, Distributor represents that it has
read, understood and will comply with the anti-bribery provisions
of the U.S. Foreign Corrupt Practices Act.
4.8
Distributor Expenses
. Distributor assumes full
responsibility for all 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, demonstration, travel and
accommodation for the employees, agents, representatives or other
personnel of Distributor.
4.9
Marketing Materials
. All marketing materials
created by or for Distributor relating to the Products shall be
approved by OMP prior to use by Distributor. Such marketing
materials shall contain copyright, trademark and accreditation
notices as prepared by OMP.
4.10
Quarterly Reports and
Reviews .
Distributor
shall provide OMP with reports of its activities , competitor activities , and other information
regarding the Products and the markets for the Products in the
Territory in such detail and with such frequency as OMP and
Distributor shall mutually agree. Distributor agrees to participate
with OMP in quarterly reviews to discuss Distributor’s sales,
marketing, and business plan for distribution of the Products, and
sales achievements and objectives.
5.
GENERAL OBLIGATIONS OF
OMP
5.1
General . OMP shall use commercially
reasonable efforts to maintain and enhance the reputation,
usefulness, and acceptance of its Products and to assist
Distributor in all reasonable ways to promote the sale of the
Products in the Territory.
5.2
Distributor Training
. OMP shall provide initial
training on the Products for Distributor’s licensed physician
and sales force and subsequent training upon the release of new
Products or Related Products subject to this Agreement. The date,
duration, content and location of the initial training and training
relating to any new Products or Related Products subject to this
Agreement, shall be mutually agreed upon by the Parties.
Notwithstanding the foregoing, Distributor shall bear all costs of
travel and living expenses for Distributor’s personnel to
attend any training whether during the initial period or subsequent
thereto. If training is provided at Distributor’s location,
Distributor shall provide reasonable training facilities without
expense to OMP. For training in addition to that identified above,
OMP and Distributor shall mutually agree in writing on the charges
for such training, in advance of the training, including but not
limited to OMP travel and other related expenses.
5.3
Marketing Support
. OMP shall provide
Distributor with an electronic and one hard copy of OMP technical
and sales literature and materials. Distributor’s shall
provide language translations of such materials at
Distributor’s expense.
5.4
Quarterly Review
. OMP agrees to participate
with Distributor in quarterly reviews to discuss
Distributor’s sales, marketing, and business plan for the
distribution of the Products, and sales achievement and
objectives.
6.
PURCHASE OF PRODUCTS AND
SERVICES
6.1
Purchase Orders and
Delivery .
Products ordered
by Distributor from OMP will be delivered by OMP directly to the
Distributor. OMP shall use its best efforts to deliver ordered
Products within thirty (30) days of the date of receipt of a
purchase order from Distributor. Distributor shall acquire the
Products only from OMP and from no other source.
6.2
Modification of Orders
. Except as otherwise agreed
to in writing or as otherwise set forth herein, all order(s) are
non-cancelable, non-refundable and non-exchangeable. All order(s)
placed with OMP by Distributor for Products shall be made on
through the submission of a Purchase Order. Notwithstanding the
content of Distributor’s purchase order, this Agreement shall
take precedence over Distributor’s purchase order, and,
subject to applicable law, in the event of any conflicting,
inconsistent or additional terms of Distributor’s purchase
order, the terms of this Section 6 shall prevail.
6.3
Delivery Terms
. All deliveries of the
Products shall be FOB OMP’s manufacturing or warehouse
facility, Incoterms 2000. OMP shall consign each shipment to the
freight forwarding agent and customs broker specified by
Distributor.
6.4
Title . Title to each of the
Products shall transfer upon consignment and delivery by OMP to the
freight forwarding agent specified in Distributor’s purchase
orders.
6.5
Acceptance of Products
. In the event of any
shortage, damage or discrepancy in or to a shipment of Products,
Distributor shall promptly report the same to OMP and furnish such
written evidence or other documentation as Distributor
may deem appropriate. OMP shall not be liable for any such
shortage, damage or discrepancy unless OMP has received notice and
evidence thereof from Distributor within thirty (30) days after
delivery of the Products at the FOB point. If such evidence
demonstrates to OMP’s satisfaction that OMP is responsible
for such shortage, damage or discrepancy, OMP shall promptly
deliver additional or substitute Products to
Distributor.
6.6
Return of Defective
Products .
OMP shall use
reasonable commercial efforts to supply Distributor with Products
manufactured in accordance with good manufacturing practices. In
the event a Product is defective, OMP shall either, in its sole
discretion, replace the Product or credit Distributor for the
purchase price of the Product as reflected on Distributor’s
paid invoice therefore, provided Distributor (a) has obtained
OMP’s prior written consent to return the Product and
(b) Distributor completes and returns with the Product the
Product Complaint Form attached hereto as Exhibit
D . OMP will pay transportation
costs for return of such Product provided the Product was shipped
to Distributor by OMP within ninety (90) days of the date
Distributor obtains OMP’s approval to return the Product. The
provisions of this Section 6.6 shall constitute
Distributor’s sole and exclusive remedy with respect to
defective Products.
6.7
Price Changes;
Notification .
Prices offered
to Distributor are and shall remain based on distributor discount
from standard pricing to US physicians. Standard US Pricing from
which distributor discount is taken shall in no case be increased
by a greater amount than pricing changes implemented in the US. OMP
shall give written notice to Distributor of any
amendment
to the Prices
listed in Exhibit A hereof. In the event of a Price increase,
OMP shall notify Distributor in 60 days in advance of any such
amendments.
6.8
Price Increase
Protection .
In the event OMP
increases the Price on any Product, any orders for such Product
which are received by OMP before the effective date of the Price
increase shall be invoiced at the previous, or lower Price. Price
protection will be extended to Distributor by OMP for the purpose
of satisfying Customer purchase agreements and binding quotations
which Distributor has in force on the effective date of the Price
increase, which Distributor cannot satisfy from its inventories,
for the period remaining on such purchase agreements and binding
quotations. In order to obtain price protection, within thirty (30)
days of notification of the Price increase, Distributor shall
provide documentation to OMP on such purchase agreements and
binding quotations, acceptable to OMP.
6.9
Price Decrease
Protection .
In the event OMP
decreases the Price of any Product, Distributor may apply for
a credit equal to the difference between the net Price paid by
Distributor, less any prior credits granted by OMP, and the new
decreased Price for the Product multiplied by the quantity of such
Products in Distributor’s inventory (including those
delivered by OMP to the Distributor’s specified
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