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 freight forwarding agent) on the effective date of the Price reduction. Price protection applies only to Products in Distributor’s inventory the three (3) months preceding the effective date of the Price reduction, including Products in transit to Distributor on the effective date of the Price decrease. Issuance of the Price protection credit by OMP is contingent upon Distributor’s submission to OMP, not later than thirty (30) days after the effective date of such Price decrease, of an inventory report which indicates the quantity of such Product in stock or in transit on the effective date of the Price decrease. Upon verification of the inventory report by OMP, said credit will be applied to Distributor’s account.

 

6.10                           Product Changes. OMP may do any of the following upon reasonable notice and without liability to Distributor:

 

(a)                                  Alter the specifications for any Product or any new Product or Related Product;