Commercial Outsourcing Services Agreement Dated February 1, 2003

Exhibit 10.31


COMMERCIAL OUTSOURCING SERVICES AGREEMENT


This Commercial Outsourcing Services Agreement (" Agreement" ) is entered into as of February 1, 2003 (" Effective Date" ) by INTEGRATED COMMERCIALIZATION SOLUTIONS, INC., a California corporation (" Service Provider" ) and SKINMEDICA, INC., a Delaware corporation (" Company" ).

RECITALS


A. Company is, among other things, in the business of manufacturing, selling and distributing pharmaceutical products, including those listed on Schedule A (" Products" );


B. Service Provider is, among other things, in the business of providing commercialization services for pharmaceutical products;


C. Company desires to engage Service Provider as its agent to provide certain commercialization services related to Products pursuant to this Agreement; and

D. Service Provider desires to provide such commercialization services to Company as its agent pursuant to this Agreement.


AGREEMENT


NOW, THEREFORE, the parties hereby agree as follows: 1. Appointment As Exclusive Agent

Company hereby appoints Service Provider as the exclusive provider of Services (as defined in Section 2) for Products sold to Company' s customers (" Customers" ) in the United States, Guam, Puerto Rico and the U.S. Territories during the Term (as defined in Section 4.1), as provided in this Agreement.

2. Services To Be Performed

Company hereby engages Service Provider to provide the following services with respect to Products (" Services" ):

2.1 Integrated Access Center as described in Exhibit B .

2.2 Warehousing and Inventory Program as described in Exhibit D .


2.3 Distribution Services as described in Exhibit E .


2.4 Warehousing and Distribution of Samples/Free Goods as described in Exhibit F .


2.5 Marketing Materials Fulfillment as described in Exhibit G .


2.6 Contract Administration and Chargeback Processing as described in Exhibit H .


2.7 Accounts Receivable Management and Cash Applications as described in Exhibit I.

2.8 Financial Management as described in Exhibit J .

2.9 Information Technology Services as described in Exhibit K .


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2.10 Service Provider will not be responsible for collection or payment of any Taxes on behalf of Company. Capitalized words used without definition in this Agreement will each have the meaning in Schedule D.

3. Compensation - Fees For Services

3.1 Company will compensate Service Provider for Services in accordance with Schedule B . All amounts due under Schedule B will be due upon receipt of a reasonably detailed invoice documenting the Services performed and any charges set forth therein. Company will notify Service Provider of any disputed charges in writing within 30 days of receipt of the invoice covering such charges. In the absence of any such notice of dispute, all invoices will be deemed to be correct and due in full within thirty (30) days of the date of the billing . A late fee of 1.5% per month (or any portion thereof) will be charged as of the due date plus a grace period of ten (10) days on all amounts not paid within thirty (30) days of the date of the billing, except for any portion of any bill that is the subject of any dispute raised by Company in good faith. If any dispute is resolved in favor of Service Provider, Company will pay the applicable late fee on such amount from the original due date. Service Provider will bill Company for any pass through charges monthly or as Service Provider is billed. All other fees for Services will be billed monthly.


3.2 Cost Adjustment . If Service Provider can reasonably demonstrate to Company that the costs to Service Provider for providing Services have materially increased (or are reasonably likely to increase materially during the following twelve (12) month period of the Term) as a result of any changes in the Requirements of Law, including the adoption of any new Requirements of Law, impacting Services, then Service Provider may increase the applicable component of the fees for such Services provided in Schedule B (" Cost Adjustment" ). Service Provider will notify Company of any proposed Cost Adjustment at least one hundred twenty (120) days prior to its effective date. All Cost Adjustments will be determined under generally accepted accounting principles (GAAP) and cost allocation methods applied on a consistent basis. In the event of any such Cost Adjustment, Service Provider shall provide reasonable documentation to Company supporting the basis for any resulting increase fees to Company and shall use Service Provider' s reasonable efforts to locate an alternative lower cost method of performing or obtaining services or materials, as applicable. If Company objects to any Cost Adjustment and the parties are unable in good faith to resolve such objection to the reasonable satisfaction of both parties, then either party may terminate this Agreement upon ninety (90) days' prior written notice to the other party.


3.3 Program Ready Date . If Company requests that Service Provider delay the launch of Services beyond the agreed-upon date on the signatory page (" Program Launch Date" ), Company will pay Service Provider a program ready fee and any associated expenses as specified in Schedule B, including reasonable out-of-pocket costs and other expenses. Company also agrees to give Service Provider at least one week' s written notice of changes to the Program Launch Date. Program ready fees will continue until the Program Launch Date. After the Program Launch Date, Company will pay applicable monthly program fees. For the first month during which Services are provided, Service Provider will prorate any difference between program ready fees and applicable monthly program fees.

4. Term And Termination

4.1 Initial Term . This Agreement will be effective as of the Effective Date and will continue for three (3) years (' Term" ) unless sooner terminated. The Term may be extended


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upon written mutual agreement of the parties, such extension to be negotiated in good faith six (6) months prior to the expiration of the Term.


4.2 Termination For Breach . Either party may terminate this Agreement upon written notice to the other party upon the other party' s failure to pay any amount due and not subject to a bona fide, good faith dispute, and such failure continues five (5) days after written notice; or failure to perform any other material obligation and such failure continues for thirty (30) days after it receives notice of such breach from the non-breaching party; provided, however, if the other party has commenced to cure a non-monetary breach within such thirty (30) days, but such cure is not completed within such thirty (30) days, it will have an additional thirty (30) days to complete its cure if it diligently pursues the cure until completion; and further provided that if such breach occurs more than three (3) times during any twelve (12)-month period, the non-breaching party may terminate this Agreement upon thirty (30) days' written notice.

4.3 Termination For Specific Events . Either party may immediately terminate this Agreement upon written notice to the other party upon the other party' s: (a) filing an application for or consenting to appointment of a trustee, receiver or custodian of its assets; (b) having an order for relief entered in Bankruptcy Code proceedings; (c) making a general assignment for the benefit of creditors; (d) having a trustee, receiver, or custodian of its assets appointed unless proceedings and the person appointed are dismissed within 30 days; (e) insolvency within the meaning of Uniform Commercial Code Section 1-201 or failing generally to pay its debts as they become due within the meaning of Bankruptcy Code Section 303(h)(1), as amended; or, (f) certification in writing of its inability to pay its debts as they become due, (and either party may require the other to periodically certify its ability to pay its debt as they become due) (collectively " Bankruptcy" ). Each party agrees to provide immediate notice to the other party upon a Bankruptcy event.


4.4 Expenses . Within five (5) days of expiration or earlier termination of this Agreement for any reason, Company will (a) pay Service Provider any amount owed but not subject to a good faith, bona fide dispute, (b) return to Service Provider all hardware, software and other equipment belonging to Service Provider, or pay to Service Provider the replacement cost of items not returned; and (c) pay non-recoverable expenses for telecommunication, facsimile, postage, shipping and other services incurred by Service Provider up to the effective date of termination. Within fifteen (15) days of expiration or earlier termination of this Agreement for any reason, Service Provider shall make available all Products and other items belonging to Company for pick up by Company during regular business hours on such dates as Company may reasonably request.


4.5 Survival . Accrued payment, indemnity and confidentiality obligations and any provision if its context shows that the parties intended it to survive will survive expiration or termination of this Agreement and, except as expressly provided, expiration or termination will not affect any obligations arising prior to the expiration or termination date.


4.6 Automatic Termination . This Agreement will automatically terminate, without any further action, upon the expiration of the Term unless extended pursuant to Section 4.1. 5. Recalls; Other FDA Issues

5.1 Recalls . If Company conducts a recall, market withdrawal or field correction of any Products (" Recall" ), Company will conduct the Recall or designate Service Provider or a third party to do so and Company will be responsible for all Recall expenses (except as set forth below). Service Provider will comply with Company' s reasonable requests in the Recall. If the Recall was not due primarily to Service Provider' s negligence or breach of this Agreement,


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Company will pay or reimburse Service Provider' s reasonable documented out-of-pocket Recall expenses (including attorneys' fees). If the Recall was due primarily to Service Provider' s negligence or breach of this Agreement, Service Provider will pay or reimburse Company' s reasonable documented out-of-pocket Recall expenses (including attorneys' fees). Each party will use its best efforts to minimize Recall expenses. Company will notify Service Provider of any proposed Recall as soon as possible and, in any event, will do so within forty-eight (48) hours of initiating a Recall.

5.2 Government Notices . Each party will provide the other with a copy of any correspondence or notices it receives from the FDA, DEA or any counterpart state agency specifically relating to Services or relating to a material violation of any kind that is Company-or Product-related, whether such violation resulted from an act or omission by Company or by Service Provider, no later than three (3) business days following such receipt. In addition, Service Provider will provide Company with any notice relating to Products promptly upon its receipt and, In any event, no later than three (3) business days following receipt. Each party will also provide the other with concurrent copies of any responses to any such correspondence or notices (e.g., such as an FDA 483 notice, warning letters, untitled regulatory letters and establishment insp ...