Product Distribution Agreement

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 2060 E. Alosta Avenue, Suite 103, Glendora, California (hereinafter referred to as "Worldwide") and Cellogique Corporation, a California Corporation, located and doing business at 3545 Long Beach Boulevard, Suite 105, Long Beach, California (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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INITIALS: George Michel Max Sawaf
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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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INITIALS: George Michel Max Sawaf
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WORLDWIDE DISTRIBUTOR


[***] 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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INITIALS: George Michel Max Sawaf
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WORLDWIDE DISTRIBUTOR


[***] 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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INITIALS: George Michel Max Sawaf
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WORLDWIDE DISTRIBUTOR


[***] 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 ...