Exhibit 10.1

 
Stock Purchase Agreement
 
This Stock Purchase Agreement (this “Agreement”), dated as of November 15, 2010,
is by and among Obagi Medical Products, Inc., a Delaware corporation (the
“Company”), Stonington Capital Appreciation 1994 Fund, L.P., a Delaware limited
partnership (“Stonington”), and The Zein and Samar Obagi Family Trust (the
“Obagi Trust,” and together with Stonington, the “Selling Stockholders”).
 
Recitals
 
 
        A.    Whereas, as of the date hereof, Stonington is the holder of record
of 4,722,285 shares of common stock, par value $0.001 per share, of the Company
(the "Common Stock"), which constitutes approximately 21.4% of the issued and
outstanding shares of Common Stock, and the Obagi Trust is the holder of record
of 1,524,869 shares of Common Stock, which constitutes approximately 6.9% of the
issued and outstanding shares of Common Stock.
 
 
        B.    Whereas, pursuant to Section 2.1 of that certain Investors’ Rights
Agreement, dated as of December 2, 1997, as amended, among the Company and the
Selling Stockholders (the "Investors’ Rights Agreement"), the Selling
Stockholders have requested that the Company register the resale of certain of
their shares of Common Stock pursuant to a registration statement on Form S-1
(the "Registration Statement");
 
 
        C.    Whereas, the Company, the Selling Stockholders and Stifel Nicolaus
& Company, Incorporated  (the “Underwriter”) intend to enter into an agreement
pursuant to which the Selling Stockholders will sell certain shares of Common
Stock (the “Underwritten Shares”) to the Underwriter (the “Underwriting
Agreement”); and
 
 
        D.    Whereas, in addition to selling the Underwritten Shares to the
Underwriter pursuant to the Underwriting Agreement, each of the Selling
Stockholders desires and voluntarily agrees to sell certain shares of Common
Stock held by such Selling Stockholder to the Company, and the Company agrees to
purchase such shares from the Selling Stockholders;
 
 
        NOW THEREFORE, in consideration of the covenants and promises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
 
 
AGREEMENT
 
 
               1.    Purchase and Sale of the Shares; the Closing.    
 
 
1.1    Purchase and Sale of Common Stock.    Subject to the consummation of the
sale of the Underwritten Shares to the Underwriter pursuant to and in accordance
with the Underwriting Agreement, and the other terms and conditions of this
Agreement, and on the basis of the representations, warranties and covenants set
forth herein, the Selling Stockholders agree to sell to the Company, and the
Company agrees to purchase from the Selling Stockholders $35.0 million worth of
shares of Common Stock (the “Shares”) at the Closing. The allocation of the
Shares to be sold by each Selling Stockholder at the Closing shall be pro rata
based on the number of shares of Common Stock held of record by each as of the
date hereof, and,
 

 
 

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accordingly, the Company shall purchase the following value of shares from each
Selling Stockholder:
 
Selling Stockholder
Pro Rata Percentage of Shares Owned
Value of Shares to be Purchased from such Selling Stockholder
Stonington
75.59%
$26,456,500
Obagi Trust
24.41%
$8,543,500

 
The obligations of the Selling Stockholders to sell the Shares to the Company
pursuant to the terms of this Agreement shall be several and not joint.
 
 
1.2    Purchase Price.     The “Per Share Purchase Price” for the Shares shall
be equal to the price per share at which the Underwriter purchases the
Underwritten Shares from the Selling Stockholders pursuant to the terms of the
Underwriting Agreement; provided, however, that should the Per Share Purchase
Price be greater than $13.00, then the Company shall not purchase the Shares
hereunder.
 
 
1.3    The Closing.    Subject to the terms and conditions hereof, the purchase
and sale of the Shares contemplated by this Agreement (the “Closing”) will take
place at the offices of the Company, 3760 Kilroy Airport Way, Suite 500, Long
Beach, CA 90806, on the third business day following the expiration of any
prohibitions or restrictions on the Company's ability to purchase shares of its
Common Stock pursuant to Regulation M, as promulgated by the SEC, 17 CFR
§ 242.100, et. seq., as may be amended from time to time, or such other day or
location as the parties may mutually agree. It is anticipated that the Closing
will take place on the third business day following the closing of the
Underwriter’s purchase of the Underwritten Shares.  At the Closing, (a) the
Selling Stockholders will deliver to the Company certificates representing the
Shares to be purchased by the Company duly endorsed or accompanied by stock
powers duly executed in blank and, if required, signature guarantees, and
otherwise in form acceptable for transfer on the books of the Company (or shall
deliver the Shares in such other manner as is reasonably agreed), and any such
other documents as may be reasonably required to effect the transfer of the
Shares to the Company and (b) the Company shall deliver the applicable pro rata
portion of the purchase price to each of the Selling Stockholders by wire
transfer of immediately available funds to one or more accounts specified by the
Selling Stockholders. Each of the Selling Stockholders acknowledges that, unless
there shall have been a default in payment by the Company of the Per Share
Purchase Price for each Share being sold, such Selling Stockholder shall have no
further rights whatsoever with respect to the Shares and the Selling Stockholder
shall cease to be a stockholder of the Company with respect to such Shares.
 
 
2. Representations and Warranties of the Selling Stockholders.
 
 
In order to induce the Company to enter into this Agreement, each of the Selling
Stockholders hereby represents and warrants to the Company, severally and not
jointly, as follows:
 
 
2.1    Ownership of Shares.    Such Selling Stockholder is the beneficial owner
of the number of issued and outstanding shares of Common Stock set forth in the
recitals to this Agreement. The Shares to be sold to the Company by such Selling
Stockholder when delivered to the Company shall be free and clear of any liens,
encumbrances, equities or adverse claims, except for restrictions imposed by
applicable securities laws and regulations or created by the
 

 
 

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Company or this Agreement (collectively, “Liens”).  There are no restrictions on
the transfer of such Shares imposed by any stockholder or similar agreement or
any law, regulation or order, other than applicable state and federal securities
laws. The delivery to the Company of the Shares pursuant to the provisions
hereof will transfer to the Company valid title thereto, free and clear of any
Liens whatsoever.
 
 
2.2    Authorization.    Such Selling Stockholder has full right, power and
authority to execute, deliver and perform this Agreement and to sell, assign and
deliver the Shares to be sold by it to the Company. This Agreement is the legal,
valid and, assuming due execution and delivery by the other parties hereto,
binding obligation of such Selling Stockholder, enforceable against such Selling
Stockholder in accordance with its terms, except to the extent that the
enforceability thereof may be limited by: (a) principles of public policy,
(b) applicable bankruptcy, insolvency, reorganization, moratorium or other laws
of general application relating to or affecting the enforcement of creditors'
rights generally (including, without limitation, fraudulent conveyance laws),
and (c) by general principles of equity, including, without limitation, concepts
of materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief, regardless of
whether considered in a proceeding in equity or law.
 
 
2.3    No Violation; No Consent.    The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby by
such Selling Stockholder: (a) will not constitute a violation of any provision
of any applicable statute, law, rule or regulation by which such Selling
Stockholder or its properties are bound; (b) will not result in a material
breach of or default under any material agreement or instrument to which such
Selling Stockholder is a party or by which the Selling Stockholder or the Shares
may be bound; (c) will not constitute a breach or violation of or default under
any judgment, decree or order to which such Selling Stockholder is subject;
(d) will not result in the creation or imposition of any Lien upon the Shares to
be sold by such Selling Stockholder; and (e) will not require the consent of or
notice to or filing with any governmental entity or any party to any contract,
agreement or arrangement with such Selling Stockholder, other than any filings
with the Securities and Exchange Commission required under the Securities and
Exchange Act of 1934, as amended.
 
 
2.4    Brokerage.    There are no claims for brokerage commissions or finder's
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
such Selling Stockholder.
 
 
2.5   Acknowledgment.    Except as expressly set forth herein, such Selling
Stockholder acknowledges that the Company has not made, and is not making, any
representation or warranty as to the business, assets, properties, condition
(financial or otherwise), risks, results of operations, prospects or any other
aspect of the operations of the Company. The Selling Stockholder has such
knowledge and experience in business and financial matters as to be capable of
evaluating the risks and merits of the transactions contemplated hereunder. Such
Selling Stockholder has adequate information and has made its own independent
investigation concerning the business, assets, properties, condition (financial
or otherwise), risks, results of operations, prospects of the Company to make an
informed decision regarding sale of the Shares. In entering into this Agreement,
such Selling Stockholder has relied solely upon its own investigation and
analysis, without reliance upon any information from the Company or its
affiliates, other than what is, and what the Company has made, publicly
available.
 
2.6   Tax Matters.    Such Selling Stockholder has had the opportunity to review
with its own tax advisors the federal, state and local tax consequences of the
sale of the Shares by said

 
 

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Selling Stockholder to the Company. The Selling Stockholder is relying solely
upon itself and its advisors and not on any statements or representations of the
Company, other than those explicitly contained herein. The Selling Stockholder
understands that it (and not the Company) shall be responsible for its own tax
liability, if any, that may arise as a result of the transactions contemplated
in this Agreement.
 
                3. Representations and Warranties of the Company
 
In order to induce the Selling Stockholders to enter into this Agreement, the
Company hereby represents and warrants as follows:
 
 
3.1    Organization and Corporate Power; Authorization.    The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. The Company has the requisite power and authority
to execute, deliver and perform this Agreement and to acquire the Shares. As of
the Closing, the Company will have sufficient capital to purchase the Shares
hereunder in compliance with Section 160 of the Delaware General Corporation
Law. The execution, delivery and performance of this Agreement and the
consummation by the Company of the transactions contemplated hereby have been
approved by a majority of the disinterested directors on the Board of Directors
of the Company, having been advised by counsel, and have been otherwise duly
authorized by all requisite action on the part of the Company. This Agreement
and any other agreements, instruments, or documents entered into by the Company
pursuant to this Agreement have been duly executed and delivered by the Company
and are the legal, valid and, assuming due execution and delivery by the other
parties hereto, binding obligations of the Company, enforceable against the
Company in accordance with its terms except to the extent that the
enforceability thereof may be limited by (a) principles of public policy, (b)
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting the enforcement of creditors'
rights generally (including, without limitation, fraudulent conveyance laws),
and (c) by general principles of equity, including, without limitation, concepts
of materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief, regardless of
whether considered in a proceeding in equity or law.
 
 
3.2    No Violation; No Consent.    The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby by
the Company (a) will not constitute a violation of any provision of any
applicable statute, law, rule or regulation by which the Company  or its
properties are bound; (b) will not result in a material breach of or default
under any material agreement or instrument to which the Company is a party or by
which the Company may be bound; (c) will not constitute a breach or violation of
or default under any judgment, decree or order to which the Company is subject;
and (d) will not require the consent of or notice to or filing with any
governmental entity or any party to any contract, agreement or arrangement with
the Company, other than any filings with the Securities and Exchange Commission
required under the Securities and Exchange Act of 1934, as amended.
 
 
3.3    Brokerage.    Except for Oppenheimer & Co. Inc. whose fees and expenses
have already been paid by the Company, there are no claims for brokerage
commissions or finder's fees or similar compensation in connection with the
transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of the Company.
 
 
3.4    Underwriting Agreement.  The representations and warranties of the
Company contained in Section 3 of the Underwriting Agreement will be true and
correct as of (a) the date
 

 
 

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of the Underwriting Agreement, (b) the date the Underwriters make payment for
the Underwritten Shares, and (c) the Closing.
 
 
4. Conditions to the Company’s Obligations at the Closing
 
The obligations of the Company under Article 1 to purchase the Shares at the
Closing from the Selling Stockholders are subject to the fulfillment as of the
Closing of each of the following conditions unless waived by the Company in
accordance with Section 7.4:
 
 
 4.1    Representations and Warranties.    The representations and warranties of
the Selling Stockholders contained in Article 2 shall be true and correct on and
as of the date of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of the
Closing.
 
 
 4.2    Performance.    The Selling Stockholders shall have performed and
complied in all material respects with all agreements, obligations, and
conditions contained in this Agreement that are required to be performed or
complied with by it on or before the date of the Closing.
 
 
 4.3    Sale of Underwritten Shares.    The sale of the Underwritten Shares by
the Selling Stockholders to the Underwriter shall have closed in accordance with
the terms of the Underwriting Agreement and the Per Share Purchase Price shall
be not greater than $13.00.
 
 
 4.4    Expiration of Regulation M Restrictions.    Any prohibitions or
restrictions on the Company's ability to purchase shares of its Common Stock
pursuant to Regulation M, as promulgated by the SEC, 17 CFR § 242.100 et. seq.,
as may be amended from time to time, shall have expired.
 
 
 4.5    No Prohibition.    No governmental authority shall have advised or
notified the Company that the consummation of the transactions contemplated
hereunder would constitute a material violation of any applicable laws or
regulations, which notification or advice shall not have been withdrawn after
the exhaustion of the Company's good faith efforts to cause such withdrawal.
 
 
        5.    Conditions to the Selling Stockholders' Obligations.    
 
 
The obligations of the Selling Stockholders under Article 1 to sell the Shares
to the Company at the Closing are subject to the fulfillment as of the Closing
of each of the following conditions unless waived by the Selling Stockholders in
accordance with Section 7.4:
 
 
5.1    Representations and Warranties.    The representations and warranties of
the Company contained in Article 3 shall be true and correct on and as of the
date of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Closing.
 
 
5.2    Performance.    The Company shall have performed and complied in all
material respects with all agreements, obligations and conditions contained in
this Agreement that are required to be performed or complied with by it on or
before the date of the Closing.
 

 
 

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5.3    Sale of Underwritten Shares.    The sale of the Underwritten Shares by
the Selling Stockholders to the Underwriter shall have closed in accordance with
the terms of the Underwriting Agreement and the Per Share Purchase Price shall
be not greater than $13.00.
 
 
5.4    Expiration of Regulation M Restrictions.    Any prohibitions or
restrictions on the Company's ability to purchase shares of its Common Stock
pursuant to Regulation M, as promulgated by the SEC, 17 CFR § 242.100, et. seq.,
as may be amended from time to time shall have expired.
 
 
5.5    No Prohibition.   No governmental authority shall have advised or
notified the Selling Stockholders that the consummation of the transactions
contemplated hereunder would constitute a material violation of any applicable
laws or regulations, which notification or advice shall not have been withdrawn
after the exhaustion of the Selling Stockholders' good faith efforts to cause
such withdrawal.
 
 
6.   Survival of Representations and Warranties.
 
Each of the representations and warranties in this Agreement shall survive the
Closing. Each party shall have the right to fully rely on the representations,
warranties, covenants and agreements of the other party contained in this
Agreement or in any other documents or papers delivered in connection herewith.
 
7.    Miscellaneous.    
 
 
7.1    Adjustments.    Wherever a particular number is specified herein,
including, without limitation, number of shares or price per share, such number
shall be adjusted to reflect any stock dividends, stock-splits, reverse
stock-splits, combinations or other reclassifications of stock or any similar
transactions and appropriate adjustments shall be made with respect to the
relevant provisions of this Agreement so as to fairly and equitably preserve, as
far as practicable, the original rights and obligations of the Company and the
Selling Stockholder under this Agreement.
 
 
7.2    Governing Law; Jurisdiction.    This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York.
 
 
7.3    Assignment; Successors and Assigns.    None of the parties shall have the
right to assign its rights or obligations under this Agreement without the prior
written consent of the other parties; provided, however, that such consent shall
not be required in the event of a merger, acquisition or sale of substantially
all of the assets of a party. Any purported assignment in derogation of the
immediately foregoing sentence shall be null and void. Subject to the preceding
sentences, this Agreement will be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. This Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
 
 
 7.4    Entire Agreement; Amendment.    This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects hereof. Neither this Agreement nor any provision hereof may be amended,
changed or waived other than by a written instrument signed by the party against
who enforcement of any such amendment, change or waiver is sought.
 

 
 

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7.5    Cooperation.    The Company and each of the Selling Stockholders shall,
from and after the date hereof, cooperate in a reasonable manner to effect the
purposes of this Agreement.
 
 
7.6    Termination.    The Company or each of the Selling Stockholders (as to
such Selling Stockholder) may terminate this Agreement if: (a) the Company, the
Selling Stockholders and the Underwriter have not entered into the Underwriting
Agreement on or before November 19, 2010; (b) the Underwriting Agreement (other
than the provisions that survive termination) shall terminate or be terminated,
in each case, prior to payment for and delivery of the Underwritten Shares to be
sold thereunder; or (c) if the Per Share Purchase Price is greater than $13.00.
In the event that one of the Selling Stockholders terminates the Agreement as to
itself, the Company and the non-terminating Selling Stockholder shallstill
proceed to consummate the sale of the pro rata portion of the Shares held by the
non-terminating Selling Stockholder hereunder. Upon termination of this
Agreement pursuant to clauses (a), (b) or (c) of this Section 7.6, the parties
as to which the Agreement has terminated shall have no liability to each other
hereunder except for any breaches of such party's representations, warranties or
covenants occurring prior to the date of such termination.
 
 
7.7    Notices. All notices required or permitted hereunder shall be in writing
and shall be deemed effectively given: (a) upon personal delivery to the party
to be notified; (b) when sent by confirmed telex, facsimile  or electronic mail
if sent during normal business hours of the recipient, if not, then on the next
business day. All communications shall be sent to the parties hereto at the
respective addresses set forth below:
 

         
if to Stonington:
  
Stonington Capital Appreciation 1994 Fund, L.P
 
  
600 Madison Avenue
 
  
New York, NY 10022
 
  
Attention: Albert J. Fitzgibbons, III
 
  
Facsimile: (212) 339-8585
   
with a copy to:
  
Shearman & Sterling LLP
 
  
599 Lexington Avenue
 
  
New York, New York  10022
 
  
Attention: Eliza W. Swann, Esq.
 
  
Facsimile: (646) 848-8073
               
if to Obagi Trust:
 
The Zein and Samar Obagi Family Trust
   
270 North Canon Drive
   
Beverly Hills, CA   90210
    Attention: Zein E. Obagi, M.D.     Facsimile: (310) 271-8120      
with a copy to:
 
O’Melveny & Myers LLP
   
400 South Hope Street
   
Los Angeles, CA 90071
   
Attention: Matthew Close, Esq.
   
Facsimile: (213) 430-6407
             
if to the Company:
  
Obagi Medical Products, Inc.
 
  
3760 Kilroy Airport Way, Suite 500
 
  
Long Beach, CA 90806

 
 
 

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Attention: Preston S. Romm
 
  
Facsimile: (562) 628-1008
     
with a copy to:
  
Goodwin Procter LLP
 
  
The New York Times Building
   
620 Eighth Avenue
 
  
New York, NY 10018
 
  
Attention: Kevin T. Collins, Esq.
 
  
Facsimile: (212) 355-3333

 
7.8    Severability.    If any provision of this Agreement shall be judicially
determined to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
 
 
7.9    Titles and Subtitles.    The titles of the Articles and Sections of this
Agreement are for convenience of reference only and in no way define, limit,
extend, or describe the scope of this Agreement or the intent of any of its
provisions.
 
 
7.10   Interpretation. Reference in this Agreement to “beneficial ownership”
shall have the meaning set forth in Rule 13d-3 under the Exchange Act. The
various section headings are inserted for purposes of reference only and shall
not affect the meaning or interpretation of this Agreement or any provision
hereof.
 
7.11    Delays or Omissions.    It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party upon any breach or
default of any other party under this Agreement shall impair any such right,
power or remedy, nor shall it be construed to be a waiver of any such breach or
default, or any acquiescence therein, or of any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. It is further agreed that any waiver, permit, consent or approval of
any kind or character of any breach or default under this Agreement, or any
waiver of any provisions or conditions of this Agreement must be in writing and
shall be effective only to the extent specifically set forth in writing, and
that all remedies, either under this Agreement, by law or otherwise, shall be
cumulative and not alternative.
 
 
7.12    Consents.    Any permission, consent, or approval of any kind or
character under this Agreement shall be in writing and shall be effective only
to the extent specifically set forth in such writing.
 
 
7.13   Fees and Expenses. Each party hereto shall be solely responsible for the
payment of the fees and expenses of its advisors, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement,
except to the extent expressly set forth in this Agreement. Notwithstanding the
foregoing and not in lieu of any other legal rights that one party may have
against the other party, in the event that a party fails to perform its
obligations pursuant to the terms of this Agreement at the Closing, such
defaulting party shall be responsible for all reasonable out-of-pocket expenses
incurred by the non-defaulting party in connection with this Agreement and the
transactions contemplated hereby, including reasonable fees and expenses of one
legal counsel and financial advisors to the non-defaulting party.

 
 

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7.14    Further Assurances. Each party shall execute and deliver such additional
instruments, documents or other writings as may be reasonably requested by the
other party in order to confirm and carry out and to effectuate fully the intent
and purposes of this Agreement.
 
7.15   Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original, but all of which
together shall constitute one instrument.
 
 

[Signature page follows]

 
 

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        In Witness Whereof, the parties hereto have executed and delivered this
Stock Purchase Agreement as of the date first set forth above.

  OBAGI MEDICAL PRODUCTS, INC.                                       By: 
/s/ ALBERT F. HUMMEL
  By: 
/s/ PRESTON S. ROMM
     
Name:  Albert F. Hummel
   
Name:  Preston S. Romm
     
Title:  President
   
Title:  CFO
 

  STONINGTON CAPITAL APPRECIATION 1194 FUND, L.P.           By: Stonington
Partners, L.P., its general partner            By: Stonington Partners, Inc. II,
its general partner                                       By: 
/s/ JOHN A. BARTHOLDSON
            Name:  John A. Bartholdson             Title:  Partner        

  THE ZEIN AND SAMAR OBAGI TRUST                                       By: 
/s/ SAMAR OBAGI
            Name: Samar Obagi             Title:  Trustee, Zein and Samar Obagi
Trust

 

 

 

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