EXHIBIT 10.1

 

[Letterhead of Obagi Medical Products]

 

March 24, 2008

 

Mr. Stephen Garcia

9839 La Arena Circle

Fountain Valley, CA 92708

 

Re:   Transition Arrangements

 

Dear Stephen:

 

The purpose of this letter is to confirm the circumstances of your employment
with OMP, Inc. over the next four months as we have discussed recently.  Our
intent is to facilitate the Company’s orderly transition to a new CFO & EVP of
Operations & Administration, and to provide you with the possibility of a
substantial monetary reward, the “Transition Success Payment,” in exchange for
your cooperation in that transition.

 

We plan to continue your employment as CFO at your current salary and benefits
until July 15, 2008.  During that period of time you will be transitioning your
duties and responsibilities to others, as directed by the Company, and you will
use your best efforts to ensure a smooth transition.  Although our plan is to
continue your employment through July 15, your employment status until that time
will remain “at will,” which means that either you or the Company may end your
employment at any time for any reason.

 

Provided that you remain employed by the Company until July 15, 2008 and you
have performed your transitional duties to the Company’s reasonable
satisfaction, you will be eligible based at the CEO’s sole discretion, to
receive a Transition Success Payment equal to your current annual salary of
$253,000 payable over a period of one year on the Company’s normal payroll
cycle, less all normal payroll deductions.  During the period of time that you
receive this payment, you will not be an employee of the Company and you will
not be eligible to receive any benefits provided to the Company’s employees.  In
addition, you will be eligible based at the CEO’s sole discretion, to receive
any and all stock options that remain unvested, that would have vested between
the Separation Date and December 31, 2008, shall be deemed fully vested and
immediately exercisable, as of the Separation Date.  If your employment ends for
any reason before July 15, 2008, unless by mutual agreement with the CEO, you
will not be eligible for this payment or the accelerated stock vesting.  Your
receipt of this payment shall be conditional upon your execution of a release of
all claims as stated in Exhibit A attached hereto.

 

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Please sign below to indicate your acceptance of this proposal.  We look forward
to a mutually satisfactory transition.

 

 

Sincerely

 

 

/s/ Steven R. Carlson

 

 

March 24, 2008

 

  /s/ Stephen Garcia

Date

Stephen Garcia

 

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Exhibit A

 

Separation Agreement and General Release

 

For good and valuable consideration, the parties below enter this Separation
Agreement and General Release (the “Agreement”).

 

1.             Parties.  The parties to this Agreement are Stephen Garcia, his
heirs, representatives, successors and assigns (hereinafter referred to
collectively as “Mr. Garcia”) and OMP, Inc. and/or any of its successors,
subsidiaries, affiliates, parents, and related companies (hereinafter referred
to collectively as the “Company”).

 

2.             Separation from Employment.  Mr. Garcia acknowledges and agrees
that his employment relationship with the Company has ended, effective July 15,
2008 (the “Separation Date”), and has not been terminated earlier by either
party.

 

3.             Separation Benefits.  As consideration for the promises and
covenants of Mr. Garcia set forth in this Agreement the Company will pay
Mr. Garcia a Transition Success Payment equal to one year of pay at his current
rate of compensation of $253,000.  This sum shall be paid over a period of one
year in equal installments on the Company’s normal payroll schedule, less all
normal payroll deductions.  Mr. Garcia shall not be an employee of the Company
during the period that these payments are made, and he shall not be eligible for
any benefits provided to the Company’s employees during that period.  These
payments will begin on the first normal payroll date after the effective date of
this Agreement.  In addition, you will be eligible based at the CEO’s sole
discretion, to receive any and all stock options that remain unvested, that
would have vested between the Separation Date and December 31, 2008, shall be
deemed fully vested and immediately exercisable, as of the Separation Date.  
Mr. Garcia will be allowed to continue, at Mr. Garcia’s sole expense, his
coverage in the Company’s group health plans, pursuant to applicable law
(COBRA).

 

4.             No Other Payments Due.  Mr. Garcia acknowledges and agrees that
he has received all salary, accrued vacation, bonuses, or other such sums due to
him other than the Transition Success Payment.

 

5.             Release of Claims By Mr. Garcia.   As consideration for the
promises and covenants of the Company set forth in this Agreement, Mr. Garcia
hereby fully and forever releases and discharges the Company and its or their
current and former owners, shareholders, agents, employee benefit plans,
representatives, employees, attorneys, parties, successors, predecessors,
related companies, and assigns (hereinafter collectively called the “Released
Parties”), from all claims and causes of action, whether known or unknown,
including but not limited to those arising out of or relating in any way to
Mr. Garcia’s employment with the Company, including the termination of his
employment, based on any acts or events occurring up until the date of
Mr. Garcia’s signature below.  Mr. Garcia understands and agrees that this
Release is a full and complete waiver of all claims, including, but not limited
to, any claims of wrongful discharge,

 

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breach of contract, breach of the covenant of good faith and fair dealing,
violation of public policy, defamation, personal injury, emotional distress; any
claims under Title VII of the Civil Rights Act of 1964, as amended, the Fair
Labor Standards Act, the Age Discrimination in Employment Act of 1967, the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), as
related to severance benefits, the California Fair Employment and Housing Act,
California Government Code § 12900 et seq., the California Labor Code, the
California Business & Professions Code, the Equal Pay Act of 1963, the Americans
With Disabilities Act, the Family and Medical Leave Act, the California Family
Rights Act, the Civil Rights Act of 1991; and any claims under any other
federal, state, and local laws and regulations.  This Agreement does not release
claims that cannot be released as a matter of law, including, but not limited
to, claims under Division 3, Article 2 of the California Labor Code (which
includes indemnification rights).

 

6.             Outstanding Claims.  As further consideration and inducement for
this Agreement, Mr. Garcia represents that he has not filed or otherwise pursued
any charges, complaints or claims of any nature which are in any way pending
against the Company or any of the Released Parties with any court with respect
to any matter covered by this Agreement and that, to the extent permitted by
law, he will not do so in the future.  Mr. Garcia further represents that, with
respect to any charge, complaint or claim he has filed or otherwise pursued or
will file or otherwise pursue in the future with any state or federal agency
against the Company or any of the Released Parties, he will forgo any monetary
damages, including but not limited to compensatory damages, punitive damages,
and attorneys’ fees, to which he may otherwise be entitled in connection with
said charge, complaint or claim.  Nothing in this Agreement shall limit
Mr. Garcia’s right to file a charge, complaint or claim with any state or
federal agency or to participate or cooperate in such matters.

 

7.             Civil Code 1542 Waiver. As a further consideration and inducement
for this Agreement, Mr. Garcia hereby waives any and all rights under
Section 1542 of the California Civil Code or any other similar state, local, or
federal law, statute, rule, order or regulation he may have with respect to the
Company and any of the Released Parties.

 

Section 1542 provides:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

 

Mr. Garcia expressly agrees that this Agreement shall extend and apply to all
unknown, unsuspected and unanticipated injuries and damages as well as those
that are now disclosed.

 

8.             Consideration and Revocation Periods.  Mr. Garcia has been
advised that he should to consult with an attorney before signing this
Agreement.  Mr. Garcia also understands that he has twenty-one (21) calendar
days after receipt of this Agreement within which to review and

 

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consider it and decide to execute or not execute it, and that he shall not sign
it prior to July 15, 2008.  Mr. Garcia also understands that for a period of
seven (7) calendar days after signing this Agreement, he may revoke this
Agreement by delivering to the VP, Human Resources of the Company, within said
seven (7) calendar days, a letter stating that he is revoking it.  This
Agreement will be effective only after the expiration of this revocation period.

 

9.             No Admission of Liability.  By entering into this Agreement, the
Company and all Released Parties do not admit any liability whatsoever to
Mr. Garcia or to any other person arising out of claims heretofore or hereafter
asserted by him, and the Company, for itself and all Released Parties, expressly
denies any and all such liability.

 

10.          Confidentiality of Terms of Agreement.  Mr. Garcia agrees to
maintain in confidence the terms of this Agreement and to discuss them only with
attorneys, tax advisors, and family members who have a reasonable need to know
of such terms.

 

11.          Non-Disclosure of Confidential and Proprietary Information. 
Mr. Garcia agrees that he shall continue to maintain the confidentiality of all
confidential and proprietary information of the Company.  Mr. Garcia agrees
that, in accordance with this Agreement and any other confidentiality agreements
which may exist between him and the Company, he shall not divulge, furnish, or
make available to any party any confidential or proprietary information of the
Company.  Mr. Garcia further agrees that on or before the Separation Date, he
shall return to the Company all of its property in his possession.

 

12.          Joint Participation In Preparation Of Agreement.  The parties
hereto participated jointly in the negotiation and preparation of this
Agreement, and each party has had the opportunity to obtain the advice of legal
counsel and to review, comment upon, and redraft this Agreement.  Accordingly,
it is agreed that no rule of construction shall apply against any party or in
favor of any party.  This Agreement shall be construed as if the parties jointly
prepared this Agreement, and any uncertainty or ambiguity shall not be
interpreted against any one party and in favor of the other.

 

13.          Choice of Law and Consent to Jurisdiction.  The parties agree that
California law shall govern the validity, effect, and interpretation of this
Agreement.

 

14.          Section Headings.  Section headings in this Agreement are included
for convenience of reference only and shall not be considered a part of this
Agreement for any other purpose.

 

15.          Entire Agreement.  This Agreement constitutes the complete
understanding between Mr. Garcia and the Company and supersedes any and all
prior agreements, promises, representations, or inducements, no matter its or
their form, concerning its subject matter, with the exception of the Settlement
Agreement and General Release and any confidentiality, proprietary information,
trade secret or invention assignment agreement previously executed by
Mr. Garcia, which remain in full force and effect to the extent not inconsistent
with this Agreement.  No promises or agreements made subsequent to the execution
of this Agreement by these parties shall be binding unless reduced to writing
and signed by authorized representatives of these parties.  Should any of the
provisions of this Agreement be rendered invalid by a court or government agency
of

 

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competent jurisdiction, the remainder of this Agreement shall, to the fullest
extent permitted by applicable law, remain in full force and effect.

 

16.          Acknowledgement.  Mr. Garcia hereby acknowledges that he has read
and understands the foregoing Agreement and that he signs it voluntarily and
without coercion.

 

 

Dated:                                 , 200   

 

 

Stephen Garcia

 

 

 

 

Dated:                                 , 200   

OMP, Inc.

 

 

 

By

 

 

[Title]

 

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