Exhibit 10.31


4-1-13


EMPLOYMENT AGREEMENT


August
10, 1999


David Goldstein

9 Via Zapador

Rancho Santa Margarita, CA 92688


Dear David:


I am pleased to offer you
the position of Director of Sales, United States for Obagi Medical Products,
Inc. (“OMP” or the “Company”) effective Oct 18, 1999 on the following terms:


A.                                                                                   Duties


You will perform the duties
customarily associated with this position with respect to the Company’s
operations on a full-time basis, and will report directly to the Vice President
of Sales and Marketing of the Company.


B.                                                                                     Compensation


Salary: Your
salary shall be $110,000 per annum subject to annual cost of living increases
based on the Consumer Price Index for All Items, All Urban Consumers for the
Los Angeles-Anaheim-Riverside, CA area or such greater increase as may be
approved by the Company’s Board of Directors in its discretion. Your salary
shall be paid semi-monthly, subject to standard payroll deductions and
withholdings.


Stock Option Grant: The Company intends to grant you 5,000 stock options to purchase
common stock of the Company under its Stock Option Plan. These options will
have an exercise price of $1.00 per share. All options will be subject to the
requirements of the Company’s Stock Option Plan, applicable rules under the
Internal Revenue Code, applicable accounting policies and securities laws.


Benefits: You
will be eligible for three weeks vacation annually and sick leave according to
standard Company.   You will also receive
all other benefits the Company provides to its most senior employees (e.g.,
health and dental insurance coverage). You will be eligible to participate in
the Company’s 401k plan after six months.



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Bonus: You
shall be entitled to an annual bonus based on the achievement of certain
benchmarks and in the amounts as set forth on Exhibit “A” attached hereto. All
bonuses will be subject to the standard payroll deductions and withholdings and
shall be paid not later than the end of the first fiscal quarter of the
following year. No bonus shall be due and owing unless you are employed by the
Company on December 31 of the applicable year. 
Pro rated bonus for 4th Qtr
1999 based on current published parameters.


C.                                                                                     Expenses


The Company shall reimburse
you for all other reasonable, ordinary and necessary expenses incurred in the
performance of your duties including all licenses and membership fees to
agencies and associations (such reimbursement shall be conditioned upon the
submission of reasonable detailed receipts and/or invoices substantiating such
expenses).


D.                                                                                    Termination


Either you or the Company
may terminate your employment with or without cause, at any time, for any
reason whatsoever without advance notice. This at-will employment relationship
cannot be changed except by a writing signed by the Chairman of the Board of
the Company.


If you voluntarily terminate
your employment, if you die or become physically or mentally disabled (subject
to the Company’s requirement to comply with all applicable laws), or if the
Company terminates your employment for cause, all compensation and benefits
shall cease immediately. For purposes of this agreement, termination for cause
shall mean material misconduct, including, but not limited to (i) conviction of
any felony or any crime involving moral turpitude or dishonesty or which is
punishable by imprisonment in a state or federal correctional facility; (ii)
participation in a fraud or act of dishonesty against the Company or any of its
customers or suppliers; (iii) willful and material breach of Company policies
or willful violation of reasonable rules, regulations, orders or directives of
the Company’s Board of Directors; (iv) refusal to perform your duties on a
full-time basis; (v) material breach of any term of this Agreement; (vi)
intentional damage to Company property; (vii) conduct by you which in the good
faith and reasonable determination of the Board of Directors of the company
demonstrates gross negligence, willful malfeasance or gross unfitness to serve.
In the case of sections iii, iv, and v, Company must provide Employee with
written notice of their intent to terminate and Employee shall be given 30 days
to correct the “cause” in order to avoid termination. The determination as to
the adequacy of such “corrective” action on the part of the employee shall be
subject to the good faith and reasonable determination of the Board of
Directors of the Company.



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E.                                                                                      Policies and Procedures


You will be expected to
abide by all Company policies and procedures. Company may issue policies,
rules, regulations, guidelines, procedures, or other informational material,
whether in the form of handbooks, memoranda, or otherwise, relating to its
employees. These materials are general guidelines for your information and
shall not be construed to alter, modify, or amend this agreement for any purpose
whatsoever, and this agreement shall control over such policies, to the extent
of any conflict.


F.                                                                                      Confidentiality/Non-Competition


At any time following
execution of this agreement, you agree not to use or disclose, directly or
indirectly, for any reason, whatsoever or in any way any confidential
information or trade secrets of Company, including, but not limited to,
information with respect to Company as follows: the identity, lists, and/or
descriptions of any customers of Company; financial statements, cost reports,
and other financial information; product or service pricing information;
contract proposals and bidding information; processes, policies and procedures
developed as part of a confidential business plan; and management systems and
procedures, including manuals and supplements thereto, other than (i) at the
direction of Company during the course of your employment (ii) after receipt of
the prior written consent of Company, (iii) as required by any court or
governmental regulatory agency having competent jurisdiction over Company, or
(iv) information made public by Company.


You agree that all
copyrights, trademarks, tradenames, service marks, inventions, processes and
other intangible or intellectual property rights that may be invented, conceived,
developed or enhanced by you while you are employed by the Company that relate
to the Company’s business, or that result from any work performed by you for
the Company, shall be the sole property of the Company, and you hereby assign
to the Company any right or interest that you may otherwise have in respect
thereof Upon the reasonable request of the Company, you shall execute,
acknowledge, deliver and file any instrument or document necessary or
appropriate to give effect to this provision and do all other acts and things
necessary to enable the Company to exploit the same or to obtain patents or
similar protection with respect thereto. You agree mat the covenants set forth
in this paragraph shall accrue to the benefit of Company, irrespective of the
reason for termination of the other provisions of this agreement and the
corresponding employment relationship created hereby.


You agree that while you are
employed by the Company and for a period of three years thereafter, you will
not, without the prior written consent of the Company’s Board of Directors:



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a.             Whether for compensation or otherwise,
directly or indirectly engage in the Company’s business, or any part thereof,
or assist any other person in such person’s conduct of the Company’s business,
or any part thereof, whether as a director, officer, employee, consultant,
adviser, independent contractor or otherwise;


b.             Hold a legal or beneficial interest in any
person which is engaged in the Company’s business or any part thereof, whether
such interest is as an owner, investor, partner, creditor (other than as a
trade creditor in the ordinary course of business), joint venture or otherwise;


c.             Solicit, divert or attempt to divert from the
Company or any person deriving title to the goodwill of the Company (a “Transferee”)
any business constituting, or any customer of, any part of the Company’s
business then conducted by the Company or such Transferee; or


d.             Induce or attempt to induce any person then,
or during the immediately preceding six (6) month period, engaged or employed
(whether part-time or full- time) by the Company or any Transferee, whether as
an officer, employee, consultant, salesman, adviser or independent contractor
to leave the employ of the Company or such Transferee, as the case may be, or
to cease providing the services to the Company or such Transferee, as the case
may be, then provided by such person, or in any other manner seek to engage or
employ any such person (whether or not for compensation) as an officer,
employee consultant, adviser or independent contractor such that such person
would thereafter be unable to devote his or her full business time and
attention to the business then conducted by the Company or such Transferee, as
the case may be.


You hereby specifically
acknowledge and agree that the restrictions contained in this paragraph are
reasonable and necessary to protect the business and prospective business of
Company, and that the enforcement of the provisions of this paragraph will not
work an undue hardship on you.


However, in the event your
employment is terminated by the Company without cause, you shall be permitted
to do the following as of the first anniversary of the date of such
termination:


a.             Whether for compensation or otherwise,
directly or indirectly engage in the Company’s business, or any part thereof,
or assist any other person in such person’s conduct of the Company’s business,
or any part thereof, whether as a director, officer, employee consultant,
adviser, independent contractor or otherwise; or


b.             Hold a legal or beneficial interest in any
person which is engaged in the Company’s business or any part thereof, whether
such interest is as an owner, investor, partner, creditor (other than as a
trade creditor in the ordinary course of business), joint venture or otherwise;
or



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G.                                                                                  Miscellaneous


To ensure rapid and economical resolution of any
disputes which may arise with the Company, or any of its officers or directors
or under this agreement, you agree that any and all disputes or controversies,
whether of law or fact of any nature whatsoever (including, but not limited to,
all state and federal statutory and discrimination claims whether for race,
sex, sexual orientation, religion, national origin, age, marital status, or
medical condition, handicap or disability, or otherwise) arising from any such
dispute or regarding the interpretation, performance, enforcement or breach of
this agreement shall be resolved by final and binding arbitration under the
Judicial Arbitration and Mediation Services Rules of Practice and Procedure.


If any provision of this agreement is held to be
illegal, invalid, or unenforceable under present or future laws, such provision
shall be fully severable, and this agreement and each separate provision hereof
shall be construed and enforced as if such illegal invalid, or unenforceable
provision had never comprised a part of this agreement, and the remaining
provisions of this agreement, shall remain in full force and effect and shall
not be affected by the illegal, invalid or unenforceable provision or by its
severance from this agreement. In addition, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of this
agreement a provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible and be legal, valid, and enforceable, if such
reformation is allowable under applicable law.


This agreement constitutes the complete, final and
exclusive embodiment of the entire agreement between you and the Company with
respect to the terms and conditions of your employment, and it supersedes any
other agreements or promises made to you by anyone, whether oral or
written.  You agree that, except as
provided herein, no other representations or promises were made to you
regarding your employment with the Company. This agreement shall be construed
and interpreted in accordance with the laws of the State of California.



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We look forward to your joining the Company and to a
successful and enjoyable working relationship.


 


	
  Sincerely,

  
	
   

  
	
   

  
	
  By

  	
   

  	
  /s/ Phillip J.
  Rose 8/10/99

  	
   

  
	
   

  	
   

  	
  Phillip J. Rose,
  President & CEO

  Obagi Medical Products, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Accepted By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ David Goldstein 8/31/99

  	
   

  
	
  David Goldstein

  	
   

  




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Exhibit “A”


Annual
bonus based on the percentage achievement of the Company’s consolidated annual
Net Revenue and EBITDA plan approved by the Board of Directors, in accordance
with the following schedule:




	
  Percentage of Plan Achieved

  	
   

  	
  Bonus Payable

  
	
   

  	
   

  	
   

  
	
  90%

  	
   

  	
  30% of Base Salary

  
	
  100%

  	
   

  	
  40% of Base Salary

  
	
  115%

  	
   

  	
  50% of Base Salary

  






 


Achievement of plan for the purposes of bonus
calculation will be weighted 50% to Net Revenue and 50% to EBITDA.



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