Document:

Confidential
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Exhibit 10.20

 

CONSULTANT SERVICES AND

CONFIDENTIALITY AGREEMENT

 

This
Consultant Services and Confidentiality Agreement (the “Agreement”) is made and
entered into as of the 18th day of July, 2005 (the “Effective Date”)
by and between Obagi Medical Products, Inc., a Delaware corporation (“OMP”
or “Company”) and Jose Ramirez and JR Chem LLC (“JR” or “Consultant”).

 

Recitals

 

WHEREAS,
Consultant is being engaged to perform certain services for Company as
described in this Agreement in exchange for the compensation set forth herein.

 

WHEREAS,
in performing the services, Consultant will be involved with and have access to
information and materials of a highly sensitive nature which must be carefully
protected for Company’s success including, without limitation, certain
confidential information and trade secrets of Company.

 

WHEREAS,
Company and Consultant desire to define the rights and obligations between the
parties with respect to the subject matter hereof.

 

NOW
THEREFORE, in consideration of the mutual covenants and agreements herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, Company and Consultant agree as follows:

 

1.                         Terms and Conditions of
Consultant Engagement.

 

(a) Term.
Consultant shall commence providing services on January 1, 2005, for a
period of five (5) years (the “Initial Term”). If the parties mutually
agree in writing, within sixty (60) days prior to the expiration of the
then-current term, the Initial Term may be extended for up to two,
one-year renewal terms (each a “Renewal Term”).

 

(b) Service.
Consulting services (the “Services”) will include such activities as product
formulation, product development and regulatory work and such other services as
reasonably requested by Company, as well as the provision of sound scientific
support of marketing claims, research related to publications or presentations
resulting from clinical studies, alternative manufacturing site sourcing or
rectification of manufacturing processes or practices as they relate to quality
and such other projects and activities as reasonably requested by Company from
time to time. The Services may be more specifically defined in various
Statements of Work from time to time which shall become a part of this
Agreement and are hereby incorporated herein by this reference. In the event of
a conflict between the terms of this Agreement and the Statement of Work, the
Statement of Work shall control. The results of the Services shall be referred
to herein as “Work.” Consultant agrees to do the following as part of the
Services:

 

(i) Consultant
shall participate in such meetings as are reasonably requested by Company from
time to time.

 

(ii) Consultant
shall cooperate in good faith toward the development of the requirements and
deliverables for various Company projects (“Projects”) and related Company
project plan timeline (“Projects Plans”).

 

THE SYMBOL
[***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTION.

 

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(iii) Consultant
shall use its commercially reasonable efforts to undertake and complete each
Project in accordance with, and substantially on the schedule specified
in, the applicable Project Plan and provide tangible embodiments of the various
deliverables as defined in the Project Plans including, without limitation,
progress reports, formulations, methods, techniques, know-how, ideas or
inventions.

 

(iv) Unless
otherwise provided all deliverables under any Project are subject to acceptance
by Company using reasonable commercial judgment.

 

(v) Consultant
shall provide such technical support and training as Company may request
from time to time.

 

(c) Conflict
of Interest Prohibited. It is also understood that, during the Initial Term
and any Renewal Term(s) of this Agreement, Consultant may not consult,
work or serve in any capacity for (1) another person or entity which
intends to operate or does operate in any business in competition with the
Company (“Competitor”)or (2) any past, current or future customer of the
Company (“Customer”) to work in a field of work: (i) similar to the
Services, Skin Healthcare, or dermatology, aesthetic procedures, and/or plastic
surgery; (ii) related to technology similar to the Company’s technology or
(iii) that could result in disclosure of Company’s Confidential
Information. Notwithstanding the foregoing, if OMP is offered the option to
pursue an Other Invention (as hereinafter defined) by Consultant but refuses to
obtain rights in such Other Invention in accordance with this Agreement, then
Consultant shall be free to pursue that specific Other Invent (but not anything
beyond) with such third party as it chooses so long as: (i) such third
party is not a Customer or Competitor, and (ii) at all times Consultant
strictly observes all obligations hereunder including, without limitation,
obligations of confidentiality. Not withstanding the foregoing, it will not be
a conflict of interest for Consultant to continue to work with any person or
entity with which Consultant is currently working.

 

(d) Means
and Methods. The Consultant agrees to furnish personal services as provided
herein as an independent contractor using Consultant’s own means and methods.

 

(e) Compensation.
During the term of this Agreement and subject to the terms and conditions
hereof; the Company shall pay to Consultant for Services [***]

 

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(f) Consultant
Responsible for Taxes and Indemnification. Without limiting any of the
foregoing, Consultant agrees to accept exclusive liability for the payment of
taxes or contributions for unemployment insurance or old age pensions or
annuities or social security payments which are measured by the wages, salaries
or other remuneration paid to Consultant, if any, and to reimburse and
indemnify the Company for such taxes or contributions or penalties which the
Company may be compelled to pay. The Consultant also agrees to comply with
all valid administrative regulations respecting the assumption of liability for
such taxes and contributions.

 

(g) Company
Buy-Out Option. Company may buy-out the Consultant’s service
obligation (the “Buy-Out Option”) for the then-current term as follows:  [***]

 

(h) Termination
by Death. This Agreement shall automatically terminate upon Consultant’s
death. In such event, the Company shall be obligated to pay Consultant’s estate
or beneficiaries only the accrued but unpaid fees and expenses due as of the
date of death and any royalty obligations that continue after the termination
of the Agreement.

 

(i) Termination
by Notice. This Agreement is terminable by the Company, without triggering
the Buy-Out Option, effective upon thirty (30) days’ notice to Consultant for
any violation by Consultant of any provision of this Agreement, unless
Consultant is able to cure such violation within the notice period. Subject to
the Buy-Out Option, this Agreement is terminable for convenience by the Company
at any time in its sole and absolute discretion, effective upon thirty (30)
days’ notice to Consultant. If the Company exercises its right to terminate the
Agreement, any obligation, except for royalty obligations, it may otherwise
have under this Agreement shall cease immediately. The Consultant’s obligations
pursuant to Section 1(c) (conflict of interest prohibition) of this
Agreement shall continue, however, beyond the termination of this Agreement for
the duration of its term. The Consultant’s obligation pursuant to Sections 2, 3,
4, 5, 9, 10, 12 and 13 of this Agreement shall continue in perpetuity.

 

(j)
Immediate Termination. Company may immediately terminate this
Agreement without triggering the Buy-Out Option: (1) if Consultant is
convicted of a felony or another crime involving material harm to the standing
or reputation of the Company; (2) for Consultant’s nonfeasance or willful
misconduct in the performance of Consultant’s duties for the Company; (3) for
conduct by Consultant which brings the Company into public disgrace or
disrepute, including, without limitation, dishonesty and fraud; or (4) if
Consultant shall have been continuously inattentive to Consultant’s duties
after written notice of the same.

 

2.                         Company Confidential
Information. Consultant agrees
and acknowledges that information and materials disclosed to or produced to
Consultant by Company in written, oral, magnetic, photographic, optical or
other form whether now existing or developed or created during the period
of Consultant’s employment or engagement with Company are proprietary to
Company and are highly sensitive in nature and “Confidential Information” means
any proprietary information (including, without limit, patents, copyrights,
trade secrets, trademarks, service marks, and the like), technical data, trade
secrets, methods, techniques, know-how of Company or its licensors and the
Inventions (as hereinafter defined), including, but not limited to, research, product

 

THE SYMBOL
[***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTION.

 

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plans, products, services,
suppliers, employee lists and employees, customers lists and customers,
markets, software, developments, inventions, processes, formulas, technology,
designs, drawings, engineering, hardware configuration information,
manufacturing information and procedures, marketing, finances, budgets or other
business information disclosed either directly or indirectly. All materials or
information provided by Company to Consultant that Company deems to be
confidential shall be clearly marked “Confidential” in writing by Company.
Confidential Information does not include information which: (i) is known
to Consultant at the time of disclosure to Consultant by Company as evidenced
by Consultant’s written records, (ii) has become publicly known and made
generally available through no wrongful act of Consultant, or (iii) has
been rightfully received by Consultant from a third party who is authorized to
make such disclosure.

 

3.                         Consultant Obligations As To
Confidential Information. During
Consultant’s engagement by Company, Consultant will have access to the
Confidential Information and will occupy a position of trust and confidence
regarding Company’s affairs and business. Consultant agrees to take the following
steps to preserve the confidential and proprietary nature of the Confidential
Information:

 

(a) Non-Disclosure.
During and at all times after Consultant’s engagement with Company, except to
the extent specifically provided in this Agreement, Consultant shall: (i) not
use, disclose or otherwise permit any person or entity access to any of the
Confidential Information or any notes, compilations, analyses, studies,
interpretations or any other documents or other embodiment prepared by
Consultant that is comprised of or includes any portion of the Confidential
Information (“Notes”); (ii) only use the Confidential Information for the
benefit of the Company and not for any other person or entity whatsoever; (iii) not
copy or reproduce any Confidential Information without the express prior
written consent of the Company; (iv) not use the Confidential Information
to compete with or cause detriment to the Company; (v) not, either
directly or indirectly, or through a third party, copy or use the Confidential
Information, or a derivative thereof, to create any product that is
functionally, visually, or otherwise substantially similar to a work or product
or products of the Company, or to create a derivative thereof; (vi) not,
either directly or indirectly, or through a third party, reverse engineer, any
of the Confidential Information, (vii) not remove any copyright or
proprietary rights notice attached to or included in any Confidential
Information, and reproduce on each copy of the Confidential Information, or part thereof,
the same proprietary notices or legends which appear on the original copy of
the Confidential Information provided hereunder; and (viii) not disclose
the existence of or any provisions of this Agreement Consultant understands
that the Confidential Information is and shall remain the property of Company
and that Consultant is not allowed to sell, license or otherwise exploit any
products or services which embody in whole or in part any Confidential
Information.

 

(b) Prevent
Disclosure. Consultant will take all reasonable precautions to prevent
disclosure of the Confidential Information to unauthorized persons or entities.
Consultant shall immediately notify Company of any information which comes to
its attention which might indicate that there has been a loss of
confidentiality of the Confidential Information. In such event, Consultant
shall take all reasonable steps within Consultant’s power to limit the scope of
such loss of confidentiality.

 

(c) Abide
by Company’s Restrictions. Consultant will treat as confidential and
proprietary any third party information in accordance with Company’s reasonable
instructions to Consultant.

 

THE SYMBOL
[***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTION.

 

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(d) Return
All Materials. Upon termination of Consultant’s engagement with Company for
any reason whatsoever, or at any time Company may so request, Consultant
will deliver to Company any and all materials embodying any Confidential
Information, including, without limitation, any documentation, records,
listings, designs, Notes, notebooks, data, flowcharts, sketches, drawings,
memoranda, models, accounts, reference materials, samples, machine-readable
media and equipment and similar repositories of Confidential Information which
in any way relate to the Confidential Information including, without
limitation, all copies, summaries, records, descriptions, modifications,
drawings or adaptations of such materials, which Consultant may then
possess or have under its control. Concurrently with the return of the
aforementioned proprietary materials to Company, Consultant shall deliver to
Company a certificate of Consultant certifying that all such materials have
been returned to Company. All covenants and agreements of Consultant herein
shall survive the return of such materials. Consultant further agrees that upon
termination of this Agreement, Consultant shall not retain any document, data
or other material of any description containing any Confidential Information or
proprietary materials of Company.

 

(e) No
Solicitation by Consultant. During the period of Consultant’s engagement
and for twelve (12) months after such engagement is terminated, Consultant will
not directly or indirectly solicit any of Company’s employees for employment or
engagement with a person or entity involved in marketing products or services
competitive with Company.

 

(f) Additional
Restrictions on the Use of Confidential Information.

 

(i) Restriction.
Except as specifically provided for in this Agreement, Consultant agrees and
covenants that because of the confidential and sensitive nature of the
Confidential Information and because the use of, or even the appearance of the
use of, the Confidential Information in certain circumstances may cause
irreparable damage to Company and its reputation, or to customers of Company,
Consultant shall not at any time, directly or indirectly, through any
corporation or association in any business, enterprise or employment, develop,
apply, invent, or use the Confidential Information, or otherwise derive from
the Confidential Information a corresponding work, technology or product of any
kind, including, without limitation, a corresponding work product or technology
that is in any way similar to or competitive in the marketplace.

 

(ii) Scope.
The parties agree that the marketplace for the Company’s products and
technology and the geographic scope of Company’s use of the Confidential
Information, products, and Services are and shall be worldwide and therefore
the covenants restricting Consultant’s activities as provided in Section 3(f)(i) shall
apply to all cities, counties and countries in which Company is doing business
worldwide.

 

(iii) Judicial
Modification. The parties agree and stipulate that the agreements and
covenants contained in the preceding Sections 3(f)(i) and 3(f)(ii) are
fair and reasonable in light of all of the facts and circumstances of the
relationship between the parties; however, the parties are aware that in
certain circumstances courts have refused to enforce certain restrictions of
this type. Therefore, in furtherance of and not in derogation of the provision
of Sections 3(f)(i) and 3(f)(ii), the parties agree that in the event a
court should decline to enforce the provision of Section 3(f)(ii) or
3(f)(ii), then that Section or Sections shall be deemed to be modified to
restrict Consultant’s competition with Company to the maximum extent, in both time
and geography, which the court shall find enforceable; however, in no event
shall the provision of the

 

THE SYMBOL
[***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTION.

 

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preceding Section be
deemed to be more restrictive to Consultant than those already contained in
this Section 3(f).

 

(iv) Equitable
Relief. Consultant’s obligations contained in this Section 3(f) are
of a special and unique character which gives them a peculiar value to Company,
and Company cannot be reasonably or adequately compensated in damages in an
action at law in the event Consultant breaches such obligations. Consultant
therefore expressly agrees that, in addition to any other rights or remedies
Company may possess, Company shall be entitled to injunction or other
equitable relief in the form of preliminary and permanent injunctions,
without bond or other security unless required by law, in the event of any
actual or threatened breach of such obligations by Consultant.

 

4.                         Ideas And Inventions. Consultant agrees to promptly disclose to
Company all Consultant’s written work, ideas, concepts, know-how, techniques,
processes, methods, inventions, discoveries, developments, Work, innovations
and improvements conceived or made by Consultant, whether alone or with others,
during Consultant’s engagement with Company and during the one (1) year
period thereafter, and which either: (a) involve or are related to Company’s
actual or demonstrably anticipated research or development; (b) incorporate
or are based on, in whole or in part, any of the Confidential Information or
other Company ideas; (c) involve or are related to the concepts listed in Exhibit B
attached hereto; or (d) result from or in connection with the Services
(the foregoing collectively “Inventions”). For the sake of clarity and for
purposes of this Agreement, the term Inventions, as defined in this Section 4,
is distinct and different from the meaning of Other Inventions in Section 7
of this Agreement. For further clarity, Inventions shall be assigned in
accordance with this Section 4 and Other Inventions may be licensed
in accordance with Section 7. Consultant hereby agrees to license all
right title and interests in an to any and all Inventions including, without
limitation, all intellectual property rights, industrial property rights or
similar rights and the right to obtain such rights throughout the world.
Consultant agrees to provide all assistance reasonably requested by Company in
the preservation of its interests in the Inventions, such as by executing
documents, testifying, and all similar activity, such assistance to be provided
at Company’s expense. Consultant shall, at the expense of Company, assist
Company or its nominees to obtain patents for such Inventions in any countries
throughout the world. Such Inventions shall be the property of Company or its
nominees, whether patented or not. For the purposes of this Agreement, an
Invention is deemed to have been made during the term of Consultant’s
engagement if the Invention was conceived or first actually reduced to practice
during the term of such engagement.

 

5.                         Copyrights. Consultant agrees that any Work which is
eligible for copyright protection in the United States or elsewhere shall be a
work made for hire. If any such Work is deemed for any reason not to be a work
made for hire, Consultant assigns all right, title and interest in the
copyright in such Work, and all extensions and renewals thereof, to the
Company, and agrees to provide all assistance reasonably requested by Company
in the establishment, preservation and enforcement of its copyright in such
Work, such assistance to be provided at Company’s expense but without any
additional compensation to Consultant. Consultant agrees to waive all moral
rights relating to the Work developed or produced, including, without
limitation, any and all rights of identification of authorship and any and all
rights of approval, restriction or limitation on use or subsequent
modifications.

 

6.                         Conflicting Obligations And
Rights. Prior to commencing
any Work for Company, Consultant shall inform Company in writing of any
apparent or potential conflict between Consultant’s Work for Company and (a) any
obligations Consultant may have to preserve

 

THE SYMBOL
[***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTION.

 

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the confidentiality of the
proprietary information or materials of any other party, or (b) any rights
Consultant claims to any patents, copyrights, trade secrets, or other
discoveries, inventions, ideas, know-how, techniques, methods, processes or
other proprietary information or materials. Otherwise, Company may conclude
that no such conflict exists and Consultant agrees thereafter to make no such
claim against Company. Company shall receive such disclosures in confidence.
All such existing obligations and claims of Consultant, if any, as of the date
of this Agreement are listed on Exhibit A attached hereto. Nothing herein
shall constitute a transfer to Company of rights in any pre-existing invention
or intellectual property owned by Consultant or on which Consultant is an
inventor.

 

7.                         Right of First Refusal. As part of the consideration and as a
material inducement for Company entering into this Agreement, Company shall
have right of first refusal for the exclusive license of any and all inventions
of Consultant that are patentable, copyrightable, or otherwise protectable by
legal means in any jurisdiction throughout the world, developed or reduced to
practice by Consultant during the term of this Agreement but not in connection
with the Services and therefore not otherwise assigned to Company pursuant to Section 4
of this Agreement (“Other Invention”) for applications within Skin Healthcare
[***]

 

“Skin
Healthcare” is defined as any and all products or technologies which can be or
are applied to the surface of skin (topically) for an indirect or direct effect
on the skin or underlying tissues. Skin Healthcare shall also include any
systemic applications whereby a previous topical application has been licensed.
This would not apply to products or technologies involving direct application
to internal tissues such as oral care, cardiovascular or orthopedic implants.

 

(a) Feasibility
Plan and Evaluation Period. Within thirty (30) days of the date that
Consultant provides Company with written notice of the Other Invention, the
parties will in good faith negotiate, and Consultant shall not unreasonably
withhold agreement, and agree upon a feasibility plan and a time table for
carrying out such feasibility plan for the Other Invention (“Feasibility Plan”),
which will include the necessary preclinical, proof of concept clinical and
manufacturing feasibility studies, in order to evaluate the commercial value of
such patents or other legally protectable right and each related product. Consultant
agrees to cooperate and provide reasonable assistance in preparing the
Feasibility Plan and provide company all technical information and know-how
related to the Other Invention. All information generated during the
Feasibility Plan shall be owned by the Company and subject to the terms of
confidentially herein. As part of Company’s right of first refusal,
Company shall have a minimum of six (6) months or longer as reasonably
required by the feasibility plan time table to evaluate the Other Invention (“Evaluation
Period”), commencing from the date of the mutually signed and agreed upon
Feasibility Plan. Upon Company’s written request, the Evaluation Period may be
extended as reasonably necessary to determine the feasibility of the product
and accomplish the goals of the Feasibility Plan.

 

(b) Option.
At the end of the Evaluation Period, including any extension thereof, Company may exercise
its option (each an “Option”) by providing affirmative notification in writing
of the exercise of its Option to the Other Invention. Upon Company’s exercise
of an Option and with respect to the Other Invention evaluated, Consultant
agrees to grant, subject to the royalty provisions of Section 8, below, an
exclusive (even as to Consultant), worldwide license and right to use,
research, develop, make or have made, modify or have modified, distribute or
have distributed, import or have imported, sell, license and otherwise exploit
the Other Invention including, without

 

THE SYMBOL
[***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTION.

 

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limitation, any and all
intellectual property rights therein throughout the world and the patent(s) and
any products which fall under the patent(s) (“Licensed Rights”) to Company.
Company shall not have the right to sublicense or transfer said license without
the prior written approval of Consultant, which approval shall not be
unreasonably withheld. For the purposes of this agreement, a change in control
of the company, whether through merger with another entity, or the acquisition
of or by another company, shall not constitute a sublicense or transfer of said
license, and shall not require written approval of Consultant. As requested
Consultant shall provide to Company all intellectual property related to the
Other Invention and Licensed Rights including, without limitation, all
know-how, ideas, notes, analysis, descriptions, formulas, methods and any
tangible embodiments thereof (regardless of the form or format). In the
event Company does not exercise the Option to obtain, after the expiration of
the Evaluation Period, or extension thereof, the Licensed Rights, Consultant
shall be free to pursue any other third party relationship with respect
thereto.

 

(c) Patent
Prosecution. Consultant agrees to, at its expense, prosecute, or cause to
be prosecuted to allowance or final rejection, and reasonably maintain, in the
United States and such other countries as Company may request from time to
time, the patents and patent applications (or other similar rights throughout
the world however called) Consultant in its sole discretion deems appropriate
related to the Other Invention (“Other Invention Patent”). During the
Evaluation Period Consultant shall notify Company in writing regarding all
actions related to the Other Invention Patents and Company and Consultant shall
discuss and mutually agree on the various activities and responses related
thereto. Consultant shall reasonably pursue each such Other Invention Patent
application to allowance. In the event Company exercises its Option with
respect to any Other Invention, then Company shall at that point assume the expense
of filing, prosecuting and maintaining any patent applications or patents
relating to the Other Invention for which the Option was exercised After
exercise of an Option relating to an Other Invention, Company shall pay all
government fees required to obtain and keep in force any and all Other
Invention Patents and applications therefor and shall submit evidence to
Consultant that said government fees have been timely paid. In the event that
Company decides not to prosecute, not to pay a government fee due on, or
otherwise to abandon, any Other Invention Patent or application therefor within
the in any country in which it is required to do so, Company shall send
Consultant written notice of said decision at least ninety (90) days in advance
of the action or payment due date. If Company decides not to prosecute, not to
pay a government fee due on, or otherwise to abandon, a Other Invention Patent
or application therefor in any country in which it is required to do so,
Consultant shall have the option to take over such Other Invention Patents. If
Consultant takes over such Other Invention Patent pursuant to the foregoing
sentence, Consultant shall in its sole discretion thereafter be responsible for
paying the costs and expenses associated with prosecuting and maintaining such
Other Invention Patent or application therefor. As set forth in Section 8,
below, Company’s obligation to pay royalties may be reduced, but is not
relieved by the absence of an issued patent in any particular country.

 

(d) Product
Development Plan. Commencing on the date that Company exercises an Option
and Consultant licenses the Licensed Rights, a product development plan (“Product
Development Plan”) with estimated costs and timelines will be completed within
sixty (60) days by Company for the development and commercialization of each
product. Subject to the R&D Chargeback, Company agrees to solely bear the
full cost and responsibility for all evaluation expenses, product development,
clinical assessments, commercial preparation, patent protection and related patent
expenses, consulting costs.

 

THE SYMBOL
[***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
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8.                         Royalty. As consideration for the Licensed Rights,
Company will pay a royalty for the successful commercialization of products
developed or identified by Consultant within the scope of this Agreement as
follows:

 

(a) Products
developed or licensed by Company. For new products sold by Company based on
the Licensed Rights pursuant to this Agreement, Company will pay royalties as
follows:  [***]

 

THE SYMBOL [***]
IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTION.

 

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[***]

 

9.                         Solicitation And Consultant
Restrictions. In
consideration of the disclosure of Confidential Information of Company to
Consultant, Consultant agrees that, during Consultant’s engagement and for a
period of two (2) years following the end of Consultant’s engagement to

 

THE SYMBOL
[***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND
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perform the Services,
Consultant will not directly or indirectly (through a family member or any
other person acting on their behalf, or otherwise); (i) be involved, directly
or indirectly in the development of a product that is substantially similar to
the Service or and Company product, or (ii) act as an officer, director,
employee, consultant, shareholder, lender, or agent of any entity which is
engaged in any business of the same or substantially similar nature as, or in
competition with, the business in which Company is now engaged or in which
Company becomes engaged during the term of Consultant’s engagement. The
foregoing restrictions are deemed reasonable by Consultant since Consultant
agrees that the inadvertent use of Confidential Information in such
circumstances would be inevitable. Notwithstanding the foregoing, if Consultant
can prove to Company’s reasonable satisfaction that none of Company’s
Confidential Information will be used, then the above restriction will not
apply.

 

10.                  Remedies and Enforcement. No remedy conferred on Company by any of
the specific provisions of this Agreement is intended to be exclusive of any
other remedy, and each and every remedy shall be cumulative and shall be in
addition to every other remedy given or now or later existing at law or in
equity or by statute or otherwise. The election of one or more remedies by
Company or Consultant shall not constitute a waiver of the right to pursue
other available remedies. The failure of Company to promptly institute legal
action upon any breach of this Agreement shall not constitute a waiver of that
or any other breach hereof.

 

11.                  Consultant Warranties. Consultant warrants that: (a) Consultant’s
agreement to perform the Services does not violate any agreement or
obligation between Consultant and any third party; (b) the Work as
delivered to Company does not known or suspected to infringe any copyright,
patent, trade secret or any other proprietary right held by any third party; (c) Consultant
has obtained all necessary licenses, permits and other requisite authorizations
and has taken all actions required by applicable laws or governmental
regulations in connection with its business
as now conducted; (e) Consultant has the right, without the consent of any
other person or entity, to enter into this Agreement and assign rights as set
forth herein, grant the Option and the Licensed Rights; and (c) Consultant
has not assigned and/or granted licenses to any intellectual property covered
by this Agreement including, without limitation, the Work, Inventions, Other
Inventions, Other Invention Patents or Licensed Rights to any other person or
entity that would restrict the rights granted hereunder. Without limiting the
foregoing, Consultant specifically represents and warrants to Company that
Consultant’s performance of all the terms of this Agreement does not and will
not knowingly breach any agreement to keep in confidence proprietary
information or trade secrets acquired by Consultant in confidence or in trust
prior to its engagement by Company, and Consultant will not disclose to
Company, or induce Company to use, any confidential or proprietary information
or material belonging to others. Consultant agrees not to enter into any
agreement, either written or oral, in conflict with this Agreement.

 

12.                  Indemnification.

 

(a) Indemnification
by Consultant. Consultant shall, at its own expense, defend, indemnify and
hold harmless Company and its employees, officers, directors, licensees and
agents from and against any and all liabilities, claims, actions, losses, costs
and expenses (including, without limitation, reasonable attorneys’ fees and
disbursements) relating to or arising out of (i) allegations that any
intellectual property covered by this Agreement including, without limitation,
the Work, Inventions, Other Inventions, Other Invention Patents or Licensed
Rights (or any portions thereof), or the use thereof, or the exercise of any of
the rights granted to Company under this Agreement, intentionally infringes
upon or misappropriates the rights of any third party; or (ii) Consultant’s
actual or alleged: (a) intentional infringement of any United States or
foreign patent,

 

THE SYMBOL
[***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTION.

 

11

 

Confidential
Treatment Requested

 

foreign letters patent,
license, trademark, copyright, trade secret or any other proprietary right; (b) breach
of this Agreement, any other agreement or the inaccuracy of any Consultant
representation herein; (c) violation of any law, statute, ordinance,
order, rule or regulation; or (d) act or omission in connection with
the performance of any of the Services called for by this Agreement, or any
gross negligence or intentional misconduct in connection with such performance
at Consultant’s facility.

 

(b) Indemnification
by Company. Company shall, at its own expense, defend, indemnify and hold
harmless Consultant from and against any and all liabilities, claims, actions,
losses, costs and expenses (including, without limitation, reasonable attorneys’
fees and disbursements) relating to or arising out of Company’s actual or
alleged gross negligence or intentional misconduct in connection with the
performance of its obligations under this Agreement the development, sale or
use of any product under this Agreement by or on behalf of Company.

 

13.                  Limit of Liability. NOTWITHSTANDING ANYTHING ELSE IN THIS
AGREEMENT OR OTHERWISE, NEITHER CONSULTANT NOR COMPANY WILL BE LIABLE WITH
RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE,
STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY INCIDENTAL,
SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES. THE FOREGOING LIMITATION DOES NOT
APPLY TO CONSULTANT’S OBLIGATIONS OF CONFIDENTIALITY UNDER SECTIONS 2 AND 3 OR
INDEMNITY UNDER SECTION 12.

 

14.                  Independent Contractor. Consultant is an independent contractor of
Company. Consultant understands and agrees that Consultant shall not be
considered as having employee status with Company and Consultant will not
participate in any plans, arrangements, or distributions by Company pertaining
to or in connection with any pension, stock, bonus, profit-sharing, or other
benefit program Company may have for its employees. Consultant has no
authority to act on behalf of or to enter into any contract, incur any
liability or make any representation on behalf of Company.

 

15.                  Miscellaneous Provisions.

 

(a) Assignment
and Delegation. Company’s rights under this Agreement shall be assignable,
and its duties may be delegated. Consultant’s rights under this Agreement shall
not be assignable nor shall Consultant’s duties be delegated without the prior
written consent of Company which consent shall not be unreasonably withheld.
For the purposes of this agreement, a change in control of the Consultant,
whether through merger with another entity, or the acquisition of or by another
company, shall not constitute a sublicense or transfer of said license, and
shall not require written approval of the Company so long as the primary owner
of Consultant on the date this agreement is executed shall remain an active
principle of the surviving entity. Nothing contained in this Agreement,
expressed or implied, is intended to confer upon any person or entity other
than the parties and their successors in interest and permitted assignees, any
rights or remedies resulting from this Agreement unless so stated to the
contrary.

 

(b) Prior
Disclosures. The parties agree this Agreement shall apply to any
Confidential Information that may have been provided to Consultant by
Company, prior to the Effective Date hereof.

 

THE SYMBOL
[***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTION.

 

12

 

Confidential
Treatment Requested

 

(c) Severability.
This Agreement is intended to be valid and enforceable in accordance with its
terms to the fullest extent permitted by law. If any provision of this
Agreement is held to be void, invalid, unenforceable or inoperative, by any
court of competent jurisdiction, such event shall not affect the validity or
enforceability of any and all other provisions hereof, which shall continue and
remain in full force and effect as though such void, invalid, unenforceable or
inoperative provision had not been a part of this Agreement.

 

(d) Notice.
All notices, requests, demands and other communications shall be in writing and
shall be deemed to have been duly given if delivered or if mailed, to the
parties at the addresses indicated below their respective signatures on the
last page hereof (or at such other address as shall be given in writing by
either party to the other) by United States certified or registered mail,
prepaid, return receipt requested.

 

(e) Successors
and Assigns. All covenants, representations, warranties and agreements of
the parties contained herein shall be binding upon and inure to the benefit of
their respective successors and permitted assigns.

 

(f) Amendments.
This Agreement shall not be modified, amended, changed, supplemented or in any
way altered, nor may any obligations hereunder be waived or extensions of
time for performance granted, except by an instrument in writing signed by duly
authorized agents of Company and Consultant.

 

(g) Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

 

(h) Entire
and Sole Agreement. This Agreement constitutes the entire understanding and
final expression of the agreement between the parties regarding the subject
matter of this Agreement and supersedes any and all prior or contemporaneous
oral or written communications regarding it, all of which are merged herein and
may not be contradicted by evidence of any prior or contemporaneous
agreement. Each of the Exhibits and Schedules referred to in this Agreement is
incorporated into this Agreement by this reference. The parties further intend
that this Agreement constitutes the complete and exclusive statement of its
terms and that no extrinsic evidence whatsoever may be introduced in any
judicial proceeding, if any, involving this Agreement.

 

(i) Survival.
The confidentiality obligation set forth herein shall survive any termination
or expiration of this Agreement.

 

(j)
Governing Law. This Agreement shall be governed, construed and
interpreted in accordance with the laws of the State of Delaware excluding the
choice-of-law provisions of such laws, the Uniform Commercial Code on the
Sale of Goods, and the United Nations Convention on Contracts for the
International Sale of Goods. In the event a judicial proceeding is necessary,
the sole forum for resolving disputes arising under or relating to this
Agreement are the state and/or federal courts of Delaware, and the parties
hereby consent to the jurisdiction of such courts, and that venue shall be
proper in such courts.

 

(k)
Attorneys Fees. In the event any declaratory or other legal or equitable
action is instituted between any of the parties in connection with this
Agreement, then, as between the parties hereto, the prevailing party shall be
entitled to recover from the losing party all of its costs,

 

THE SYMBOL
[***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTION.

 

13

 

Confidential
Treatment Requested

 

fees and expenses, including,
without limitation, court costs and reasonable attorneys’ fees (“Costs”). In
addition, without limitation, should any judgment be enforced or collected
relating to any dispute regarding this Agreement, the prevailing party shall be
entitled to all of its Costs reasonably necessary to enforce or collect such
judgment. The “prevailing party” means the party determined by the court to
have most nearly prevailed, even if such party did not prevail in all matters,
not necessarily the one in whose favor a judgment is rendered. Further, in the
event of any default by a party under this Agreement, such defaulting party
shall pay all the expenses and attorneys’ fees incurred by the other party in
connection with such default, whether or not any litigation is commenced.

 

(l)
Covenant Not to Bring Claims. Consultant agrees and covenants not to
bring any claim against Company for any infringement of Consultant’s rights for
any use or exploitation by Company of any of the Inventions, Other Invention,
Work or products for which the Company affirmatively exercised its rights to
license.

 

(m)
Waivers and Extensions. Waivers or extensions may be given or
withheld in the sole and absolute discretion of the party who is requested to
grant the waiver or extension, but to make such a waiver effective it must be
made in writing. No waiver of any breach of any agreement or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof or of any other agreement or provision herein contained. No extension
of time for performance of any obligations or acts shall be deemed an extension
of the time for performance of any other obligations or acts.

 

[Signature Page Follows]

 

THE SYMBOL
[***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTION.

 

14

 

Confidential
Treatment Requested

 

WHEREFORE,
by their signature below, the parties acknowledge that they have reviewed
carefully what has been expressed in this document, which they understand is a
legally binding document, and that the understandings and agreements expressed
in this document are binding upon them.

 

	
   

  	
   

  	
  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OBAGI
  MEDICAL PRODUCTS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
  /s/ STEVE CARLSON

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Printed Name:

  	
  STEVE CARLSON

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  PRESIDENT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
  310 Golden Shore, Suite 100,

  
	
   

  	
   

  	
   

  	
  Long Beach, CA 90802

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CONSULTANT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  JOSE
  RAMIREZ

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
  /s/ Jose E Ramirez

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Printed Name:

  	
  Jose E Ramirez

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
  18 Fox Court 

  
	
   

  	
   

  	
   

  	
  Trumbull, CT 06611

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  JR CHEM
  LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
  /s/ Jose E Ramirez

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Printed Name:

  	
  Jose E Ramirez

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Owner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
  116 A Research Drive

  
	
   

  	
   

  	
   

  	
  Milford, CT 06460

  

 

SIGNATURE PAGE

 

THE SYMBOL
[***] IS USED TO INDICATE THAT A PORTION OF THE EXHIBIT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTION.Exhibit 10.21

 

INDEMNIFICATION AGREEMENT

 

This Agreement is
made as of                       ,
2006, between Obagi Medical Products,
Inc., a Delaware corporation (the “Company”), and                         
(the “Indemnitee”).

 

RECITALS

 

Both the Company and
Indemnitee recognize that highly competent persons have become more reluctant
to serve publicly-held corporations as directors or in other capacities unless
they are provided with adequate protection through insurance or adequate
indemnification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of the corporation.

 

In recognition of
Indemnitee’s need for substantial protection against personal liability in
order to enhance Indemnitee’s continued service to the Company in an effective
manner and Indemnitee’s reliance on the provisions of the Company’s Certificate
of Incorporation (“Certificate of Incorporation”) and the Company’s Bylaws (the
“Bylaws”) permitting indemnification of the Indemnitee to the fullest extent
permitted by law, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such Certificate of Incorporation and
Bylaws will be available to Indemnitee (regardless of, among other things, any
amendment to or revocation of such Certificate of Incorporation or Bylaws or
any change in the composition of the Company’s Board of Directors or
acquisition transaction relating to the Company), the Company wishes to provide
in this Agreement for the indemnification of and the advancing of expenses to
Indemnitee to the fullest extent (whether partial or complete) permitted by law
and as set forth in this Agreement.

 

The Certificate of
Incorporation, the Bylaws and the General Corporation Law of the State of
Delaware (“DGCL”) expressly provide that the indemnification provisions set
forth therein are not exclusive and thereby contemplate that contracts may be
entered into between the Company and members of the board of directors,
officers and other persons with respect to indemnification.

 

It is reasonable,
prudent and necessary for the Company contractually to obligate itself to
indemnify, and to advance expenses on behalf of, such persons to the fullest
extent permitted by applicable law so that they will serve or continue to serve
the Company free from undue concern that they will not be so indemnified.

 

This Agreement is
a supplement to and in furtherance of the Certificate of Incorporation and
Bylaws and any resolutions adopted pursuant thereto and shall not be deemed a
substitute therefor, nor to diminish or abrogate any rights of Indemnitee
thereunder.

 

 

AGREEMENT

 

In consideration
of the premises and of Indemnitee agreeing to serve or continuing to serve the
Company directly or, at its request, with another enterprise, and intending to
be legally bound hereby, the parties hereto agree as follows:

 

1.             Basic Indemnification
Agreement.

 

(a)           In the event Indemnitee was, is or
becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, a Claim (as defined in
Section 9(b)) by reason of (or arising in part out of) an Indemnifiable Event
(as defined in Section 9(d)), the Company shall indemnify Indemnitee to the
fullest extent permitted by law as soon as practicable but in any event no
later than 30 days after written demand is presented to the Company, against
any and all Expenses (as defined in Section 9(c)), judgments, fines, penalties
and amounts paid in settlement (including all interest, assessments and other
charges paid or payable in connection therewith) of such Claim actually and
reasonably incurred by or on behalf of Indemnitee in connection with such Claim
and any federal, state, local or foreign taxes imposed on Indemnitee as a
result of the actual or deemed receipt of any payments under this Agreement. If
requested by Indemnitee in writing, the Company shall advance (within ten
business days of such written request) any and all Expenses to Indemnitee (an “Expense
Advance”). Notwithstanding anything in this Agreement to the contrary, prior to
a Change of Control (as defined in Section 9(a)) and except as set forth in
Sections 1(b), 3 and 7, Indemnitee shall not be entitled to indemnification
pursuant to this Agreement in connection with any Claim (i) initiated by
Indemnitee against the Company or any director or officer of the Company unless
the Company has joined in or consented to the initiation of such Claim; (ii)
made on account of Indemnitee’s conduct which constitutes a breach of
Indemnitee’s duty of loyalty to the Company or its stockholders or is an act or
omission not in good faith or which involves intentional misconduct or a
knowing violation of the law; or (iii) arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”).

 

(b)           Notwithstanding the foregoing, (i) the
indemnification obligations of the Company under Section 1(a) shall not be
applicable if the Reviewing Party (as defined in Section 9(f)) has determined
(in a written opinion, in any case in which the special independent counsel
referred to in Section 2 is involved) that Indemnitee would not be permitted to
be indemnified under applicable law, and (ii) the obligation of the Company to
make an Expense Advance pursuant to Section 1(a) shall be subject to the
condition that the Company receives an undertaking that, if, when and to the
extent that the Reviewing Party determines that Indemnitee would not be permitted
to be so indemnified under applicable law, the Company shall be entitled to be
reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid; provided, however, that if Indemnitee has
commenced legal proceedings in the Court of Chancery of the State of Delaware
(the “Delaware Court”) to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Reviewing Party
that Indemnitee would not be permitted to be indemnified under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial determination is made
with respect

 

2

 

thereto (as to
which all rights of appeal therefrom have been exhausted or lapsed). Indemnitee’s
obligation to reimburse the Company for Expense Advances shall be unsecured and
no interest shall be charged thereon. If there has not been a Change in Control,
the Reviewing Party shall be selected by the Board of Directors, and if there
has been such a Change in Control, the Reviewing Party shall be the special
independent counsel referred to in Section 2. If there has been no
determination by the Reviewing Party or if the Reviewing Party determines that
Indemnitee substantively would not be permitted to be indemnified in whole or
in part under applicable law, Indemnitee shall have the right to commence
litigation in the Delaware Court seeking an initial determination by the court
or challenging any such determination by the Reviewing Party or any aspect
thereof and the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party otherwise shall be
conclusive and binding on the Company and Indemnitee. The Company shall
indemnify Indemnitee for Expenses incurred by Indemnitee in connection with the
successful establishment or enforcement, in whole or in part, by Indemnitee of
Indemnitee’s right to indemnification or advances.

 

2.             Change in Control. The Company agrees that if there is a Change in
Control of the Company (other than a Change in Control which has been approved
by two- thirds or more of the Company’s Board of Directors who were directors
immediately prior to such Change in Control) then with respect to all matters
thereafter arising concerning the rights of Indemnitee to indemnity payments
and Expense Advances under this Agreement or any other agreement, the Bylaws or
Certificate of Incorporation now or hereafter in effect relating to Claims for
Indemnifiable Events, the Company shall seek legal advice only from special
independent counsel selected by Indemnitee and approved by the Company (which
approval shall not be unreasonably withheld or delayed) and who has not
otherwise performed services for the Company within the last five years (other
than in connection with such matters) or for Indemnitee. In the event that
Indemnitee and the Company are unable to agree on the selection of the special
independent counsel, such special independent counsel shall be selected by lot
from among at least five law firms with offices in the State of Delaware having
more than fifty attorneys, having a rating of “av” or better in the then
current Martindale Hubbell Law Directory and having attorneys which specialize
in corporate law. Such selection shall be made in the presence of Indemnitee
(and his legal counsel or either of them, as Indemnitee may elect). Such
counsel, among other things, shall, within 90 days of its retention, render its
written opinion to the Company and Indemnitee as to whether and to what extent
Indemnitee would be permitted to be indemnified under applicable law. The
Company agrees to pay the reasonable fees of the special independent counsel
referred to above and to fully indemnify such counsel against any and all
expenses (including attorneys’ fees), claims, liabilities, and damages arising
out of or relating to this Agreement or its engagement pursuant hereto.

 

3.             Indemnification for
Additional Expenses. The
Company shall indemnify Indemnitee against any and all expenses (including
attorneys’ fees) and, if requested by Indemnitee in writing, shall (within ten
business days of such written request) advance such expenses to Indemnitee,
which are incurred by Indemnitee in connection with any Claim asserted against
or action brought by Indemnitee for (i) indemnification or advance payment of
Expenses by the Company under this Agreement or any other agreement, the Bylaws
or Certificate of Incorporation now or hereafter in effect relating to Claims
for Indemnifiable Events and/or (ii)

 

3

 

recovery under any
directors’ and officers’ liability insurance policies maintained by the
Company, regardless of whether the Company believes that Indemnitee is entitled
to such indemnification, advance expense payment or insurance recovery, as the
case may be. The Indemnitee shall qualify for advances solely upon the
execution and delivery to the Company of an undertaking providing that the
Indemnitee undertakes to repay the advance to the extent that it is ultimately
determined that the Indemnitee is not entitled to be indemnified by the
Company.

 

4.             Partial Indemnity. If Indemnitee is entitled under any provisions of this
Agreement to indemnification by the Company of some but not all of the
Expenses, liabilities, judgments, fines, penalties and amounts paid in
settlement of a Claim, the Company shall nevertheless indemnify Indemnitee for
the portion thereof to which Indemnitee is entitled. Moreover, notwithstanding
any other provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any or all Claims relating
in whole or in part to an Indemnifiable Event or in defense of any issue or
matter therein, including dismissal without prejudice, Indemnitee shall be
indemnified against all Expenses incurred in connection therewith. In
connection with any determination by the Reviewing Party or otherwise as to
whether Indemnitee is entitled to be indemnified hereunder the burden of proof
shall be on the Company to establish that Indemnitee is not so entitled.

 

5.             No Presumption. For purposes of this Agreement, the termination of any
action, suit or proceeding by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief.

 

6.             Notification and Defense
of Claim. Within
30 days after receipt by Indemnitee of notice of the commencement of a Claim
which may involve an Indemnifiable Event, Indemnitee will, if a claim in
respect thereof is to be made against the Company under this Agreement, submit
to the Company a written notice identifying the proceeding, but the omission so
to notify the Company will not relieve it from any liability which it may have
to Indemnitee under this Agreement unless the Company is materially prejudiced
by such lack of notice. With respect to any such Claim as to which Indemnitee
notifies the Company of the commencement thereof:

 

(a)           the Company will be entitled to
participate therein at its own expense;

 

(b)           except as otherwise provided below, to
the extent that it may wish, the Company jointly with any other indemnifying
party similarly notified will be entitled to assume the defense thereof, with
counsel selected by the Board of Directors and satisfactory to Indemnitee. After
notice from the Company to Indemnitee of its election to assume the defense
thereof, the Company will not be liable to Indemnitee under this Agreement for
any legal or other expenses subsequently incurred by Indemnitee in connection
with the defense thereof other than reasonable costs of investigation or as
otherwise provided below. Indemnitee shall have the right to employ its own
counsel in such action, suit or proceeding, but the fees and expenses of such
counsel incurred after notice from the Company of its assumption of the defense
thereof shall be at the expense of Indemnitee unless (i) the employment of
counsel by Indemnitee has been authorized by the Company, (ii) Indemnitee shall
have reasonably concluded that there may be a

 

4

 

conflict of
interest between the Company and the Indemnitee in the conduct of the defense
of such action, or (iii) the Company shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and expenses
of counsel shall be at the expense of the Company. The Company shall not be
entitled to assume the defense of any claim brought by or on behalf of the
Company or as to which Indemnitee shall have made the conclusion provided for
in clause (ii) above; and

 

(c)           the Company shall not be liable to
indemnify Indemnitee under this Agreement for any amounts paid in settlement of
any action or claim effected without its written consent. The Company shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Indemnitee without Indemnitee’s written consent. Neither the
Company nor Indemnitee will unreasonably withhold or delay their consent to any
proposed settlement.

 

7.             Non-exclusivity. The rights of Indemnitee hereunder shall be in
addition to any other rights Indemnitee may have under the Certificate of
Incorporation, the Bylaws, the DGCL, any agreement, a vote of the stockholders,
a resolution of directors or otherwise. No amendment, alteration or repeal of
this Agreement or of any provision hereof shall limit or restrict any right of
Indemnitee under this Agreement in respect of any action taken or omitted by
such Indemnitee acting on behalf of the Company and at the request of the
Company prior to such amendment, alteration or repeal. To the extent that a
change in the DGCL (whether by statute or judicial decision), the Certificate
of Incorporation or the Bylaws permits greater indemnification by agreement
than would be afforded currently under the Certificate of Incorporation, the
Bylaws and this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
such change. No right or remedy herein conferred is intended to be exclusive of
any other right or remedy, and every other right and remedy shall be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other right or remedy.

 

8.             Liability Insurance. To the extent the Company maintains an insurance
policy or policies providing directors’ and officers’ liability insurance,
Indemnitee shall be covered by such policy or policies in accordance with its
or their terms to the maximum extent of the coverage available for any Company
director or officer. If, at the time the Company receives notice from any
source of a Claim as to which Indemnitee is a party or a participant (as a
witness or otherwise), the Company has director and officer liability insurance
in effect, the Company shall give prompt notice of such Proceeding to the
insurers in accordance with the procedures set forth in the respective policies.
The Company shall thereafter take all necessary or desirable action to cause
such insurers to pay, on behalf of the Indemnitee, all amounts payable as a
result of such Claim in accordance with the terms of such policies. In the
event of a Potential Change in Control (as defined in Section 9), the Company
shall maintain in force any and all insurance policies then maintained by the
Company providing directors’ and officers’ liability insurance, in respect of
Indemnitee, for a period of six years thereafter. The Company shall indemnify
Indemnitee for Expenses incurred by Indemnitee in connection with any
successful action brought by Indemnitee for recovery under any insurance policy
referred to in this Section 8 and shall advance to Indemnitee the Expenses of
such action in the manner provided in Section 3 above.

 

5

 

9.             Certain Definitions.

 

(a)           A “Change in Control” shall be deemed to
have occurred if:

 

(1)           subsequent to the date hereof, any person,
as that term is used in Section 13(d) and Section 14(d)(2) of the Exchange Act,
becomes, is discovered to be, or files a report on Schedule 13D or 14D-1 (or
any successor schedule, form or report) disclosing that such person is a
beneficial owner (as defined in Rule 13d-3 under the Exchange Act or any
successor rule or regulation), directly or indirectly, of securities of the
Company representing 35% or more of the total voting power of the Company’s
then outstanding Voting Securities (unless such person becomes such a
beneficial owner in connection with the initial public offering of the
Company);

 

(2)           during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors of the Company and any new director whose election by the Board of
Directors or nomination for election by the Company’s stockholders was approved
by a vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof;

 

(3)           the Company, or any material subsidiary
of the Company, is merged, consolidated or reorganized into or with another
corporation or other legal person (an “Acquiring Person”) or securities of the
Company are exchanged for securities of an Acquiring Person, and immediately
after such merger, consolidation, reorganization or exchange less than a
majority of the combined voting power of the then outstanding securities of the
Acquiring Person immediately after such transaction are held, directly or
indirectly, in the aggregate by the holders of Voting Securities immediately
prior to such transaction;

 

(4)           the Company, or any material subsidiary
of the Company, in any transaction or series of related transactions, sells or
otherwise transfers all or substantially all of its assets to an Acquiring
Person, and less than a majority of the combined voting power of the then
outstanding securities of the Acquiring Person immediately after such sale or
transfer is held, directly or indirectly, in the aggregate by the holders of
Voting Securities immediately prior to such sale or transfer;

 

(5)           the Company and its subsidiaries, in any
transaction or series of related transactions, sells or otherwise transfers
business operations that generated two thirds or more of the consolidated
revenues (determined on the basis of the Company’s four most recently completed
fiscal quarters) of the Company and its subsidiaries immediately prior thereto;

 

6

 

(6)           the Company files a report or proxy
statement with the Securities and Exchange Commission pursuant to the Exchange
Act disclosing that a change in control of the Company has or may have occurred
or will or may occur in the future pursuant to any then existing contract or
transaction; or

 

(7)           any other transaction or series of
related transactions occur that have substantially the effect of the
transactions specified in any of the preceding clauses in this paragraph (ii).

 

Notwithstanding
the provisions of Section 9(a)(1) or 9(a)(4), unless otherwise determined in a
specific case by majority vote of the Board of Directors of the Company, a
Change of Control shall not be deemed to have occurred for purposes of this
Agreement solely because (i) the Company, (ii) an entity in which the Company
directly or indirectly beneficially owns 50% or more of the voting securities
or (iii) any Company sponsored employee stock ownership plan, or any other
employee benefit plan of the Company, either files or becomes obligated to file
a report or a proxy statement under or in response to Schedule 13D, Schedule
14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or report or
item therein) under the Exchange Act, disclosing beneficial ownership by it of
shares of stock of the Company, or because the Company reports that a Change in
Control of the Company has or may have occurred or will or may occur in the
future by reason of such beneficial ownership.

 

(b)           A “Claim” is any threatened, pending or
completed action, suit, proceeding or alternative dispute resolution mechanism,
or any inquiry, hearing or investigation whether conducted by the Company or
any other party, whether civil, criminal, administrative, investigative or
other.

 

(c)           “Expenses” include attorneys’ fees and
all other costs, fees, expenses and obligations of any nature whatsoever paid
or incurred in connection with investigating, defending, being a witness in or
participating in (including appeal), or preparing to defend, be a witness in or
participate in any Claim relating to any Indemnifiable Event.

 

(d)           An “Indemnifiable Event” is any event or
occurrence (whether before or after the date hereof) related to the fact that
Indemnitee is or was a director, officer, employee, consultant, agent or
fiduciary of or to the Company, or any subsidiary of the Company, or is or was
serving at the request of the Company as a director, officer, employee,
trustee, agent or fiduciary of another corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise, or by reason of anything done
or not done by Indemnitee in any such capacity.

 

(e)           A “Potential Change in Control” shall be
deemed to have occurred if (i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control;
(ii) any person (including the Company) publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute a Change
in Control; (iii) any person, other than a trustee or other fiduciary holding
securities

 

7

 

under an employee
benefit plan of the Company or a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, who is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 9.5% or more
of the combined voting power of the Company’s then outstanding Voting
Securities, increases such person’s beneficial ownership of such securities by
five percentage points or more over the initial percentage of such securities;
or (iv) the Board of Directors of the Company adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in Control has
occurred.

 

(f)            A “Reviewing Party” is (i) the Company’s
Board of Directors (provided that a majority of directors are not parties to
the particular Claim for which Indemnitee is seeking indemnification) or (ii)
any other person or body appointed by the Company’s Board of Directors, who is
not a party to the particular Claim for which Indemnitee is seeking
indemnification, or (iii) if there has been a Change in Control, the special
independent counsel referred to in Section 2 hereof.

 

(g)           “Voting Securities” means any securities
of the Company which vote generally in the election of directors.

 

10.          Amendments, Termination
and Waiver. No
supplement, modification, amendment or termination of this Agreement shall be
binding unless executed in writing by both of the parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar) nor shall such
waiver constitute a continuing waiver.

 

11.          Contribution. If the indemnification provided in Sections 1 and 3 is
unavailable, then, in respect of any Claim in which the Company is jointly
liable with Indemnitee (or would be if joined in the Claim), the Company shall
contribute to the amount of Expenses, judgments, fines, penalties and amounts
paid in settlement as appropriate to reflect: (i) the relative benefits
received by the Company, on the one hand, and Indemnitee, on the other hand,
from the transaction from which the Claim arose, and (ii) the relative fault of
the Company, on the one hand, and of Indemnitee, on the other, in connection
with the events which resulted in such Expenses, judgments, fines, penalties
and amounts paid in settlement, as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of
Indemnitee, on the other, shall be determined by reference to, among other
things, the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent the circumstances resulting in such Expenses
and Liabilities. The Company agrees that it would not be just and equitable if
contribution pursuant to this Section 11 were determined by pro rata allocation
or any other method of allocation which does not take account of the equitable
considerations described in this Section 11.

 

12.          Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.

 

8

 

13.          No Duplication of Payments. The Company shall not be liable under this Agreement
to make any payment in connection with any Claim made against Indemnitee to the
extent Indemnitee has otherwise actually received payment (under insurance
policy, Certificate of Incorporation or otherwise) of the amounts otherwise
indemnifiable hereunder.

 

14.          Binding Effect. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors, assigns, including any direct or indirect successor by purchase,
merger, consolidation or otherwise to all or substantially all of the business
and/or assets of the Company, spouse, heirs, and personal and legal
representatives. This Agreement shall continue in effect regardless of whether
Indemnitee continues to serve as a director or officer (or in one of the
capacities enumerated in Section 9(d) hereof) of the Company or of any other
enterprise at the Board of Director’s request.

 

15.          Severability. The provisions of this Agreement shall be severable in
the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.

 

16.          Applicable Law and Consent
to Jurisdiction. This
Agreement and the legal relations among the parties shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
without regard to its conflict of laws rules. The Company and Indemnitee hereby
irrevocably and unconditionally (i) agree that any action or proceeding arising
out of or in connection with this Agreement shall be brought only in the
Delaware Court and not in any other state or federal court in the United States
of America or any court in any other country, (ii) consent to submit to the
exclusive jurisdiction of the Delaware Court for purposes of any action or
proceeding arising out of or in connection with this Agreement, (iii) appoint,
irrevocably, to the extent such party is not a resident of the State of Delaware,
as its agent in the State of Delaware as such party’s agent for acceptance of
legal process in connection with any such action or proceeding against such
party with the same legal force and validity as if served upon such party
personally within the State of Delaware, (iv) waive any objection to the
laying of venue of any such action or proceeding in the Delaware Court, and (v)
waive, and agree not to plead or to make, any claim that any such action or
proceeding brought in the Delaware Court has been brought in an improper or
inconvenient forum.

 

9

 

17.          Identical Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement. Only one
such counterpart signed by the party against whom enforceability is sought
needs to be produced to evidence the existence of this Agreement.

 

	
  Executed this
               day
  of                           ,
  2006

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Obagi Medical Products, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  [Name]

  
	
   

  	
   

  	
  [Title]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Indemnitee]

  

 

10

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