Document:

Exhibit 10.8

 

AGREEMENT

 

This Agreement (the “Agreement”) is made and
entered into as of this 29th day of June, 2006, between OMP, Inc. (“OMP”)
a Delaware corporation with an address at 310 Golden Shore, Suite 100, Long
Beach, CA 90802 and OMP’s parent Obagi Medical Products, Inc. (“Obagi
Medical” and along with OMP the “OMP Entities”), a Delaware corporation with an address
at 310 Golden Shore, Suite 100, Long Beach, CA 90802, on the one hand, and Zein E. Obagi, MD Inc., (with Dr. Zein Obagi
as its principal, herein referred to as “Obagi Inc.”), Zein Obagi, (“Dr.
Obagi”), Samar Obagi, the Zein and Samar Obagi Family Trust (the “Trust”)
(collectively the “Obagi Entities”), and Skin Health Properties, Inc.
(the “Marketer”), a California Corporation with an address at 270 North
Canon Drive, Beverly Hills, CA 90210, on the other hand. The OMP Entities along with Dr. Obagi, Samar Obagi and the Trust
are collectively referred to herein as the “Parties”).

 

W I T N E S S E T H

 

Whereas OMP and Dr. Obagi have been party to an amended and restated employment agreement, dated
December 17, 2002, between OMP and Dr. Obagi (the “Employment
Agreement”); and

 

Whereas Dr. Obagi has agreed to voluntarily resign his
employment with OMP pursuant to a Separation Agreement between Dr. Obagi and
the OMP Entities, dated June 29, 2006 (the “Separation Agreement”); and

 

Whereas the OMP Entities and Obagi Entities have
agreed to enter into a Lease Agreement (the “Lease Agreement”) governing
the use of facilities located at 260-290 North Canon Drive, Beverly Hills,
California; and

 

Whereas the OMP Entities and Obagi Entities wish to
set forth the terms of their future relationships in this Agreement; and

 

Whereas OMP markets and distributes skin care and
other related products set forth on Exhibit A
hereto (the “OMP Products”) globally on a wholesale basis. OMP Products
shall also include all products that are designated Group A Products in the
future pursuant to Section 1(c)(1)a)iii of this Agreement; and

 

Whereas OMP desires to establish an initial marketing
center to support the development and marketing of current and new OMP
Products; and

 

Whereas upon the prior written approval of the OMP
Entities, which approval will not unreasonably be withheld, it is understood
that certain rights, duties and obligations that the Obagi Entities have under
this Agreement may in the future be transferred to another entity they control
(the “Marketer”, which will also be a member of the “Obagi Entities”
when and if such transfer occurs) and upon such transfer the Marketer shall be
required to become a party to this Agreement and shall have all of the rights,
duties and obligations of the Marketer under this Agreement; and

 

 

Whereas Obagi Inc. and/or the Marketer wishes to
provide marketing services to OMP as an independent contractor rendering the
services more fully described in the marketing program desired by OMP and
described in Exhibit B attached
hereto (the “Program”) and perform the duties associated with the
Program set forth in Exhibit B hereto (the “Services”);
and

 

Whereas the Parties desire to enter into this
Agreement whereby Obagi Inc. and/or the Marketer agrees to market the Program
as an independent contractor, and to perform the services set forth herein; and

 

Whereas some or all of the Parties are currently or
have in the past been parties to the agreements listed on Exhibit C attached hereto
(the “Prior Agreements”) and the Parties wish to have all monetary
obligations, percentage discounts or any other obligation that has not already been
performed by either the OMP Entities and/or the Obagi Entities which are still
due or to be granted under any of the Prior Agreements or any other agreements
or understandings between the Parties (the “Pre-Existing Nonperformed
Obligations”) terminated and going forward the only obligations similar to
or covering the same subject matter as the Pre-Existing Nonperformed
Obligations that the Parties will owe to each other are those obligations
described or specified in this Agreement and the accompanying Separation
Agreement and Lease Agreement.

 

NOW THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties
hereby agree as follows:

 

1.     OBLIGATIONS OF THE OBAGI ENTITIES.

 

(a)           Marketing
Obligations. During the Term (as defined in Section 10) of this Agreement,
Obagi Inc. and/or the Marketer shall actively and diligently use its
commercially reasonable efforts to promote the Program and Services, as defined
in Exhibit B hereto, and to support the marketing of the OMP Products
in accordance with the specifications set forth in the Program. As part of its
marketing duties, Obagi Inc. and/or the Marketer agrees during the Term hereof
to provide oversight and management of the 2063 square foot marketing space (the
“Space”) located at 260-290 North Canon Drive, Beverly Hills, California
(the “Premises”), to perform the Services and to provide maximum
exposure for the OMP Products. Obagi Inc. and/or Marketer also agrees to
perform Services and to market the products sold as part of the Program
throughout the Term hereof. In the performance of all of its obligations
hereunder, Obagi Inc. and/or the Marketer agrees to ensure that the Space and
all Services provided by Obagi Inc. and/or the Marketer will at all times
comply with any and all applicable laws and regulations promulgated by any
federal, state, municipal or other level of government from time to time,
including, without limitation, laws and regulations regarding zoning,
advertising, the practice of medicine, healthcare, privacy and consumer
protection laws as well as any and all standards and requirements specified by
OMP from time to time that, in OMP’s sole discretion, are necessary or
desirable to provide for and implement the Program.

 

(b)           Payment
Terms. Obagi Inc. and/or the Marketer agrees that if any amount due to OMP for
the purchase of OMP products remains unpaid 30 days after the earlier of (i)
the date of any invoice or (ii) any notice of the breach of the terms hereof
contemplated by Section 11(a)(1) hereof, then OMP may, in addition to any other
remedies it may have, offset any and all sums owed by Obagi Inc. and/or the
Marketer thereunder against any and all payment obligations 

 

2

 

OMP may have to Obagi Inc. and/or the Marketer,
including, but not limited to, all obligations owing under Section 2 of this
Agreement. Both Parties acknowledge, however, that any amounts so offset shall
not constitute an accord or satisfaction and OMP shall be entitled to all
remedies to recover payment for any additional amounts owed by Obagi Inc.
and/or the Marketer under this Agreement.

 

(c)           Services
to be Rendered. In addition to the services to be provided in Exhibit B, Obagi Inc. shall render the following marketing and other services
to OMP as an independent contractor (the “Obagi Inc. Services”) on a retainer
and/or fee basis as defined herein. Additional services beyond the retainer or
fees shall be billed and reimbursed as mutually agreed to between Obagi
Inc. and
OMP in writing, in advance. The services that Obagi Inc. initially
agrees to provide shall include, but not be limited to:(1)

 

(1)           The
services provided under the Retainer and ProDerm Development/Royalty Fee
provisions of this Agreement are as follows:

 

a)    Obagi
Inc. agrees to be available, and shall provide upon request, a minimum of 10
hours per week in advising and assisting OMP in the formulation and clinical
testing of new products. As part of the new product development services, OMP and
Obagi Inc. agree to the following:

 

i.      That
prior to the development of any new products by either OMP or Obagi Inc., both Parties
will consult with each other and, pursuant to the procedures described in this
Section 1(c)(1), shall determine whether OMP (the “Group A Products”), Obagi Inc.
(the “Group B Products”) or neither (the “Group C Products”) will develop such
product. All potential new products shall be deemed to be Group C Products
until it is determined that such product is either a Group A Product or a Group
B Product. Exhibit D attached hereto provides
a list of all Group A Products, Group B Products and Group C Products as of the
execution date of this Agreement.

 

ii.     In
order for a potential new product or a Group C Product to be designated as a
Group A or Group B Product, either Party shall present to the other Party a
detailed development timeline (the “Development Timeline”) setting forth the
new product’s active ingredients, anticipated efficacy, and cosmetic use in
relation to other existing OMP Products. (“System Concept”)

 

iii.    Within
thirty (30) calendar days after the submission of the Development Timeline, OMP
shall have the option to designate such product a Group A Product. For all
Group A Products, Obagi Inc. shall use its commercially reasonable efforts to
work with OMP and/or such third parties as OMP may from time to time designate,
in OMP’s 

 

(1)   It
being understood that at the beginning of each year the Parties will meet to
discuss and agree in writing as to whether any changes, both additions and
subtractions, need to be made to the list of additional services set forth in
Section 1(c).

 

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sole discretion, to
develop and evaluate products that are clinically superior to existing
commercially available products. OMP agrees to fully fund the development of
such products and the determination as to the clinical superiority of said
developed products. All Group A Products shall be subject to the terms of the
Intellectual Property License-Ownership provisions discussed below in Section 3.
In the event that OMP’s Development Timeline is not met and no extensions have
been granted, or OMP abandons a Group A Product, it shall give notification to Obagi
Inc., and Obagi Inc. may, but is not required to, designate such product as a
Group B Product pursuant to the procedures described in subparagraph (iv)
below.

 

iv.    Upon
Obagi Inc.’s submission of a new Group B Product Development Timeline, if OMP
makes a determination that it does not desire to designate such product as a
Group A Product, then it shall be required to provide Obagi Inc. with written
notification of such determination. OMP shall have thirty (30) calendar days from
the submission of the Development Timeline to make a determination of whether
to fund the development or have Obagi Inc. fund and pursue the development of
said Group B product. For all Group B Products (which do not compete with OMP
current products at the time of such designation), Obagi Inc. may pursue the
development and clinical evaluation. All Group B Products shall be subject to
the terms of the Intellectual Property License-Ownership provisions discussed
below in Section 3. All development costs and/or intellectual property costs
associated with the Group B Products shall be the sole and exclusive
responsibility of Obagi Inc. In the event that Obagi Inc.’s Development
Timeline is not met and no extensions have been granted, or Obagi Inc. abandons
a Group B Product, such product shall be designated as a Group C Product upon
the expiration of the Development Timeline.

 

v.     In
the event that the Development Timeline for a particular product is not met, an
extension of time, if requested, shall be mutually agreed upon as long as the Party
in charge of product development (either OMP or Obagi Inc.) is using
commercially reasonable efforts to continue development.

 

vi.    The
Parties shall only pursue the commercial development and manufacture of
products which have been demonstrated to be safe for their intended use. Clinical
testing is not required on those products where efficacy claims are not made,
needed or appropriate for that type of product. Clinical testing will be
required, however, for products which make efficacy claims or are positioned as
superior to a competitive brand or product(s).

 

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b)    Obagi
Inc. and/or the Marketer shall, either directly or through third parties (such
third parties being engaged at the Marketer’s expense), provide a minimum of
forty (40) hours per week managing the Space and supporting the Spa Program as
described more fully in Exhibit B;

 

c)     Obagi
Inc. shall meet and present a report to OMP on a quarterly basis describing the
development status of all Group B Product and the clinical/development status
of Group A Products to the extent Obagi Inc. is engaged in such activities;

 

d)    Other
services as OMP may reasonably request to assist the OMP Entities in the
operations of their business, including assistance in marketing the OMP
Products, dealing with customers, suppliers, employees, distributors and others
currently having business relationships with the OMP Entities.

 

e)     For
the avoidance of doubt, in the event Obagi Inc. presents a Group B Product
Development Timeline for a fully-developed product or System Concept that
includes Obagi Inc.-developed proprietary and/or patentable invention(s), and
OMP wishes to pursue and fund the development of such Group B Product rather
than have Obagi Inc. fund and control the development process, Obagi Inc. will
still be entitled to such royalty payments as may be required on the
commercialization of said products pursuant to Section 2(b). It is hereby
understood that OMP cannot elect to designate a Group B Product as a Group A
Product merely to avoid its obligations to make royalty payments to Obagi Inc.

 

(2)           Services
to be provided on a fee basis are as follows:

 

a)    Conduct
training/education seminars, including organizing and conducting Obagi Skin
Health “Alumni” Advanced Training Seminar and Clinical Advisory meetings. The
dates and locations of such training/education seminars shall be mutually
agreed upon by OMP and Obagi Inc., in writing, in advance. The exact number of training/education
seminars to be performed by Obagi Inc. shall be mutually agreed upon by OMP and
Obagi Inc., provided however,
that such number shall not be less than 1 and not more than 2 per year, unless
otherwise mutually agreed upon between the Parties;

 

b)    Participate in at
least one (1) clinical study per year. The dates, locations and subject matter of
such clinical studies shall be mutually agreed upon by OMP and Obagi Inc., in
writing, in advance;

 

Obagi Inc. hereby accepts
such engagement and agrees to perform the above services, in addition to those
described in Exhibit B, for the OMP Entities
upon the terms and conditions set forth in this Agreement. During the Term (as
defined in Section 10), Obagi Inc., and specifically Dr. Obagi, shall devote
such time, attention, skill and energy to the business of the OMP Entities as
may be reasonably required to perform the services required under this
Agreement. All fee-based services shall be performed by Obagi Inc. only after
receiving the prior written approval of 

 

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the chief executive
officer of OMP. Obagi Inc. shall report to the chief executive officer of OMP,
and except for the Marketer and Dr. Obagi’s personal medical practice together
with those aspects of Dr. Obagi’s practice as described and set forth in Exhibit F attached hereto (collectively, “Dr.
Obagi’s Practice”), Obagi Inc. warrants that neither it nor its officers currently
render services for or have a direct or indirect relationship, ownership
interest in any other corporation, firm, entity or person that provides services
similar to those described above, the Program, the Services, or which would be
competitive to OMP. In consideration for performing the above-mentioned
services, Obagi Inc. shall be compensated and reimbursed for its reasonable expenses
in accordance with Sections 2(a), 2(b), 2(c)(2), 2(c)(3), and 2(c)(4) below.

 

(d)           Location
of Services. Obagi Inc. shall have discretion to determine the means and
manner in which it performs the services described in Section 1. However, both
Parties anticipate that Obagi Inc. will perform such services primarily at the
Premises or the business premises of the customers and suppliers of OMP and
other locations as mutually agreed. Obagi Inc. acknowledges that it shall only
be reimbursed for its actual expenses incurred in connection with its rendering
services at such other locations pursuant to Section 2(c)(3) below and shall
not receive any additional reimbursement for expenses incurred in connection
with the rendering of services at such other location. Obagi Inc. shall submit to
OMP an invoice and supporting receipts for expenses incurred for reimbursement.

 

(e)           Independent
Contractor. In rendering the services described in Section 1, Obagi Inc.,
furnishing the services of Dr. Obagi, shall be acting as an independent
contractor and not as an employee or agent of the OMP Entities. As an
independent contractor, Obagi Inc. shall have discretion to determine the means
and manner in which it performs the services described in this Agreement. As an
independent contractor, Obagi Inc. shall have no authority, express or implied,
to commit or obligate the OMP Entities in any manner whatsoever, except as
specifically authorized from time to time in writing by an authorized
representative of the OMP Entities. Nothing contained in this Agreement shall
be construed or applied to create a partnership, joint venture or employment
relationship. Obagi Inc. shall be responsible for the payment of all federal,
state or local taxes payable with respect to all amounts paid to Obagi Inc. under
this Agreement; provided, however,
that if the OMP Entities are determined to be liable for collection and/or
remittance of any such taxes, Obagi Inc. shall immediately reimburse such OMP
Entity for all such payments made by such OMP Entity. The Parties agree that
OMP shall advise Obagi Inc. of any audit, inquiry or investigation relating to
such tax liabilities and that Obagi Inc. may participate in the defense of any
such audit, inquiry or investigation. Both Parties also agree, however, that
OMP shall retain final decision-making authority regarding litigation strategy
and/or settlement authority with respect to any such audit, inquiry or
investigation, and such authority shall not relieve Obagi Inc. of its
obligation to indemnify OMP pursuant to this Section.

 

(f)            Injuries.

 

(1)           Injuries
to Obagi Inc. Principal and Employees. Obagi Inc. waives any rights to
recovery from the OMP Entities for any injuries that Dr. Obagi or its other
employees may sustain while rendering the services described in Section 1 and
that are a result of Obagi Inc.’s negligence, acts or omissions.

 

6

 

(2)           Injuries
to Others. Obagi Inc. agrees to take all necessary precautions to prevent
injury to any persons (including the OMP Entities’ employees) and damage to
property (including the OMP Entities’ property) during the rendering of the
services describe in Section 1; and

 

(3)           Insurance.
Obagi Inc. agrees maintain insurance coverage to cover any claims that may
arise out of rendering services described in Section 1.

 

(g)           Indemnification.
The Obagi Entities shall indemnify, defend and hold harmless the OMP Entities
and their officers, directors, agents and employees from and against all
claims, losses, expenses, fees (including attorneys’ and expert witnesses’
fees), costs and judgments that may be asserted against the OMP Entities that
either (a) result from the acts or omissions of any of the Obagi Entities; or
(b) result from or arise in any way out of any such claims by any third parties
which are based upon or are the result of any breach of this Agreement or of
the warranties given by the Obagi Entities contained in this Agreement.

 

2.     OBLIGATIONS OF OMP.

 

In exchange for Obagi Inc.’s and/or the Marketer’s
obligations under this Agreement, OMP shall pay and/or provide to Obagi Inc.
and/or the Marketer the following, subject to Section 11:

 

(a)           Retainer.
$570,000 per year on an annual retainer (subject to annual cost of living
increases under the Consumer Price Index) (the “Retainer”), to be
payable to Obagi Inc. in arrears at the end of each calendar month during the
Term ($47,500 per month installments). The Retainer shall be payable on a
prorated basis, where applicable, in the event that this Agreement is
terminated at any point during the Term of this Agreement pursuant to Section
11 of this Agreement. OMP shall pay Obagi Inc. the Retainer for, among other
things:

 

(1)           Advising,
formulating, developing and clinical testing of Group A Products;

 

(2)           Developing,
marketing and supporting the Spa Program and Services described in Exhibit B; and

 

(3)           Chairing
an Annual Obagi Skin Health Alumni Symposium(2) and up to two (2) Clinical
Advisory meetings. OMP agrees to organize and pay for the marketing and
execution of such annual symposia and advisory meetings.

 

(b)           ProDerm
Development/Royalty Fees. For the first two (2) years of this Agreement,
OMP shall pay Obagi Inc. an annual payment of two hundred thousand dollars
($200,000) per year (“ProDerm Fee”) for developing the ProDerm line of products
(the “ProDerm Product”), to be payable to Obagi Inc. in arrears at the end of
each calendar month ($16,667 per month installments). At the conclusion of the
second year of this Agreement’s term, OMP shall have the option, in its sole
discretion, of continuing to market and produce the ProDerm Product. If 

 

(2)   It
is understood that services that Samar Obagi may provide for Symposia, are to
be separately presented in terms of both scope and fee to arrange and
coordinate such Symposia.  If Samar Obagi
and OMP can agree upon the fee, OMP will retain Samar Obagi for her services in
connection with such Symposia.  In the
event that the two Parties cannot agree upon a reasonable fee, OMP will retain
these services elsewhere.

 

7

 

OMP exercises its option to continue the ProDerm
Product after the conclusion of the second full year of this Agreement, OMP
shall pay Obagi Inc. an annual royalty payment of $200,000 per year or
an annual royalty payment equal to five percent (5%) of OMP’s net revenues (net
amounts received by OMP as determined under generally accepted accounting
principles) from sales of the ProDerm Product (“ProDerm Royalties”), whichever
amount is greater, for as long as OMP elects to market and produce the ProDerm
Product. Such ProDerm Royalties shall be paid on a quarterly basis, within
thirty (30) calendar days of the close of OMP’s fiscal quarter. Obagi Inc.
shall be entitled to review, on a quarterly basis, OMP’s statements of sales
with respect to the ProDerm Product, and Obagi Inc. shall have the right to
conduct audits of such sales at its own cost. In the event that there is an
underpayment of ProDerm Royalty payments to Obagi Inc. pursuant to this Section
2(b) of greater than 5%, OMP shall compensate Obagi Inc. for the commercially
reasonable costs of the audit that determined such underpayment. Notwithstanding
anything in this Section to the contrary, if OMP elects not to market and/or
produce the ProDerm Product after the second full year of this Agreement, or
elects to stop marketing and/or producing the ProDerm Product at any time after
the second full year of this Agreement, OMP’s obligations to pay Obagi Inc. the
ProDerm Royalties shall cease immediately as of the date of OMP’s discontinuance
of such marketing and production. In the event that OMP elects to cease
marketing and producing the ProDerm Product, Obagi Inc. shall have the right to
produce, market, sell, license or distribute the ProDerm Product at its sole
discretion subject to the terms of Section 3 below regarding the use of Marks
without having to pay any consideration whatsoever to OMP.

 

In addition, OMP shall pay Obagi Inc. royalty fees for
developing Group B Products equal to five percent (5%) of OMP’s net revenues
(net amounts received by OMP as determined under generally accepted accounting
principles) from sales of the any and all Group B Products (“Group B Royalties”)
that OMP purchases from Obagi Inc. pursuant to Section 3(h)(4), below. Such
Group B Royalties shall be paid each year promptly after receipt by OMP of
final audited financial statements and reports for such year from its
independent auditors. Such Group B Royalties shall be paid for the life of the
product.

 

(c)           Services, Fees
and Expenses.

 

(1)           Training
and Consulting Fees. For the training/education seminars and other services
described in Section 1(c)(2), outside of Dr. Obagi’s Practice, Obagi Inc. will
be compensated at $5000 per day for each day of such services provided by Dr.
Obagi on behalf of Obagi Inc. For training/education seminars that are
conducted at the Premises or at other locations within Dr. Obagi’s Practice (as
defined below), Obagi Inc. will be compensated at a discount rate of $2500 per
day for such services provided by Dr. Obagi on behalf of Obagi Inc. The fees
paid pursuant to this Section shall be referred to as the “Training Fees”.

 

(2)           Clinical
Service Fees. For clinical testing of all products not included in Group A
or B, OMP agrees to compensate Obagi Inc. $2500 per patient completed, for
clinical studies in which Dr. Obagi agrees to and does participate.

 

(3)           Travel
Expenses. Travel days, when no training is conducted, will be reimbursed at
$5000 per weekday and $3000 per weekend day. For clarity, if Dr. Obagi 

 

8

 

travels to a location and conducts training on the
same day of his travel, he will not be paid pursuant to this paragraph and
shall only receive the $5000 Training Fee. All expenses, except First Class
Airfare and hotel accommodations, incurred by Dr. Obagi that are in excess of
the amounts payable pursuant to this Section 2(c)(3) will not be paid by OMP
and will remain Dr. Obagi’s responsibility. Dr. Obagi acknowledges that this
per diem rate shall cover all of the expenses that he shall incur in rendering
such services and that the OMP Entities shall not be obligated to pay him any
more than the amounts described in this Section 2(c).

 

(4)           Marketing
Expenses. OMP agrees to provide marketing support / advice and to pay 50%
of all invoiced commercially reasonable marketing design and development (not
production) expenses associated with opening of the Space and launching the
Program through the earlier of the opening of the Spa or December 31, 2006, provided however, such reimbursement shall
not exceed one hundred thousand dollars ($100,000.00), unless otherwise
approved in writing by the CEO of OMP, unless otherwise required to be approved
by the OMP Board of Directors.

 

(d)           Indemnification.
The OMP Entities shall indemnify, defend and hold harmless the Obagi Entities
and any of their officers, directors, agents and employees from and against all
claims, losses, expenses, fees (including attorneys’ and expert witnesses’
fees), costs and judgments that may be asserted against the Obagi Entities that
either (a) result from the acts or omissions of either of the OMP Entities; or
(b) result or arise in any way out of any such third party claims against OMP
products; or (c) result from or arise in any way out of any such claims by any
third parties which are based upon or are the result of any breach of the
warranties given by the OMP Entities contained in this Agreement.

 

(e)           Right
of First Refusal. Obagi Medical, subject to Board approval, hereby grants
Dr. Obagi a right of first offer (“Right of First Offer”) to purchase
his Pro Rata Share (as defined in the following sentence) of any equity
securities of Obagi Medical, which Obagi Medical may, from time to time,
propose to issue and sell to a third party investor. “Pro Rata Share” shall
mean an amount equal to the fraction obtained by dividing (a) the sum of the
total number of shares of Obagi Medical common stock then held by the Obagi Entities
by (b) the sum of the total number of shares of Obagi Medical common stock then
issued and outstanding. This Right of First Offer shall terminate upon any
initial public offering of Obagi Medical’s common stock.

 

(f)            Quarter
Reporting. OMP shall meet and present a report to Obagi Inc. on a quarterly
basis describing the development status of all Group A Products.

 

3.     INTELLECTUAL PROPERTY LICENSE-OWNERSHIP.

 

(a)           Program
Data. Subject to existing Federal and State privacy laws regarding Obagi
Inc.’s patients (including compliance with HIPAA), as between Obagi Inc. and/or
the Marketer on one hand and OMP on the other, and subject to Section 11, Obagi
Inc. and/or the Marketer shall be the owner of all accounts, customer lists and
other customer information and data (the “Program Data”) developed in
connection with the Program; provided,
however, that OMP shall have a perpetual, royalty-free,
non-exclusive license to have access to and to utilize the Program Data.

 

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(b)           Trademark
License. Subject to Section 3(c), OMP hereby grants to Obagi Inc. and/or
the Marketer a limited, non-exclusive, irrevocable license to use, reproduce
and display OMP’s trademarks and trade names and logos attached hereto as Exhibit E, which exhibit may be amended
from time to time by OMP (the “Marks”), solely for the purposes of
identifying, advertising, marketing and promoting OMP Products in connection
with (x) the Program and the Space as described in Section 1(a) herein; (y)
subject to OMP’s approval (which shall not be unreasonably withheld), such
additional office locations at which Dr. Obagi may practice, provided however, that such additional office locations
shall be subject to the terms of this Agreement; and (z) Dr. Obagi’s Practice,
in all media, and strictly in accordance with Obagi Inc.’s, the Marketer’s (the
“Licensees”) obligations as set forth in the rest of this Section 3. The
Licensees cannot and shall not sublicense the rights granted to the Licensees
under this 3(b). To be clear, the licenses granted pursuant to this Section 3
are the only licenses granted by the OMP Entities to the Licensees and
supersede and replace any prior licenses that have been previously granted by
the OMP Entities to the Licensees, including but not limited to those license
granted pursuant to the Termination, License and Obligation Agreement dated
December 17, 2002 between OMP, Dr. Obagi and the Zein and Samar Obagi Family
Trust. The Licensees shall not use any Mark in any way whatsoever in connection
with any Group B Products unless they first obtain the advance written approval
of OMP. However, the Licensees shall be allowed to develop a new trademark or
trade name for the Group B Products which may include Skin Health, Skin Health
Institute and the by-line, “Formulated By, or Developed By, Dr. Zein Obagi,
M.D.”, or something similar, provided
however, that any such new trademark or trade name shall be
sufficiently different from any Mark as to be able to achieve registration with
the United States Patent and Trademark Office on an arms-length basis. All
licenses granted under this Section 3(b) shall survive the term of this
Agreement.

 

(c)           Trademark
Use. The Licensees may not alter the form or format of any of the Marks
provided to the Licensees for use in accordance with this Agreement without the
prior written approval of OMP. All goodwill arising out of the use of any of
the Marks as provided for hereunder shall inure solely to the benefit of, and
automatically vest in, OMP. The Licensees agree to cooperate with OMP in
facilitating OMP’s control of the nature and quality of services rendered by
the Licensees in connection with the Marks, to permit reasonable inspection of
the Licensees’ operations, and to supply OMP with specimens of all uses of the
Marks upon request. The Licensees shall comply with all applicable laws and
regulations and obtain all appropriate government approvals pertaining to the
use of the Marks. OMP may terminate the license granted in Section 3(b) herein
if, in OMP’s reasonable discretion, the Licensees’ use of any of the Marks
tarnishes, blurs or dilutes the quality associated with such Marks or the
associated goodwill and such problem is not cured within thirty (30) days of
notice of such breach. Title to and ownership of the Marks shall remain at all
times with OMP. There are no implied licenses under this Agreement. The
Licensees shall not exceed the scope of the rights granted hereunder. The
Licensees shall use the Marks in conformance with all OMP trademark usage
policies. The Licensees shall not take any action inconsistent with OMP’s
ownership of the Marks and the Licensees shall not form any combination marks
with the Marks.

 

(d)           OMP
Marketing Materials. OMP grants Obagi Inc. and/or the Marketer a
non-exclusive license to use and reproduce the marketing materials designated
by OMP to Obagi Inc. and/or the Marketer in writing from time to time, solely
for the purposes of promoting the Program described in Section 1 and in Exhibit B hereto (including the sale of the OMP Products 

 

10

 

in accordance with the terms hereof). All rights not
expressly granted to Obagi Inc. and/or the Marketer herein are reserved to OMP.
Obagi Inc. and/or the Marketer shall not exceed the scope of the rights granted
hereunder.

 

(e)           Marketing
Materials Prepared by the Marketer. Obagi Inc. and/or the Marketer grants
OMP, during the Term, a non-exclusive license to use and reproduce the
marketing materials created by Obagi Inc. and/or the Marketer under Section 1(a),
which marketing materials are subject to approval by OMP under Section 3(f)
herein.

 

(f)            Approval
by OMP. For the purposes of promoting the Program, the Space, Dr. Obagi’s
Practice and those office locations at which Dr. Obagi practices that are
operated by Cellogique, Inc., as described in Section 1 and Section 3(b), respectively,
the Licensees agree only to use: (i) the Marks, in accordance with the terms of
this Section 3; (ii) the OMP marketing materials referenced in Section 3(d) herein; and (iii) the
marketing materials created by the Licensees under the terms of Section 1(a),
which marketing materials are subject to approval under this Section 3(f). Prior
to displaying or otherwise using any marketing materials to promote the
Program, including any modifications to previously approved materials, the
Licensees shall furnish to OMP a copy of such marketing materials for approval.
Approval or disapproval of such marketing materials shall be in OMP’s sole
discretion. Approval of any marketing materials by OMP hereunder must be in
writing. OMP shall use commercially reasonable efforts to provide the Licensees
with such written approval in a timely manner. If any marketing material is
disapproved by OMP, such material shall not be displayed or otherwise used by
the Licensees for promoting the Space, Dr. Obagi’s Practice or such other
office locations described in Section 3(b).

 

(g)           Notification
and Disclosure. Obagi Inc. shall promptly notify the OMP Entities in
writing of the existence and nature of, and shall promptly and fully disclose
to the OMP Entities, any and all ideas, designs, practices, processes,
apparatus, improvements, new product developments and inventions, proposed to
be created or developed by Obagi Inc. pursuant to the new products development
services described in Section 1(c)(1) or otherwise that Obagi Inc. has
conceived or first actually reduced to practice and/or may conceive or first
actually reduce to practice during the Term, including but not limited to those
products listed in Exhibit D, or
which Obagi Inc. may conceive or reduce to practice (all of which are
hereinafter referred to as “Inventions”), within six months after the
Term, if such Inventions relate to a product or process upon which Obagi Inc.
worked during the Term or during the period of Dr. Obagi’s employment with OMP.

 

(h)           Ownership
of Inventions. The ownership of all Inventions shall be as follows.

 

(1)           All
Group A Products in development and any products that are developed and
commercialized as a Group A Product, shall be the sole and exclusive property
of OMP. OMP shall have the right to produce, market, sell, license or distribute
these developed Group A Products without having to pay any further
consideration, besides the Retainer, to Obagi Inc. Group A Products that are
transferred to Group B Products shall be subject to the terms and conditions of
Group B Products herein. The Obagi Entities shall have the right to purchase
any 

 

11

 

of these developed Group A Products from OMP pursuant
to the terms of Section 6 hereof.

 

(2)           All
Group B Products, both those in development and any products that are developed
that were a Group B Product, shall initially be the sole and exclusive property
of Obagi Inc. unless otherwise acquired by OMP under the option terms within
this Agreement under Section 3(h)(4).

 

(3)           Obagi
Inc. shall present to OMP all developed Group B Products and any product data
relating to such developed Group B Products, including but not limited to any
clinical support for product claims to the extent any such claims are made, to
OMP immediately upon the conclusion of the development of such Group B Product.
OMP shall have thirty (30) calendar days from the date after it receives a full
dossier on the formulation, validated manufacturing process, safety and
clinical data, or such longer period of time as is mutually agreed to in
writing between the Parties, which time extension shall not be unreasonably
withheld, to confirm any reported data and Obagi Inc.’s clinical results.

 

(4)           If
OMP decides to produce, market and distribute such developed Group B Product,
then OMP shall purchase such Group B Product from Obagi Inc. for an amount
which is equal to one hundred twenty five percent (125%) of all Obagi Inc.’s
supported direct expenses associated with the development of such product, provided however, if such expenses are
greater than five hundred thousand dollars ($500,000), then the Parties will
mutually agree on a lower percentage mark-up. In addition, OMP shall pay Obagi
Inc. a royalty fee subject to the terms of Section 2(b) above. Once OMP
purchases such developed Group B Product pursuant to the terms of this Section
3(h)(4) then such product shall immediately become the sole and exclusive
property of OMP and the Obagi Entities shall only have the right to purchase
such developed products pursuant to the terms of Section 6 hereof.

 

(5)           In
the event that OMP does not elect to purchase such developed Group B Product
from Obagi Inc. pursuant to the terms of Section 3(h)(4) above, Obagi Inc.
shall have the right to produce, market, sell, license or distribute such
developed Group B Product at its sole discretion subject to the terms of
Section 3 above regarding the use of Marks without having to pay any
consideration whatsoever to OMP.

 

(i)            Copyrightable
Material.

 

(1)           All
right, title, and interest in all copyrightable material which Dr. Obagi shall
conceive or originate, either individually or jointly with others, and which
arise out of the performance of this Agreement, in connection with a Group A
Product, and/or a Group B Product that OMP purchases pursuant to Section
3(h)(4), shall be the property of the OMP Entities and are hereby assigned to
the OMP Entities along with ownership of any and all copyrights in the
copyrightable material. Obagi Inc. agrees to execute all papers and perform all
other acts necessary to assist the OMP Entities to obtain and register
copyrights on such materials in any 

 

12

 

and all countries. Where applicable, works of
authorship created by Obagi Inc. for the OMP Entities in performing the
services hereunder, in connection with the Group A Products, shall be
considered “works made for hire” as defined in the U.S. Copyright Act.

 

(2)           All
right, title, and interest in all copyrightable material which Dr. Obagi shall
conceive or originate, either individually or jointly with others, and which
arise out of the performance of this Agreement, in connection with a Group B
Product that OMP does not purchase pursuant to Section 3(h)(4) shall be the
property of Obagi Inc. and are hereby assigned to Obagi Inc. along with
ownership of any and all copyrights in the copyrightable material unless OMP
exercises the right to purchase under the terms of this Agreement per Section
3(h)(4). The OMP Entities agree to execute all papers and perform all other
acts necessary to assist Obagi Inc. to obtain and register copyrights on such
materials in any and all countries. Where applicable, works of authorship
created by Obagi Inc. for the OMP Entities in performing the services hereunder,
in connection with the Group B Products, shall not be considered “works made for hire” as defined in the U.S.
Copyright Act.

 

(j)            Spa
Concept Franchise.

 

(1)           The
business conducted in the Space, or the Program, as referred to in Section 1(a)
and Exhibit B shall be the sole and
exclusive property of Obagi Inc., Dr. Obagi and/or its nominee and the
operations obligations shall solely be Dr. Obagi’s and/or Obagi Inc.’s (excluding
OMP’s commitment pursuant to the accompanying Lease Agreement);

 

(2)           During
the Term of this Agreement and six months thereafter, Obagi Inc. hereby grants
to OMP a first option to an exclusive worldwide right to open or cause a third
party to open any business similar to the business conducted in the Space for
the remainder of the Term, if any, and three years thereafter. OMP shall have
thirty (30) calendar days of being notified by Obagi Inc. of its intention of
opening such business and its proposed location, to notify Obagi Inc. in
writing that it desires to exercise such option. If OMP does not deliver such
notification to Obagi Inc., then Obagi Inc., if allowed to do so pursuant to
Section 4, and subject to the conditions of Sections 3(b) and 3(c), is hereby
permitted to (a) open such business itself or (b) grant a license to a third
party to open such business.

 

(k)           Survival.
Subsections 2(b), 2(d), 2(e), 3(b), 3(d), 3(g), 3(h), 3(i), 3(j) and Section 6 shall
survive the Term.

 

4.     NON-CIRCUMVENTION

 

The Parties shall not circumvent or evade any of their
respective obligations under this Agreement, nor induce or conspire with any
third party, including, but not limited to, any partner of a party, to
circumvent or evade any of its obligations to the other party hereunder. The Parties
understand that each is bound by a covenant of good faith and fair dealing
under which each 

 

13

 

Party shall not deny the
other Party the benefit of this Agreement and under which each Party has an
affirmative duty to cooperate to assist the other Party in achieving the
benefit of this Agreement.

 

5.     CONFIDENTIAL INFORMATION

 

(a)           The Parties
acknowledge and agree that, in order to perform the obligations pursuant to the
terms of this Agreement, each Party may disclose to the other Party (the “Recipient”)
certain proprietary and confidential information, including without limitation
any design, process, procedure, formula, improvement or systems information
that is commercially valuable to the OMP Entities or Obagi Entities and not
generally known in the industry (the “Information”). No Party shall
disclose, transfer, use, copy, or allow access to any Information, except to
such Party’s employees, attorneys and certified public accountants who have a
need to know such Information consistent with the requirements of this
Agreement and who have undertaken an obligation of confidentiality and
limitation of use in writing, acceptable to the disclosing Party in its
reasonable discretion, it being understood that notwithstanding the obtaining
of such obligation of confidentiality and limitation of use, the Party engaging
such persons shall also continue to be responsible for any unauthorized
disclosures of the Information by any of them.

 

(b)           A Recipient
will not be obliged to maintain the confidentiality of any such Information if
the Recipient can demonstrate that (i) the Information was known by the
Recipient before receiving such Information from the disclosing Party; (ii) the
Information is available or became available to the public through sources
independent of the Recipient, through no fault of the Recipient; (iii) the
Information is available or became available to the Recipient from a third
party who had a right to disclose such Information; or (iv) the Recipient is
legally required to disclose such Information. The obligations set forth in
this Section 5 shall survive the termination of this Agreement.

 

(c)           Each Party
agrees that the other Party shall suffer irreparable harm if it fails to comply
with its obligations set forth in this Section 5, and further agrees that
monetary damages shall be inadequate to compensate the other Party for any such
breach. Accordingly, each Party agrees that the disclosing Party shall, in
addition to any other remedies available to it at law or in equity, be entitled
to the issuance of injunctive relief to enforce the provisions hereof.

 

(d)           Upon the disclosing Party’s request, the
Recipient will promptly return to the disclosing Party all copies of the
Information, will destroy all notes, abstracts and other documents that contain
Information, and will provide to the disclosing Party a written certification
of an officer of the Recipient that it has done so. Nothing in this Agreement
will be construed as granting any rights to the Recipient, by license or
otherwise, to any of the disclosing Party’s Information, except as specifically
stated in this Agreement.

 

6.     DISTRIBUTION AGREEMENTS / DISCOUNTS

 

All products distributed by OMP which are supplied by
OMP to Obagi Inc. and/or Dr. Obagi’s Practice shall be pursuant to the terms
and conditions of applicable distribution agreements, including the
indemnification provisions provided therein. The maximum discount 

 

14

 

that OMP provides to
independent third party physicians in the U.S. shall apply to all products
distributed by OMP which are supplied by OMP to (x) Obagi Inc. and/or the
Marketer, as part of the Program for resale by Obagi Inc. and/or the Marketer
in connection with the rendering of its Services hereunder and (y) Obagi Inc.
in connection with Dr. Obagi’s Practice within the United States. Such discount
shall not affect any discount available to Dr. Obagi’s Practice as covered by
separate distribution agreements, or to any Affiliate (as defined herein) of
Dr. Obagi and/or the Marketer; provided
however, such maximum discount shall not be deemed to include any
one-time or introductory discounts or adjustments that may be provided to third
party physicians. For purposes of this Agreement, the term “Affiliate” of
anyone shall mean any person directly or indirectly controlling or controlled
by or under common control with such person as well as all family members of
any natural person irrespective of whether such family members reside together
or not.

 

7.     OBAGI ENTITIES’ REPRESENTATIONS AND WARRANTIES

 

The Obagi Entities represent and warrant to the OMP
Entities as follows:

 

(a)           Intellectual
Property. Obagi Inc. has and will have good and marketable title to all of
the inventions, information, material or work product made, created, conceived,
written, invented or provided by Obagi Inc. hereunder (“Work Product”), free
and clear of all liens, claims, encumbrances or demands of third parties,
including any claims by any such third parties of any right, title or interest
in or to the Work Product arising out of any trade secret, copyright or patent;

 

(b)           Compliance
with Laws. All services provided hereunder comply with and will comply with
all applicable laws and regulations;

 

(c)           Competing
Activities. Other than the obligations, arrangements, agreements or
interests identified on Exhibit F, the
Obagi Entities warrant that they are not now under any obligation of a
contractual or other nature to any person, firm, corporation or other entity
which is inconsistent or in conflict with this Agreement, or which would
prevent, limit or impair the execution of this Agreement or the performance by
the Obagi Entities of their obligations hereunder;

 

(d)           Duly
Organized. That the Obagi Entities that are entities, are corporations or
other applicable legal entities duly organized, validly existing and in good
standing under the laws of the State or other jurisdiction where they are
organized;

 

(e)           Authority.
That the Obagi Entities that are entities, have the lawful right, power,
authority and capacity to enter into this Agreement and upon the execution of
this Agreement it will be a valid and binding obligation to such entity;

 

(f)            Authorized.
That the persons signing this Agreement on the behalf of the Obagi Entities
that are entities are authorized to do so; and

 

(g)           No
Conflicts. That neither the execution nor the performance of this Agreement
shall constitute a violation of or interfere with any obligations of the Obagi
Entities to any other person or entity.

 

15

 

8.     OMP ENTITIES’ REPRESENTATIONS AND WARRANTIES.

 

The OMP Entities represent and warrant that:

 

(a)           Duly
Organized. They are corporations duly organized, validly existing and in
good standing under the laws of the State of Delaware;

 

(b)           Authority.
They have the lawful right, power, authority and capacity to enter into this
Agreement and upon execution of this Agreement it will be a valid and binding
obligation to such entity;

 

(c)           Authorized.
The persons signing this Agreement are authorized to do so; and

 

(d)           No
Conflicts. Neither the execution nor the performance of this Agreement
shall constitute a violation of or interfere with the OMP Entities’ obligations
to any third party.

 

9.     TERMINATION OF PRE-EXISTING NONPERFORMED
OBLIGATIONS.

 

(a)           The OMP
Entities and the Obagi Entities hereby agree and acknowledge that any and all
Pre-Existing Nonperformed Obligations are hereby terminated and such provisions
in any of the Prior Agreements are herby null and void and of no further force
or effect, except to the extent that any are specifically reserved hereunder.

 

(b)           The OMP
Entities and the Obagi Entities hereby
agree that all obligations under the Prior Agreements that have been performed
prior to entering into this Agreement and all rights that have been granted and
vested under the Prior Agreements prior to entering into this Agreement (the “Pre-Existing
Performed Obligations”) are not terminated or amended in any way by this
Agreement except as expressly provided for in this Agreement. For the avoidance
of doubt, all intellectual property rights assigned, granted and/or sold to the
OMP Entities, or their predecessors, under any of the Prior Agreements or
otherwise remain in effect and are not terminated or amended in any manner
whatsoever by this Agreement.

 

(c)           Nothing in
this Section shall affect the continuing validity of the Parties’ accompanying
Separation Agreement, the Intellectual
Property Assignment and Nondisclosure Agreement, dated November 26, 1997, between
OMP and Dr. Obagi (which is an exhibit to the Separation Agreement), the
Investor’s Rights Agreement between OMP, Mandarin Partners LLC and Obagi Family
Trust, dated December 2, 1997 and amended on November 15, 2000 and January 10,
2001, and/or the Lease Agreement. Those agreements shall remain in full force
and effect pursuant to their terms.

 

(d)           In
exchange for the valuable consideration provided to the Obagi Entities pursuant
to this Agreement, the Obagi Entities, their heirs, affiliates, parents and
subsidiary companies, and their respective officers, directors, employees,
agents, representatives, successors and assigns (the “Obagi Releasees”), hereby
voluntarily discharge and release the OMP Entities and their affiliates,
parents and subsidiary companies, and their respective officers, directors,
employees, agents, representatives, successors and assigns (the “OMP Releasees”)
from any and all claims or liabilities of any kind or description, known or
unknown, suspected or unsuspected, fixed or contingent, which the Obagi Releasees
ever had, now have or hereafter may have against each or 

 

16

 

any of the OMP Releasees
by reason of any matter or event whatsoever occurring prior to the date of this
Agreement, including but not limited to any claims arising out of or resulting
from the termination of any and all Pre-Existing Nonperformed Obligations. The
release of claims specifically includes, but is not limited to, claims arising
under or based upon, the Age Discrimination in Employment Act, the Older
Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, the
Civil Rights Act of 1991, the Family and Medical Leave Act of 1993, the
Employee Retirement Income Security Act, the Rehabilitation Act of 1973, the
Americans with Disabilities Act of 1990, the Fair Labor Standards Act, and/or
any other state, federal, or municipal employment discrimination statutes
(including but not limited to claims based on age, sex, attainment of benefit
plan rights, race, national origin, religion, handicap, sexual orientation,
sexual harassment, family or marital status, retaliation, and veteran status),
and/or any other federal, state, or local statute, law, ordinance, or
regulation and/or pursuant to any other theory whatsoever, including but not
limited to claims related to breach of implied or express employment contracts,
breach of the implied covenant of good faith and fair dealing, defamation,
wrongful discharge, constructive discharge, negligence of any kind, intentional
infliction of emotional distress, whistle-blowing, fraud, estoppel or
detrimental reliance, public policy, constitutional or tort claims, violation
of the penal statutes and common law claims, or pursuant to any other theory or
claim whatsoever, including claims for attorneys’ fees, arising out of or
related to the termination of any and all Pre-Existing Nonperformed
Obligations, and any other occurrence from the beginning of time to the date of
this Agreement. This release excludes claims arising after the date of this
Agreement and claims with respect to rights and obligations provided in this
Agreement and the Distribution Agreements. The OMP Entities, for themselves and
the OMP Releasees, hereby voluntarily discharge and release the Obagi Releasees
from any and all claims or liabilities of any kind or description, known or
unknown, suspected or unsuspected, fixed or contingent, which the OMP Entities
ever had, now have or hereafter may have against each or any of the Obagi
Releasees by reason of any matter whatsoever arising out of or resulting from
the termination of any and all Pre-Existing Nonperformed Obligations and any
other occurrence from the beginning of time to the date of this Agreement. This
release excludes claims arising after the date of this Agreement and claims
with respect to rights and obligations provided in this Agreement and the
Distribution Agreements.

 

(e)           The Obagi
Entities’ Acknowledgement. The Obagi Entities and specifically Dr. Obagi
acknowledge that (i) they fully understand this Agreement, are entering into
this Agreement knowingly, voluntarily and with full knowledge of its
significance and that the OMP Entities have not coerced, threatened or
intimidated them into signing this Agreement; (ii) they have been advised to
consult an attorney, they are represented by an attorney and their attorney(s)
has reviewed this Agreement; (iii) they have had a reasonable period of time
and at least twenty-one (21) days during which time they may consider whether
to accept this Agreement; (iv) they are not otherwise entitled to the
consideration described in this Agreement; and (v) they may repudiate this
Agreement within seven (7) calendar days of entering into this Agreement, by
sending OMP a written repudiation of this Agreement.

 

(f)            OMP
Entities’ Acknowledgement. Notwithstanding anything to the contrary herein, the
OMP Entities acknowledge that Dr. Obagi’s rights as a current or former officer
and/or director of the Company for indemnification under the Bylaws of OMP
Entities, the Certificates 

 

17

 

of Incorporation of the
OMP Entities, and the General Corporation Law of the State of Delaware shall
not be impaired in any way by the terms and conditions of this Agreement.

 

(g)           Section
1542 Waiver. As to matters released, the Parties expressly waive any and all
rights under Section 1542 of the Civil Code of California, and under any
statute of similar import or purpose of any other jurisdiction. Section 1542
provides as follows:

 

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

 

10.  TERM

 

Unless earlier terminated in accordance with the terms
of this Agreement, the term of this Agreement is five (5) years (the “Term”)
from June 29, 2006. This Agreement may also be renewed for additional annual
terms upon the mutual consent of both parties and/or their assigns or
successors upon 6 months’ written notice prior to the end of the initial 5-year
term.

 

11.  TERMINATION

 

(a)           Notwithstanding
any contrary provision contained elsewhere in this Agreement, this Agreement
and the rights and obligations of the OMP Entities, Obagi Inc. and/or the
Marketer hereunder (other than the rights and obligations of the Parties under
Sections 2(b), 2(d), 2(e), 3(a), 3(b), 3(c), 3(h), 3(i), 3(j), 4, 5, 7, 8, 9, 12,
13 and 14) shall be terminated immediately upon the occurrence of any of the
following events:

 

(1)           Any
Party may terminate this Agreement at any time upon thirty (30) days prior
written notice to the other in the event that (i) the other Party (the “Breaching
Party”) has materially breached the terms of this Agreement and failed to
cure such breach within such thirty (30) calendar day period. A “material
breach” shall include, but not be limited to, the failure of any Party to
perform its obligations under Sections 1 or 2;

 

(2)           Dr.
Obagi is convicted of any felony (excluding traffic violations or other minor
offenses);

 

(3)           Obagi
Inc. and/or the Marketer willfully refuses to comply with or implement
reasonable policies established by the Company and fail to cure such breach
within such thirty (30) calendar day period;

 

(4)           The
OMP Entities, the Obagi Entities and/or the Marketer goes into Chapter 7
liquidation or receivership; or

 

18

 

(5)           There
is a change in the control or management of the Marketer that has not been
approved by OMP. Both Parties agree that OMP’s approval of any such changes in
control shall not be unreasonably withheld.

 

(b)           Notwithstanding
any contrary provision contained elsewhere in this Agreement, this Agreement
and the rights and obligations of the OMP Entities, Obagi Inc. and/or the
Marketer hereunder (other than the rights and obligations of the Parties under
Sections 2(b), 2(d), 2(e), 3(a), 3(b), 3(c), 3(h), 3(i), 3(j), 4, 5, 7, 8, 9, 12,
13 and 14) may be terminated by OMP in its sole discretion upon the occurrence
of any of the following events:

 

(1)           At
any time, upon twelve (12) months prior notice, after the closing of an initial
public offering of either OMP Entities and the Obagis’ liquidating 75% of their
equity holding;

 

(2)           At
any time, upon twelve (12) months prior written notice to the Obagi Entities,
in the event of a sale of all or substantially all of the assets of either OMP
Entity;

 

(3)           At
any time, upon twelve (12) months prior written notice to the Obagi Entities,
in the event of change in control (defined as a change in voting equity
ownership of over 50%), or a consolidation or merger of either OMP Entity with
another entity other than mergers of any wholly-owned subsidiary with and into
an OMP Entity (with the OMP Entity as the surviving entity of such merger) or
with and into any other wholly owned subsidiary of either OMP Entity.

 

(c)           Notwithstanding
any contrary provision contained elsewhere in this Agreement, this Agreement
and the rights and obligations of the OMP Entities, Obagi Inc. and/or the
Marketer hereunder (other than the rights and obligations of the Parties under
Sections 1(a), those portions of 2(b) relating to the Annual Royalty, 2(d),
2(e), 3(a), 3(b), 3(c), 3(d), 3(e), 3(f), 3(g), 3(h), 3(i), 3(j), 4, 5, 7, 8,
9, 12, 13 and 14) shall be terminated immediately upon the occurrence of any of
the following events:

 

(1)           Dr.
Obagi’s death;

 

(2)           Dr.
Obagi becomes physically or mentally disabled such that he is unable to
adequately perform the services hereunder for a continuous period of one
hundred eighty (180) calendar days.

 

(d)           Notwithstanding
any contrary provision contained elsewhere in this Agreement, this Agreement
and the rights and obligations of the OMP Entities, Obagi Inc. and/or the
Marketer hereunder (other than the rights and obligations of the Parties under
Sections 2(a), 2(b), 2(d), 2(e), 3(a), 3(b), 3(c), 3(d), 3(h), 3(i), 3(j), 4, 5,
6, 7, 8, 9, 12, 13 and 14), OMP may also terminate this Agreement “without
cause” upon thirty (30) days written notice to the Obagi Entities. For the purposes
of this Agreement, “without cause” shall include any reason, or no reason, in
OMP’s sole discretion.

 

(e)           If this
Agreement is terminated pursuant to this Section 11(a), 11(b) or 11(c), Obagi
Inc. shall be entitled to receive only his pro rata payments pursuant to
Section 2(a) above, through the date of termination. All other rights to
receive such fees shall terminate on such 

 

19

 

date. If this Agreement is terminated without cause
pursuant to Section 11(d), however, OMP shall pay the Obagi Entities any and
all amounts due under this Agreement for the remainder of the Term. Moreover,
termination of this Agreement pursuant to this Section 11 shall not affect or
impair Dr. Obagi’s entitlement to the royalty payments described in Section 2.

 

12.  WARRANTY DISCLAIMER

 

OMP GRANTS NO WARRANTIES, EITHER EXPRESS OR IMPLIED,
WITH REGARD TO THE PRODUCTS OR THE MARKS, INCLUDING, WITHOUT LIMITATION, ANY
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NON-INFRINGEMENT. OMP WILL ACCEPT RETURN OF ANY DEFECTIVE PRODUCT SOLD BY
MARKETER IN ACCORDANCE WITH THE TERMS HEREOF AND, AS MARKETER’S SOLE REMEDY FOR
SUCH DEFECTIVE PRODUCT, EITHER, AT OMP’S SOLE DISCRETION, REPLACE SUCH PRODUCT
OR ISSUE A CREDIT THEREFOR.

 

13.  LIMITATION OF LIABILITY

 

NOTWITHSTANDING ANY OTHER PROVISION HEREIN TO THE
CONTRARY, (A) OMP’S MAXIMUM LIABILITY UNDER THIS AGREEMENT WILL BE LIMITED TO
THE RECOVERY OF ACTUAL DAMAGES UP TO THE NET AMOUNT PAID TO THE OBAGI ENTITIES
UNDER THIS AGREEMENT AND (B) NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR
LOST PROFITS OR SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES WHETHER
BASED IN CONTRACT OR TORT (INCLUDING NEGLIGENCE, STRICT LIABILITY OR
OTHERWISE), AND WHETHER OR NOT ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

14.  GENERAL TERMS AND CONDITIONS

 

(a)           Non-exclusive
Relationship. Sections 1(a), 3(a), and 3(b) of this Agreement do not
establish an exclusive arrangement between the Parties, and do not prohibit any
Party from establishing similar marketing arrangements with other Parties
consistent with their obligations set forth herein.

 

(b)           Notices.
All notices, requests, and other communications or approvals required by this
Agreement shall be in writing and addressed/directed to the other Party at the
address/facsimile number set forth in the preamble hereof or at such other
address of which the notifying Party hereafter receives notice in conformity
with this section with copies sent to the following persons:

 

In the case of OMP, to:

 

Wesley C. Fredericks, Jr.

Heller Ehrman LLP

Times Square Tower

7 Times Square

New York, New York 10036-6524

 

20

 

In the case of the Obagi Entities and/or the Marketer,
to:

 

Michael R. Morris, Esq.

Valensi, Rose, Magaram, Morris & Murphy, PLC

Century Plaza Towers

20th Floor

2029 Century Park East

Suite #2050

Los Angeles, California 90067-3031

 

All such notices,
requests, and approvals shall be deemed to have been duly given if delivered in
person or by facsimile transmission effective on the date of delivery, or by
registered or certified mail (postage prepaid, return receipt requested)
effective four days after postmark, to the respective parties at the address
listed in the preamble hereof.

 

(c)           Governing
Law. This Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of California, without giving effect to
that body of law concerning conflicts of law.

 

(d)           Cooperation.
Each Party agrees to execute and deliver such further documents and to
cooperate as may be necessary to implement and give effect to the provisions
contained herein.

 

(e)           Force
Majeure. Neither Party shall be liable to the other for any delay or
failure to perform which results from causes outside its reasonable control.

 

(f)            Attorneys’
Fees. In the event there is any dispute concerning the terms of this
Agreement or the performance of any Party hereto pursuant to the terms of this
Agreement, and any Party hereto retains counsel for the purpose of enforcing
any of the provisions of this Agreement or asserting the terms of this
Agreement in defense of any suit filed against said Party, the successful or
prevailing Party or Parties shall be entitled to recover reasonable attorneys’
fees and other costs incurred in that action or proceeding from the other Parties,
in addition to any other relief to which it may be entitled.

 

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

 

(h)           Section
Headings. Section headings in this Agreement are for convenience only, and
shall not be used in construing the Agreement.

 

(i)            Severability.
A judicial determination that any provision of this Agreement is invalid in
whole or in part shall not affect the enforceability of those provisions found
to be valid.

 

(j)            No
Implied Waivers. If either Party fails to require performance of any duty
hereunder by the other Party, such failure shall not affect its right to
require performance of that or any other duty thereafter. The waiver by either
Party of a breach of any provision of this Agreement shall not be a waiver of
the provision itself or a waiver of any breach thereafter, or a waiver of any
other provision herein.

 

21

 

(k)           Binding
Effect; Assignment, Amendments.

 

(1)           This
Agreement shall be binding upon and shall inure to the benefit of the Parties
hereto, and their respective representatives, successors and permitted assigns.

 

(2)           This
Agreement shall not be assignable by the Obagi Entities, including to an entity
in which any of the Obagi Entities has merged or which has otherwise succeeded
to all or substantially all of such Obagi Entities’ business and assets to
which this Agreement pertains and which has assumed in writing or by operation
of law its obligations under this Agreement, without the express written
consent of the OMP Entities (which consent may be withheld in the OMP Entities’
sole discretion). Any attempted assignment in violation of this provision will
be void. Any modifications to this Agreement must be in writing and signed by
authorized representatives of all the Parties.

 

(3)           This
Agreement may be assigned by the
OMP Entities to its successor(s) or to an entity in which any of the OMP
Entities has merged or which has otherwise succeeded to all or substantially
all of such OMP Entities’ business and assets to which this Agreement pertains,
provided, however, that such assignees
agree to be bound by the terms of this Agreement.

 

(4)           Notwithstanding
anything in this Agreement to the contrary, Obagi Inc. shall have the right to
assign any and all royalties that may be payable pursuant to Section 2(b) of this
Agreement.

 

(l)            Preemption.
Any provisions of the Parties’ proposals, contracts, invoices, billing
statements, acknowledgment forms or any other documents, which are inconsistent
with the provisions of this Agreement, shall be of no force or effect.

 

(m)          Independent
Contractors. Each of the Parties is and at all times shall be an
independent contractor in its performance of the Agreement. Each of the Parties
shall exercise control over its own employees and agents and shall be solely
responsible for the determination of its employment eligibility, payment of any
wages, salaries or other remuneration of its employees and agents and for its
payment of any payroll taxes, contributions for unemployment insurance, social
security, pension or annuities, which are imposed as a result of the employment
of its employees and agents.

 

(n)           Arbitration.
Any and all disputes, claims or controversies arising out of or relating to
this Agreement or the breach, termination, enforcement, interpretation or
validity thereof, including the determination of the scope or applicability of
this arbitration provision, shall be determined and resolved by binding
arbitration before JAMS/Endispute (“JAMS”) in Los Angeles, California before
one (1) arbitrator. The arbitration shall be administered by JAMS Comprehensive
Arbitration Rules and Procedures. Judgment on the Award may be entered in any
court having jurisdiction. This clause shall not preclude Parties from seeking
provisional remedies in aid of arbitration from a court having appropriate
jurisdiction. The arbitrator shall, in the Award, allocate all or part of the
costs of arbitration, including the fees of the arbitrator, and shall award
reasonable attorneys’ fees to the prevailing party. The award in such
arbitration 

 

22

 

proceeding shall be final and binding, and may be
entered in any court of competent jurisdiction set forth in Section 14(c)
above. To the extent that there is any variance between the JAMS rules and this
Agreement, this Agreement shall control. The Parties hereto each agree to take
all steps, and execute all documents, necessary for the implementation of
arbitration proceedings. All statutes of limitations applicable to any dispute
apply to the arbitration. The provisions of this Section 14(n) shall survive
any expiration or termination of this Agreement. Either Party may require the
submission of the dispute to binding arbitration at any reasonable time,
notwithstanding that a lawsuit or other proceeding has been commenced. Should
any arbitration or other proceeding be commenced to enforce the provisions of
this Agreement or to resolve any dispute arising from this Agreement, the
arbitrator shall award that Party’s costs and attorneys’ fees, plus
disbursements actually made in the prosecution or defense of such arbitration
or proceeding.

 

[Signature Page to Follow]

 

23

 

IN WITNESS WHEREOF, the Parties hereunto have executed
this Agreement as of the day and year first above written. 

 

 

	
   

  	
  OMP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Steve Carlson

  	
   

  
	
   

  	
   

  	
  Name: Steve Carlson

  
	
   

  	
   

  	
  Title: President and
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  OBAGI MEDICAL PRODUCTS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steve Carlson

  	
   

  
	
   

  	
   

  	
  Name: Steve Carlson

  
	
   

  	
   

  	
  Title: President and
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  DR. ZEIN E. OBAGI, M.D.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Zein E. Obagi, M.D.

  	
   

  
	
   

  	
   

  	
  Name: Zein Obagi, M.D.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SKIN HEALTH PROPERTIES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Zein E. Obagi, M.D.

  	
   

  
	
   

  	
   

  	
  Name: Zein Obagi, M.D.

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   

  	
  ZEIN AND SAMAR OBAGI
  FAMILY TRUST

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samar Obagi,

  	
   

  
	
   

  	
   

  	
  Name: Samar Obai

  
	
   

  	
   

  	
  Title: Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  SAMAR OBAGI

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samar Obagi

  	
   

  
	
   

  	
   

  	
  Ms. Samar Obagi

  

 

 

EXHIBIT A

 

OMP
PRODUCTS

 

	
  Obagi Nu-Derm Line

  	
  Obagi-C Rx Line

  	
   

  
	
  Toner

  	
  Cleansing Gel

  	
   

  
	
  Foaming Gel

  	
  Clarifying Serum

  	
   

  
	
  Gentle Cleanser

  	
  Exfoliating Day Lotion SPF 12

  	
   

  
	
  Clear

  	
  Exfoliating Day Lotion

  	
   

  
	
  Exfoderm

  	
  Therapy Night Cream

  	
   

  
	
  Exfoderm Forte

  	
  Sun Guard SPF 30

  	
   

  
	
  Blender

  	
   

  	
   

  
	
  Sunfader

  	
  Professional C Line

  	
   

  
	
  Sun Block

  	
  5% Serum

  	
   

  
	
  Healthy Skin Protection

  	
  10% Serum

  	
   

  
	
  Tolereen

  	
  15% Serum

  	
   

  
	
  Action

  	
  20% Serum

  	
   

  
	
  Eye Cream

  	
   

  	
   

  
	
  Travel Set (Normal to Oily)

  	
   

  	
   

  
	
  Travel Set (Normal to Dry)

  	
  Tretinoin 0.025%

  	
   

  
	
  Starter Set (Normal to Oily)

  	
  Tretinoin 0.05%

  	
   

  
	
  Starter Set (Normal to Dry)

  	
  Tretinoin 0.1%

  	
   

  
	
   

  	
   

  	
   

  
	
  Blue Peel Line

  	
  Cffectives Line

  	
   

  
	
  Blue Peel Kit

  	
  5% Serum

  	
   

  
	
  Cleanser

  	
  10% Serum

  	
   

  

 

 

EXHIBIT B

 

PROGRAM

 

The terms “Services” and “Program”
including the marketing services to be provided by the Marketer at 260-290
North Canon Drive, Beverly Hills are as follows:

 

1)    The Obagi Logo will be prominently displayed by
Obagi Inc. and/or the Marketer as
the primary signage on the face of the building in a manner approved by OMP.

 

2)    OMP skin care products will be prominently
displayed and highlighted by Obagi Inc. and/or the Marketer in window displays visible from both the Cannon and
Dayton Street fronts.

 

3)    OMP skin care products will be maintained by Obagi
Inc. and/or the Marketer as a prominently
featured core product offering within the retail space.

 

4)    Obagi
Inc. and/or the Marketer will provide or maintain
the minimum levels of general liability insurance for the Space as is customary
for the operation of a retail outlet.

 

5)    Obagi
Inc. and/or the Marketer will provide or
maintain a licensed physician within or contiguous to the Space with adequate training
on the use and dispensing of the OMP skin care products.

 

6)    Obagi
Inc. and/or the Marketer will provide or
maintain a retail sales staff adequate for the sale and marketing services to
be provided and Obagi Inc. and/or
the Marketer will provide training to all retail sales personnel engaged by Obagi
Inc. and/or the Marketer on the OMP skin
care products as to the use, positioning and application thereof for maximum
consumer exposure and sales.

 

7)    Although Obagi Inc. and/or the Marketer may sell complementary
products and services to the OMP skin care products, without the prior written
approval of OMP, Obagi Inc. and/or
the Marketer agrees it will not market, promote or sell competitive products
lines; including products that contain Hydroquinone, Tretinoin, and/or products
that are positioned to address hyper-pigmentation, fine lines and wrinkles. OMP
reserves the right, at any time, to review and approve the products being
offered. Any products not approved by OMP must no longer be displayed in the
Space. It is hereby understood and agreed that OMP has no rights to and Obagi
Inc. shall use, promote, display and sell its current products, including
Complex A, surgical blades, syringes and other such products that he has
previously developed.

 

8)    To the extent that OMP develops a product or
line of products that address new skin conditions which are added as OMP skin
care products, Obagi Inc. and/or
the Marketer agrees to replace competing product lines, except those products
which Obagi Inc. and/or the
Marketer have developed previously with the prior authorization of OMP, in the
Space with such new OMP skin care products, and give prominent display and
promotional support to the new OMP skin care products.

 

9)    OMP skin care products covered under the
Program are the following:

 

a.             The Entire Obagi Nu-Derm Line;

 

 

b.             The Entire Obagi-C Rx Line;

 

c.             Cffectives (5% and 10% vitamin C
concentrations) and Professional Vitamin C (5%, 10%, 15%, 20%);

 

d.             Triax Tretinoin, except Obagi Inc. and/or the Marketer may use at his/its
discretion, Complex A which he/it has the sole right to use exclusively in
his/its Practice, to the extent sold to Physicians by OMP and so long as Obagi
Inc. and/or the Marketer employs an
appropriately licensed physician who is capable of marketing such Product; and

 

e.             All newly developed product or line of products
that address new skin conditions which are added as OMP skin care products.

 

10)  Notwithstanding anything in this Agreement to
the contrary, it is hereby understood that Obagi Inc. shall display, promote
and sell Group B products in association with OMP products.

 

 

EXHIBIT C

 

Prior Agreements between OMP and Dr. Obagi

 

1.             Intellectual
Property Assignment and Nondisclosure Agreement, dated November 26, 1997, between
OMP and Dr. Obagi.

 

2.             Option
and Transfer Agreement, dated December 2, 1997, between OMP and Dr. Obagi.

 

3.             Investors’
Rights Agreement between OMP, Mandarin Partners LLC and Obagi Family Trust,
dated December 2, 1997

 

4.             Assignment
of Trademarks, dated January 31, 2000, between OMP and Dr. Obagi.

 

5.             First
Amendment to Investors’ Rights Agreement between OMP, Mandarin Partners LLC and
Obagi Family Trust, dated November 15, 2000

 

6.             Second
Amendment to Investors’ Rights Agreement between OMP, Mandarin Partners LLC and
Obagi Family Trust, dated January 10, 2001

 

7.             Amended
and Restated Employment Agreement, dated December 17, 2002, between OMP and Dr.
Obagi.

 

8.             Mutual
and General Release, dated December 17, 2002, between OMP, Dr. Obagi, Samar
Obagi and Zein and Samar Obagi Family Trust (the “Family Trust”).

 

9.             Termination,
License and Obligations Agreement, dated December 17, 2002, between OMP, Dr.
Obagi and the Family Trust.

 

10.          Amended
and Restated Noncompetition Agreement, dated December 17, 2002, between OMP and
Dr. Obagi.

 

11.          Exchange
Agreement, dated December 17, 2002, between OMP and Family Trust.

 

12.          Stock
Purchase and Subscription Agreement, dated December 17, 2002, between OMP and
Family Trust.

 

13.          Product
Distribution Agreement, dated May 21, 1994, between Worldwide Products
Distribution, Inc. (“Worldwide”) and Cellogique Corporation.

 

14.          License
Agreement, dated March 1, 1997, between Dr. Obagi and Derma Tech Corporation.

 

15.          Distribution
Agreement, dated September 23, 1997, between Worldwide and CNO Chinese Obagi
Corporation.

 

 

16.          Proprietary
Information and Invention Agreement, dated December 2, 1997, between OMP and
Dr. Obagi.

 

 

EXHIBIT D

 

NEW PRODUCT DESIGNATIONS

 

	
  Group A Products

  	
   

  	
  Group B
  Products

  	
   

  	
  Group C
  Products

  
	
  1.

  	
   

  	
  1. 

  	
  Skin Peel System

  	
   

  	
  1.

  
	
  2.

  	
   

  	
  2.

  	
   

  	
   

  	
  2.

  
	
  3.

  	
   

  	
  3.

  	
   

  	
   

  	
  3.

  
	
  4.

  	
   

  	
  4.

  	
   

  	
   

  	
  4.

  
	
  5.

  	
   

  	
  5.

  	
   

  	
   

  	
  5.

  
	
  6.

  	
   

  	
  6.

  	
   

  	
   

  	
  6.

  
	
  7.

  	
   

  	
  7.

  	
   

  	
   

  	
  7.

  
	
  8.

  	
   

  	
  8.

  	
   

  	
   

  	
  8.

  
	
  9.

  	
   

  	
  9.

  	
   

  	
   

  	
  9.

  
	
  10.

  	
   

  	
  10.

  	
   

  	
   

  	
  10.

  
	
  11.

  	
   

  	
  11.

  	
   

  	
   

  	
  11.

  
	
  12.

  	
   

  	
  12.

  	
   

  	
   

  	
  12.

  
	
  13.

  	
   

  	
  13.

  	
   

  	
   

  	
  13.

  
	
  14.

  	
   

  	
  14.

  	
   

  	
   

  	
  14.

  
	
  15.

  	
   

  	
  15.

  	
   

  	
   

  	
  15.

  
	
  16.

  	
   

  	
  16.

  	
   

  	
   

  	
  16.

  
	
  17.

  	
   

  	
  17.

  	
   

  	
   

  	
  17.

  
	
  18.

  	
   

  	
  18.

  	
   

  	
   

  	
  18.

  
	
  19.

  	
   

  	
  19.

  	
   

  	
   

  	
  19.

  
	
  20.

  	
   

  	
  20.

  	
   

  	
   

  	
  20.

  

 

 

EXHIBIT E

 

MARKS

 

	
  Country

  	
   

  	
  Trademark

  	
   

  	
  Class

  	
   

  	
  Registered
  Owner

  	
   

  	
  Appl.
  Number

  	
   

  	
  Reg. No.

  	
   

  	
  Status

  
	
  United States of America

  	
   

  	
  OBAGI & Label Design

  	
   

  	
  3, 5, 42

  	
   

  	
  OMP, Inc.

  	
   

  	
  75/979799

  	
   

  	
  2450253

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  OBAGI BLUE PEEL

  	
   

  	
  3

  	
   

  	
  OMP, Inc.

  	
   

  	
  74/691164

  	
   

  	
  2155170

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  OBAGI LABEL (no words)

  	
   

  	
  3, 5

  	
   

  	
  OMP, Inc.

  	
   

  	
  75/980004

  	
   

  	
  2454186

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  OBAGI NU-DERM

  	
   

  	
  3

  	
   

  	
  OMP, Inc.

  	
   

  	
  74/442192

  	
   

  	
  2155067

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  OBAGI PROTOCOLS &
  Design

  	
   

  	
  5

  	
   

  	
  OMP, Inc.

  	
   

  	
  75/982661

  	
   

  	
  2684171

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  OBAGI SKIN HEALTH

  	
   

  	
  3

  	
   

  	
  OMP, Inc.

  	
   

  	
  74/691165

  	
   

  	
  2160756

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  OBAGI (Stylized)

  	
   

  	
  3

  	
   

  	
  OMP, Inc.

  	
   

  	
  74/264964

  	
   

  	
  2114897

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  OBAGI-C

  	
   

  	
  3, 5

  	
   

  	
  OMP, Inc.

  	
   

  	
  78/413318

  	
   

  	
  2955085

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  OMP INC. & Design

  	
   

  	
  44

  	
   

  	
  OMP, Inc.

  	
   

  	
  78/200919

  	
   

  	
  2855926

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  OMP INC. & Design

  	
   

  	
  3

  	
   

  	
  OMP, Inc.

  	
   

  	
  75/982743

  	
   

  	
  2643677

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  PENETRATING THERAPEUTICS

  	
   

  	
  3,5

  	
   

  	
  OMP, Inc.

  	
   

  	
  78/701174

  	
   

  	
   

  	
   

  	
  Pending

  
	
  United States of America

  	
   

  	
  PHOTOLUMINES

  	
   

  	
  3, 5

  	
   

  	
  OMP, Inc.

  	
   

  	
  78/413338

  	
   

  	
   

  	
   

  	
  Pending

  
	
  United States of America

  	
   

  	
  PRODERM

  	
   

  	
  3, 5

  	
   

  	
  OMP, Inc.

  	
   

  	
  76/975174

  	
   

  	
  2707942

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  PRODERM

  	
   

  	
  44

  	
   

  	
  OMP, Inc.

  	
   

  	
  78/200912

  	
   

  	
   

  	
   

  	
  Pending

  
	
  United States of America

  	
   

  	
  SOLUBLE THERAPEUTICS

  	
   

  	
  3, 5

  	
   

  	
  OMP, Inc.

  	
   

  	
  78/701169

  	
   

  	
   

  	
   

  	
  Pending

  
	
  United States of America

  	
   

  	
  SUNFADER

  	
   

  	
  5

  	
   

  	
  OMP, Inc.

  	
   

  	
  75/615064

  	
   

  	
  2300062

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  TOLEREEN

  	
   

  	
  3

  	
   

  	
  OMP, Inc.

  	
   

  	
  76/025767

  	
   

  	
  2569150

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  ACTION

  	
   

  	
  3

  	
   

  	
  OMP, Inc.

  	
   

  	
  75/615067

  	
   

  	
  2472716

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  BLENDER

  	
   

  	
  5

  	
   

  	
  OMP, Inc.

  	
   

  	
  75/615066

  	
   

  	
  2302207

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  BLUE PEEL

  	
   

  	
  3

  	
   

  	
  OMP, Inc.

  	
   

  	
  76/464317

  	
   

  	
  2950469

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  CFFECTIVES

  	
   

  	
  3

  	
   

  	
  OMP, Inc.

  	
   

  	
  75/982024

  	
   

  	
  2564375

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  COMPLEX 272

  	
   

  	
  3

  	
   

  	
  OMP, Inc.

  	
   

  	
  78/413974

  	
   

  	
   

  	
   

  	
  Pending

  
	
  United States of America

  	
   

  	
  EXFODERM

  	
   

  	
  3

  	
   

  	
  OMP, Inc.

  	
   

  	
  74/660836

  	
   

  	
  1958029

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  LIPOFIRM

  	
   

  	
  3, 5, 10

  	
   

  	
  OMP, Inc.

  	
   

  	
  76/119132

  	
   

  	
   

  	
   

  	
  Pending

  
	
  United States of America

  	
   

  	
  LUMINATRIX

  	
   

  	
  3, 5

  	
   

  	
  OMP, Inc.

  	
   

  	
  76/201359

  	
   

  	
  2860612

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  LUMINATRIX

  	
   

  	
  3

  	
   

  	
  OMP, Inc.

  	
   

  	
  76/975211

  	
   

  	
  2861156

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  NU-DERM

  	
   

  	
  44

  	
   

  	
  OMP, Inc.

  	
   

  	
  78/200887

  	
   

  	
  2838572

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  OBAGI

  	
   

  	
  3

  	
   

  	
  OMP, Inc.

  	
   

  	
  74/442512

  	
   

  	
  2203028

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  OBAGI

  	
   

  	
  44

  	
   

  	
  OMP, Inc.

  	
   

  	
  78/201322

  	
   

  	
  2786594

  	
   

  	
  Registered

  
	
  United States of America

  	
   

  	
  OBAGI

  	
   

  	
  5

  	
   

  	
  OMP, Inc.

  	
   

  	
  78/198050

  	
   

  	
  2838565

  	
   

  	
  Registered

  

 

 

EXHIBIT F

 

Dr. Obagi’s
Practice

 

Obagi Entity practices
are listed below and may include future clinics/locations subject to OMP’s
reasonable approval for inclusion as a licensee practice for use of the Marks.

 

1)            Obagi
Skin Health Institute – Beverly Hills

 

2)            Chinese
Nu-Derm Obagi (“CNO”) – Medical Spa/Clinic located within the City of San
Gabriel, California.

 

3)            Vietnam
Nu-Derm Obagi (“VNO”) – Medical Spa/Clinic located within the City of
Westminster, California

 

4)            Cellogique
Corporation – Corporation located in the state of California, operating Medical
Spas and Clinics within the following countries of the Middle East:

 

a.             Syria,
Egypt, Lebanon, Jordan, Saudi Arabia, United Arab Emirates, Bahrain, Kuwait,
Iraq, Oman, Yemen, Libya, Tunisia, Morocco, Turkey, Cypress, Iran, Sudan,
Algeria, Qatar, and IsraelExhibit 10.10

 

 

RETAIL LEASE AGREEMENT

 

 

BY AND BETWEEN

 

SKIN HEALTH PROPERTIES, INC.,

 

AS LANDLORD

 

AND

 

OMP, INC.,

 

AS TENANT

 

 

DATED AS OF JUNE 29, 2006

 

 

 

 

RETAIL LEASE AGREEMENT

 

THIS RETAIL LEASE AGREEMENT (this “Lease”) is
entered into as of June 29, 2006, by and between SKIN HEALTH PROPERTIES, INC.,
a California corporation (“Landlord”), and OMP, INC., a Delaware
corporation (“Tenant”).

 

	
  Landlord and Tenant
  agree:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  BASIC LEASE
  INFORMATION.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1

  	
  Tenant’s
  Address for Notice.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  OMP, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
  310 Golden
  Shore

  	
   

  
	
   

  	
   

  	
   

  	
  Suite 100

  	
   

  
	
   

  	
   

  	
   

  	
  Long Beach,
  California 90802

  	
   

  
	
   

  	
   

  	
   

  	
  Attention:
  Steve Garcia, CFO

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.2

  	
  Landlord’s
  Address for Notice.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Skin Health
  Properties, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
  270 North
  Canon Drive

  	
   

  
	
   

  	
   

  	
   

  	
  Beverly
  Hills, California 90210

  	
   

  
	
   

  	
   

  	
   

  	
  Attention:
  Zein E. Obagi

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy
  to:

  	
  Valensi,
  Rose, Magaram, Morris & Murphy, PLC

  
	
   

  	
   

  	
   

  	
  2029 Century
  Park East, Suite 2050

  
	
   

  	
   

  	
   

  	
  Los Angeles,
  California 90067-3031

  
	
   

  	
   

  	
   

  	
  Attention: Michael R. Morris, Esq.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.3

  	
  Premises.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Approximately
  2,063 useable square feet located on the ground floor of the Building as
  shown on the Site Plan attached hereto as Exhibit A and
  appurtenant basement.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.4

  	
  Building.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  The building
  with an address of 270 North Canon Drive, Beverly Hills, California 90210
  (the “Building”).

  
										

 

1

 

	
   

  	
  1.5

  	
  Land.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  The real
  property on which the Building is located.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.6

  	
  Term.

  	
  Five (5)
  years, commencing on August 1, 2006 (the “Commencement Date”), and
  terminating on July 31, 2011 (the “Termination Date”), as the same may
  be extended or sooner terminated as provided herein.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.7

  	
  Extension
  Options.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Tenant shall
  have the right to extend the Term of this Lease for one (1) additional period
  of five (5) years (the “Extension Term”).

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.8

  	
  Base Rent.

  	
  Base Rent
  shall initially be payable at the rate of $86,646.00 per annum, or Seven
  Thousand Two Hundred Twenty and 50/100 Dollars ($7,220.50) per month.
  Effective as of the first anniversary of the Commencement Date, and as of
  each anniversary of the Commencement Date thereafter, the Base Rent shall
  escalate by three and one-half percent (3.5%) per annum, as follows:

  

 

	
  Lease Year:

  	
   

  	
  Annual Base Rent:

  	
   

  	
  Monthly Base Rent:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  $

  	
  86,646.00

  	
   

  	
  $

  	
  7,220.50

  	
   

  
	
  2

  	
   

  	
  $

  	
  89,678.61

  	
   

  	
  $

  	
  7,473.22

  	
   

  
	
  3

  	
   

  	
  $

  	
  92,817.36

  	
   

  	
  $

  	
  7,734.78

  	
   

  
	
  4

  	
   

  	
  $

  	
  96,065.97

  	
   

  	
  $

  	
  8,005.50

  	
   

  
	
  5

  	
   

  	
  $

  	
  99,428.28

  	
   

  	
  $

  	
  8,285.69

  	
   

  

 

	
   

  	
  1.9

  	
  Security
  Deposit.

  	
  None

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.10

  	
  Useable
  Square Feet in the Premises.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Approximately
  2,063 useable square feet.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.11

  	
  Use.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  The display
  and marketing of skin health care products.

  

 

2

 

	
   

  	
  1.12

  	
  Broker.

  	
  None

  	
   

  

 

	
  Exhibit A:

  	
   

  	
  Site Plan

  
	
  Exhibit B:

  	
   

  	
  Leasehold Improvements

  
	
  Exhibit C:

  	
   

  	
  Schedule of Costs

  
	
  Exhibit D.

  	
   

  	
  Master Lease

  

 

Any reference in this Lease to the above terms shall
mean and refer to the information and terms set forth in the above Basic Lease
Information. In the event of any conflict between the Basic Lease Information
and the terms of this Lease, the terms of this Lease shall control.

 

2.             PARTIES.
This Lease is made by and between Landlord and Tenant as specified in Article
1. The exhibits as may be referred to herein are attached hereto and incorporated
as a part of this Lease.

 

3.             INCORPORATION
OF MASTER LEASE. Notwithstanding that this document is called a Retail
Lease Agreement and the parties hereto are referred to as Landlord and Tenant,
this document is actually a sublease and is subject to the provisions of the
certain Standard Multi-Tenant Office Lease - Gross dated May 15, 2006 attached
hereto as Exhibit D (the “Master Lease”) by and between ZSO, LP, a
California limited partnership as the lessor thereunder (“Master Landlord”),
and Zein E. Obagi, M.D., Inc., a California corporation, and Landlord,
collectively as the lessee thereunder. This Lease is and shall be at all times
subject and subordinate to the Master Lease. If and to the extent that terms of
the Master Lease and this Lease shall conflict, the terms of this Lease shall
prevail. Provided, however, notwithstanding the foregoing or anything to the
contrary contained in the Master Lease or herein, Landlord acknowledges and
agrees that (a) Tenant shall not have any repair, maintenance, restoration,
compliance or other obligations hereunder with respect to the Premises except
as expressly set forth in this Lease, nor any monetary or payment obligations
under this Lease other than the Rent and insurance obligations set forth in
Sections 7 and 8 hereof, and (b) the following provisions of the Master Lease
shall not be applicable to this Lease: 
Sections 1.2(b), 1.6, 1.9, 1.13, 2.2, 2.3, 2.5, 2.6, 2.9, 2.10, 3.3,
4.2, 6.2, 6.3, 7.1, 7.4, 8.3(c), 8.4, 8.7, 10.1, 10.2, 10.3, 10.4, 11.2, the
second and third sentences of Section 11.4, 13.1(d), 17, the second sentence of
Section 40, Section 41, Section 43(a) and the second sentence of Section 49 of
the Master Lease. The second sentence of Section 36 of the Master Lease shall
not apply to the Leasehold Improvements. Landlord agrees to keep the Master
Lease in effect during the Term of this Sublease and to make commercially
reasonable efforts to enforce its rights thereunder for the benefit of Tenant,
subject, however, to any earlier termination of the Master Lease without the
fault of Landlord, and to enforce all of Landlord’s rights under the Master
Lease for the benefit of Tenant. In the event that the Master Lease shall
terminate during the Term of this Lease, then Master Landlord shall assume the
obligations of Landlord under this Lease and recognize Tenant as its tenant
under all of the terms of this Lease, allowing Tenant, at its option, to remain
in possession of the Premises upon all the terms of this Lease through the
Termination Date, unless sooner terminated pursuant to the terms and conditions
hereof.

 

3

 

4.             PREMISES/LEASEHOLD
IMPROVEMENTS.

 

4.1           Lease of Premises.

 

Landlord hereby
leases the Premises to Tenant and Tenant leases the Premises from Landlord for
the Term, at the rental, and upon all the conditions set forth herein. The
Premises are located in the Building. Use of any mezzanine, basement or storage
space shall be at no additional charge and the area of such space shall not be
included in the area of the Premises.

 

4.2           Landlord’s Construction of Leasehold Improvements. Landlord shall use commercially reasonable efforts
to cause the Leasehold Improvements (as set forth on Exhibit B) to be
completed by September 1, 2006, subject to minor punchlist items. In respect of
the performance by Landlord of the Leasehold Improvements, Tenant has
heretofore paid Legacy Construction, the contractor for construction of the
Leasehold Improvements, the sum of One Million Eight Hundred Seventeen Thousand
One Hundred Eleven and No/100 Dollars ($1,817,111.00) (“Tenant’s Leasehold
Improvement Share”), as more particularly shown on the Schedule of Costs
attached hereto as Exhibit C. Landlord expressly acknowledges and
agrees, on behalf of itself and all people or entities affiliated with
Landlord, that Tenant’s sole obligation and liability with respect to the
performance of, and the payment for, the Leasehold Improvements shall be the
payment of the Tenant’s Leasehold Improvement Share and that, regardless of the
actual cost of the Leasehold Improvements or any costs incurred in connection
therewith, Tenant shall not owe or be required to pay to Landlord or to any
people or entities affiliated with Landlord any additional amounts or any
amount in excess of Tenant’s Leasehold Improvement Share heretofore paid.

 

5.             TERM.

 

5.1           Term.  The Term of this Lease shall be for the
period which commences on the Commencement Date and ends on the Termination
Date unless sooner terminated pursuant to any provision hereof. If Landlord is
unable to deliver possession of the Premises on or before the Commencement
Date, Landlord shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease or the Termination Date. Tenant shall
not, however, be obligated to pay Rent or perform its other obligations
hereunder until it receives possession of the Premises. If possession is not
delivered within sixty (60) days after the Commencement Date, Tenant may, at
its option, by notice in writing to Landlord delivered within ten (10) days of
the expiration of such 60-day period, cancel this Lease, in which event both
parties hereto shall be discharged from all obligations hereunder. Except as
otherwise provided herein, if possession is not tendered to Tenant within 60
days after the Commencement Date and Tenant does not terminate this Lease, as
aforesaid, any period of rent abatement that Tenant would otherwise have
enjoyed shall run from the date of delivery of possession and continue for a
period equal to what Tenant would otherwise have enjoyed under the terms
hereof.

 

5.2           Tenant’s Option to
Extend.  Tenant shall have the right
to extend the Term of this Lease in accordance with the Extension Option as
provided for in Article 1, provided that Tenant is not in default of any
provision of this Lease (beyond any applicable notice and cure period) at the
time of its exercise of the Option or upon the commencement of the Extension
Term. Tenant may exercise the Extension Option by delivering to Landlord
written notice of Tenant’s intention to exercise the Extension Option (the “Notice
of Intent”) no later than ninety (90) days and no earlier than one hundred
eighty (180) days prior to the expiration of the initial Term of this Lease,
time being of the essence. If proper notification of the exercise of the
Extension Option is not given and/or received, the Extension Option shall
automatically expire. 

 

4

 

The Extension
Term shall be upon all of the terms and conditions contained in this Lease. The
Extension Option is personal to the original Tenant and cannot be assigned or
exercised by anyone other than said original Tenant and only while the original
Tenant is in full possession of the Premises and without the intention of
thereafter assigning or subletting; provided, however, notwithstanding the
foregoing, the Extension Option shall be assignable to any person or entity to
whom Tenant sells all or substantially all of its assets or stock or with whom
Tenant merges.

 

6.             USE.  The Premises may be used only for the uses
set forth in Section 1.11 hereof and for no other purpose (the “Permitted
Use”).

 

7.             RENT.

 

7.1           Base Rent.  Tenant shall pay Landlord throughout the Term
hereof, as it may be extended, the Base Rent on a monthly basis, as set forth
in Section 1.8 hereof, in lawful money of the United States of America, payable
in advance on the first (1st) day of each month commencing with the
Commencement Date; subject, however, to the provisions of Section 6.2 below.
Base Rent for any period during the Term hereof which is for less than one
month shall be prorated based on the number of days in such month. Base Rent
shall be payable to Landlord at the address stated in Section 1.2 or to such
other persons or at such other places as Landlord may designate in writing.
Base Rent and any other amounts payable by Tenant to Landlord hereunder are
sometimes hereinafter referred to as “Rent.”

 

7.2           Prepaid Rent.  Landlord expressly acknowledges
and agrees that Tenant has heretofore paid to Landlord or its agent the sum of
Three Hundred Seventy-Nine Thousand Eight Hundred Thirty-Two and No/100 Dollars
($379,832.00) (the “Prepaid Rental”), as more particularly shown on Exhibit
C. Landlord expressly acknowledges and agrees that the Prepaid Rental shall
be credited, until fully applied, against Tenant’s obligations to pay Rent
under this Lease commencing on the Commencement Date. Landlord also
acknowledges that the Prepaid Rental fully satisfies all amounts owing or
becoming payable under this Lease.

 

8.             INSURANCE
MAINTAINED BY TENANT. Tenant shall be required to obtain and maintain,
throughout the Term of this Lease, the commercial general liability insurance
described in Section 8.2(a) of the Master Lease, only.

 

9.             QUIET
ENJOYMENT. Landlord covenants and agrees that, so long as this Lease is in
full force and effect, Tenant shall lawfully and quietly hold, occupy and enjoy
the Premises during the Term of this Lease without disturbance by Landlord or
by any person having an interest in the Premises paramount to Landlord’s
interest or by any person claiming through or under Landlord. The foregoing
express covenant shall be in addition to and not in derogation of any implied
or other rights of quiet enjoyment Tenant may have under applicable law.

 

10.           NOTICE. Notwithstanding the provisions of Section 23.1 of the Master Lease,
Tenant’s address for notice purposes shall be as set forth in Section 1.1
hereof throughout the Term of this Lease, or such different address as Tenant
may by written notice specify to Landlord, but the Premises shall not
constitute Tenant’s address for notice.

 

11.           LANDLORD’S INDEMNITY. Landlord shall indemnify, defend and hold 

 

5

 

Tenant harmless from and
against all loss, cost and expense, including reasonable attorneys’ fees,
arising from any injury or damage to any person or property, occurring in or
about the Building (including the Premises) or the Land as a result of any
negligent act, omission or willful misconduct of Landlord or its officers,
contractors, licensees, agents, tenants, employees, guests, or visitors, or
arising from any breach or default under this Lease by Landlord. The foregoing
provisions shall not be construed to make Landlord responsible for loss, damage,
liability or expense resulting from injuries to third parties caused by the
grossly negligent act, omission or willful misconduct of Tenant, or its
officers, contractors, licensees, agents, subtenants, assignees, employees or
invitees.

 

Each party hereto represents and warrants to the other
that it is authorized to execute and deliver this Lease on such party’s behalf,
and that the person
executing this Lease is authorized by it to do so.

 

The parties hereto have executed this Lease as of the
date first set forth above.

 

 

	
   

  	
  LANDLORD:

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
  SKIN HEALTH PROPERTIES, INC.,

  a California corporation

  	
  OMP, INC., a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Samar Obagi

  	
   

  	
  By:

  	
  /s/ Steve Carlson

  	
   

  
	
   

  	
  Name:

  	
  Samar Obagi

  	
   

  	
  Name:

  	
  Steve Carlson

  	
   

  
	
   

  	
  Its:

  	
  Partner

  	
   

  	
  Its:

  	
  President and Chief Executive Officer

  	
   

  
											

 

6

 

CONSENT BY MASTER LANDLORD

 

The undersigned Master Landlord
hereby consents to the foregoing Sublease and agrees to the following:  For so long as the foregoing Sublease shall
remain in full force and effect, Master Landlord shall not lease or permit any
portion of the Building, other than the Premises, to be used for the Permitted
Use, except for any space that may be occupied by Zein Obagi, M.D., Samar
Obagi, the Zein and Samar Obagi Family Trust, Zein E. Obagi, M.D., Inc., or
Landlord. In addition, for so long as this Lease shall remain in full force and
effect, neither the Building nor any part thereof may be named for a direct or
indirect competitor of the business to be conducted in the Premises by Tenant
without Tenant’s written consent, which consent may be withheld in Tenant’s
sole discretion. In the event that this covenant is violated, Tenant
acknowledges and agrees that its sole remedy shall be to terminate this Lease,
and Tenant hereby waives all other rights or remedies that it may have in
connection therewith.

 

MASTER
LANDLORD:

ZSO, LP, a California limited
partnership

 

 

	
  By:

  	
  /s/ Samar
  Obagi

  	
   

  	
   

  
	
  Name:

  	
  Samar Obagi

  	
   

  	
   

  
	
  Title:

  	
  Partner

  	
   

  	
   

  

 

 

Dated:  June 29, 2006

 

 

CONSENT BY ZEIN E. OBAGI, M.D., INC.

 

The undersigned, who jointly
with Landlord constitutes the “Lessee” under the Master Lease, hereby consents
to the terms and conditions of the foregoing Sublease.

 

ZEIN E. OBAGI, M.D., INC., a California corporation

 

 

	
  By:

  	
  /s/ Zein E.
  Obagi M.D.

  	
   

  	
   

  
	
  Name:

  	
  Zein E. Obagi, M.D.

  	
   

  	
   

  
	
  Title:

  	
  President

  	
   

  	
   

  

 

 

Dated:  June 29, 2006

 

7

EXHIBIT A

 

SITE PLAN

 

 

A-1

EXHIBIT B

 

LEASEHOLD IMPROVEMENTS 

 

	
   

  	
   

  	
   

  	
  General
  requirements

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Total site work

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Concrete

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Masonry

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Metals

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Carpentry

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Thermal and
  moisture

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Doors and windows

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Electrical

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Contractors fee

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Finishes

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Marble exterior

  	
   

  	
   

  	
  43

  	
   

  	
  Revision of
  Millwork per SAMAR

  
	
   

  	
   

  	
   

  	
  Painting exterior

  	
   

  	
   

  	
  44

  	
   

  	
  Electronic Air
  filter in OR SAMAR

  
	
   

  	
   

  	
   

  	
  other

  	
   

  	
   

  	
  45

  	
   

  	
  Reroute
  refrigeration to new location

  
	
   

  	
   

  	
   

  	
  Furnishings

  	
   

  	
   

  	
  46

  	
   

  	
  Replace existing
  sprinkler heads

  
	
   

  	
   

  	
   

  	
  Cabinetry

  	
   

  	
   

  	
  47

  	
   

  	
  additional
  plumbing

  
	
   

  	
   

  	
   

  	
  Conference table

  	
   

  	
   

  	
  48

  	
   

  	
  Auto Clave rough
  in

  
	
   

  	
   

  	
   

  	
  File cabinets

  	
   

  	
   

  	
  49

  	
   

  	
  Deputy Inspection

  
	
   

  	
   

  	
   

  	
  other

  	
   

  	
   

  	
  50

  	
   

  	
  Steel support for
  Countertops

  
	
   

  	
   

  	
   

  	
  Plumbing

  	
   

  	
   

  	
  51

  	
   

  	
  Fire
  Corridor/rebuild front canopy

  
	
   

  	
   

  	
   

  	
  HVAC

  	
   

  	
   

  	
  52

  	
   

  	
  Recessed lights
  in Treatment room

  
	
   

  	
   

  	
   

  	
  Fountain

  	
   

  	
   

  	
  53

  	
   

  	
  Access
  panels/catwalks

  
	
   

  	
   

  	
   

  	
  Plumbing

  	
   

  	
   

  	
  54

  	
   

  	
  Dr Obagi’s office
  ceiling drywall

  
	
   

  	
   

  	
   

  	
  Water Wall

  	
   

  	
   

  	
  55

  	
   

  	
  Frame out for A/V
  and reframe Canopy

  
	
   

  	
   

  	
   

  	
  other

  	
   

  	
   

  	
  56

  	
   

  	
  Water fall
  overflow feature

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  57

  	
   

  	
  Subterranean
  Drainage at North Elevation

  
	
  Change Orders

  	
   

  	
   

  	
  58

  	
   

  	
  Sheet Metal
  Backing Access Panels

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  59

  	
   

  	
  Perimeter
  concrete

  
	
   

  	
  1

  	
   

  	
  Asbestos testing

  	
   

  	
   

  	
  60

  	
   

  	
  Install fire
  rated plywood in ceiling

  
	
   

  	
  2

  	
   

  	
  Demolish stone
  veneer

  	
   

  	
   

  	
  61

  	
   

  	
  Upgrade front
  door to automatic

  
	
   

  	
  3

  	
   

  	
  Demolish Basement
  Vault

  	
   

  	
   

  	
  62

  	
   

  	
  Revise door 117,
  105 + 107

  
	
   

  	
  4

  	
   

  	
  Asbestos
  abatement Lobby

  	
   

  	
   

  	
  63

  	
   

  	
  Material for 90
  min. wood doors

  
	
   

  	
  5

  	
   

  	
  Sheet rock on
  ceiling of first floor

  	
   

  	
   

  	
  64 

  	
   

  	
  Work at Stair
  well Trailer

  
	
   

  	
  6

  	
   

  	
  Demo hidden
  structure in vestibule

  	
   

  	
   

  	
  65 

  	
   

  	
  Asbestos
  Abatement Lobby

  
	
   

  	
  7 

  	
   

  	
  clean air studios
  for tenants

  	
   

  	
   

  	
  66

  	
   

  	
  Deputy Inspection
  for water feature

  
	
   

  	
  8

  	
   

  	
  Permit fees

  	
   

  	
   

  	
  67

  	
   

  	
  Rebuilt Vestibule
  Perimeter walls

  
	
   

  	
  9

  	
   

  	
  Fire rated
  corridor In basement

  	
   

  	
   

  	
  68

  	
   

  	
  Upgrade windows in
  room 121

  
	
   

  	
  10

  	
   

  	
  Replace existing
  fan coils first floor

  	
   

  	
   

  	
  69

  	
   

  	
  Wrap Interior columns
  for fire

  
	
   

  	
  11

  	
   

  	
  Front entry door 

  	
   

  	
   

  	
  70

  	
   

  	
  Delete sun shades

  
	
   

  	
  12

  	
   

  	
  VE Storefront
  Glass

  	
   

  	
   

  	
  71

  	
   

  	
  Vestibule Floor
  Trench Drain

  
	
   

  	
  13

  	
   

  	
  Sheet rock
  ceiling in OR

  	
   

  	
   

  	
  72

  	
   

  	
  Upgrade
  Storefront glass door to 3/4”

  
	
   

  	
  14

  	
   

  	
  Structural steel

  	
   

  	
   

  	
  73

  	
   

  	
  Raise Floors to
  meet Marble height

  
	
   

  	
  15

  	
   

  	
  Kitchen Plumbing

  	
   

  	
   

  	
  74

  	
   

  	
  Security Access
  system

  
	
   

  	
  16

  	
   

  	
  Smoke/Fire
  Dampers

  	
   

  	
   

  	
  75

  	
   

  	
  additional suede
  fabric for future use

  
	
   

  	
  17

  	
   

  	
  Addition of
  support Wall Basement

  	
   

  	
   

  	
  76

  	
   

  	
  waterproof
  membrane north wall

  
	
   

  	
  18

  	
   

  	
  Wall hung toilet
  work

  	
   

  	
   

  	
  77

  	
   

  	
  Additional signage

  
	
   

  	
  19

  	
   

  	
  After hours demo

  	
   

  	
   

  	
  78

  	
   

  	
  Thin brick East
  elevation

  
	
   

  	
  20

  	
   

  	
  Electrical
  additions

  	
   

  	
   

  	
  79

  	
   

  	
  Exterior plaster

  
	
   

  	
  21

  	
   

  	
  Sonar imaging
  basement wall

  	
   

  	
   

  	
  80

  	
   

  	
  Stainless shoe
  for circular glass

  
	
   

  	
  22

  	
   

  	
  Power to dampers

  	
   

  	
   

  	
  81

  	
   

  	
  Electrical room
  connections

  
	
   

  	
  23

  	
   

  	
  Void

  	
   

  	
   

  	
  82

  	
   

  	
  Additional Marble
  for entry door

  
	
   

  	
  24

  	
   

  	
  Void

  	
   

  	
   

  	
  83

  	
   

  	
  Change Fire
  Dampers/Run Dryer Vent

  
	
   

  	
  24A

  	
   

  	
  Install exterior
  wall In OR

  	
   

  	
   

  	
  84

  	
   

  	
  Single Phase
  Electrical Service Revisions

  
	
   

  	
  24B

  	
   

  	
  Install studs for
  wall hung toilets

  	
   

  	
   

  	
  85

  	
   

  	
  Delete Glass
  Display Box

  
	
   

  	
  25

  	
   

  	
  Recess Circular
  soffit

  	
   

  	
   

  	
  86

  	
   

  	
  Electrical Work
  not inducated on plans

  
	
   

  	
  26

  	
   

  	
  Deputy inspection
  of basement footing

  	
   

  	
   

  	
  87

  	
   

  	
  Electrical Work
  Revisions from RDHA

  
	
   

  	
  27

  	
   

  	
  Install concrete
  footing (vs wood) In front

  	
   

  	
   

  	
  88

  	
   

  	
  Electrical Work
  from RDHA SK

  
	
   

  	
  28

  	
   

  	
  Demo remaining
  basement

  	
   

  	
   

  	
  89

  	
   

  	
  New Plaster Color
  coat

  
	
   

  	
  29

  	
   

  	
  Add concrete on
  basement support wall

  	
   

  	
   

  	
  90

  	
   

  	
  VOID

  
	
   

  	
  30

  	
   

  	
  Telephone/Data
  Audio video

  	
   

  	
   

  	
  91

  	
   

  	
  Structural
  Support for Operational Light

  
	
   

  	
   

  	
   

  	
  Audio Visual - Retail

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Conference room

  	
   

  	
  PENDING (as of
  5-15-06)

  
	
   

  	
   

  	
   

  	
  General Data/AV

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  92

  	
   

  	
  Post and Parking
  lot signs

  
	
   

  	
  31

  	
   

  	
  credit VE

  	
   

  	
   

  	
  93

  	
   

  	
  Screen for
  Mechanicals

  
	
   

  	
  32

  	
   

  	
  credit for C/O 11

  	
   

  	
   

  	
   

  	
   

  	
  Removed intentionally

  
	
   

  	
  33

  	
   

  	
  credit for
  deletion of Conference table

  	
   

  	
   

  	
  95

  	
   

  	
  Refurbish Parking
  lot gate

  
	
   

  	
  34

  	
   

  	
  Credit for stone

  	
   

  	
   

  	
  96

  	
   

  	
  Credit for shelf
  a over pond

  
	
   

  	
  35

  	
   

  	
  Add stone to
  Vestibule

  	
   

  	
   

  	
  97

  	
   

  	
  Architect Work

  
	
   

  	
  36

  	
   

  	
  add windows in
  staff room

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  37

  	
   

  	
  Fireproof all
  pipe columns

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  38

  	
   

  	
  Deputy inspection
  of concrete on canon

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  39

  	
   

  	
  Concrete stem
  wall on North elevation

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  40

  	
   

  	
  Electrical extras

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  41

  	
   

  	
  Electrical
  changes per Samar Obagi

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  42

  	
   

  	
  Install Marble
  stone in Waterfall

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

B-1

 

EXHIBIT C

 

SCHEDULE OF COSTS

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Medical

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cost

  	
   

  	
  sub category

  	
   

  	
  Retail %

  	
   

  	
  Retail Alloc

  	
   

  	
  %

  	
   

  	
  Medical Alloc

  	
   

  	
  Alloc. Method

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  General Billings

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  General
  requirements

  	
   

  	
  $214,803.25

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  $73,745.90

  	
   

  	
  65.7

  	
  %

  	
  $

  	
  141,057.35

  	
   

  	
  Total SQ Ft

  	
   

  
	
  Total site work

  	
   

  	
  82,800.00

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  28,426.76

  	
   

  	
  65.7

  	
  %

  	
  54,373.24

  	
   

  	
  Total SQ Ft

  	
   

  
	
  Concrete 

  	
   

  	
  13,800.00

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  4,737.79

  	
   

  	
  65.7

  	
  %

  	
  9,062.21

  	
   

  	
  Total SQ Ft

  	
   

  
	
  Masonry

  	
   

  	
  7,300.00

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  2,506.22

  	
   

  	
  65.7

  	
  %

  	
  4,793.78

  	
   

  	
  Total SQ Ft

  	
   

  
	
  Metals

  	
   

  	
  8,750.00

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  3,004.04

  	
   

  	
  65.7

  	
  %

  	
  5,745,96

  	
   

  	
  Total SQ Ft

  	
   

  
	
  Carpentry

  	
   

  	
  27,000.01

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  9,269.60

  	
   

  	
  65.7

  	
  %

  	
  17,730.40

  	
   

  	
  Total SQ Ft

  	
   

  
	
  Thermal and
  moisture

  	
   

  	
  23,750.00

  	
   

  	
   

  	
   

  	
  75.0

  	
  %

  	
  17,812.50

  	
   

  	
  25.0

  	
  %

  	
  5,937.50

  	
   

  	
  Total SQ Ft

  	
   

  
	
  Doors and windows

  	
   

  	
  181,200.00

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  155,000.00

  	
   

  	
   

  	
   

  	
  29,200.00

  	
   

  	
  Specific ID

  	
   

  
	
  Electrical

  	
   

  	
  264,000,00

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  90,636.05

  	
   

  	
  65.7

  	
  %

  	
  173,363.95

  	
   

  	
  Total SQ Ft

  	
   

  
	
  Contractors fee

  	
   

  	
  207,227.33

  	
   

  	
   

  	
   

  	
  52.7

  	
  %

  	
  109,223.01

  	
   

  	
  47.3

  	
  %

  	
  98,004.32

  	
   

  	
  % of all materials/costs

  	
   

  
	
  Finishes

  	
   

  	
  658,875.00

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marble exterior

  	
   

  	
   

  	
   

  	
  482,500.00

  	
   

  	
  75.0

  	
  %

  	
  361,875.00

  	
   

  	
  25,0

  	
  %

  	
  120,625.00

  	
   

  	
  Incremental cost over non-marble cost

  	
   

  
	
  Painting exterior

  	
   

  	
   

  	
   

  	
  42,500.00

  	
   

  	
  45.0

  	
  %

  	
  19,125.00

  	
   

  	
  55.0

  	
  % 

  	
  23,375.00

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  other

  	
   

  	
   

  	
   

  	
  133,875.00

  	
   

  	
  50.0

  	
  %

  	
  66,937.50

  	
   

  	
  50.0

  	
  %

  	
  66,937.50

  	
   

  	
  Total SQ Ft

  	
   

  
	
  Furnishings

  	
   

  	
  305,295.00

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cabinetry

  	
   

  	
   

  	
   

  	
  271,450.00

  	
   

  	
  34.3

  	
  %

  	
  93,193.77

  	
   

  	
  65.7

  	
  %

  	
  178,256.23

  	
   

  	
  Note 1

  	
   

  
	
  Conference table

  	
   

  	
   

  	
   

  	
  18,185.00

  	
   

  	
   

  	
   

  	
  0.00

  	
   

  	
  100.0

  	
  %

  	
  18,185.00

  	
   

  	
  Specific ID

  	
   

  
	
  File cabinets

  	
   

  	
   

  	
   

  	
  8,180.00

  	
   

  	
   

  	
   

  	
  0.00

  	
   

  	
  100.0

  	
  %

  	
  8,180.00

  	
   

  	
  Specific ID

  	
   

  
	
  other

  	
   

  	
   

  	
   

  	
  7,480.00

  	
   

  	
  34.3

  	
  %

  	
  2,568.02

  	
   

  	
  65.7

  	
  %

  	
  4,911.98

  	
   

  	
  Total SQ Ft

  	
   

  
	
  Plumbing

  	
   

  	
  283,800.00

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HVAC

  	
   

  	
   

  	
   

  	
  105,200.00

  	
   

  	
  34.3

  	
  %

  	
  36,117.09

  	
   

  	
  65.7

  	
  %

  	
  69,082.91

  	
   

  	
  Total SQ Ft

  	
   

  
	
  Fountain

  	
   

  	
   

  	
   

  	
  55,000.00

  	
   

  	
  100.0

  	
  %

  	
  55,000.00

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Plumbing

  	
   

  	
   

  	
   

  	
  54,900.00

  	
   

  	
  34.3

  	
  %

  	
  18,848.18

  	
   

  	
  65.7

  	
  %

  	
  36,051.82

  	
   

  	
  Total SQ Ft

  	
   

  
	
  Water Wall

  	
   

  	
   

  	
   

  	
  35,000.00

  	
   

  	
  100.0

  	
  %

  	
  35,000.00

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  other

  	
   

  	
   

  	
   

  	
  33,700.00

  	
   

  	
  58.0

  	
  %

  	
  19,533.50

  	
   

  	
  42.0

  	
  %

  	
  14,166,50

  	
   

  	
  % of total plumbing

  	
   

  
	
  Change Orders

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1 Asbestos
  testing

  	
   

  	
  8,015,13

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  2,751.74

  	
   

  	
  65.7

  	
  %

  	
  5,263.39

  	
   

  	
  Total SQ Ft

  	
   

  
	
  2 Demolish stone
  veneer

  	
   

  	
  2,933,63

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  2,933.63

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3 Demolish
  Basement Vault

  	
   

  	
  8,949.42

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  8,949.42

  	
   

  	
  Specific ID

  	
   

  
	
  4 Asbestos
  abatement Lobby

  	
   

  	
  4,067.24

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  4,067.24

  	
   

  	
  Specific ID

  	
   

  
	
  5 Sheet rock on
  ceiling of first floor

  	
   

  	
  25,054,73

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  11,274.63

  	
   

  	
  55.0

  	
  %

  	
  13,780.10

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  6 Demo hidden
  structure in

  vestibule

  	
   

  	
  931.31

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  931.31

  	
   

  	
  Specific ID

  	
   

  
	
  7 clean air
  studios for tenants

  	
   

  	
  1,571,59

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  1,571.59

  	
   

  	
  Specific ID

  	
   

  
	
  8 Permit fees

  	
   

  	
  27,990.89

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  9,609.79

  	
   

  	
  65.7

  	
  %

  	
  18,381.10

  	
   

  	
  Total SQ Ft

  	
   

  
	
  9 Fire rated
  corridor in basement

  	
   

  	
  39,439.16

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  39,439.16

  	
   

  	
  Specific ID

  	
   

  
	
  10 Replace
  existing fan coils

  first floor

  	
   

  	
  3,445.86

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  1,550.64

  	
   

  	
  55.0

  	
  %

  	
  1,895.22

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  11 Front entry
  door

  	
   

  	
  523.85

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  523.85

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Specific ID

  	
   

  
	
  12 VE Storefront
  Glass

  	
   

  	
  (4,899.53

  	
  )

  	
   

  	
   

  	
  100.0

  	
  %

  	
  (4,899.53

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
  Specific ID

  	
   

  
	
  13 Sheet rock
  ceiling in OR

  	
   

  	
  7,319.62

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  7,319.62

  	
   

  	
  Specific ID

  	
   

  
	
  14 Structural
  steel

  	
   

  	
  23,305.27

  	
   

  	
   

  	
   

  	
  75.0

  	
  %

  	
  17,478.95

  	
   

  	
  25.0

  	
  %

  	
  5,826.32

  	
   

  	
  1st FLOOR

  	
   

  
	
  15 Kitchen
  Plumbing

  	
   

  	
  5,966,23

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  5,966.23

  	
   

  	
  Specific ID

  	
   

  
	
  16 Smoke/Fire Dampers

  	
   

  	
  4,244.46

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  1,457.20

  	
   

  	
  65.7

  	
  %

  	
  2,787.26

  	
   

  	
  Total SQ Ft

  	
   

  
	
  17 Addition of
  support Wall Basement

  	
   

  	
  7,725.26

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  7,725.26

  	
   

  	
  Specific ID

  	
   

  
	
  18 Wall hung
  toilet work

  	
   

  	
  3,472.40

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  1,562.58

  	
   

  	
  55.0

  	
  %

  	
  1,909.82

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  19 After hours
  demo

  	
   

  	
  8,244.33

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  2,830.43

  	
   

  	
  65.7

  	
  %

  	
  5,413.90

  	
   

  	
  Total SQ Ft

  	
   

  
	
  20 Electrical
  additions

  	
   

  	
  21,067.63

  	
   

  	
   

  	
   

  	
  0.0

  	
  %

  	
  0.00

  	
   

  	
  100.0

  	
  %

  	
  21,067.63

  	
   

  	
  Total SQ Ft

  	
   

  
	
  21 Sonar imaging
  basement wall

  	
   

  	
  1,322.70

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  1,322.70

  	
   

  	
  Specific ID

  	
   

  
																	

 

C-1

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Medical

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cost

  	
   

  	
  sub category

  	
   

  	
  Retail %

  	
   

  	
  Retail Alloc

  	
   

  	
  %

  	
   

  	
  Medical Alloc

  	
   

  	
  Alloc. Method

  	
   

  
	
  22 Power to
  dampers

  	
   

  	
  2,357.38

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  809.33

  	
   

  	
  65.7

  	
  %

  	
  1,548.05

  	
   

  	
  Tolal SQ Ft

  	
   

  
	
  23 Void

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24 Void

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24A install
  exterior wall in OR

  	
   

  	
  7,336.31

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  7,336.31

  	
   

  	
  Specific ID

  	
   

  
	
  24B install studs
  for wall hung

  toilets

  	
   

  	
  1,597.07

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  718.68

  	
   

  	
  55.0

  	
  %

  	
  878.39

  	
   

  	
  Specific ID

  	
   

  
	
  25 Recess
  Circular soffit

  	
   

  	
  3,026.77

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  3,026.77

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Specific ID

  	
   

  
	
  26 Deputy inspection
  of basement

  footing

  	
   

  	
  337.60

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0.00

  	
   

  	
  100.0

  	
  %

  	
  337.60

  	
   

  	
  Specific ID

  	
   

  
	
  27 Install
  concrete footing (vs wood) in front

  	
   

  	
  29,012.05

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  13,055.42

  	
   

  	
  55.0

  	
  %

  	
  15,956.63

  	
   

  	
  Specific ID

  	
   

  
	
  28 Demo remaining
  basement

  	
   

  	
  4,074.50

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  4,074.50

  	
   

  	
  Specific ID

  	
   

  
	
  29 Add concrete
  on basement support wall

  	
   

  	
  8,378.22

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  8,378.22

  	
   

  	
  Specific ID

  	
   

  
	
  30 Telephone/Data
  Audio video

  	
   

  	
  217,057.55

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Audio Visual - Retail

  	
   

  	
   

  	
   

  	
  109,935.45

  	
   

  	
  100.0

  	
  %

  	
  109,935.45

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Specific ID

  	
   

  
	
  Conference room

  	
   

  	
   

  	
   

  	
  18,943.75

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  18,943.75

  	
   

  	
  Specific ID

  	
   

  
	
  General Data/AV

  	
   

  	
   

  	
   

  	
  88,178.35

  	
   

  	
  34.3

  	
  %

  	
  30,273.25

  	
   

  	
  65.7

  	
  %

  	
  57,905.10

  	
   

  	
  Total SQ Ft

  	
   

  
	
  31 credit VE

  	
   

  	
  (47,474.22

  	
  )

  	
   

  	
   

  	
  45.0

  	
  %

  	
  (34,819.72

  	
  )

  	
  55.0

  	
  %

  	
  (12,654.50 

  	
  )

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  32 credit for C/O
  11

  	
   

  	
  (523.85

  	
  )

  	
   

  	
   

  	
  100.0

  	
  %

  	
  (523.85

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
  SPECIFIC

  	
   

  
	
  33 credit for
  deletion of Conference

  table

  	
   

  	
  (18,022.47

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  (18,022.47 

  	
  )

  	
  Specific ID

  	
   

  
	
  34 Credit for
  stone

  	
   

  	
  (25,611.19

  	
  )

  	
   

  	
   

  	
  75.0

  	
  %

  	
  (19,208.39

  	
  )

  	
  25.0

  	
  %

  	
  (6,402.80 

  	
  )

  	
  Total SQ Ft

  	
   

  
	
  35 Add stone to
  Vestibule

  	
   

  	
  25,611,19

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  11,525.04

  	
   

  	
  55.0

  	
  %

  	
  14,086.15

  	
   

  	
  SPECIFIC

  	
   

  
	
  36 add windows in
  staff room

  	
   

  	
  4,714.78

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  4,714,78

  	
   

  	
  SPECIFIC

  	
   

  
	
  37 Fireproof all
  pipe columns

  	
   

  	
  16,054.33

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  16,054.33

  	
   

  	
  0.0

  	
  %

  	
  0.00

  	
   

  	
  Total SQ Ft

  	
   

  
	
  38 Deputy
  inspection of concrete

  on canon

  	
   

  	
  232.82

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  79.93

  	
   

  	
  65.7

  	
  %

  	
  152.89

  	
   

  	
  Total SQ Ft

  	
   

  
	
  39 Concrete stem wall
  on North

  elevation

  	
   

  	
  5,471.48

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  1,878.46

  	
   

  	
  65.7

  	
  %

  	
  3,593.02

  	
   

  	
  Total SQ Ft

  	
   

  
	
  40 Electrical
  extras

  	
   

  	
  3,238.70

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  3,288.70

  	
   

  	
  Specific ID

  	
   

  
	
  41 Electrical
  changes per Samar Obagi

  	
   

  	
  7,537.83

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  7,537.83

  	
   

  	
  Specific ID

  	
   

  
	
  42 Install Marble
  stone in Waterfall

  	
   

  	
  5,675.20

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  5,675.20

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Specific ID

  	
   

  
	
  43 Revision of
  Millwork per

  SAMAR

  	
   

  	
  32,195.58

  	
   

  	
   

  	
   

  	
  20.0

  	
  %

  	
  6,439.12

  	
   

  	
  80.0

  	
  %

  	
  25,756.46

  	
   

  	
  Specific ID

  	
   

  
	
  44 Electronic Air
  filter in OR SAMAR

  	
   

  	
  3,958.09

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  3,958.09

  	
   

  	
  Specific ID

  	
   

  
	
  45 Reroute
  refrigeration to new

  location

  	
   

  	
  1,047.73

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  359.70

  	
   

  	
  65.7

  	
  %

  	
  688.03

  	
   

  	
  Total SQ Ft

  	
   

  
	
  46 Replace
  existing sprinkler heads

  	
   

  	
  861.47

  	
   

  	
   

  	
   

  	
  0,0

  	
  %

  	
  0.00

  	
   

  	
  100.0

  	
  %

  	
  861.47

  	
   

  	
  Specific ID

  	
   

  
	
  47 additional
  plumbing

  	
   

  	
  4,452.85

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  2,003.78

  	
   

  	
  55.0

  	
  %

  	
  2,449.07

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  48 Auto Clave
  rough in

  	
   

  	
  19,487.79

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  19,487.79

  	
   

  	
  Specific ID

  	
   

  
	
  49 Deputy
  Inspection

  	
   

  	
  1,629.80

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  1,629.80

  	
   

  	
  0.0

  	
  %

  	
  0.00

  	
   

  	
  Total SQ Ft

  	
   

  
	
  50 Steel support
  for Countertops

  	
   

  	
  856.81

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  294.16

  	
   

  	
  65.7

  	
  %

  	
  562.65

  	
   

  	
  Total SQ Ft

  	
   

  
	
  51 Fire
  Corridor/rebuild front

  canopy

  	
   

  	
  8,723.83

  	
   

  	
   

  	
   

  	
  27.9

  	
  %

  	
  2,431.00

  	
   

  	
  72.1

  	
  %

  	
  6,292,83

  	
   

  	
  Specific ID

  	
   

  
	
  52 Recessed
  lights in Treatment room

  	
   

  	
  1,979.04

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  1,979.04

  	
   

  	
  Specific ID

  	
   

  
	
  53 Access
  panels/catwalks

  	
   

  	
  6,107.13

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  2,096.69

  	
   

  	
  65.7

  	
  %

  	
  4,010.44

  	
   

  	
  Total SQ Ft

  	
   

  
	
  54 Dr Obagi’s
  office ceiling drywall

  	
   

  	
  582.07

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  582.07

  	
   

  	
  Specific ID

  	
   

  
	
  55 Frame out for
  A/V and reframe

  Canopy

  	
   

  	
  6,911.39

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  6,911.39

  	
   

  	
  0.0

  	
  %

  	
  0.00

  	
   

  	
  Total SQ Ft

  	
   

  
	
  56 Water fall
  overflow feature

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  0.00

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Specific ID

  	
   

  
	
  57 Subterranean
  Drainage at North Elevation

  	
   

  	
  11,495.92

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  5,173.16

  	
   

  	
  55.0

  	
  %

  	
  6,322.76

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  58 Sheet Metal
  Backing Access Panels

  	
   

  	
  4,530.72

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  2,038.82

  	
   

  	
  55.0

  	
  %

  	
  2,491.90

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  59 Perimeter
  concrete

  	
   

  	
  6,628.37

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  2,982.77

  	
   

  	
  55.0

  	
  %

  	
  3,645.60

  	
   

  	
  Total SQ Ft

  	
   

  
	
  60 install fire
  rated plywood in ceiling

  	
   

  	
  1,089.63

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  490.33

  	
   

  	
  55.0

  	
  %

  	
  599.30

  	
   

  	
  Specific ID

  	
   

  
	
  61 Upgrade front
  door to automatic

  	
   

  	
  18,714.41

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  18,714.41

  	
   

  	
  0.0

  	
  %

  	
  0.00

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  62 Revise door
  117. 105 + 107

  	
   

  	
  26,426.09

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  11,691.74

  	
   

  	
  55.0

  	
  %

  	
  14,534.35

  	
   

  	
  Specific ID

  	
   

  
	
  63 Material for
  90 min. wood doors

  	
   

  	
  18,033.38

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  8,115.02

  	
   

  	
  55.0

  	
  %

  	
  9,918.36

  	
   

  	
  Specific ID

  	
   

  
	
  64 Work at Stair
  well Trailer

  	
   

  	
  23,452.91

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  23,452.91

  	
   

  	
  Specific ID

  	
   

  
	
  65 Asbestos
  Abatement Lobby

  	
   

  	
  5,580.63

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  5,580.63

  	
   

  	
  Specific ID

  	
   

  
	
  66 Deputy
  inspection for water feature

  	
   

  	
  465.65

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  465.65

  	
   

  	
  0.0

  	
  %

  	
  0.00

  	
   

  	
  Specific ID

  	
   

  
	
  67 Rebuilt
  Vestibule Perimeter

  walls

  	
   

  	
  12,554.65

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100,0

  	
  %

  	
  12,554.65

  	
   

  	
  Specific ID

  	
   

  
	
  68 Upgrade
  windows in room 121

  	
   

  	
  3,259.60

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  3,259.60

  	
   

  	
  Specific ID

  	
   

  
	
  69 Wrap Interior
  columns for fire

  	
   

  	
  2,095.46

  	
   

  	
   

  	
   

  	
  50.0

  	
  %

  	
  1,047.73

  	
   

  	
  50.0

  	
  %

  	
  1,047.73

  	
   

  	
  1st FLOOR

  	
   

  
	
  70 Delete sun
  shades

  	
   

  	
  (3,897.35

  	
  )

  	
   

  	
   

  	
  34.3

  	
  %

  	
  (1,336.79

  	
  )

  	
  65.7

  	
  %

  	
  (2,560.56 

  	
  )

  	
  Specific ID

  	
   

  
	
  71 Vestibule
  Floor Trench Drain

  	
   

  	
  8,607.41

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  8,607.41

  	
   

  	
  Specific ID

  	
   

  
	
  72 Upgrade
  Storefront glass door to 3/4”

  	
   

  	
  12,332.68

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  12,332.68

  	
   

  	
  0.0

  	
  %

  	
  0.00

  	
   

  	
  Specific ID

  	
   

  
	
  73 Raise Floors to
  meet Marble

  height

  	
   

  	
  3,259.60

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  1,466.82

  	
   

  	
  55.0

  	
  %

  	
  1,792.78

  	
   

  	
  Specific ID

  	
   

  
	
  74 Security
  Access system

  	
   

  	
  25,179,02

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  11,330.56

  	
   

  	
  55.0

  	
  %

  	
  13,848.46

  	
   

  	
  TOTAL

  	
   

  
	
  75 additional
  suede fabric for future

  use

  	
   

  	
  1,455.17

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  1,455.17

  	
   

  	
  0.0

  	
  %

  	
  0.00

  	
   

  	
  Specific ID

  	
   

  
	
  76 waterproof membrane
  north wall

  	
   

  	
  1,164.14

  	
   

  	
   

  	
   

  	
  34.3

  	
  %

  	
  399.30

  	
   

  	
  65.7

  	
  %

  	
  764.84

  	
   

  	
  Specific ID

  	
   

  
	
  77 Additional
  signage

  	
   

  	
  3,201.40

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  3,201.40

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Specific ID

  	
   

  
	
  78 Thin brick
  East elevation

  	
   

  	
  2,910.36

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  1,309.66

  	
   

  	
  55.0

  	
  %

  	
  1,600.70

  	
   

  	
  1st FI Sq Ft Alloc

  	
   

  
	
  79 Exterior plaster

  	
   

  	
  7,599.85

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  3,419.93

  	
   

  	
  55.0

  	
  %

  	
  4,179.92

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  80 Stainless shoe
  for circular glass

  	
   

  	
  6,402.79

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  6,402.79

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Specific ID

  	
   

  
	
  81 Electrical
  room connections

  	
   

  	
  29,987.20

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  13,494.24

  	
   

  	
  55.0

  	
  %

  	
  16,492.96

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  82 Additional
  Marble for entry door

  	
   

  	
  20,583.43

  	
   

  	
   

  	
   

  	
  75.0

  	
  %

  	
  15,437.57

  	
   

  	
  25.0

  	
  %

  	
  5,145.86

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  83 Change Fire
  Dampers/Run Dryer

  Vent

  	
   

  	
  1,138.53

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  512.34

  	
   

  	
  55.0

  	
  %

  	
  626.19

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  84 Single Phase
  Electrical Service Revisions

  	
   

  	
  10,324.65

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  4,646.09

  	
   

  	
  55.0

  	
  %

  	
  5,678.56

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  85 Delete Glass
  Display Box

  	
   

  	
  (3,059.69

  	
  )

  	
   

  	
   

  	
  100.0

  	
  %

  	
  (3,059.69

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
  Specific ID

  	
   

  
	
  86 Electrical
  Work not indicated on plans

  	
   

  	
  4,644.94

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  2,090.22

  	
   

  	
  55.0

  	
  %

  	
  2,554.72

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  87 Electrical
  Work Revisions from

  RDHA

  	
   

  	
  1,338.76

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  602.44

  	
   

  	
  55.0

  	
  %

  	
  736.32

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  88 Electrical
  Work from RDHA SK

  	
   

  	
  4,249.12

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  1,912.10

  	
   

  	
  55.0

  	
  %

  	
  2,337.02

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  89 New Plaster
  Color coat

  	
   

  	
  11,511.07

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  5,179.98

  	
   

  	
  55.0

  	
  %

  	
  6,331.09

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  90 VOID

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  91 Structural
  Support for

  Operational Light

  	
   

  	
  3,084.97

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100.0

  	
  %

  	
  3,084.97

  	
   

  	
  Specific ID

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PENDING (as of 05-15-06)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  92 Post and
  Parking lot signs

  	
   

  	
  1,578.00

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  710.10

  	
   

  	
  55.0

  	
  %

  	
  867.90

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  93 Screen for Mechanicals

  	
   

  	
  7,515.00

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  3,381.75

  	
   

  	
  55.0

  	
  %

  	
  4,133.25

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
       Removed
  intentionally

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  95 Refurbish
  Parking lot gate

  	
   

  	
  4,466.00

  	
   

  	
   

  	
   

  	
  45.0

  	
  %

  	
  2,009.70

  	
   

  	
  55.0

  	
  %

  	
  2,456.30

  	
   

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
  96 Credit for
  shelf’s over pond

  	
   

  	
  (3,642.00

  	
  )

  	
   

  	
   

  	
  45.0

  	
  %

  	
  (1,638.90

  	
  )

  	
  55.0

  	
  %

  	
  (2,003.10 

  	
  )

  	
  1st Fl Sq Ft Alloc

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Construction
  Costs

  	
   

  	
  3,117,479.86

  	
   

  	
   

  	
   

  	
  49.6

  	
  %

  	
  1,546,458.49

  	
   

  	
  50.4

  	
  %

  	
  1,571,021.37

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Architect
  Billings

  	
   

  	
  494.412.05

  	
   

  	
   

  	
   

  	
  49.6 

  	
  %

  	
  270,652.22 

  	
   

  	
  50.4 

  	
  %

  	
  223,759.83 

  	
   

  	
  Note 2

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Cost

  	
   

  	
  $

  	
  3,611,891.91

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  1,817,110.71

  	
   

  	
   

  	
   

  	
  $

  	
  1,794,781.20 

  	
   

  	
   

  	
   

  
																							

 

	
  Note 1

  	
  Per discussion with Jim Petree main contractor
  (Legacy Construction), Painwood cost (including labor) is 60% of the total
  costs and splits 35%/65% of total Cabinetry is the remaining cost and is on
  par with Sq. Ft. based on his estimates, we are applying the total sq ft.
  allocation.

  
	
   

  	
   

  
	
  Note 2

  	
  First 100K of Architect billings related to image
  design and heavily weighted 75% toward retail brand image (Obagi logo,
  window/storefront, retail design), remining costs are split at 49.6%/50.4%
  consistent with overall costs allocation

  

 

C-2

 

EXHIBIT D

 

MASTER LEASE

 

 

[intentionally omitted]

 

D-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}]]