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FIRST AMENDMENT TO
INVESTORS' RIGHTS AGREEMENT
THIS FIRST AMENDMENT TO INVESTORS' RIGHTS AGREEMENT (this "AGREEMENT")
is entered into as of November 15, 2000, by and between Obagi Medical Products,
Inc., a California corporation (the "COMPANY") (formerly known as OMP
Acquisition Corporation), Mandarin Partners LLC ("MANDARIN") and the Zein and
Samar Obagi Family Trust (the "OBAGI TRUST") (collectively referred to as the
"PARTIES").
RECITALS
WHEREAS, the Parties entered into an Investors' Rights Agreement, dated
December 2, 1997 (the "INVESTORS' RIGHTS AGREEMENT"); and
WHEREAS the Parties desire to amend the Investors' Rights Agreement to
increase to three (3) from two (2) the number of registrations (as that term is
defined in the Investors' Right Agreement) filed in compliance with the
Securities Act of 1933 after which the Company shall not be obligated to take
any action to effect any further registrations; and
WHEREAS the Parties desire to amend the Investors' Rights Agreement to
provide that no Holder (as that term is defined in the Investors' Rights
Agreement) shall be held jointly and severally liable with any other Holder for
any indemnification arising under Section 2.9(b) of the Investors' Rights
Agreement; and
WHEREAS the Parties desire to amend the Investors' Rights Agreement to
provide that a selling Holder's indemnification obligation under Section 2.9(d)
of the Investors' Rights Agreement shall not exceed the amount of gross proceeds
from the offering received by such selling Holder; and
WHEREAS the Parties desire to amend the Investors' Rights Agreement to
provide that the Company shall pay all expenses incurred in connection with a
registration requested pursuant to Section 2.11 of the Investors' Rights
Agreement as further described below, but excluding any underwriter's discounts
or commissions associated with Registrable Securities (as that term is defined
in the Investors' Rights Agreement); and
WHEREAS the Parties desire to amend Section 2.14(a) of the Investors'
Rights Agreement to increase to five (5) the number of years after which no
Holder shall be entitled to exercise any right provided under Section 2 of the
Investors' Rights Agreement following the consummation of the sale of securities
pursuant to a registration statement filed by the Company under the Act, and to
deletes the words "Section 1" and replace such words with "Section 2" to
accurately reflect the intent of the parties.
NOW, THEREFORE, in consideration of the mutual premises and promises
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
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AGREEMENT
1. Section 2.1(d)(i) of the Investors' Rights Agreement is hereby
amended by deleting all of said Section 2.1(d)(i) and replacing it with the
following:
"(i) After the Company has effected three (3) registrations
pursuant to this Section 2.1 and such registrations have been declared
or ordered effective;".
2. Section 2.9(b) of the Investors' Rights Agreement is hereby amended
by deleting all of said Section 2.9(b) and replacing it with the following:
"(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of
its officers who has signed the registration statement, each person, if
any, who controls the Company within the meaning of the Act, any
underwriter, any other Holder selling securities in such registration
statement and any controlling person of any such underwriter or other
Holder, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject,
under the Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by
such Holder expressly for use in connection with such registration; and
each such Holder will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant
to this subsection 2.9(b), in connection with investigation or
defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this subsection
2.9(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be
unreasonably withheld; provided, that, in no event shall any indemnity
under this subsection 2.9(b) exceed the gross proceeds from the
offering received by such Holder. In no event shall a selling Holder be
jointly and severally liable with any other selling Holder for any
indemnification arising under this Section 2.9(b)."
3. Section 2.9(d) of the Investors' Rights Agreement is hereby amended
by deleting all of said Section 2.9(d) and replacing it with the following:
"(d) If the indemnification provided for in this Section 2.9
is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage,
or expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such
loss, liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on
the one hand
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and of the indemnified party on the other in connection with the
statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
Notwithstanding any provision to the contrary in this Section 2.9(d),
in the event that the indemnifying party is a selling Holder, in no
event shall the selling Holder's obligation to contribute any amounts
hereunder exceed the amount of gross proceeds from the offering
received by such Holder."
4. Section 2.11(c) of the Investors' Rights Agreement is hereby amended
by deleting all of said Section 2.11(c) and replacing it with the following:
"(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after
receipt of the request or requests of the Holders. All expenses
incurred in connection with a registration requested pursuant to
Section 2.11, including (without limitation) all registration, filing,
qualification, printer's and accounting fees and the reasonable fees
and disbursements of one counsel for the selling Holder or Holders if
Company counsel does not make itself available for this purpose, and
counsel for the Company, but excluding any underwriter's discounts or
commissions associated with Registrable Securities, shall be borne and
paid for by the Company. Registrations effected pursuant to this
Section 2.11 shall not be counted as demands for registration or
registrations effected pursuant to Sections 2.1 or 2.2, respectively."
5. Section 2.14(a) of the Investors' Rights Agreement is hereby amended
by deleting all of said Section 2.14(a) and replacing it with the following:
"(a) No Holder shall be entitled to exercise any right
provided for in this Section 2 after five (5) years following the
consummation of the sale of securities pursuant to a registration
statement filed by the Company under the Act in connection with the
initial firm commitment underwritten offering of its securities to the
general public."
6. EFFECT OF AMENDMENT. All terms and provisions of the Investors'
Rights Agreement shall continue in full force and effect except as expressly
modified in this Agreement. Each reference in the Investors' Rights Agreement to
"this Agreement," "hereunder," "hereof," or words of like import, and each
reference to the Investors' Rights Agreement in any and all instruments or
documents provided for in the Investors' Rights Agreement or delivered or to be
delivered thereunder or in connection therewith, shall, except where the context
otherwise requires, be deemed a reference to the Investors' Rights Agreement as
amended hereby.
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7. NO THIRD-PARTY BENEFICIARIES. Nothing expressed or implied in this
Agreement is intended to confer upon any person, other than the parties hereto,
or their respective successors or permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
8. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
9. CHOICE OF LAW; HEADINGS. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of California
(regardless of such state's conflict of laws principles), and without reference
to any rules of construction regarding the party responsible for the drafting
hereof. Headings in this Agreement are for the purposes of reference only and
shall not limit or otherwise affect any of the terms hereof.
10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
OBAGI MEDICAL PRODUCTS, INC.
By:
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Phillip J. Rose
Its: President
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SHAREHOLDERS:
MANDARIN PARTNERS LLC
By:
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Peter P. Tong
Its: Manager
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ZEIN AND SAMAR OBAGI
FAMILY TRUST
By:
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Dr. Zein Obagi
Its: Trustee
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