Exhibit 10.21
INDEMNIFICATION
AGREEMENT
This Agreement is made as of
,
2006, between Obagi Medical Products, Inc., a Delaware corporation
(the “Company”), and
(the “Indemnitee”).
RECITALS
Both the Company and Indemnitee
recognize that highly competent persons have become more reluctant
to serve publicly-held corporations as directors or in other
capacities unless they are provided with adequate protection
through insurance or adequate indemnification against inordinate
risks of claims and actions against them arising out of their
service to and activities on behalf of the corporation.
In recognition of Indemnitee’s
need for substantial protection against personal liability in order
to enhance Indemnitee’s continued service to the Company in
an effective manner and Indemnitee’s reliance on the
provisions of the Company’s Certificate of Incorporation
(“Certificate of Incorporation”) and the
Company’s Bylaws (the “Bylaws”) permitting
indemnification of the Indemnitee to the fullest extent permitted
by law, and in part to provide Indemnitee with specific contractual
assurance that the protection promised by such Certificate of
Incorporation and Bylaws will be available to Indemnitee
(regardless of, among other things, any amendment to or revocation
of such Certificate of Incorporation or Bylaws or any change in the
composition of the Company’s Board of Directors or
acquisition transaction relating to the Company), the Company
wishes to provide in this Agreement for the indemnification of and
the advancing of expenses to Indemnitee to the fullest extent
(whether partial or complete) permitted by law and as set forth in
this Agreement.
The Certificate of Incorporation,
the Bylaws and the General Corporation Law of the State of Delaware
(“DGCL”) expressly provide that the indemnification
provisions set forth therein are not exclusive and thereby
contemplate that contracts may be entered into between the Company
and members of the board of directors, officers and other persons
with respect to indemnification.
It is reasonable, prudent and
necessary for the Company contractually to obligate itself to
indemnify, and to advance expenses on behalf of, such persons to
the fullest extent permitted by applicable law so that they will
serve or continue to serve the Company free from undue concern that
they will not be so indemnified.
This Agreement is a supplement to
and in furtherance of the Certificate of Incorporation and Bylaws
and any resolutions adopted pursuant thereto and shall not be
deemed a substitute therefor, nor to diminish or abrogate any
rights of Indemnitee thereunder.
AGREEMENT
In consideration of the premises and
of Indemnitee agreeing to serve or continuing to serve the Company
directly or, at its request, with another enterprise, and intending
to be legally bound hereby, the parties hereto agree as
follows:
1.
Basic Indemnification
Agreement .
(a)
In the event
Indemnitee was, is or becomes a party to or witness or other
participant in, or is threatened to be made a party to or witness
or other participant in, a Claim (as defined in Section 9(b)) by
reason of (or arising in part out of) an Indemnifiable Event (as
defined in Section 9(d)), the Company shall indemnify Indemnitee to
the fullest extent permitted by law as soon as practicable but in
any event no later than 30 days after written demand is presented
to the Company, against any and all Expenses (as defined in Section
9(c)), judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or
payable in connection therewith) of such Claim actually and
reasonably incurred by or on behalf of Indemnitee in connection
with such Claim and any federal, state, local or foreign taxes
imposed on Indemnitee as a result of the actual or deemed receipt
of any payments under this Agreement. If requested by Indemnitee in
writing, the Company shall advance (within ten business days of
such written request) any and all Expenses to Indemnitee (an
“Expense Advance”). Notwithstanding anything in this
Agreement to the contrary, prior to a Change of Control (as defined
in Section 9(a)) and except as set forth in Sections 1(b), 3 and 7,
Indemnitee shall not be entitled to indemnification pursuant to
this Agreement in connection with any Claim (i) initiated by
Indemnitee against the Company or any director or officer of the
Company unless the Company has joined in or consented to the
initiation of such Claim; (ii) made on account of
Indemnitee’s conduct which constitutes a breach of
Indemnitee’s duty of loyalty to the Company or its
stockholders or is an act or omission not in good faith or which
involves intentional misconduct or a knowing violation of the law;
or (iii) arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange
Act of 1934, as amended (the “Exchange
Act”).
(b)
Notwithstanding
the foregoing, (i) the indemnification obligations of the Company
under Section 1(a) shall not be applicable if the Reviewing Party
(as defined in Section 9(f)) has determined (in a written opinion,
in any case in which the special independent counsel referred to in
Section 2 is involved) that Indemnitee would not be permitted to be
indemnified under applicable law, and (ii) the obligation of the
Company to make an Expense Advance pursuant to Section 1(a) shall
be subject to the condition that the Company receives an
undertaking that, if, when and to the extent that the Reviewing
Party determines that Indemnitee would not be permitted to be so
indemnified under applicable law, the Company shall be entitled to
be reimbursed by Indemnitee (who hereby agrees to reimburse the
Company) for all such amounts theretofore paid; provided, however,
that if Indemnitee has commenced legal proceedings in the Court of
Chancery of the State of Delaware (the “Delaware
Court”) to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the
Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company for any
Expense Advance until a final judicial determination is made with
respect
2
thereto (as to which all
rights of appeal therefrom have been exhausted or lapsed).
Indemnitee’s obligation to reimburse the Company for Expense
Advances shall be unsecured and no interest shall be charged
thereon. If there has not been a Change in Control, the Reviewing
Party shall be selected by the Board of Directors, and if there has
been such a Change in Control, the Reviewing Party shall be the
special independent counsel referred to in Section 2. If there has
been no determination by the Reviewing Party or if the Reviewing
Party determines that Indemnitee substantively would not be
permitted to be indemnified in whole or in part under applicable
law, Indemnitee shall have the right to commence litigation in the
Delaware Court seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or any
aspect thereof and the Company hereby consents to service of
process and to appear in any such proceeding. Any determination by
the Reviewing Party otherwise shall be conclusive and binding on
the Company and Indemnitee. The Company shall indemnify Indemnitee
for Expenses incurred by Indemnitee in connection with the
successful establishment or enforcement, in whole or in part, by
Indemnitee of Indemnitee’s right to indemnification or
advances.
2.
Change in Control
. The Company agrees that if
there is a Change in Control of the Company (other than a Change in
Control which has been approved by two- thirds or more of the
Company’s Board of Directors who were directors immediately
prior to such Change in Control) then with respect to all matters
thereafter arising concerning the rights of Indemnitee to indemnity
payments and Expense Advances under this Agreement or any other
agreement, the Bylaws or Certificate of Incorporation now or
hereafter in effect relating to Claims for Indemnifiable Events,
the Company shall seek legal advice only from special independent
counsel selected by Indemnitee and approved by the Company (which
approval shall not be unreasonably withheld or delayed) and who has
not otherwise performed services for the Company within the last
five years (other than in connection with such matters) or for
Indemnitee. In the event that Indemnitee and the Company are unable
to agree on the selection of the special independent counsel, such
special independent counsel shall be selected by lot from among at
least five law firms with offices in the State of Delaware having
more than fifty attorneys, having a rating of “av” or
better in the then current Martindale Hubbell Law Directory and
having attorneys which specialize in corporate law. Such selection
shall be made in the presence of Indemnitee (and his legal counsel
or either of them, as Indemnitee may elect). Such counsel, among
other things, shall, within 90 days of its retention, render its
written opinion to the Company and Indemnitee as to whether and to
what extent Indemnitee would be permitted to be indemnified under
applicable law. The Company agrees to pay the reasonable fees of
the special independent counsel referred to above and to fully
indemnify such counsel against any and all expenses (including
attorneys’ fees), claims, liabilities, and damages arising
out of or relating to this Agreement or its engagement pursuant
hereto.
3.
Indemnification for Additional
Expenses .
The Company shall
indemnify Indemnitee against any and all expenses (including
attorneys’ fees) and, if requested by Indemnitee in writing,
shall (within ten business days of such written request) advance
such expenses to Indemnitee, which are incurred by Indemnitee in
connection with any Claim asserted against or action brought by
Indemnitee for (i) indemnification or advance payment of Expenses
by the Company under this Agreement or any other agreement, the
Bylaws or Certificate of Incorporation now or hereafter in effect
relating to Claims for Indemnifiable Events and/or (ii)
3
recovery under any
directors’ and officers’ liability insurance policies
maintained by the Company, regardless of whether the Company
believes that Indemnitee is entitled to such indemnification,
advance expense payment or insurance recovery, as the case may be.
The Indemnitee shall qualify for advances solely upon the execution
and delivery to the Company of an undertaking providing that the
Indemnitee undertakes to repay the advance to the extent that it is
ultimately determined that the Indemnitee is not entitled to be
indemnified by the Company.
4.
Partial Indemnity
. If Indemnitee is entitled
under any provisions of this Agreement to indemnification by the
Company of some but not all of the Expenses, liabilities,
judgments, fines, penalties and amounts paid in settlement of a
Claim, the Company shall nevertheless indemnify Indemnitee for the
portion thereof to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the
extent that Indemnitee has been successful on the merits or
otherwise in defense of any or all Claims relating in whole or in
part to an Indemnifiable Event or in defense of any issue or matter
therein, including dismissal without prejudice, Indemnitee shall be
indemnified against all Expenses incurred in connection therewith.
In connection with any determination by the Reviewing Party or
otherwise as to whether Indemnitee is entitled to be indemnified
hereunder the burden of proof shall be on the Company to establish
that Indemnitee is not so entitled.
5.
No Presumption
. For purposes of this
Agreement, the termination of any action, suit or proceeding by
judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that Indemnitee did not
meet any particular standard of conduct or have any p
|
