10.4.1
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LIMITED LIABILITY COMPANY AGREEMENT
OF
MEDICIS CONSUMER PRODUCTS COMPANY, L.L.C.
A DELAWARE LIMITED LIABILITY COMPANY
Dated as of June 18, 1998
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TABLE OF CONTENTS
ARTICLE I. DEFINITIONS AND INTERPRETATION......................................1
1.1 CERTAIN DEFINITIONS...................................................1
1.2 OTHER DEFINED TERMS...................................................5
1.3 INTERPRETATION........................................................6
ARTICLE II. INTRODUCTORY MATTERS...............................................7
2.1 FORMATION OF LLC......................................................7
2.2 NAME..................................................................7
2.3 PRINCIPAL OFFICE......................................................7
2.4 REGISTERED OFFICE AND REGISTERED AGENT................................7
2.5 PERPETUAL EXISTENCE...................................................7
2.6 BUSINESS AND PURPOSE OF THE LLC.......................................7
2.7 TITLE TO ALL PROPERTIES...............................................7
ARTICLE III. MEMBERS...........................................................8
3.1 MEMBERS; NO PERSONAL LIABILITY........................................8
3.2 TRANSACTIONS WITH THE LLC.............................................8
3.3 COMPENSATION OF MEMBERS...............................................8
3.4 NO REGULAR MEETINGS...................................................8
3.5 ACTIONS WITHOUT A MEETING.............................................8
3.6 REQUIRED VOTE.........................................................9
3.7 QUORUM AND EFFECT OF VOTE.............................................9
ARTICLE IV. CAPITAL CONTRIBUTIONS..............................................9
4.1 INITIAL CAPITAL CONTRIBUTIONS.........................................9
4.2 IMX CONTRIBUTED ASSETS................................................9
4.3 ADDITIONAL CONTRIBUTIONS..............................................9
4.4 RIGHTS WITH RESPECT TO CAPITAL.......................................10
4.5 GENERAL RULES FOR ADJUSTMENT OF CAPITAL ACCOUNTS.....................10
4.6 SPECIAL RULES WITH RESPECT TO CAPITAL ACCOUNTS.......................11
4.7 TRANSFEREE'S CAPITAL ACCOUNT.........................................11
ARTICLE V. ALLOCATION OF PROFITS AND LOSSES...................................11
5.1 ALLOCATION OF NET PROFITS AND NET LOSSES.............................11
5.2 RESIDUAL ALLOCATIONS.................................................12
5.3 QUALIFIED INCOME OFFSET..............................................12
5.4 MINIMUM GAIN CHARGEBACK..............................................12
5.5 MEMBER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK......................13
5.6 MEMBER NONRECOURSE DEDUCTIONS........................................13
5.7 SPECIAL ALLOCATIONS..................................................13
5.8 FEES TO MEMBERS OR AFFILIATES........................................13
5.9 SECTION 704(c) ALLOCATION............................................14
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ARTICLE VI. DISTRIBUTIONS.....................................................14
6.1 AVAILABLE CASH FLOW..................................................14
6.2 LIQUIDATING DISTRIBUTIONS............................................14
6.3 AUTHORITY TO WITHHOLD................................................15
ARTICLE VII. MANAGEMENT.......................................................15
7.1 MANAGERS.............................................................15
7.2 LIMITATIONS ON RIGHTS AND POWERS.....................................18
7.3 COMPENSATION OF MANAGERS.............................................19
7.4 EXPENSE REIMBURSEMENT................................................19
7.5 OTHER BUSINESS VENTURES..............................................19
ARTICLE VIII. RESTRICTIONS ON TRANSFER OF LLC INTERESTS; ADMISSION OF
NEW MEMBERS...................................................................19
8.1 TRANSFER OR ASSIGNMENT OF MEMBER'S INTEREST..........................19
8.2 VOID TRANSFERS.......................................................20
8.3 SUBSTITUTION OF MEMBERS..............................................20
8.4 ADMISSION OF NEW MEMBERS.............................................20
8.5 SUBSEQUENT TRANSFERS SUBJECT TO TERMS OF AGREEMENT...................20
8.6 RIGHTS OF LEGAL REPRESENTATIVES......................................20
8.7 PURCHASE TERMS VARIED BY AGREEMENT...................................21
ARTICLE IX. OPTION TO PURCHASE IMX'S INTEREST.................................21
9.1 MEDICIS OPTION TO PURCHASE...........................................21
9.2 RIGHT TO REQUIRE PURCHASE............................................22
ARTICLE X. TERMINATION AND DISSOLUTION........................................23
10.1 DISSOLUTION.........................................................23
10.2 DISASSOCIATION EVENT................................................23
10.3 CONDUCT OF BUSINESS.................................................23
10.4 FILING OF CERTIFICATE OF CANCELLATION...............................23
10.5 DISTRIBUTION OF NET PROCEEDS........................................24
ARTICLE XI. BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS.........................24
11.1 MAINTENANCE OF BOOKS AND RECORDS; REPORTS TO MEMBERS................24
11.2 INSPECTION AND AUDIT RIGHTS.........................................25
11.3 FISCAL YEAR.........................................................25
11.4 TAX MATTERS.........................................................25
11.5 INCOME TAX ELECTIONS................................................26
11.6 OBLIGATIONS OF MEMBERS TO REPORT ALLOCATIONS........................26
ARTICLE XII. INDEMNIFICATION OF MEMBERS, MANAGERS AND AFFILIATES.............26
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12.1 INDEMNIFICATION OF THE MEMBERS AND THEIR PRINCIPALS.................26
12.2 EXPENSES............................................................26
12.3 INDEMNIFICATION RIGHTS NON-EXCLUSIVE................................27
12.4 ERRORS AND OMISSIONS INSURANCE......................................27
12.5 ASSETS OF THE LLC...................................................27
ARTICLE XIII. ISSUANCE OF LLC CERTIFICATES....................................27
13.1 ISSUANCE OF LLC CERTIFICATES........................................27
13.2 TRANSFER OF LLC INTERESTS...........................................28
13.3 LOST, STOLEN OR DESTROYED CERTIFICATES..............................28
ARTICLE XIV. AMENDMENTS.......................................................28
14.1 AMENDMENT, ETC. OF OPERATING AGREEMENT..............................28
14.2 AMENDMENT OF CERTIFICATE OF FORMATION...............................29
ARTICLE XV. MISCELLANEOUS PROVISIONS..........................................29
15.1 CHOICE OF FORUM AND GOVERNING LAW...................................29
15.2 SEVERABILITY........................................................29
15.3 ASSIGNMENT; BINDING AGREEMENT.......................................29
15.4 ENTIRE AGREEMENT AND MODIFICATION...................................30
15.5 NON-DISCLOSURE OF INFORMATION.......................................30
15.6 REMEDIES............................................................30
15.7 NON-WAIVER OF RIGHTS................................................30
15.8 ENTIRE AGREEMENT AND MODIFICATION...................................30
15.9 COUNTERPARTS........................................................31
15.10 COOPERATION........................................................31
15.11 HEADINGS; INTERPRETATION...........................................31
15.12 PAYMENT OF FEES AND EXPENSES.......................................31
15.13 NOTICES............................................................31
15.14 SURVIVAL OF RIGHTS.................................................32
15.15 REPRESENTATIONS AND ACKNOWLEDGMENTS................................32
15.16 PARTITION..........................................................32
15.17 WAIVER.............................................................32
15.18 ATTORNEYS' FEES....................................................32
15.19 CONFIDENTIALITY AND PRESS RELEASES.................................33
ARTICLE XVI. MISCELLANEOUS...................................................33
16.1 ASSIGNMENT; BINDING AGREEMENT.......................................33
EXHIBIT A......................................................................1
INITIAL MEMBER NAMES AND ADDRESSES; INITIAL CAPITAL
CONTRIBUTIONS AND PERCENTAGE INTERESTS....................................1
EXHIBIT B......................................................................2
(FACE OF CERTIFICATE).....................................................2
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MEDICIS CONSUMER PRODUCTS CORPORATION, LLC
LIMITED LIABILITY COMPANY AGREEMENT
This Limited Liability Company Agreement (this "Agreement") is made and
entered into and effective as of June 5, 1999 by and between Medicis Partners
Incorporated, a Delaware corporation ("Medicis"), and IMX Pharmaceuticals, Inc.,
a Utah corporation ("IMX").
R E C I T A L S
WHEREAS, the Members have caused Medicis Consumer Products Corporation,
L.L.C. (the "LLC") to be formed pursuant to the provisions of the Delaware
Limited Liability Company Act as set forth in Title 6, Chapter 18 (commencing
with Section 18-101) of the Delaware Code (the "Statute"); and
WHEREAS, the Members do hereby adopt this Agreement as the limited
liability company agreement of the LLC.
NOW, THEREFORE, in consideration of the covenants and the promises made
herein, the parties hereto hereby agree as follows.
ARTICLE I.
DEFINITIONS AND INTERPRETATION
1.1 CERTAIN DEFINITIONS. In this Agreement, the following terms have the
meanings specified or referred to in this Section 1.1, which shall be equally
applicable to both the singular and plural forms.
1.1.1 "Adjusted Capital Account Deficit" means, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of the
end of the relevant fiscal year of the LLC, after giving effect to the following
adjustments:
(i) increase such Capital Account by any amounts which such
Member is obligated to contribute to the LLC (pursuant to the terms of this
Agreement or otherwise) or is deemed to be obligated to contribute to the LLC
pursuant to Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) reduce such Capital Account by the amount of the items
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
1.1.2 "Affiliate" means, when used with reference to a specified
Person, (i) the Principal of the Person, (ii) any Person directly or indirectly
controlling, controlled by or under common control with such Person, (iii) any
Person owning or controlling 10% or more of the outstanding voting interests of
such Person and (iv) any relative or spouse of such Person.
1.1.3 "Agreement" means this Limited Liability Company Agreement, as
originally executed and as amended from time to time.
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1.1.4 "Available Cash Flow" means, with respect to any fiscal year
of the LLC or other period, the sum of all cash receipts of the LLC from any and
all sources, less all cash disbursements (including loan repayments, capital
improvements and replacements) and a reasonable allowance for Reserves,
contingencies and anticipated obligations, as determined by the Manager.
1.1.5 "Capital Contribution" means any money, property or services
rendered, or a promissory note or other binding obligation to contribute money,
property or services, that a Member contributes to the LLC as capital in such
Member's capacity as a Member and pursuant to an agreement among the Members,
including an agreement as to the value of such contribution.
1.1.6 "Certificate of Formation" means the certificate of formation
filed with the Delaware Secretary of State for the purpose of forming the LLC.
1.1.7 "Code" means the Internal Revenue Code of 1986, as amended.
1.1.8 "Depreciation" means, for each fiscal year of the LLC or other
period, an amount equal to the depreciation, amortization or other cost recovery
reduction allowable with respect to an asset for such fiscal year or other
period.
1.1.9 "Disassociation Event" means the death, retirement,
resignation, expulsion, bankruptcy or dissolution of a Member, or any other
event that terminates the continued membership in the LLC of a Member.
1.1.10 "Economic Interest" means a Person's right to share in the
Net Profits, Net Losses or similar items of, and to receive distributions from,
the LLC, but does not include any other rights of a Member including the right
to vote or to participate in the management of the LLC or, except as provided by
the Statute, any right to information concerning the business and affairs of the
LLC.
1.1.11 "General Manager" means the Person responsible for the
overall management and control of the business of the LLC pursuant to Section
7.1 hereof.
1.1.12 "LLC Interest" or "Interest" means an ownership interest in
the LLC, which includes the Economic Interest, the right to vote or participate
in the management of the LLC and the right to information concerning the
business and affairs of the LLC, as provided in this Agreement and under the
Statute. The Interests of the Members, and any portion thereof, constitute the
personal property of the holders.
1.1.13 "LLC Minimum Gain" means the amount determined by computing
with respect to each nonrecourse liability of the LLC, the amount of gain (of
whatever character), if any, that would be realized by the LLC if it disposed
(in a taxable transaction) of the Property subject to such liability in full
satisfaction thereof, and by then aggregating the amounts so computed as set
forth in Regulations Section 1.704-2(d).
1.1.14 "Major Agreements" means this Agreement, the joint venture
agreement
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by and among the parties and the LLC dated as of June 12, 1998 ("Joint Venture
Agreement") and the agreements attached thereto as exhibits which are an
integral part of the transaction contemplated therein including the consulting
agreement, the new product agreement, the facility agreement, the service
agreement and the stock purchase agreement.
1.1.15 "Majority in Interest of the Members" means, with respect to
any date of determination, more than 50% of the interests of the Members in the
current profits and capital of the LLC.
1.1.16 "Manager" means each Person designated or elected to manage
the LLC pursuant to Section 7.1 of this Agreement.
1.1.17 "Member Nonrecourse Debt" has the meaning set forth in
Regulations Section 1.704-2(b)(4).
1.1.18 "Member Nonrecourse Debt Minimum Gain" means an amount, with
respect to each Member Nonrecourse Debt, equal to the LLC Minimum Gain that
would result if such Member Nonrecourse Debt were treated as a nonrecourse
liability of the LLC, determined in accordance with Regulations Sections
1.704-2(i)(2) and (3).
1.1.19 "Member Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2). The amount of Member Nonrecourse Deductions
with respect to a Member Nonrecourse Debt for a fiscal year of the LLC equals
the excess (if any) of the net increase (if any) in the amount of Member
Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt
during that fiscal year over the aggregate amount of any distributions during
that fiscal year to the Member that bears (or is deemed to bear) the economic
loss for such Member Nonrecourse Debt to the extent such distributions are from
the proceeds of such Member Nonrecourse Debt and are allocable to an increase in
Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse
Debt, determined in accordance with Regulations Section 1.704-2(i)(2).
1.1.20 "Member" means a Person who is a signatory to this Agreement,
as the same may be amended from time to time, and who has not resigned,
withdrawn or been expelled as a Member or, if other than an individual, been
dissolved.
1.1.21 "Net Profits" and "Net Losses" mean, for each fiscal year of
the LLC or other period, an amount equal to the LLC's taxable income or loss for
such fiscal year or period, determined in accordance with Code Section 703(a)
(for this purpose, all items of income, gain, loss or deduction required to be
stated separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:
(i) Any income of the LLC that is exempt from Federal income
tax and not otherwise taken into account in computing Net Profits or Net Losses
shall be added to such taxable income or loss;
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(ii) Any expenditures of the LLC described in Code Section
705(b)(2)(B) or treated as Code Section 705(b)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into account in
computing Net Profits or Net Losses shall be subtracted from such taxable income
or loss;
(iii) Gain or loss resulting from any disposition of Property
with respect to which gain or loss is recognized for Federal income tax purposes
shall be computed by reference to the fair market value of the Property disposed
of, notwithstanding that the adjusted tax basis of such Property differs from
its fair market value;
(iv) In lieu of depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year or other
period, computed in accordance with the Section 1.1.8 hereof, and
(v) Notwithstanding any other provision of this subsection,
any items of income, gain, loss or deduction which are specifically allocated
shall not be taken into account in computing Net Profits or Net Losses.
1.1.22 "Percentage Interest" means the percentage interest of a
Member as set forth on Exhibit A hereto, as the same may be amended from time to
time or supplemented by a register of LLC Interests or any other books and
records maintained by the LLC or its transfer agent or register for the purpose
of recording the interests of the LLC's Interest holders.
1.1.23 "Principal" means the individual who is in ultimate control
of a Member.
1.1.24 "Property" means all assets of the LLC, both tangible and
intangible, or any portion thereof.
1.1.25 "Regulations" means the Federal income tax regulations
promulgated by the Treasury Department under the Code, as such regulations may
be amended from time to time.
1.1.26 "Reserves" means funds set aside from Capital Contributions
or gross cash revenues as reserves. Such Reserves shall be maintained in amounts
reasonably deemed sufficient by the Managers for working capital and the payment
of taxes, insurance, debt service, repairs, replacements, renewals or other
costs or expenses incident to the business of the LLC.
1.2 OTHER DEFINED TERMS. The following terms have the meanings defined for
such terms in the Sections set forth below:
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Term Section
Capital Account 4.4.3
Change in Control 9.2
IMX Preamble
IMX Contributed Assets 4.1
Indemnitee 12.1
Joint Venture Agreement 1.1.14
LLC Recitals
LLC Certificate 13.1
Medicis Preamble
Net Sales 9.1.2
Purchase Consideration 9.1
Statute Recitals
Transfer 8.1
Vote 3.6
Year 1999 9.1.1
Year 2000 9.1.1
Year 2001 9.1.1
1.2.1 Other capitalized terms used herein without definition shall
have the meaning ascribed to them in the Joint Venture Agreement.
1.3 INTERPRETATION. As used in this Agreement, the word "including" means
without limitation, the word "or" is not exclusive and the words "herein,"
"hereof," "hereto" and hereunder refer to this Agreement as a whole. Unless the
context otherwise requires, references herein: (i) to Articles, Sections and
Exhibits mean the Articles and Sections of and the Exhibits attached to this
Agreement, (ii) to an agreement, instrument or other document means such
agreement, instrument or other document as amended, supplemented and modified
from time to time to the extent permitted by the provisions thereof and by this
Agreement and (iii) to a statute means such statute as amended from time to time
and includes any successor legislation thereto. The Exhibits referred to herein
shall be construed with and as an integral part of this Agreement to the same
extent as if they were set forth verbatim herein. Titles to Articles and
headings of Sections are inserted for convenience of reference only and shall
not be deemed a part of or to affect meaning or interpretation of this
Agreement. The language herein shall be in all cases construed simply according
to its fair meaning and not strictly for or against any of the Members. In the
event that the terms of this Agreement and the Joint Venture Agreement conflict
for any reason, the terms of the Joint Venture Agreement shall control.
ARTICLE II.
INTRODUCTORY MATTERS
2.1 FORMATION OF LLC. Concurrently herewith, the Members shall organize,
create and form the LLC pursuant to the provisions of the Statute by filing the
Certificate of Formation with the Delaware Secretary of State. The rights and
liabilities of the Members shall be
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determined pursuant to the Statute and this Agreement. To the extent that the
rights or obligations of any Member are different by reason of any provision of
this Agreement than they would be in the absence of such provision, this
Agreement shall, to the extent permitted by the Statute, control.
2.2 NAME. The name of the LLC shall be "Medicis Consumer Products Company,
L.L.C." The business of the LLC may be conducted under such name or, upon
compliance with applicable laws, any other name that the General Manager deems
appropriate or advisable. The General Manager shall file any fictitious name
certificates and similar filings, and any amendments thereto, that the General
Manager deems appropriate or advisable.
2.3 PRINCIPAL OFFICE. The LLC shall maintain its principal place of
business at 0000 Xxxxxxxxx Xxxx., Xxxx Xxxxx, Xxxxxxx 00000, or at any other
location mutually agreed upon by the Members.
2.4 REGISTERED OFFICE AND REGISTERED AGENT. The location of the registered
office and the name of the registered agent of the LLC in the State of Delaware
shall be as set forth in the Certificate of Formation.
2.5 PERPETUAL EXISTENCE. The LLC shall have perpetual existence until
dissolved in accordance with the Statute or pursuant to Article XI of this
Agreement.
2.6 BUSINESS AND PURPOSE OF THE LLC. The purpose of the LLC is to engage
in any lawful activities for which a LLC may be organized under the Statute,
including the development and marketing of pharmaceutical products as set forth
in the Joint Venture Agreement and Major Agreements, provided that the LLC shall
not conduct any banking, insurance or trust company business.
2.7 TITLE TO ALL PROPERTIES. Real and personal property owned or purchased
by the LLC shall be held and owned, and conveyance made, in the name of the LLC.
Instruments and documents providing for the acquisition, mortgage or disposition
of Property of the LLC shall be valid and binding upon the LLC, except as
otherwise provided by this Agreement, if executed by the General Manager.
ARTICLE III.
MEMBERS
3.1 MEMBERS; NO PERSONAL LIABILITY. The name, present mailing address and
Percentage Interest of each Member is set forth on Exhibit A hereto. No Member
shall have any personal liability for any obligation of the LLC, except as
expressly provided by law.
3.2 TRANSACTIONS WITH THE LLC. Subject to any limitations set forth in
this Agreement and with the prior approval of the General Manager after full
disclosure of the Member's involvement, a Member may transact business with the
LLC. Subject to applicable law, a Member so transacting business with the LLC
shall have the same rights and obligations with respect thereto as a person who
is not a Member.
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3.3 COMPENSATION OF MEMBERS. Except as expressly permitted by this
Agreement or any other duly authorized and approved written agreement, the LLC
shall pay no compensation to any Member or any Principal of any Member for their
services to the LLC.
3.4 NO REGULAR MEETINGS. Notwithstanding anything to the contrary herein,
no annual or regular meetings of the Members are required to be held. The
Members may meet at such times as they may mutually determine, whether at the
offices of the LLC or at such other place, and in such manner, including
telephone conference, as may mutually be agreed upon.
3.5 ACTIONS WITHOUT A MEETING. Except as may be limited by the Statute,
any action which may be taken at any annual or special meeting of Members may be
taken without a meeting and without prior notice if a consent in writing,
setting forth the action so taken, shall be signed by Members holding in the
aggregate the number of votes equal to or greater than the number of votes
required to approve such action at a meeting of the Members.
3.6 REQUIRED VOTE. Unless otherwise expressly set forth in this Agreement
or required by the terms of the Statute, Code or applicable Regulations
thereunder, the affirmative vote of at least 50% of the Members (a "Vote"),
wherein each Member casts a number of votes equal to the Member's Percentage
Interest in the LLC, shall constitute the approval of the Members.
3.7 QUORUM AND EFFECT OF VOTE. A Majority in Interest of the Members shall
constitute a quorum at all meetings of the Members for the transaction of
business, and a Vote of the Members shall be required to approve any action,
unless a greater vote is required or a lesser vote is provided for by this
Agreement or by the Statute. Each Member shall have a number of votes equal to
the Percentage Interest held by such Member, provided that if, pursuant to the
Statute or the terms of this Agreement, a Member is not entitled to vote on a
specific matter, then such Member's number of votes and Percentage Interest
shall not be considered for purposes of determining whether a quorum is present,
or whether approval by Vote of the Members has been obtained in respect of such
specific matter.
ARTICLE IV.
CAPITAL CONTRIBUTIONS
4.1 INITIAL CAPITAL CONTRIBUTIONS. Upon execution of this Agreement,
Medicis shall contribute to the LLC cash in the amount of $4 million, and IMX
shall contribute to the LLC certain assets and properties (as more particularly
described in Section 4.2 hereof, the "IMX Contributed Assets"), which assets and
properties shall be valued in the amount set forth beside such Member's name
under the heading "Member's Capital Contribution" on Exhibit A hereto.
4.2 IMX CONTRIBUTED ASSETS. The IMX Contributed Assets shall be comprised
of all of IMX's right, title and interest in, to or under (i) the EXOREX Product
Line (including the shampoo and cream products) and all improvements thereto,
and (ii) the Helpline and the product fulfillment center as more fully set forth
in Section 1.7 of the Joint Venture Agreement.
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4.3 ADDITIONAL CONTRIBUTIONS. Except as may be otherwise expressly set
forth herein, no Member shall be required to make any additional Capital
Contributions or loan or caused to be loaned to the LLC any money or other
assets.
4.4 RIGHTS WITH RESPECT TO CAPITAL.
4.4.1 LLC Capital. Except as otherwise provided in this Agreement,
no Member shall have the right to withdraw or receive any return of its Capital
Contribution, and no Capital Contribution may be returned in the form of
property other than cash.
4.4.2 No Interest on Capital Contributions. Except as expressly
provided in this Agreement, no Capital Contribution of any Member shall bear any
interest or otherwise entitle the contributing Member to any compensation for
the use of contributed capital.
4.4.3 Establishment of Capital Accounts. A separate capital account
(each, a "Capital Account") shall be maintained for each Member. For book
purposes, each Member's Capital Account will be separated into a contribution
account and an income (loss) account and will be maintained according to
generally accepted accounting principles consistently applied. Sections 4.5 and
4.6 below describe the appropriate accounting treatment for tax purposes of the
Capital Accounts.
4.5 GENERAL RULES FOR ADJUSTMENT OF CAPITAL ACCOUNTS.
4.5.1 Increases. The Capital Account of a Member shall be increased
by:
(i) Such Member's cash contributions;
(ii) The agreed fair market value of property contributed by
such Member (net of liabilities secured by such
contributed property that the LLC is deemed to assume or
take subject to under Code Section 752); and
(iii) All items of LLC income and gain (including income and
gain exempt from tax) allocated to such Member pursuant
to Article IV or other provisions of this Agreement.
4.5.2 Decreases. The Capital Account of a Member shall be decreased
by:
(i) The amount of cash distributed to such Member;
(ii) The agreed fair market value of all actual and deemed
distributions of property made to such Member pursuant
to this Agreement (net of liabilities secured by such
distributed property that the Member is deemed to assume
or take subject to under Code Section 752); and
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(iii) All items of LLC deduction and loss allocated to such
Member pursuant to Article IV or other provisions of
this Agreement.
4.6 SPECIAL RULES WITH RESPECT TO CAPITAL ACCOUNTS.
4.6.1 Time of Adjustment for Capital Contributions. For purposes of
computing the balance in a Member's Capital Account, no credit shall be given
for any Capital Contribution which such Member is to make until such
contribution is actually made.
4.6.2 Intent to Comply with Treasury Regulations. The provisions of
Section 4.5 and this Section 4.6 and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent therewith. To the extent such provisions are inconsistent with such
Regulations Section or are incomplete with respect thereto, the Capital Accounts
shall be maintained in such manner as is required to comply with such
Regulations Section.
4.7 TRANSFEREE'S CAPITAL ACCOUNT. In the event a Member or the holder of
an Economic Interest transfers an Interest in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital Account of the transferor
to the extent it relates to the transferred Interest.
ARTICLE V.
ALLOCATION OF PROFITS AND LOSSES
5.1 ALLOCATION OF NET PROFITS AND NET LOSSES. Except as otherwise provided
in this Article V, Net Profits and Net Losses in each fiscal year of the LLC
shall be allocated among the Members as follows:
5.1.1 Net Profits. After giving effect to any special or other
overriding allocations set forth in this Article V, Net Profits shall be
allocated among the Members as follows:
(i) first, in proportion to and up to the amounts of Net
Losses allocated for previous fiscal years of the LLC
pursuant to Section 5.1.2(ii) and not previously
affected by allocations pursuant to this Section
5.1.1(i);
(ii) second, in proportion to and up to the amounts of Net
Losses allocated for previous fiscal years of the LLC
pursuant to Section 5.1.2(i) and not previously affected
by allocations pursuant to this Section 5.1.1(ii); and
(iii) thereafter, to the Members in accordance with their
respective Percentage Interests.
5.1.2 Allocation of Net Losses. After giving effect to any special
or other
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overriding allocations set forth in this Article V, Net Losses shall be
allocated among the Members as follows:
(i) first, in proportion and to the extent of the Members'
positive adjusted Capital Accounts; and
(ii) thereafter, to the Members in accordance with their
respective Percentage Interests.
5.2 RESIDUAL ALLOCATIONS. Except as otherwise provided in this Agreement,
all items of LLC income, gain, loss, deduction and any other allocations not
otherwise provided for shall be divided among the Members in the same
proportions as they share Net Profits or Net Losses, as the case may be, for the
applicable fiscal year of the LLC.
5.3 QUALIFIED INCOME OFFSET. If any Member unexpectedly receives any
adjustments, allocation or distributions described in clauses (4), (5) or (6) of
Regulations Section 1.704-1(b)(2)(ii)(d), items of LLC income shall be specially
allocated to such Member in an amount and manner sufficient to eliminate the
Adjusted Capital Account Deficit created by such adjustments, allocations or
distributions as quickly as possible. This Section 5.3 is intended to constitute
a "qualified income offset" within the meaning of Regulations Section
1.704-1(b)(2)(ii)(d)(3).
5.4 MINIMUM GAIN CHARGEBACK. If there is a net decrease in LLC Minimum
Gain during a fiscal year, each Member will be allocated, before any other
allocation under this Article V, items of income and gain for such fiscal year
(and, if necessary, subsequent years) in proportion to and to the extent of an
amount equal to such Member's share of the net decrease in LLC Minimum Gain
determined in accordance with Regulations Section 1.704-2(g)(2). This Section
5.4 is intended to comply with, and shall be interpreted consistently with, the
"minimum gain chargeback" provisions of Regulations Section 1.704-2(f).
5.5 MEMBER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK. Notwithstanding any
other provision of this Article V, but except Section 5.4, if there is a net
decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member
Nonrecourse Debt during any fiscal year of the LLC, each Member who has a share
of the Member Nonrecourse Debt Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Treasury Regulations Section
1.704-2(i)(5), shall be specially allocated items of LLC income and gain for
such year (and, if necessary, subsequent years) in an amount equal such Member's
share of the net decrease in Member Nonrecourse Debt Minimum Gain attributable
to such Member Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each
Member pursuant thereto. The items to be so allocated shall be determined in
accordance with Regulations Section 1.704-2(i)(4). This Section 5.5 is intended
to comply with a minimum gain chargeback requirement of that Section of the
Regulations and shall be interpreted consistently therewith.
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5.6 MEMBER NONRECOURSE DEDUCTIONS. Any Member Nonrecourse Deductions for
any fiscal year of the LLC or other period shall be specially allocated to the
Member who bears (or is deemed to bear) the economic risk of loss with respect
to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(i)(2).
5.7 SPECIAL ALLOCATIONS. Any special allocations of items of Net Profits
pursuant to Sections 5.4, 5.5 and 5.6 shall be taken into account in computing
subsequent allocations of Net Profits pursuant to Section 5.1, so that the net
amount of any items so allocated and the gain, loss and any other item allocated
to each Member pursuant to Section 5.1 shall, to the extent possible, be equal
to the net amount that would have been allocated to each such Member pursuant to
the provisions of this Article V if such special allocations had not occurred.
5.8 FEES TO MEMBERS OR AFFILIATES. Notwithstanding the provisions of
Section 5.1, in the event that any fees, interest or other amounts paid to any
Member or any Affiliate thereof pursuant to this Agreement or any other
agreement between the LLC and any Member or Affiliate thereof providing for the
payment of such amount, and deducted by the LLC in reliance on Section 707(a)
and/or 707(c) of the Code, are disallowed as deductions to the LLC on its
federal income tax return and are treated as LLC distributions, then:
(i) the Net Profits or Net Losses, as the case may be, for the
fiscal year of the LLC in which such fees, interest, or other amounts were paid
shall be increased or decreased, as the case may be, by the amount of such fees,
interest or other amounts that are treated as LLC distributions; and
(ii) there shall be allocated to the Member to which (or to
whose Affiliate) such fees, interest or other amounts were paid, prior to the
allocations pursuant to Section 5.1, an amount of gross income for such fiscal
year equal to the amount of such fees, interest or other amounts that are
treated as LLC distributions.
5.9 SECTION 704(c) ALLOCATION. Any item of income, gain, loss and
deduction with respect to any property (other than cash) that has been
contributed by a Member to the capital of the LLC and which is required or
permitted to be allocated to such Member for income tax purposes under Section
704(c) of the Code so as to take into account the variation between the tax
basis of such property and its fair market value at the time of its contribution
shall be allocated to such Member solely for income tax purposes in the manner
so required or permitted.
ARTICLE VI.
DISTRIBUTIONS
6.1 AVAILABLE CASH FLOW. The Managers shall on a quarterly basis
distribute Available Cash Flow of the LLC to the Members in proportion to their
Percentage Interests as of the time of such distribution. For purposes of
allocations of Net Profits pursuant to Section 5.1.1, Available Cash Flow
attributable to a specific fiscal year of the LLC shall be deemed distributed as
of the end of such fiscal year.
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6.2 LIQUIDATING DISTRIBUTIONS. If the LLC is liquidated, the assets of the
LLC shall be distributed to the Members in accordance with the balances in their
respective Capital Accounts, after giving effect to all Capital Contributions,
distributions and allocations for all periods. Distributions to the Members
pursuant to this Section 6.2 shall be made in accordance with Section
1.704-1(b)(2)(ii)(b)(2) of the Regulations.
6.3 AUTHORITY TO WITHHOLD. The Members hereby irrevocably authorize the
General Manager to withhold from amounts otherwise distributable or allocable
(whether or not distributable) to any Member, any and all amounts as may be
required, from time to time, to be withheld with respect to such Member under
the provisions of Sections 1441, 1442, 1445 or 1446 of the Code and any
applicable Regulations or any other applicable provision of federal, state or
local income or other tax law. To the extent that any amount is required to be
so withheld with respect to a Member, such amount shall be treated as a
distribution of Available Cash Flow to such Member. If the amount so deemed to
be distributed exceeds the amount, if any, which the Member would then otherwise
be entitled to receive as a distribution of Available Cash Flow (excluding loan
payments) under the Agreement, then such Member shall be obligated to make a
Capital Contribution of cash in the amount of such excess on or before the date
on which the LLC is required to withhold the tax, unless the LLC agrees to an
extension of the date for payment. IMX shall be responsible for all other taxes
relating to or arising from its Interest in the LLC or in the formation of the
LLC and IMX agrees to indemnify LLC for any liabilities arising from IMX's
Interest in the LLC or in connection with the formation of the LLC.
ARTICLE VII.
MANAGEMENT
7.1 MANAGERS. The LLC shall be managed initially by Medicis and IMX.
Medicis shall be the General Manager unless and until removed or replaced as
General Manager in accordance with this Agreement. The overall management and
control of the business and affairs of the LLC shall be vested solely in the
General Manager, provided that to the extent practicable, the General Manager
shall consult with the other Managers with respect to the business and
operations of the LLC. Subject to reasonable consultation with and input from
the other Managers, the General Manager shall be responsible for establishing
the policies and operating procedures with respect to the business and affairs
of the LLC and, except as otherwise set forth herein, for making all decisions
of the LLC in all matters. Except as otherwise set forth herein or as otherwise
unanimously agreed by the Managers in writing, the General Manager and no other
Manager shall be authorized to execute agreements, documents and instruments on
behalf of the LLC. Notwithstanding the foregoing, the General Manager may
authorize by written instrument any other Manager to execute any agreement,
document or instrument, or any class of agreements, documents or instruments
and, subject to this Agreement and the Statute, to bind the LLC thereby.
7.1.1 Duties and Authority of the General Manager. Except as
otherwise expressly provided in this Agreement, all decisions relating to any
matter set forth herein or otherwise affecting or arising out of the conduct of
the business of the LLC shall be made by the General Manager who shall have the
exclusive right and full authority to manage, conduct and operate the business
of the LLC. Specifically, but not by way of limitation, the General Manager
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shall be authorized in the name and on behalf of the LLC:
(i) to borrow money, to issue evidences of indebtedness and to
guarantee the debts of others for whatever purposes it may specify and, as
security therefor, to mortgage, pledge or otherwise encumber the assets of the
LLC;
(ii) to cause to be paid on or before the due date thereof all
amounts due and payable by the LLC to any person or entity;
(iii) to employ or engage such agents, employees, managers,
accountants, attorneys, consultants and other persons necessary or appropriate
to carry out the business and affairs of the LLC, including itself, whether or
not any such persons so employed are affiliated or related to any Member, and to
pay such fees, expenses, salaries, wages and other compensation to such persons
as it shall in its sole discretion determine and to terminate such employment or
engagement, including, without limitation, to enter into the Service Agreements
and to terminate the same in accordance with the provisions thereof;
(iii) to pay, extend, renew, modify, adjust, subject to arbitration,
prosecute, defend or compromise, upon such terms as it may determine and upon
such evidence as it may deem sufficient, any obligation, suit, liability, cause
of action or claim, including taxes, either in favor of or against the LLC;
(iv) to pay any and all fees and to make any and all expenditures
which it, in its sole discretion, deems necessary or appropriate in connection
with the organization of the LLC, the management of the affairs of the LLC and
the carrying out of its obligations and responsibilities under this Agreement;
(v) to comply in all respects with the obligations imposed by any
mortgages encumbering the LLC's assets from time to time and by any other
agreements pertaining to the LLC's assets;
(vi) to cause all income which may become due with respect to the
LLC's assets to be collected;
(vii) to invest excess funds of the LLC in such investments as the
General Manager deems advisable and prudent;
(viii) to establish reserves for taxes, insurance, replacements and
other items as the General Manager may determine;
(ix) to establish banking accounts for and in the name of the LLC,
with such bank or banks or as the General Manager may elect;
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(x) to exercise all powers and authority granted by the Statute to
Managers, except as otherwise provided in this Agreement; and
(xi) subject to Section 7.2 hereof, to sell all or any portion of
the LLC's assets at such time or times and upon such terms as the General
Manager shall, in its sole discretion, determine without regard to the effect of
such sale upon the individual income tax obligations of any Member; provided,
however, that there shall be no installment sale election without the prior
written consent of all Members.
7.1.2 Election. The number of Managers shall be fixed at two until
such time as the Members shall otherwise unanimously agree. Medicis shall be
entitled to designate one Manager, who shall be the General Manager, and IMX,
for so long as the Percentage Interest of IMX equals or exceeds 10%, shall be
entitled to designate one Manager. In any election of Managers, the Members
hereby covenant and agree to vote their Interests in accordance with the
proceeding sentence. Each Manager shall hold office until such Manager's
successor has been designated pursuant to this Section 7.1 and has qualified,
unless such Manager earlier resigns or is removed or otherwise disqualified to
serve.
7.1.3 Subordinate Officers. The General Manager may appoint a
secretary, a chief financial officer and such other officers as the business of
the LLC may require, each of whom shall hold office for such period, have such
authority and perform such duties as are provided in this Agreement, or as the
General Manager may determine.
7.1.4 Removal and Resignation. Any Manager or other officer of the
LLC may be removed, with or without cause, by a Vote of the Members provided,
that Medicis shall at all times have the right to designate one Manager, who
shall be the General Manager and that at all times as the Percentage Interest of
IMX equals or exceeds 10%, IMX shall have the right to designate one Manager.
Any Manager or other officer of the LLC may resign at any time without prejudice
to any rights of the LLC under any contract to which the Manager or other
officer of the LLC is a party, by giving written notice to the Members or to the
General Manager, as applicable. Any such resignation shall take effect at the
date of the receipt of such notice or at any later time specified therein, and
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
7.1.5 Vacancies. Subject to the provisions of Section 7.1.2 hereof
regarding the designation of Managers, a vacancy among the Managers or in any
office because of death, resignation, removal, disqualification or any other
cause shall be filled by a Vote of the Members through the appointment of a
successor Manager or officer who shall hold office for the unexpired term.
7.1.6 Meetings. Meetings of the Managers shall be held at the
principal office of the LLC, unless some other place is designated in the notice
of the meeting. Any Manager may participate in a meeting through use of a
conference telephone or similar communication equipment so long as all Managers
participating in such a meeting can hear one another. Accurate minutes of any
meeting of the Managers shall be maintained by the officer designated by the
Managers for that purpose. No regular meetings of the Managers shall be
required, except that the Managers may
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designate any such periodic meetings as they may mutually determine. Special
meetings of the Managers for any purpose may be called at any time by any
Manager. At least 48 hours notice of the time and place of a special meeting of
the Managers shall be delivered personally to the Managers or personally
communicated to them by an officer of the LLC by telephone, telegraph or
facsimile. If the notice is sent to a Manager by letter, it shall be addressed
to such Manager at his, her or its last known business address as it is shown in
the records of the LLC. In case such notice is mailed, it shall be deposited in
the United States mail, first-class postage, prepaid, in the place in which the
principal office of the LLC is located at least four days prior to the time of
the holding of the meeting. Such mailing, telegraphing, telephoning or delivery
as above provided shall be considered due, legal and personal notice to such
Manager.
7.1.7 Meetings Without Notice. Notice of a meeting need not be given
to any Manager who signs a waiver of notice, a consent to holding the meeting or
an approval of the minutes thereof, whether before or after the meeting, or who
attends the meeting without protesting, prior thereto or at its commencement,
the lack of notice to such Manager. All such waivers, consents and approvals
shall be filed with the LLC's records or made a part of the minutes of the
meeting.
7.1.8 Written Consent in Lieu of Meetings. Any action required or
permitted to be taken by the Managers may be taken without a meeting and will
have the same force and effect as if taken by a vote of the Managers at a
meeting properly called and noticed, if authorized by a writing signed
individually or collectively by all, but not less than all, of the Managers.
Such consent shall be filed with the records of the LLC.
7.1.9 Quorum. A majority of the total number of incumbent Managers
shall constitute a quorum for the transaction of business at any meeting of the
Managers, and except as otherwise provided in this Agreement or by the Statute,
the action of a majority of the Managers present at any meeting at which there
is a quorum, when duly assembled, is valid. A meeting at which a quorum is
initially present may continue to transact business, notwithstanding the
withdrawal of Managers, if any action taken is approved by the General Manager
or a majority of the required quorum for such meeting.
7.2 LIMITATIONS ON RIGHTS AND POWERS. So long as the Percentage Interest
of IMX equals or exceeds 10%, neither the General Manager, any other Manager nor
any officer of the LLC shall have the authority, except by the unanimous
agreement of the Managers which is evidenced in writing, to:
(i) enter into or amend any Service Agreement other than on an arm's
length basis (and other than any Service Agreement entered into concurrently
with the execution of this Agreement);
(ii) commence the liquidation or termination of the LLC;
(iii) sell all or substantially all of the assets of the LLC in one
or more related transactions, except as otherwise expressly contemplated herein;
or
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(iv) do any act in contravention of this Agreement.
7.3 COMPENSATION OF MANAGERS. Except for the Major Agreements, the LLC
shall pay to the Managers such salary and other benefits as shall be approved
from time to time by the Vote of all the Members. The LLC shall reimburse the
Managers for any expense paid by a Manager that properly is to be borne by the
LLC.
7.4 EXPENSE REIMBURSEMENT. The LLC shall reimburse the Members for any
expense paid by them that properly is to be borne by the LLC, as approved from
time to time by the Managers. Expenses incurred in connection with service
agreements for outside consultants in amounts in excess of $50,000 shall require
the consent of all the Managers.
7.5 OTHER BUSINESS VENTURES. Unless otherwise agreed to, no Manager shall
be required to devote all of such Manager's time or business efforts to the
affairs of the LLC, but shall devote so much of such Manager's time and
attention to the LLC as is reasonably necessary and advisable to manage the
affairs of the LLC to the best advantage of the LLC.
ARTICLE VIII.
RESTRICTIONS ON TRANSFER OF LLC INTERESTS;
ADMISSION OF NEW MEMBERS
8.1 TRANSFER OR ASSIGNMENT OF MEMBER'S INTEREST. No transfer, sale,
hypothecation, pledge, encumbrance, assignment or other disposition (any of the
foregoing, a "Transfer") of a Member's Interest, or any part thereof, in the LLC
(other than to Medicis or its Affiliate) will be valid without the consent of a
Majority in Interest of the Members, so long as IMX has 10% or more Percentage
Interest in the LLC, and provided however, that if MEDICIS desires to Transfer
its Interest, MEDICIS shall first discuss with IMX the terms of any such
Transfer. Nothing in this Section 8.1 shall be construed as requiring IMX's
consent to any Transfer, unless IMX holds a Majority in Interest of the Members.
Any Transfer of an Interest which does not satisfy the requirements of this
Section 8.1 shall be voidable at the election of the General Manager in its sole
discretion.
8.2 VOID TRANSFERS. If the General Manager determines in its sole
discretion that any Transfer would cause the termination of the LLC under the
Code, then the Transfer shall be null and void.
8.3 SUBSTITUTION OF MEMBERS. A transferee of an Interest shall become a
substitute Member, provided that (i) the Transfer was valid under Section 8.1
hereof and not voided by the Managers pursuant to Section 8.2 hereof, (ii) the
transferee has become a party to this Agreement and (iii) the transferee pays
any reasonable expenses in connection with his, her or its admission as a
Member. A transferee who becomes a substituted Member has, to the extent
transferred, all of the rights, powers and duties of a Member under this
Agreement and the Statute.
8.4 ADMISSION OF NEW MEMBERS. A new Member may be admitted into the LLC
only upon the consent of the Members holding, in the aggregate, at least 90% of
the
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Percentage Interests then outstanding. The amount of Capital Contribution, if
any, which must be made by a new Member shall be determined by the Vote of all
existing Members. A new Member shall not be deemed admitted into the LLC until
the Capital Contribution required of such Person shall have been made and such
Person has become a party to this Agreement and made any and all investment
representations deemed necessary or advisable by the Managers in their sole
discretion.
8.5 SUBSEQUENT TRANSFERS SUBJECT TO TERMS OF AGREEMENT. After the
consummation of any Transfer of any part of an LLC Interest, the Interest or
portion thereof so transferred shall continue to be subject to the terms and
provisions of this Agreement and any further Transfers shall be required to
comply with all the terms and provisions hereof.
8.6 RIGHTS OF LEGAL REPRESENTATIVES. If a Member who is an individual dies
or is adjudged by a court of competent jurisdiction to be incompetent to manage
the Member's person or property, the Member's executor, administrator, guardian,
conservator or other legal representative may exercise all of the Member's
rights for the purpose of settling the Member's estate or administering the
Member's property, including any power the Member has under the Certificate of
Formation or this Agreement to give an assignee the right to become a Member. If
a Member is a corporation, trust or other entity and is dissolved or terminated,
the powers of that Member may be exercised by its legal representative or
successor.
8.7 PURCHASE TERMS VARIED BY AGREEMENT. Provided that the restrictions set
forth in this Agreement have been satisfied, nothing contained herein is
intended to prohibit Members from agreeing upon other terms and conditions for
the purchase by the LLC or any other Member of the Interest (or any portion
thereof) of any Member desiring to retire, withdraw or resign.
ARTICLE IX.
OPTION TO PURCHASE IMX'S INTEREST
9.1 MEDICIS OPTION TO PURCHASE. Within 30 days after June 30 of each of
1999, 2000 and 2001, Medicis shall have the option to acquire one third of IMX's
Percentage Interest in the LLC existing as of the date hereof upon the payment
of the Purchase Consideration. The payment of the Purchase Consideration shall
be made in immediately available funds no later than 60 days after the exercise
of an option. The "Purchase Consideration" for each option shall mean the
product of the Sales Multiple and one-sixth of the Net Sales during the most
recently completed fiscal year of the LLC.
9.1.1 Determination of Sales Multiples. For the year ended June 30,
1999 ("Year 1999"), if the Net Sales are equal to or below $6 million, the Sales
Multiple shall be two, and if the Net Sales are equal to or above $10 million,
the Sales Multiple shall be three. The Sales Multiple shall be prorated for Net
Sales between $6 million and $10 million. For the fiscal year ended June 30,
2000 ("Year 2000") and 2001 ("Year 2001"), the Sales Multiple shall be as
follows:
(i) if Net Sales decline over the prior fiscal year of the
LLC, the Sales Multiple is one; and
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(ii) if Net Sales increase over the prior fiscal year of the
LLC by:
(A) less than 10%, the Sales Multiple is 1.5;
(B) 10%, the Sales Multiple is two;
(C) 30%, the Sales Multiple is three; and
(D) greater than or equal to 50%, the Sales Multiple
is four.
The Sales Multiple shall be prorated for any Net Sales increases between 10% and
50% in Years 2000 and 2001.
9.1.2. Definition of "Net Sales." "Net Sales" shall mean the gross
amount invoiced by the LLC on all sales of LLC's products less deductions for:
(i) sales taxes, value-added taxes and excise taxes, tariffs, import or export
duties, and duties paid or allowed by a selling party and any other governmental
charges imposed upon the importation, use or sale of such products which are
included in the gross amount invoiced; (ii) allowed customary trade and quantity
discounts and allocated sales discounts; (iii) allocated transportation, bulk
packaging, handling and freight charges and reasonable and customary insurance
where such are separately stated as part of the sales price and are included in
the gross amount invoiced; and (iv) allowances and credits to customers on
account of rejection or return of products. Sales between or among LLC and its
Affiliates or sublicensees shall be excluded from the computation of Net Sales,
but Net Sales shall include the subsequent sales to third parties by such
Affiliates or sublicensees. For purposes of determining Net Sales, a sale shall
be deemed to have occurred when the products have been shipped.
9.1.3 Exercise of Option in Subsequent Years. Within 30 days after
Year 2000 and 2001, Medicis may also purchase the Percentage Interest of IMX
that Medicis elected not to purchase in any prior period, provided that in
calculating the Purchase Consideration, the Net Sales amount used will be for
Year 2000 or Year 2001, as applicable, and the Sales Multiple will be determined
based on sales growth between Year 1999 and Year 2000 or Year 2000 and Year
2001, as applicable.
9.1.4 Exercise of Option in Subsequent Years. To the extent that
Medicis does not exercise any option pursuant to this Section 9.1 prior to
September 30, 2001, Medicis shall have the right to purchase at any time the
remainder of IMX's Percentage Interest not previously purchased by Medicis upon
the payment of the Purchase Consideration calculated for Year 2001.
9.2 RIGHT TO REQUIRE PURCHASE. In the event there is a Change in Control
of Medicis, if the Percentage Interest of IMX equals or exceeds 10%, IMX may
elect to require Medicis (or its successor) to purchase the remainder of IMX's
Percentage Interest not previously purchased by Medicis within 180 days of
providing written notice to Medicis, upon the payment of the Purchase
Consideration (calculated as set forth in Section 9.1 by using Net Sales for the
most recently completed fiscal year of the LLC before the date of purchase and a
Sales Multiple based upon sales growth between the year prior to such year and
such year multiplied by the amount (expressed as a percentage) of the Medicis
option pursuant to Section 9.1 remaining unexercised as of the date of such
Change of Control). A "Change in Control" shall mean the purchase or other
acquisition by any person or entity of beneficial ownership (within the meaning
of Rule 13d-3
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promulgated under the Securities Exchange Act of 1934, as amended) of a majority
in interest of either the then outstanding shares of common stock of the Company
or the combined voting power of the Company's then-outstanding voting securities
entitled to vote generally in the election of directors.
ARTICLE X.
TERMINATION AND DISSOLUTION
10.1 DISSOLUTION. The LLC shall be dissolved upon the occurrence of any of
the following events:
(i) a Vote of the Members to dissolve the LLC;
(ii) the entry of a decree of judicial dissolution by a court of
competent jurisdiction providing for the dissolution of the LLC; or
(iii) the sale of all or substantially all of the assets of the LLC
and the distribution to the Members of the proceeds thereof.
10.2 DISASSOCIATION EVENT. Upon the occurrence of a Disassociation Event,
the business of the LLC shall be automatically continued.
10.3 CONDUCT OF BUSINESS. Upon the occurrence of any event specified in
Section 10.1, the LLC shall continue solely for the purpose of winding up its
affairs in an orderly manner, liquidating its assets and satisfying the claims
of its creditors. The General Manager or other Managers who have not wrongfully
dissolved the LLC or, if none, the Members, shall be responsible for overseeing
the winding up and liquidation of the LLC, shall take full account of the assets
and liabilities of the LLC, shall cause its assets to be either sold or
distributed, and shall cause the proceeds therefrom, to the extent sufficient
therefor, to be applied and distributed as provided in this Section 11.3. The
Persons winding up the affairs of the LLC shall give written notice of the
commencement of winding up by mail to all known creditors and claimants whose
addresses appear on the records of the LLC. The Manager or Managers winding up
the affairs of the LLC shall be entitled to reasonable compensation for such
services. On winding up the LLC, the assets of the LLC shall be distributed
first to creditors of the LLC, including Members who are creditors, in
satisfaction of the liabilities of the LLC, and then to the Members in
accordance with Article VI.
10.4 FILING OF CERTIFICATE OF CANCELLATION. Upon completion of the winding
up of the affairs of the LLC, the Managers shall promptly file, or cause to be
filed, a certificate of cancellation of the Certificate of Formation with the
Delaware Secretary of State. If there are no Managers, the Certificate of
Cancellation shall be filed by the remaining Members. If there are no Members,
the Certificate of Cancellation shall be filed by the legal or personal
representative of the Person who was the last Member.
10.5 DISTRIBUTION OF NET PROCEEDS. The Members shall continue to divide
Net Profits and Net Losses and Available Cash Flow during the winding-up period
in the same
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manner and the same priorities as provided for in Articles V and VI hereof. The
proceeds from the liquidation of Property shall be applied in the following
order:
(i) to creditors other than Members in the order of priority
provided by law;
(ii) to creditors who are Members in order of priority, except
amounts owed to Members on account of their Capital Contributions.
(iii) to Members in respect of their share of the Net Profits and
other compensation by way of income on their Capital Contributions;
(iv) to Members for return of their Capital Contributions; and
(v) to Members in accordance with the respective positive Capital
Account balances after giving effect to all Capital Contributions,
distributions, revaluations and allocations required under this Agreement.
Where the distribution pursuant to this Section 11.5 consists both of cash (or
cash equivalents) and non-cash assets, the cash (or cash equivalents) shall
first be distributed, in a descending order, to fully satisfy each category
starting with the most preferred category set forth above. In the case of
non-cash assets, the distribution values are to be based on the fair market
value thereof as determined in good faith by the liquidator, and the shortest
maturity portion of such non-cash assets (e.g., notes or other indebtedness)
shall, to the extent such non-cash assets are readily divisible, be distributed,
in a descending order, to fully satisfy each category above, starting with the
most preferred category.
ARTICLE XI.
BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS
11.1 MAINTENANCE OF BOOKS AND RECORDS; REPORTS TO MEMBERS. The General
Manager shall cause to be maintained proper and complete books and records in
which shall be entered all transactions and other matters relevant to the
business and affairs of the LLC. Such books and records shall be prepared and
maintained in accordance with generally accepted accounting principles. The
determination of the General Manager as to adjustments to the financial reports,
books, records and returns of the LLC, in the absence of fraud or gross
negligence, shall be final and binding upon the LLC and all of the Members. In
addition, the General Manager shall cause the LLC to deliver reports to the
Members in accordance with prudent business practices and the Statute.
11.2 INSPECTION AND AUDIT RIGHTS. Each Member has the right upon
reasonable request, for purposes reasonably related to the interest of that
Person, to inspect and copy at his, her or its expense during normal business
hours any of the following XXX xxxxx and records:
(i) true and full information regarding the status of the business
and financial condition of the LLC;
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(ii) promptly after becoming available, a copy of the LLC's federal,
state and local income tax returns for each year;
(iii) a current list of the name and last known business, residence
or mailing address of each Member and Manager;
(iv) a copy of this Agreement and the Certificate of Formation and
all amendments thereto, together with executed copies of any written powers of
attorney pursuant to which this Agreement, the Certificate of Formation or any
amendments thereto have been executed;
(v) true and full information regarding the amount of cash and a
description and statement of the agreed value of any other property or services
contributed by each Member and which each Member has agreed to contribute in the
future, and the date on which each such Person became a Member; and
(vi) such other information regarding the affairs of the LLC as is
just and reasonable.
Notwithstanding the foregoing, the General Manager may keep confidential
from the Members, for such period of time as they deem reasonable, any
information which the General Manager reasonably believe to be trade secrets or
which the General Manager in good faith believe the disclosure of which to be
detrimental to the LLC or prohibited by law or by an agreement with a third
party.
11.3 FISCAL YEAR. The fiscal year of the LLC shall end on June 30 of each
year.
11.4 TAX MATTERS. One of the Managers who is also a Member, or in the
event no Manager is a Member, a Member or an officer of a corporate Member,
shall be designated as "Tax Matters Partner" (as defined in Code section 6231),
to represent the LLC (at the LLC's expense) in connection with all examinations
of the LLC's affairs by tax authorities, including resulting judicial and
administrative proceedings, and to expend LLC funds for professional services
and costs associated therewith. In its capacity as Tax Matters Partner, the
designated Person shall oversee the LLC tax affairs in the overall best
interests of the LLC. Unless and until the Members designate another Person to
be the Tax Matters Partner, the General Manager shall be the initial Tax Matters
Partner.
11.5 INCOME TAX ELECTIONS. The Tax Matters Partner designated pursuant to
Section 12.5 shall have the authority on behalf of the LLC to make all elections
permitted under the Code and all other tax-related statutes and regulations,
including elections of methods of depreciation and elections under Section 754
of the Code. The decision to make or not to make an election shall be at the Tax
Matters Partner's sole and absolute discretion.
11.6 OBLIGATIONS OF MEMBERS TO REPORT ALLOCATIONS. The Members hereby
acknowledge that they are aware of the income tax consequences of the
21
allocations made by this Agreement and hereby agree to be bound by the
provisions of this Agreement in reporting their shares of the LLC income and
loss for income tax purposes.
ARTICLE XII.
INDEMNIFICATION OF MEMBERS,
MANAGERS AND AFFILIATES
12.1 INDEMNIFICATION OF THE MEMBERS AND THEIR PRINCIPALS. The LLC shall
indemnify and hold harmless the Members, the Managers, their Affiliates and
their respective officers, directors, employees, agents and Principals
(individually, an "Indemnitee") from and against any and all losses, claims,
demands, costs, damages, liabilities, joint and several, expenses of any nature
(including reasonable attorneys' fees and disbursements), judgments, fines,
settlements and other amounts arising from any and all claims, demands, actions,
suits or proceedings, whether civil, criminal, administrative or investigative,
in which the Indemnitee was involved or may be involved, or threatened to be
involved, as a party or otherwise, arising out of or incidental to the business
of the LLC, regardless of whether the Indemnitee continues to be a Member, an
Affiliate, or an officer, director, employee, agent or Principal of the Member
at the time any such liability or expense is paid or incurred, to the fullest
extent permitted by the Statute and all other applicable laws.
12.2 EXPENSES. Expenses incurred by an Indemnitee in defending any claim,
demand, action, suit or proceeding subject to Section 13.1 shall, from time to
time, be advanced by the LLC prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the LLC of an undertaking by
or on behalf of the Indemnitee to repay such amount if it shall be determined
that such Person is not entitled to be indemnified as authorized in Section
13.1.
12.3 INDEMNIFICATION RIGHTS NON-EXCLUSIVE. The indemnification provided by
Section 13.1 shall be in addition to any other rights to which those indemnified
may be entitled under any agreement or vote of the Members, as a matter of law
or equity or otherwise, both as to action in the Indemnitee's capacity as a
Member, as an Affiliate or as an officer, director, employee, agent or Principal
of a Member and as to any action in another capacity, and shall continue as to
an Indemnitee who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns, representatives and administrators of
the Indemnitee.
12.4 ERRORS AND OMISSIONS INSURANCE. The LLC may purchase and maintain
insurance, at the LLC's expense, on behalf of the Members and such other Persons
as the Members shall determine, against any liability that may be asserted
against, or any expense that may be incurred by, such Person in connection with
the activities of the LLC and/or the Members' acts or omissions as the Members
of the LLC regardless of whether the LLC would have the power to indemnify such
Person against such liability under the provisions of this Agreement or under
applicable law.
12.5 ASSETS OF THE LLC. Any indemnification under Section 13.1 shall be
satisfied solely out of the assets of the LLC. No Member shall be subject to
personal liability or
22
required to fund or to cause to be funded any obligation by reason of these
indemnification provisions.
ARTICLE XIII.
ISSUANCE OF LLC CERTIFICATES
13.1 ISSUANCE OF LLC CERTIFICATES. Upon or at any time after the execution
of this Agreement and the payment of the Capital Contributions by the Members,
the General Manager may elect to cause the LLC to issue one or more LLC
Certificates in the form of Exhibit B hereto (each, an "LLC Certificate") in the
name of each Member certifying that the Person named therein is the record
holder of the LLC Interests set forth therein. For purposes of this Agreement,
the term "record holder" shall mean the person whose name appears on Exhibit A
as the Member owning the LLC Interest at issue.
13.2 TRANSFER OF LLC INTERESTS. An LLC Interest which is transferred in
accordance with the terms of this Agreement shall be transferable on the books
of the LLC by the record holder thereof in person or by such record holder's
duly authorized attorney, but, except as provided in Section 14.3 hereof with
respect to lost, stolen or destroyed certificates, in the event an LLC
Certificate has been issued, no transfer of an LLC Interest shall be entered
until the previously issued LLC Certificate representing such LLC Interest shall
have been surrendered to the LLC and canceled and a replacement LLC Certificate
issued to the assignee of such LLC Interest in accordance with such procedures
as the General Manager may establish. In the event of a Transfer of less than
all of a Member's LLC Interests and if LLC Certificates have been issued, the
General Manager shall issue to the transferring Member a new LLC Certificate
representing the LLC Interests not being transferred. Except as otherwise
required by law, the LLC shall be entitled to treat the record holder of an LLC
Certificate on its books as the owner thereof for all purposes regardless of any
notice or knowledge to the contrary.
13.3 LOST, STOLEN OR DESTROYED CERTIFICATES. The LLC shall issue a new LLC
Certificate in place of any LLC Certificate previously issued if the record
holder of the LLC Certificate:
(i) makes proof by affidavit, in form and substance satisfactory to
the Managers, that a previously issued LLC Certificate has been lost, destroyed
or stolen;
(ii) requests the issuance of a new LLC Certificate before the LLC
has notice that the LLC Certificate has been acquired by a purchaser for value
in good faith and without notice of an adverse claim;
(iii) indemnifies the LLC against any claim that may be made on
account of the alleged loss, destruction or theft of the LLC Certificate; and
(iii) satisfies any other reasonable requirements imposed by the
Managers.
If a Member fails to notify the LLC within a reasonable time after it has notice
of the loss, destruction or theft of an LLC Certificate, and a transfer of the
LLC Interest represented by the
23
LLC Certificate is registered before receiving such notification, the LLC shall
have no liability with respect to any claim against the LLC for such transfer or
for a new LLC Certificate.
ARTICLE XIV.
AMENDMENTS
14.1 AMENDMENT, ETC. OF OPERATING AGREEMENT. This Agreement may be
adopted, altered, amended or repealed and a new operating agreement may be
adopted by a Vote of the Members. Any amendments to this Agreement which
materially alter the rights under this Agreement of a Member holding a minority
of the outstanding Percentage Interests shall require consent of such minority
Member.
14.2 AMENDMENT OF CERTIFICATE OF FORMATION. Notwithstanding any provision
to the contrary in the Certificate of Formation or this Agreement, in no event
shall the Certificate of Formation be amended without the affirmative vote of at
least a Majority in Interest of the Members.
ARTICLE XV.
MISCELLANEOUS PROVISIONS
15.1 CHOICE OF FORUM AND GOVERNING LAW. In light of LLC's substantial
contacts with the State of Delaware, and the parties' interests in ensuring that
disputes regarding the interpretation, validity and enforceability of this
Agreement are resolved on a uniform basis, the parties agree that: (i) any
litigation involving any noncompliance with or breach of the Agreement, or
regarding the interpretation, validity and/or enforceability of the Agreement,
shall be filed and conducted exclusively in the state or federal courts in
Maricopa County, Arizona; (ii) the parties hereby consent to the jurisdiction of
such courts, agree that venue will be proper in such courts and waive any
objections based upon forum non conveniens; and (iii) the Agreement shall be
deemed to be made in and in all respects shall be interpreted, construed and
governed by and in accordance with the laws of the State of Delaware, without
regard for any conflict of law principles. The choice of forum set forth in this
Section 15.1 shall not be deemed to preclude the enforcement of any action under
this Agreement in any other jurisdiction.
15.2 SEVERABILITY. In the event any portion of this Agreement shall be
held illegal, void or ineffective, the remaining portions hereof shall, remain
in full force and effect. If any of the terms or provisions of this Agreement
are in conflict with any applicable statute or rule of law, then such terms or
provisions shall be deemed inoperative to the extent that they may conflict
therewith and shall be deemed to be modified to conform with such statute or
rule of law. In the event that the terms and conditions of this Agreement are
materially altered, the parties will renegotiate the terms and conditions of
this Agreement to resolve any inequities in an attempt to carry out to the
extent legally permissible the severed or altered portion.
15.3 ASSIGNMENT; BINDING AGREEMENT.
(a) This Agreement and all or any part of LLC's rights and
obligations
24
hereunder may be assigned by LLC at any time to any Affiliate of LLC. LLC shall
cause such Affiliate(s) to perform any of LLC's obligations hereunder which are
assigned to such Affiliate(s).
(b) Neither this Agreement nor any of IMX's rights or obligations
hereunder may be assigned by IMX without LLC's prior written consent.
(c) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and to their respective successors and permitted
assigns. This Agreement is not intended, nor shall be construed, to give any
person except (1) the parties hereto and their respective successors, assigns
and legal representatives, (2) Affiliates and Principals of the Members and (3)
any other Person as may be entitled to benefits of Article XIII hereof.
15.4 ENTIRE AGREEMENT AND MODIFICATION. This Agreement, including the
Schedules and Exhibits attached hereto, the documents delivered pursuant hereto
and the other Major Agreements, constitute the entire agreement between the
parties. No changes of, modifications of, or additions to this Agreement shall
be valid unless the same shall be in writing and signed by all parties hereto.
15.5 NON-DISCLOSURE OF INFORMATION. Without the prior written consent of
MEDICIS, IMX will not disclose or reveal to any third Person any confidential,
non-public or commercially valuable information (a) concerning MEDICIS or LLC to
which IMX was exposed in connection with this Agreement or the other Major
Agreements, (b) in connection with the Business.
15.6 REMEDIES. Nothing contained herein is intended to or shall be
construed to limit the remedies which either party may have against the other in
the event of a breach of or default under this Agreement, it being intended that
any remedies shall be cumulative and not exclusive.
15.7 NON-WAIVER OF RIGHTS. The failure to enforce at any time any of the
provisions of this Agreement or to require at any time performance by the other
party of any of the provisions hereof shall in no way be construed to be a
waiver of such provisions or to affect either the validity of this Agreement, or
any part hereof, or the right of either party thereafter to enforce each and
every provision in accordance with the terms of this Agreement.
15.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement, including the
Schedules and Exhibits attached hereto, and the other Major Agreements and the
documents delivered pursuant hereto, constitutes the entire agreement between
the parties. No changes of, modifications of, or additions to this Agreement
shall be valid unless the same shall be in writing and signed by all parties
hereto.
15.9 COUNTERPARTS. This Agreement may be executed in one or more identical
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
25
15.10 COOPERATION. Each party agrees to cooperate and to take such further
action and to execute and deliver such additional instruments and documents as
the other party may, from time to time, reasonable request in order to
effectuate and accomplish the purpose of this Agreement, including Sections 4.2
and 8.5 hereof.
15.11 HEADINGS; INTERPRETATION. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of the Agreement. Both parties have participated
substantially in the negotiation and drafting of this Agreement and each party
hereby disclaims any defense or assertion in any litigation or arbitration that
any ambiguity herein should be construed against the draftsman.
15.12 PAYMENT OF FEES AND EXPENSES. Each party hereto shall pay all fees
and expenses of such party's respective counsel, accountants and other experts
and all other expenses incurred by such party incident to the negotiation,
preparation and execution of this Agreement and the consummation of the
transaction contemplated hereby, including any finder's or brokerage fees;
provided, however, that the expenses related to the formation of the LLC shall
be paid by LLC.
15.13 NOTICES. All written notices or other written communications
required under this Agreement shall be deemed properly given when provided to
the parties entitled thereto by personal delivery (including delivery by
commercial services such as messengers and airfreight forwarders) or by mail
sent registered or certified mail, postage prepaid at the addresses set forth on
Exhibit A (or to such other address of a party designated in writing by such
party to the others). All written notices shall be deemed delivered and properly
received upon the earlier of two (2) days after mailing the confirmation notice
or upon actual receipt of the notice provided by personal delivery or electronic
means.
15.14 SURVIVAL OF RIGHTS. This Agreement shall be binding upon, and, as to
permitted or accepted successors, transferees and assigns, inure to the benefit
of the Members and the LLC and their respective heirs, legatees, legal
representatives, successors, transferees and assigns, in all cases whether by
the laws of descent and distribution, merger, reverse merger, consolidation,
sale of assets, other sale, operation of law or otherwise.
15.15 REPRESENTATIONS AND ACKNOWLEDGMENTS. (a) Each Member does hereby
represent and warrant by the signing of a counterpart of this Agreement that the
Interest acquired by him was acquired for his/her own account, for investment
only, and not for the benefit of any other person, and not for resale to any
other person or future distribution, and that he/she has relied solely on the
advice of his/her personal tax, investment or other advisor(s) in making
his/her decision. The Managers have not made and hereby make no warranties or
representations other than those set forth in this Agreement.
(b) Each member acknowledges and agrees that the firm of Xxxxx Xxxx
LLP has represented Medicis. Each Member acknowledges and agrees that they have
been advised to seek their own separate counsel with respect to the LLC, this
Agreement and all matters pertaining thereto.
26
15.16 PARTITION. The Members agree that the Property that the LLC may own
or have an interest in is not suitable for partition. Each of the Members hereby
irrevocably waives any and all rights that it may have to maintain any action
for partition of any Property the LLC may at any time have an interest in.
15.17 WAIVER. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute a waiver of any such breach or any other covenant, duty, agreement or
condition.
15.18 ATTORNEYS' FEES. In the event of any litigation, arbitration or
other dispute arising as a result of or by reason of this Agreement, the
prevailing party in any such litigation, arbitration or other dispute shall be
entitled to, in addition to any other damages assessed, its reasonable
attorneys' fees, and all other costs and expenses incurred in connection with
settling or resolving such dispute. The attorneys' fees which the prevailing
party is entitled to recover shall include fees for prosecuting or defending any
appeal and shall be awarded for any supplemental proceedings until the final
judgment is satisfied in full. In addition to the foregoing award of attorneys'
fees to the prevailing party, the prevailing party in any lawsuit or arbitration
procedure on this Agreement shall be entitled to its reasonable attorneys' fees
incurred in any post judgment proceedings to collect or enforce the judgment.
This attorneys' fees provision is separate and several and shall survive the
merger of this Agreement into any judgment.
15.19 CONFIDENTIALITY AND PRESS RELEASES. The Members and their respective
Affiliates and Principals hereby agree that it is in all of their best interests
to keep this Agreement and the business of the LLC and all information
concerning such business confidential. Such parties each agree that they will
not take any action nor conduct themselves in any fashion, including giving
press releases or granting interviews, that would disclose to third parties
unrelated to the LLC or the business of the LLC any aspect of the LLC or the
business of the LLC without the unanimous prior written approval of all Members.
To the extent such prior approval is given, it may be conditioned upon approval
of the text of any press release or the scope of any intended interview.
ARTICLE XVI.
MISCELLANEOUS
16.1 ASSIGNMENT; BINDING AGREEMENT.
(a) This Agreement and all or any part of MEDICIS's rights and
obligations hereunder may be assigned by MEDICIS at any time to any Affiliate of
MEDICIS. MEDICIS shall cause such Affiliate(s) to perform any of MEDICIS's
obligations hereunder which are assigned to such Affiliate(s).
(b) Neither this Agreement nor any of IMX's rights or obligations
hereunder may be assigned by IMX without MEDICIS's prior written consent.
27
(c) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and to their respective successors and permitted
assigns.
IN WITNESS WHEREOF, the parties hereto have hereunto executed this
Agreement as of the date first written above.
MEDICIS PARTNERS INCORPORATED
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Xxxx X. Xxxxxxxx, Xx.
Chief Financial Officer
IMX PHARMACEUTICALS, INC.
By: /s/ Xxxx Xxxxxxx, President
-----------------------------------
Xxxx Xxxxxxx, President
28
EXHIBIT A
INITIAL MEMBER NAMES AND ADDRESSES; INITIAL
CAPITAL CONTRIBUTIONS AND PERCENTAGE INTERESTS
================================================================================
MEMBER'S NAME MEMBER'S ADDRESS MEMBER'S MEMBER'S
CAPITAL PERCENTAGE
CONTRIBUTION INTEREST
================================================================================
Medicis Partners 4343 East Camelback $4,000,000 51%
Incorporated Xxxxx 000
Xxxxxxx, XX 00000-0000
--------------------------------------------------------------------------------
IMX Pharmaceuticals, Inc. 0000 Xxxxxxxxx Xxxx. $4,000,000* 49%
Xxxx Xxxxx, XX 00000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTALS: $8,000,000 100%
================================================================================
* Represents the agreed upon fair market value of property contributed by IMX to
the capital of the LLC.
-1-
EXHIBIT B
(FACE OF CERTIFICATE)
THE LLC INTERESTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
LAWS OF ANY STATE. SUCH LLC INTERESTS MAY NOT BE SOLD OR TRANSFERRED UNLESS
SUBSEQUENTLY REGISTERED OR QUALIFIED OR UNLESS AN EXEMPTION FROM REGISTRATION OR
QUALIFICATION IS AVAILABLE. THE AGREEMENT (AS DEFINED BELOW) PROVIDES FOR
FURTHER RESTRICTIONS ON TRANSFER OF THE LLC INTERESTS REPRESENTED HEREBY.
CERTIFICATE FOR LLC INTEREST
IN
MEDICIS CONSUMER PRODUCTS COMPANY, L.L.C.
Certificate No. __________ __________ Percentage Interest
The undersigned, as a General Manager of Medicis Consumer Products
Company, L.L.C., a Delaware limited liability company (the "LLC"), hereby
certifies that ___________________________ is the holder of an LLC Interest
representing a _______ percent (__%) Percentage Interest, as those terms are
defined in the Limited Liability Company Agreement of Medicis Consumer Products
Corporation dated as of June 5, 1998, as amended and restated from time to time
(the "Agreement") (copies of which are on file at the principal office of the
LLC).
This Certificate is not negotiable or transferable except by operation of
law, or as otherwise provided in the Agreement, and any such transfer will be
valid only upon delivery of this Certificate, together with a duly executed
assignment in the form set forth on the reverse hereof (or otherwise acceptable
to the Managers and sufficient to convey an interest in an LLC pursuant to the
Delaware Limited Liability Company Act, as it may be amended and in effect from
time to time, or any successor statute thereto) to the Managers of the LLC.
Dated: __________ MEDICIS CONSUMER PRODUCTS
COMPANY, L.L.C.
By:
-----------------------------------
Its: Manager
-2-
(REVERSE OF CERTIFICATE)
ASSIGNMENT OF LLC INTEREST
IN
MEDICIS CONSUMER PRODUCTS COMPANY, L.L.C.
FOR VALUE RECEIVED, the undersigned ("Assignor") hereby assigns, conveys,
sells and transfers unto
________________________________________________________________________________
("Assignee")
________________________________________ ___________________________________
(Please insert Social Security (Please print or typewrite name and
or other identifying number of Assignee) address of Assignee)
all rights and interest of Assignor in ______ percent of the LLC Interest
evidenced hereby and directs that all future distributions and allocations with
respect to such specified assigned LLC Interest be paid or allocated by the LLC
to such Assignee. The Assignor hereby irrevocably constitutes and appoints each
Manager as Assignor's attorney-in-fact with full power of substitution in the
premises to transfer the same on the books of the LLC.
Dated: ____________________ ______________________________________
Signature of Assignor
Note: The signature to any assignment must correspond with the name as
written upon the face of this Certificate, in every particular, without
alteration or enlargement or any change whatever. If the assignment is
executed by an attorney, executor, administrator, trustee or guardian,
the person executing the assignment must give such person's full title
in such capacity, and proper evidence of authority to act in such
capacity, if not on file with the LLC or its transfer agent, must be
forwarded with this Certificate.
The undersigned, a General Manager of the LLC, hereby consents to
this Assignment pursuant to Section 9.1 of the Agreement.
Dated: ____________________ MEDICIS CONSUMER PRODUCTS
COMPANY, L.L.C.
By:
--------------------------------------
Its: General Manager
THE LLC INTERESTS EVIDENCED HEREBY ARE SUBJECT TO ALL TERMS AND CONDITIONS
OF THE AGREEMENT AND UNLESS AND UNTIL ADMITTED TO THE LLC AS A MEMBER, NO
ASSIGNEE SHALL BE ENTITLED TO ANY OF THE RIGHTS, POWERS OR PRIVILEGES OF THE
ASSIGNOR, EXCEPT THAT ASSIGNEE SHALL BE ENTITLED TO THE DISTRIBUTIONS PAID AND
ALLOCATIONS MADE WITH RESPECT TO SUCH INTERESTS AS DIRECTED BY THE ASSIGNOR
ABOVE.
-3-
