Exhibit 10.4
==============================================
JOINT VENTURE AGREEMENT
between
MEDICIS PHARMACEUTICAL CORPORATION
("Medicis")
MEDICIS CONSUMER PRODUCTS COMPANY, L.L.C.
("LLC")
IMX PHARMACEUTICALS, INC.
("IMX")
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TABLE OF CONTENTS
of
JOINT VENTURE AGREEMENT
1. DEFINITIONS...............................................................1
1.1 Affiliate.........................................................1
1.2 Balance Sheet.....................................................1
1.3 Balance Sheet Date................................................1
1.4 Business..........................................................2
1.5 Closing...........................................................2
1.6 Contract..........................................................2
1.7 Assets............................................................2
1.8 Environmental Law.................................................3
1.9 Exorex Product Line...............................................3
1.10 Financial Statements..............................................3
1.11 GAAP..............................................................3
1.12 Government........................................................3
1.13 Improvements......................................................4
1.14 IMX Contribution..................................................4
1.15 IMX Intellectual Property.........................................4
1.16 Intellectual Property.............................................4
1.17 Inventory.........................................................4
1.18 Law...............................................................4
1.19 Liabilities.......................................................5
1.20 Lien..............................................................5
1.21 LLC Consideration.................................................5
1.23 Major Agreements..................................................5
1.24 MEDICIS Contribution..............................................5
1.25 New Intellectual Property.........................................5
1.26 New Product.......................................................6
1.27 Ordinary Course...................................................6
1.28 Receivables.......................................................6
1.29 Retained Assets...................................................6
1.30 Significant Employees.............................................6
1.31 Taxes.............................................................6
1.32 Other Defined Terms...............................................6
2. FORMATION AND CAPITALIZATION OF THE JOINT VENTURE.........................7
2.1 MEDICIS Contribution..............................................7
2.2 IMX Contribution..................................................7
2.3 Liabilities of the Business.......................................8
3. ADDITIONAL AGREEMENT......................................................8
4. BUSINESS PURPOSE AND RIGHTS...............................................8
5. MANAGEMENT AND CONTROL....................................................9
6. IMX SUPPORT OBLIGATIONS...................................................9
6.1 Consulting Services...............................................9
7. MEDICIS SUPPORT OBLIGATIONS...............................................9
8. CLOSING...................................................................9
8.1 Deliveries of IMX at Closing......................................9
8.2 Deliveries of MEDICIS at Closing..................................9
9 REPRESENTATIONS AND WARRANTIES OF IMX.....................................10
9.1 Corporate Existence and Power of IMX.............................10
9.2 Approval and Enforceability of Agreement.........................10
9.3 Financial Statements.............................................10
9.4 Events Subsequent to December 31, 1997...........................11
9.5 Inventories......................................................12
9.6 Receivable.......................................................12
9.7 Undisclosed Liabilities..........................................12
9.8 Taxes............................................................12
9.9 Real Property--Owned.............................................13
9.10 Real and Personal Property--Leased to Seller.....................13
9.11 Intellectual Property............................................14
9.12 Necessary Property and Transfer of Purchased Assets..............15
9.13 Licenses and Permits.............................................15
9.14 Use and Condition of Property....................................15
9.15 Contracts........................................................15
9.16 No Breach of Law or Governing Documents..........................16
9.17 Litigation and Arbitration.......................................16
9.18 Officers, Directors, Employees and Consultants...................17
9.19 Payments, Compensation and Perquisites of Agents and Employees...17
9.20 Labor Matters....................................................17
9.21 Employee Benefit Matters.........................................18
9.22 Discrimination, Workers Compensation and Occupational
Safety and Health .............................................19
9.23 Alien Employment Eligibility.....................................19
9.24 Insurance Policies...............................................19
9.25 Guarantees.......................................................19
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9.26 Product Warranties...............................................19
9.27 Product Liability Claims.........................................20
9.28 Product Safety Authorities.......................................20
9.29 Environmental Matters............................................20
9.30 Broker's Fees....................................................20
9.31 Foreign Operations and Export Control............................20
9.32 Truthfulness.....................................................20
9.33 Books and Records................................................21
9.34 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇................................................21
10. OPTION TO PURCHASE......................................................21
11. COVENANTS OF IMX........................................................21
11.1 Payment of Debts.................................................21
11.2 Release of Liens.................................................21
11.3 Operation of the Business........................................21
11.4 Taxes............................................................22
12. INVENTIONS..............................................................23
12.1 New Intellectual Property........................................23
13. NONCOMPETE..............................................................24
13.1 Restrictive Covenants............................................24
13.2 MEDICIS/▇▇▇▇▇-▇▇▇▇ Relationship..................................25
13.3 Severability.....................................................25
14. TERM AND TERMINATION....................................................26
14.1 Term.............................................................26
14.2 Default..........................................................26
14.3 Termination......................................................26
15. CONFIDENTIALITY.........................................................27
16. CONDITIONS TO MEDICIS's OBLIGATIONS.....................................27
16.1 Representations and Warranties of IMX............................28
16.2 Approval by IMX's Shareholders...................................28
16.3 Performance of this Agreement....................................28
16.4 No Material Adverse Change.......................................28
16.5 Certificate of IMX...............................................28
16.6 Documents........................................................28
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16.7 Facility Agreement...............................................29
16.8 Consulting Agreement.............................................29
16.9 New Product Agreement............................................29
16.10 No Lawsuits.....................................................29
16.11 No Restrictions.................................................29
16.12 Consents........................................................29
16.13 Releases........................................................29
16.14 Termination of Employees........................................29
16.15 Bulk Sales......................................................30
16.16 Due Diligence...................................................30
16.17 Further Assurances..............................................30
17. CONDITIONS TO IMX'S OBLIGATIONS.........................................30
17.1 Performance of the Major Agreements..............................30
16.3 Approval by IMX's Shareholders...................................30
17.2 Payment of MEDICIS Contribution and LLC Consideration and
Assumption of Liabilities......................................30
17.3 Facility Agreement...............................................30
17.4 Consulting Agreement.............................................31
17.5 Service Agreement................................................31
17.6 Stock Purchase Agreement.........................................31
17.7 Further Assurances...............................................31
18. INDEMNIFICATION.........................................................31
18.1 Survival of Representations and Warranties.......................31
18.2 Indemnification of MEDICIS and LLC...............................31
18.3 Limitations......................................................32
18.4 Set-off Rights...................................................32
18.5 Participation in Litigation......................................32
18.6 Claims Procedure.................................................32
18.7 Tax Indemnification..............................................33
19. ARBITRATION.............................................................33
20. MISCELLANEOUS...........................................................35
20.1 Choice of Forum and Governing Law................................35
20.2 Severability.....................................................35
20.3 Assignment; Binding Agreement....................................35
20.4 Non-Disclosure of Information....................................35
20.5 Remedies.........................................................36
20.6 Non-Waiver of Rights.............................................36
20.7 Entire Agreement and Modification................................36
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20.8 Counterparts.....................................................36
20.9 Cooperation......................................................36
20.10 Headings; Interpretation........................................36
20.11 Payment of Fees and Expenses....................................36
20.12 Notices.........................................................37
Schedule 1.9 Exorex Product Line
Schedule 2.3 Assumed Liabilities
Exhibit A LLC Agreement
Exhibit B Stock Purchase Agreement
Exhibit C Consulting Agreement
Exhibit D New Product Agreement
Exhibit E Facility Agreement
Exhibit F Service Agreement
Exhibit G Assignment and Assumption Agreement
Exhibit H Assignment of Contributed Intellectual Property
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JOINT VENTURE AGREEMENT
THIS JOINT VENTURE AGREEMENT is entered into as of the 12th day of
June, 1998 by and between MEDICIS PARTNERS INCORPORATED, a Delaware corporation,
("MEDICIS"), MEDICIS CONSUMER PRODUCTS COMPANY, L.L.C., a Delaware limited
liability company ("LLC") and IMX PHARMACEUTICALS, INC. a Utah corporation
("IMX").
A. IMX is a pharmaceutical product design and development company
with expertise in the development of skin care products and other related
products and the methods of their manufacture.
B. MEDICIS is in the business, inter alia, of manufacturing and
selling pharmaceutical products and other products including skin care products.
C. The parties desire to form a joint venture (the "JV") to develop
skin care products and to provide supplemental research and development for the
benefit of MEDICIS according to the terms of this Agreement.
D. MEDICIS and IMX have together formed LLC to act as the entity
through which they will carry out their joint venture arrangement.
E. The parties desire to enter into this Agreement, inter alia, in
order to set forth the manner in which they will cause the JV to be formed,
funded and managed as well as to define their respective rights and obligations
with respect to the conduct of the business of the Joint Venture and their
interests therein.
NOW, THEREFORE, in consideration of the premises and covenants and
subject to all of the terms and conditions herein contained, the parties hereto
hereby agree as follows:
1. DEFINITIONS. For the purposes of this Agreement, the following terms
shall have the respective meanings hereinafter set forth:
1.1 Affiliate. "Affiliate" means any person controlling, controlled
by, or under the common control with, a party hereto.
1.2 Balance Sheet. "Balance Sheet" means the audited balance sheet
of IMX as of December 31, 1997, and all notes and schedules thereto.
1.3 Balance Sheet Date. "Balance Sheet Date" means the date of the
Balance Sheet.
1.4 Business. "Business" means the development, manufacture,
marketing and sale of the Exorex Product Line and the related telephone product
information and ordering services provided to customers and distributors
("Helpline") and product fulfillment center.
1.5 Closing. "Closing" means the consummation of the transactions
contemplated by this Agreement and "Closing Date" means June 18, 1998 or if the
conditions to Closing are not by then satisfied, on such date within 5 days
following satisfaction of such conditions (other than conditions to be satisfied
at Closing according to the terms hereof).
1.6 Contract. "Contract" means any contract, agreement, arrangement,
understanding, lease, indenture, evidence of indebtedness, binding commitment or
instrument, purchase order, or offer, written or oral, entered into or made by
or on behalf of any IMX in connection with the Contributed Assets.
1.7 Contributed Assets. "Contributed Assets" means all assets and
property and associated rights and interests, real, personal, and mixed,
tangible and intangible, of whatever kind, owned or used by IMX in connection
with the Business other than the Retained Assets. Without limiting the
generality of the foregoing, the Contributed Assets include the following items:
(a) all assets reflected and/or described on the Balance
Sheet, exclusive of any cash and prepaid items which do not relate to any
Contributed Assets, all assets which have been fully depreciated or written off
and all assets acquired since the Balance Sheet Date, except any such assets
which have been disposed of in the Ordinary Course since the Balance Sheet Date;
(b) the Receivables (subject to the provisions of Section 2.2
hereof);
(c) the Inventory (subject to the provisions of Section 2.2
hereof);
(d) all Contracts of IMX with suppliers, customers or sales
representatives in connection with the Business;
(e) all machinery, equipment, supplies and tools of IMX used
in connection solely with the Business which are not also being used by IMX for
purposes other than the Business;
(f) all permits, approvals, licenses and certifications issued
to IMX by a government or by a private testing or certifying authority in
connection with the Business, to the extent assignable under the terms thereof
and applicable Law;
(g) all Intellectual Property related to the Business and
owned or licensed by IMX, including without limitation the computer software
(object and source code) used in relation to the Helpline as well as the
financial system interface and financial data software, and the trademark
"Exorex" and documentation thereof and the right and power to assert, defend and
recover title thereto in the same manner and to the same extent as IMX could
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or could cause to be done if the transactions contemplated hereby did not occur,
and the right to recover for past damages on account of the infringement,
misuse, or theft thereof ("Contributed Intellectual Property");
(h) all employees involved in the Business other than the
Significant Employees;
(i) all records, including business, computer, engineering,
and other records, and all associated documents, discs, tapes, and other storage
or recordkeeping media of IMX prepared or held in connection with the Business,
including but not limited to all sales data, customer lists, accounts, bids,
contracts, supplier records, and other data and information of in connection
with the Business, excluding corporate minute books of IMX;
(j) all rights and claims against others under Contracts; and
(k) all other claims against others, rights, and choices in
action, liquidated or unliquidated, of IMX arising from or in connection with
the Business, including those arising under insurance policies.
1.8 Environmental Law. "Environmental Law" means any current, past
or future Law relating to the protection of health or the environment, including
without limitation: the Clean Air Act, the Federal Water Pollution Control Act,
the Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Toxic Substance Control Act, any
comparable state or foreign Law, and the common law, including the law of
nuisance and strict liability.
1.9 Exorex Product Line. "Exorex Product Line" shall mean all skin
care products currently developed by IMX for the treatment of and relief from
psoriasis or other dermatological conditions including without limitation
shampoos and cream products and marketed by IMX under the trademark or tradename
"Exorex," including without limitation the products listed on Schedule A.
1.10 Financial Statements. "Financial Statements" means the Balance
Sheet and the other financial statements of IMX including interim management
accounts, related statements of earnings, stockholder's equity and changes in
notes and schedules thereto.
1.11 GAAP. "GAAP" means United States generally accepted accounting
principles consistently applied.
1.12 Government. "Government" means the United States of America,
any other nation or sovereign state, the European Union, any federal, bilateral
or multilateral governmental authority, any state, possession, territory,
county, district, city or other governmental unit or subdivision, and any
branch, agency, or judicial body of any of the foregoing.
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1.13 Improvements. "Improvements" means any Intellectual Property
including without limitation any findings, discoveries, inventions, additions,
modifications, or changes (including by way of example and not by way of
limitation, in compositions, formulations, production methods, or processes) or
derivative works invented, discovered or otherwise made, acquired or developed
by any of the parties either individually or jointly with any other person,
relating to the Contributed Intellectual Property, whether or not patentable,
copyrightable, or trademarkable.
1.14 IMX Contribution. "IMX Contribution" means that amount set
forth in Section 2.2.
1.15 IMX Intellectual Property. "IMX Intellectual Property" means
and includes all Intellectual Property which is identified in writing by IMX as
"IMX Intellectual Property", which does not include the Contributed Intellectual
Property and which was (a) created and owned by IMX prior to the Closing Date
(and evidenced by writings or other documentation created prior to such date);
or (b) conceived, created, developed, made or acquired after such date and in a
manner in which: (i) no personnel, equipment, supplies, or facilities provided
or paid for by LLC or MEDICIS were utilized after the Closing Date; (ii) no
Intellectual Property of MEDICIS or LLC was used; or (iii) such Intellectual
Property does not relate to or result from, whether directly or indirectly, any
work performed or to be performed by IMX for, or on behalf of, LLC or MEDICIS.
1.16 Intellectual Property. "Intellectual Property" means and
includes all proprietary intellectual property rights (in whatever form or
medium) including but not limited to algorithms, chemical compounds, conceptual
expressions, copyrights, designs, formulae, ideas, improvements, patents,
inventions, trademarks, service marks, trade names, computer software (both
object and source code), proprietary processes, mask works, know-how (whether or
not publicly known or a trade secret), etc., all registrations and applications
thereof, together with that portion of all media (whether in human or machine
readable form) containing any expression of the proprietary intellectual
property rights and licenses, sublicenses, assignments and agreements in respect
of any of the foregoing.
1.17 Inventory. "Inventory" means all inventories of IMX maintained
in connection with the Business, including but not limited to all raw materials,
component parts, work in process, packaging, all finished goods held by IMX
which have an expiration date of more than 18 months from the Closing Date, and
all finished goods held by IMX which have an expiration date of less than 18
months but more than 12 months from the Closing Date which are to be sold via
the Helpline;
1.18 Law. "Law" means any statute, law, treaty, ordinance, rule,
regulation, instrument, directive, decree, order, or injunction of any
Government, quasi-governmental authority, or Court, and includes rules or
regulations of any regulatory or self-regulatory authority compliance with which
is required by law.
1.19 Liabilities. "Liabilities" means liabilities, debts,
commitments or obligations, known or unknown, contingent or otherwise, whether
or not required to be reflected
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on the financial statements of a business, including without limitation claims
brought by employees or former employees, environmental or product liability
claims or tax liabilities (including liabilities related to income, transfer,
sales, use and other taxes arising in connection with the consummation of the
transactions contemplated by this Agreement.
1.20 Lien. "Lien" means any lien, security interest, mortgage,
option, lease, tenancy, occupancy, covenant, condition, easement, agreement,
pledge, hypothecation, charge, claim, restriction, or other encumbrance of every
kind and nature.
1.21 LLC Consideration. "LLC Consideration" means that amount set
forth in Sections 2.2(b) and 2.2(c) of this Agreement.
1.22 LLC Net Sales. "1.22 LLC Net Sales" means the gross amount
invoiced by 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 IMX or MEDICIS, as the
case may be, 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.
1.23 Major Agreements. "Major Agreements" shall mean this Agreement,
the LLC Agreement, the Stock Purchase Agreement, the Consulting Agreement, the
Facility Agreement, the New Product Agreement and the Service Agreement.
1.24 MEDICIS Contribution. "MEDICIS Contribution" means that amount
set forth in Section 2.1.
1.24 New Intellectual Property. "New Intellectual Property" means
any Intellectual Property conceived, created, developed, made or acquired, in
whole or in part, by IMX, either itself or jointly with others, after the
Closing Date which: (a) utilizes personnel, equipment, supplies, or facilities
provided or paid for by MEDICIS or LLC for its development after the Closing
Date; (b) utilizes or incorporates the Contributed Assets, including without
limitation the Contributed Intellectual Property for its development, (c)
utilizes or incorporates any Intellectual Property of MEDICIS or LLC; (d)
consists of Improvements, or (e) directly or indirectly, relates to, or results
from, any work performed or to be performed for, or on behalf of, MEDICIS or
LLC.
1.25 New Product. "New Product" means any product made or acquired,
in whole or in part, by IMX, either itself or jointly with others, to be used or
usable in the cosmetic
5
or healthcare industry, provided however, that the basis for such product is not
New Intellectual Property or any Improvements.
1.26 Ordinary Course. "Ordinary Course" means, with respect to the
Business, only the ordinary course of commercial operations customarily engaged
in by such Business consistent with past practices, and specifically does not
include (a) activity (i) involving the purchase or sale of such business or of
any product line or business unit, (ii) involving modification or adoption of
any Employee Plan, as defined in Section 9.21 or (iii) which requires approval
by the board of directors or shareholders of a corporation engaged in such
business, or (b) the incurrence of any liability for any tort or any breach or
violation of or default under any Contract or Law.
1.27 Receivables. "Receivables" means all accounts receivable
(including all consignment or point of sale arrangements) of IMX in connection
with the Business that have been outstanding for less than 120 days at Closing.
1.28 Retained Assets. "Retained Assets" means those assets of IMX
set forth on Schedule 1.26.
1.29 Significant Employees. "Significant Employees" means ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇.
1.30 Taxes. "Taxes" means all taxes, charges, fees, levies or other
like assessments imposed or assessed by any government, including without
limitation income, profits, windfall profit, employment (including Social
Security, state pension plans, and unemployment insurance), withholding,
payroll, franchise, gross receipts, sales, use, transfer, stamp, occupation,
real or personal property, ad valorem, value added, premium, and excise taxes;
Pension Benefit Guaranty Corporation premiums and any other like government
charges; and shall include all penalties, fines, assessments, additions to tax,
and interest resulting from, attributable to, or incurred in connection with
such Taxes or any contest or despite thereof. Any one of the foregoing Taxes may
be referred to sometimes as a "Tax."
1.31 Other Defined Terms. The following terms have the meanings
defined for such terms in the Sections set forth below:
Term Section
---- -------
Agents 12.1(a)
Competitive Business 13.1(a)
Consulting Agreement 6.1
Costs 18.6
Facility Agreement 6.2
Employee Plans 9.21(a)
ERISA 9.21(b)
Hearing 19.4
Helpline 1.4
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HSR Act 9.34
Indemnified Losses 18.2
Indemnified Parties 18.2
IRCA 9.24
LLC Agreement 2.0
LLC Business 13.1(a)
Losing Party 19.5
Market 13.1(a)
New Product Agreement 3.2
Other Intellectual Property 12.1(d)
Returns 9.8(a)
Service Agreement 7.0
Stock Purchase Agreement 3.1
Successful Party 19.5
2. FORMATION AND CAPITALIZATION OF THE JOINT VENTURE. IMX and MEDICIS
hereby agree to form the JV by contributing at the Closing certain cash and
assets to the LLC which shall be operated under the name of Medicis Consumer
Products Corporation, L.L.C. The rights and obligations of IMX and MEDICIS with
respect to the LLC shall be determined by this Agreement and the LLC Agreement
substantially similar to that agreement set forth as Exhibit A attached hereto
("LLC Agreement"). In the event of a conflict between this Agreement and the LLC
Agreement, the provisions of this Agreement shall control.
2.1 MEDICIS Contribution.
(a) On the Closing Date, upon the execution of this Agreement
and of the LLC Agreement, MEDICIS shall contribute to the LLC cash in the sum of
$4,000,000. As consideration for the contribution, MEDICIS shall receive 51% of
the interest in the LLC.
2.2 IMX Contribution. On the Closing Date, upon the execution of
this Agreement and of the LLC Agreement, IMX shall contribute to the LLC the
Contributed Assets. Consideration for the Contributed Assets shall be as
follows:
(a) As consideration for the Contributed Assets, except for
the Inventory and the Receivables, IMX shall receive 49% of the interest in the
LLC;
(b) As consideration for the Receivables, LLC agrees to pay to
IMX on the Closing Date: (i) $2,400,000 if the outstanding amount of Receivables
on the Closing Date is equal to or more than $2,700,000, or (ii) 90% of the
actual outstanding amount of the Receivables if such amount is less than
$2,700,000. To determine the payment required under this Section 2.2(b), IMX
will prepare and deliver to LLC at Closing a schedule setting forth the
Receivables and the value thereof determined in accordance with GAAP.
(c) As consideration for the Inventory, LLC agrees to pay to
IMX, within 10 days after receipt of the Inventory by LLC and inspection by
LLC's agents, the actual cost by lot number of the Inventory as reflected in
IMX's books and records.
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2.3 Liabilities of the Business. The LLC will assume solely those
Liabilities of IMX incurred in the Ordinary Course and related to the Business
which are set forth on Schedule 2.3. OTHER THAN THOSE LIABILITIES EXPRESSLY SET
FORTH ON SCHEDULE 2.3, LLC SHALL NOT ASSUME ANY LIABILITIES OF IMX, THE
BUSINESS, IMX'S SHAREHOLDERS OR ANY PREDECESSOR THEREOF OR ANY OTHER PERSON,
WHETHER OR NOT RELATED TO THE CONTRIBUTED ASSETS, INCLUDING ANY LIABILITIES FOR
ANY PREVIOUS OR SUBSEQUENT OPERATIONS OF IMX OCCURRING PRIOR TO, ON OR
SUBSEQUENT TO THE CLOSING. NO OTHER STATEMENT IN OR PROVISION OF THIS AGREEMENT
AND NO OTHER STATEMENT, WRITTEN OR ORAL, ACTION, OR FAILURE TO ACT INCLUDES OR
CONSTITUTES ANY SUCH ASSUMPTION OR AGREEMENT, AND ANY STATEMENT TO THE CONTRARY
BY ANY PERSON IS UNAUTHORIZED AND HEREBY DISCLAIMED.
3. ADDITIONAL AGREEMENTS.
3.1. In addition to its contribution to the LLC and as a condition
to IMX's participation in the JV, MEDICIS also hereby agrees to purchase or to
cause an Affiliate to purchase from IMX and IMX hereby agrees to sell to MEDICIS
or its Affiliate at the Closing, 400,000 shares of IMX's common stock at $2.50
per share, for a total purchase price of $1,000,000. The purchase and sale of
IMX's stock by MEDICIS or its Affiliate shall be on the terms and conditions
contained in a Stock Purchase Agreement substantially similar to that agreement
set forth at Exhibit B attached hereto ("Stock Purchase Agreement").
3.2. IMX shall grant to MEDICIS a right to purchase or license all
New Products developed by IMX subject to the terms and conditions of a New
Product Agreement substantially similar to that agreement set forth at Exhibit C
attached hereto ("New Product Agreement").
4. BUSINESS PURPOSE AND RIGHTS. The LLC has been formed specifically for
the purpose of the research, development, production and distribution of
pharmaceutical products. However, notwithstanding anything to the contrary
contained herein, the LLC shall have the authority which such authority shall be
included in its organizational documents to engage in any lawful activities for
which an LLC may be organized under applicable Laws.
5. MANAGEMENT AND CONTROL. The LLC shall be operated, managed and
controlled in accordance with the provisions in the LLC Agreement.
6. IMX SUPPORT OBLIGATIONS.
6.1. Consulting Services. During the term of this Agreement and the
New Product Agreement, unless earlier terminated pursuant thereto, IMX agrees
that it shall provide to LLC certain consulting services related to its
specialized knowledge of the Contributed Assets and Contributed Intellectual
Property in accordance with the terms and conditions of a Consulting,
Confidentiality and Noncompete Agreement substantially similar to that agreement
set forth in Exhibit D attached hereto ("Consulting Agreement"). LLC shall pay
to IMX a fee equal to 6% of the LLC Net Sales for the consulting services on the
terms included in more detail
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in the Consulting Agreement.
6.2. IMX shall also sublease to LLC pursuant to the terms and
conditions of a Facility Agreement substantially similar to that agreement set
forth as Exhibit E attached hereto ("Facility Agreement") the office space,
furniture, computer hardware, all utilities, including, telephone and fax
services and warehouse facilities and equipment leased, owned and occupied by
IMX as of the Closing Date.
7. MEDICIS SUPPORT OBLIGATIONS. MEDICIS shall be responsible for day to
day operation of the LLC. MEDICIS hereby agrees that it shall provide to LLC
those additional support services as more fully set forth in a Service Agreement
substantially similar to that agreement attached hereto as Exhibit F ("Service
Agreement"). The support services may include the following: general and
administrative support, financial reporting, provision of manufacturing
facilities, provision of warehousing facilities, product distribution, sales
support, customer service and product research and development support.
8. CLOSING. The Closing shall take place at 10:00 a.m. on the Closing Date
at the offices of ▇▇▇▇▇ ▇▇▇▇ LLP, 2800 North Central Avenue, 21st Floor,
Phoenix, Arizona.
8.1 Deliveries of IMX at Closing. At the Closing, subject to the
conditions to IMX's obligations in Section 17, IMX shall execute and deliver or
cause to be delivered the documents identified in Section 17.
8.2 Deliveries of MEDICIS at Closing. At Closing, subject to the
conditions to MEDICIS' obligations contained in Section 16, MEDICIS and LLC, as
applicable, shall (a) execute and deliver or cause to be delivered the documents
identified in Section 16 and (b) transfer by wire transfer, to an account
designated by IMX on the Closing Date, the amounts set forth in Sections 2.1 and
2.2(b).
9. REPRESENTATIONS AND WARRANTIES OF IMX. IMX hereby makes the following
representations and warranties for the express benefit of MEDICIS and LLC, each
of which is true and correct on the date hereof and, except for changes
expressly permitted by this Agreement, shall be true and correct on the Closing
Date and each of which shall survive the Closing Date and the transactions
contemplated hereby.
9.1 Corporate Existence and Power of IMX.
(a) IMX is a corporation duly organized, validly existing and in
good standing under the Laws of Utah.
(b) IMX has the corporate power and authority to own and use the
Contributed Assets and to transact the Business, holds all franchises, licenses
and permits necessary and required therefor, is duly licensed or qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where such license or qualification is required. IMX has the corporate
9
power to enter into this Agreement and the other Major Agreements, to perform
its obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby.
9.2 Approval and Enforceability of Agreement.
(a) The execution and delivery of this Agreement and the other
Major Agreements and the consummation of the transactions contemplated hereby
and thereby have been duly authorized, approved and ratified by all necessary
action on the part of IMX and such authorization has not been altered, amended,
rescinded, repealed or revoked.
(b) Upon the due execution and delivery hereof, this Agreement
and the other Major Agreements will be the legal, valid and binding obligation
of IMX, enforceable against IMX according to its terms.
9.3 Financial Statements.
(a) Attached as Schedule 9.3 hereto are draft financial
statements which shall conform in all material respects to the Financial
Statements to be delivered before Closing. The Financial Statements are
certified by B.D.O. ▇▇▇▇▇▇▇, certified public accountants, and their opinion is
appended thereto.
(b) The Financial Statements were derived from the books and
records of IMX and (i) are true, complete, and correct, (ii) present fairly, in
all material respects, the financial position, results of operations, and cash
flows of IMX at the dates and for the periods indicated, (iii) have been
prepared in accordance with GAAP applied on a basis consistent with previous
periods, and (iv) do not include any untrue statement of a material fact
required to be stated or reflected therein or omit to state or reflect any
material fact necessary to make any statements therein not misleading.
9.4 Events Subsequent to December 31, 1997. Since December 31, 1997,
except as set forth on Schedule 9.4, there has been no:
(a) change in the Business other than changes in the Ordinary
Course, none of which have been materially adverse;
(b) loss or threatened loss of a customer account;
(c) damage, destruction or loss, whether covered by insurance
or not, materially affecting the Business or the Contributed Assets;
(d) declaration, setting aside, or payment of any dividend or
any distribution (in cash or in kind) with respect to any securities of IMX;
(e) increase in or commitment to increase compensation,
benefits, or other remuneration to or for the benefit of any shareholder,
member, partner, director, officer, employee or agent of IMX, or, in connection
with the Business, any other person, or any benefits
10
granted under any benefit plan with or for the benefit of any such shareholder,
member, partner, director, officer, employee, agent or person;
(f) transaction entered into or carried out by IMX other than
in the ordinary course of commercial operations in connection with the Business;
(g) borrowing or incurrence of any indebtedness (including
letters of credit and foreign exchange contracts), contingent or other, by or on
behalf of IMX, or any endorsement, assumption, or guarantee of payment or
performance of any Indebtedness or Liability of any other Person or entity by
IMX;
(h) change made by IMX in its Tax or financial accounting or
any Tax election;
(i) grant of any Lien with respect to the Business;
(j) transfer of any Contributed Assets other than arm's-length
sales, leases, or dispositions in the Ordinary Course in connection with the
Business;
(k) modification or termination of any Contract or any
material term thereof;
(l) lease or acquisition of any capital assets included in the
Business with a value greater than $1,000 per item;
(m) in connection with the Business, loan or advance to any
person except for advances not material in amount made in the Ordinary Course of
in connection with the Business to employees; or
(n) commitment or agreement by IMX to do any of the foregoing
items (d) through (n).
9.5 Inventories. All inventories relating to the Contributed Assets
held by IMX at any location are merchantable in the Ordinary Course of the
Business without markdown or discount and, except to the extent of any reserve
therefor on the Balance Sheet, are not physically damaged, previously used,
obsolete, discontinued or "excess". "Excess" inventory shall mean the amount of
inventory in excess of a 6 month supply based on actual sales of products over
the preceding 12 months, or for products introduced within the last 12 month
period, based on the forecasted sales amount for such products during the 6
months following the Closing. The inventories of IMX have been valued in
accordance with GAAP.
9.6 Receivables. Set forth on Schedule 9.6 hereto are all the
Receivables of IMX and an aging schedule related thereto, each as of May 29,
1998. The Receivables are, and any Receivables arising between such date and the
Closing Date shall be, valid, genuine and subsisting, and all such accounts and
notes receivable arose or will have arisen in the Ordinary Course in connection
with the Contributed Assets. Receivables are not, and will not be on the
11
Closing Date, subject to any defense, set-off, counterclaims or Lien. Except to
the extent of any reserve therefor on the Financial Statements or paid in full
prior to Closing, all Receivables are and will be current and fully collectible.
LLC shall use commercially reasonable efforts to collect the Receivables. Any
Receivables which have not been collected by LLC within 60 days from the Closing
Date will be assigned to IMX upon execution by LLC of an assignment agreement in
a form reasonably acceptable to IMX and IMX will pay LLC the amount set forth on
the Financial Statements for such accounts or notes receivable, net of any
applicable reserve. The parties agree that any Receivables consisting solely of
consignment and point of sale arrangements collected by LLC shall be included in
LLC Net Sales for the first year of the term of this Agreement.
9.7 Undisclosed Liabilities. IMX does not have, in connection with
the Contributed Assets, any Liabilities whatsoever, known or unknown, asserted
or unasserted, liquidated or unliquidated, accrued, absolute, contingent, or
otherwise, and there is no basis for any claim against IMX in connection with
the Contributed Assets for any such Liability except (a) to the extent set forth
on the Balance Sheet, (b) to the extent set forth on Schedule 9.7, or (c)
Liabilities incurred in the Ordinary Course in connection with the Contributed
Assets since the Balance Sheet Date, none of which will, or could, have an
adverse effect upon the Contributed Assets on the condition of the Contributed
Assets.
9.8 Taxes.
(a) All Tax and informational returns and reports required to
be filed by or on behalf of IMX, including estimated tax and informational
returns, ("Returns") on or prior to the Closing Date with respect to Taxes have
been or will be timely filed and no Returns have been amended. All Returns are
true, correct and complete.
(b) All amounts for Taxes (whether or not reflected in the
Returns as filed) payable by IMX with respect to all periods prior to the
Closing have been paid or will be paid when due and there are no grounds for the
assertion or assessment of any Taxes against IMX, the Contributed Assets or in
connection with the Business with respect to such periods.
(c) Neither the Contributed Assets nor the Business is and
will not be encumbered by any Liens arising out of any unpaid Taxes and there
are no grounds for the assertion or assessment of any Liens against the
Contributed Assets or the Business in respect of any Taxes (other than Liens for
Taxes if payment thereof is not yet required, and which are set forth on
Schedule 9.8 hereto).
(d) The transactions contemplated by this Agreement will not
give rise to (i) the creation of any Liens against the Contributed Assets or the
Business in respect of any Taxes or (ii) the assertion of any additional Taxes
against the Contributed Assets or the Business.
(e) There is no action or proceeding or unresolved claim for
assessment or collection, pending or to the best of IMX's knowledge threatened,
by, or present or expected dispute with, any Government authority for assessment
or collection from IMX of any Taxes of any nature affecting the Contributed
Assets or the Business.
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(f) There is no extension or waiver of the period for
assertion of any Taxes against IMX affecting the Contributed Assets or the
Business.
(g) None of the Contributed Assets are subject to a tax
indemnification agreement.
(h) At all times prior to the Closing, IMX has complied with
all Laws relating to the withholding of Taxes and the payment thereof, and has
timely and properly withheld from employee wages and paid over to the proper
government entity all amounts required to by withheld and be paid over under
applicable Laws.
9.9 Real Property and Personal Property -- Owned. IMX owns no real
property. Except as set forth on Schedule 9.9 hereto, IMX has good and
marketable title to all personal property included in the Contributed Assets,
including in each case all personal property reflected on the Balance Sheet or
acquired after the date thereof (except any personal property subsequently sold
in the Ordinary Course of the Business), free and clear of all Liens, and there
exists no restriction on the use or transfer of such property.
9.10 Real and Personal Property -- Leases. IMX is not the lessor of
any real or personal property in connection with the Business. Set forth on
Schedule 9.10(a) hereto is a description of each lease under which IMX is the
lessee of any real property in connection with the Business, and on Schedule
9.10(b) hereto is a description of each lease under which IMX is the lessee of
any personal property in connection with the Business. IMX has delivered to
MEDICIS and LLC a true, correct and complete copy of each lease identified on
Schedules 9.10(a) and 9.10(b). The premises or property described in said leases
are presently occupied or used by IMX as lessee under the terms of such leases.
Except as set forth on Schedules 9.10(a) and 9.10(b), all rentals due under such
leases have been paid and there exists no default under the terms of any such
leases and no event has occurred which, upon passage of time or the giving of
notice, or both, would result in any event of default or prevent IMX from
exercising and obtaining the benefits of any rights or options contained
therein. IMX has all right, title and interest of the lessee under the terms of
said leases, free of all Liens and all such leases are valid and in full force
and effect. Except as set forth on Schedules 9.10(a) and 9.10(b), no consent is
necessary for the assignment to LLC of such leases or any sublease to LLC under
such leases of any of IMX's rights under the leases of real property which IMX
is lessee. Upon the Closing and except as set forth in Schedule 4.10, LLC will
have all right, title and interest of the lessee under the terms of the leases,
free of all Liens. There is no default or basis for acceleration or termination
under, nor has any event occurred nor does any condition exist which, with the
passage of time or the giving of notice, or both, would constitute a default or
basis for acceleration under any underlying lease, agreement, mortgage or deed
of trust which default or basis for acceleration would materially adversely
affect any lease described on Schedules 9.10(a) or 9.10(b) or the property or
use of the property covered by such lease. Subject to any consent required of a
lessor as set forth on Schedules 9.10(a) and 9.10(b), there will be no default
or basis for acceleration under any such underlying lease, agreement, mortgage
or deed of trust as a result of the transactions provided for in this Agreement.
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9.11 Intellectual Property.
(a) Schedule 9.11 contains a true, complete and accurate list
of all the Contributed Intellectual Property which identifies, where
appropriate, by country, for each item of the Contributed Intellectual Property:
filing date, issue date, classification of invention or goods covered, licensor,
license date and licensed subject matter. Schedule 9.11 contains a complete and
accurate list of all licenses and other rights granted by IMX to any third party
with respect to any item of the Contributed Intellectual Property. True,
complete and correct copies of the forms of such customer licenses are included
as part of Schedule 9.11.
(b) IMX hereby represents and warrants the following: (i) the
Contributed Intellectual Property is valid and enforceable and encompasses all
proprietary rights necessary or desirable for the conduct of the Business as
presently conducted or proposed to be conducted (in each case free and clear of
all Liens); (ii) IMX has taken all actions necessary to maintain and protect the
Contributed Intellectual Property; (iii) to the knowledge of IMX, the owners of
the Contributed Intellectual Property licensed to IMX have taken all actions
necessary to maintain and protect the Contributed Intellectual Property subject
to such licenses; (iv) there has been no claim made against IMX asserting the
invalidity, misuse or unenforceability of any of the Contributed Intellectual
Property or challenging such IMX's right to use or ownership of any of the
Contributed Intellectual Property, and there are no grounds for any such claim
or challenge; (v) IMX is not aware of any infringement or misappropriation of
any of the Contributed Intellectual Property or of any facts raising a
likelihood of infringement or misappropriation; (vi) to the best of IMX's
knowledge the conduct of the Business has not infringed or misappropriated, and
does not infringe or misappropriate, any intellectual property or proprietary
right of any other entity; (vii) no loss of any of the Contributed Intellectual
Property is threatened, pending or reasonably foreseeable; and (viii) the
consummation of the transactions contemplated by this Agreement will not alter,
impair or extinguish any of the Contributed Intellectual Property.
9.12 Necessary Property and Transfer of Contributed Assets. Except
as set forth on Schedule 9.12, the Contributed Assets constitute all of IMX's
property and property rights now used, useful or necessary for the conduct of
the Business in the manner and to the extent presently conducted or planned by
IMX. No such assets or property are in the possession of others and the IMX
holds no property on consignment. Except as set forth on Schedule 9.12 hereto,
no consent is necessary to, and there exists no restriction on, the transfer of
any of the Contributed Assets to LLC. There exists no condition, restriction or
reservation affecting the title to or utility of the Contributed Assets which
would prevent LLC from occupying or utilizing the Contributed Assets, or any
part thereof, to the same full extent that IMX might continue to do so if the
sale and transfer contemplated hereby did not take place. Upon the Closing, good
and marketable title to the Contributed Assets shall be vested in LLC free and
clear of all Liens.
9.13 Licenses and Permits. Set forth on Schedule 9.13 hereto is a
description of each license or permit required for the conduct of the Business
together with the name of the Government agency or entity issuing such license
or permit. Such licenses and permits are valid and in full force and effect.
Except as noted on Schedule 9.13, such licenses and permits are
14
freely transferable by IMX, and upon Closing, LLC will have all right, title and
interest of the holder thereof.
9.14 Use and Condition of Property. All of the Contributed Assets
are in good operating condition and repair as required for their use in the
Business as presently conducted or planned, and to IMX's knowledge conform to
all applicable Laws, and no notice of any violation of any Law relating to any
of the Contributed Assets has been received by IMX except such as have been
fully complied with. There is no proposed, pending or threatened condemnation
proceeding or similar action affecting the Contributed Assets or with respect to
any streets or public amenities appurtenant thereto or in the vicinity thereof
which would materially adversely affect the Business or the use of the
Contributed Assets.
9.15 Contracts.
(a) Set forth on Schedule 9.15 is a list of each Contract
which (i) is material to the Business or the Contributed Assets, (ii) involves
(A) a guaranty, indemnity, or power of attorney, (B) a sharing of payments or
joint venture, (C) a sales agency, representation, distributorship, or franchise
arrangement, (D) restrictions on competition, (E) collective bargaining, works
council, or union representation, or (F) an obligation in excess of $50,000,
(iii) is not terminable upon 30 days' notice without liability, (iv) has
resulted or will result in a loss to the Contributed Assets, or (v) is not in
the ordinary course of the Business. True and complete copies of all written
Contracts have been delivered to MEDICIS.
(b) Each Contract is a valid and binding obligation of the
parties thereto, enforceable in accordance with its terms, and in full force and
effect.
(c) No party to a Contract is in default under or in breach or
violation of any Contract, and no event has occurred that, through the passage
of time or the giving of notice, or both, would constitute, and neither the
execution of this Agreement nor the Closing do or will constitute or result in,
such a default, breach or violation, cause the acceleration of any obligation of
any party thereto or the creation of a lien or encumbrance upon any Contributed
Asset, or require any consent thereunder.
(d) No obligations under Contracts will result in a loss to
LLC or would result in a loss to IMX, assuming it had continued in the Business.
(e) Each Contract will be duly assigned to LLC on the Closing
Date and upon such assignment, LLC will acquire all right, title and interest of
IMX in and to such Contract and will be substituted for IMX under the terms of
such Contract. Except as set forth on Schedule 9.10(b), no consent is required
for such assignment.
9.16 No Breach of Law or Governing Documents. IMX has complied with
and is not in default under or in breach or violation of any applicable Laws of
any Government body, or the provisions of any franchise or license, or in
default under or in breach or violation of any provision of its articles or
certificate of incorporation or association or its bylaws. Neither the execution
of this Agreement nor the Closing does or will constitute or result in any such
default,
15
breach or violation. In particular, the Closing and the completion of the
transactions contemplated hereby (including the transfer of the Contributed
Assets to LLC) will not cause IMX to be unable to meet any of its Liabilities,
pay its creditors or otherwise render IMX bankrupt or insolvent under applicable
Laws or cause any third parties to file a petition in bankruptcy and such
transfer of the Contributed Assets will not be deemed to be a preferential or
fraudulent transfer under any Laws relating to bankruptcy, insolvency or fraud
in any jurisdictions which might assert jurisdiction over IMX, MEDICIS or LLC.
9.17 Litigation and Arbitration. Except as set forth on Schedule
9.17 hereto, there is no suit, claim, action or proceeding now pending or, to
the best knowledge of IMX, threatened before any court, grand jury,
administrative or regulatory body, Government agency, arbitration or mediation
panel or similar body, nor are there any grounds therefor, to which IMX is a
party or which may result in any judgment, order, decree, liability, award or
other determination which will, or could, have any adverse effect upon any
Contributed Asset or upon the condition of the Business. No such judgment,
order, decree or award has been entered against IMX nor has any such liability
been incurred which has, or could have, such effect. There is no claim, action
or proceeding now pending or threatened before any court, grand jury,
administrative or regulatory body, Government agency, arbitration or mediation
panel or similar body which will, or could, prevent or hamper the consummation
of the transactions contemplated by this Agreement, and the IMX has not been or
been threatened to be subject to, and there are no grounds for, any suit, claim,
litigation, proceeding (administrative, judicial, or in arbitration, mediation
or alternative dispute resolution), Government or grand jury investigation, or
other action or order, writ, injunction, or decree of any court or other
Government relating to personal injury, death, or property or economic damage
arising from products of the IMX.
9.18 Officers, Directors, Employees and Consultants. Set forth on
Schedule 9.18 hereto is a complete list of all IMX's directors, officers (with
office held), employees in connection with the Business and all consultants in
connection with the Business; together, in each case, with the current rate of
compensation payable to each.
9.19 Payments, Compensation and Perquisites of Agents and Employees.
IMX has properly and accurately reflected on its books and records all
compensation paid to and perquisites provided to or on behalf of its
consultants, agents and employees. Such compensation and perquisites have been
properly and accurately disclosed in the financial statements, proxy statements
and other public or private reports, records or filings of IMX to the extent
required by Law.
9.20 Labor Matters.
(a) There is no collective bargaining, works council, union
representation or similar agreement or arrangement to which IMX is or has been a
party or by which it is or has been bound.
(b) IMX is not and has not engaged in any unfair labor
practice;
16
(c) There is no labor strike, dispute, slowdown, or stoppage
pending or, threatened against IMX;
(d) No right of representation exists respecting IMX's
employees;
(e) No collective bargaining agreement is currently being
negotiated and no organizing effort is currently being made with respect to
IMX's employees; and
(f) No current or former employee of IMX has any claim against
IMX on account of or for (i) overtime pay, other than overtime pay for the
current payroll period, (ii) wages or salary (excluding current bonus, accruals
and amounts accruing under pension and profit-sharing plans) for any period
other than the current payroll period, (iii) vacation, time off or pay in lieu
of vacation or time off, other than that earned in respect of the current fiscal
year, or (iv) any violation of any Law relating to minimum wages or maximum
hours of work.
9.21 Employee Benefit Matters.
(a) Except as set forth on Schedule 9.21, IMX does not have
outstanding and is not a party to or subject to liability under: (i) any
agreement, arrangement, plan, or policy, whether or not considered legally
binding, that involves (A) any pension, retirement, profit sharing, deferred
compensation, bonus, stock option, stock purchase, health, welfare, or incentive
plan; or (B) welfare or "fringe" benefits, including without limitation
vacation, severance, disability, medical, hospitalization, dental, life and
other insurance, tuition, company car, club dues, sick leave, maternity,
paternity or family leave, or other benefits; or (ii) any employment,
consulting, engagement, or retainer agreement or arrangement ((i) and (ii)
together the "Employee Plans" and each item thereunder an "Employee Plan").
True, correct, and complete copies of all documents creating or evidencing any
Employee Plan listed on Schedule 9.21 have been delivered to MEDICIS and LLC.
There are no negotiations, demands or proposals which are pending or threatened
or which have been made since January 1, 1996 which concern matters now covered,
or that would be covered, by the foregoing types of agreement, arrangement,
plan, or policy other than negotiations and proposals related to changing health
care coverage for employees which became effective November 1, 1996.
(b) Each Employee Plan has been administered in compliance in
all material respects with its terms, and, except as set forth on Schedule 2.23,
in compliance in all material respects with, and IMX does not have any direct or
indirect material liability under, the Employee Retirement Income Security Act
of 1974, as amended ("ERISA") or other Law applicable to any Employee Plan. Each
Employee Plan that is intended to qualify under Section 401(a) or Section
509(c)(9) of the Code has received a favorable determination letter from the
Internal Revenue Service (a copy of which has been provided to MEDICIS and LLC)
and related trusts have been determined to be exempt from taxation. Nothing has
occurred that would cause and no Action is pending or threatened which could
result in the loss of such exemption or qualification.
(c) (i) IMX has not made any contributions to any
multi-employer plan (as defined in ERISA) or to any pension plan subject to the
minimum funding standards of
17
ERISA or Title IV of ERISA, (ii) IMX has never been a member of a controlled
group which contributed to any such plans and (iii) IMX has never been under
common control with an employer which contributed to any such plans.
(d) IMX has not terminated or taken action to terminate any
employee benefit plans since January 1, 1993.
(e) All of the Employee Plans, to the extent applicable, are
in compliance in all material respects with the continuation of health benefit
provisions contained in the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, and with Section 1862(b)(4)(A)(i) of the Social Security Act,
and IMX does not have any material liability for any excise tax imposed by Code
Section 5000.
9.22 Discrimination, Workers Compensation and Occupational Safety
and Health. No Person or party (including, but not limited to, Government
agencies of any kind) has any claim, notice of claim, charge, lawsuit or to
IMX's knowledge any basis for any thereof, against IMX in connection with the
Business arising out of any Law relating to discrimination in employment or
employment practices or occupational safety and health standards, and no such
claim, notice of claim, charge or lawsuit is pending or, to the best knowledge
of IMX, threatened against IMX. Since April 30, 1993, IMX has not received any
notice in connection with the Business from any Person alleging a violation of
any such Law or occupational safety or health standards. IMX has no outstanding
Contracts or obligations to indemnify any person for violation of the Laws and
standards set forth in this Section.
9.23 Alien Employment Eligibility. With respect to each Person
employed by IMX in the Business on or after May 1, 1987, and who actually
commenced such employment on or after November 6, 1986, (a) IMX hired such
Person in compliance with the Immigration Reform and Control Act of 1986 and the
rules and regulations thereunder ("IRCA") and (b) IMX and each Affiliate have
complied with all recordkeeping and other regulatory requirements under IRCA.
9.24 Insurance Policies. Set forth on Schedule 9.24 hereto is a list
of all insurance policies and bonds in force covering or relating to the
Contributed Assets or the Business, including without limitation all properties,
operations or personnel of IMX used in connection with the Business. Policies
thereon described evidence insurance in such amounts and against such risks and
losses as are generally maintained with respect to comparable businesses and
properties.
9.25 Guarantees. IMX is not a guarantor, indemnity, surety or
accommodation party or otherwise liable for any indebtedness of any other
Person, firm or corporation except as endorser of checks received and deposited
in the Ordinary Course.
9.26 Product Warranties. Set forth on Schedule 9.26 hereto are the
standard forms of product warranties and guarantees used in the Business, and
copies of all other material product warranties and guarantees, and a summary of
all oral product warranties used by IMX if different from the foregoing. Except
as specifically described on Schedules 9.26 or 9.27, since
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April 30, 1992 no product warranty or similar claims have been made against IMX
in connection with the Business except routine claims as to which, in the
aggregate, losses and expenses in respect of repair or replacement of
merchandise do not and will not exceed $5,000. The aggregate loss and expense
attributable to all product, warranty and similar claims now pending or
hereafter asserted with respect to products manufactured on or prior to the
Effective Date will not exceed $5,000. No Person or party (including, but not
limited to, Government agencies of any kind) has any claim, or basis for any
action or proceeding, against IMX under any Law relating to unfair competition,
false advertising or other similar claims arising out of product warranties,
guarantees, specifications, manuals or brochures used in the Business.
9.27 Product Liability Claims. Except as described on Schedule 9.27,
IMX has not received notice or information as to any claim or allegation of
injury, death, or property or economic damages, any claim for punitive or
exemplary damages, any claim for contribution or indemnification, or any claim
for injunctive relief in connection with any product manufactured, sold,
distributed or otherwise put in commerce by or in connection with any service
provided by IMX in connection with the Business, except for routine claims
described and quantified pursuant to Section 9.26. The aggregate loss and
expense attributable to any and all such claims and allegations with respect to
products manufactured, sold or distributed or services provided prior to the
Closing Date which are asserted after the date of this Agreement will not exceed
$5,000, exclusive of any recovery or coverage under any insurance policy.
9.28 Product Safety Authorities. Except as set forth on Schedule
9.28 hereto, to the knowledge of IMX, no Person has been required to file any
notification or other report with or provide information to any Government
agency or product safety standards group concerning actual or potential defects
or hazards with respect to any product manufactured, sold, distributed or
otherwise put in commerce in connection with the Business, and there exist no
grounds for the recall of any such product.
9.29 Environmental Matters. Except as set forth on Schedule 9.29,
all assets and property currently or previously owned, leased, operated, or used
by the IMX, all current or previous conditions on and uses of all of the
property and assets currently or previously owned leased, operated or used by
IMX. All current or previous ownership or operation of the IMX or such property
and assets (including without limitation transportation and disposal of
Hazardous Materials by or for the IMX) comply and have at all times complied
with, and do not cause, have not caused, and will not cause liability to be
incurred by the IMX under any Environmental Law. Except as set forth on Schedule
9.29, the IMX is not in violation of and has not violated any Environmental Law.
9.30 Broker's Fees. Except as described on Schedule 9.30, IMX has
not retained any broker, finder or agent or agreed to pay any brokerage fees,
finder's fees or commissions with respect to the transactions contemplated by
this Agreement.
9.31 Foreign Operations and Export Control. IMX has made no sales
outside of the United States, directly or indirectly, and does not maintain any
sales depots or other manufacturing, distribution or sales entities outside of
the United States.
19
9.32 Truthfulness. No representation or warranty of IMX herein and
no statement, information or certificate furnished or to be furnished by or on
behalf of IMX or its counsel, accountants or other agents pursuant hereto or in
connection with the transactions contemplated hereby contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. There is no fact or development, actual or prospective,
other than general economic conditions, which materially adversely affects or in
the future might reasonably be expected adversely to affect the Business, the
Contributed Assets in any material respect which has not been set forth or
described in this Agreement or in the Schedules hereto.
9.33 Books and Records. The books of account, stock record books and
minute books and other corporate records of IMX are in all material respects
complete and correct, have been maintained in accordance with good business
practices and the matters contained therein are accurately reflected on the
Financial Statements. The minute books and stock books of IMX have been made
available to MEDICIS and LLC and are correct and complete to the date hereof.
9.34 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. For purposes of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976 ("HSR Act"), IMX is its own ultimate parent
entity and does not meet the size-of-person test set forth in Section 7A(a) of
the HSR Act or the rules relating thereto. The annual net sales of IMX (as
stated on its last regularly prepared annual statement of income and expense)
and the total assets of IMX (as stated on its last regularly prepared balance
sheet) are each less than $10 million.
10. OPTION TO PURCHASE. MEDICIS shall have the option to acquire IMX's
interest in the LLC in three annual equal installments on each of June 30, 1999,
2000, 2001 pursuant to the terms and conditions contained in the LLC Agreement.
11. COVENANTS OF IMX.
11.1. Payment of Debts. IMX hereby covenants and agrees that until
the Closing Date and for 90 days thereafter, IMX shall timely pay all of its
debts and other obligations involving more than $25,000 as they become due;
provided however that if IMX wishes to delay payment of any debts or obligations
over $25,000 for any reason whatsoever, IMX shall first inform LLC and MEDICIS
of such wish and of the underlying reason for such wish and shall obtain written
consent from LLC or MEDICIS, such consent not to be unreasonably withheld,
before IMX delays any such payment.
11.2. Release of Liens. Upon the Closing or immediately thereafter,
IMX shall use such portion of the consideration received pursuant to Sections
2.2(b) and 2.2(c) of this Agreement or pursuant to the Stock Purchase Agreement
as is necessary to cause the release of any Liens on IMX property or assets
arising from or related to financing arranged by IMX.
11.3 Closing Covenants. IMX covenants and agrees with LLC and
MEDICIS that, from and after the date of this Agreement and until the Closing
Date, IMX will conduct the Business subject to the following provisions and
limitations.
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(a) Operation of the Business. Without the prior written
consent of LLC and MEDICIS, IMX in connection with the Business and Contributed
Assets, will not:
(i) enter into any Contract or commitment or engage in
any transaction which is not in the Ordinary Course of the Business or which is
inconsistent with past practices;
(ii) sell or dispose of or encumber any material amount
of the Contributed Assets;
(iii) make, or enter into any Contract for, any material
capital expenditure or enter into any material lease of capital equipment or
real estate;
(iv) enter into any Contract, whether for the purchase
or sale of inventory, supplies, other products or services or otherwise, and
whether in the Ordinary Course of the Business or otherwise, involving more than
$5,000 or enter into any series of such Contracts with one party or affiliated
group of parties involving more than $5,000 in the aggregate;
(v) create, assume, incur or guarantee any indebtedness
other than (i) in the Ordinary Course of the Business and with a maturity date
of less than one year or (ii) that incurred pursuant to existing Contracts
disclosed in the schedules delivered pursuant hereto;
(vi) make or institute any unusual or novel method of
transacting business or change any accounting procedures or practices or its
financial structure;
(vii) make any amendments to or changes in its articles
or certificate of incorporation or association or bylaws;
(viii) perform any act, or attempt to do any act, or
permit any act or omission to act, which will cause a breach of any material
contract, commitment or obligation to which IMX is a party; or
(ix) take any action or incur any liability or
obligation which, if taken or incurred prior to the date of this Agreement,
would be required to be disclosed on any Schedule hereto.
(b) Preservation of Business. IMX shall carry on the Business
diligently and substantially in the same manner as heretofore conducted and
shall keep its business organizations intact, including its present employees
and present relationships with suppliers and customers and others having
business relations with IMX. IMX will at all times maintain in inventory
quantities of raw materials, component parts, work in process, finished goods
and other supplies and materials sufficient to allow the LLC to continue to
operate the Business, after the Closing Date, free from any shortage of such
items.
11.4. Taxes.
(a) IMX shall pay all applicable sales, use or other similar
transfer
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Taxes that are, or become, due or payable as a result of the transfer or
delivery of the Contributed Assets hereunder, whether levied on MEDICIS, LLC or
IMX. IMX shall prepare, subject to LLC's reasonable approval, and file any
Returns required in respect of such Taxes.
(b) All real estate, personal property, ad valorem and any
other local or state Taxes relating to the Contributed Assets or the Business
which shall be accrued but unpaid as of the Closing Date, shall be prorated to
the Closing Date and shall be paid by IMX to any Government levying such Taxes,
if such Taxes are levied directly against IMX, or to LLC if such Taxes are
levied against LLC or MEDICIS.
12. INVENTIONS. IMX acknowledges and agrees that the Contributed
Intellectual Property shall be the sole and exclusive property of LLC and,
unless otherwise agreed by the parties in writing or in this Section 12, the New
Intellectual Property shall be the sole and exclusive property of LLC and IMX
shall have no rights thereto other than the limited right to use the same for
the purposes reasonably related to its obligations under this Agreement.
12.1 New Intellectual Property. IMX and LLC agree to make prompt and
full disclosure to MEDICIS of all New Intellectual Property and advise MEDICIS,
regularly, of all work being done by IMX or LLC on any New Intellectual
Property.
(a) To the extent IMX or any of its directors, officers,
employees, consultants, agents, successors or assigns ("Agents") would be deemed
by law to be owners of any rights to the New Intellectual Property (other than
pursuant to agreement between the parties evidenced in writing), IMX hereby
assigns to LLC and hereby agrees to cause its Agents to assign to LLC all such
rights to the New Intellectual Property, effective upon its creation.
(b) IMX shall cooperate with LLC or MEDICIS, as LLC's agent or
assignee, provide all reasonable assistance and information, and execute any and
all applications, assignments or other instruments which LLC or MEDICIS may deem
necessary in order to enable LLC, at LLC's expense:
(i) to apply for, prosecute and obtain any patents,
trademarks, copyrights or other legal protection in the United States or foreign
countries for the New Intellectual Property; or
(ii) in order to assign or convey to or vest in LLC or
MEDICIS, as the case may be, the sole and exclusive right, title and interest in
and to the New Intellectual Property.
(c) LLC hereby agrees that upon MEDICIS's request and for
reasonable consideration to be determined at the time of such request, LLC shall
assign to MEDICIS all LLC's right, title and interest to the New Intellectual
Property.
(d) If IMX intends to incorporate into any New Intellectual
Property any Intellectual Property which IMX claims is proprietary to any person
other than LLC or MEDICIS (the "Other Intellectual Property"), IMX shall first
notify LLC and MEDICIS of such
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intention before its incorporation into any New Intellectual Property. IMX shall
incorporate the Other Intellectual Property into such property only upon the
written consent of LLC and MEDICIS. If such Other Intellectual Property is so
incorporated, IMX hereby:
i) Grants to LLC or MEDICIS, as the case may be, a
perpetual, irrevocable, world-wide, royalty-free right to use (and sublicense
others to use) the Other Intellectual Property so incorporated effective upon
delivery which shall be exclusive to LLC or MEDICIS, as the case may be, with
respect to IMX Intellectual Property and non-exclusive if such Intellectual
Property belongs to a third party; and
ii) Represents and warrants that the use of the Other
Intellectual Property by LLC or MEDICIS (and its Affiliates and sublicensees)
will not infringe upon or violate any patent, copyright, trade secret or other
proprietary right of any third party.
13. NONCOMPETE. IMX acknowledges and agrees that (i) the MEDICIS
Contribution and the LLC Consideration as well as the consideration and benefits
to be provided to LLC under this Agreement and the Major Agreements have been
bargained and negotiated in exchange for, and in consideration of, IMX's
agreement to abide by the covenants contained in this Section 13 and other
noncompetition agreements to be executed in connection with this Agreement; (ii)
the continued involvement by IMX in a business in competition with LLC or
MEDICIS would diminish the value of the IMX Contribution to a level where
MEDICIS would not receive the benefit of its bargain to participate in the joint
venture; and (iii) as an inducement to MEDICIS to participate in the joint
venture, IMX has agreed not to compete with LLC and MEDICIS and to refrain from
making disclosures to the extent set forth below.
13.1 Restrictive Covenants. IMX covenants and agrees that for a
period that is the lesser of (i) three years from the date of termination of the
LLC, whether by dissolution, liquidation or otherwise, or (ii) three years from
the date after which IMX holds less than 10% of the total interest outstanding
in the LLC (the "Restricted Period"), IMX will not, without the express written
approval of MEDICIS:
(a) directly or indirectly, in one or a series of
transactions, own, manage, operate, control, invest or acquire an interest
in, or otherwise engage or participate in, whether as a proprietor,
partner, stockholder, lender, director, officer, employee, joint venturer,
investor, lessor, supplier, customer, agent, representative or other
participant, in any business which competes ("Competitive Business"),
directly or indirectly, with any business conducted, or engaged in, or
proposed to be conducted or engaged in, by LLC or MEDICIS as of the
Closing Date or at any time during IMX's term of investment with LLC (the
"LLC Business") located in any county in the United States of America and
each similar jurisdiction in any other country in which the LLC Business
is conducted or engaged in by LLC or MEDICIS, or is proposed to be
conducted or engaged in by LLC or MEDICIS, as of the Closing Date or at
any time during IMX's term of investment with LLC (the "Market") without
regard to (A) whether the Competitive Business has its office,
manufacturing or other business facilities within or without the Market,
(B) whether any of the activities of IMX referred to above occur or are
performed within or without the Market,
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or (C) whether IMX resides, or reports to an office, within or without the
Market; provided, however, that (x) IMX may, anywhere in the Market,
directly or indirectly, in one or a series of transactions, own, invest or
acquire an interest in up to five percent of the capital stock of a
corporation whose capital stock is traded publicly, or that (y) IMX may
accept employment or engagement as an independent consultant with LLC,
MEDICIS or any successor company to LLC or MEDICIS.
(b) directly or indirectly, in one or a series of
transactions, (A) recruit, solicit or otherwise induce or influence any
proprietor, partner, stockholder, lender, director, officer, employee,
sales agent, joint venturer, investor, lessor, supplier, customer, agent,
representative or any other person which has a business relationship with
LLC or MEDICIS to discontinue, reduce or modify such employment, agency or
business relationship with LLC or MEDICIS, or (B) employ or seek to employ
or cause any Competitive Business to employ or seek to employ any person
or agent who is then (or was at any time within six months prior to the
date IMX or the Competitive Business employs or seeks to employ such
person) employed or retained by LLC or MEDICIS. Notwithstanding the
foregoing, nothing herein shall prevent IMX from providing a letter of
recommendation to an employee with respect to a future employment
opportunity.
13.2 MEDICIS/▇▇▇▇▇-▇▇▇▇ Relationship. MEDICIS covenants and agrees
that it shall not attempt to expand its relationship with ▇▇▇▇▇-▇▇▇▇
Laboratories to matters that are not related to or arise out of the IMX
Contribution or any New Products purchased by MEDICIS under the New Product
Agreement without the prior written approval of IMX.
13.3 Severability. LLC, MEDICIS and IMX believe the covenants
against competition contained in this Section 13 are reasonable and fair in all
respects, and are necessary to protect the interests of LLC and MEDICIS.
However, in case any one or more of the provisions or parts of a provision
contained in this Section 13 shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other provision or part of a
provision of this Section 13 or this Agreement or any other jurisdiction, but
this Section 13 shall be reformed and construed in any such jurisdiction as if
such invalid or illegal or unenforceable provision or part of a provision had
never been contained herein and such provision or part shall be reformed so that
it would be valid, legal and enforceable to the maximum extent permitted in such
jurisdiction. Without limiting the foregoing, the parties intend that the
covenants and agreements contained in Section 13.1 shall be deemed to be a
series of separate covenants and agreements, one for each county or other
jurisdiction of the Market. If, in any judicial proceeding, a court shall refuse
to enforce all the separate covenants and agreements deemed to be included in
Section 13.1, it is the intention of the parties hereto that the covenants and
agreements which, if eliminated, would permit the remaining separate covenants
and agreements to be enforced in such proceeding shall, for the purpose of such
proceeding, be deemed eliminated from Section 13.1.
14. TERM AND TERMINATION.
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14.1 Term. Unless earlier terminated as provided herein, this
Agreement shall continue in force until the earlier of (i) the dissolution or
liquidation of LLC; (ii) the date on which IMX is no longer the owner of 10% or
more of any interest in LLC.
14.2 Default. In the event that any party hereto shall materially
breach any of the provisions contained in this Agreement or in any of the Major
Agreements, which breach has not been cured within thirty (30) days after
written notice to the defaulting party by the non-defaulting party, the
non-defaulting party may terminate this Agreement without further notice to the
defaulting party.
14.3 Termination. Upon the effective date of the termination of this
Agreement:
(a) If the termination is due to the default of either party
under Section 14.2 above, the LLC shall immediately cease doing business, except
as is necessary to wind up its affairs in an orderly manner and the assets of
LLC shall be distributed as set forth in the LLC Agreement.
(b) The obligations of the parties hereto contained in
Sections 3, 6, 7, 9-15, 17-20, inclusive shall survive the termination of this
Agreement.
(c) If the termination is due to a default of IMX under
Section 14.2 above, MEDICIS shall have the right to immediate possession of all
Contributed Intellectual Property and all New Intellectual Property as well as
copies of all such Intellectual Property in the possession of or under the
control of IMX and IMX shall promptly deliver the same to MEDICIS.
(d) If the termination is due to a default by MEDICIS under
Section 14.2, LLC shall have the right to maintain possession of all Contributed
Intellectual Property and all New Intellectual Property as well as copies of all
such Intellectual Property in the possession of or under the control of IMX and
IMX shall promptly deliver the same to LLC.
(e) Any amounts owing which are due to the breaching party by
the other party may be withheld and applied to offset any damages occasioned by
such breach.
(f) No termination of this Agreement or termination of the JV
or LLC shall constitute a waiver by any party hereto of any other rights or
remedies which it may have against the other, nor shall it constitute a
termination of any license arrangement between the parties hereto relating to a
New Product.
15. CONFIDENTIALITY. Subject to any limitations on confidentiality
obligations imposed by applicable Laws of any Government, each of MEDICIS and
IMX shall use all confidential information of the other party or LLC solely for
the purposes of carrying out their obligations and exercising their rights
hereunder, provided however, that subject to the New Products Agreement, MEDICIS
shall be permitted to use and/or disclose the confidential
25
information of the LLC after IMX no longer holds an interest in the LLC or prior
to such time, if such use and/or disclosure will not or does not materially
affect the LLC's Net Sales.
15.1 Each party shall treat all confidential information as
confidential and proprietary and shall take reasonable steps to hold such
information in confidence, to protect against its unauthorized disclosure and to
restrict its use to those purposes consistent with the rights of the parties
hereto including without limitation having such party's employees and
consultants execute written agreements agreeing to abide by the confidential
obligations of such party.
15.2 Neither party shall be obligated to protect or hold in
confidence any confidential information which is:
(a) legally known to and reduced to writing by the receiving
party prior to the disclosure by the other party except this exception shall not
apply to IMX in relation to the confidential information contained in the
Contributed Assets;
(b) known or becomes known, to third parties knowledgeable in
the industry without the fault or negligence of the receiving party; or
(c) subsequently rightly received from a third party without
similar restriction and without a breach of this Agreement; or
(d) independently developed by the receiving party without
recourse to the confidential information or breach of this Agreement; or
(e) approved for release by written authorization of the
providing party; or
(f) disclosed pursuant to a governmental requirement or
disclosure is permitted by operation of law.
16. CONDITIONS TO MEDICIS's OBLIGATIONS. The obligations of MEDICIS to
consummate the transactions provided for in this Agreement shall be subject to
the satisfaction of each of the following conditions on or before the Closing
Date, subject to the right of MEDICIS to waive any one or more of such
conditions:
16.1 Representations and Warranties of IMX. The representations and
warranties of IMX contained in this Agreement, including the Schedules hereto,
and in the certificates and papers to be delivered to MEDICIS and LLC pursuant
hereto and in connection herewith shall be true and correct in all material
respects on the date hereof and on the Closing Date (except for changes
specifically permitted hereunder) as though such representations and warranties
were made on the Closing Date.
16.2 Approval by IMX's Shareholders. The shareholders of IMX shall
have, in a general meeting duly noticed and conducted, approved and adopted this
Agreement and the
26
other Major Agreements and the transactions contemplated hereby and thereby in
accordance with all applicable requirements of Law and the articles or
certificate of incorporation or association and bylaws of IMX. Evidence of the
taking of such action, in a form satisfactory to MEDICIS and its counsel, shall
be delivered to MEDICIS prior to or at the Closing.
16.3 Performance of this Agreement. IMX shall have duly performed or
complied in all material respects with all of the obligations to be performed or
complied with by it under the terms of this Agreement and the other Major
Agreements on or prior to the Closing Date.
16.4 No Material Adverse Change. There shall have been no material
adverse change, actual or threatened, in connection with the Business (including
relationships with customers or vendors for any reason), whether or not covered
by insurance, as a result of any cause whatsoever.
16.5 Certificate of IMX. MEDICIS shall have received a certificate
signed by the President and Treasurer of IMX dated as of the Closing Date and
subject to no qualification certifying that the conditions set forth in Sections
16.1, 16.3, 16.4, 16.5, 16.12, 16.13, 16.14, 16.15 and 16.17 hereof have been
fully satisfied. Such certificate shall be deemed a representation and warranty
of IMX under this Agreement.
16.6 Documents. LLC shall receive from IMX on the Closing Date:
(a) a fully executed Assignment and Assumption Agreement in
the form of Exhibit G attached hereto and other appropriate documents conveying
to LLC good and marketable title to the Contributed Assets, other than the
Contributed Intellectual Property; and
(b) a fully executed Assignment of the trademark, "Exorex" and
any other trademarks or tradenames used in the Business in the form of Exhibit H
attached hereto and such other appropriate documents conveying to LLC good and
marketable title to the trademark; and
(c) a fully executed Computer Software License in the form to
be agreed between the parties and copies of the object code and source code, in
machine and human readable form, as appropriate, and all supporting instructions
and documentation relating to the use of the software; and
(d) a fully executed Exclusive Distribution Agreement
Assignment in the form of Exhibit I attached hereto and a related side letter.
16.7 Facility Agreement. IMX shall have executed and delivered the
Facility Agreement.
16.8 Consulting Agreement. IMX shall have executed and delivered the
Consulting Agreement and each Significant Employee shall have executed and
delivered the Nondisclosure Agreement.
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16.9 New Product Agreement. IMX shall have executed and delivered
the New Product Agreement.
16.10 No Lawsuits. No suit, action or other proceeding or
investigation shall be threatened or pending before or by any court or
Government concerning this Agreement or the consummation of the transactions
contemplated hereby, or in connection with any claim against IMX not disclosed
herein or on the Schedules hereto. No Government shall have threatened or
directed any request for information concerning this Agreement, the transaction
contemplated hereby or the consequences or implications of such transaction to
LLC, MEDICIS or IMX, or any officer, director, employee or agent of each of
them.
16.11 No Restrictions. There shall exist no conditions, restrictions
or reservations materially affecting the title to or utility of the Contributed
Assets which would prevent LLC from occupying and utilizing the Contributed
Assets, or any part thereof, to the same full extent that IMX might continue to
do so if the sale and transfer contemplated hereby did not take place including
without limitation no conditions of IMX such that the transactions contemplated
hereby would be considered preferential or fraudulent transfers under applicable
Laws.
16.12 Consents. All consents and approvals necessary to insure that
LLC will continue to have the same full rights in respect to the Contributed
Assets as IMX had immediately prior to the consummation of the transaction
contemplated hereunder shall have been obtained.
16.13 Releases. At the Closing or within three days thereafter, IMX
shall deliver to LLC and MEDICIS the written release of all Liens relating to
the Contributed Assets, executed by the holder of or parties to each such Lien.
The releases shall be satisfactory in substance and form to MEDICIS and its
counsel.
16.14 Termination of Employees. IMX shall have effectively
terminated all of the employees included in the Contributed Assets in compliance
with all applicable Laws, including the WARN Act, and shall have paid to all
such terminated employees all amounts then due and owing such employees plus all
accrued but not taken vacation and other pay.
16.15 Bulk Sales. IMX at its expense shall have taken all action
required, including preparation and, in cooperation with MEDICIS, mailing of a
notice to creditors, to effect compliance with any applicable bulk sales Law.
16.16 Due Diligence. MEDICIS shall be satisfied in all respects with
the contents of the Schedules hereto which may be amended until the Closing Date
and the results of its due diligence review in connection with the Business,
including without limitation the Financial Statements, the validity of the
Contributed Intellectual Property, customer, vendor, and other third person
relationships and environmental, tort, securities, corporate, product liability,
employee benefits, taxation and insurance matters.
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16.17 Further Assurances. MEDICIS shall have received such further
instruments and documents as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained and the performance of all conditions to the
consummation of such transactions.
17. CONDITIONS TO IMX'S OBLIGATIONS. The obligations of IMX to consummate
the transactions provided for in this Agreement shall be subject to the
satisfaction of each of the following conditions on or before the Closing Date,
subject to the right of IMX to waive any one or more of such conditions:
17.1 Performance of the Major Agreements. MEDICIS shall have duly
performed or complied in all material respects with all of the obligations to be
performed or complied with by it under the terms of this Agreement and the other
Major Agreements on or prior to the Closing Date.
17.2 Approval by IMX's Shareholders. The shareholders of IMX shall
have, in a general meeting duly noticed and conducted, approved and adopted this
Agreement and the other Major Agreements and the transactions contemplated
hereby and thereby.
17.3 Payment of MEDICIS Contribution and LLC Consideration and
Assumption of Liabilities. IMX shall receive from MEDICIS and LLC, as
applicable, on the Closing Date, the MEDICIS Contribution and the LLC
Consideration, and the Assumption and Assignment Agreement duly executed by LLC.
17.4 Facility Agreement. LLC shall have executed and delivered the
Facility Agreement.
17.5. Consulting Agreement. LLC shall have executed and delivered
the Consulting Agreement.
17.6 Service Agreement. MEDICIS shall have executed and delivered
the Service Agreement.
17.7 Stock Purchase Agreement. MEDICIS shall have executed and
delivered the Stock Purchase Agreement.
17.8 Further Assurances. IMX shall have received such further
instruments and documents as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained and the performance of all conditions to the
consummation of such transactions.
18. INDEMNIFICATION
18.1 Survival of Representations and Warranties. All representations
and warranties of the parties made in this Agreement and the other Major
Agreements or in any exhibit, statement, Schedule, certificate, instrument or
document delivered pursuant hereto and
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thereto shall survive the Closing and shall remain in effect for a period of two
years after the Closing Date and shall thereupon terminate and be of no further
force and effect; provided, however, that the foregoing shall not apply to
representations and warranties under Sections 9.8, 9.11, 9.21, 9.22, 9.27, 9.28
and 9.29; and provided, further, that this shall not prohibit any claim for
Indemnified Losses pursuant to Section 18.2(a) after such applicable survival
period with respect to Indemnified Losses as to which the indemnifying party has
received notice in accordance with this Section 18 prior to the expiration of
such survival period. The expiration of any representation or warranty made in
this Agreement or in any exhibit, statement, Schedule, certificate, instrument
or document delivered pursuant hereto shall not impair or restrict the rights
that any party could assert with respect to any and all remedies at law or in
equity in the absence of such representation or warranty. All representations
and warranties hereunder shall be deemed to be material and, except as otherwise
specifically provided herein, relied upon by the parties with or to whom the
same were made, notwithstanding any investigation or inspection made by or on
behalf of such party or parties.
18.2 Indemnification of MEDICIS and LLC. IMX hereby agrees to
indemnify and hold MEDICIS and its subsidiaries and Affiliates and the LLC
(together with their shareholders, directors, officers, employees, successors,
assigns and agents of each of them) (collectively, the Indemnified Parties")
harmless from, against and in respect of, and waives any claim for contribution
or indemnity with respect to, any and all claims, losses, damages, liabilities,
expenses or costs ("Losses"), plus reasonable attorneys' fees and expenses
and/or enforcement of this Agreement, plus interest from the date incurred
through the date of payment at the prime lending rate of Citibank, N.A. from
time to time prevailing (in all, "Indemnified Losses") incurred or to be
incurred by any of them (a) to the extent resulting from or arising out of, or
alleged to result from or arise out of, any breach or violation of the
representations, warranties, covenants or agreements of the IMX contained in
this Agreement and the other Major Agreements, or in any exhibit, statement,
Schedule, certificate, instrument or document delivered pursuant hereto and
thereto, including provisions of this Section 18, and (b) to the extent
resulting from or arising out of, or alleged to result from or arise out of, any
liability or obligation not expressly assumed by LLC hereunder, (c) the conduct
or operation of the Business of IMX; (d) the failure of IMX to perform any term,
condition, or obligation required by this Agreement or any of the Major
Agreements to be performed by IMX; or (e) any act or omission of gross
negligence, willful misconduct or bad faith by IMX in connection with its
performance of its obligations under this Agreement or any Major Agreement.
Notwithstanding the foregoing, the IMX shall not have any liability to the
Indemnified Parties for any Liabilities resulting primarily and directly from
the Indemnified Parties' negligence, willful misconduct.
18.3 Limitations. The Indemnified Parties shall not be entitled to
recover Indemnified Losses under this Section 18 until such Indemnified Losses
exceed a threshold amount of $25,000 in the aggregate, but once the Indemnified
Losses exceed such threshold amount, the Indemnified Parties shall be able to
recover the entire amount of the Indemnified Losses from IMX including the first
$25,000 of such Indemnified Losses.
18.4 Set-off Rights. MEDICIS and LLC shall be entitled to set off
any amounts owing by IMX to the Indemnified Parties, or any of them, pursuant to
this Section 18 or
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otherwise, against any amounts owed to IMX by MEDICIS or LLC. If it is
determined by a court of competent jurisdiction, after all appeals have been
exhausted by MEDICIS or LLC, or after the expiration of all applicable appeal
periods, that MEDICIS or LLC was not, in any particular circumstance, entitled
to invoke the set-off rights contained herein, MEDICIS or LLC shall pay, on
demand, the reasonable attorney's fees and expenses incurred by the IMX, or any
of them, in connection with such determination.
18.5 Participation in Litigation. In the event any suit or other
proceeding is initiated against an Indemnified Party with respect to which
MEDICIS alleges IMX is or may be obligated to indemnify an Indemnified Party
hereunder, IMX shall be entitled to participate in such suit or proceeding, at
its expense and by counsel of its choosing, provided that (a) such counsel is
reasonably satisfactory to MEDICIS, and (b) MEDICIS shall retain primary control
over such suit or proceeding. Such counsel shall be afforded access to all
information pertinent to the suit or proceeding in question. MEDICIS shall not
settle or otherwise compromise any such suit or proceeding without the prior
consent of IMX, which consent shall not be unreasonably withheld, if the effect
of such settlement or compromise would be to impose liability on IMX hereunder.
18.6 Claims Procedure. In the event from time to time MEDICIS
believes that it or any other Indemnified Party has or will suffer any Losses
for which IMX is obligated to indemnify it hereunder, it shall promptly notify
IMX in writing of the matter, specifying therein the reason why MEDICIS believes
that IMX is or will be obligated to indemnify, the amount, if liquidated, to be
indemnified, and the basis on which MEDICIS has calculated such amount; if not
yet liquidated, the notice shall so state; provided, however, that the right of
a person to be indemnified hereunder shall not be adversely affected by a
failure to give such notice unless, and then only to the extent that, an
Indemnifying Party is prejudiced thereby. IMX shall pay any amount to be
indemnified hereunder not more than five days after receipt of notice from
MEDICIS of the liquidated amount to be indemnified.
18.7 Tax Indemnification. In addition to any other indemnification
granted herein and notwithstanding the survivability or limits, if any, of any
representation contained herein or the absence of any representation herein, IMX
agrees to indemnify, defend and hold harmless MEDICIS and LLC, their Affiliates
and their respective officers, directors, employees and agents from and against
all loss, liability, including IMX's liability for its own Taxes or its
liability, if any (for example, by reason of transferee liability or application
of Treas. Reg. Section 1.1502-6) for Taxes of others, damage or reasonable
expense (including but not limited to reasonable attorneys' fees and expenses)
(collectively, "Costs") payable with respect to Taxes claimed or assessed
against MEDICIS or the Contributed Assets (i) for any taxable period ending on
or before the Closing Date or (ii) for any taxable period resulting from a
breach of any of the representations or warranties contained in Section 9.8
hereof. IMX also agrees to indemnify, defend and hold harmless MEDICIS and LLC
from and against any and all costs sustained in a tax period of LLC ending after
the Closing Date arising out of the settlement or other resolution of a proposed
tax adjustment which relates to a tax period ending on or before the Closing
Date.
19. ARBITRATION.
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19.1 The parties shall promptly submit to arbitration any dispute
which may arise in connection with this Agreement (or the transactions or
relationships contemplated thereby) that is not promptly resolved by them,
except that MEDICIS or LLC may seek injunctive relief for breaches of Sections
12, 13 or 15 of this Agreement if either party makes a good faith determination
that such breach by the other party will result in irreparable harm and that
injunctive relief is the only adequate remedy. Neither any provision of, nor the
exercise of any right under this Article shall limit the right of any party
before, during and after the pendency of the Arbitration to exercise any
self-help remedies such as, for example, set-off. The institution, use or
maintenance of any such remedies shall not constitute a waiver of the right of
any party to submit the controversy or claim to Arbitration.
19.2 The American Arbitration Association shall have jurisdiction
over any arbitration, which shall be conducted in Maricopa County, Arizona, in
accordance with the Commercial Arbitration Rules of such Association, except as
modified by agreement of the parties.
19.3 In the event a dispute is to be submitted to arbitration
pursuant to this Section 19, the parties agree that the dispute shall be
resolved by a private arbitration conducted by one arbitrator. Within ten (10)
days after the submission of such dispute to arbitration, the parties shall
agree upon one arbitrator, selected from a panel of five individuals, none of
whom is an officer, director or employee of a party or an affiliate of such
party, or a person who has a direct or indirect personal or financial interest
in the outcome of the arbitration, designated by the American Arbitration
Association from its permanent panel of commercial arbitrators. The parties
shall select the arbitrator by alternately striking names of the individuals so
designated until only one name remains. A coin toss will determine which party
is to strike the first name.
19.4 The arbitrator shall set a hearing date for an arbitration (the
"Hearing") within 90 days from the date the arbitrator is selected, unless
otherwise agreed by the parties. At least 15 days before the Hearing, each party
shall submit to the arbitrator a list of all witnesses and exhibits which it
intends to present at the Hearing. No later than ten days before the Hearing,
each party shall provide to the arbitrator a short (not to exceed five
single-spaced pages or such other page limit as the arbitrator permits)
statement of its position with regard to the dispute. Notwithstanding the
Commercial Arbitration Rules, each party shall have the right to conduct up to a
total of two depositions and may serve upon any other party one or more requests
for the production of documents. No other discovery may be conducted absent
agreement of the parties or an order of the arbitrator. At the Hearing, each
party shall, unless it waives the opportunity, make an oral opening statement
and an oral closing statement. The arbitrator shall not be strictly bound by
rules of procedure or rules of evidence, but shall use the Federal Rules of
Evidence as a guideline in conducting the Hearing. When testimony is complete
and each party has introduced its exhibits pursuant to the provisions of this
Agreement, and each party has made a closing statement pursuant to the
provisions of this Agreement or waived the opportunity to do so, the arbitrator
shall declare the Hearing closed; provided that the parties may submit
post-hearing briefs pursuant to an agreed upon schedule or a schedule formulated
by the arbitrator. The Hearing shall be held at a location agreed upon by the
parties and convenient for the arbitrator, or if the parties cannot agree upon a
location, at a location designated by the
32
arbitrator. The Hearing shall be conducted in private. Attendance at the hearing
shall be limited to the following: (i) the arbitrator; (ii) representatives of
each party; (iii) each party's attorneys and attorneys' assistants or advisors,
if any, including expert witnesses, if any; (iv) a court reporter if requested
by either party; and (v) any witnesses. The arbitrator may sequester witnesses
upon the motion of a party. Within 30 days of the close of the Hearing or
submission of the post-hearing briefs, the arbitrator shall issue a written
opinion and award (the "Award") based on evidence, arguments and post-hearing
briefs, if any. The Award shall be a decision of the arbitrator, shall resolve
the parties' dispute and shall be final and binding on the parties. Except as
otherwise provided in this Agreement, there shall be no ex parte communication
regarding the subject matter of the Hearing between a party or its attorneys and
the arbitrator from the time the arbitrator is appointed until after the parties
receive the Award. The parties may agree to submit the dispute to the arbitrator
without a Hearing, in which event the arbitrator will render and deliver to the
parties a written opinion and Award within 30 days of being notified that the
parties waive the Hearing. Notwithstanding any other provision of this
Agreement, the arbitrator shall have no power to delete from, add to or modify
the terms of this Agreement, and may not award any remedy which effectively
conflicts directly or indirectly with any provision of this Agreement.
19.5 In any arbitration, all of the reasonable costs and expenses of
the Successful Party (including reasonable attorneys' fees and expenses), all
fees and expenses of experts retained by the Successful Party and all costs of
the arbitrator shall be borne the Losing Party in such arbitration. The "Losing
Party" and the "Successful Party" shall be determined by the arbitrator based on
the relative success or failure of each party to such arbitration.
20. MISCELLANEOUS
20.1 Choice of Forum and Governing Law. The parties hereby agree
that: (i) subject to Section 19, any claims or 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 consent to such jurisdiction, 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 20 shall not be deemed to preclude the
enforcement of any action under this Agreement in any other jurisdiction
20.2 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.
33
20.3 Assignment; Binding Agreement.
(a) This Agreement and all or any part of LLC's rights and
obligations 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 other than the parties hereto and their respective successors,
assigns and legal representatives, any legal or equitable right, remedy or claim
hereunder.
20.4 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.
20.5 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.
20.6 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.
20.7 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.
20.8 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.
20.9 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
34
may, from time to time, reasonable request in order to effectuate and accomplish
the purpose of this Agreement.
20.10 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.
20.11 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.
20.12 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 following addresses
(or to such other address of a party designated in writing by such party to the
others):
If to LLC: Medicis Consumer Products Company, L.L.C.
c/o Medicis Pharmaceutical Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
If to MEDICIS: Medicis Partners Incorporated
c/o Medicis Pharmaceutical Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to: ▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If to IMX: IMX Pharmaceutical Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
35
with a copy to: Nason, Yeager, Gerson, White & ▇▇▇▇▇, P.A.
1645 Palm Beach ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, on
the day and year first above written.
MEDICIS CONSUMER PRODUCTS COMPANY, L.L.C.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------------
Medicis Partners Incorporated, General Manager
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chairman and Chief
Executive Officer
MEDICIS PARTNERS INCORPORATED
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chairman and Chief
Executive Officer
IMX PHARMACEUTICALS, INC.
By:____________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
36
EXHIBIT A
LLC AGREEMENT
[See Exhibit 10.4.1]
EXHIBIT B
STOCK PURCHASE AGREEMENT
EXHIBIT C
NEW PRODUCT AGREEMENT
[See Exhibit 10.4.2]
EXHIBIT D
CONSULTING AGREEMENT
EXHIBIT E
FACILITY AGREEMENT
[See 10.4.3]
EXHIBIT F
SERVICE AGREEMENT
EXHIBIT G
ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT H
TRADEMARK ASSIGNMENT
EXHIBIT I
ASSIGNMENT OF EXCLUSIVE DISTRIBUTION AGREEMENT
ADDENDUM DATED JUNE 18, 1998 TO JOINT VENTURE AGREEMENT BY AND
BETWEEN MEDICIS PARTNERS INCORPORATED, MEDICIS CONSUMER
PRODUCTS COMPANY, L.L.C., AND IMX PHARMACEUTICALS, INC. DATED
JUNE 12, 1998
As an amendment to certain provisions of the Joint Venture Agreement, the
parties agree as follows:
1. Paragraph 1.28 shall be amended so that it shall read as follows:
"Receivables." Receivables shall mean all accounts receivable of IMX
in connection with the Business that have been outstanding for less than 120
days at the Closing, and also all consignment or point of sale arrangements that
are outstanding.
2. There shall be added a final sentence to Paragraph 1.25 New
Intellectual Property as follows: Notwithstanding the foregoing, New
Intellectual Property shall not include any Intellectual Property relating to
any New Product.
IMX PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
MEDICIS PARTNERS INCORPORATED
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Chief Financial Officer
MEDICIS CONSUMER PRODUCTS
COMPANY, L.L.C.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Chief Executive Officer