Exhibit 10.19

AMENDED AND RESTATED OPERATING AGREEMENT

OF

NUGLOW COSMACEUTICALS, LLC

A California Limited Liability Company

This AMENDED AND RESTATED OPERATING AGREEMENT (this “Agreement”) of NUGLOW
COSMACEUTICALS, LLC (the “Company”) is made and entered into as of July 1, 2010,
by and among the Members (as defined below) named on the signature pages hereto,
as Members, and NUGLOW COSMACEUTICALS, LLC.

FOR AND IN CONSIDERATION OF the mutual covenants, rights, and obligations set
forth in this Agreement, the benefits to be derived from them, and other good
and valuable consideration, the receipt and the sufficiency of which each Member
hereby acknowledges, the Members agree as follows:

PREAMBLE

WHEREAS, the Company is a California limited liability company also known as
California entity number 200219910142 in the records of the California Secretary
of State, which was formed on July 18, 2002 by filing its original Articles of
Organization;

WHEREAS, the Company was formerly known as “It Really Works, LLC”;

WHEREAS, the Company previously operated under an Operating Agreement dated
October 1, 2002, which was amended by a First Amendment executed October 1,
2002; a Second Amendment executed May 14, 2004; a Third Amendment executed
March 7, 2006; and a Fourth Amendment executed June 16, 2010 (collectively, the
“Original Agreement”);

WHEREAS, the Company’s sole member and manager, holding 100% of the issued and
outstanding interest in the Company, has been CAMDEN STREET PARTNERS, LLC
(“Camden”), a California limited liability company, since 2004, and Camden and
the Company have been managed solely by Steven Sheiner, who has also served as
the agent for service of process on the Company;

WHEREAS, Camden and the Company have agreed and authorized the admission of
HELIX BIOMEDIX, INC., a Delaware corporation (“HXBM”) as a new Member in
exchange for an initial capital contribution to the Company in the amount of
$350,000.00;

Confidential treatment has been requested for portions of this Exhibit. This
Exhibit omits the information subject to the confidential treatment request.
Omissions are designated as ***. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

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WHEREAS, as the result of the admission of a second Member, the Company is no
longer taxed as a one-member limited liability company managed by its sole
Member such that the nature of the Company is thereby changed for certain
purposes including federal income taxation; and

WHEREAS, the Original Agreement contained provisions related to the interests of
former members who no longer hold an interest in the Company, and related to
legal counsel who no longer represent the Company and its members, and in that
an additional amendment could potentially create a more confusing operating
agreement than an amended and restated operating agreement which would supersede
entirely the Original Agreement;

THEREFORE, the Company, Camden and HXBM unanimously agree to amend and restate
the Original Agreement as set forth herein, and the parties hereto further agree
as follows:

ARTICLE I

DEFINITIONS

When used in this Agreement, the following terms shall have the meanings set
forth below; provided, however, terms with an initial capital letter relating to
tax allocations and other tax matters used in Article VI shall have the meaning
given them in the Code and Treasury Regulations, and all other terms with an
initial capital letter used in this Agreement which are not defined below shall
have the meanings given them elsewhere in this Agreement:

1.1 “Act” shall mean the Beverly-Killea Limited Liability Company Act, also
known as California Corporations Code Title 2.5, Sections 17000 et seq., as the
same may be amended and replaced from time to time by the State of California.

1.2 “Adjusted Capital Account” means, with respect to any Member, the balance,
if any, in such Member’s Capital Account as of the end of the relevant fiscal
year, after giving effect to the following adjustments: (i) add to such balance
any amounts which such Member is obligated to restore pursuant to Treasury
Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of
Treasury Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5); and (ii) subtract
from such balance the items described in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition of
adjusted Capital Account is intended to comply with the provisions of Treasury
Regulations Section 1.704-1(b) (2) (ii) (d) and shall be interpreted
consistently therewith.

1.3 “Affiliate” shall mean any individual, partnership, limited liability
company, corporation, trust or other entity or association, directly or
indirectly, through one or more intermediaries, controlling, controlled by, or
under common control with the Member, Manager, or other Person(s) referred to
immediately preceding the word “Affiliate,” as the case may be. The term
“control,” as used in the immediately preceding sentence, means, with respect to
a corporation or limited liability company the right to exercise, directly or
indirectly, more than 50% of the voting rights attributable to the controlled
corporation or limited liability company, and, with respect to any individual,
partnership, trust, other entity or association, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of the controlled entity.

 

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1.4 “Agreed Value” shall be (i) with respect to all property contributed by a
Member to the Company or distributed by the Company to a Member, the Fair Market
Value of the property on the date of contribution or distribution as determined
by the Manager, and (ii) with respect to the revaluation of Company Property in
accordance with this Agreement, the Fair Market Value of such Company Property
at the time of the event requiring such revaluation as determined by the
Manager.

1.5 “Agreement” shall mean this Amended and Restated Operating Agreement, as
originally executed and as amended from time to time.

1.6 “Articles” shall mean the Articles of Organization for the Company filed
under Corporations Code section 17050, including all amendments thereto or
restatements thereof. If any provision of the Articles conflicts with one or
more provisions of this Agreement, the Articles shall control pursuant to
Corporations Code section 17005(f).

1.7 “Capital Account” shall mean with respect to any Member the capital account
which the Company establishes and maintains for such Member, as discussed in
Section 3.5 herein.

1.8 “Capital Contribution” shall mean the total value of cash contributed to the
Company by the Members.

1.9 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time, the provisions of succeeding law, and to the extent applicable, the
Treasury Regulations.

1.10 “Company” shall mean NuGlow Cosmaceuticals, LLC, a California limited
liability company.

1.11 “Company Minimum Gain” means, with respect to each Nonrecourse Liability of
the Company, the amount of gain (of whatever character) that would be realized
by the Company if it disposed of the Company Property subject to such liability
in a taxable transaction in full satisfaction of such liability (and for no
other consideration), and by then aggregating the amounts so computed. It is
further understood that Company Minimum Gain shall be determined in a manner
consistent with the rules of Treasury Regulations Section 1.704-2(d), including
without limitation the requirement that if the book value of property (as
determined for purposes of computing Net Income and Net Loss) subject to one or
more Nonrecourse Liabilities differs from its adjusted tax basis, Company
Minimum Gain shall be determined with reference to such book value.

1.12 “Company Property” shall mean all property, whether real or personal,
tangible or intangible, owned by the Company.

1.13 “Corporations Code” shall mean the California Corporations Code as amended
from time to time, and the provisions of succeeding law.

 

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1.14 “Dispose,” “Disposing” or “Disposition” means any direct or indirect sale,
assignment, alienation, gift, transfer, hypothecation, exchange, mortgage,
pledge, grant of a security interest, or other disposition or encumbrance,
whether voluntary or involuntary.

1.15 “Distributable Cash” shall mean for any period the total cash of the
Company that is available for distribution to the Members after reasonable
reserves have been set aside for: (i) all current and ordinary expenses of the
Company, including accrued amounts for customary future expenses, in each case
as consistent with the applicable Budget for such period; and (ii) any
extraordinary or contingent expenses of the Company, as determined by the
Manager in its reasonable discretion.

1.16 “Economic Interest” shall mean a Member’s or Economic Interest Owner’s
right to share in one or more of the Company’s Net Profits, Net Losses, and
distributions of the Company’s assets pursuant to this Agreement and the
Corporations Code, but shall not include any other rights of a Member,
including, without limitation, the right to vote or participate in the
management, or, except as required by the Corporations Code, any right to
information concerning the business and affairs of the Company.

1.17 “Economic Interest Owner” shall mean the owner of an Economic Interest who
is not a Member.

1.18 “Economic Risk of Loss” has the meaning set forth in Treasury Regulations
Section 1.752-2(a).

1.19 “Effective Tax Rate” is defined in Section 4.5(a).

1.20 “Fair Market Value” shall mean, as to any Membership Interest or other
property, the price at which a willing seller would sell .and a willing buyer
would buy such Membership Interest or other property having full knowledge of
the facts, in an arm’s-length transaction without time constraints, and without
being under any compulsion to buy or sell.

1.21 “Fiscal Year” shall mean the Company’s fiscal year, which shall be the
calendar year.

1.22 “Majority Interest” shall mean one or more Percentage Interests of Members
which, taken together, exceed 50% of the aggregate of all Percentage Interests.

1.23 “Manager” shall mean Camden or any other Person that succeeds Camden in
that capacity. If more than one Manager is appointed, the singular “Manager”
shall include the plural “Managers.”

1.24 “Member” shall mean Camden, HXBM, each Person who is later admitted to the
Company as a Member in accordance with this Agreement, and any person who is an
assignee who has become a Member in accordance with Section 5.10 of this
Agreement, and any person who is an assignee who has become a Member in
accordance with Article IX of this Agreement, and who has not become solely an
Economic Interest Owner under any provision of this Agreement.

 

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1.25 “Member Nonrecourse Debt” means any nonrecourse debt of the Company for
which any Member bears the Economic Risk of Loss.

1.26 “Membership Interest” shall mean a Member’s entire interest in the Company,
including the Member’s Economic Interest, the right to vote on or participate in
the management of the Company, and the right to receive information concerning
the business and affairs of the Company, as well as the Member’s entire
obligation to the Company and to the other Members.

1.27 “Minimum Gain Attributable” to a Member Nonrecourse Debt, with respect to
any Member nonrecourse Debt, shall have the meaning ascribed to such term for
purposes of Treasury Regulations Section 1.704-2(i)(5).

1.28 “Net Income or Net Loss” shall mean, for any taxable year or month of the
Company, the taxable income or loss, respectively, of the Company for federal
income tax purposes, except that (i) any income of the Company that is exempt
from federal income tax and not otherwise taken into account in computing
taxable income or loss shall be added to such taxable income or subtracted from
such loss, (ii) any non-deductible expenditures of the Company described in
Section 705(a)(2)(B) of the Code or treated as expenditures described in
Section 705(a)(2)(B) of the Code pursuant to Treas. Reg.
Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into account under this
definition (any such expenditures being referred to for purposes of the
Agreement as “Section 705(a)(2)(B) Expenditures”) shall be subtracted from such
taxable income or added to such loss, (iii) any amount of gain or loss that
would have been recognized by the Company if property distributed by the Company
to the Members had instead been sold in a taxable disposition for its Agreed
Value at the time of distribution shall be taken into account, and (iv) items of
income, gain, loss, and deduction (including depreciation, cost recovery, and
amortization deductions) relating to property contributed to the Company by a
Member (or revalued pursuant to the last sentence of Section 4.01 (a) shall be
computed in the manner prescribed by Treasury Regulations
Section 1.704-l(b)(2)(iv)(g)(3) (or, to the extent applicable, Treasury
Regulations Section 1.704-3(d). Except as otherwise provided in the Treasury
Regulations issued under Section 704(b) of the Code, such amounts shall be
computed without regard to any basis adjustment for federal income tax purposes
under Sections 732, 734 and 743 of the Code resulting from an election under
Section 754 of the Code.

1.29 “Net Taxable Income” is defined in Section 4.5(b).

1.30 “Nonrecourse Liability” means any Company liability (or portion thereof)
for which no Member bears the Economic Risk of Loss.

1.31 “Percentage Interest” shall mean a Member’s percentage of ownership of the
Company, which initially is a 70% interest held by Camden and a 30% interest
held by HXBM. The Percentage Interests shall not be adjusted as relative
proportions of the Capital Accounts of the Members are adjusted from time to
time.

1.32 “Person” shall mean an individual, general partnership, limited
partnership, limited liability company, corporation, trust, estate, real estate
investment trust, association or any other entity.

 

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1.33 “Substitute Member” shall mean those transferees of an Economic Interest
who have received the required approvals set forth herein to participate in the
voting on issues on which Members are entitled to vote.

1.34 “Tax Distributions” is defined in Section 4.5.

1.35 “Treasury Regulations” shall mean, unless the context clearly indicates
otherwise, the regulations currently in force as final or temporary that have
been issued by the U.S. Department of Treasury or the Internal Revenue Service
pursuant to the Code.

1.36 “Two-Thirds Interest” shall mean one or more Percentage Interests of
Members which, taken together, exceed two-thirds ( 2/3) of the aggregate of all
Percentage Interests.

ARTICLE II

ORGANIZATION

2.1 Formation. Effective with the filing of the Articles described in
Section 2.5 on July 18, 2002, the Company was formed under its former name of It
Really Works, LLC.

2.2 Name. The name of the Company is now “NuGlow Cosmaceuticals, LLC.” The
business of the Company may be conducted under that name or, upon compliance
with applicable laws, any other name that the Manager deems appropriate or
advisable. The Manager shall file any fictitious name certificates and similar
filings, and any amendments thereto, that the Manager considers appropriate or
advisable.

2.3 Registered Agent; Other Offices. The registered agent for service of process
on the Company in the State of California or any other jurisdiction shall be
such Person or Persons as the Manager may designate from time to time. The
Company may have such other offices as the Manager may designate from time to
time.

2.4 Purposes. The purpose of the Company is to engage in any business and/or
activity for which limited liability companies may be formed under the Act. The
Company shall have all the powers necessary or convenient to effect any purpose
for which it is formed, including all powers granted by the Act.

2.5 Articles; Foreign Qualification. Company has executed and caused to be filed
with the Secretary of State of the State of California Articles of Organization
containing information required by the Act and such other information as the
Manager has deemed appropriate. Prior to the Company’s conducting business in
any jurisdiction other than California, the Manager shall cause the Company to
comply, to the extent those matters are reasonably within the control of the
Manager, with all requirements necessary to qualify the Company as a foreign
limited liability company in that jurisdiction. At the request of the Manager,
each Member shall execute, acknowledge, swear to, and deliver all certificates
and other instruments conforming with this Agreement that are necessary or
appropriate to form, qualify, continue, and terminate the Company as a limited
liability company under the laws of the State of California and to qualify,
continue, and terminate the Company as a foreign limited liability company in
all other jurisdictions in which the Company may conduct business, and to this
end the Manager may use the power of attorney described in this Agreement.

 

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2.6 Term. The Company commenced on the date the Articles were first properly
filed with the Secretary of State of the State of California and shall
perpetually continue in existence unless and until its business and affairs are
wound up and dissolved in accordance with this Agreement.

2.7 Operating Agreement. This Agreement shall supersede and replace in its
entirety the Original Agreement, which shall thereafter be void and of no
further force or effect, effective as of the date on which this Agreement is
executed by the Company, HXBM and Camden.

ARTICLE III

CAPITAL CONTRIBUTIONS

3.1 Members. The Members of the Company are the Persons who execute this
Agreement, including Persons who execute future amendments thereto that add
additional Members to the Company in accordance with this Agreement.

3.2 Initial Capital Contributions. In exchange for its Membership Interest, HXBM
shall make an initial Capital Contribution in the amount of $350,000.00 by wire
transfer to the Company in accordance with the Membership Interest Agreement
entered into among Camden, HXBM and the Company of even date herewith. Such
Capital Contribution shall satisfy HXBM’s obligation to make a Capital
Contribution on the date of this Agreement as shall be set forth in the initial
Budget. Camden, formerly the sole Member, shall make no further Capital
Contribution at the time of HXBM’s initial Capital Contribution. The initial
Capital Accounts of the two Members shall be determined in accordance with
Section 3.5(c).

3.3 Annual Budget.

(a) No later than November 1 of each calendar year commencing November 1, 2010,
the Manager shall prepare and deliver to the Members for their review and
approval a proposed budget and projected cash flow statement for the Company for
the following calendar year in the form and containing the information
previously approved by a Majority Interest (each, a “Budget”).

(b) If by the first day of any calendar year commencing January 1, 2011, a
Budget for such calendar year shall not have been approved by the Members, then
the Budget in effect for the preceding calendar year, as adjusted by the Manager
to reflect increases of each expense item by up to 5% (to account for increases
in the Consumer Price Index) (other than extraordinary nonrecurring expenses
approved by a Majority Interest, , or any recurring expense which is the subject
of a contractual commitment of the Company which provides for no increase or an
increase of other than up to 5%, in which case, the increase, if any, shall be
in accordance with such contract), shall be deemed to be the approved Budget for
the then-current calendar year.

 

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3.4 Additional Capital Contributions.

(a) If any Budget approved by the Members shows a deficit for the coming
calendar year (a “Deficit”), the Manager shall distribute to each Member a
certificate (the “Budget Certificate”) stating (i) the amount of the Deficit, if
any, to be funded through additional Capital Contributions from the Members,
(ii) when the additional Capital Contributions must be made (the “Funding
Dates”), (iii) the amount of the additional Capital Contributions required to be
made on each such Funding Date and (iv) each Member’s share of those additional
Capital Contributions on each such Funding Date, which shall be based on each
Member’s Percentage Interest (and which shall be payable in accordance with this
Article III).

(b) The Members shall be required to make additional Capital Contributions to
fund a Deficit on the terms set forth in this Article III.

(c) The Manager shall be required to obtain the approval of the Members by a
Majority Interest prior to amending any Budget then in effect during any
calendar year (including any change in additional Capital Contributions required
to fund a Deficit) and shall thereupon promptly cause to be issued a revised
Budget Certificate for such calendar year (or remainder thereof). Each Member
shall make all additional Capital Contributions as and when called for by any
Budget Certificate as in effect from time to time on the terms set forth in this
Article III. If a Member objects to making such additional Capital Contributions
or otherwise fails to make such additional Capital Contributions, then the
Manager’s and Company’s remedies shall be as set forth in this Article III.

(d) All Capital Contributions shall be made in U.S. dollars.

(e) If any new Member fails to make the full amount of its initial Capital
Contribution, as required by any amendment to this Agreement adding a new
Member, within 5 calendar days after the execution of said amendment, the
Manager shall have the right to declare said amendment void at any time
thereafter until the new Member’s initial Capital Contribution has been paid. In
the event that such a Member has made part, but not all, of said Member’s
initial Capital Contribution, the Company shall refund the portion of the
Capital Contribution that was made before the amendment adding said Member was
declared void by the Manager.

 

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(f) If any Member objects to contributing an additional Capital Contribution, or
otherwise fails to contribute its share of additional Capital Contributions when
due (an “Unpaid Contribution”), that Member shall be a “Non-paying Member” and
shall be in default under this Agreement. In such event, the Manager shall send
the Non-paying Member written notice of such nonpayment, giving such Non-paying
Member thirty (30) days from the date such notice is given to contribute the
entire amount of such Non-paying Member’s required additional Capital
Contribution. If the Non-paying Member does not contribute the required
additional Capital Contribution to the Company within said 30-day period, those
Members who have paid their respective additional Capital Contributions
(“Complying Members”) and who hold a majority of the Membership Interests held
by all Complying Members shall choose one of the following options to enable the
Company to proceed with the full amount of additional funds needed to meet the
Budget on which the requirement of additional Capital Contributions was based:

(i) Additional Capital Contributions by Complying Members. The Complying
Members, or so many of them as consent to do so, may contribute additional
Capital Contributions to the Company to cover the Unpaid Contribution, with all
Members’ Capital Accounts to be adjusted as follows: All other Members shall
have the right to replace the Unpaid Contribution by contributing more than
their share of additional Capital Contribution in proportion to their respective
Percentage Interests. If any Member or Members replaces the Unpaid Contribution,
then Percentage Interests shall be adjusted as set forth in this
Section 3.4(f)(i). The Percentage Interest of the Non-paying Member shall be
reduced by the number of percentage points determined by the following formula:
Reduction = (Unpaid Contribution/total initial Capital Contributions)
x 50 x 1.2. The result shall be rounded to the nearest one-hundredth of a
percentage point. The Percentage Interests of the Complying Member or Members
who have replaced the Unpaid Contribution shall be increased by the same amount,
apportioned among them according to the shares of the Unpaid Contribution each
of them has replaced. For example, assume that total initial Capital
Contributions were $4,000,000, that additional Capital Contributions are called
for in the amount of $1,000,000, that a Member’s Percentage Interest is 10% and
that the Member’s share of the additional Capital Contribution is therefore
$100,000, and that the Member’s actual additional Capital Contribution is $0.
The Non-paying Member’s Unpaid Contribution would therefore be $100,000, and the
reduction in the Non-paying Member’s Percentage Interest would be
($100,000/$4,000,000) x 50 x 1.2 = 1.50 percentage points. The Non-paying
Member’s Percentage Interest would therefore be reduced to 8.50% [i.e., 10% -
1.50% = 8.50%], and the Percentage Interests of those Complying Members who have
replaced the Unpaid Contribution would be increased by such amount (divided
among them according to the portions of the Unpaid Contribution they have
provided). All adjustments to Percentage Interests shall take effect as of the
first day of the month in which the Unpaid Contribution was due. Adjustments to
Percentage Interests shall not affect the obligations of Members to make
additional Capital Contributions, which shall continue to be in proportion to
their Percentage Interests. In the event that either Camden’s or HXBM’s
percentage interest is reduced under this option, then the purchase and
repurchase options pursuant to Sections 9.9(a) and (b) shall become options to
purchase or repurchase whatever percentage interest that either Camden or HXBM
holds in the Company as a result of this adjustment, and the option price to be
paid upon exercise thereof shall be adjusted pro rata to reflect the adjustment
in the percentage interest thereby purchased.

(ii) Loans by Complying Members. In the alternative to additional Capital
Contributions pursuant to Section 3.4(f)(i), the Complying Members, or so many
of them as consent to do so, may advance funds to the Company to cover those
amounts which the Non-paying Member fails to contribute. Amounts which a
Complying Member so advances on behalf of the Non-paying Member shall become a
loan due and owing from the Non-paying Member to such Complying Member(s). All
Distributable Cash otherwise distributable to the Non-paying Member under this
Agreement shall instead be paid to the Complying Members making such advances
until such advances and interest thereon are paid in full. In any event, each
such advance shall be due and payable with interest by the Non-paying Member
five (5) years from the date that such advance was made. Any amounts repaid
shall first be applied to interest and thereafter to principal. Effective upon a
Member becoming a Non-paying Member, the Non-paying Member hereby grants to the
Complying Members who advance funds under this Section 3.4(f)(ii) a security
interest in the Non-paying Member’s Economic Interest enforceable under the
California Uniform Commercial Code to secure the Non-paying Member’s obligation
to repay such advances; and the Non-paying Member hereby authorizes the
Complying Members who advance such funds to file one or more U.C.C. financing
statements with the California Secretary of State, either individually or
together, to perfect the aforementioned security interest under the California
Uniform Commercial Code.

 

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(g) Each Member acknowledges and agrees that the remedies described in this
Section 3.4 bear a reasonable relationship to the damages which the Members
estimate may be suffered by the Company and the Complying Members by reason of
the failure of a Non-paynigMember to make an additional Capital Contribution and
that the election of any or all of the above described remedies is not
unreasonable under the circumstances existing as of the date hereof.
Furthermore, the election of the Complying Members to pursue any remedy provided
in this Section 3.4 shall not be a waiver or limitation of the right to pursue
an additional or different remedy available hereunder or of law or equity with
respect to any subsequent default.

3.5 Capital Accounts.

(a) The Company shall establish an individual Capital Account for each Member
and shall determine and maintain each such Capital Account in accordance with
this Article III and Treasury Regulations Section 1.704-1(b)(2)(iv).

(b) If a Member transfers all of the Member’s Membership Interest in accordance
with this Agreement, such Member’s Capital Account attributable to the
transferred Membership Interest shall carry over to the new owner of such
Membership Interest pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(k)(1).

(c) As of the date of this Agreement, the initial Capital Account of HXBM shall
equal its initial Capital Contribution of $350,000.00, and the initial Capital
Account of Camden shall equal $816,667.00, which the parties agree is the Fair
Market Value of the Company Property immediately prior to HXBM’s initial Capital
Contribution. For income tax purposes only, Camden shall be treated as having
contributed such Company Property to the Company in exchange for its Membership
Interest and shall be subject to the tax allocation rules of Section 4.3 hereof
with respect to any item of income, gain, loss or deduction attributable to such
Company Property.

3.6 Interest. No Member shall be entitled to receive any interest on the
Member’s Capital Contributions; provided, however, any loans from Members to the
Company shall bear simple interest at the rate of 10% per annum, unless Members
holding a Two-Thirds Interest agree to a different rate of interest.

 

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ARTICLE IV

CAPITAL ACCOUNT ALLOCATIONS AND DISTRIBUTIONS

4.1 Capital Accounts.

(a) A Capital Account shall be maintained for each Member in accordance with the
rules of Treasury Regulations Section 1.704-1(b) (2) (iv). The Capital Account
of each Member shall be credited with (i) the amount of any Capital Contribution
made in cash by such Member, (ii) the Agreed Value (net of any liabilities the
Company is considered to assume or take subject to under Section 752 of the
Code) of any Capital Contribution made in property other than cash by such
Member, (iii) allocations to such Member of Net Income pursuant to Section 4.2,
and (iv) any other item required to be credited for proper maintenance of
capital accounts by the Treasury Regulations under Section 704(b) of the Code. A
Member’s Capital Account shall be debited with (w) the amount of any cash
distributed to such Member, (x) the Agreed Value (net of liabilities that such
Member is considered to assume or take subject to under Section 752 of the Code)
of any property other than cash distributed to such Member, (y) allocations to
such Member of Net Loss pursuant to Section 4.2, and (z) any other item required
to be debited for proper maintenance of capital accounts by the Treasury
Regulations under Section 704(b) of the Code. Each Member’s Capital Account
shall be adjusted as required by Treasury Regulation
Section 1.704-1(b)(2)(iv)(f) to reflect a revaluation of Company Property at
Agreed Value upon the occurrence of any event described in Treasury Regulations
Section 1.704-1(b) (2) (iv) (f) (5) (i), (ii) or (iii).

(b) In the event that all or any portion of any Membership Interest is Disposed
of in accordance with this Agreement, the transferee(s) of such Membership
Interest shall succeed to all or the corresponding portion, as the case may be,
of the transferor’s Capital Account.

4.2 Allocation of Net Income and Net Loss.

(a) Except as otherwise provided in Sections 4.2(b) through (h), Net Income and
Net Loss shall be allocated to the Members as follows:

(i) First, Net Income shall be allocated to offset in reverse order any Net Loss
allocated in the current period and in all prior periods that have not
previously been offset under this Section 4.2;

(ii) Next, Net Income shall be allocated 70% to HXBM and 30% to Camden until
such time as HXBM has received total cumulative distributions (excluding any Tax
Distributions) that equal HXBM’s initial Capital Contribution;

(iii) Next, Net Income shall be allocated among all Members in proportion to
their respective Percentage Interests;

(iv) In the event of a Net Loss, the Net Loss shall be allocated first as
necessary to offset in reverse order any Net Income allocated in the current and
all prior periods that have not previously been offset or distributed to the
Members;

(v) Next, any Net Loss shall be allocated among all Members in proportion to
their respective Percentage Interests.

 

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(b) If there is a net decrease in Company Minimum Gain during a Company taxable
year, each Member shall be specially allocated items of income and gain for such
year (and, if necessary, for subsequent years) in proportion to, and to the
extent of, an amount equal to the portion of such Member’s share of the net
decrease in Company Minimum Gain during such year (which share of such net
decrease shall be determined under Treasury Regulations Section 1.704-2(g)(2)).
It is intended that this Section 4.2(b) shall constitute a “minimum gain
chargeback” described in Treasury Regulations Section 1.704-2(f).

(c) If there is a net decrease during a Company taxable year in the Minimum Gain
Attributable to a Member Nonrecourse Debt (as determined under Treasury
Regulations Section 1.704-2(i)(3)), any Member with a share of Minimum Gain
Attributable to such Member Nonrecourse Debt at the beginning of such year shall
be specially allocated items of income and gain for such year (and, if
necessary, for subsequent years) in proportion to, and to the extent of, an
amount equal to the portion of such Member’s share of the net decrease in
Minimum Gain Attributable to such Member Nonrecourse Debt (as determined under
Treasury Regulations Section 1.704-2(g)(2)) during such year. It is intended
that this Section 4.2(c) shall constitute a “minimum gain chargeback” described
in Treasury Regulations Section 1.704-2(i)(4).

(d) Items of Company loss, deduction or Section 705(a)(2)(B) Expenditure that
are attributable to a Member Nonrecourse Debt (“Member Nonrecourse Deductions”)
shall be allocated among the Members who bear the Economic Risk of Loss for such
Member Nonrecourse Debt. This provision is to be interpreted in a manner
consistent with the requirements of Treasury Regulations Section 1.704-2(i)(1).

(e) The Nonrecourse Deductions for each taxable year shall be allocated among
the Members in proportion to their respective Percentage Interest.

(f) In the event that any Member unexpectedly receives any adjustments,
allocations or distributions described in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or
1.704-1(b)(2)(ii)(d)(6), items of Company income and gain shall be specially
allocated to such Member in an amount and manner sufficient to eliminate, to the
extent required by the Treasury Regulations promulgated under Section 704(b) of
the Code, the deficit balance, if any, in its Adjusted Capital Account created
by such adjustments, allocations or distributions as quickly as possible. This
provision is intended to be a “qualified income offset” described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d) and is to be interpreted in a manner
consistent therewith.

(g) To the extent that an adjustment to the adjusted tax basis of any Company
Property pursuant to Code Section 734(b) or Code Section 743(b) is required,
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Treasury
Regulations Section 1.704-(b)(2)(iv)(m)(4), to be taken into account in
determining Capital Accounts as a result of a distribution to a Member, the
amount of such adjustment to the Capital Accounts shall be treated as an item of
gain (if the adjustment increases the basis of the Company Property) or loss (if
the adjustment decreases the basis of the Company Property), and such gain or
loss shall be allocated to the Members in accordance with Treasury Regulations
Section 1.704-1(b)(2)(iv)(m)(2) or Treasury Regulation
Section 1.704-1(b)(2)(iv)(m)(4), as the case may be.

 

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(h) In the event that any item of Company income, gain, loss, deduction or
Section 705(a)(2)(B) Expenditure is allocated pursuant to Sections 4.2(b)
through (g), subsequent items of Company income, gain, loss, deduction or
Section 705(a)(2)(B) Expenditure (as determined for purposes of computing Net
Income or Net Loss) shall, to the extent consistent with Sections 4.2(b) through
(g), be allocated between the Members so as to eliminate as quickly as possible
on a proportionate basis, with respect to each Member, any disparity between
(i) the sum of (x) such Member’s Capital Account balance and (y) such Member’s
share of Company Minimum Gain and Minimum Gain Attributable to Member
Nonrecourse Debts determined in accordance with Treasury Regulations
Section 1.704-2(g) and (i)(5) and (ii) the Capital Account which such Member
would have had if all Company Minimum Gain and Minimum Gain Attributable to any
Member Nonrecourse Debt had been realized and all allocations of Net Income and
Net Loss had been made pursuant to Section 4.2(a) (without giving effect to the
reference therein to Sections 4.2(b) through (h)).

(i) In the event that the Percentage Interest of the Members shall change
pursuant to the terms of this Agreement, there shall be an interim closing of
the books of the Company as of the close of the day of such change (the
“Interest Change Date”). The Net Income or Net Loss of the Company for the
period ending on the Interest Change Date shall be allocated to the Members in
accordance with their respective Percentage Interest in effect prior to the
Interest Change Date. The Net Income or Net Loss of the Company for any period
commencing after the Interest Change Date shall be allocated to the Members in
accordance with their respective Percentage Interest in effect after the
Interest Change Date. Notwithstanding the foregoing, if the Interest Change Date
is not the last day of a month, Net Income or Net Loss of the Company for the
month in which the Interest Change Date occurs shall be prorated on a daily
basis between the portion of the month ending on the Interest Change Date and
the remainder of such month.

4.3 Tax Allocations. For income tax purposes, all items of income, gain, loss,
deduction and credit shall be allocated among the Members in the manner set
forth in Section 4.2; provided, however, that (i) all items of income, gain,
loss and deduction with respect to any property contributed to the Company by a
Member (or revalued pursuant to the last sentence of Section 4.1(a)) shall be
allocated for income tax purposes so as to take into account any variation
between the adjusted tax basis of such property and its Agreed Value at the time
of contribution (or the event requiring revaluation) in accordance with
Section 704(c) of the Code (and Treasury Regulations
Section 1.704-1(b)(2)(iv)(f) and the remedial method described in Treasury
Regulations Section 1.704-3(d)); (ii) any gain arising from a Disposition of
Company Property that is characterized as ordinary income pursuant to
Section 1245 or 1250 or any other applicable provision of the Code shall, to the
extent that other items can be allocated in such a way that this proviso does
not affect the total amount of taxable income or loss allocable to any Member
for tax purposes, be allocated to the Members who were allocated the
depreciation or other deductions giving rise to such ordinary income in
proportion to the deductions allocated to such Members (treating any such
deductions allowable to any Member or Affiliate thereof for any period during
which the Company Property was held by such Member or Affiliate as deductions
allocable to such Member); and (iii) creditable foreign taxes shall be allocated
in accordance with Treasury Regulations Section 1.704-1(b)(4)(viii). Any
increase (or decrease) in taxable income or loss resulting from adjustments to
the basis of Company Property made pursuant to Section 743 of the Code shall be
taken into account by the Member or Members to which such adjustment is
attributable.

 

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4.4 Distributions. Subject to applicable law and any limitations contained
elsewhere in this Agreement:

(a) In the case of the liquidation or dissolution of the Company, the Manager
shall cause the Company to pay distributions in accordance with Section 10.2.

(b) For distributions other than those paid under Section 4.4(a) and Tax
Distributions, the Manager shall distribute any Distributable Cash to the
Members as follows: (i) until such time as HXBM has received total cumulative
distributions (excluding any Tax Distributions) that equal HXBM’s initial
Capital Contribution, 70% of such Distributable Cash shall be distributed to
HXBM and 30% of such Distributable Cash shall be distributed to Camden; and
(ii) thereafter, Distributable Cash shall be distributed to the Members in
accordance with each Member’s Percentage Interest.

4.5 Tax Distributions. If, after taking into account the distributions in
Section 4.4(b), any Member has not received cash distributions for a given
calendar year in an amount at least equal to the amount of taxes which will be
owing by such Member on account of Net Income allocated to such Member for such
year, the Manager shall cause the Company to make distributions to such Members
no later than April 1 following such calendar year in a sufficient amount to
cover such taxes if such distributions can reasonably be made without resulting
in a breach of the Company’s contractual obligations (any such distributions
being referred to herein as “Tax Distributions”). If such Tax Distributions
cannot be made in full by said date, the Manager shall cause such Tax
Distributions to be made as soon as reasonably possible without resulting in a
breach of the Company’s contractual obligations. The amount of Tax Distribution
to any Member for any calendar year shall equal the product of the Effective Tax
Rate and the Net Taxable Income allocated to such Member for such calendar year.
For this purpose:

(a) The “Effective Tax Rate” shall initially be the maximum applicable Federal
ordinary income tax rate as reasonably determined by the Manager. If the Company
recognizes long-term capital gain in a given year, the Manager shall compute the
Tax Distributions for such year by applying the Effective Tax Rate to the
ordinary taxable income allocated to the Members and by applying Federal capital
gains tax rates, as reasonably determined by the Manager, to the long-term
capital gains allocated to the Members.

(b) The “Net Taxable Income” of the Company for a calendar year shall be the
aggregate amount of taxable income allocated to the Members on the Company’s
Federal income tax return for such year, reduced by the amount of taxable losses
allocated to the Members in prior calendar years and not previously offset by
taxable income in computing Net Taxable Income in a prior tax year.

 

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(c) The Manager shall cause the Company to make estimated Tax Distributions to
the Members on a quarterly basis, prior to the times that estimated tax payments
are payable by the Members, when such Tax Distributions can reasonably be made
without detrimentally affecting the Company’s ability to meet its contractual
obligations and without otherwise detrimentally affecting the Company’s
day-to-day business transactions. If such estimated Tax Distributions are in
excess of the amount of Tax Distributions ultimately determined to be due for a
calendar year, Tax Distributions for future years shall be reduced by the amount
of such excess.

4.6 Tax Withholding. The Manager is authorized to make all income tax
withholdings and payments required by the Code or by any applicable state or
local law, including but not limited to all applicable foreign investor tax
withholding. All sums withheld from any Member for payment to any governmental
tax authority (federal, state, local or international) shall be included in the
calculation of the amount distributed to said Member in the same manner as if
paid directly to the Member.

ARTICLE V

MANAGEMENT AND OPERATION

5.1 Management of the Company by Manager. Subject to the provisions of this
Article to the contrary, the business, property and affairs of the Company shall
be managed by the Manager. Except for situations in which the approval of the
Members is expressly required by this Agreement or as otherwise provided herein,
the Manager shall have full, complete and exclusive authority, power, and
discretion to manage and control the business, property and affairs of the
Company, to make all decisions regarding those matters, and to perform any and
all other acts or activities customary or incidental to the management of the
Company’s business, property and affairs.

5.2 Agency Authority of Manager. Subject to the provisions of this Article to
the contrary, the Manager is authorized to endorse checks, drafts, and other
evidences of indebtedness made payable to the order of the Company, but only for
the purpose of deposit into the Company’s accounts. All checks, drafts, and
other instruments obligating the Company to pay money may be signed by the
Manager, and the Manager is authorized to sign contracts and obligations on
behalf of the Company.

5.3 Election of Managers.

(a) Number, Term and Qualifications. The Company shall initially have one
Manager. The number of Managers of the Company may be changed from time to time
by the affirmative vote or written consent of Members holding a Majority
Interest, provided that in no instance shall there be less than one Manager.
Unless the Manager resigns or is removed, the Manager shall hold office until a
successor shall have been elected and qualified. Managers shall be elected by
the affirmative vote or written consent of Members holding a Majority Interest.
A Manager need not be a Member or an individual.

 

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(b) Resignation. The Manager may resign at any time by giving written notice to
the Members without prejudice to the rights, if any, of the Manager or the
Company under any contract to which that Manager is a party. The resignation of
any Manager shall take effect upon receipt of that notice or at such later time
as shall be specified in the notice; and, unless otherwise specified in the
notice, the acceptance of the resignation shall not be necessary to make it
effective. The resignation of a Manager who is also a Member shall not affect
that Manager’s rights as a Member and shall not constitute a withdrawal of a
Member. Any resignation shall be without prejudice to the rights, if any, of the
Company under any contract to which the Manager is a party.

(c) Removal. Any or all Managers may be removed, with or without cause, by the
affirmative vote or written consent of Members holding a Two-Thirds Interest. To
the extent the removal of the Manager is prohibited by a loan encumbering the
Company Property, the written consent of the lender shall first be procured. Any
removal of the Manager shall be without prejudice to any rights of the Manager
or the Company under any contract to which the Manager is a party, or, if the
Manager is a Member, to any rights of the Manager as a Member of the Company
under this Agreement.

(d) Vacancies. Any vacancy occurring for any reason in the position of Manager
may be filled by the affirmative vote or written consent of Members holding a
Majority Interest.

5.4 Powers of Manager. Without limiting the generality of Section 5.1, but
subject to the express limitations set forth in this Agreement, including but
not limited to Section 5.17, the Manager shall have all necessary powers to
manage and carry out the purposes, business and affairs of the Company,
including, without limitation, the power to exercise on behalf and in the name
of the Company all of the powers described in the Act.

5.5 Limitations on Power of Manager/Consent of Two-Thirds Interest. The Manager
shall not have authority to cause the Company to take any of the following
actions or engage in any of the following transactions without first obtaining
the affirmative vote or written consent of Members holding a Two-Thirds
Interest:

(a) Dissolve and wind up the Company;

(b) Institute proceedings to adjudicate the Company as bankrupt or consent to
the filing of a bankruptcy proceeding against the Company or file a petition or
answer or consent seeking reorganization of the Company under the United States
Bankruptcy Code or any other similar applicable federal, state or foreign law or
consent to the filing of any such petition against the Company or consent to the
appointment of a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of the Company or of its property, or make an assignment for the
benefit of creditors of the Company, or admit in writing the Company’s inability
to pay its debts generally as they become due;

(c) Merge or consolidate the Company with or into another Person (or engage in
any other transaction having substantially the same effect);

 

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(d) Take any action or consummate any other transaction described in this
Agreement as requiring the vote, consent, or approval of Members holding a
Two-Thirds Interest; or

(e) Take any action or consummate any other transaction which would make it
impossible to carry on the ordinary business of the Company;

provided, however, that until such time as HXBM has received total cumulative
distributions (excluding any Tax Distributions) that equal its initial Capital
Contribution, the Manager shall not have authority to cause the Company to enter
into or incur any obligation to pay salary, benefits, or other compensation to
Steven Sheiner or his spouse or to Camden or its members or to any Affiliate
thereof without first obtaining the express prior written consent of HXBM, and
after such time payment of or the incurrence of any obligation to pay any such
salary, benefits, or other compensation shall be limited by Section 5.13 of this
Agreement; and provided further, that at no time shall the Manager have
authority to cause the Company to take any of the following actions or engage in
any of the following transactions without first obtaining the express written
consent of HXBM:

(a) Incur any indebtedness;

(b) Approve any new Members or issue any new Membership Interests;

(c) Merge or consolidate the Company with or into another Person (or engage in
any other transaction having substantially the same effect) or consummate a sale
of substantially all of the Company’s assets; or

(d) Dissolve and wind up the Company.

5.6 Members Have No Managerial Authority. The Members shall have no power to
participate in the management of the Company except as expressly authorized by
this Agreement and except as expressly required by the Act. Unless expressly and
duly authorized in writing to do so by the Manager, no Member shall have any
power or authority to bind or act on behalf of the Company in any way, to pledge
its credit, or to render it liable for any purpose.

5.7 Performance of Duties; Liability of Manager.

(a) The Manager shall perform all managerial duties in good faith, in a manner
it reasonably believes to be in the best interests of the Company and its
Members, and with such care, including reasonable inquiry, as an ordinarily
prudent person in a like position would use under similar circumstances. The
Manager shall not have any liability solely by reason of being or having been a
Manager of the Company. In performing its duties, the Manager shall be entitled
to rely on information, opinions, reports, or statements, including financial
statements and other financial data, of any attorney, independent accountant, or
other licensed person as to matters which the Manager reasonably believes to be
within such person’s professional or expert competence, unless the Manager has
knowledge concerning the matter in question that would cause such reliance to be
unwarranted, and provided that the Manager acts in good faith and after
reasonable inquiry when the need therefor is indicated by the circumstances.

 

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(b) Neither the Manager nor the Company, in any way, guarantees the return of
the Members’ Capital Contributions or a profit for the Members from the
operations of the Company.

(c) Unless otherwise required by the Act, the Manager shall not be liable to the
Company or to any Member for any loss or damage sustained by the Company or any
Member, unless the loss or damage shall have been the result of a Manager’s
fraud. Any fiduciary duty or obligations imposed upon the Manager pursuant to
California Corporations Code Sections 16404(b) and 17153 are hereby waived
pursuant to California Corporations Code Section 17005. The Manager shall be
obligated to the Company and to each of the Members to act in accordance with
the business judgment rule and to exercise due care, good faith and loyalty
toward the Company and toward each of the Members. Delaware law shall apply
solely to construe the language of this contractual fiduciary duty.

5.8 Devotion of Time. The Manager is not obligated to devote all of its time or
business efforts to the affairs of the Company. The Manager shall devote
whatever time, effort, and skill as it reasonably deems necessary for the
operation of the Company.

5.9 Limited Liability. Except as required under the Act or as expressly set
forth in this Agreement, no Member shall be personally liable for any debt,
obligation, or liability of the Company, whether that liability or obligation
arises in contract, tort, or otherwise.

5.10 Admission of Additional Members. The Manager may admit additional Members
to the Company only upon the prior written consent of HXBM and Members holding a
Two-Thirds Interest. Any additional Members shall obtain Membership Interests
and shall participate in Net Profits, Net Losses, and distributions of the
Company on such terms as are determined by the Manager and approved by all of
the Members. Notwithstanding the foregoing, Substitute Members may only be
admitted in accordance with all requirements of this Agreement, and only Members
and Substitute Members shall participate in management decisions requiring a
vote or approval of the Members.

5.11 Withdrawal of Members. No Member may withdraw from the Company except to
the extent required by applicable law. Upon any purported withdrawal in
violation of this Section 5.11, the Member shall become an Economic Interest
Owner and shall no longer have a right to vote or participate in the management
of the business, property and affairs of the Company or to exercise any rights
of a Member. Notwithstanding the foregoing, if, in the determination of the
Manager, a withdrawal in violation of this Section 5.11 would cause the
termination of the Company under the Act or the Code, the purported or attempted
withdrawal shall be null and void and the Member shall remain a Member.

5.12 Transactions with the Company. Subject to any limitations set forth in this
Agreement and with the prior approval of the Manager, a Member (or an Affiliate
of a Member) may lend money to and transact other business with the Company.
Subject to other applicable law, such Member (or an Affiliate of a Member) has
the same rights and obligations with respect thereto as a Person who is not a
Member; provided, however, loans from Members shall bear simple interest at the
rate of 10% per annum, unless Members holding a Two-Thirds Interest agree to a
different rate of interest. Members shall not be required to make loans to the
Company; provided, however, to the extent the Manager determines loans from
Members are necessary or desirable, all Members shall be allowed to make loans
to the Company pro rata according to the Members’ respective Percentage
Interests.

 

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5.13 Remuneration to Manager and Members. Except as otherwise expressly
authorized pursuant to this Agreement, no Member or Manager in their capacity as
such is entitled to remuneration for services rendered to the Company except as
provided in any applicable Budget. Notwithstanding the Budget, no Member or
Manager in his/its capacity as such (or any member or Affiliate thereof,
including, without limitation, Steven Sheiner and his spouse) is entitled to
remuneration for their services to the Company until such time as HXBM has
received total cumulative distributions (excluding any Tax Distributions) that
equal its initial Capital Contribution, after which time the Manager in its
capacity as such (together with any member or Affiliate thereof, including,
without limitation, Steven Sheiner and his spouse) shall be entitled to receive
remuneration to the extent set forth in the Budget but not to exceed in the
aggregate for any given calendar year 20% of the Company’s annual Net Income for
such calendar year, which remuneration may be paid from time to time during such
calendar year based on the Manager’s good faith estimate of the Company’s annual
Net Income for such calendar year.

5.14 Members are Not Agents. The management of the Company is vested in the
Manager. No Member, acting solely in the capacity of a Member, is an agent of
the Company, nor can any Member in such capacity bind or execute any instrument
on behalf of the Company.

5.15 Voting Rights. Except as expressly provided in this Agreement, Members
shall have no voting, approval or consent rights. In all matters in which a
vote, approval or consent of the Members holding a Two-Thirds Interest is
required, the vote, consent or approval of Members holding a Two-Thirds Interest
shall be required to authorize or approve such act. In all other matters in
which a vote, approval or consent of the Members is required, except as
otherwise expressly provided herein, the vote, consent or approval of Members
holding a Majority Interest shall be required to authorize or approve such act.

5.16 Meetings of Members.

(a) Date, Time and Place of Meetings of Members; Secretary. Meetings of Members
may be held at such date, time and place as the Manager may fix from time to
time. No annual or regular meetings of Members is required. At any Members’
meeting, the Manager shall appoint a person to preside at the meeting and a
person to act as secretary of the meeting.

(b) Power to Call Meetings. Unless otherwise prescribed by the Act or by the
Articles, meetings of the Members may be called by the Manager, or upon written
demand of any Member for the purpose of addressing any matters on which the
Members may vote.

(c) Notice of Meeting. The Manager shall give written notice of a meeting of
Members to each Member not less than 10 nor more than 60 days before the date of
the meeting. The notice shall specify the place, date and hour of the meeting
and the general nature of the business to be transacted. No other business may
be transacted at this meeting. If the meeting is called upon written demand of a
Member, the Manager shall give written notice of the meeting at a time requested
by the person calling the meeting, not less than 10 days nor more than 60 days
after the receipt of the request. If the notice is not given within 20 days
after the receipt of the request, the Members entitled to call the meeting may
give the notice.

 

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(d) Manner of Giving Notice. Notice of any meeting of Members shall be given
either personally, by nationally-recognized overnight delivery service, or by
facsimile transmission, charges prepaid, addressed to the Member at the address
(or the facsimile transmission number) of that Member appearing on the books of
the Company or given by the Member to the Company for the purpose of notice. If
no address or facsimile transmission number of the Member appears on the books
of the Company, notice may be given to the Member at the principal office of the
Company. Notice shall be deemed to have been given at the time when delivered or
received by facsimile transmission.

(e) Validity of Action. Any action approved at a meeting, other than by approval
of Members holding a Two-Thirds Interest, shall be valid only if the general
nature of the proposal so approved was stated in the notice of meeting.

(f) Quorum. The presence in person or by proxy of Members holding a Majority
Interest shall constitute a quorum at a meeting of Members. The Members present
at a duly called or held meeting at which a quorum is present may continue to do
business until adjournment, notwithstanding the loss of a quorum, if any action
taken after loss of a quorum (other than adjournment) is approved by at least
Members holding at least a Majority Interest.

(g) Adjourned Meeting; Notice. Any Members’ meeting, whether or not a quorum is
present, may be adjourned from time to time by the vote of the majority of the
Membership Interests represented at that meeting, either in person or by proxy,
but in the absence of a quorum, no other business may be transacted at that
meeting, except as provided in this Article. When any meeting of Members is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place are announced at a meeting at which the
adjournment is taken, unless a new record date for the adjourned meeting is
subsequently fixed, or unless the adjournment is for more than 45 days from the
date set for the original meeting. At any adjourned meeting the Company may
transact any business which might have been transacted at the original meeting.

(h) Waiver of Notice or Consent. The actions taken at any meeting of Members
however called and noticed, and wherever held, have the same validity as if
taken at a meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy, and if, either before or after the
meeting, each of the Members entitled to vote, who was not present in person or
by proxy, signs a written waiver of notice or consents to the holding of the
meeting or approves the minutes of the meeting. Attendance of a person at a
meeting shall constitute a waiver of notice of that meeting, except when the
person objects, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened, and except that
attendance at a meeting is not a waiver of any right to object to the
consideration of matters not included in the notice of the meeting if that
objection is expressly made at the meeting. Neither the business to be
transacted nor the purpose of any meeting of Members need be specified in any
written waiver of notice.

 

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(i) Action by Written Consent Without a Meeting. Subject to Section 5.5, any
action that may be taken at a meeting of Members may be taken without a meeting,
if a consent in writing setting forth the action so taken is signed and
delivered to the Manager by Members having not less than the minimum number of
votes that would be necessary to authorize or take that action at a meeting at
which all Members entitled to vote on that action at a meeting were present and
voted. Any Member giving a written consent, or the Member’s proxy holders, may
revoke the consent by a writing received by the Manager before written consents
of the number of votes required to authorize the proposed action have been
filed. Unless the consents of all Members entitled to vote have been solicited
in writing, (i) notice of any Member approval (by less than unanimous written
consent) of an amendment to the Articles or this Agreement, a dissolution of the
Company, a merger of the Company or a sale of substantially all of the Company’s
assets, without a meeting shall be given at least 10 days before the
consummation of the action authorized by such approval, and (ii) prompt notice
shall be given of the taking of any other action approved by Members without a
meeting, if approved by less than unanimous written consent, to those Members
entitled to vote who have not consented in writing. Notwithstanding anything to
the contrary contained herein, a written consent must be signed by Members
holding a Two-Thirds Interest if consent of Members holding a Two-Thirds
Interest is required by any applicable provision of this Agreement for the
action thus taken.

(j) Telephonic Participation by Member at Meetings. Members may participate in
any Members’ meeting through the use of any means of conference telephones or
similar communications equipment as long as all Members participating can hear
one another. A Member so participating is deemed to be present in person at the
meeting.

(k) Proxies. Every Member entitled to vote for the Manager or on any other
matter shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the Manager. A
proxy shall be deemed signed if the Member’s name is placed on the proxy
(whether by manual signature, typewriting, telegraphic transmission, electronic
transmission or otherwise) by the Member or the Member’s attorney in fact. A
validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (i) revoked by the person executing it,
before the vote pursuant to that proxy, by a writing delivered to the Company
stating that the proxy is revoked, or by a subsequent proxy executed by, or
attendance at the meeting and voting in person by, the person executing the
proxy; or (ii) written notice of the death or incapacity of the maker of that
proxy is received by the Company before the vote pursuant to that proxy is
counted; provided, however, that no proxy shall be valid after the expiration of
11 months from the date of the proxy, unless otherwise provided in the proxy.
The revocability of a proxy that states on its face that it is irrevocable shall
be governed by the provisions of the Act. Notwithstanding the foregoing, a
Member who is initially present at a meeting in person or by telephone may give
an oral proxy to another person at the meeting in the presence of the other
Members present, which proxy shall be deemed revoked at the conclusion of the
meeting, as it may be continued from time to time.

5.17 Product Oversight Committee. Effective as of the date of this Agreement,
the Company shall establish an Oversight Committee (the “Committee”) comprised
of two (2) designees of HXBM (the “HXBM Designees”), initially Jack Clifford and
Robin Carmichael, and one (1) designee of Camden (the “Camden Designee”),
initially Steven Sheiner. In the event of any resignation or removal of any of
the HXBM or Camden Designees by HXBM or Camden, respectively, HXBM or Camden (or
their assignees or successors-in-interest) shall have the right to designate a
replacement HXBM or Camden Designee, as the case may be. The Committee shall be
responsible for:

(i) Reviewing the Company’s media plan and timelines for product rollout;

 

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(ii) Reviewing and approving the Company’s collateral marketing materials and
packaging changes;

(iii) Reviewing and agreeing upon product messaging and positioning;

(iv) Reviewing the Company’s product manufacturing timelines and rolling
forecasts; and

(v) Reviewing any new product categories that might be introduced (i.e., adding
complementary products as upsells).

For all items requiring review, approval, or agreement by the Committee,
approval and agreement shall not be unreasonably withheld. The Committee shall
have a maximum of five (5) business days to complete its review and approval
process of any given item. If the Committee has not given its response to the
Company within such period, then the Committee shall be deemed to have given its
approval and agreement. The dispute resolution procedures set forth in
Section 13.12 shall apply in the event of any disagreement with respect to the
Committee’s approval or disapproval of any given item.

ARTICLE VI

INFORMATION, INTELLECTUAL PROPERTY, AND TRADE SECRETS

6.1 Access to Books of Account. Subject to compliance with Section 6.2, each
Member shall have the right to (i) audit, examine and make copies of the books
of account of the Company, (ii) visit the facilities of the Company and
(iii) discuss the affairs of the Company with its officers, employees,
attorneys, accountants, customers and suppliers. Such right may be exercised
through any agent or employee of such Member designated by it, him or her or by
independent certified public accountants or counsel designated by such Member.
Each Member shall bear all expenses and out-of-pocket costs and expenses
incurred in any examination made for such Member’s account.

6.2 Trade Secrets. The Members acknowledge that, from time to time, they may
receive information from or regarding the Company in the nature of trade secrets
or that otherwise is confidential, the release of which is reasonably likely to
be materially damaging to the Company or Persons with which it does business
(“Confidential Information”). All recipes, cooking methods, techniques, names of
customers, and names of suppliers are Confidential Information of the Company.
Each Member shall hold in strict confidence and not use (except for matters
involving the Company) any Confidential Information such Member receives
regarding the Company and may not disclose it to any Person other than another
Member, except for disclosures (a) compelled by law (but the Member must notify
the Manager promptly of any request for that information, before disclosing it
if practicable), (b) to advisors or representatives of the Member or Persons to
which that Member’s Membership Interest may be Disposed as permitted by this
Agreement, but only if the recipients have agreed to be bound by the provisions
of this Section 6.2, or (c) of information that Member also has received from a
source independent of the Company that the Member reasonably believes obtained
that information without breach of any obligation of confidentiality. The
Members acknowledge that breach of the provisions of this Section 6.2 may cause
irreparable injury to the Company for which monetary damages are inadequate,
difficult to compute, or both. Accordingly, the Members agree that the
provisions of this Section 6.2 may be enforced by specific performance.

 

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6.3 Intellectual Property. All logos, slogans, product names, brand names, trade
dresses, trademarks, websites, advertisements, mottos, and designs invented,
authored or developed by any Member for use by the Company shall be Company
Property, except as otherwise agreed by such Member and the Company A. No Member
shall submit an application for trademarks, patents, or copyright registration
of any of the foregoing except with the Manager’s consent, and all such
applications shall state that the intellectual property was created by the
Member as an agent of the Company, such that the Company shall be the sole owner
of all such intellectual property rights. No intellectual property of the
Company shall be transferred, conveyed or assigned except upon a vote of the
Members holding a Two-Thirds Interest with the Manager’s consent. The Members
acknowledge that breach of the provisions of this Section 6.3 may cause
irreparable injury to the Company for which monetary damages are inadequate,
difficult to compute, or both. Accordingly, the Members agree that the
provisions of this Section 6.3 may be enforced by specific performance.

ARTICLE VII

TAXES

7.1 Tax Returns. The Manager of the Company shall, subject to the direction of
the Members, cause to be prepared and filed all necessary federal and state
income tax returns for the Company. Each Member shall furnish to the Company all
pertinent information in its possession relating to Company operations that is
necessary to enable the Company’s income tax returns to be prepared and filed.

7.2 Tax Elections. The Company shall be treated as a partnership for federal and
applicable state income tax purposes and the Manager shall have no authority to
elect to treat the Company as a corporation without the consent of all Members.
However, in the event that the Company again becomes a one-member limited
liability company, through the exercise of the purchase or repurchase option
pursuant to Section 9.9 of this Agreement or otherwise, then the Company shall
again be treated as a one-member limited liability company for tax purposes
without need for any amendment to this Agreement. The Company shall make the
following elections on the appropriate tax returns:

(a) to adopt the calendar year or other period as the Company’s fiscal year;

 

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(b) to adopt the accrual method of accounting and to keep the Company’s books
and records based on that method;

(c) to elect to amortize the organizational expenses of the Company under
Section 709(b) of the Code ratably over the shortest period permitted by
applicable law;

(d) the election under Section 754 of the Code; and

(e) any other election as determined by the Manager in its reasonable discretion
consistent with the terms and conditions of this Agreement.

7.3 Tax Matters Partner. The Manager shall be the “tax matters member” of the
Company pursuant to Section 6231(a)(7) of the Code.

ARTICLE VIII

BOOKS, RECORDS, REPORTS AND BANK ACCOUNTS

8.1 Maintenance of Books. The books of account for the Company shall be
maintained in accordance with sound business practices and with U.S. generally
accepted accounting principles (“GAAP”) consistently applied and the terms of
this Agreement, except that the Capital Accounts of the Members shall be
maintained in accordance with Article IV. The accounting year of the Company
shall end on December 31 of each year.

8.2 Reports. The officers of the Company shall cause to be prepared or delivered
such reports as the Manager shall deem appropriate. The Company shall bear the
costs of all these reports.

8.3 Accounts. The Company shall establish and maintain one or more separate bank
and investment accounts and arrangements for Company funds in the Company name
with financial institutions and firms that the Manager determines. The Company’s
funds shall not be commingled with the funds of the Manager or any Member.

8.4. Financial Statements.

(a) Annual Statements. As soon as practicable following the end of each fiscal
year, but in any event within 40 calendar days after the end of the fiscal year,
the Company shall prepare and deliver to each Member an audited balance sheet of
the Company as at the end of such fiscal year, and audited statements of income
(loss) and cash flows of the Company for such fiscal year, prepared in
accordance with GAAP and accompanied by the accountants’ report thereon.

(b) Other Information. At the request of any Member, the Company shall prepare
and deliver to each Member, as soon as practicable following such request, any
additional financial information and statements as such Member shall from time
to time reasonably request.

 

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ARTICLE IX

DISPOSITIONS OF INTERESTS

9.1 Restrictions on Transfer of Interests. No Member may transfer, assign,
convey, sell, exchange, encumber or in any way alienate (hereinafter in this
Article IX “transfer”) all or any portion of such Member’s Membership Interest,
whether now owned or later acquired, except pursuant to the provisions of this
Article IX. After the consummation of any transfer, the Membership Interest so
transferred shall continue to be subject to the terms and provisions of this
Agreement. Any further transfer of the Membership Interest must comply with the
terms and provisions of this Agreement, and any transferee of the Membership
Interest shall take subject to the restrictions on transfer imposed by
Section 5.10 and Article IX of this Agreement.

9.2 Further Restrictions on Transfer of Interests. In no event may any Member
transfer all or any portion of such Member’s Membership Interest (i) without
compliance with all requirements of this Agreement, (ii) if the Membership
Interest to be transferred, when added to all other Membership Interests
transferred in the 12 calendar months prior thereto, would cause a dissolution
of the Company under the Code, or (iii) if the transfer is prohibited by the
terms of any loan encumbering Company Property.

9.3 Permitted Transfers. Notwithstanding other restrictions set forth in this
Article IX, with the consent of the Manager, which consent shall not be
unreasonably withheld, conditioned or delayed, but subject to the restrictions
imposed by Section 9.2, (i) a Member who is a natural person may transfer all or
any portion of his or her Membership Interest to a revocable trust, limited
partnership, limited liability company or other entity created for the benefit
of the Member, or for the benefit of the Member and the Member’s spouse and/or
issue, provided that the Member retains a beneficial interest in and control of
the entity, and (ii) any Member may transfer all or any portion of such Member’s
Membership Interest to an Affiliate in which the Member retains a beneficial
interest and which is controlled by the Member. The failure to retain a
beneficial interest in and control of any such entity, because of death or
otherwise, shall be deemed a further transfer, which must comply with the
provisions of this Article IX.

9.4 Limitations on Transfers to Legal Representatives and Others. Upon (a) the
appointment of an executor, administrator, guardian, conservator, or other legal
representative for an individual Member, (b) the dissolution or termination of a
Member which is a corporation, limited liability company, trust, or other
entity, (c) the filing of an application by a Member for, or a Member’s consent
to, the appointment of a trustee, receiver, or custodian of the Member’s assets,
(d) the entry of an order for relief with respect to a Member in proceedings
under the United States Bankruptcy Code, (e) the making by a Member of a general
assignment for the benefit of creditors, (f) the entry of an order, judgment, or
decree by any court of competent jurisdiction appointing a trustee, receiver, or
custodian of the assets of a Member, (g) the involuntary transfer of a
Membership Interest to a creditor of a Member by attachment, execution of
judgment or similar legal proceeding, or (h) the entry of an order, judgment or
decree in a marital dissolution proceeding transferring, confirming or awarding
all or any portion of a Member’s Membership Interest to a spouse who is not
already a Member, neither the Member, nor the Member’s legal representative, nor
any transferee of the Member on account thereof, shall have the right to vote or
participate in the management of the business, property or affairs of the
Company or to exercise any rights of a Member, and the Member, legal
representative or transferee shall become an Economic Interest Owner and
thereafter shall only receive the share of the Company’s Net Profits, Net Losses
and distributions of the Company’s assets to which the Member would otherwise
have been entitled.

 

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9.5 Option to Purchase. Except as provided in Section 9.9 below (which shall
control in preference for this Section 9.5 whenever Section 9.9 shall be
applicable), on the happening of any of the following events (each a “triggering
event”), the Members, followed by the Company as to any Membership Interest not
purchased by the Members, shall have the option to purchase the Membership
Interest of the Member affected by the triggering event (the “Subject Member”):
(a) the death of an individual Member; (b) the termination of employment of an
individual Member who is an employee of the Company; or (c) the events described
in Section 9.4(a) through (h).

(a) Exercise of Option. Within 90 days after the Manager and other Members have
received actual notice of the triggering event (the “Exercise Date”), each
Member other than the Subject Member shall give written notice to the Manager
and the Subject Member, or the Subject Member’s legal representative or
transferee, that such Member elects to purchase all or a portion of the Subject
Membership Interest. The maximum percentage of the Subject Membership Interest
that a Member may purchase shall be the Member’s pro rata share calculated from
the Member’s Percentage Interest except as otherwise set forth in this
paragraph. The failure of any Member to submit a notice on or before the
Exercise Date shall constitute an election on the part of that Member not to
purchase any of the Subject Membership Interest. In the event any Member elects
to purchase less than all of the Member’s pro rata share of the Subject
Membership Interest, then the other Members may elect to purchase more than
their pro rata shares. If the Members fail to purchase the entirety of the
Subject Membership Interest, the Company may, but shall not be required to,
purchase any remaining portion of the Subject Membership Interest.

(b) Option Price. The purchase price of the Subject Membership Interest shall be
the “fair market value” of the Subject Membership Interest. The “fair market
value” means the cash price that a willing buyer would pay to a willing seller
when neither is acting under compulsion and when both have reasonable knowledge
of the relevant facts as of the date of the triggering event. The selling and
purchasing parties shall first use commercially reasonable efforts to mutually
agree upon the fair market value. If the parties are unable to agree on the fair
market value within 30 days after the Exercise Date, the fair market value shall
be determined pursuant to the mediation and arbitration provisions of this
Agreement.

(c) Close of Purchase. The fair market value of the Subject Membership Interest
as determined pursuant to Section 9.5(b) above shall be paid in cash at such
time as the parties agree, or otherwise within 90 days following the entry of a
final judgment confirming an arbitration award.

 

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9.6 Right of First Refusal. Except as provided in Section 9.9 below (which shall
control in preference for this Section 9.6 whenever Section 9.9 shall be
applicable), each time a Member proposes to voluntarily or gratuitously transfer
all or any portion of such Member’s Membership Interest, the Members, pro-rata,
followed by the Company, shall have a right of first refusal to purchase the
Membership Interest (the “Subject Membership Interest”) of the transferring
Member (the “Transferring Member”) in accordance with the following provisions:

(a) Notice of Intended Transfer. The Transferring Member shall first offer the
Subject Membership Interest to the other Members and the Company by delivering
to the other Members and the Company a written notice (the “Right of First
Refusal Notice”) stating (i) the Transferring Member’s bona fide intention to
transfer the Subject Membership Interest, (ii) the name and address of the
proposed transferee, (iii) the Membership Interest to be transferred (again, the
“Subject Membership Interest”), and (iv) the purchase price and terms of payment
for which the Transferring Member proposes to transfer the Subject Membership
Interest.

(b) Election to Purchase. Within 30 days after receipt of the Right of First
Refusal Notice (the “Exercise Date”), each Member other than the Subject Member
shall give written notice to the Manager and the Subject Member that such Member
elects to purchase all or a portion of the Subject Membership Interest. The
maximum percentage of the Subject Membership Interest that a Member may purchase
shall be the Member’s pro rata share calculated from the Member’s Percentage
Interest except as otherwise set forth in this paragraph. The failure of any
Member to submit a notice on or before the Exercise Date shall constitute an
election on the part of that Member not to purchase any of Subject Membership
Interest. In the event any Member elects to purchase less than all of the
Member’s pro rata share of the Subject Membership Interest, then the other
Members may elect to purchase more than their pro rata shares. If the Members
fail to purchase the entirety of the Subject Membership Interest, the Company
may, but shall not be required to, purchase any remaining portion of the Subject
Membership Interest.

(c) Purchase Price. The purchase of the Subject Membership Interest shall be
upon the price and terms of payment specified in the Right of First Refusal
Notice; provided, however, if the Right of First Refusal Notice provides for the
payment of non-cash consideration, the purchasing party or parties may elect to
pay the consideration in cash equal to the fair market value of the non-cash
consideration as of the Exercise Date. The selling and purchasing parties shall
first use commercially reasonable efforts to mutually agree upon the fair market
value of the non-cash consideration. If the parties are unable to agree on the
fair market value of the non-cash consideration within 30 days after the
Exercise Date, the fair market value shall be determined pursuant to the
mediation and arbitration provisions of this Agreement. Regardless of the terms
of the Right of First Refusal Notice, in no event shall the purchase price be
payable prior to the later of 90 days after the date of the Right of First
Refusal Notice or 90 days following the entry of a final judgment confirming an
arbitration award as to the fair market value of the non-cash consideration.

(d) Transfer if Option Not Exercised. If the Members, and/or the Company elect
not to purchase all of the Subject Membership Interest, then the Transferring
Member may transfer the Subject Membership Interest, or that portion not
purchased, as the case may be, to the proposed transferee, providing such
transfer (i) is completed within 180 days after the date of the Right of First
Refusal Notice, (ii) is made on terms no less favorable to the Transferring
Member than as designated in the Right of First Refusal Notice, and (iii) all
requirements Section 9.7 of this Agreement are satisfied by the purchaser. If
the Subject Membership Interest is not so transferred, the Transferring Member
must give a Right of First Refusal Notice in accordance with this Section prior
to any other or subsequent transfer of the Subject Membership Interest.

 

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9.7 Substitution of Members. A transferee of a Membership Interest shall have
the right to become a Substitute Member only if (i) the requirements of this
Article IX and applicable securities and tax laws are met, (ii) such Person
executes an instrument satisfactory to the Manager accepting and adopting the
terms and provisions of this Agreement, and (iii) such Person pays any
reasonable expenses in connection with admission as a new Member. The admission
of a Substitute Member shall not result in the release of the Member who
transferred the Membership Interest from any liability that such Member may have
to the Company. If the requirements of this Section 9.7 are not met, then the
transferee of a Membership Interest shall be only an Economic Interest Owner and
not a Member.

9.8 Transfers in Violation of Agreement. Upon any transfer of a Membership
Interest in violation of this Article IX, the transferee shall have no right to
vote or participate in the management of the business, property or affairs of
the Company or to exercise any rights of a Member. Such transferee shall only be
entitled to become an Economic Interest Owner and thereafter shall only receive
the share of the Company’s Net Profits, Net Losses and distributions of the
Company’s assets to which the Member would otherwise have been entitled.
Notwithstanding the foregoing, if, in the determination of the Manager, the
transfer would violate any provision of Section 9.2, the transfer shall be null
and void and the purported transferee shall become neither a Member nor an
Economic Interest Owner.

9.9 HXBM’s Option to Purchase/Camden’s Option to Repurchase.

(a) HXBM’s Purchase Option. At any time (i) after the second anniversary but
prior to the fifth anniversary of the date of this Agreement; (ii) upon the
resignation or termination of Steven Sheiner’s employment by the Company for any
reason; (iii) upon a merger or consolidation of Camden with or into another
Person or transfer of a majority-in-interest of Camden (or any other transaction
having substantially the same effect) or a sale of substantially all of Camden’s
assets; or (iv) in the event proceedings are instituted to adjudicate Camden as
bankrupt or Camden consents to the filing of a bankruptcy proceeding against it
or files a petition or answer or consent seeking reorganization under the United
States Bankruptcy Code or any other similar applicable federal, state or foreign
law or consents to the filing of any such petition against it or consents to the
appointment of a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of Camden or of its property, or makes an assignment for the benefit
of its creditors, or admits in writing its inability to pay its debts generally
as they become due, HXBM shall thereupon have the right to purchase from Camden
all of Camden’s Membership Interest for an aggregate purchase price payable in
immediately available funds equal to Camden’s Percentage Interest in the Company
multiplied by the Company Valuation. For purposes of this Section 9, the
“Company Valuation” shall equal ***.

 

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(b) Camden’s Repurchase Option. In the event that HXBM does not exercise its
purchase option described in Section 9.9(a), or at any time before HXBM
exercises its purchase option (i) upon a merger or consolidation of HXBM with or
into another Person (or any other transaction having substantially the same
effect) or a sale of substantially all of HXBM’s assets; or (ii) in the event
proceedings are instituted to adjudicate HXBM as bankrupt or HXBM consents to
the filing of a bankruptcy proceeding against it or files a petition or answer
or consent seeking reorganization under the United States Bankruptcy Code or any
other similar applicable federal, state or foreign law or consents to the filing
of any such petition against it or consents to the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of HXBM or of its
property, or makes an assignment for the benefit of its creditors, or admits in
writing its inability to pay its debts generally as they become due, Camden
shall thereupon have the right to repurchase from HXBM all of HXBM’s Membership
Interest for an aggregate purchase price payable in immediately available funds
equal to HXBM’s Percentage Interest in the Company multiplied by the Company
Valuation.

(c) Closing of Option Exercise. The purchase price payable by HXBM or Camden
pursuant to Section 9.9(a) or (b), respectively, shall be paid in cash at such
time as the parties agree, or otherwise within 90 days following receipt by the
other party of a written exercise notice delivered in connection therewith.

(d) Membership and Manager Approval. In the event of the exercise by HXBM or
Camden of its purchase option or repurchase option pursuant to Section 9.9(a) or
(b), respectively, all Members and the Manager shall be deemed to have approved
the resulting Membership Interest transfer such that the transferee’s Membership
Interest shall increase by the amount of transferor’s Membership Interest for
all purposes hereunder including but not limited to voting rights and
distribution of profits.

ARTICLE X

DISSOLUTION, LIQUIDATION, AND TERMINATION

10.1 Dissolution. The Company shall dissolve and its business and affairs shall
be wound up on the first to occur of the following:

(a) subject to the provisions of Section 5.5, upon a vote of the Members holding
a Two-Thirds Interest required pursuant to Section 5.5 of this Agreement; or

(b) any event causing dissolution of a limited liability company as described in
the Act.

10.2 Liquidation and Termination. On dissolution of the Company, the Manager
shall act as liquidator or may appoint one or more other Persons as liquidator.
The liquidator shall proceed diligently to wind up the affairs of the Company
and make final distributions as provided in this Agreement within the time
required by Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(2) (or any
successor thereto) if applicable. The costs of liquidation shall be borne as a
Company expense. Until final distribution, the liquidator shall continue to
operate the Company properties with all of the power and authority of the
Manager. The steps to be accomplished by the liquidator are as follows:

(a) As promptly as practicable after dissolution, and again after final
liquidation, the liquidator shall cause a proper accounting to be made by a
recognized firm of certified public accountants of the Company’s assets,
liabilities, and operations through the last day of the calendar month in which
the dissolution occurs or the final liquidation is completed, as applicable;

 

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(b) The liquidator shall pay from Company funds all of the debts and liabilities
of the Company (including, without limitation, all expenses incurred in
liquidation) or otherwise make adequate provision for them (including, without
limitation, the establishment of a cash escrow fund for contingent liabilities
in such amount and for such term as the liquidator may reasonably determine);

(c) The liquidator shall sell all Company Property; and

(d) All liquidation proceeds and any other remaining assets of the Company shall
be distributed to the Members and Economic Interest Holders as follows:
(i) first, 100% of such proceeds shall be paid to HXBM until such time as HXBM
has received total cumulative distributions (comprising both ordinary and
liquidating distributions, but excluding any Tax Distributions) that equal the
aggregate of HXBM’s initial and any additional Capital Contributions;
(ii) second, to the extent of the positive balance of each Member’s or Economic
Interest Holder’s Capital Account, as determined after taking into account all
Capital Account adjustments, including, but not limited to, adjustments in
connection with the liquidation, until each such Capital Account is reduced to
zero, and then (iii) the remainder, if any, in accordance with the Percentage
Interest of each Member or Economic Interest Holder, as applicable.

10.3 Termination. On completion of the distribution of Company Property as
provided in this Agreement, the Company is terminated, and the Manager (or such
other Person or Persons as the Act may require or permit) shall cause the
cancellation of the Articles and any filings made as provided in Section 2.5 and
shall take such other actions as may be necessary to terminate the Company.

10.4 Deficit Capital Accounts. Notwithstanding anything to the contrary in this
Agreement, upon a liquidation within the meaning of Section 1.704-1(b)(2)(ii)(g)
of the Treasury Regulations, if any Member or Economic Interest Holder has a
negative Capital Account balance (after giving effect to all Capital Account
adjustments for all taxable years, including the year during which such
liquidation occurs), such Member or Economic Interest Holder shall have no
obligation to make any Capital Contribution to the Company, and the negative
balance of such Member’s or Economic Interest Holder’s Capital Account shall not
be considered a debt owed by such Member or Economic Interest Holder to the
Company or to any other person for any purpose whatsoever.

 

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ARTICLE XI

REPRESENTATIONS AND WARRANTIES

11.1 Each Member hereby represents and warrants to each other Member and to the
Company as follows:

(a) Such Member has all requisite power, and if such Member is an individual,
such member is at least 21 years of age and legally competent, to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereunder; the consummation by such Member of the transactions
contemplated hereunder will not result in a breach or a violation of, or a
default under, any agreement or instrument by which such Member or any of such
Member’s properties is bound or any statute, rule, regulation, order or other
law to which such Member is subject, nor require the obtaining of any consent,
approval, permit or license from or filing with, any governmental authority or
other person by such Member in connection with the execution, delivery and
performance by such Member of this Agreement; and this Agreement constitutes
(assuming its due authorization and execution by the other Members) such
Member’s legal, valid and binding obligation and is enforceable against such
Member in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or moratorium or other similar
laws affecting the enforcement of creditors’ rights generally, and except to the
extent that equitable remedies, such as injunctive relief or specific
performance are within the discretion of courts of competent jurisdiction. If
such Member is a corporation, all corporate and other proceedings required to be
taken by such Member to authorize the execution, delivery and performance of
this Agreement have been taken.

(b) Such Member is acquiring such Member’s Membership Interest for investment
solely for such Member’s own account and not for distribution, transfer or sale
to others in connection with any distribution or public offering in violation of
federal or state securities laws.

(c) Such Member is financially able to bear the economic risk of an investment
in the Company and has no need for liquidity in this investment.

(d) Such Member has such knowledge, experience and skill in financial and
business matters in general and with respect to investments of a nature similar
to an investment in the Company so as to be capable of evaluating the merits and
risks of, and making an informed business decision with regard to, this
investment.

(e) Such Member (i) has received all information that such Member deems
necessary to make an informed investment decision with respect to an investment
in the Company and (ii) has had the unrestricted opportunity to make such
investigation as such Member desires pertaining to the Company and an investment
therein and to verify any information furnished to such Member.

 

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(f) Such Member understands that such Member must bear the economic risk of an
investment in the Company for an indefinite period of time because (i) the
Membership Interests have not been registered under the Securities Act or
applicable state securities laws and (ii) the Membership Interests may not be
sold, transferred, pledged or otherwise disposed of except in accordance with
this Agreement and then only if they are subsequently registered in accordance
with the provisions of the Securities Act and applicable state securities laws
or registration under the Securities Act and any applicable state securities
laws is not required.

(g) Such Member understands that the Company is not obligated to register the
Membership Interests for resale under the Securities Act of 1933, as amended
(the “Securities Act”), or any applicable state securities laws and that the
Company is not obligated to supply such Member with information or assistance in
complying with any exemption under the Securities Act or any applicable state
securities laws.

(h) Such Member, if it is a corporation or limited liability company, is duly
organized and validly existing under the laws of its jurisdiction of
organization and has all power and authority necessary to carry on its business
as it is now being conducted.

ARTICLE XII

EVENTS OF DEFAULT; CONSEQUENCES AND REMEDIES

12.1 Events of Default. An “Event of Default” means, with respect to any Member,
the occurrence of any of the following:

(a) the Disposition of all or any portion of such Member’s Membership Interest
except as permitted by this Agreement; provided, however, that no Event of
Default shall be considered to have occurred for 30 days following the
involuntary encumbrance of all or any part of such Membership Interest if during
such 30-day period such Member removes any such encumbrance, including, but not
limited to, by effecting the posting of a bond to prevent foreclosure where
necessary;

(b) the failure by any Member to comply with the provisions of Article III; or

(c) the failure by such Member to perform any other obligation to be performed
by such Member hereunder, or the violation by such Member of any other term or
condition hereof, which failure or violation continues for 15 business days
after written notice thereof from the Company or any other Member; provided,
however, that with respect to any failure or violation under this
Section 12.1(c) which is not a failure to pay money, if (i) such failure does
not constitute, and has not resulted from, the willful misconduct of such Member
or any of its Affiliates, (ii) such failure or violation is curable but is of
such a nature that it cannot reasonably be cured within such 15 business day
period, and (iii) such Member in good faith begins efforts to cure such failure
or violation within such 15 business day period and continues diligently to do
so, such Member shall have a reasonable additional period thereafter, not to
exceed 30 business days, to effect the cure.

 

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12.2 General Consequences. Upon the occurrence and during the continuance of an
Event of Default with respect to a Member (the “Breaching Member”), such
Breaching Member shall forfeit all rights to vote or consent to any action
required or permitted to be taken by Members (whether by law or otherwise) until
such time as such Event of Default is cured in full or waived by the
non-Breaching Members, and no other Event of Default with respect to such
Breaching Member has occurred and is continuing. In all other respects, a
Breaching Member shall continue to have all of the rights and obligations of the
non-Breaching Member under this Agreement and applicable law except to the
extent otherwise provided by Section 3.4(f) of this Agreement.

12.3 Other Remedies. Notwithstanding any provision of this Agreement and in
addition to any other remedy provided for herein (including but not limited to
the remedies allowed under Section 3.4(f) of this Agreement), upon the
occurrence of an Event of Default with respect to a Breaching Member, then the
Company and the non-Breaching Members shall be entitled to seek any remedy
available at law or inequity, including monetary damages or injunctive relief,
except that (a) neither the Company nor any non-Breaching Member shall be
entitled to recover any business losses, consequential damages or punitive
damages from any Breaching Member, and (b) if the Event of Default is a failure
to make a required Capital Contribution, Section 3.4(f) shall apply.

ARTICLE XIII

GENERAL PROVISIONS

13.1 Offset. Whenever the Company is to pay any sum to any Member, any amounts
that Member owes the Company may be deducted from that sum before payment.

13.2 Notices. All notices or other communications required or permitted to be
given under this Agreement shall be sufficiently given if in writing and
personally delivered, mailed by prepaid registered or certified mail, return
receipt requested, sent by nationally recognized overnight courier service (with
proof of delivery) or sent by facsimile transmission. Notices and other
communications shall be effective upon receipt by the Person to be notified. The
address for notices and other communications to a Member is the address given
for that Member on the signature pages hereof or such other address as that
Member may specify by notice to the other Members and the Company. Any notice or
other communication to the Company must be given to the Company at the address
set forth on the signature pages hereof or such other address as the Company may
specify by notice to the Members.

13.3 Entire Agreement. This Agreement sets forth the entire understanding and
agreement of the Members relating to the Company and supersedes and replaces any
prior understanding, agreement or statement (written or oral) of intent with
respect to the Company, including, without limitation, the Original Agreement
and that certain Memorandum of Understanding by and among the Company, HXBM and
Camden dated April 9, 2010. When any new Member signs any document accepting the
terms and provisions of this Agreement, then this Agreement shall likewise set
forth the entire understanding and agreement of the Members including said new
Member relating to the Company, and this Agreement shall supersede and replace
any prior understanding, agreement or statement (written or oral) of intent with
respect to the Company and said new Member.

 

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13.4 Effect of Waiver or Consent. A waiver or consent, express or implied to or
of any breach or default by any Person in the performance by that Person of its,
his or her obligations hereunder is not a consent or waiver to or of any other
breach or default in the performance by that Person of the same or any other
obligations of that Person hereunder. Failure on the part of a Person to
complain of any act of any Person or to declare any Person in default hereunder,
irrespective of how long that failure continues, does not constitute a waiver by
that Person of its his or her rights with respect to that default until the
applicable statute-of limitations period has run.

13.5 Amendment or Modification. This Agreement, the Articles, and other
organizational documents of the Company may be amended or modified from time to
time only by a written instrument executed by all of the Members.

13.6 Binding Effect. Subject to the restrictions on Dispositions set forth in
this Agreement, this Agreement is binding on and inures to the benefit of the
Members and their respective heirs, legal representatives, successors, and
assigns.

13.7 Remedies Cumulative. No remedy herein conferred upon any party is intended
to be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or otherwise. No single
or partial exercise by any party of any right, power or remedy hereunder shall
preclude any other or further exercise thereof.

13.8 Governing Law; Severability. EXCEPT AS OTHERWISE PROVIDED HEREIN, THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF
THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW
PROVISION OR RULE (WHETHER OF THE STATE OF CALIFORNIA OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF CALIFORNIA. In the event anyone or more of the provisions contained in
this Agreement should be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in .any way be affected or impaired thereby.

13.9 Further Assurances. In connection with this Agreement and the transactions
contemplated by it, each Member shall execute and deliver any additional
documents and instruments and perform any additional acts that may be necessary
or appropriate to effectuate and perform the provisions of this Agreement and
those transactions.

13.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single instrument.

 

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13.11 Third Party Beneficiaries. None of the provisions of this Agreement shall
be for the benefit of or enforceable by any third party, including, without
limitation, any creditor of either the Company or any Member. No such third
party shall obtain any right under any provision of this Agreement or shall by
reason of any such provision make any claim in respect of any debt, liability,
or obligation (or otherwise) against the Company or any Member.

13.12 Mediation and Arbitration.

(a) Urgent Matters. If an impasse is reached among the Members so that a
decision cannot be obtained by the requisite vote for any decision which a
Member or Manager believes in good faith must be made within 90 days in the best
interest of the Company; if a Member, Manager, former Member, or former Manager,
believes in good faith that its rights under this Agreement will suffer
irreparable harm if an order cannot be obtained within 90 days; or if a Member
or Manager believes in good faith that the Company’s best interest requires an
order of the Court reforming this Agreement or authorizing action within 90
days; then the Company, Member, Manager, former Member, or former Manager may
file a civil action in the Superior Court of San Diego County, California,
against the Company, any Member, the Manager, any former Member, or any former
Manager seeking a restraining order, preliminary injunction, or any other remedy
available under California law. If such an action is filed, then the Court shall
have authority to issue any order on ex parte application or motion upon good
cause shown why the matter should not await resolution in the course of an
arbitration hearing under the provisions of this Agreement. Filing such a civil
action shall not be deemed a waiver of the right to resolve disputes by binding
arbitration pursuant to this Agreement. The parties to any such action
(including the plaintiff or plaintiffs in the civil action) may file a motion to
compel arbitration of the dispute at any time within 6 months after any such
civil action is filed. If permitted by the Court, the parties to any such action
shall proceed with civil discovery for up to 6 months after such civil action is
filed, whether or not an arbitration proceeding is also pending related to the
matter in issue in the civil action, so as to enable the parties to obtain
discovery from non-parties to the arbitration through the civil subpoena process
for a limited time without waiving their right to arbitration.

(b) Negotiated Resolution. If any dispute (“Dispute”) arises (i) out of or
relating to, this Agreement or any alleged breach of this Agreement, or
(ii) with respect to any of the transactions or events contemplated by this
Agreement, the party desiring to resolve such Dispute shall deliver a notice of
the dispute (“Dispute Notice”) to the other parties to such Dispute. If any
party delivers a Dispute Notice pursuant to this Section, the parties involved
in the Dispute shall make a good faith effort to meet or confer by phone at
least twice within the thirty (30) day period commencing with the date of the
Dispute Notice and in good faith shall attempt to resolve such Dispute.

(c) Mediation. If any Dispute is not resolved or settled by the parties as a
result of negotiation pursuant to Section 13.12(b) above, the parties shall
submit the Dispute to non-binding mediation before a retired judge of a U.S.
District Court or California Superior, Appellate or Supreme Court, or some
similarly qualified, mutually agreeable individual. The parties shall bear the
costs of such mediation equally. Said mediation shall be completed within 60
days after the Dispute Notice, except that the parties may agree to extend the
time for completion of said mediation by written or oral agreement confirmed in
writing or confirmed by electronic transmission (e-mail).

 

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(d) Arbitration. Without regard to any mediation or lack thereof, any party with
an interest in the subject matter of the Dispute may file a demand for
arbitration at any time before the date on which the dispute is barred by the
applicable statute of limitations.

(i) The parties shall make a good faith effort to bring the Dispute to an
arbitration hearing as expeditiously as possible, taking into consideration the
subject matter of the dispute, the dollar amount in issue, and the amount of
discovery that may be reasonably necessary to a resolution of the dispute.
However, unless the urgency of the matter in dispute requires an expedited
decision, the arbitration hearing shall be held no sooner than the later of
(a) 60 days after the Dispute Notice or (b) seven calendar days after completion
of the mediation if the parties have agreed to a mediation date later than 60
days after the Dispute Notice.

(ii) The Dispute shall be resolved by binding arbitration conducted in San
Diego, California (or such other location as the parties to the Dispute may
unanimously agree) in accordance with the rules and procedures of Judicial
Arbitration and Mediation Services (“JAMS”) then in effect with respect to
commercial disputes. In the event that JAMS ceases to do business in the County
of San Diego, such that JAMS is no longer available to manage the arbitration;
and in the event that JAMS ceases to have rules applicable to commercial
disputes, then the demand for arbitration shall be filed with the American
Arbitration Association (“AAA”) and AAA rules applicable to commercial
arbitrations shall apply, with the provision that the arbitrator must be a
retired judge of a U.S. District Court or California Superior, Appellate or
Supreme Court, or some similarly qualified arbitrator, and that the arbitrator
need not be on the AAA panel of arbitrators to be selected or appointed as
arbitrator.

(iii) The arbitration shall be an impartial arbitrator with no conflicts of
interest. In the event the parties cannot agree to the appointment of an
arbitrator, an arbitrator shall be appointed in accordance with Section 1281.6
of the California Code of Civil Procedure (or any such similar or successor
statute that may exist at the time of the court order appointing an arbitrator).
The arbitrator thus appointed by the court shall be an arbitrator provided
through JAMS. In the event that a JAMS arbitrator is not available, then the
Court appointed arbitrator shall be a retired judge of a U.S. District Court or
California Superior, Appellate or Supreme Court, or some similarly qualified
arbitrator.

(iv) The arbitration shall allow for production of relevant documents and
depositions, and sanctions, at the discretion of the arbitrator, for failure to
comply with any such discovery requests, and such non-party discovery as may be
available through a concurrent civil action in the event that such a civil
action was filed pursuant to Section 13.12(a).

(v) The arbitration of all issues required by this Agreement to be arbitrated,
including the determination of any amount of damages suffered by any party
hereto by reason of the acts or omissions of any party, shall be final and
binding upon all parties.

 

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(vi) Except as otherwise set forth in this Agreement, the cost of any
arbitration hereunder, including the cost of the record or transcripts thereof,
if any, administrative fees, and all other fees involved, including reasonable
attorneys’ fees incurred by the party determined by the arbitrator to be the
prevailing party, shall be paid by the party determined by the arbitrator not to
be the prevailing party, or otherwise allocated in an equitable manner as
determined by the arbitrator.

(vii) The parties shall instruct the arbitrator to render its decision no later
than 30 days after the arbitration hearing.

13.13 Further Action. Each Member agrees to perform all further acts and to
execute, acknowledge and deliver any documents which may be reasonably
necessary, appropriate or desirable to carry out the provisions of this
Agreement.

13.14 No Presumption. With regard to each and every term and condition of this
Agreement and any and all agreements and instruments subject to the terms hereof
or referred to herein, the parties hereto understand and agree that the same
have or has been mutually negotiated, prepared and drafted, and if at any time
the parties hereto desire or are required to interpret or construe any such term
or condition or any agreement or instrument subject hereto, no consideration
shall be given to the issue of which party hereto actually prepared, drafted or
requested any term or condition of this Agreement or any agreement or instrument
subject hereto.

13.15 Expenses. Except as may otherwise be expressly provided herein, each
Member shall pay its own expenses (including legal, accounting, investment
banker, broker or finder’s fees) incident to the negotiation and execution of
this Agreement and the performance of its obligations hereunder and shall
indemnify and hold harmless the Company and the other Members from any of such
expenses.

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IN WITNESS WHEREOF, the undersigned have executed the Agreement as of the date
first set forth above.

 

NUGLOW COSMACEUTICALS, LLC By:  

/s/ Steven Sheiner

 

Name: Steven Sheiner

 

Title: Managing Member of Camden Street Partners, LLC, its Manager

 

COMPANY Address: COMPANY Telecopier:

 

Member: CAMDEN STREET PARTNERS, LLC     

70%

Percentage

Interest

 

By:  

/s/ Steven Sheiner

 

Name: Steven Sheiner

 

Title: Managing Member

 

Address:   Telecopier:  

 

Member: HELIX BIOMEDIX, INC.     

30%

Percentage

Interest

 

By:  

/s/ R. Stephen Beatty

 

Name: R. Stephen Beatty

 

Title: President and Chief Executive Officer

 

Address:   22118 20th Ave. SE, Suite 204   Bothell, WA 98021 Telecopier:  

 

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