EXHIBIT 10.30
OPERATING AGREEMENT
of
BIOMARIN/GENZYME LLC
dated as of September 4, 1998
TABLE OF CONTENTS
ARTICLE 1. FORMATION AND MEMBERSHIP 1
1.1 Formation 1
1.2 Members 1
1.3 Management 1
ARTICLE 2. OFFICES, NAME, ETC 2
2.1 Principal Office 2
2.2 Registered Office; Resident Agent 2
2.3 Name 2
2.4 Term 2
2.5 Business Ventures 2
ARTICLE 3. PURPOSES AND POWERS 2
3.1 Purpose 2
3.2 Powers 2
ARTICLE 4. MEMBERS AND THEIR CONTRIBUTIONS AND LOANS 2
4.1 Contributions 2
4.2 Capital Accounts 3
4.3 Loans 4
4.4 Additional Members 4
4.5 Liability of Members 4
4.6 Withdrawal of Members 4
ARTICLE 5. ALLOCATIONS 4
5.1 Certain Definitions 4
5.2 Allocations of Profit and Loss 6
5.3 Special Allocations 6
ARTICLE 6. DISTRIBUTIONS 8
6.1 Distribution of Company Funds 8
ARTICLE 7. INDEMNIFICATION 8
7.1 Indemnification of Members 8
7.2 Assignment 9
7.3 Substitute Members 9
7.4 Rights of Assignees 10
7.5 Other Restrictions 10
ARTICLE 8. FISCAL YEAR, ACCOUNTING, INSPECTION OF BOOKS 10
8.1 Fiscal Year and Accounting 10
8.2 Inspection of Books 10
ARTICLE 9. DISSOLUTION 10
9.1 Events of Dissolution 10
9.2 Consent to Continue Company 11
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9.3 Distribution Upon Dissolution 11
ARTICLE 10. GENERAL PROVISIONS 11
10.1 Complete Agreement; Modification 11
10.2 Governing Law; Severability 12
10.3 Notice 12
10.4 Headings 12
10.5 Successors and Assigns 12
10.6 Counterparts 12
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OPERATING AGREEMENT
OF
BIOMARIN/GENZYME LLC
THIS OPERATING AGREEMENT (the "Agreement") is made and adopted as of
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September 4, 1998 by and among Genzyme Corporation, a Massachusetts corporation
having its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Genzyme"), BioMarin Pharmaceutical Inc., a Delaware
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corporation having its principal place of business at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("BioMarin"), BioMarin Genetics, Inc., a Delaware corporation
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and a wholly-owned subsidiary of BioMarin having its principal place of business
at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Subsidiary") and such other
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persons who may become members of BioMarin/Genzyme LLC (the "Company") in
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accordance with law or the terms hereof (hereinafter collectively referred to as
the "Members" and individually as a "Member"). BioMarin and Subsidiary are
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hereinafter collectively referred to as the "BioMarin Companies." Capitalized
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terms used but not defined herein shall be given the same meaning as provided in
the Collaboration Agreement of even date herewith among the Company, BioMarin
and Genzyme (the "Collaboration Agreement").
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ARTICLE 1. FORMATION AND MEMBERSHIP
1.1 Formation. The Company has been organized as a limited liability
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company pursuant to the Delaware Limited Liability Company Act (the "Act"). The
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Act shall govern the rights and liabilities of the parties hereto except as
otherwise expressly stated herein.
1.2 Members. The sole initial Member of the Company was BioMarin.
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Following the execution and delivery of the Collaboration Agreement, BioMarin
assigned one percent (1%) of its interest in the Company to Subsidiary, and
Subsidiary was admitted as a Member of the Company. The Company elected under
Section 754 of the Internal Revenue Code of 1986, as amended ("IRC"), to apply
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the provisions of Sections 734(b) and 743(b) of the IRC. Thereafter, effective
upon execution and delivery of the Purchase Agreement of even date herewith by
and between BioMarin and Genzyme (the "Purchase Agreement"), BioMarin has sold
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and assigned to Genzyme a fifty percent (50%) interest in the Company (subject
to adjustment as provided herein and in Section 4.1 of the Collaboration
Agreement). Upon execution and delivery of this Agreement, BioMarin and
Subsidiary each hereby consent to the admission of Genzyme as a Member of the
Company and Genzyme is hereby admitted as a Member of the Company. Hence, the
Members of the Company are those persons listed on Schedule A attached hereto,
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as amended from time to time.
1.3 Management. Subject to the authority granted herein or in the
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Collaboration Agreement to the Members, the Company shall be managed by the
Steering Committee provided for in Section 8.2 of the Collaboration Agreement.
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ARTICLE 2. OFFICES, NAME, ETC.
2.1 Principal Office. The principal office of the Company shall be
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located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or such place
within the Commonwealth of Massachusetts as may be determined by the Members
from time to time. The Company shall maintain its records at such address.
2.2 Registered Office; Resident Agent. The name and address of the
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Company's registered agent for service of process in the State of Delaware shall
be Corporation Service Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-
1297. The name and address of the Company's registered agent for service of
process in the Commonwealth of Massachusetts shall be Genzyme Corporation, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The name and address of the
Company's registered agent for service of process in the State of California
shall be BioMarin Pharmaceutical Inc.,11 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
2.3 Name. The business of the Company shall be conducted under the
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name of "BioMarin/Genzyme LLC".
2.4 Term. The term of the Company shall commence upon the filing of
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the Certificate of Formation (the "Effective Date") and shall be perpetual until
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it is terminated as hereinafter provided.
2.5 Business Ventures. Subject to Section 2.2 of the Collaboration
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Agreement, any Member may engage independently or with others in other business
ventures of every nature and description, and neither the Company nor any Member
shall have any rights in and to such independent ventures or the income or
profits derived therefrom.
ARTICLE 3. PURPOSES AND POWERS
3.1 Purpose. The purpose of the Company is to: (i) develop and
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commercialize the Collaboration Products; (ii) act as a partner in limited
partnerships, general partnerships and limited liability partnerships, and as a
member of limited liability companies; and (iii) engage in any other business
permitted under the Act that the Members shall deem desirable or expedient.
3.2 Powers. The Company shall have all the powers necessary or
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convenient to the conduct, promotion or attainment of the business, trade,
purposes or activities of the Company, including, without limitation, all the
powers of an individual, partnership, corporation or other entity.
ARTICLE 4. MEMBERS AND THEIR CONTRIBUTIONS AND LOANS
4.1 Contributions.
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(a) Each Member has agreed with each other to contribute the (i)
amounts and/or property set forth in Sections 3.1, 3.2, 3.4, 4.1 and 4.2 of the
Collaboration Agreement. The cash and agreed value of any property contributed
by each Member as of the date hereof is set
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forth in Schedule A attached hereto.
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(b) Pursuant to the terms of the Collaboration Agreement, BioMarin,
on behalf of the BioMarin Companies, and Genzyme have undertaken to make monthly
Capital Contributions to the Company in the amounts specified therein. Such
undertakings regarding Capital Contributions are by and between, and shall
create rights and obligations between, BioMarin, on behalf of the BioMarin
Companies, and Genzyme only, and may not be relied upon or enforced by the
Company or any third parties, including without limitation creditors of the
Company or its members.
If either Genzyme or BioMarin (on behalf of the BioMarin Companies) fails
to make all or any portion of a monthly Capital Contribution, the other Member
may elect to make such Contribution (or a portion thereof). If either Genzyme
or BioMarin (on behalf of the BioMarin Companies) fails to make all or any
portion of a monthly Capital Contribution, the Percentage Interests (as defined
below) shall be adjusted to correspond to the percentage of cumulative Capital
Contributions made by or on behalf of each Member and subsequent monthly Capital
Contributions shall be made by the Members in proportion to their adjusted
Percentage Interests.
(c) No interest shall accrue on any Capital Contributions, and no
Member shall have the right to withdraw or to be repaid any capital it has
contributed, except as specifically provided in this Agreement.
(d) Each Member's percentage interest ("Percentage Interest") is as
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set forth in Schedule A hereto, subject to adjustment as provided in Section
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4.1(b) of this Agreement.
4.2 Capital Accounts. A separate account (a "Capital Account") shall
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be maintained for each Member and adjusted in accordance with Treasury
Regulation Section 1.704-1(b) as follows:
(a) There shall be credited to each Member's Capital Account the
amount of such Member's Capital Contribution as of the date, and to the extent,
that such Capital Contribution has been paid, and such Member's allocable share
of Net Profits (and any items in the nature of income or gain separately
allocated to such Member); and there shall be charged against each Member's
Capital Account the amount of all distributions to such Member and such Member's
allocable share of Net Losses (and any items in the nature of losses or
deductions separately allocated to such Member). Capital Contributions made by
or on behalf of the BioMarin Companies shall be credited to their Capital
Accounts in proportion to their relative Percentage Interests.
(b) If the Company at any time distributes any of its assets in kind
to any Member, the Capital Account of each Member shall be adjusted to account
for that Member's allocable share (as determined under Section 5.1) of the Net
Profits or Net Losses that would have been realized by the Company had it sold
the assets that were distributed at their respective fair market values
immediately prior to their distribution.
(c) In the event any Member's interest is transferred in accordance
with the terms of this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent
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it relates to the transferred interest.
4.3 Loans. The Members shall not make loans to the Company unless
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the Members unanimously agree in writing to make such loans.
4.4 Additional Members. Except as otherwise provided in Section 8.2
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below with respect to Substitute Members, additional Members may only be
admitted with the prior written unanimous approval of the Members. Such
additional Members shall execute and acknowledge a counterpart to this Agreement
or shall otherwise evidence in writing their agreement to be bound by the terms
hereof in such manner as the Members shall determine .
4.5 Liability of Members.
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(a) No Member shall be liable for the obligations of the Company
solely by reason of being a Member.
(b) No Member shall be required to make any contributions to the
capital of the Company other than as provided in this Article 4.
(c) No Member shall be personally liable to the Company or its other
Members for monetary damages for breach of fiduciary duty as a Member to the
extent permitted by applicable law; provided, however, that this provision shall
not eliminate the liability of a Member (i) for any breach of the Member's duty
of loyalty to the Company or its other Members, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law or (iii) for any transaction from which the Member derived an improper
personal benefit. No amendment to or repeal of this Section 4.5(c) shall apply
to or affect the liability or alleged liability of any Member for or with
respect to any acts or omissions of such Member occurring prior to such
amendment or repeal.
4.6 Withdrawal of Members. No Member shall have the right to withdraw
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from the Company or to demand a return of its capital interest at any time
except upon termination and dissolution of the Company, unless agreed to by the
unanimous written consent of the other Members.
ARTICLE 5. ALLOCATIONS
5.1 Certain Definitions. For purposes of this Agreement, the
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following terms shall have the meanings given them in this Article 5:
(a) "Adjusted Capital Account" for a Member means such Member's
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Capital Account (i) reduced by the net adjustments, allocations and
distributions described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
(5) and (6) which, as of the end of the Company's taxable year are reasonably
expected to be made to such Member, and (ii) increased by the sum of (A) the
amounts a Member is deemed obligated to restore pursuant to the penultimate
sentence of Treasury Regulation Sections 1.704-2(g)(1) or the penultimate
sentence of Treasury Regulation Section 1.704-2(i)(5), (B) the excess, if any,
of such Member's Capital Contribution over such Member's actual paid-in capital
contribution and (C) that portion of any indebtedness of the Company (other than
"partner nonrecourse debt" as defined in Treasury Regulation Section
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1.704-2(b)(4)) with respect to which the Member bears the economic risk of loss
that such indebtedness would not be repaid out of the assets of the Company if
all of the assets of the Company were sold at their respective book values as of
the end of the fiscal period and the proceeds from the sales together with any
amounts described in clause (B) above, were used to pay the liabilities of the
Company.
(b) "Net Profits" and "Net Losses" mean the taxable income or loss,
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as the case may be, for a period (or from a transaction) as determined in
accordance with Section 703(a) of the IRC (for this purpose, all items of
income, gain, loss or deduction required to be separately stated pursuant to IRC
Section 703(a)(1) shall be included in taxable income or loss) computed with the
following adjustments:
(i) To the extent required by (and in the manner
described in) Treasury Regulation 1.704-1(b)(2),
items of gain, loss and deduction shall be
computed based upon the book values of the
Company's assets rather than upon such assets'
adjusted bases for federal income tax purposes (if
different);
(ii) Any tax-exempt income received by the Company
shall be included as an item of gross income;
(iii) The amount of any adjustments to the adjusted
bases (or book values if clause (i) above applies)
of any assets of the Company pursuant to IRC
Section 743 shall not be taken into account; and
(iv) Any expenditure of the Company described or
treated as being described in IRC Section
705(a)(2)(B) shall be treated as a deductible
expense.
(c) "Member Loan Nonrecourse Deductions" means any Company deductions
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that would be Nonrecourse Deductions if they were not attributable to a
liability owed to or guaranteed by a Member within the meaning and intent of
Treasury Regulation Section 1.704-2(i).
(d) "Member Loan Minimum Gain" has the meaning set forth in Treasury
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Regulation Section 1.704-2(i)(3).
(e) "Minimum Gain" has the meaning set forth in Treasury Regulation
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Section 1.704-2(d). Minimum Gain shall be computed separately for each Member in
a manner consistent with the Treasury Regulations under IRC Section 704(b).
(f) "Nonrecourse Deductions" has the meaning set forth in Treasury
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Regulation Section 1.704-2(b)(1). The amount of Nonrecourse Deductions for a
taxable year of the Company shall be determined according to the provisions of
Treasury Regulation Section 1.704-2(c).
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(g) "Nonrecourse Liability" means any liability of the Company with
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respect to which no Member has personal liability, as determined in accordance
with IRC Section 752 and the Treasury Regulations promulgated thereunder.
5.2 Allocations of Profit and Loss. As of the end of each fiscal year
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of the Company, or at the time any allocation is determined to be necessary by
the Members, Net Profits or Net Losses shall be allocated as follows:
(a) Except as provided in Section 5.3, any allocation required by
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this Section 5.2 to be made to the Members shall be allocated among the Members
in proportion to their respective Percentage Interests.
(b) With respect to the allocation of Net Losses or Net Profits
pursuant to this Section 5.2 among the Members for any fiscal year in which an
additional or substitute Member is admitted to the Company or there is an
adjustment to the Percentage Interests during such fiscal year, all Net Losses
or Net Profits so allocable shall be allocated in a manner which takes into
account the varying Percentage Interests during such fiscal year based on an
accounting convention chosen by the Members. In no event shall a retroactive
allocation of Net Losses be made pursuant to this Section 5.2.
5.3 Special Allocations. Notwithstanding the provisions of Section
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5.2, the following allocations of Net Profits and Net Losses and items thereof
shall be made:
(a) If, during any year a Member unexpectedly receives any
adjustment, allocation or distribution described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) and, as a result of such adjustment,
allocation or distribution, such Member's Adjusted Capital Account has a
negative balance (computed with the adjustments set forth in clauses (i) and
(ii) of Section 5.1(a)), then items of gross income for such year (and, if
necessary, subsequent years) shall first be allocated to such Member in the
amount necessary to eliminate such negative balance as quickly as possible. This
Section 5.3(a) is intended to constitute a "qualified income offset" provision
within the meaning of the above Treasury Regulations, and shall be so
interpreted.
(b) Nonrecourse Deductions for a taxable year or other period shall
be specially allocated among the Members in proportion to their Percentage
Interests.
(c) Any Member Loan Nonrecourse Deduction for any taxable year or
other period shall be specially allocated to the Member or Members who bear the
risk with respect to the loan to which the Member Loan Nonrecourse Deduction is
attributable in accordance with Treasury Regulation Section 1.704-2(b).
(d) In no event shall Net Losses of the Company be allocated to a
Member if such allocation would cause or increase a negative balance in such
Member's Adjusted Capital Account.
(e) Except as set forth in Treasury Regulation Section 1.704-2(f)(2),
(3) and (4), if, during any taxable year, there is a net decrease in Minimum
Gain, each Member, prior to any other allocation pursuant to this Article 5,
shall be specially allocated items of gross income and
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gain for such taxable year (and, if necessary, subsequent taxable years) in an
amount equal to that Member's share of the net decrease in Minimum Gain,
computed in accordance with Treasury Regulation Section 1.704-2(g). Allocation
of gross income and gain pursuant to this Section 5.3(e) shall be made first
from gain recognized from the disposition of Company assets subject to non-
recourse liabilities (within the meaning of the Treasury Regulations promulgated
under IRC Section 752), to the extent of the Minimum Gain attributable to those
assets, and thereafter, from a pro rata portion of the Company's other items of
income and gain for the taxable year. It is the intent of the parties hereto
that any allocation pursuant to this Section 5.3(e) shall constitute a "minimum
gain chargeback" under Treasury Regulation Section 1.704-2(f). With respect to a
net decrease in Member Loan Minimum Gain, items of gross income shall be
specially allocated consistent with the preceding sentence, and Treasury
Regulation Section 1.704-2(i)(4).
(f) In the event that Net Profits, Net Losses or items thereof are
allocated to one or more Members pursuant to paragraphs (a) or (d) above,
subsequent Net Profits and Net Losses will first be allocated (subject to the
provisions of paragraphs (a) through (d)) to the Members in a manner designed to
result in each Member having a Capital Account balance equal to what it would
have been had the original allocation of Net Profits, Net Losses or items
thereof pursuant to paragraphs (a) or (d) not occurred.
(g) The respective Percentage Interests in the Net Profits and Net
Losses or items thereof shall remain as set forth above (subject to adjustment
as provided in Section 4.1(b) and Article 5) unless changed by amendment to this
Agreement or by an assignment of an interest in the Company authorized by the
terms of this Agreement. Except as otherwise provided herein, for tax purposes,
all items of income, gain, loss, deduction or credit shall be allocated to the
Members in the same manner as are Net Profits and Net Losses; provided, however,
that if, as a result of clause (i) of Section 5.1(b), the book value of any
property of the Company was used in computing Net Profits or Net Losses, then
items of income, gain, deduction or credit related to such property for tax
purposes shall be allocated among the Members so as to take account of the
variation between the adjusted basis of the property for tax purposes and its
book value in accordance with the "traditional method" described in Treasury
Regulation Section 1.704-3(b).
(h) If a Member's Percentage Interest is reduced (provided the
reduction does not result in a complete termination of the Member's interest in
the Company), the Member's share of the Company's "unrealized receivables" and
"substantially appreciated inventory" (within the meaning of IRC Section 751)
shall not be reduced, so that, notwithstanding any other provisions of this
Agreement to the contrary, that portion of the Net Profit otherwise allocable
upon a liquidation or dissolution of the Company pursuant to Article 5 hereof
which is taxable as ordinary income (recaptured) for federal income tax purposes
shall, to the extent possible without increasing the total gain to the Company
or to any Member, be specially allocated among the Members in proportion to the
deductions (or basis reductions treated as deductions) giving rise to such
recapture.
(i) In each taxable year of the Company, items of deduction and
credit attributable to Program Costs shall be allocated to the Members in
proportion to the Capital Contributions which funded the applicable expenditure.
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ARTICLE 6. DISTRIBUTIONS
6.1 Distribution of Company Funds. The timing of distributions by the
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Company (other than distributions in dissolution to which Section 10.3 applies)
shall be determined in accordance with the provisions of Section 4.3 of the
Collaboration Agreement. Such distributions shall be made to the Members first
in proportion to the excess of the positive balances in their Capital Accounts
over the amounts of their Capital Contributions, and then in proportion to their
remaining positive Capital Account balances; provided, however, that the amount
distributable to the Members pursuant to this Section 6.1 shall be reduced by
the amount required to fund the budgeted capital, working capital and reserve
requirements of the Company during the one hundred and eighty (180) day period
following the proposed distribution date and by such other amounts as the
Steering Committee reasonably determines to be necessary or appropriate for the
operation of the Company.
ARTICLE 7. INDEMNIFICATION
7.1 Indemnification of Members.
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(a) The Company shall, to the fullest extent permitted by the Act, as
amended from time to time, indemnify each Member, each Member's Affiliates, and
the respective directors, officers, employees and agents of each Member and its
Affiliates (collectively, "Indemnified Persons") from and against all expenses
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and liabilities (including counsel fees, judgments, fines, excise taxes,
penalties and amounts paid in settlements) reasonably incurred by or imposed
upon an Indemnified Person in connection with any threatened, pending or
completed action, suit or other proceeding, whether civil, criminal,
administrative or investigative, in which such Indemnified Person may become
involved by reason of (i) any act performed by such Indemnified Person in
connection with the performance of and within the scope of the authority
conferred by the Collaboration Agreement or (ii) such Indemnified Person's
service as a director, officer, manager or member of the Company or any of its
subsidiaries or, if such service was undertaken at the request of the Company,
such Indemnified Person's service as a director, officer or trustee of, or in a
similar capacity with, another organization.
(b) Indemnification may include payment by the Company of expenses in
defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by the Indemnified Person to
repay such payment if it is ultimately determined that such Indemnified Person
is not entitled to indemnification under this Article 7, which undertaking may
be accepted without reference to the financial ability of the Indemnified Person
to make such repayments.
(c) The Company shall not indemnify any Indemnified Person in connection
with a proceeding (or part thereof) initiated by such person unless such
Indemnified Person is successful on the merits, the proceeding was authorized by
the Members or the proceeding seeks a declaratory judgment regarding such
Indemnified Person's own conduct.
(d) The indemnification rights provided in this Article 7 (i) shall not be
deemed exclusive of any other rights to which Indemnified Persons may be
entitled under any law,
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agreement or vote of disinterested Members or otherwise and (ii) shall inure to
the benefit of the heirs, executors and administrators of Indemnified Persons.
The Company may, to the extent authorized from time to time by its Members,
grant indemnification rights to employees or agents of the Company or persons
other than Indemnified Persons serving the Company and such rights may be
equivalent to, or greater or less than, those set forth in this Article 7.
(e) No indemnification shall be provided for any Indemnified Person with
respect to (i) any matter as to which such Indemnified Person shall have been
finally adjudicated in any proceeding not to have acted in good faith in the
reasonable belief that such Indemnified Person's action was in the best
interests of the Company, (ii) any act which constitutes gross negligence or
willful misconduct or (iii) any matter disposed of by a compromise payment by
such Indemnified Person, pursuant to a consent decree or otherwise, unless the
payment and indemnification thereof have been approved by the Members, which
approval shall not unreasonably be withheld, or by a court of competent
jurisdiction.
(f) Any amendment or repeal of the provisions of this Article 7 shall not
adversely affect any right or protection of an Indemnified Person with respect
to any act or omission of such Indemnified Person occurring prior to such
amendment or repeal.
7.2 Assignment.
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(a) Except in accordance with Section 14.6 of the Collaboration Agreement,
a Member may not assign his or her interest in whole or in part to any assignee
which is not already a Member without the prior written consent of all of the
other Members, which consent may be withheld in their absolute discretion.
(b) An assignment of a Member's interest does not of itself dissolve the
Company or permit the assignee to participate in the business and affairs of the
Company or to become a Member or exercise any rights or powers of a Member.
7.3 Substitute Members. No assignee of a Member's interest (other than an
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assignee which is already a Member) shall have the right to be admitted as a
substitute member in place of the assignor (a "Substitute Member") unless:
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(a) the assignor shall designate in writing satisfactory to the other
Members the intention that the assignee is to become a Substitute Member;
(b) the assignee shall agree in writing to be bound by all of the terms of
this Agreement;
(c) all of the other Members consent in writing to the admission of the
assignee as a Substitute Member, which consent may be withheld in their absolute
discretion;
(d) the assignee shall execute and/or deliver such instruments, including
without limitation, an opinion of counsel satisfactory to the Members, to the
effect that such proposed
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assignment and substitution does not violate the registration requirements of
state or federal securities laws, and such instrument as the Members deem
necessary or desirable to effect such assignee's admission as a Substitute
Member and to evidence the assignee's acceptance of the terms of this Agreement;
and
(e) the assignee shall pay all reasonable expenses of the Company in
connection with the assignee's admission as a Substitute Member.
7.4 Rights of Assignees. An assignee who does not become a Substitute
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Member shall succeed only to the rights of the assignor to receive allocations
and distributions from the Company as provided in Articles 5, 6 and 10 hereof,
and shall not have the right to become a Member or exercise any rights or powers
of a Member.
7.5 Other Restrictions. A Member may not pledge, encumber or
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hypothecate any of its interest without the consent of the other Members.
ARTICLE 8. FISCAL YEAR, ACCOUNTING, INSPECTION OF BOOKS
8.1 Fiscal Year and Accounting. Except as otherwise approved by the
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Members, or required by law, the fiscal year of the Company shall be the
calendar year and the books of the Company shall be kept on the accrual method.
8.2 Inspection of Books. The books of the Company shall at all times be
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available for inspection and audit by any Member at the Company's principal
place of business during business hours. The Company shall furnish each Member
with all necessary tax reporting information as to its interest in the Company,
with an annual balance sheet and profit and loss statement and with a cash flow
statement showing any distributions made to the Members, within sixty (60) days
after the close of each fiscal year.
ARTICLE 9. DISSOLUTION
9.1 Events of Dissolution. The term of the Company shall commence on the
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Effective Date and shall continue until the earliest of the following:
(a) the sale or disposition of all or substantially all of the Company's
property;
(b) the approval of the dissolution of the Company by the unanimous
written consent of the Members;
(c) the bankruptcy or dissolution of a Member other than Subsidiary;
provided, however, that if there are at least two (2) remaining Members, the
Members may consent to the continuation of the business of the Company after the
occurrence of such an event, pursuant to Section 18-802 of the Act and Section
10.2 of this Agreement;
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(d) the entry of a decree of judicial dissolution under Section 18-802 of
the Act;
(e) the occurrence of any event, other than those referred to in paragraph
(d), which causes dissolution of a limited liability company under the Act; or
(f) upon the occurrence of an event and at the time specified in Article
13 of the Collaboration Agreement.
Notwithstanding the dissolution of the Company, the business of the Company
shall continue to be governed by this Agreement until the winding up of the
Company occurs.
9.2 Consent to Continue Company. The Members may vote to continue the
---------------------------
business of the Company within ninety (90) days after the occurrence of an event
of dissolution set forth in Section 10.1(d) of this Agreement, pursuant to and
in accordance with Section 18-801(4) of the Act. The agreement of the remaining
Members holding a majority of the remaining Percentage Interests shall
constitute the consent of the Members to the continuation of the Company.
9.3 Distribution Upon Dissolution.
-----------------------------
(a) After payment of liabilities owing to creditors, the Members or
liquidator shall set up such reserves as they deem reasonably necessary for any
contingent or unforeseen liabilities or obligations of the Company, including
the expenses of liquidation. Such reserves may be paid over by the Members or
liquidator to a bank, to be held in escrow for the purpose of paying any such
contingent or unforeseen liabilities or obligations and, at the expiration of
such period as the Members or liquidator may deem advisable, such reserves shall
be distributed to all of the Members or their assigns in the manner set forth in
Section 10.3(b) below. In the event that any part of such net assets consists
of securities or other non-cash assets, the Members or liquidator may (but shall
not be required to) take whatever steps they deem appropriate to convert such
assets into cash or into any other form that would facilitate the distribution
thereof.
(b) After payment has been made pursuant to Section 10.3(a) above, the
Members or the liquidator shall cause the remaining net assets of the Company to
be distributed to and among the Members in proportion to and to the extent of
their positive Capital Account balances (after such balances have been adjusted
to reflect all allocations of Net Profits and Net Losses and distributions
pursuant to Article 6). Cash and non-cash assets shall be distributed to each
Member on a pro rata basis, or in such other manner as the Members may agree,
with all noncash assets being distributed on the basis of their fair market
value.
(c) The Company shall terminate when all property has been distributed
among the Members. Upon such termination, the Members shall execute and cause
to be filed a certificate of cancellation of the Company, as provided for in
Section 18-203 of the Act, and any and all other documents necessary in
connection with the termination of the Company.
ARTICLE 10. GENERAL PROVISIONS
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10.1 Complete Agreement; Modification. This Agreement and the
--------------------------------
Collaboration Agreement together contain a complete statement of all the
agreements among the parties with respect to the Company. There are no
representations, agreements, arrangements or undertakings, oral or written,
between or among the parties to this Agreement relating to the subject matter of
this Agreement which are not fully expressed in such Agreements. This Agreement
may be amended or modified only with the unanimous consent of the Members.
10.2 Governing Law; Severability. All questions with respect to the
---------------------------
construction of this Agreement and the rights and liabilities of the parties
shall be determined in accordance with the applicable provisions of the laws of
the State of Delaware, and this Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations of such state. If any provision of this
Agreement, or the application thereof to any person or circumstances, shall, for
any reason and to any extent, be invalid or unenforceable, the remainder of this
Agreement and the application of that provision to other persons or
circumstances shall not be affected but rather be enforced to the extent
permitted by law.
10.3 Notice. All notices, requests, consents and statements hereunder
------
shall be deemed to have been properly given if mailed from within the United
States by prepaid certified mail, return receipt requested, or if sent by
prepaid telegram, or overnight delivery service, or if hand delivered, addressed
in each case if to the Company at its principal place of business and, if to any
Member, to the address set forth herein, or to such other address or addresses
as any such Member shall have theretofore designated in writing to the Company
in accordance with this Section 11.3.
10.4 Headings The headings of Articles and Sections are included only
--------
for convenience and shall not affect the meaning or construction of this
Agreement.
10.5 Successors and Assigns. Subject to Article 8, this Agreement shall
----------------------
be binding upon and inure to the benefit of all parties hereto and their heirs,
successors, assigns and legal representatives.
10.6 Counterparts. This Agreement may be signed in one or more
------------
counterparts and all counterparts so executed shall constitute one agreement
binding on all parties hereto, notwithstanding that all parties have not signed
the original or the same counterpart.
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IN WITNESS WHEREOF, we have affixed our signatures as of the day first
above written.
MEMBERS:
-------
GENZYME CORPORATION
By: /s/ signature
Title: Executive Vice President
Date: September 4, 1998
BIOMARIN PHARMACEUTICAL, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
Date: September 4, 1998
BIOMARIN GENETICS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
Date: September 4, 1998
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Schedule A
----------
Members Capital Contribution Percentage Interest
------- -------------------- --------------------
Genzyme Corporation $12,100,000 50.00%
BioMarin Pharmaceutical, Inc. $11,858,000 49.00%
BioMarin Genetics, Inc. $ 242,000 1.00%
----------- ------
TOTAL: $24,200,000 100.00%
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