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DIACRIN, INC., HAS REQUESTED THAT THE MARKED PORTIONS OF THIS DOCUMENT BE
ACCORDED CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
EXHIBIT 10.19
OPERATING AGREEMENT
Between
DIACRIN, INC.,
and
GENZYME CORPORATION
dated as of October 1, 1996
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TABLE OF CONTENTS
Page
ARTICLE 1 - FORMATION AND MEMBERSHIP ..................................... 1
SECTION 1.1 Formation .............................................. 1
SECTION 1.2 Member ................................................. 1
SECTION 1.3 Management ............................................. 2
ARTICLE 2 - OFFICES, NAME, ETC. .......................................... 2
SECTION 2.1 Principal Office ....................................... 2
SECTION 2.2 Registered Office; Resident Agent ...................... 2
SECTION 2.3 Name ................................................... 2
SECTION 2.4 Term ................................................... 3
SECTION 2.5 Business Ventures ...................................... 3
ARTICLE 3 - PURPOSES AND POWERS .......................................... 3
SECTION 3.1 Purpose ................................................ 3
SECTION 3.2 Powers ................................................. 3
ARTICLE 4 - MEMBERS AND THEIR CONTRIBUTIONS AND LOANS .................... 4
SECTION 4.1 Contributions .......................................... 4
SECTION 4.2 Capital Accounts ....................................... 4
SECTION 4.3 Loans .................................................. 5
SECTION 4.4 Additional Members ..................................... 5
SECTION 4.5 Liability of Members ................................... 5
SECTION 4.6 Withdrawal of Members .................................. 6
ARTICLE 5 - ALLOCATIONS .................................................. 6
SECTION 5.1 Certain Definitions .................................... 6
SECTION 5.2 Allocations of Profit and Loss ......................... 9
SECTION 5.3 Special Allocations .................................... 10
ARTICLE 6 - DISTRIBUTIONS ................................................ 14
SECTION 6.1 Distribution of Company Funds .......................... 14
ARTICLE 7 - INDEMNIFICATION .............................................. 15
SECTION 7.1 Indemnification of Members ............................. 15
ARTICLE 8 - ASSIGNABILITY OF MEMBERSHIP INTERESTS ........................ 17
SECTION 8.1 Assignment ............................................. 17
SECTION 8.2 Substitute Members ..................................... 17
SECTION 8.3 Rights of Assignees .................................... 18
SECTION 8.4 Other Restrictions ..................................... 18
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ARTICLE 9 - FISCAL YEAR, ACCOUNTING, INSPECTION OF BOOKS ................. 19
SECTION 9.1 Fiscal Year and Accounting .............................. 19
SECTION 9.2 Inspection of Books ..................................... 19
ARTICLE 10 - DISSOLUTION ................................................. 19
SECTION 10.1 Events of Dissolution .................................. 19
SECTION 10.2 Consent to Continue Company ............................ 20
SECTION 10.3 Distribution Upon Dissolution .......................... 21
ARTICLE 11 - GENERAL PROVISIONS .......................................... 22
SECTION 11.1 Complete Agreement; Modification ....................... 22
SECTION 11.2 Governing Law; Severability ............................ 22
SECTION 11.3 Notice ................................................. 23
SECTION 11.4 Pronouns ............................................... 23
SECTION 11.5 Titles ................................................. 23
SECTION 11.6 Successors and Assigns ................................. 23
SECTION 11.7 Counterparts ........................................... 23
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OPERATING AGREEMENT
OF
DIACRIN/GENZYME LLC
THIS OPERATING AGREEMENT (this "Agreement") is made and adopted as of
October 1, 1996 by and among Diacrin, Inc., a Delaware corporation having its
principal place of business at Charlestown Navy Yard, Building 96, 13th Street,
Charlestown, Massachusetts 02129 ("Diacrin"), Genzyme Corporation, a
Massachusetts corporation having its principal place of business at Xxx Xxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 ("Genzyme") and such other persons who
may become members of Diacrin/Genzyme LLC (the "Company") in accordance with law
or the terms hereof (hereinafter collectively referred to as the "Members" and
individually as a "Member"). Capitalized 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, Diacrin and Genzyme ("Collaboration
Agreement").
ARTICLE 1
FORMATION AND MEMBERSHIP
SECTION 1.1 Formation. The Company shall be organized as a limited
liability company pursuant to the Massachusetts Limited Liability Company Act
(the "Act"). The Act shall govern the rights and liabilities of the parties
thereto except as otherwise expressly stated herein.
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SECTION 1.2 Member. The Members of the Company are those persons listed
on Schedule A attached hereto, as amended from time to time.
SECTION 1.3 Management. The Company shall be managed by the Members for
purposes of the Act. Notwithstanding the preceding sentence, the Steering
Committee provided for in Section 8.2 of the Collaboration Agreement shall
perform certain functions on behalf of the Members as set forth in the
Collaboration Agreement. Except for such functions, all decisions of the Company
shall be approved by unanimous consent of the Members.
ARTICLE 2
OFFICES, NAME, ETC.
SECTION 2.1 Principal Office. The principal office of the Company shall
be located at Xxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 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.
SECTION 2.2 Registered Office; Resident Agent. The name and address of
the Company's registered agent for service of process in the Commonwealth of
Massachusetts shall be Genzyme Corporation, Xxx Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx 00000.
SECTION 2.3 Name. The business of the Company shall be conducted under
the name of "Diacrin/Genzyme LLC".
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SECTION 2.4 Term. The term of the Company shall commence upon the filing
of the Certificate of Formation (the "Effective Date") and shall continue until
it is terminated as hereinafter provided.
SECTION 2.5 Business Ventures. 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; provided,
however, that a Member's participation in such venture is subject to and
consistent with the provisions of Sections 2.2 of the Collaboration Agreement.
ARTICLE 3
PURPOSES AND POWERS
SECTION 3.1 Purpose. The purpose of the Company is to (i) develop and
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.
SECTION 3.2 Powers. The Company shall have all the powers necessary or
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.
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ARTICLE 4
MEMBERS AND THEIR CONTRIBUTIONS AND LOANS
SECTION 4.1 Contributions.
(a) Each Member has agreed to contribute the amounts and/or property set
forth in Sections 3.1, 3.3, 3.5, 4.1.1, 4.1.2 and 4.1.3 of the Collaboration
Agreement. The cash and agreed value of any property contributed by each Member
as of the date hereof is set forth in Schedule A attached hereto. The amount so
contributed is hereinafter referred to as each Member's "Capital Contribution".
(b) 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 otherwise specifically provided in this Agreement.
(c) Except as provided in Article 5 of this Agreement, each Member's
share of Net Profits, Net Losses and Net Pretax Profit ("Percentage Interest")
shall be set forth in Schedule A.
SECTION 4.2 Capital Accounts. A separate account (a "Capital Account")
shall 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
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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).
(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 below) 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 it relates to the transferred interest.
SECTION 4.3 Loans. The Members shall not make loans to the Company
unless the Members unanimously agree in writing to make such loans.
SECTION 4.4 Additional Members. Except as otherwise provided in Section
8.2 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.
SECTION 4.5 Liability of Members.
(a) No Member shall be liable for the obligations of the Company solely
by reason of being a Member.
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(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 have any effect on 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 occurring, or any cause of action, suit or claim that, but
for this Section 4.5(c), would accrue or arise prior to such amendment, repeal
or adoption of an inconsistent provision.
SECTION 4.6 Withdrawal of Members. No Member shall have the right to
withdraw 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
SECTION 5.1 Certain Definitions. For purposes of this Agreement, the
following terms shall have the meanings given them in this Article 5:
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(a) "Adjusted Capital Account" for a Member means such Member's 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 sentences of
Treasury Regulation Sections 1.704-2(g)(1) and 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 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, as
the case may be, for a period (or from a transaction) as determined
in accordance with Section 703(a) of the Internal
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Revenue Code of 1986, as amended ("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 (A) 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 that
would be Nonrecourse Deductions if they were not attributable to a
liability owed to or guaranteed by a Member
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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
Regulation Section 1.704-2(i)(3).
(e) "Minimum Gain" has the meaning set forth in Treasury Regulation
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
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).
(g) "Nonrecourse Liability" means any liability of the Company with
respect to which no Member has personal liability, as determined in
accordance with IRC Section 752 and the Treasury Regulations
promulgated thereunder.
SECTION 5.2 Allocations of Profit and Loss. As of the end of each fiscal
year of the Company, or at the time of any allocation is determined to be
necessary by the Members, Net Profits or Net Losses shall be allocated as
follows:
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(a) Except as provided in Sections 5.2(b) and 5.3, any allocation
required by this Section 5.2 to be made to the Members shall be allocated among
the Members in proportion to their respective Percentage Interests as set forth
on Schedule A.
(b) After making the special allocations provided for in Section 5.3,
the remaining Net Profits arising from the sale of the Diacrin Patent Rights,
Diacrin Technology and the Manufacturing Know-How ("Diacrin Property") shall be
allocated: first to Genzyme, until the cumulative amount allocated to it
pursuant to this clause first equals the lesser of (i) the Unamortized Book
Basis of the Diacrin Property, or (ii) the total Capital Contributions of the
Members, other than the Diacrin Property; and second, the balance in accordance
with the Percentage Interest of each Member.
(c) 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, 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.
SECTION 5.3 Special Allocations. Notwithstanding the provisions of
Section 5.2 above, the following allocations of Net Profits and Net Losses and
items thereof shall be made:
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(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
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allocated items of gross income and gain for such taxable year (and, if
necessary, subsequent taxable years) in an amount equal to that Member's share
of the net decrease of 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.
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(g) The respective Percentage Interests in the Net Profits and Net
Losses or items thereof shall remain as set forth above 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 the manner provided for under IRC Section 704(c).
(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
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
among the Members in proportion to the deductions (or basis reductions treated
as deductions) giving rise to such recapture.
(i) For purposes of determining the book depreciation of the Diacrin
Property in accordance with Treasury Regulation Section 1.704-1(b)(2)(g)(3), the
book basis of the Diacrin Property upon contribution to the Company shall be
equal to ***********. The Diacrin Property shall be depreciated on a
straight-line basis with a useful life of seven (7) years. All such depreciation
deductions shall be allocated to Diacrin. The basis of the Diacrin Property as
so adjusted for book depreciation is referred to herein as "Unamortized Book
Basis".
(j) In each taxable year of the Company, items of deduction and credit
attributable to Commercialization Costs, Dedicated Facility Costs, and
Development Costs shall be allocated to the Members in proportion to the Capital
Contributions which funded the applicable expenditure.
ARTICLE 6
DISTRIBUTIONS
SECTION 6.1 Distribution of Company Funds. After providing for the
payment of any amounts due on the indebtedness of the Company, if any, and
providing for a reasonable reserve for the payment of expenses of the Company,
the balance of the Net Pretax Profits of the Company (other than Net Pretax
Profits
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arising from the sale of Diacrin Property) shall be distributed to the Members
in accordance with the provisions of Section 4.3 of the Collaboration Agreement.
After making provisions for indebtedness and reserves set forth in the preceding
sentence, the net proceeds from the sale of the Diacrin Property shall be
distributed: first, to Diacrin, in an amount equal to the Unamortized Book Basis
of the Diacrin Property; second, to Genzyme, in an amount equal to the lesser of
(i) the amount allocated to Diacrin in the immediately preceding clause first,
or (ii) the total capital contributions of the Members, other than the Diacrin
Property; and third, the balance in accordance with the Percentage Interest of
each Member.
ARTICLE 7
INDEMNIFICATION
SECTION 7.1 Indemnification of Members.
(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
and liabilities (including counsel fees, judgments, fines, excise taxes,
penalties and amounts payable 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 him in connection with the
performance of and within the scope of the
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authority conferred by the Collaboration Agreement or (ii) his service as a
director, officer, manager or member of the Company or any of its subsidiaries
or, if such service as a director or officer of the Company or any of its
subsidiaries or, if such service was undertaken at the request of the Company,
his 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 any undertaking by the Indemnified Person
to repay such payment if it is ultimately determined that he 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 he is
successful on the merits, the proceeding was authorized by the Members or the
proceeding seeks a declaratory judgment regarding his 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, 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
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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 he shall have been finally adjudicated in
any proceeding not to have acted in good faith in the reasonable belief that his
action was in the best interests of the Company, (ii) any act which constitutes
gross negligence or wilful 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.
ARTICLE 8
ASSIGNABILITY OF MEMBERSHIP INTERESTS
SECTION 8.1 Assignment. (a) A Member may not assign his or her interest
in whole or in part without the prior written consent of all of the other
Members who may or may not consent 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.
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SECTION 8.2 Substitute Members. No assignee of a Member's interest shall
have the right to be admitted as a Substitute Member in place of the assignor
unless:
(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 assignment and substitution does
not violate 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 in connection with
the assignee's admission as a Substitute Member.
SECTION 8.3 Rights of Assignees. An assignee who does not become a
Substitute 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,
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and shall not have the right to vote to the extent of the assigned interest.
SECTION 8.4 Other Restrictions. A Member may not pledge, encumber or
hypothecate any of its interest without the consent of the Company.
ARTICLE 9
FISCAL YEAR, ACCOUNTING, INSPECTION OF BOOKS
SECTION 9.1 Fiscal Year and Accounting. Except as otherwise approved by
the 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.
SECTION 9.2 Inspection of Books. The books of the Company shall at all
times be 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 10
DISSOLUTION
SECTION 10.1 Events of Dissolution. The term of the Company shall
commence on the Effective Date and shall be in full force and effect until the
earliest of the following:
(a) the sale or disposition of all or substantially all of the
Company property;
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(b) the dissolution of the Company by the unanimous written
consent of the Members;
(c) the death, insanity, retirement, resignation, expulsion,
bankruptcy, or dissolution of a Member; provided, however, that if there are at
least two 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 43 of the Act and Section 10.2 of this Agreement;
(d) the entry of a decree of judicial dissolution under Section
44 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 termination 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.
SECTION 10.2 Consent to Continue Company. The Members may vote to
continue the business of the Company within 90 days after the occurrence of an
event of dissolution as set forth in Section 10.1, pursuant to and in accordance
with Section 43 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.
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SECTION 10.3 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
below in Section 10.3(b). 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), 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 the payments made in
Section 10.3(a)). 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.
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(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 14 of the Act, and any and all other documents necessary in connection
with the termination of the Company.
ARTICLE 11
GENERAL PROVISIONS
SECTION 11.1 Complete Agreement; Modification. This Agreement contains 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 this
Agreement. This Agreement may be amended or modified only with the unanimous
consent of the Members.
SECTION 11.2 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 Commonwealth of Massachusetts, 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
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application of that provision to other persons or circumstances shall not be
affected but rather be enforced to the extent permitted by law.
SECTION 11.3 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.
SECTION 11.4 Pronouns. Feminine or masculine pronouns shall be
substituted for the neuter pronouns, neuter pronouns for masculine or feminine
pronouns, plural for the singular and the singular for the plural, in any place
in this Agreement where the context may require such substitution.
SECTION 11.5 Titles. The titles of Articles and Sections are included
only for convenience and shall not be construed as a part of this Agreement or
in any respect affecting or modifying its provisions.
SECTION 11.6 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of all parties hereto and their heirs, successors,
assigns, and legal representatives.
SECTION 11.7 Counterparts. This Agreement may be signed in one or more
counterparts and all counterparts so executed shall constitute one agreement
binding
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on all parties hereto, notwithstanding that all parties have not signed the
original or the same counterpart.
IN WITNESS WHEREOF, we have affixed our signatures as of the day first
above written.
MEMBERS:
Diacrin, Inc.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Title: President
Genzyme Corporation
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Title: Executive Vice President
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
Schedule A
Members Capital Contribution Percentage Interest
Diacrin The Diacrin Property 50.00
having an agreed fair
market value of
*********** and an
adjusted tax basis
(as defined in Section
1011 of the Code) of
zero.
Genzyme ******** 50.00
------
100.00%
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