EXHIBIT 10.8
FOURTH AMENDMENT TO OPERATING AGREEMENT
FOR
SCIENCE PARK CENTER LLC
A CALIFORNIA LIMITED LIABILITY COMPANY
THAT CERTAIN OPERATING AGREEMENT ("Operating Agreement") for SCIENCE
PARK CENTER LLC, a California limited liability company (the "Company"), made
July 31, 1997, by and between NEUROCRINE BIOSCIENCES, INC., a Delaware
corporation ("Neurocrine"), and NEXUS PROPERTIES, INC., a California corporation
("Nexus"), which was previously amended by a First Amendment effective July 31,
1997, a Second Amendment effective August 1, 1998, and a Third Amendment
effective November 1, 1999, is hereby amended by this Fourth Amendment (this
"Amendment") effective as of April 1, 2003, as set forth herein.
Unless otherwise defined in this Amendment, terms with an initial
capital letter shall have the meanings given them in the Operating Agreement as
previously amended.
1. ASSIGNMENT OF MEMBERSHIP INTERESTS. In consideration of the
payments received from the Company pursuant to Paragraph 2 below, Nexus hereby
assigns to Neurocrine 50% of Nexus' Percentage Interests in the Company (or
49.5% of the Percentage Interests of the Company), including the Membership
Interests and all other right, title and interest associated therewith
(excepting therefrom any payments due Nexus under Sections 7.1(iii) and (iv) of
the Operating Agreement as described in Paragraphs 2 and 3 below), and
Neurocrine hereby accepts such assignment in consideration for its payments made
pursuant to Paragraph 2 below, as a result of which Neurocrine shall own 50.5%
of the Percentage Interests of the Company (including the Membership Interests
and all other right, title and interest associated therewith) and Nexus shall
own 49.5% of the Percentage Interests of the Company (including the Membership
Interests and all other right, title and interest associated therewith). Also,
inconsideration of the payments received by Nexus from the Company pursuant to
Paragraph 2 below, after the sale, exchange or transfer of the Project, and
before the transfer of the remaining Membership Interests of Nexus contemplated
by Paragraph 7 below, with the exception of the payments and distributions paid
and payable to Nexus pursuant to Paragraphs 3 and 4 hereof, all Distributable
Cash and any other proceeds of the Company, shall accrue 100% to Neurocrine.
2. IMMEDIATE LUMP SUM PAYMENT TO NEXUS. Neurocrine shall pay to
the Company, in consideration for receipt of 50% of Nexus' Membership Interest
in the Company, 50% of the payments and distributions payable to Nexus for all
of its Membership Interest pursuant to Section 9.5 of the Operating Agreement,
and the Company shall distribute to Nexus concurrently with the execution and
delivery of this Amendment, as if the Premises had been sold or exchanged and in
lieu of any other payments under Section 7.1 of the Operating Agreement, in
cash, the sum of the following:
(i) $174,038 (one-half of the Preferred Return accrued as
of August 31, 2002 pursuant to Section 7.1(iii) of the Operating Agreement);
plus
(ii) $63,812 ($301 multiplied by the number of days
elapsed between September 1, 2002 and March 31, 2003) (Preferred Return accrued
from September 1, 2002 pursuant to Section 7.1(iii) of the Operating Agreement);
plus
(iii) $375,000 (one-half of the payment pursuant to Section
7.1(iv) of the Operating Agreement); less
(iv) $200,000 (one-half of the distributions to Nexus
under Section 7.2(iii) deducted pursuant to Section 7.1(iii) of the Operating
Agreement).
3. SUBSEQUENT LUMP SUM PAYMENT TO NEXUS. On or before March 31,
2006, Neurocrine shall pay to the Company, in consideration for receipt of the
remaining Membership Interest of Nexus in the Company (after assignment of the
Nexus Membership Interest set forth in Paragraph 1 above), the remaining 50% of
the payments and distributions payable to Nexus for all of its Membership
Interest pursuant to Section 9.5 of the Operating
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Agreement, and the Company shall concurrently distribute to Nexus (or to any
Member or Economic Interest Owner succeeding to the Membership Interest of
Nexus), as if the Premises had been sold or exchanged and in lieu of any other
payments under Section 7.1 of the Operating Agreement, in cash, the sum of the
following:
(i) $174,038 (one-half of the Preferred Return accrued as
of August 31, 2002 pursuant to Section 7.1(iii) of the Operating Agreement);
plus
(ii) $150 multiplied by the number of days elapsed between
March 31, 2003 and August 31, 2003 prior to the date of payment; plus $166
multiplied by the number of days elapsed between September 1, 2003 and August
31, 2004 prior to the date of payment; plus $182 multiplied by the number of
days elapsed between September 1, 2004 and August 31, 2005 prior to the date of
payment; plus $200 multiplied by the number of days elapsed between September 1,
2005 and the date of payment (one-half of the Preferred Return accruing after
March 31, 2003 pursuant to Section 7.1(iii) of the Operating Agreement); plus
(iii) $375,000 (one-half of the payment pursuant to Section
7.1(iv) of the Operating Agreement); less
(iv) $200,000 (one-half of the distributions to Nexus
under Section 7.2(iii) deducted pursuant to Section 7.1(iii) of the Operating
Agreement).
4. PERIODIC PAYMENTS TO NEXUS. In addition to the payments
described in Paragraphs 2 and 3 above, and in lieu of and in satisfaction of the
payments to be paid to Nexus under Section 8.3 of the Operating Agreement, the
Company shall pay to Nexus (or to any Member or Economic Interest Owner
succeeding to the Membership Interest of Nexus) on the first day of each and
every calendar month, until such time as the entirety of the payments are made
to Nexus pursuant to Paragraphs 2 and 3, the amount of $4,575 per month for the
months of April through September 2003, the amount of $5,033 per month for the
months of October 2003 through September 2004, the amount of $5,536 per month
for the months of October 2004 through September 2005, and the amount of $6,090
per month for the months of October 2005 and each and every month thereafter
(pursuant to Section 8.3 of the Operating Agreement). At the election of Nexus,
the entirety of the sums payable to Nexus pursuant to Paragraph 3 above and this
Paragraph 4 shall become immediately due and payable upon the default by the
Company with respect to any payment required under this Paragraph 4 or any other
provision of this Amendment, if such default remains uncured by the Company for
a period of more than five (5) business days after the Manager's receipt of
written notice that any such payment was not received by Nexus when due.
5. GUARANTEE OF PAYMENTS. Neurocrine shall concurrently with
execution of this Amendment execute and deliver to Nexus a guarantee of the
payments by the Company pursuant to Paragraphs 3 and 4 above in the form
attached hereto as Exhibit "A".
6. RESIGNATION AS MANAGER. Nexus hereby resigns as a Manager of
the Company, as a result of which Neurocrine is now the sole Manager of the
Company.
7. TRANSFER OF REMAINING NEXUS INTERESTS. Notwithstanding the
provisions of Section 9.5 of the Operating Agreement, concurrently with
Neurocrine's payments to the Company, and the Company's concurrent distribution
to Nexus of the entirety of the amounts paid by Neurocrine to the Company
pursuant to Paragraphs 2, 3 and 4 above (which payments shall be in full
satisfaction of the distributions, payments and other monetary obligations of
Neurocrine set forth in Section 9.5), Nexus shall transfer to Neurocrine all of
its Percentage Interests in the Company, including the Membership Interests
associated therewith and all other right, title and interest in the Company, in
two equal increments on each of the dates when such distributions are received
by Nexus. In furtherance of such transfer, at the request of Neurocrine, Nexus
agrees to execute any and all documents reasonably required to effectuate or
memorialize such transfer.
8. VOTING RIGHTS. Section 4.7 of the Operating Agreement is
amended to read:
No Member other than Neurocrine shall have voting, approval or
other consent rights. In all matters in which a vote, approval or consent of the
Members is required, the vote, consent or approval of Neurocrine shall be
sufficient to authorize or approve such act. Notwithstanding the foregoing,
until such time as Nexus has
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been paid all sums due pursuant to Paragraphs 3 and 4 of this Agreement, and the
remaining Membership Interests of Nexus have been transferred to Neurocrine
pursuant to Paragraph 7 above, without the consent or Nexus neither Neurocrine
nor any other Member or Manager shall have authority to:
(a) Amend, alter, modify, change or repeal any provision
of this Amendment, any provision of Sections 6.1 and 6.2 as they appear in the
Third Amendment of the Operating Agreement, or any other provision of the
Operating Agreement which would serve to deny, reduce or diminish in any way the
benefits given to Nexus by this Amendment;
(b) Do any act in contravention of the Operating
Agreement;
(c) Knowingly perform any act that would subject Nexus,
as a Member or otherwise, to liability in any jurisdiction;
(d) Dissolve or liquidate the Company;
(e) Sell or lease, or otherwise dispose of all or
substantially all of the assets of the Company except as part of an exchange
pursuant to Section 1031 of the Internal Revenue Code;
(f) File a voluntary petition or otherwise initiate
proceedings to have the Company adjudicated bankrupt or insolvent, or consent to
the institution of bankruptcy or insolvency proceedings against the Company, or
file a petition seeking or consenting to reorganization or relief of the Company
as debtor under any applicable federal or state law relating to bankruptcy,
insolvency, or other relief for debtors with respect to the Company, or seek or
consent to the appointment of any trustee, receiver, conservator, assignee,
sequestrator, custodian, liquidator (or other similar official) of the Company
or of all or any substantial part of the properties and assets of the Company,
or make any general assignment for the benefit of creditors of the Company, or
admit in writing the inability of the Company to pay its debts generally as they
become due or declare or effect a moratorium on the Company debt or take any
action in furtherance of any such action;
9. FEDERAL INCOME TAX TREATMENT. The parties hereto acknowledge
and agree that the contributions and distributions made pursuant to Paragraphs 2
and 3 above shall be treated as a sale of a partnership interest pursuant to
Section 707(a)(2) of the Internal Revenue Code.
10. MISCELLANEOUS AMENDMENTS.
(a) In order to implement the intent of the parties with
regard to the distributions made pursuant to Paragraphs 2 and 3 above, Section
1..53 of the Operating Agreement is hereby amended to read as follows:
SECTION 1.53. "Unreturned Capital Contributions" shall mean
the $600,000 initial Capital Contribution of Nexus, as reduced
by that portion of the payments made pursuant to Section
7.1(iv) which are deemed by the parties, without warranty, to
be a nontaxable return of capital.
In order to clarify the effect of the distribution to be made pursuant to
Paragraph 2(iii) on the amended definition, the parties hereby agree that upon
Nexus' receipt of the payment made by Neurocrine pursuant to Paragraph 2(iii) of
this Amendment, the Unreturned Capital Contribution shall be an amount equal to
$300,000 (based upon such amount being agreed by the parties, without warranty
by either of them, to be a nontaxable return of capital).
(b) In order to implement the intent of the parties with
regard to the distributions made pursuant to Paragraphs 2 and 3 above, Section
6.2.1(iii) of the Operating Agreement is hereby amended to read as follows:
SECTION 6.2.1(III). Third, 100% to Nexus in an amount
necessary to reduce its Capital Account balance to an amount
equal to its remaining Unreturned Capital Contribution (as
such Unreturned Capital Contribution may be reduced from time
to time in accordance with the definition thereof).
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As set forth above, the Unreturned Capital Contribution following the
distribution to be made pursuant to Paragraph 2(iii) shall be an amount equal to
$300,000 (based upon such amount being agreed to by the parties, without
warranty by either of them, as a nontaxable return of capital).
(b) Section 9.5 is amended to add the following at the end of
said section:
"Neurocrine may purchase less than the entire Membership
Interest of Nexus, provided that the amount payable by
Neurocrine for any portion of Nexus' Membership Interest shall
equal the Unreturned Capital Contribution and the purchase
price payable pursuant to the first sentence of this Section
9.5 multiplied by the percentage of the Membership Interest of
Nexus being acquired by Neurocrine; and upon any such sale of
a portion of the Membership Interest of Nexus, the amounts
subsequently payable or otherwise distributed to Nexus under
Sections 6.2, 7.1, 7.2 and 8.3 of the Operating Agreement
shall be reduced by a percentage equal to the percentage share
of Nexus' Membership Interest acquired by Neurocrine."
Pursuant to this Amendment, following payment of the amount set forth in
Paragraph 2(iii) above, Neurocrine shall receive 50% of the Membership Interest
of Nexus and the amounts subsequently payable or otherwise distributed to Nexus
under Sections 6.2, 7.1, 7.2 and 8.3 of the Operating Agreement shall be reduced
by 50%. By way of example, the remainder of the cumulative amount payable to
Nexus under Section 7.1(iv) shall be $375,000.
11. INDEMNITY AGREEMENT. The Company and Neurocrine hereby agree
to indemnity, defend and hold harmless Nexus from any and all claims, losses,
damages and liability now existing or arising in the future on account of any
and all actions and omission taken by Nexus as a Member or Manager of the
Company, including but not limited to any and all claims, losses, damages and
liability arising from the Indemnity and Guaranty Agreement given by Nexus to
Midland Loan Services, Inc., on or about September 1, 1998, or otherwise on
account of the mortgage loan given by such lender to the Company or any other
loan to the Company by such lender or any other lender.
In all other respects, the Operating Agreement shall remain in full
force and effect as amended by the First, Second and Third Amendments thereto.
IN WITNESS WHEREOF, the Members and Managers of Science Park Center
LLC, a California limited liability company, have executed this Fourth Amendment
to Operating Agreement effective on the day and year set forth above.
NEUROCRINE BIOSCIENCES, INC.
A Delaware corporation
Member and Manager
By: /s/ Xxxx X. Xxxxxx
______________________________
Xxxx X. Xxxxxx
Senior Vice President
NEXUS PROPERTIES, INC.
A California corporation
Member and Manager
By: /s/ Xxxxxxx X. Xxxxx
_______________________________
Xxxxxxx X. Xxxxx
Chief Executive Officer
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EXHIBIT "A"
GUARANTY OF OBLIGATIONS
Reference is made to that certain Fourth Amendment (the "Fourth
Amendment") to Operating Agreement (as amended by the Fourth Amendment, the
"Operating Agreement") for Science Park Center LLC, a California limited
liability company (the "Company"), dated effective April 1, 2003, executed by
Neurocrine Biosciences, Inc., a Delaware corporation ("Neurocrine"), and Nexus
Properties, Inc., a California corporation ("Nexus").
This Guaranty relates to: (i) the payment of all sums due Nexus under
the Fourth Amendment, and (ii) the full, prompt and absolute performance and
observance by the Company of all of the covenants, conditions, undertakings,
agreements, duties and obligations for the benefit of or in favor of Nexus
contained in the Operating Agreement to be performed or observed by, or imposed
upon, the Company, all of which matters are collectively hereinafter referred to
as the "Liabilities."
FOR VALUE RECEIVED and in consideration for, and as an inducement to,
Nexus consenting to the Fourth Amendment as requested by Neurocrine, Neurocrine
hereby absolutely, unconditionally and irrevocably guarantees to Nexus the full,
prompt and absolute payment, performance and observance of all Liabilities.
Neurocrine expressly agrees that the validity of this Guaranty and the
obligations of Neurocrine hereunder shall in no way be terminated, abated,
affected or impaired by the happening from time to time of any event or
condition including, without limitation, any of the following: (i) the assertion
or non-assertion by Nexus of any of the rights or remedies reserved to Nexus
pursuant to the provisions of the Operating Agreement and all instruments and
documents referred to therein, or pursuant to applicable statutes, (ii) the
waiver by Nexus of, or the failure of Nexus to enforce, or the lack of diligence
of Nexus in connection with the satisfaction of, any of the Liabilities, (iii)
the granting of any indulgence or extension of time by Nexus, (iv) the exercise
by Nexus of any so-called self-help remedies, or (v) any other act, omission or
condition which might in any manner or to any extent vary the risk to Neurocrine
or might otherwise operate as a discharge or release of Neurocrine, all of which
may be given or done without notice to, or consent of, Neurocrine. The foregoing
shall not effect the discharge of Neurocrine or the modification of Neurocrine's
obligations hereunder except to the same extent that the Company's obligations
under the Fourth Amendment are partially or fully discharged by the Company's
payment or performance of the Company's obligations under the Fourth Amendment,
or are modified with Nexus's consent; provided, however, that Neurocrine's
obligations hereunder shall not be discharged, released or impaired by reason of
the release or discharge of the Company, or the rejection or disaffirmance of
the Operating Agreement or the Fourth Amendment, in any bankruptcy or insolvency
proceeding, or by any disability or lack of authority of the Company or its
officers or directors.
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Neurocrine (in its capacity as Neurocrine and not as a member of the
Company) hereby waives: (i) all notice of default in the payment of, or
non-performance of, any of the Liabilities; (ii) all protest, demands, notices
or presentments of every kind and description now or hereafter provided by any
statute or rule of law; and (iii) notice of any acceptance of this Guaranty.
Neurocrine hereby waives any and all suretyship defenses or defenses in the
nature thereof (including California Civil Code Sections 2819-2825) without in
any manner limiting any other provisions of this Guaranty.
Neurocrine further grants to Nexus full power, in Nexus's unfettered
discretion and without notice to or consent of Neurocrine, and without any
termination, abatement or offset or impairment of the validity of this Guaranty
and obligations of Neurocrine hereunder, to deal in any manner with the any
collateral from time to time held by Nexus upon default by the Company under the
Operating Agreement.
The liability of Neurocrine hereunder shall in no way be terminated,
abated, affected or impaired by: (i) the release or discharge of the Company in
any creditors' receivership, bankruptcy or other proceedings; (ii) the
impairment, limitation, modification or termination of: (a) the Company's
liability in bankruptcy, or (b) any remedy for the enforcement of the Company's
liability under the Operating Agreement or any instruments or documents referred
to therein resulting from the operation of any present or future provision of
the United States Bankruptcy Code or other statute or from any decision in any
court; (iii) the rejection or disaffirmance of the Operating Agreement or the
Fourth Amendment or any instruments or documents referred to therein in any such
proceedings; (iv) any disability or other such defense of the Company; or (v)
the cessation, from any cause whatsoever (other than by reason of payment or
performance) of the Liabilities of the Company under the Operating Agreement or
any instruments or documents referred to therein.
Nexus may proceed jointly or severally against the Company, Neurocrine,
and any surety or other party who may be liable. In addition, Neurocrine agrees
that Neurocrine's liability under this Guaranty shall be primary, and that with
respect to any right of action which shall accrue to Nexus relating to any of
the Liabilities, Nexus may at its sole option proceed directly against
Neurocrine without having proceeded against the Company or any surety or other
party who may be liable. Neurocrine hereby waives any and all legal requirements
that Nexus shall institute any action or proceedings at law or in equity against
the Company, or anyone else, or exhaust its remedies against the Company, or
anyone else, in respect of the Operating Agreement or in respect of any other
security held by Nexus, as a condition precedent to bringing an action against
Neurocrine upon this Guaranty. All remedies afforded to Nexus by reason of this
Guaranty are separate and cumulative remedies and it is agreed that no one of
such remedies, whether exercised by Nexus or not, shall be deemed to be an
exclusion of any of the other remedies available to Nexus and shall not limit or
prejudice any other legal or equitable remedy which Nexus may have. If the
Company shall fail to satisfy any of the Liabilities when due or performable,
Neurocrine shall immediately pay to Nexus all sums due it by reason of the
Company's default in satisfying the Liabilities.
Each default on any of the Liabilities shall give rise to a separate
cause of action and separate actions may be brought hereunder as each cause of
action arises or, at Nexus's option, any or all causes of action which arise
prior to or after any action is commenced hereunder may be included in such
action.
Neurocrine further represents to Nexus, as an inducement to executing
the Fourth Amendment, that this Guaranty and all action contemplated to be taken
by Neurocrine hereunder has been duly authorized, and that this Guaranty and
such action and undertaking are valid and binding upon Neurocrine in accordance
with their terms.
No encumbrance, assignment or other transfer by Nexus of all or any
part of its remaining Membership Interests in the Company shall operate to
extinguish or diminish the liability of Neurocrine under this Guaranty, whether
or not Neurocrine has consented to or received notice of such encumbrance,
assignment or other transfer.
All references to the Company, Neurocrine and Nexus shall be deemed to
include references to the successors and assigns of each of them, and the
provisions of this Guaranty shall be binding upon and inure to the benefit of
their respective successors and assigns.
Any dispute arising from or related to this Guaranty, including any
action to enforce the provisions of this Guaranty, shall be resolved by binding
arbitration under the Commercial Rules of the American Arbitration Association.
Venue for any arbitration or court action shall be in the County of San Diego.
This Agreement shall be
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construed in accordance with California law, and any arbitrator appointed
hereunder shall be required to apply such law.
If any term or provision of this Guaranty or the application thereof to
any person or circumstances shall, to any extent, be invalid or unenforceable,
the remainder of this Guaranty, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Guaranty shall be valid and enforceable to the fullest extent permitted by
law.
The waiver of any provision of this Guaranty by Nexus shall constitute
a waiver of that provision on that occasion only, and shall not constitute a
waiver of any other term of this Guaranty, nor a waiver of that provision with
respect to any other occasion.
Except as otherwise provided herein, or by operation of law, this
Guaranty shall not be modified, amended, released or discharged except by a
writing executed by Nexus.
Neurocrine understands that Nexus's election to pursue a particular
remedy against the Company (or Nexus's election not to pursue a remedy or to
waive rights as against the Company) could destroy or impair, by operation of
California law, rights which Neurocrine might otherwise have (including without
limitation rights of subrogation, reimbursement and contribution) as against the
Company.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this instrument effective March 31, 2003, at San Diego County, California.
NEUROCRINE BIOSCIENCES, INC.
A Delaware corporation
By:
______________________________
Xxxx X. Xxxxxx
Senior Vice President
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