OPERATING AGREEMENT
OF
IMG TECHNOLOGY, LLC
Dated as of March 5, 1999
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT......................................................... 1
ARTICLE I DEFINITIONS............................... 1
Section 1.1 Definitions............................... 1
Section 1.2 Rules of Construction..................... 4
ARTICLE II ORGANIZATIONAL MATTERS.................... 5
Section 2.1 Organization.............................. 5
Section 2.2 Company Name.............................. 5
Section 2.3 Principal Place of Business............... 5
Section 2.4 Registered Agent.......................... 5
Section 2.5 Company Purpose........................... 5
Section 2.6 Term of Company........................... 5
Section 2.7 Title to Property......................... 5
ARTICLE III CAPITALIZATION............................ 5
Section 3.1 Initial Capital Contributions of the
Members................................. 6
Section 3.2 Admission of Members...................... 6
Section 3.3 Company Capital........................... 6
ARTICLE IV MANAGEMENT OF THE COMPANY; ACTS OF
MEMBERS AND MEMBER MEETINGS............. 6
Section 4.1 Management................................ 6
Section 4.2 Voting Rights............................. 6
Section 4.3 Management Powers......................... 6
Section 4.5 Meetings of the Members................... 8
Section 4.6 Limitation of Liability................... 9
Section 4.7 Liability for Certain Acts................ 9
Section 4.8 Reimbursement of Expenses;
Compensation............................10
ARTICLE V TRANSFERS; RESTRICTIONS ON TRANSFERS;
ADDITIONAL MEMBERS .....................10
Section 5.1 Transfer Procedures.......................10
Section 5.2 Restrictions on Transfers; Permitted
Transfers...............................10
Section 5.3 Transfers by IMMUNOMEDICS.................11
Section 5.4 Transfers by GOLDENBERG...................11
Section 5.6 Additional Members........................12
ARTICLE VI DISSOLUTION AND WINDING UP................12
Section 6.1 Dissolution Events........................12
ARTICLE VII REMEDIES FOR BREACH.......................13
Section 7.1 Specific Enforcement......................13
Section 7.2 Attorneys Fees and Expenses...............13
ARTICLE VIII AMENDMENTS................................13
ARTICLE IX MISCELLANEOUS.............................13
Section 9.1 Notices...................................13
Section 9.2 Consents..................................14
Section 9.3 Binding Effect............................14
Section 9.4 Further Actions...........................14
Section 9.5 Headings and Captions.....................14
Section 9.6 Relationship of this Agreement to the
Default Rules...........................14
Section 9.7 Relationship of this Agreement and
the Certificate of Formation............14
Section 9.8 Counterparts..............................14
Section 9.9 Creditors and Other Third Parties.........14
Section 9.10 Governing Law.............................14
Section 9.11 No Waiver.................................15
Section 9.12 Integration...............................15
Section 9.13 Severability..............................15
ADDENDUM.................................................................... A-1
MEMBERSHIP ROSTER..................................................... EXHIBIT A
INITIAL CAPITAL CONTRIBUTIONS......................................... EXHIBIT B
THIS OPERATING AGREEMENT is entered into and shall be effective as of
March 5, 1999, by and between IMMUNOMEDICS, INC., a Delaware corporation
("IMMUNOMEDICS"), and DAVID GOLDENBERG, an individual ("GOLDENBERG")
(IMMUNOMEDICS and GOLDENBERG each a "Member" and sometimes collectively referred
to herein as the "Members"), and IMG TECHNOLOGY, LLC, a Delaware limited
liability company (the "Company").
PRELIMINARY STATEMENT
A. The Company was formed on February 25, 1999 by the filing of a
Certificate of Formation, duly executed by Tanya M. Taylor (in
her capacity as organizer of the Company, the "Organizer"), in
the office of the Secretary of the State of the State of
Delaware. On February 25, 1999, the Organizer executed a
Statement of the Organizer certifying to the formation of the
Company and the appointment of IMMUNOMEDICS as the initial
Member of the Company.
B. The Company and Coulter Corporation intend to enter into an
Operating Agreement of IBC Pharmaceutical, LLC ("IBC
Pharmaceutical") (the "IBC Operating Agreement"), as Members
pursuant to which the Company will, through IMMUNOMEDICS,
contribute certain targeted technology to IBC Pharmaceutical.
C. The parties to this Agreement wish to set forth their
agreements regarding the financing, ownership, governance and
operation of the Company. To reflect the foregoing, the
parties hereto agree to continue the Company on the terms and
conditions set forth below.
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. When used in this Agreement and the Addendum,
the following capitalized terms shall have the meanings set forth in this
Section, unless the context otherwise requires:
"Accountants" means such regionally or nationally recognized firm of
independent public accountants as may be engaged by the Members on behalf of the
Company.
"Act" means the Delaware Limited Liability Company Act as set forth in
Sections 18-101 to 18-1109 of the Delaware Code, as amended from time to time
(or any corresponding provision or provisions of succeeding law).
"Addendum" means that addendum annexed hereto and incorporated herein
by reference, which contains rules of governance with respect to various
financial matters pertaining to the Company, including issues pertaining to
allocations of profits and losses and with respect to applicable rules under the
Code and Treasury Regulations.
"Affiliate" means, with respect to any person, (i) any person that
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, the specified person; (ii) any
person that is an officer of, director of, partner in, or trustee of, or serves
in a similar capacity with respect to, the specified person or of which the
specified person is an officer, member or trustee, or with respect to which the
specified person serves in a similar capacity (iii) any person that, directly or
indirectly, is the beneficial owner of ten percent (10%) or more of any class of
equity securities of the specified person or of which the specified person is
directly or indirectly the beneficial owner of ten percent (10%) or more of any
class of equity securities; or (iv) any relative or spouse of the specified
person who makes his home with that of the specified person; except that a
person who is a member in a company or joint venture with the Company or any
Affiliate of the Company is not an Affiliate of the Company or the Member if
such person is not otherwise an Affiliate thereof.
"Agreement" means this operating agreement, as originally executed and
as amended from time to time.
"Bankruptcy" means, with respect to any Person, the (i) commencement by
such Person of a voluntary case for relief as a debtor under the United States
Bankruptcy Code or the filing by such Person of a petition to take advantage of
any other present or future insolvency act or other applicable law relating to
bankruptcy, insolvency, reorganization, or relief of debtors; (ii) making by
such Person of an assignment for the benefit of creditors; (iii) consent by such
Person to, or acquiescence in by such Person of, the appointment of a receiver,
liquidator, trustee, custodian, or other similar official of such Person or of
the whole or any substantial part of such Person's properties or assets; (iv)
entering by a court of competent jurisdiction of an order, judgment, or decree,
appointing a receiver, liquidator, trustee, custodian, or other similar official
of such Person or of the whole or any substantial part of such Person's
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properties or assets, which order, judgment, or decree has remained unvacated,
or not set aside, or unstayed, for a period of not less than one hundred twenty
(120) days; (v) commencement of an involuntary case against such Person under
the United States Bankruptcy Code, or filing against such Person of a petition
seeking similar relief under any other present or future insolvency act or other
applicable law relating to bankruptcy, insolvency, reorganization, or relief of
debtors, which case or petition has remained undismissed for not less than one
hundred twenty (120) days; (vi) assumption, under the provisions of any other
law for the relief or aid of debtors, by any court of competent jurisdiction of
custody or control of such Person or the whole or any substantial part of such
Person's properties or assets, which custody or control remains unvacated or
unstayed for not less than one hundred twenty (120) days; or (vii) in the case
of a Member that is a corporation, partnership or limited liability company, the
liquidation or dissolution of such Member.
"Business Day" means any day on which the New York Stock Exchange is
neither required nor authorized to close.
"Capital Account" means the capital account established on the books of
the Company for each Member in accordance with the provisions of Section 2.1 of
the Addendum.
"Capital Contribution" means, with respect to any Member, the amount of
money and the fair market value of any property (other than money or a
promissory note that is made by such Member and that is not readily traded on an
established securities market) contributed to the Company by such Member with
respect to his interest in the Company.
"Certificate of Cancellation" means a certificate of cancellation filed
with the Secretary pursuant to the Act to cancel the Certificate of Formation.
"Certificate of Formation" means the certificate of formation filed
with the Secretary on February 25, 1999 in connection with the formation of the
Company, as the same may be amended from time to time.
"Company" means the limited liability company formed and operated
pursuant to the Articles of Organization and this Agreement.
"Default Rules" means a rule provided by the Act that (i) structures,
defines or regulates the finances, governance, operations or other aspect of a
limited liability formed under the Act, and (ii) applies except to the extent it
is negated or modified through the provisions of a limited liability company's
articles of organization or operating agreement.
"Delaware Code" means Chapter 18, Title 6 of the Delaware Code
Annotated.
"Dissolution Event" means an event described in Section 7.1. "Fiscal
Year" means (i) the period commencing on the date of this Agreement and ending
on the following December 31; (ii) any subsequent twelve (12) month period
beginning on January 1 and ending on December 31; or (iii) any portion of the
period described in clauses (i) or (ii) for which the Company is required to
close its books and allocate Profits (as such term is defined in the Addendum),
Losses (as such term is defined in the Addendum) and other items of income,
gain, loss, deduction or credit.
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"Initial Capital Contribution" means, with respect to any Member, the
aggregate Capital Contributions made by such member as of the effective date of
this Agreement.
"Interest" means a Member's membership interest in the Company at any
given time, including such Member's interest in the capital and profits of the
Company.
"Member" means, at any time, any Person who is then a member of the
Company (within the meaning of Section 102(q) of the Act).
"Permitted Transferee" means, with respect to any Member, (i) his
spouse, children or grandchildren, (ii) a trustee of a trust for the sole
benefit of any one or more of the persons identified in the preceding clause
(i), or (iii) any corporation, partnership or other entity controlled by such
Member or any person identified in the preceding clause (i).
"Person" means any individual or trust, estate, partnership,
corporation, limited liability company or other entity.
"Secretary" means the Office of the Secretary of State of the State of
Delaware.
"Transfer" means to sell, assign, convey, donate, transfer, lease,
mortgage, pledge, encumber or otherwise dispose of all or part of any Interest,
or to contract to do any of the foregoing.
Section 1.2 Rules of Construction. Unless the context otherwise
requires, (i) a term shall have the meaning assigned to it in Section 1.1; (ii)
an accounting term not otherwise defined shall have the meaning assigned to it
in accordance with generally accepted accounting principles; (iii) "or" shall
not be exclusive; (iv) words in the singular shall include the plural, and vice
versa; (v) words in the masculine gender shall include the feminine and neuter,
and vice versa; and (vi) any reference to an "Article" or "Section," if not
otherwise modified, shall be a reference to an Article or Section of this
Agreement.
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ARTICLE II
ORGANIZATIONAL MATTERS
Section 2.1 Organization. On February 25, 1999, a Certificate of
Formation in compliance with Section 18-201(a) of the Act was filed with the
Secretary causing the organization of the Company, effective as of said date.
Section 2.2 Company Name. The name of the Company is "IMG TECHNOLOGY,
LLC".
Section 2.3 Principal Place of Business. The principal place of
business of the Company is located at 300 American Road, Morris Plains, New
Jersey 07950. The Members may change the principal place of business of the
Company to any other place within or without the State of New Jersey. The
Company may maintain such additional offices and places of business in such
locations as the Members may deem necessary or advisable.
Section 2.4 Registered Agent. The Secretary is designated as the
Company's registered agent upon whom process against the Company may be served
within the State of Delaware. The President is authorized to appoint a successor
registered agent or agents if the registered agent or agents resign or if the
Members otherwise deem it desirable to do so.
Section 2.5 Company Purpose. The purposes of the Company are (i) to
engage in any lawful act or activity for which limited liability companies may
be formed under the Act, and (ii) to engage in any and all activities necessary
or incidental thereto.
Section 2.6 Term of Company. The term of the Company commenced on the
date the Articles were filed with the Secretary and shall continue until twelve
o'clock noon on December 31, 2050, unless terminated sooner pursuant to the
provisions of Article XII.
Section 2.7 Title to Property. All property owned by the Company
shall be owned by the Company as an entity and no Member shall have any
ownership interest in such property in his individual name, and each Member's
Interest shall be personal property for all purposes. At all times after the
date of this Agreement, the Company shall hold title to all of its property in
its own name and not in the name of any Member.
ARTICLE III
CAPITALIZATION
Section 3.1 Initial Capital Contributions of the Members. The Capital
Contribution of each of the Members, as of the date hereof, is as set forth on
the schedule annexed hereto as Exhibit B.
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Section 3.2 Admission of Members. The Company shall not accept a
Capital Contribution on behalf of the Company from any person that is not a
Member and shall not admit any such person to the Company as a Member.
Section 3.3 Company Capital.
Section 3.3.1. Interest. The Company shall not be required
to pay interest on any Capital Contribution.
Section 3.3.2. Returns and Withdrawals. No Member shall have
the right to withdraw or receive any return of his Capital Contribution, except
as expressly provided by Section 3.3.1 and Articles IV and VI of the Addendum,
and no Capital Contribution may be returned in the form of property (other than
money), except as specifically provided by Section 6.8 of the Addendum.
ARTICLE IV
MANAGEMENT OF THE COMPANY;
ACTS OF MEMBERS AND MEMBER MEETINGS
Section 4.1 Management. The overall management of the Company shall
be vested in its Members and all management decisions with respect to the
Company shall be made in accordance with Section 4.3 and 4.4.
Section 4.2 Voting Rights. On matters subject to a vote of the
Members, the Members shall vote in proportion with their percentage Interest in
the Company.
Section 4.3 Management Powers. Management and control of the affairs of
the Company shall be vested in the Members. The rights and powers of the Members
shall be exercised by them in the manner set forth herein. In addition to the
powers now or hereafter granted by law and as otherwise provided for in this
Agreement, the Members for, and in the name and on behalf of the Company, shall
have the power, either directly or through one or more intermediaries, to (i)
acquire by purchase, lease or otherwise any real or personal property which may
be necessary, convenient or incidental to the accomplishment of the purposes of
the Company; (ii) operate, maintain, finance, improve construct, own, grant
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options with respect to, sell, convey, assign or lease any real or personal
property which may be necessary, convenient or incidental to the accomplishment
of the purposes of the Company; (iii) incur indebtedness or issue evidences of
indebtedness which may be necessary, convenient, or incidental to the purposes
of the Company and secure the same by mortgage, pledge, or other lien on any
assets of the Company; (iv) execute any and all agreements, contracts,
documents, certifications, and instruments which may be necessary, convenient,
or incidental in connection with the acquisition, financing, operation, and sale
of any assets of the Company; (v) prepay in whole or in part, refinance, recast,
increase, modify, or extend any borrowings or indebtedness of the Company and,
in connection therewith, to execute any extensions, consolidations,
modifications, or renewals of any mortgages on any assets of the Company; (vi)
perform, or cause to be performed, all of the Company's obligations under any
agreement to which the Company is a party or is otherwise bound; (vii)
prosecute, defend, or compromise upon such terms as they may determine and upon
such evidence as they may deem sufficient, any obligation, suit, liability,
cause of action, claim, either in favor of or against the Company; (viii) employ
employees, agents, attorneys, auditors, accountants, and depositories and to pay
fees, expenses, and other compensation to such persons; (ix) establish and
maintain reserves for such purposes and in such amounts as the Members deem
appropriate from time to time; (x) make appropriate elections permitted under
applicable tax law, provided, however, that such elections shall not in the
opinion of counsel to the Company or of the Accountants be disadvantageous to a
majority-in-interest of the Members; and (xi) engage in any kind of activity and
perform and carry out contracts of any kind necessary to, in connection with, or
incidental to, the accomplishment of the purposes of the Company, as may be
lawfully carried on or performed by a limited liability company under the laws
of the State of Delaware and in each state where the Company has qualified or
does business.
Section 4.4 Exclusive Duty to the Company. Each Member shall devote
his or its full business time and attention to the business of the Company.
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Section 4.5 Meetings of the Members.
Section 4.5.1 Procedures. Meetings of the Members may be
called by Members possessing, in the aggregate, at least a twenty (20%) percent
Interest in the Company. The notice shall state the place, date and time of the
meeting, and may, but shall not be required to, state the purpose of the meeting
and the business to be transacted. Notice of any such meeting shall be given to
all Members not less than ten (10) Business Days nor more than thirty (30)
Business Days prior to the date of such meeting. No notice of any meeting of
Members need be given to any Member who attends in person or is represented by
duly executed proxy, or to any Member entitled to such notice who, in a writing
executed and filed with the records of the meeting, either before or after the
time thereof, waives such notification. Members may vote in person, by proxy or
by telephone at such meeting and may waive advance notice of such meeting. The
presence in person or by proxy of a majority in interest of the Members shall
constitute a quorum for all meetings of the Members. Each meeting of Members
shall be held at the Company's principal place of business or at any other
location set forth in the notice thereof. At such meetings, the Members shall
transact such business as may properly be brought before the meeting, whether or
not notice of such meeting referenced the action taken at such meeting.
Section 4.5.2 Manner of Acting. If a quorum is present, the
affirmative vote of those Members holding a majority in interest present at the
meeting shall be the act of the Members.
Section 4.5.3 Record Date. For the purpose of determining
the Members entitled to notice of, or to vote at, any meeting of the Members or
any adjournment thereof, the Member calling the meeting may fix, in advance of
sending of the notice, a date as the record date for any such determination.
Such date shall not be more than thirty (30) days nor less than ten (10) days
before any such meeting.
Section 4.5.4 Proxies. Each Member may authorize any Person
or Persons to act for it by proxy on all matters in which a Member is entitled
to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed on behalf of the Member
or by its attorney-in-fact. No proxy shall be valid after the expiration of
eleven (11) months from the date thereof unless otherwise provided in the proxy.
Every proxy shall be revocable at the direction of the Member executing it.
Section 4.5.5 Management of Meetings. A representative of
IMMUNOMEDICS shall preside at and conduct any meeting of the Members.
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Section 4.5.6 Meetings by Conference Telephone. Any action
required to be taken at a meeting of the Members may be taken at a meeting held
by means of conference telephone or other communications equipment by means of
which all Persons participating in the meeting can hear each other.
Participation in such a meeting shall constitute presence in person at such
meeting.
Section 4.5.7 Actions Without a Meeting. Any action required
or permitted to be taken at a meeting of the Members may be taken without a
meeting by written action signed by Members who possess the percentage Interests
equal to the percentage Interests that would be required to take the same action
at a meeting of the Members at which all Members were present. The written
action is effective when signed by Members possessing the required percentage
Interests, unless a different effective time is provided in the written action.
Section 4.6 Limitation of Liability. Except as otherwise required by
applicable law, no Member shall be personally liable for the debts, obligations
or liabilities of the Company, whether arising in tort, contract or otherwise,
solely by reason of being a Member. A Member shall be liable only to make his or
its initial Capital Contribution, and shall not be required to lend any funds to
the Company or, after his or its initial capital contribution shall have been
made, to make any further Capital Contributions to the Company or to repay any
Member, or any creditor of the Company all or any part of the negative balance
of his Capital Account, provided that a Member may be required to repay
distributions made to it as provided in Section 18-607 of the Act.
Section 4.7 Liability for Certain Acts. The Members shall exercise
their business judgment in managing the business, operations, and affairs of the
Company. Unless fraud, willful misconduct or gross negligence shall be proved by
a nonappealable court order, judgment, decree or decision, no Member shall be
liable or otherwise accountable in damages to the Company or any Member for any
mistake of fact or judgment or for the doing of any act or the failure to do any
act in conducting the business, operations and affairs of the Company, which may
cause or result in any loss or damage to the Company or to any Member. No Member
shall be deemed to have in any way guaranteed the return of the Members' Capital
Contributions or a profit for the Members from the operations of the Company,
and no Member shall be responsible to any Member because of a loss of such
Member's investment, unless such loss shall have been the result of fraud,
willful misconduct or gross negligence of such Member.
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Section 4.8 Reimbursement of Expenses; Compensation.
Section 4.8.1 The Company shall reimburse each Member for the
out of pocket expenditures he may incur in managing the business of the Company,
including, without limitation, travel and lodging expenses upon submission of
appropriate documentation expenses.
Section 4.8.2 No Member shall receive any interest, salary or
drawing with respect to his Capital Contributions or Capital Account or for
services rendered on behalf of the Company, or otherwise, in his capacity as a
Member, except as otherwise provided in this Agreement.
ARTICLE V
TRANSFERS; RESTRICTIONS ON TRANSFERS;
ADDITIONAL MEMBERS
Section 5.1 Transfer Procedures. Except as otherwise expressly provided
in this Agreement and subject in all respects to the other provisions of this
Article V, the transfer of any Interest upon the books of the Company shall be
accomplished only by the submission to the Company by the transferor or
transferee of a duly executed and acknowledged counterpart of the instrument
making such transfer together with such other instrument or instruments
signifying the transferee's agreement to be bound by all of the provisions of
this Agreement (including but not limited to all of the transferor's obligations
hereunder), all of the foregoing in such form and substance as shall be
reasonably satisfactory to the Company. If such instruments are not so
submitted, the Company need not recognize any such transfer as being effective
for any purpose.
Section 5.2 Restrictions on Transfers; Permitted Transfers.
Section 5.2.1 General Restrictions on Transfer. Except as
otherwise permitted by this Agreement, no Member shall Transfer any or all of
his or its Interest without the consent of all of the other Members.
Section 5.2.2 Permitted Transfers. Subject to compliance
with the provisions of this Agreement, any Member may voluntarily Transfer all
or any part of his or its Interest to any Permitted Transferee. Such Transfer
shall not be effective unless the transferring Member provides notice to the
Company setting forth (i) the identity of the transferee, and (ii) the
consideration, if any, paid for the Transferred Interest at least ten (10) days
before the effective date of the Transfer.
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Section 5.3 Transfers by IMMUNOMEDICS. IMMUNOMEDICS may at any time
Transfer all or any portion of its Interest pursuant to Section 5.1 for
consideration to an unaffiliated third party, subject to the following
provisions:
(i) Mandatory Sale by GOLDENBERG. In the event that
IMMUNOMEDICS intends to transfer its entire Interest to an unaffiliated third
party pursuant to the provisions of this Section 5.3, then upon the demand of
IMMUNOMEDICS, GOLDENBERG shall be required to sell to the proposed purchaser all
of his Interest, such sale to be made on the same terms, conditions and price
and at the same time as the proposed purchase from IMMUNOMEDICS.
(ii) Optional Sale by GOLDENBERG. Notwithstanding the
provisions set forth in paragraph (i) of this Section 5.3, in the event that
IMMUNOMEDICS receives and intends to transfer a portion of its Interest to an
unaffiliated third party pursuant to the provisions of this Section 5.3 and such
portion of its Interest is equal to or greater than fifty-one (51%) percent of
the total Interest of all Members, then as a condition to the closing of such
sale, the proposed purchaser shall be required to offer to purchase from
GOLDENBERG that same percentage of his Interest as the percentage obtained by
multiplying IMMUNOMEDICS' percentage Interest being sold times the entire
Interest then held by IMMUNOMEDICS.
Section 5.4 Transfers by GOLDENBERG.
Section 5.4.1 Purchase Option. If at any time GOLDENBERG
desires to Transfer all or any portion of his Interest other than to a Permitted
Transferee pursuant to Section 5.1 for consideration, he must in any event first
provide IMMUNOMEDICS an opportunity to purchase his Interest, or such portion
thereof, by notice, for consideration and upon other terms and conditions as
GOLDENBERG shall determine. IMMUNOMEDICS shall have sixty (60) days after the
mailing date of such notice in which to accept the offered Interest by written
notice to GOLDENBERG.
Section 5.4.2 Failure to Exercise Option. In the event that
IMMUNOMEDICS does not elect to purchase all or such portion of the Interest
offered by GOLDENBERG pursuant to Section 5.4.1, GOLDENBERG shall be free for a
period of one (1) year after the expiration of the sixty (60) day acceptance
period, to transfer all, but not less than all, of his offered Interest to any
prospective transferee for consideration and on such other terms and conditions
no more favorable to such transferee than those offered to IMMUNOMEDICS. If the
consideration or other terms or conditions offered to such transferee are more
favorable than those offered to IMMUNOMEDICS, GOLDENBERG must re-offer the
offered Interest to IMMUNOMEDICS pursuant to the provisions of Section 5.4.1. In
the event that a Transfer of the offered Interest is effected pursuant to this
Section 5.4.2, GOLDENBERG shall, within ten (10) days thereafter, certify to
IMMUNOMEDICS the identity of the transferee and that the consideration of such
Transfer was no more favorable than that offered to IMMUNOMEDICS.
Section 5.5 Repayment of Loans. Whenever the entire Interest of any
Member is purchased pursuant to the provisions of this Agreement, the purchasing
Member or third party may set off against the first payment to be made on
account of the purchase price of the Interest purchased hereunder the unpaid
balance of any indebtedness owing by such Member to the Company.
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Section 5.6 Additional Members. Additional Members may be admitted to
the Company upon (i) the unanimous written consent of all of the Members, which
consent may be granted or withheld in their sole discretion, and (ii) the
agreement of the new Member in writing to be bound by the terms of this
Agreement.
ARTICLE VI
DISSOLUTION AND WINDING UP
Section 6.1 Dissolution Events.
The Company shall dissolve and shall commence winding up and liquidating upon
the first to occur of any of the following events:
(i) 12:00 p.m. on December 31, 2050;
(ii) upon written notice from the Members of their desire to commence the
voluntary dissolution of the Company, in accordance with the terms of Section
5.3.3; or
(iii) the entry of a decree of judicial dissolution under Section 18-802 of the
Act.
The death, retirement, resignation, expulsion or Bankruptcy of a Member
or the occurrence of any other event which terminates the continued membership
of a Member in the Company shall not result in the dissolution or liquidation of
the Company and the business of the Company shall continue notwithstanding the
occurrence of such event. The foregoing sentence shall be deemed to be a stated
right to continue by the Company in conformity with Section 18-801(b) of the
Act. Notwithstanding any provision of the Act, the Company shall not dissolve
prior to the occurrence of a Dissolution Event.
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ARTICLE VII
REMEDIES FOR BREACH
Section 7.1 Specific Enforcement. All breaches of this Agreement are
subject to specific enforcement, without prejudice to the right to seek damages
or other remedies.
Section 7.2 Attorneys Fees and Expenses. If the Company resorts to
litigation to remedy a breach of this Agreement by a Member or former Member and
the Company prevails in the litigation, in addition to any other remedies
available to the Company under this Agreement or by law, the Company may collect
its reasonable attorneys fees and expenses of litigation from such Member.
ARTICLE VIII
AMENDMENTS
Members possessing at least a majority-in-interest of the Company may,
without prior notice to or consent of any other Member, amend any provision of
this Agreement; provided, however, that no amendment that has the effect of
increasing the liability of any Member or adversely affecting any Member's
interest in the income, gain or loss of the Company or in cash distributions by
the Company may become effective unless affirmatively consented to by all
Members who would be adversely affected thereby. Written notice of any amendment
to this Agreement effected pursuant to this Article VIII shall be sent to all
Members within a reasonable period of time after its adoption.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices. All notices permitted or required to be given by
this Agreement shall be in writing and shall be deemed to be duly given if given
personally with receipt acknowledged or sent, by registered or certified mail,
return receipt requested, or by fax, or by overnight courier for next day
delivery, addressed to the Company at its principal office, and addressed to the
respective Members at their addresses set forth on the schedule annexed hereto
as Exhibit A, unless notice in writing is given of a change of address in the
manner set forth herein, in which case notices shall be sent to the new address
so designated. Notice of change of address shall be deemed given when actually
received or upon refusal to accept delivery thereof; all other notices shall be
deemed given and received on the earlier of (i) the date when actually received
or upon refusal to accept delivery thereof, or (ii) on the date when personally
delivered, one (1) day after being sent by telex, fax or overnight courier and
three (3) days after mailing, as aforesaid.
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Section 9.2 Consents. Any consent required under the Agreement must
be in writing.
Section 9.3 Binding Effect. Subject to the restrictions on transfer
set forth herein, this Agreement shall be binding upon, and inure to the benefit
of, the parties hereto and their successors and assignors.
Section 9.4 Further Actions. Each of the Members shall hereafter
execute and deliver such further instruments, including written powers of
attorney, and perform such further acts as may be required to carry out the
intent and purposes of the Agreement.
Section 9.5 Headings and Captions. All headings and captions
contained in the Agreement and the table of contents hereto are inserted only as
a matter of convenience and in no way define, limit, extend, or describe the
scope of this Agreement or the intent of any provision hereof.
Section 9.6 Relationship of this Agreement to the Default Rules.
Regardless of whether this Agreement specifically refers to particular Default
Rules, (i) if any provision of this Agreement conflicts with a Default Rule,
such provision shall control and the Default rule shall be modified or negated
accordingly; and (ii) if it is necessary to construe a Default Rule as modified
or negated in order to effectuate any provision of this Agreement, such Rule
shall be modified or negated accordingly.
Section 9.7 Relationship of this Agreement and the Certificate of
Formation. If a provision of this Agreement differs from a provision of the
Certificate of Formation, then to the extent allowed by law this Agreement will
govern.
Section 9.8 Counterparts. This Agreement may be executed in one or
more counterparts and all such counterparts shall constitute one Agreement
binding on all the parties notwithstanding that all the parties are not
signatories to the original or the same counterpart.
Section 9.9 Creditors and Other Third Parties. None of the provisions
of this Agreement are made for the benefit of, or shall be enforceable by, any
creditor of the Company or any other Person who is not a Member.
Section 9.10 Governing Law. This Agreement shall, except as otherwise
expressly provided herein, be governed by, and construed in accordance with, the
laws of the State of Delaware without regard to the conflict of laws provisions
thereof.
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Section 9.11 No Waiver. The failure of any party to insist upon strict
performance of any provision hereof, irrespective of the length of time for
which such failure continues, shall not be a waiver of such party's right to
demand strict compliance in the future, and no consent or waiver, express or
implied, to any breach or default in the performance of any obligation hereunder
shall constitute a consent or waiver to any other breach or default in the
performance of the same or any other obligation hereunder.
Section 9.12 Integration. This Agreement constitutes the entire
agreement among the parties with respect to the Company, superseding all oral
and written, prior or contemporaneous agreements, discussions, negotiations, or
understandings.
Section 9.13 Severability. If any provision of this Agreement, or the
application to any party or circumstance, shall be determined by a court of
competent jurisdiction to be invalid or unenforceable to any extent, the
remainder of this Agreement, or the application of such provision to such Person
or circumstance, other than those as to which it is so determined to be invalid
or unenforceable, shall not be affected thereby, and each provision hereof shall
be valid and shall be enforced to the fullest extent permitted by law.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
IMMUNOMEDICS, INC.
By: ________________________
Name: Robert J. DeLuccia
Title: Chief Executive Officer
IMG TECHNOLOGY, LLC
BY: IMMUNOMEDICS, INC.,
its sole Member
By: ________________________
Name: Robert J. DeLuccia
Title: Chief Executive Officer
___________________________
DAVID M. GOLDENBERG
ADDENDUM
\
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. When used in this Addendum to that certain
Operating Agreement of IMG TECHNOLOGY, LLC, dated as of February 25, 1999 (the
"Agreement"), and in the Agreement itself, capitalized terms used herein shall
have the meanings set forth below in this Section, unless the context otherwise
requires. Capitalized terms used herein but not otherwise defined herein shall
have the meaning set forth in the Agreement.
"Adjusted Capital Account Deficit" means, with respect to any Member at
the close of any Fiscal Year, the deficit balance in such Member's Capital
Account at such time (determined by (i) crediting to such Capital Account (x)
the amount of such Member's Deficit Restoration Obligation at that time and (y)
the amount such Member is deemed to be obligated to restore under the
penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Treasury Regulations at such time (determined after taking into account any
changes in the Company Minimum Gain and Member Minimum Gain of the Company
during such Fiscal Year); and (ii) charging to such Capital Account (x) any
adjustments described in Section 1.704-1(b)(2)(ii)(d)(4) of the Treasury
Regulations that, at such time, are reasonably expected to be made to such
Member's Capital Account, (y) any allocations described in Section
1.704-1(b)(2)(ii)(d)(5) of the Treasury Regulations that, at such time, are
reasonably expected to be made to such Member, and (z) any distributions
described in Section 1.704-1(b)(2)(ii)(d)(6) of the Treasury Regulations that,
at such time, are reasonably expected to be made to such Member).
"Capital Account" means the capital account established on the books of
the Company for each Member in accordance with the provisions of Section 2.1.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time (or any corresponding provision or provisions of any subsequent federal
revenue law).
"Company Minimum Gain" means, at the close of any Fiscal Year, the
minimum gain of the Company (determined in accordance with Section 1.704-2(i)(2)
of the Treasury Regulations).
"Deficit Restoration Obligation" means, with respect to any Member at
the end of any Fiscal Year, the amount such Member is obligated to restore under
applicable law or pursuant to any provision of this Agreement on account of a
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deficit balance in such Member's Capital Account or is deemed obligated to
restore under Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Treasury
Regulations (determined after taking into account any changes in the Minimum
Gain and the Member Minimum Gain during such Fiscal Year).
"Liquidator" means the Person appointed by the Members pursuant to
Section 6.7 to oversee the liquidation of the Company.
"Loss" means, for any Fiscal Year, an amount equal to the Company's
loss for such year, determined in accordance with Section 5.1.
"Member Minimum Gain" means an amount, with respect to each Member
Nonrecourse Debt, equal to the Company Minimum Gain that would result if such
Member Nonrecourse Debt were treated as a Nonrecourse Liability (determined in
accordance with Section 1.704-2(i)(3) of the Treasury Regulations.
"Member Nonrecourse Debt" means any liability of the Company that is a
partner nonrecourse debt (as that term is defined by Section 1.704-2(b)(4) of
the Treasury Regulations).
"Member Nonrecourse Deductions" means, for any Fiscal Year, the partner
nonrecourse deductions of the Company for such Year (determined in accordance
with Section 1.704-2(i)(2) of the Treasury Regulations).
"Net Cash Flow" means, for any Fiscal Year, the sum of (x) the excess
of (A) the gross cash proceeds received by the Company in such Fiscal Year
(including the net cash proceeds from all sales and other dispositions, but
excluding cash proceeds received from all borrowings or refinancing of assets),
over (B) the portion of such proceeds used in such Fiscal Year to pay or
establish reserves for expenses, capital improvements, debt repayments,
replacements and contingencies, and (y) any reductions in such Fiscal Year of
previously established reserves.
"Nonrecourse Deductions" means, for any Fiscal Year, the nonrecourse
deductions of the Company for such Year (determined in accordance with Section
1.704-2(b)(1) of the Treasury Regulations).
"Nonrecourse Liability" means a liability of the Company that is a
nonrecourse liability (as that term is defined in Section 1.704-2(b)(3) of the
Treasury Regulations).
"Profit" means, for any Fiscal Year, the amount equal to the Company's
profit for such year, determined in accordance with Section 3.2.
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"Regulatory Allocations" means, collectively, the allocations set
forth in Section 3.5.
"Service" means the Internal Revenue Service.
"Treasury Regulations" means the official Treasury Department
interpretation of the Code found in Title 26 of the Code of Federal Regulations.
Section 1.2 Rules of Construction. Unless the context otherwise
requires, (i) a term shall have the meaning assigned to it in Section 1.1; (ii)
an accounting term not otherwise defined shall have the meaning assigned to it
in accordance with generally accepted accounting principles; (iii) "or" shall
not be exclusive; (iv) words in the singular shall include the plural, and vice
versa; (v) words in the masculine gender shall include the feminine and neuter,
and vice versa; and (vi) any reference to an "Article" or "Section," if not
otherwise modified, shall be a reference to an Article or Section of this
Addendum.
ARTICLE II
CAPITAL STRUCTURE; CAPITAL ACCOUNTS
Section 2.1 Establishment. A single Capital Account shall be
established on the books of the Company for each Member. Initial Capital
Accounts shall be as set forth on Exhibit B.
Section 2.2 Maintenance of Capital Accounts. The Capital Account
established for any Member shall be maintained in accordance with the following
rules.
Section 2.2.1 Basic Rules. The Capital Account established for
any Member shall be (i) credited with (A) such Member's Capital Contributions,
(B) such Member's allocable share of Profits and any items in the nature of
income or gain that are specially allocated pursuant to Section 3.3, and (C) the
amount of any Company liabilities assumed by such Member or which are secured by
any property distributed to such Member by the Company; and (ii) charged with
(A) the amount of money and the gross fair market value of any property
distributed to such Member pursuant to any provision of this Agreement, (B) such
Member's allocable share of Losses and any items in the nature of expense or
loss that are specially allocated pursuant to Section 3.3 of the Addendum, and
(C) the amount of such Member's liabilities assumed by the Company or that are
secured by any property contributed to the Company by such Member.
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Section 2.2.2 Treatment of Liabilities. The amount of any
liability shall be determined for purposes of this Section 2.2 taking into
account Section 752(c) of the Code and any other applicable provisions of the
Code and the Treasury Regulations.
Section 2.2.3 Treatment of Certain Promissory Notes. If a
promissory note (other than a note that is readily tradeable on an established
securities market) is contributed to the Company by the person who is the maker
of such note, such person's Capital Account shall be credited on account of the
contribution of such note only when there is a taxable disposition of such note
by the Company or when the maker makes principal payments on such note.
Section 2.3 Revaluations of Property. The book values of all Company
assets shall be adjusted to their respective gross fair market values as of the
following times: (i) the acquisition of an additional interest in the Company by
any new or existing Member in exchange for more than a de minimis amount of
money or other property; (ii) the distribution by the Company to a Member of
more than a de minimis amount of money or other property as consideration for an
interest in the Company; and (iii) the liquidation of the Company within the
meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations, provided,
however, that adjustments made at the times described in clauses (i) and (ii)
hereof shall be made only if the Members reasonably determine that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Members. The Members shall determine the gross fair market
values of all Company assets pursuant to this Section 2.3.
Section 2.4 Certain Other Adjustments to Book Values of Property. The
gross fair market value of all Company assets shall be adjusted to reflect any
adjustments to the tax bases of such assets pursuant to Section 743(b) or
Section 734(b) of the Code, but only to the extent that such adjustments are
taken into account in determining Capital Accounts pursuant to Section
1.704-1(b)(2)(iv)(m) of the Treasury Regulations and Section 3.1(vii) or Section
3.5.5; provided, however, that such gross fair market value shall not be
adjusted pursuant to this Section 2.4 to the extent an adjustment pursuant to
Section 2.3 is required in connection with a transaction that would otherwise
result in an adjustment pursuant to this Section 2.4.
Section 2.5 Compliance with Applicable Treasury Regulations. The
provisions of this Article II are intended to comply with Section 1.704-1(b) of
the Treasury Regulations and shall be interpreted and applied in a manner
consistent with such provision. In the event that the Members holding a majority
of the percentage Interest in the Company, after consultation with the
Accountants, determine that it is prudent to modify the manner in which Capital
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Accounts, or any credits or charges thereto are computed in order to comply with
such Section, they may make such modification, provided it is not likely to have
a material effect on the amounts distributable to any Member pursuant to Section
6.1 upon liquidation of the Company. The Company shall (i) after consultation
with the Accountants, make any adjustments that it deems necessary or
appropriate to maintain equality between the Capital Accounts of the Members and
the amount of Company capital reflected on the Company's balance sheet, as
computed for book purposes, in accordance with Section 1.704-1(b)(2)(iv)(q) of
the Treasury Regulations; and (ii) make any other appropriate modifications in
the event unanticipated events might otherwise cause this Agreement not to
comply with Section 1.704-1(b) of the Treasury Regulations.
Section 2.6 Transfers of Interests. If in any Fiscal Year a Member
transfers any or all of its Interest, then such Member's Capital Account (or the
portion thereof attributable to the transferred Interest) shall carry over to
the transferee. If such transfer causes a termination of the Company for federal
income tax purposes, the constructive reformation of the Company shall, for
purposes of this Article II, be treated as the formation of a new limited
liability company and the Capital Accounts of the Members shall be determined
and maintained accordingly.
ARTICLE III
COMPUTATION AND ALLOCATION
OF
FINANCIAL AND TAX ITEMS
Section 3.1 Computation of Profit and Loss. The Profit (or Loss) of
the Company for any Fiscal Year shall be an amount equal to the Company's
taxable income (or loss) for such Fiscal Year (computed in accordance with
Section 703(a) of the Code), with the following adjustments:
(i) any income of the Company for such Fiscal Year that is
exempt from federal income tax and not otherwise taken into account in computing
Profit (or Loss) under this Section 3.1 shall be added to such taxable income
(or loss);
(ii) any expenditure described in Section 705(a)(2)(B) of the
Code for such Fiscal Year not otherwise taken into account in computing Profit
(or Loss) under this Section 3.1 shall be subtracted from such taxable income
(or loss);
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(iii) in the event the book value of any asset is adjusted
pursuant to Section 2.3, the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such asset for purposes of
computing the Profit (or Loss);
(iv) any gain or loss resulting from the disposition during
such Fiscal Year of any asset (in a taxable transaction) shall be computed by
reference to the book value of such asset;
(v) in lieu of the depreciation (or cost recovery) or
amortization with respect to any asset taken into account in computing such
taxable income (or loss), there shall be taken into account depreciation (or
cost recovery) or amortization in respect of such asset determined by applying
the method used by the Company for federal income tax purposes with respect to
such asset to the book value of such asset (or if the tax basis of such asset is
zero at the beginning of such Fiscal Year, by applying any reasonable method
selected by the Members);
(vi) any items in the nature of income, gain, expense or loss
that are specially allocated pursuant to Sections 3.4 or 3.5 shall not be taken
into account; and
(vii) to the extent an adjustment to the tax basis of any
Partnership asset pursuant to Section 734(b) or Section 743(b) of the Code is
required pursuant to Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations
to be taken into account in determining Capital Accounts as a result of a
distribution other than in complete liquidation of a Member's interest, the
amount of such adjustment shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases the basis
of the asset) from the disposition of the asset and shall be taken into account
in computing Profit (or Loss).
The amount of the items in the nature of income, gain, expense or loss available
to be specially allocated pursuant to Section 3.4 and Section 3.5 shall be
determined by applying rules analogous to those set forth in this Section 3.1.
Section 3.2 Allocation of Profit.
Section 3.2.1 Operating Profit. Profits for any Fiscal Year
(determined without taking into account any item of gain attributable to the
sale or exchange of any asset by the Company or by IBC Pharmaceutical [other
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than a sale or exchange made in the ordinary course of business]) shall be
allocated to the Members as follows:
(i) first, to the Members in proportion to and to the extent
of the excess, if any, of (x) the aggregate amount of Loss allocated to each
such Member for all prior Fiscal Years pursuant to Section 3.3.2, over (y) the
aggregate amount of Operating Profit allocated to such Member pursuant to this
Section 3.2.1(i) for all prior Fiscal Years and the aggregate amount of gain
allocated to such Member pursuant to Section 3.2.2(i) for all prior Fiscal
Years; and
(ii) second, to the Members in proportion to and to the
extent of the excess, if any, of (x) the aggregate amount of Loss allocated to
each such Member for all prior Fiscal Years pursuant to Section 3.3.1, over (y)
the aggregate amount of Operating Profit allocated to such Member pursuant to
this Section 3.2.1(ii) for all prior Fiscal Years; and
(iii) the remainder, eighty (80%) percent to IMMUNOMEDICS and
twenty (20%) percent to GOLDENBERG.
Section 3.2.2 Gain on Disposition. Any item of gain that is
taken into account in computing Profit for any Fiscal Year that is attributable
to the sale or exchange of any asset by the Company or by IBC Pharmaceutical
(other than a sale or exchange made in the ordinary course of business) shall be
allocated as follows:
(i) first, to the Members in proportion to and to the extent
of the excess, if any, of (x) the aggregate amount of Loss allocated to such
Member pursuant to Section 3.3.2 for all Fiscal Years (including the current
Fiscal Year), over (y) the sum of the aggregate amount of Operating Profits
allocated to such Member pursuant to Section 3.2.1(i) for all prior Fiscal Years
and the aggregate amount of gain allocated to such Member pursuant to this
Section 3.2.2(i) for all prior Fiscal Years;
(ii) then to GOLDENBERG until the aggregate amount of gain
allocated to him pursuant to this Section 3.2.2(ii) with respect to such asset
equals twenty-five (25%) percent of the book value of such asset at the time of
sale or exchange, provided that the aggregate amount of gain allocated to
GOLDENBERG pursuant to this Section 3.2.2(ii) does not exceed $4,662,000; and
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(iii) the remainder, eighty (80%) percent to IMMUNOMEDICS and
twenty (20%) percent to GOLDENBERG.
Section 3.3 Allocation of Loss.
Section 3.3.1 General Rule. Loss for any Fiscal Year shall be
allocated eighty percent to IMMUNOMEDICS and twenty (20%) percent to GOLDENBERG.
Section 3.3.2 Special Limitation. Loss allocated to the
Members for any Fiscal year pursuant to Section 3.3.1 shall not exceed the
maximum amount of such Loss that can be so allocated without causing any Member
to have an Adjusted Capital Account Deficit at the end of such Fiscal Year. In
the event some but not all of the Members would have such Adjusted Capital
Account Deficits as a consequence of an allocation of Loss for a Fiscal Year
pursuant to Section 3.3.1, the limitation set forth in the first sentence of
this Section 3.3.2 shall be applied so as to allocate the maximum permissible
amount of such Loss to each Member under Section 1.704-1(b)(2)(ii)(d) of the
Treasury Regulations.
Section 3.4 Unanticipated State of Facts. If an unanticipated state of
facts arises (including a change in the federal income tax treatment of company
allocations), the allocations and determinations governed by this Article III
shall be made by the Members so as to carry out as nearly as practicable the
purposes of this Article III, namely, to give cumulative recognition when
allocating tax items to differences between the Fiscal Year in which a
transaction or item is recognized for purposes of determining Profit or Loss and
the taxable year in which it affects taxable income.
Section 3.5 Special Allocations. The following special allocations
shall be made in the following order:
Section 3.5.1 Minimum Gain Chargeback. Except as otherwise
provided by Section 1.704-2(f) of the Treasury Regulations, if there is a net
decrease in the Company Minimum Gain during any Fiscal Year, there shall be
allocated to each Member (before any other allocation is made under this Section
3.5) items of income and gain for such Fiscal Year (and, if necessary,
subsequent periods) in proportion to, and to the extent of, an amount equal to
such Member's share of the net decrease in Company Minimum Gain during such
Fiscal Year (determined in accordance with Section 1.704-2(g) of the Treasury
Regulations). The items to be allocated for any Fiscal year under this Section
3.5.1 shall be determined in accordance with Section 1.704-2(j)(2) of the
Treasury Regulations.
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Section 3.5.2 Member Minimum Gain Chargeback. Except as
otherwise provided by Section 1.704-2(i)(4) of the Treasury Regulations, if
during any Fiscal Year there is a net decrease in the Member Minimum Gain
attributable to a Member Nonrecourse Debt, there shall be allocated (before any
allocation for such Fiscal Year is made under this Section 3.5 (other than
Section 3.5.1)) to each Member with a share of the Member Minimum Gain
attributable to such Member Nonrecourse Debt (as determined under Section
1.704-2(i)(5) of the Treasury Regulations) items of income and gain for such
Fiscal Year (and, if necessary, for subsequent Fiscal Years) in proportion to,
and to the extent of such Member's share of the net decrease during such Fiscal
Year in the Member Minimum Gain attributable to such Member Nonrecourse Debt
(determined under Section 1.704-2(i)(4) of the Treasury Regulations). The items
to be allocated for any Fiscal Year under this Section 3.5.2 shall be determined
in accordance with Section 1.704-2(j)(2) of the Treasury Regulations.
Section 3.5.3 Qualified Income Offset. If any Member
unexpectedly receives any adjustments, allocations or distributions described in
Section 1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5) or Section
1.704-1(b)(2)(ii)(d)(6) of the Treasury Regulations during any Fiscal Year,
there shall be allocated (before any allocation is made under this Section 3.5
(other than Sections 3.5.1 or Section 3.5.2)) to such Member items of Company
income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal
Years) in an amount and manner sufficient to eliminate, to the extent required
by the Treasury Regulations, the Adjusted Capital Account Deficit of such Member
as quickly as possible, provided that an allocation pursuant to this Section
3.5.3 shall be made only if and to the extent that such Member would have an
Adjusted Capital Account Deficit after all other allocations provided in this
Section 3.5 have been tentatively made as if this Section 3.5.3 were not in the
Agreement. Any allocation of income or gain for any Fiscal Year made under this
Section 3.5.3 shall consist of a pro rata portion of each item of Company income
(including gross income) and gain for such period (other than income or gain for
such period allocated under Sections 3.5.1 or 3.5.2).
Section 3.5.4 Gross Income Allocation. If there is a deficit
balance in the Capital Account of any Member at the end of any Fiscal Year which
is in excess of the amount of such Member's Deficit Restoration Obligation at
that time, each such Member shall be specially allocated items of Company income
and gain in the amount of such excess as quickly as possible, provided that an
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allocation to the Capital Account of a Member pursuant to this Section 3.5.4
shall be made only if and to the extent that such Member would have an Adjusted
Capital Account Deficit in excess of such Deficit Restoration Obligation after
all other allocations provided for in this Section 3.5 have been made as if
Section 3.5.3 and this Section 3.5.4 were not in the Agreement.
Section 3.5.5 Section 754 Adjustments. To the extent an
adjustment to the tax basis of any Company asset pursuant to Section 734(b) or
Section 743(b) of the Code is required pursuant to Section
1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury
Regulations to be taken into account in determining Capital Accounts as the
result of a distribution to a Member in complete liquidation of such Member's
Interest or as the result of the sale of a Member's Interest, the amount of such
adjustment to Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis) and such gain or loss shall be specially allocated to the
Members in accordance with their interests in the Company in the event Section
1.704-1(b)(2)(iv)(m)(2) of the Treasury Regulations applies, or to the
distributee in the event Section 1.704-1(b) (2)(iv)(m)(4) of the Treasury
Regulations applies.
Section 3.5.6 Nonrecourse Deductions. Nonrecourse Deductions
for any Fiscal Year shall be allocated as determined by the Members in a manner
that is consistent with the principles of Sections 1.704-1 and 1.704-2 of the
Treasury Regulations.
Section 3.5.7 Member Nonrecourse Deductions. Any Member
Nonrecourse Deductions for any Fiscal Year shall be allocated to the Member who
bears the economic risk of loss with respect to the Member Nonrecourse Debt to
which such Member Nonrecourse Deductions are attributable in accordance with
Section 1.704-2(i)(1) of the Treasury Regulations.
Section 3.6 Curative Allocations. All Regulatory Allocations shall be
offset either with other Regulatory Allocations or with special allocations of
items in the nature of income, gain, expense, or loss pursuant to this Section
3.6. The Company shall make such offsetting special allocations in its
discretion so that, after such offsetting allocations are made, each Member's
Capital Account balance is, to the extent possible, equal to the Capital Account
balance such Member would have had if the Regulatory Allocations were not part
of the Addendum and all Company items were allocated pursuant to Section 3.2 and
Section 3.3 of the Agreement. In exercising its discretion under this Section
3.6, the Company shall take into account future Regulatory Allocations that,
although not yet made, are likely to offset other Regulatory Allocations
previously made.
Section 3.7 Allocation of Tax Items. For federal and state income tax
purposes, Company income gain, loss, deduction and credit (or items thereof) for
any Fiscal Year shall be allocated as follows:
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Section 3.7.1 General Rule. Except as provided in Sections
3.7.2, 3.7.3 and 3.7.4, all items of income, gain, loss, deduction and credit
shall be allocated in the same manner as the correlative items are allocated
under Sections 3.2 and 3.3.
Section 3.7.2 Section 704(c) Considerations. Items of income,
gain, loss and deduction with respect to any asset contributed to the capital of
the Company shall, solely for income tax purposes, be allocated among the
Members so as to take account of any variation between the adjusted basis of
such asset to the Company for federal income tax purposes and the gross fair
market value of such asset at the time of contribution. In the event the book
value of any asset contributed to the capital of the Company is revalued on the
Company's books, subsequent allocations of income, gain, loss and deduction with
respect to such asset shall take account of any variation between the adjusted
basis of such asset to the Company for federal income tax purposes and the book
value of such asset immediately following such revaluation in the same manner as
under Section 704(c) of the Code and the Treasury Regulations thereunder. Any
elections or other decisions relating to allocations made pursuant to this
Section 3.7.2 shall be made by the Members in any manner that reasonably
reflects the purposes and intentions of this Agreement.
Section 3.7.3 Recapture Income. For purposes of deter-mining
the character (as ordinary income or capital gain) of any taxable income of the
Company, such portion of the taxable income of the Company which is treated as
ordinary income attributable to the recapture of depreciation (or cost recovery)
shall, to the extent possible, be allocated among the Member (or their
successors in interest) in the same proportions that the depreciation (or cost
recovery) deductions directly or indirectly giving rise to such income were
previously allocated. This Section 3.7.3 shall not alter the amount of
allocations to any Member but merely the character of income so allocated.
Section 3.7.4 Transfers of Company Interests. If during any
taxable year of the Company there is a change in any Member's interest in the
Company, then each Member's distributive share of each item of Company income,
gain, loss and deduction shall be determined for federal income tax purposes as
if the taxable year of the Company closed on the date of such change. For
purposes of this Section 3.7.4, a transfer of an interest in the Company made
during the first fifteen (15) days of any calendar month will be deemed to have
been effected at the opening of month, and a transfer made after the fifteenth
day of any calendar month will be deemed to have been effected at the opening of
the following month.
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ARTICLE IV
DISTRIBUTIONS
Section 4.1 Distributions. Except as otherwise provided by Section
6.1,
Section 4.1.1 Distributable. Distributable cash (as the same
is determined by the Company at its sole discretion) at the close of any Fiscal
Year shall be distributed eighty (80%) percent to IMMUNOMEDICS and twenty (20%)
percent to GOLDENBERG.
Section 4.1.2 Special Limitation. Distributions made pursuant
to Section 4.1.1 shall not exceed the maximum amount that can be so made without
causing any Member to have an deficit Capital Account balance. In the event some
but not all of the Members would have such deficits as a consequence of a
distribution pursuant to Section 4.1.1, the limitation set forth in the first
sentence of this Section 4.1.2 shall be applied on a Member-by-Member basis so
as to distribute the maximum permissible amount to each Member.
Section 4.2 [ Intentionally Omitted ]
Section 4.3 Amounts Withheld.
Section 4.3.1 Amounts Withheld on Behalf of Governmental
Authority. All amounts withheld pursuant to the Code and the Treasury
Regulations or any provision of any state or local tax law or the law of any
foreign country or subdivision thereof with respect to any payment,
distribution, or allocation to the Company or the Members shall be treated as
amounts distributed to the Members pursuant to Section 4.1 or Section 4.2 for
all purposes under this Agreement. The Company is authorized to withhold from
distributions, or with respect to allocations, to the Members and to pay over to
any federal, state, or local government or foreign government or any subdivision
thereof any amounts required to be so withheld pursuant to the Code or any
provisions of any other federal, state, or local law or the law of any foreign
country or subdivision thereof and shall allocate such amounts to the Members
with respect to which such amount was withheld.
Section 4.4 Liability for Distributions. A Member who receives a
distribution for the Company shall have no liability under the Act or any other
applicable law for the amount of the distribution after the expiration of six
(6) years from the date of the distribution unless an action to recover the
distribution from such member is commenced prior to the expiration of such six-
(6-) year period and an adjudication of liability against such Member is made in
such action.
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Section 4.5 Distributions in Kind. The Company shall have the right
to compel a Member to accept a distribution of any asset in kind, whether or not
the percentage of the asset distributed to it exceeds a percentage of that asset
which is equal to the percentage in which it shares in distributions from the
Company.
ARTICLE V
BOOKS OF ACCOUNT;
FINANCIAL STATEMENTS; FISCAL MATTERS
Section 5.1 Accounting, Books and Records.
Section 5.1.1 Required Records. The Members shall keep on
site at the principal place of business of the Company each of the following:
(i) separate books of account for the Company which shall
show a true and accurate record of all costs and expenses incurred, all charges
made, all credits made and received, and all income derived in connection
therewith and the operation thereof accordance with this Agreement;
(ii) a current list of the full name and last known business,
residence, or mailing address of each Member, both past and present;
(iii) a copy of the Articles of Organization and all
amendments thereto, together with executed copies of any powers of attorney
pursuant to which any amendment has been executed;
(iv) copies of the Company's federal, state, and local income
tax returns and reports, if any, for the three most recent years;
(v) copies of this Agreement; and
(vi) any minutes of meetings of the Members and any written
consents obtained from Members pursuant to Section 407 of the Act and the
Agreement regarding action taken by Members without a meeting.
Section 5.1.2 Accounting Matters. The books of account of
the Company shall be kept on a calendar year basis in accordance with generally
accepted accounting principles. The Company shall, to the extent permitted by
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the Code, compute its income (and items thereof) for federal income tax purposes
on the basis of the calendar year using the cash method of accounting.
Section 5.1.3 Access to Records. After giving reasonable
advance written notice to the Company stating under oath the purpose thereof,
any Member may inspect and review the Company Records for any proper purpose and
may, at the Member's expense, have the Company make copies of any portion or all
of the Company Records. A proper purpose shall mean a purpose reasonably related
to such person's interest as a Member. Unless the Company agrees otherwise, all
Member access to the Company Records must take place during the Company's
regular business hours. The Company may impose additional reasonable conditions
and restrictions on Members' access to the Company Records, including specifying
the amount of advance notice a Member must give and the charges imposed for
copying.
Section 5.2 Reports.
Section 5.2.1 Generally. The Treasurer of the Company shall
be responsible for causing the preparation of financial reports of the Company
and the coordination of financial matters of the Company with the Accountants.
Section 5.2.2 Annual Reports. Within one hundred eighty (180)
days after the close of each Fiscal Year, the Company shall send to each Person
who was a Member at any time during the Fiscal Year then ended the consolidated
balance sheet of the Company as of the close of such Year and the related
consolidated statements of income, changes in Members' equity and changes in
financial position for such Fiscal Year. Such consolidated balance sheets and
statements need not be audited.
Section 5.3 Tax Matters.
Section 5.3.1 Tax Elections. IMMUNOMEDICS shall, without any
further consent of the Members being required, make any and all elections for
federal, state, local, and foreign tax purposes, including any election, if
permitted by applicable law (i) to adjust the basis of the Company's assets
pursuant to Sections 754, 734(b) and 743(b) of the Code (or comparable
provisions of state, local or foreign law); (ii) to extend the statute of
limitations for assessment of tax deficiencies against the Members with respect
to adjustments to the Company's federal, state, local or foreign tax returns;
and (iii) to the extent provided in Sections 6221 through 6231 of the Code and
similar provisions of federal, state, local, or foreign law, to represent the
Company and the Members before taxing authorities or courts of competent
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jurisdiction in tax matters affecting the Company or the Members in their
capacities as Members, and to file any tax returns and execute any agreements or
other documents relating to or affecting such tax matters, including agreements
or other documents that bind the Members with respect to such tax matters or
otherwise affect the rights of the Company and the Members.
Section 5.3.2 Tax Information. The Company shall use its best
efforts to send, within ninety (90) days after the close of each Fiscal Year, to
each Person who was a Member at any time during the Fiscal Year then ended, such
tax information (including a Schedule K-1) as shall be necessary for the
preparation by such Person of his or her federal and state income tax returns,
and any other tax return required by any jurisdiction in which the Company is
formed or qualified to conduct business.
Section 5.4 Tax Matters Partner. IMMUNOMEDICS shall serve as the tax
matters partner of the Company within the meaning of Section 6231(a)(7) of the
Code and the Treasury Regulations promulgated thereunder for purposes of
representing the Company in administrative proceedings relating to the federal
income tax treatment of items of Company income, gain, loss, deduction, or
credit. In its capacity as the tax matters partner of the Company, such Member
shall have all authority granted to a tax matters partner by the Code and shall
have the right, at Company expense, to retain professional assistance in
connection with any audit of the Company by the Service.
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ARTICLE VI
TAX AND FINANCIAL CONSEQUENCES
OF DISSOLUTION OF THE COMPANY
Section 6.1 Winding Up. Upon the occurrence of a Dissolution Event, the
Company shall continue solely for the purposes of winding up its affairs in an
orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Members, and no Member shall take any action that is inconsistent
with, or not necessary to or appropriate for, the winding up of the Company's
business and affairs, provided that all covenants contained in the Agreement and
this Addendum and obligations provided for in the Agreement and this Addendum
shall continue to be fully binding upon the Members until such time as all of
the Company's assets have been distributed pursuant to this Section 6.1 and the
Articles of Dissolution have been filed in accordance with the Act. The Members
shall be responsible for supervising the winding up and dissolution of the
Company, which winding up and dissolution shall be completed as expeditiously as
possible. The Members shall take full account of the Company's liabilities and
assets and shall cause its assets or the proceeds from the sale thereof (as
determined pursuant to Section 6.8), to the extent sufficient therefor, to be
applied and distributed, to the maximum extent permitted by law, in the
following order:
(i) first, to creditors (including Members who are creditors,
to the extent otherwise permitted by law) in satisfaction of all of the
Company's debts and other liabilities (whether by payment or the making of
reasonable provision for payment thereof), other than liabilities for which
reasonable provision for payment has been made and liabilities for distribution
to members under Section 507 or Section 509 of the Act;
(ii) second, except as provided in this Agreement, to Members
and former Members of the Company in satisfaction of liabilities for
distribution under Sections 507 or 509 of the Act; and
(iii) the balance, if any, to the Members in accordance with
the positive balance in Capital Accounts, after giving effect to all
contributions, distributions and allocations for all periods.
No Member shall receive additional compensation for any services performed
pursuant to this Section 6.1.
Section 6.2 Compliance with Certain Requirements of Regulations;
Deficit Capital Accounts. In the event the Company is "liquidated" within the
meaning of Regulations Section 1.704-1(b)(2)(ii)(g), (i) distributions shall be
made pursuant to this Section 6.2 to the Members who have positive Capital
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Accounts in compliance with Section 1.704-1(b)(2)(ii)(B)(2) of the Treasury
Regulations. If any Member has a deficit balance in his Capital Account (after
giving effect to all contributions, distributions and allocations for all Fiscal
Years, including the Fiscal Year during which such liquidation occurs), such
Member shall have no obligation to make any contribution to the capital of the
Company with respect to such deficit, and such deficit shall not be considered a
debt owed to the Company or to any other Person for any purpose whatsoever. In
the discretion of the Liquidator, a pro rata portion of the distributions that
would otherwise be made to the Members pursuant to this Article VI may be:
(i) distributed to a trust established for the benefit of the
Members for the purposes of liquidating Company assets, collecting
amounts owed to the Company, and paying any contingent or unforeseen
liabilities or obligations of the Company and distributed from such
trust to the Members from time to time, in the reasonable discretion of
the Liquidator, in the same proportions as the amount distributed to
such trust by the Company would otherwise have been distributed to the
Members pursuant to Section 6.1; or
(ii) withheld to provide a reasonable reserve for Company
liabilities (contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Company, provided
that such withheld amounts shall be distributed to the Members as soon
as practicable.
Section 6.3 Deemed Distribution and Recontribution. Notwithstanding any
other provision of this Article VI, in the event the Company is liquidated
within the meaning of Section 1.706-1 (b)(2)(ii)(g) of the Treasury Regulations
but no Dissolution Event has occurred, the Company shall not be liquidated, the
Company's debts and other liabilities shall not be paid or discharged, and the
Company's affairs shall not be wound up. Instead, soley for federal income tax
purposes, the Company shall, to the extent required by applicable Treasury
Regulations, be deemed to have contributed its assets in-kind to a new limited
liability company, which shall be deemed to have taken such assets subject to
all debts of the Company and other liabilities, in exchange for all of the
ownership interests in that new company. Immediately thereafter, the Company
shall, to the extent required by applicable Treasury Regulations, be deemed to
have distributed such interests in-kind to the Members.
Section 6.4 Rights of Members. Except as otherwise provided in this
Agreement, each Member shall look solely to the assets of the Company for the
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return of his Capital Contribution and has no right or power to demand or
receive assets other than cash from the Company. If the assets of the Company
remaining after payment or discharge of the debts or liabilities of the Company
are insufficient to return such Capital Contribution, the Members shall have no
recourse against the Company or any other Member.
Section 6.5 Notice of Dissolution/Termination.
Section 6.5.1 In the event a Dissolution Event occurs, the
Liquidator shall, within thirty (30) days thereafter, provide written notice
thereof to each of the Members and to all other parties with whom the Company
regularly conducts business and shall publish notice thereof in a newspaper of
general circulation in each place in which the Company regularly conducts
business.
Section 6.5.2 Upon completion of the distribution of its
assets as provided in this Article VI, the Company shall be terminated, and the
Liquidator shall cause the filing of the Articles of Dissolution pursuant to
Section 705 of the Act and shall take all such other actions as may be necessary
to terminate the Company.
Section 6.6 Allocations During Period of Liquidation. During the
period commencing on the first day of the Fiscal Year during which a Dissolution
Event occurs and ending on the date on which all of the assets of the Company
have been distributed to the Members pursuant to Section 6.1), the Members shall
continue to share Profits, Losses, gain, loss and other items of Company income,
gain, loss or deduction in the manner provided in Article III.
Section 6.7 Certain Arrangements Relating to Liquidation.
Section 6.7.1 Appointment. At the time that a Dissolution
Event first occurs, IMMUNOMEDICS shall appoint a Person to oversee the
liquidation of the Company.
Section 6.7.2 Fees. The Company is authorized to pay a
reasonable fee to the Liquidator for his services performed pursuant to this
Article VI and to reimburse the Liquidator for his reasonable costs and expenses
incurred in performing those services.
Section 6.8 Form of Liquidating Distributions. For purposes of making
distributions required by Section 6.1, the Liquidator may determine whether to
distribute all or any portion of the Company's assets in-kind or to sell all or
any portion of such assets and distribute the proceeds therefrom.
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EXHIBIT A
MEMBERSHIP ROSTER
Name of Member Address
IMMUNOMEDICS, INC. 300 American Road
Morris Plains, NJ 07950
DAVID M. GOLDENBERG
EXHIBIT B
MEMBERS INITIAL CAPITAL CONTRIBUTIONS
Name of Member $ Amount
IMMUNOMEDICS, INC. $18,648,000
DAVID M. GOLDENBERG $ 0