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EXHIBIT 10.5
OPERATING AGREEMENT
FOR
SCIENCE PARK CENTER LLC
A California Limited Liability Company
* Certain confidential portions of this Exhibit were omitted by means of
blackout of the text (the "Mark"). This Exhibit has been filed separately with
the Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 24b-2 under the
Securities Exchange Act.
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS...................................................................3
1.1 "Act"..................................................................3
1.2 "Adjusted Capital Account Deficit".....................................3
1.3 "Affiliate"............................................................3
1.4 "Agreement"............................................................4
1.5 "Articles".............................................................4
1.6 "Bankruptcy"...........................................................4
1.7 "Book Gain"............................................................4
1.8 "Book Loss"............................................................4
1.9 "Book Value"...........................................................4
1.10 "Building".............................................................4
1.11 "Built-In Gain (or Loss)"..............................................4
1.12 "Capital Contribution".................................................5
1.13 "Code".................................................................5
1.14 "Company"..............................................................5
1.15 "Company Minimum Gain".................................................5
1.16 "Corporations Code"....................................................5
1.17 "Development Services Agreement".......................................5
1.18 "Dissolution Event"....................................................5
1.19 "Distributable Cash"...................................................5
1.20 "Economic Interest"....................................................5
1.21 "Economic Interest Owner"..............................................5
1.22 "Fiscal Year"..........................................................6
1.23 "Improvements".........................................................6
1.24 "Land".................................................................6
1.25 "Managers".............................................................6
1.26 "Member"...............................................................6
1.27 "Membership Interest"..................................................6
1.28 "Member Minimum Gain"..................................................6
1.29 "Member Nonrecourse Debt"..............................................6
1.30 "Member Nonrecourse Deductions"........................................6
1.31 "Net Income" or "Net Loss".............................................6
1.32 "Neurocrine Construction Loan Agreement"...............................7
1.33 "Neurocrine Lease".....................................................7
1.34 "Neurocrine Loan"......................................................7
1.35 "Nonrecourse Debt".....................................................7
1.36 "Nonrecourse Deductions"...............................................7
1.37 "Option Agreement".....................................................7
1.38 "Percentage Interest"..................................................7
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1.39 "Permanent Loan".......................................................8
1.40 "Person"...............................................................8
1.41 "Preferred Return".....................................................8
1.42 "Preferred Capital Return".............................................8
1.43 "Premises".............................................................8
1.44 "Prime Rate"...........................................................8
1.45 "Property".............................................................8
1.46 "Regulations"..........................................................8
1.47 "Regulatory Allocations"...............................................8
1.48 "Rent".................................................................8
1.49 "Schedules"............................................................8
1.50 "Substituted Member"...................................................9
1.51 "Tax Matters Partner"..................................................9
1.52 "Tokai Construction Loan"..............................................9
1.53 "Unreturned Capital Contribution"......................................9
ARTICLE II ORGANIZATIONAL MATTERS........................................................9
2.1 Formation..............................................................9
2.2 Name...................................................................9
2.3 Term...................................................................9
2.4 Office and Agent......................................................10
2.5 Purpose of Company....................................................10
ARTICLE III CAPITAL CONTRIBUTIONS........................................................10
3.1 "Capital Account".....................................................10
3.2 Initial Capital Contribution..........................................12
3.3 Additional Capital Contributions......................................12
3.4 Member Loans..........................................................12
3.5 Neurocrine Loan.......................................................12
3.6 No Interest...........................................................13
3.7 Completion and Loan Guarantees........................................13
ARTICLE IV MEMBERS .....................................................................13
4.1 Limited Liability.....................................................13
4.2 Admission of Additional Members.......................................13
4.3 Withdrawal, Resignation or Retirement.................................13
4.4 Transactions With the Company.........................................14
4.5 Remuneration To Members...............................................14
4.6 Members Are Not Agents................................................14
4.7 Voting Rights.........................................................14
4.8 Meetings of Members...................................................14
4.8.1 Date, Time and Place of Meetings of Members; Secretary........14
4.8.2 Power to Call Meetings........................................14
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4.8.3 Notice of Meeting.............................................14
4.8.4 Manner of Giving Notice.......................................15
4.8.5 Validity of Action............................................15
4.8.6 Quorum........................................................15
4.8.7 Adjourned Meeting; Notice.....................................15
4.8.8 Waiver of Notice or Consent...................................15
4.8.9 Action by Written Consent without a Meeting...................16
4.8.10 Telephonic Participation by Member at Meetings................16
4.8.11 Record Date...................................................16
4.8.12 Proxies.......................................................17
ARTICLE V MANAGEMENT AND CONTROL OF THE COMPANY........................................17
5.1 Management of the Company by Managers.................................17
5.1.1 Management by Managers.......................................17
5.1.2 Agency Authority of Managers.................................17
5.2 Election of Managers..................................................18
5.2.1 Number, Term and Qualifications...............................18
5.2.2 Resignation...................................................18
5.2.3 Removal.......................................................18
5.2.4 Vacancies.....................................................19
5.3 Powers of Managers....................................................19
5.3.1 Powers of Managers............................................19
5.3.2 Limitations on Power of Managers..............................19
5.4 Obligations of the Managers...........................................21
5.5 Members Have No Managerial Authority..................................22
5.6 Performance of Duties; Liability of Managers..........................22
5.7 Devotion of Time......................................................22
5.8 Competing Activities..................................................22
5.9 Transactions between the Company and the Managers.....................23
5.10 Acts of Managers as Conclusive Evidence of Authority..................23
5.11 Limited Liability.....................................................23
5.12 Resolution of Disputes................................................23
ARTICLE VI ALLOCATIONS OF NET INCOME AND NET LOSS.......................................23
6.1 Allocation of Net Income and Net Loss from Operations.................23
6.2 Allocation of Net Income and Net Loss from Sale or Exchange...........24
6.2.1 Net Income Allocations.........................................24
6.2.2 Net Loss Allocations...........................................24
6.3 Special Allocations...................................................24
6.3.1 Qualified Income Offset........................................24
6.3.2 Gross Income Allocation........................................25
6.3.3 Company Minimum Gain Chargeback................................25
6.3.4 Member Minimum Gain Chargeback.................................25
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6.3.5 Nonrecourse Deductions.........................................25
6.3.6 Member Nonrecourse Deductions..................................25
6.3.7 Code Section 754 Adjustments...................................26
6.3.8 Curative Allocations...........................................26
6.4 Contributed Property..................................................26
ARTICLE VII DISTRIBUTIONS.........................................................26
7.1 Distribution of Distributable Cash from Sale
or Exchange of the Premises...........................................26
7.2 Distribution of Distributable Cash from
Operations Under the Neurocrine Lease.................................27
7.3 Persons to Receive Distributions......................................28
7.4 Form of Distribution..................................................28
7.5 Restriction on Distributions..........................................28
7.5.1 Insufficient Assets............................................28
7.5.2 Basis of Determination.........................................28
7.6 Return of Distributions...............................................28
7.7 Obligations of Members to Report Allocations..........................28
ARTICLE VIII COMPENSATION TO THE MANGERS, MEMBERS AND AFFILIATES...................29
8.1 Compensation of Members...............................................29
8.2 Company Expenses......................................................29
8.2.1 Operating Expenses.............................................29
8.2.2 Overhead of Managers...........................................29
8.3 Payments to Nexus.....................................................29
ARTICLE IX TRANSFER AND ASSIGNMENT OF INTERESTS.........................................29
9.1 Transfer and Assignment of Interests..................................29
9.2 Further Restrictions on Transfer of Interests.........................30
9.3 Substitution of Members...............................................30
9.4 No Effect to Transfers in Violation of Agreement......................30
9.5 Transfer of Nexus' Interest to Neurocrine.............................31
ARTICLE X CONSEQUENCES OF DEATH, DISSOLUTION, RETIREMENT OR
BANKRUPTCY OF MEMBER..................................................31
10.1 Dissolution Event.....................................................31
10.2 No Effect if Violation of Agreement...................................31
ARTICLE XI ACCOUNTING, RECORDS, REPORTING BY MEMBERS....................................32
11.1 Books and Records.....................................................32
11.2 Delivery to Members and Inspection....................................32
11.2.1 Requests for Information......................................32
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11.2.2 Inspection of Records.........................................33
11.2.3 Inspection by Representative..................................33
11.3 Financial Statements/Tax Returns......................................33
11.3.1 Annual Statements.............................................33
11.3.2 Tax Returns...................................................33
11.3.3 Annual Statutory Report.......................................33
11.4 Filings .............................................................33
11.5 Bank Accounts.........................................................33
11.6 Accounting Decisions and Reliance on Others...........................33
11.7 Tax Matters for the Company Handled by Members and
Tax Matters Partner................................................34
ARTICLE XII DISSOLUTION AND WINDING UP............................................34
12.1 Dissolution...........................................................34
12.2 Certificate of Dissolution............................................34
12.3 Winding Up............................................................34
12.4 Distributions in Kind.................................................35
12.5 Order of Payment of Liabilities Upon Dissolution......................35
12.5.1 Distribution to Members.......................................35
12.5.2 Provision for Liabilities.....................................35
12.6 Compliance with Regulations...........................................36
12.7 Limitations on Payments Made in Dissolution...........................36
12.8 Certificate of Cancellation...........................................36
12.9 No Action for Dissolution.............................................36
ARTICLE XIII INDEMNIFICATION AND INSURANCE.........................................37
13.1 Indemnification of Agents.............................................37
13.2 Insurance.............................................................37
ARTICLE XIV INVESTMENT REPRESENTATIONS............................................37
14.1 Preexisting Relationship or Experience................................37
14.2 No Advertising........................................................37
14.3 Investment Intent.....................................................38
14.4 Purpose of Entity.....................................................38
14.5 Residency.............................................................38
14.6 Economic Risk.........................................................38
14.7 No Registration of Membership Interest................................38
14.8 Membership Interest in Restricted Security............................38
14.9 No Obligation to Register.............................................38
14.10 No Disposition in Violation of Law....................................39
14.11 Legends...............................................................39
14.12 Investment Risk.......................................................39
14.13 Restrictions on Transferability.......................................39
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14.14 Information Reviewed..................................................39
14.15 No Representations By Company.........................................40
14.16 Consultation with Attorney............................................40
14.17 Tax Consequences......................................................40
14.18 No Assurance of Tax Benefits..........................................40
14.19 Indemnity.............................................................40
14.20 Representations by Nexus..............................................41
14.20.1 Status..................................................41
14.20.2 Due Authorization.......................................41
14.20.3 Other Agreements........................................41
14.21 Representations of Neurocrine.........................................41
14.21.1 Status..................................................42
14.21.2 Due Authorization.......................................42
14.21.3 Other Agreements........................................42
ARTICLE XV MISCELLANEOUS.........................................................42
15.1 Representation by Counsel.............................................42
15.2 Binding Effect........................................................42
15.3 Parties in Interest...................................................43
15.4 Pronouns: Statutory References........................................43
15.5 Headings..............................................................43
15.6 Interpretation........................................................43
15.7 References to this Agreement..........................................43
15.8 Governing Law/Jurisdiction/Venue......................................43
15.9 Arbitration...........................................................43
15.10 Severability..........................................................43
15.11 Additional Documents and Acts.........................................44
15.12 Notices...............................................................44
15.13 Amendments............................................................44
15.14 Reliance on Authority of Person Signing Agreement.....................44
15.15 No Interest in Company Property: Waiver of Action for Partition.......44
15.16 Multiple Counterparts.................................................44
15.17 Attorney Fees.........................................................44
15.18 Time is of the Essence................................................45
15.19 Remedies Cumulative...................................................45
15.20 Neurocrine Default....................................................45
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OPERATING AGREEMENT
FOR
SCIENCE PARK CENTER LLC
A CALIFORNIA LIMITED LIABILITY COMPANY
This Operating Agreement for SCIENCE PARK CENTER LLC, a California
limited liability company (the "Company"), is made effective July 31, 1997, by
and among NEUROCRINE BIOSCIENCES, INC., a Delaware corporation ("Neurocrine"),
and NEXUS PROPERTIES, INC., a California corporation ("Nexus"), with reference
to the following facts:
RECITALS
A. Neurocrine and Nexus have formed the Company as a limited liability
company under the laws of the State of California. On April 2, 1997, Articles of
Organization for the Company were filed with the California Secretary of State
(File No. 101997092011), and on April 21, 1997, an amendment to the Articles of
Organization were filed with the Secretary of State.
B. Neurocrine, Nexus and Brandon Crocker ("Crocker") are the only
Members of the Company, and Nexus and Neurocrine are the only Managers of the
Company.
C. The Company intends to purchase from Neurocrine certain real property
legally described as Lot 30 of Torrey Pines Science Center Unit No. 2, in the
City of San Diego, County of San Diego, State of California, according to Map
thereof No. 12845, filed in the Office of the County Recorder of San Diego
County, July 23, 1991 (the "Land") for a purchase price of $3,472,000. The
purchase price shall be financed in its entirety by a loan from Neurocrine to
the Company. In addition, the Company intends to borrow $368,000 from Neurocrine
for the construction of improvements on the Land pursuant to that certain
Construction Loan Agreement of even date between the Company and Neurocrine
("Neurocrine Construction Loan Agreement"). The two Neurocrine loans
(collectively, the "Neurocrine Loan") will be represented by a promissory note
payable by the Company to Neurocrine in the aggregate principal sum of
$3,840,000, bearing interest at the rate of 8.25%, which note will be secured by
a deed of trust on the Land and improvements.
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D. The Company intends (i) to develop and construct a research and
administrative building on the Land to consist of two levels over a single level
of subterranean area (the "Building"); and (ii) to develop and construct
landscaping, drainage, irrigation, lighting, parking facilities, walkways,
driveways and other improvements and appurtenances related thereto (the
"Improvements"). The Land, Building and Improvements are sometimes collectively
referred to herein as the "Premises".
E. The Company is leasing the Premises to Neurocrine pursuant to that
certain lease of even date between the parties (the "Neurocrine Lease").
Pursuant to the Neurocrine Lease, the Company will construct the Building and
Improvements with a construction loan (the "Tokai Construction Loan") from Tokai
Bank of California ("Tokai Bank") in the approximate amount of *** secured by a
first deed of trust on the Premises, the $368,000 borrowed from Neurocrine as
part of the Neurocrine Loan secured by a second deed of trust on the Premises,
and a capital contribution to the Company by Nexus in the amount of ***.
Following completion of construction, the Company contemplates obtaining a
permanent loan (the "Permanent Loan") to replace the Tokai Construction Loan,
which will be senior to the Neurocrine Loan. Rent under the Neurocrine Lease
("Rent") will be adjusted after completion of construction to an amount equal to
*** of the total costs for the acquisition, development and construction of the
Premises, increased each year by ***, all as set forth in the Neurocrine Lease.
***.
F. Neurocrine also has an Option to Purchase the Premises from the
Company which is set forth in that certain Option Agreement between the Company
and Neurocrine (the "Option Agreement"). Under the Option Agreement, the
purchase price for the Premises is ***.
G. Attached hereto are three (3) schedules (the "Schedules") which show
the initial projections of the parties with respect to the above matters.
Schedule 1 is a project budget; Schedule 2 is an estimated cash distribution
schedule; and Schedule 3 is the estimated option
* confidential treatment
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purchase price. Although the parties acknowledge that the figures in the
Schedules will be different based on ultimate construction costs, interest
rates, and Rent amount, the Schedules are attached hereto in order to reflect
the intent of the parties in entering into this Agreement.
H. The parties hereto desire to adopt and approve an operating agreement
for the Company.
NOW, THEREFORE, Neurocrine, Nexus and Crocker (hereinafter sometimes
collectively referred to as "Members," and individually as "Member") by this
Agreement set forth the operating agreement for the Company under the laws of
the State of California upon the terms and subject to the conditions of this
Agreement.
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
set forth below:
1.1 "ACT" shall mean the Beverly-Killea Limited Liability Company Act,
California Corporations Code Section 17000 et seq., as the same may be amended
from time to time.
1.2 "ADJUSTED CAPITAL ACCOUNT DEFICIT" shall mean, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of the
end of the relevant fiscal year, after giving effect to the following
adjustments:
(i) Credit to such Capital Account any amounts which the Member
is obligated to restore and the Member's share of Member Minimum Gain and
Company Minimum Gain; and
(ii) Debit to such Capital Account the items described in
Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5),
and 1.704-1(b)(2)(ii)(d)(6).
1.3 "AFFILIATE" shall mean any individual, partnership, corporation,
trust or other entity or association, directly or indirectly, through one or
more intermediaries, controlling, controlled by, or under common control with
the Member. The term "control," as used in the immediately preceding sentence,
means, with respect to a corporation or limited liability company the right to
exercise, directly or indirectly, more than 10% of the voting rights
attributable to the controlled corporation or limited liability company, and,
with respect to any individual, partnership, trust, other entity or association,
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of the controlled entity.
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1.4 "AGREEMENT" shall mean this Operating Agreement, as originally
executed and as amended from time to time.
1.5 "ARTICLES" shall mean the Articles of Organization for the Company
originally filed with the California Secretary of State and as amended from time
to time.
1.6 "BANKRUPTCY" shall mean: (a) the filing of an application by a
Member for, or a Member's consent to, the appointment of a trustee, receiver, or
custodian of the Member's other assets; (b) the entry of an order for relief
with respect to a Member in proceedings under the United States Bankruptcy Code,
as amended or superseded from time to time; (c) the making by a Member of a
general assignment for the benefit of creditors; (d) the entry of an order,
judgment, or decree by any court of competent jurisdiction appointing a trustee,
receiver, or custodian of the assets of a Member unless the proceedings and the
person appointed are dismissed within 90 days; or (e) the failure by a Member
generally to pay the Member's debts as the debts become due within the meaning
of Section 303(h)(1) of the United States Bankruptcy Code, as determined by the
Bankruptcy Court, or the admission in writing by a Member of such Member's
inability to pay the Member's debts as they become due.
1.7 "BOOK GAIN" shall mean the excess, if any, of the fair market value
of the Property over its adjusted basis for federal income tax purposes at the
time a valuation of the Property is required under this Agreement or Treasury
Regulations Section 1.704-1(b) for purposes of making adjustments to the Capital
Accounts.
1.8 "BOOK LOSS" shall mean the excess, if any, of the adjusted basis of
the Property for federal income tax purposes over its fair market value at the
time a valuation of the Property is required under this Agreement or Treasury
Regulations Section 1.704-1(b) for purposes of making adjustments to the Capital
Accounts.
1.9 "BOOK VALUE" shall mean the adjusted basis of Property for federal
income tax purposes increased or decreased by Book Gain, Book Loss, Built-In
Gain and Built-In Loss as reduced by depreciation, amortization or other cost
recovery deductions, or otherwise, based on such Book Value.
1.10 "BUILDING" shall have the meaning given the term in Recital D of
this Agreement.
1.11 "BUILT-IN GAIN (OR LOSS)" shall mean the amount, if any, by which
the agreed value of contributed Property exceeds (or is lesser than) the
adjusted basis of Property contributed to the Company by a Member immediately
after its contribution by the Member to the capital of the Company.
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1.12 "CAPITAL CONTRIBUTION" shall mean the total value of cash and fair
market value of property, including promissory notes or other obligation to
contribute cash or property, contributed to the Company by Members.
1.13 "CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time, the provisions of succeeding law, and to the extent
applicable, the Regulations.
1.14 "COMPANY" shall mean Science Park Center LLC.
1.15 "COMPANY MINIMUM GAIN" shall meaning "partnership minimum gain" as
set forth in Treasury Regulations Sections 1.704-2(d).
1.16 "CORPORATIONS CODE" shall mean the California Corporations Code, as
amended from time to time, and the provisions of succeeding law.
1.17 "DEVELOPMENT SERVICES FEE" shall have the meaning given the term
in Section 8.3 hereof.
1.18 "DISSOLUTION EVENT" shall mean with respect to any Member one or
more of the following: the death, insanity, withdrawal, resignation, retirement,
expulsion, Bankruptcy, dissolution or occurrence of any other event which
terminates the continued membership of the Member unless other Members holding
at least two-thirds of the other Membership Interests consent to continue the
business of the Company pursuant to Section 12.1.
1.19 "DISTRIBUTABLE CASH" shall mean the amount of cash which the
Managers deem available for distribution to the Members pursuant to Article VII,
taking into account all Company debts, liabilities, and obligations of the
Company then due and amounts which the Managers deem necessary to place into
reserves for customary and usual claims with respect to the Company's business.
Notwithstanding the foregoing, no cash shall be deemed Distributable Cash unless
payments on all notes secured by deeds of trust encumbering the Premises are
current; provided, however, that distributions to Nexus pursuant to Section 7.2
shall be made before payments are made on the Neurocrine Loan.
1.20 "ECONOMIC INTEREST" shall mean a Member's or Economic Interest
Owner's share of one or more of the Company's Net Income, Net Loss, and
distributions of the Company's assets pursuant to this Agreement and the Act,
but shall not include any other rights of a Member, including, without
limitation, the right to vote or participate in the management, or, except as
provided in Section 17106 of the Corporations Code, any right to information
concerning the business and affairs of Company.
1.21 "ECONOMIC INTEREST OWNER" shall mean the owner of an Economic
Interest who is not a Member. Crocker shall automatically become an Economic
Interest Owner, and
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shall no longer be a Member, upon the retirement of the Tokai Construction Loan,
without any further act or consent required of Crocker, the Managers, or the
Members.
1.22 "FISCAL YEAR" shall mean the Company's fiscal year, which shall be
the calendar year.
1.23 "IMPROVEMENTS" shall have the meaning given the term in Recital D
of this Agreement.
1.24 "LAND" shall have the meaning given the term in Recital C of this
Agreement.
1.25 "MANAGERS" shall mean Nexus and Neurocrine, and the singular
"Manager" shall mean either of them or any other Person that succeeds either of
them in that capacity. If at any time only one manager is appointed, the plural
"Managers" shall include the singular "Manager."
1.26 "MEMBER" shall mean Neurocrine, Nexus and Crocker, and each other
Person who is later admitted to the Company as a Member in accordance with this
Agreement, or is an assignee who has become a Member in accordance with Article
IX, so long as Neurocrine, Nexus, Crocker, or any such Person has not resigned,
withdrawn, retired, been expelled or, if other than an individual, dissolved.
Crocker shall automatically become an Economic Interest Owner, and shall no
longer be a Member, upon the retirement of the Tokai Construction Loan, without
any further act or consent required of Crocker, the Managers, or the Members.
1.27 "MEMBERSHIP INTEREST" shall mean a Member's entire interest in the
Company, including the Member's Economic Interest, the right to vote on or
participate in the management of the Company, and the right to receive
information concerning the business and affairs of the Company.
1.28 "MEMBER MINIMUM GAIN" shall mean "partner nonrecourse debt minimum
gain" as determined under Treasury Regulations Section 1.704-2(i)(3).
1.29 "MEMBER NONRECOURSE DEBT" shall mean "partner nonrecourse debt" as
set forth in Treasury Regulations Section 1.704-2(b)(4).
1.30 "MEMBER NONRECOURSE DEDUCTIONS" shall mean of "partner nonrecourse
deductions," and the amount thereof shall be, as set forth in Treasury
Regulations Section 1.704-2(i).
1.31 "NET INCOME" or "NET LOSS" shall mean, respectively, for each
taxable year of the Company the taxable income and taxable loss (exclusive of
Built-In Gain or Loss) of the Company as determined for federal income tax
purposes in accordance with Section 703(a) of the Code (including all items of
income, gain, loss, or deduction required to be separately
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stated pursuant to Section 703(a)(1) of the Code) (other than any specific item
of income, gain (exclusive of Built-In Gain), loss (exclusive of Built-In Loss),
deduction or credit subject to special allocation under this Agreement), with
the following modifications:
(i) The amount determined above shall be increased by any income
exempt from federal income tax;
(ii) The amount determined above shall be reduced by any
expenditures described in Section 705(a)(2)(B) of the Code or expenditures
treated as such pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i);
(iii) Depreciation, amortization and other cost recovery
deductions shall be computed based on Book Value instead of on the amount
determined in computing taxable income or loss. Any item of deduction,
amortization or cost recovery specially allocated to a Member and not included
in Net Income or Net Loss shall be determined for Capital Account purposes in a
similar manner; and
(iv) For purposes of this Agreement, Book Gain and Book Loss
attributable to a revaluation of Property attributable to unrealized gain or
loss in such Property shall be treated as Net Income and Net Loss.
1.32 "NEUROCRINE CONSTRUCTION LOAN AGREEMENT" shall have the meaning
given the term in Recital C of this Agreement.
1.33 "NEUROCRINE LEASE" shall have the meaning given the term in Recital
E of this Agreement.
1.34 "NEUROCRINE LOAN" shall have the meaning given the term in Recital
C of this Agreement.
1.35 "NONRECOURSE DEBT" shall have the meaning set forth in Treasury
Regulations Section 1.704-2(b)(3).
1.36 "NONRECOURSE DEDUCTIONS" shall have the meaning, and the amount
thereof shall be, as set forth in Treasury Regulations Section 1.704-2(c).
1.37 "OPTION AGREEMENT" shall have the meaning given the term in Recital
F of this Agreement.
1.38 "PERCENTAGE INTEREST" shall mean the following percentages of the
Members, which percentages shall not be adjusted as relative proportions of the
Capital Accounts of the Members are adjusted from time to time, but shall be
adjusted with the consent of Members
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holding at least two-thirds of the Membership Interests: Nexus ***; Neurocrine
***; and Crocker ***.
1.39 "PERMANENT LOAN" shall have the meaning given the term in Recital E
of this Agreement.
1.40 "PERSON" shall mean an individual, general partnership, limited
partnership, limited liability company, corporation, trust, estate, real estate
investment trust, association or any other entity.
1.41 "PREFERRED RETURN" shall mean a *** compounded annually in arrears
on *** beginning on the Term Commencement Date of the Neurocrine Lease;
provided, however, that the *** amount shall be reduced by and at the time of
any distribution made pursuant to Section 7.1(iv), or by and at the time Nexus
receives such amount from other sources.
1.42 "PREFERRED CAPITAL RETURN" shall mean a percentage per annum return
*** on Nexus' Unreturned Capital Contribution equal to what Tokai Bank would
charge for an unsecured loan of ***.
1.43 "PREMISES" shall have the meaning given the term in Recital D of
this Agreement and the Neurocrine Lease.
1.44 "PRIME RATE" shall mean the reference rate announced from
time-to-time by the bank at which the Company's bank accounts are maintained,
and changes in the Prime Rate shall be deemed to occur on the date that changes
in such rate are announced.
1.45 "PROPERTY" shall refer to any and all of such real and tangible or
intangible personal property or properties as may be acquired by the Company,
including the Premises.
1.46 "REGULATIONS" shall mean, unless the context clearly indicates
otherwise, the regulations currently in force as final or temporary that have
been issued by the U.S. Department of Treasury pursuant to its authority under
the Code.
1.47 "REGULATORY ALLOCATIONS" shall mean the allocations set forth in
Sections 6.3.1 through 6.3.7.
1.48 "RENT" shall have the meaning given the term in the Neurocrine
Lease and Recital E of this Agreement.
1.49 "SCHEDULES" shall mean the schedules described in Recital G and
attached to this Agreement.
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1.50 "SUBSTITUTED MEMBER" shall mean any person admitted as a
Substituted Member pursuant to this Agreement.
1.51 "TAX MATTERS PARTNER" shall be Neurocrine or its successor as
designated pursuant to Section 11.7.
1.52 "TOKAI CONSTRUCTION LOAN" shall have the meaning given the term in
Recital E of this Agreement.
1.53 "UNRETURNED CAPITAL CONTRIBUTION" shall mean the *** initial
Capital Contribution of Nexus, reduced by all distributions to Nexus under
Sections 7.1(ii) and 7.2(ii) of this Agreement.
ARTICLE II
ORGANIZATIONAL MATTERS
2.1 FORMATION. The Members have formed a California limited liability
company under the Act and other applicable laws of the State of California by
filing the Articles with the California Secretary of State on April 2, 1997 and
entering into this Agreement. The rights and liabilities of the Members shall be
determined pursuant to the Act and this Agreement. To the extent that the rights
or obligations of any Member are different by reason of any provision of this
Agreement than they would be in the absence of such provision, this Agreement
shall, to the extent permitted by the Act, control.
2.2 NAME. The name of the Company shall be Science Park Center LLC. The
business of the Company may be conducted under that name or, upon compliance
with applicable laws, any other name that the Managers deem appropriate or
advisable. The Managers shall file any fictitious name certificates and similar
filings, and any amendments thereto, that the Managers consider appropriate or
advisable.
2.3 TERM. The term of this Agreement shall expire on December 31, 2022,
unless extended or sooner terminated as hereinafter provided. However, in the
event the Company is unable on or before October 1, 1997 to secure (i) the Tokai
Construction Loan or another construction loan in an amount and on terms
satisfactory to Neurocrine, or (ii) grading, foundation or other permits
necessary for the commencement of construction of the Building and Improvements,
the Company shall, at the election of Neurocrine, immediately be dissolved and
terminated. Notwithstanding the provisions of Sections 7.1, 7.2 and 12.5.1 of
this Agreement to the contrary, if the Company is dissolved and terminated
pursuant to the immediately preceding sentence, or if the Neurocrine Lease is
terminated pursuant to Section 4.2 thereof, then (i) the Property shall be
distributed in kind to Neurocrine subject to any deeds of trust encumbering the
Property, (ii) Nexus shall be paid an amount equal to its initial Capital
Contribution of *** (if and to the extent made), plus an amount equal to
its
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Preferred Capital Return, from Distributable Cash, (iii) if the amount of
Distributable Cash is insufficient to pay the amount due to Nexus pursuant to
clause (ii) above, Neurocrine shall pay the deficiency, (iv) if the amount of
Distributable Cash exceeds the amount payable to Nexus pursuant to clause (ii)
above, Neurocrine shall be entitled to such excess, and (v) the provisions of
Section 12.4 hereof will not apply. In the event of such dissolution, Nexus
shall not be entitled to (i) any amounts that otherwise would be due to it
pursuant to Sections 5.9 and 8.3 of this Agreement, (ii) the Preferred Return,
or (iii) the *** described in subsection 7.1(iv).
2.4 OFFICE AND AGENT. The Company shall continuously maintain an office
and registered agent in the State of California as required by the Act. The
initial principal office of the Company shall be 3250 La Jolla Village Drive,
Suite 930, San Diego, California 92122, and shall otherwise be as the Managers
may determine. The registered agent shall be as stated in the Articles or as
otherwise determined by the Managers.
2.5 PURPOSE OF COMPANY. The purpose of the Company is to engage in any
lawful activity for which a limited liability company may be organized under the
Act. Notwithstanding the foregoing, without the unanimous consent of the
Managers, the Company shall not engage in any business other than the business
of developing, financing, improving, leasing, and selling the Premises, and such
other activities directly related to the foregoing business as may be necessary,
advisable, or appropriate to further the foregoing business.
ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 "CAPITAL ACCOUNT" with respect to any Member (or such Member's
assignee) shall mean such Member's initial Capital Contribution adjusted as
follows:
3.1.1 A Member's Capital Account shall be increased by:
(i) Such Member's share of Net Income;
(ii) Any income or gain specially allocated to a Member
and not included in Net Income or Net Loss;
(iii) Any additional cash Capital Contribution made by
such Member to the Company; and
(iv) The fair market value of any additional Capital
Contribution consisting of property contributed by such Member to the capital of
the Company reduced by any liabilities assumed by the Company in connection with
such contribution or to which the property is subject.
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3.1.2 A Member's Capital Account shall be reduced by:
(i) Such Member's share of Net Loss;
(ii) Any deduction specially allocated to a Member and
not included in Net Income or Net Loss;
(iii) Any cash distribution to such Member; and
(iv) The fair market value, as agreed to by Members
holding at least two-thirds of the Membership Interests, of any Property
(reduced by any liabilities assumed by the Member in connection with the
distribution or to which the distributed Property is subject) distributed to
such Member; provided that, upon liquidation and winding up of the Company,
unsold Property will be valued for distribution at its fair market value and the
Capital Account of each Member before such distribution shall be adjusted to
reflect the allocation of gain or loss that would have been realized had the
Company then sold the Property for its fair market value. Such fair market value
shall not be less than the amount of any nonrecourse indebtedness that is
secured by the Property.
Property other than money may not be contributed to the Company except
as specifically provided in this Agreement. Property of the Company may not be
revalued for purposes of calculating Capital Accounts unless all of the
following occur:
(i) The Members, pursuant to the consent of Members holding at
least two-thirds of the Membership Interests, agree on the fair market value of
the Property; provided, however for purposes of calculating Book Gain or Book
Loss (but not for purposes of adjusting Capital Accounts to reflect the
contribution and distribution of such Property), the fair market value of
Property shall be deemed to be no less than the outstanding balance of any
nonrecourse indebtedness secured by such Property;
(ii) Capital Accounts are adjusted to reflect the contribution
or revaluation (including, without limitation, the valuation of such Property
and the selection of book depreciation methods); and
(iii) The Members, pursuant to the consent of Members holding at
least two-thirds of the Membership Interests, agree on the allocation among the
Members of items of income, gain, depreciation, amortization and loss relating
to such Property for federal income tax purposes.
The Capital Account of a Substituted Member or an Economic
Interest Owner shall include the Capital Account of his transferor.
Notwithstanding anything to the contrary in this Agreement, Capital Accounts
shall be maintained in accordance with Treasury Regulations Section 1.704-1(b),
and allocations of items of income and loss of the Company
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shall be adjusted as necessary consistent with the foregoing to cause the
Capital Accounts of the members to be sufficient to permit the distributions
required under Sections 2.3, 7.1, 7.2 and 12.5. References in this Agreement to
the Treasury Regulations shall include corresponding subsequent provisions.
3.2 INITIAL CAPITAL CONTRIBUTION. Nexus shall contribute an initial
Capital Contribution consisting of cash in the amount of *** concurrently
with the initial funding of the Tokai Construction Loan; Neurocrine shall not be
required to make an initial Capital Contribution.
3.3 ADDITIONAL CAPITAL CONTRIBUTIONS. Additional Capital Contributions
may be made by Neurocrine; provided, however, that Neurocrine shall have no
obligation to make any additional Capital Contributions. Neurocrine may make
Capital Contributions for any reason, including, but not limited to, any
remaining distribution to Nexus required pursuant to Section 7.1 or 7.2 or to
repay any indebtedness of the Company.
3.4 MEMBER LOANS. Neurocrine or an Affiliate may make a loan to the
Company to the extent required to pay the Company's operating expenses,
including debt service. Except for the Neurocrine Loan, any such loan shall bear
interest at the Prime Rate plus 2% and provide for the payment of principal and
any accrued but unpaid interest in accordance with the terms of the promissory
note evidencing such loan approved by Neurocrine, but in no event later than
upon dissolution of the Company. Except with the consent of Members holding at
least two-thirds of the Membership Interests, or as may be expressly provided in
this Agreement, no Member or any Affiliate may make any loan to the Company.
Except for the Neurocrine Loan, amounts due on loans made pursuant to this
Section shall be repaid from Distributable Cash or proceeds from the sale or
exchange of the Premises before any further distributions are made pursuant to
Sections 7.1 or 7.2. A Member shall have the right to exercise remedies with
respect to any loans made by such Member to the Company (including, without
limitation, the Neurocrine Loan) without being in violation of any duty it may
have by reason of its status as a Member of the Company.
3.5 NEUROCRINE LOAN. Pursuant to a Purchase and Sale Agreement between
the Company and Neurocrine, Neurocrine will sell the Land to the Company for a
purchase price of $3,472,000. The purchase price shall be financed in its
entirety by a loan from Neurocrine to the Company. In addition, pursuant to the
Neurocrine Construction Loan Agreement, Neurocrine will loan to the Company
$368,000, or such greater or lesser amount as may be required to pay all costs
of construction of the Building and Improvements in excess of the ***
Tokai Bank loan and the *** Capital Contribution of Nexus. The purchase
price and the loan (defined above as the "Neurocrine Loan") will be represented
by a promissory note payable by the Company to Neurocrine in the aggregate
principal sum of $3,840,000 (or such greater or lesser amount as may have been
advanced by Neurocrine to the Company pursuant to this Section 3.5), which note
will be secured by a deed of trust on the Premises. The Neurocrine Loan will
bear interest at 8.25% per annum with interest and
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principal amortized over a ten-year period commencing on the Term Commencement
Date as defined in the Neurocrine Lease.
3.6 NO INTEREST. No Member shall be entitled to receive any interest on
the Member's Capital Contributions except as set forth herein.
3.7 COMPLETION AND LOAN GUARANTEES. To the extent required by Tokai Bank
(or such other construction lender approved by the Managers), Neurocrine will
execute a guarantee of the completion of the Building and Improvements in a form
reasonably acceptable to the lender and Neurocrine, and Nexus will provide any
personal guarantees which the lender may require. A Member's guaranty of an
obligation shall not result in the adjustment of such Member's Capital Account.
ARTICLE IV
MEMBERS
4.1 LIMITED LIABILITY. Except as required under the Act or as expressly
set forth in this Agreement, no Member shall be personally liable for any debt,
obligation, or liability of the Company, whether that liability or obligation
arises in contract, tort, or otherwise.
4.2 ADMISSION OF ADDITIONAL MEMBERS. Additional Members may be admitted
to the Company only with the consent of Members holding at least two-thirds of
the Membership Interests. Any additional Members shall obtain Membership
Interests and will participate in the management, Net Income, Net Loss, and
distributions of the Company on such terms as are determined by the consent of
Members holding at least two-thirds of the Membership Interests. Notwithstanding
the foregoing, Substituted Members may only be admitted in accordance with
Article IX. Additionally, notwithstanding the foregoing, at any time after the
Tokai Construction Loan is retired, Nexus and Crocker may assign their
Membership Interests (but not the duties of Nexus as Manager) to a limited
liability company of which Nexus is manager and Michael J. Reidy and R. Darrell
Gary are majority members; provided that such assignment does not trigger any
adverse income tax consequences for the Company or its Members or cause an
acceleration on any loan for which the Company is obligated; provided, further,
that such assignee shall only become a Member upon the unanimous consent of the
other Members. In the event Michael Reidy and Darrell Gary cease to be majority
owners of such assignee, the assignee shall become an Economic Interest Owner
and shall no longer be a Member.
4.3 WITHDRAWAL, RESIGNATION OR RETIREMENT. No Member may withdraw,
resign or retire from the Company except in the event of death. Upon the
occurrence of any event that would cause a person to cease to be a Member under
the Act, including a Dissolution Event when the business of the Company is
continued in accordance with Section 10.1 by the remaining Members, the
disassociated Member shall become an Economic Interest Owner in accordance with
Section 10.2.
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4.4 TRANSACTIONS WITH THE COMPANY. Subject to any limitations set forth
in this Agreement, a Member (or an Affiliate of a Member) may lend money to and
transact other business with the Company. Subject to other applicable law, such
Member (or an Affiliate of a Member) has the same rights and obligations with
respect thereto as a Person who is not a Member.
4.5 REMUNERATION TO MEMBERS. Except as otherwise authorized pursuant to
this Agreement, no Member is entitled to remuneration for acting in the Company
business, subject to the entitlement of Members winding up the affairs of the
Company to reasonable compensation pursuant to Section 12.3.
4.6 MEMBERS ARE NOT AGENTS. Pursuant to Section 5.1 and the Articles,
the management of the Company is vested in the Managers. No Member, acting
solely in the capacity of a Member, is an agent of the Company nor can any
Member in such capacity bind nor execute any instrument on behalf of the
Company.
4.7 VOTING RIGHTS. Except as expressly provided in this Agreement or the
Articles, Members shall have no voting, approval or consent rights. Unless
otherwise specifically provided, in all matters in which a vote, approval or
consent of the Members is required, the vote, consent or approval of Members
holding at least two-thirds of the Membership Interests shall be required to
authorize or approve such act.
4.8 MEETINGS OF MEMBERS.
4.8.1 DATE, TIME AND PLACE OF MEETINGS OF MEMBERS; SECRETARY.
Meetings of Members may be held at such date, time and place within or without
the State of California as the Members may fix from time to time. No annual or
regular meetings of Members is required. At any Members' meeting, the Managers
shall appoint a person to preside at the meeting and a person to act as
secretary of the meeting.
4.8.2 POWER TO CALL MEETINGS. Unless otherwise prescribed by the
Act or by the Articles, meetings of the Members may be called by the Managers,
or upon written demand of any Member for the purpose of addressing any matters
on which the Members may vote.
4.8.3 NOTICE OF MEETING. The Managers shall give written notice
of a meeting of Members to each Member not less than 10 nor more than 60 days
before the date of the meeting. The notice shall specify the place, date and
hour of the meeting and the general nature of the business to be transacted. No
other business may be transacted at this meeting. If the meeting is called upon
written demand of Members entitled to call a meeting pursuant to Section 4.8.2,
the Managers shall give written notice of the meeting at a time requested by the
person calling the meeting, not less than 10 days nor more than 60 days after
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the receipt of the request. If the notice is not given within 20 days after the
receipt of the request, the Members entitled to call the meeting may give the
notice.
4.8.4 MANNER OF GIVING NOTICE. Notice of any meeting of Members
shall be given either personally or by first-class mail or other written
communication (including facsimile transmission), charges prepaid, addressed to
the Member at the address of that Member appearing on the books of the Company
or given by the Member to the Company for the purpose of notice. If no such
address appears on the Company's books or is given, notice shall be deemed to
have been given if sent to that Member by first-class mail or other written
communication to the Company's principal executive office. Notice shall be
deemed to have been given at the time when delivered personally or deposited in
the mail or sent by other means of written communication (including facsimile
transmission).
4.8.5 VALIDITY OF ACTION. Any action approved at a meeting,
other than by unanimous approval of those entitled to vote, shall be valid only
if the general nature of the proposal so approved was stated in the notice of
meeting.
4.8.6 QUORUM. The presence in person or by proxy of all Members
shall constitute a quorum at a meeting of Members. The Members present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the loss of a quorum, if any action taken
after loss of a quorum (other than adjournment) is approved by all of the
Members.
4.8.7 ADJOURNED MEETING; NOTICE. Any Members' meeting, whether
or not a quorum is present, may be adjourned from time to time by the vote of
all of the Membership Interests represented at that meeting, either in person or
by proxy, but in the absence of a quorum, no other business may be transacted at
that meeting, except as provided in Section 4.8.6. When any meeting of Members
is adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place are announced at a meeting at which the
adjournment is taken, unless a new record date for the adjourned meeting is
subsequently fixed, or unless the adjournment is for more than 45 days from the
date set for the original meeting. At any adjourned meeting the Company may
transact any business which might have been transacted at the original meeting.
4.8.8 WAIVER OF NOTICE OR CONSENT. The actions taken at any
meeting of Members however called and noticed, and wherever held, have the same
validity as if taken at a meeting duly held after regular call and notice, if a
quorum is present either in person or by proxy, and if, either before or after
the meeting, each of the Members entitled to vote, who was not present in person
or by proxy, signs a written waiver of notice or consents to the holding of the
meeting or approves the minutes of the meeting. Attendance of a person at a
meeting shall constitute a waiver of notice of that meeting, except when the
person objects, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened, and except that
attendance at a meeting is not a waiver of any
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right to object to the consideration of matters not included in the notice of
the meeting if that objection is expressly made at the meeting. Neither the
business to be transacted nor the purpose of any meeting of Members need be
specified in any written waiver of notice.
4.8.9 ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any action
that may be taken at a meeting of Members may be taken without a meeting, if a
consent in writing setting forth the action so taken is signed and delivered to
the Managers by all of the Members. Any Member giving a written consent, or the
Member's proxy holders, may revoke the consent by a writing received by the
Managers before written consents of the number of votes required to authorize
the proposed action have been filed.
4.8.10 TELEPHONIC PARTICIPATION BY MEMBER AT MEETINGS. Members
may participate in any Members' meeting through the use of any means of
conference telephones or similar communications equipment as long as all Members
participating can hear one another. A Member so participating is deemed to be
present in person at the meeting.
4.8.11 RECORD DATE. In order that the Company may determine the
Members of record entitled to notices of any meeting or to vote, or entitled to
receive any distribution or to exercise any rights in respect of any
distribution or to exercise any rights in respect of any other lawful action,
the Managers (or, if they fail to do so, any Member) may fix, in advance, a
record date that is not more than 60 days nor less than 10 days prior to the
date of the meeting and not more than 60 days prior to any other action. If no
record date is fixed:
(i) The record date for determining Members entitled
to notice of or to vote at a meeting of Members shall be at the close of
business on the business day immediately preceding the day on which notice is
given or, if notice is waived, at the close of business on the business day
immediately preceding the day on which the meeting is held.
(ii) The record date for determining Members entitled
to give consent to Company action in writing without a meeting shall be the day
on which the first written consent is given.
(iii) The record date for determining Members for any
other purpose shall be at the close of business on the day on which the Managers
adopt the resolution relating thereto, or the 60th day prior to the date of the
other action, whichever is later.
(iv) The determination of Members of record entitled
to notice of or to vote at a meeting of Members shall apply to any adjournment
of the meeting unless the Managers or the Members who called the meeting fix a
new record date for the adjourned meeting, but the Managers or the Members who
called the meeting shall fix a new record date if the meeting is adjourned for
more than 45 days from the date set for the original meeting.
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4.8.12 PROXIES. Every Member entitled to vote for the election
of Managers or on any other matter shall have the right to do so either in
person or by one or more agents authorized by a written proxy signed by the
person and filed with the Managers. A proxy shall be deemed signed if the
Member's name is placed on the proxy (whether by manual signature, typewriting,
telegraphic transmission, electronic transmission or otherwise) by the Member or
the Member's attorney in fact. A proxy may be transmitted by an oral telephonic
transmission if it is submitted with information from which it may be determined
that the proxy was authorized by the Member or the Member's attorney in fact. A
validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (i) revoked by the person executing it,
before the vote pursuant to that proxy, by a writing delivered to the Company
stating that the proxy is revoked, or by a subsequent proxy executed by, or
attendance at the meeting and voting in person by, the person executing the
proxy; or (ii) written notice of the death or incapacity of the maker of that
proxy is received by the Company before the vote pursuant to that proxy is
counted; provided, however, that no proxy shall be valid after the expiration of
11 months from the date of the proxy, unless otherwise provided in the proxy.
The revocability of a proxy that states on its face that it is irrevocable shall
be irrevocable as set forth therein, and the provisions of Corporations Code
Sections 705(e) and 705(f) shall not apply thereto.
ARTICLE V
MANAGEMENT AND CONTROL OF THE COMPANY
5.1 MANAGEMENT OF THE COMPANY BY MANAGERS.
5.1.1 MANAGEMENT BY MANAGERS. The business, property and
affairs of the Company shall be managed by the Managers. Except for situations
in which the approval of the Members is expressly required by this Agreement,
the Managers shall have full, complete and exclusive authority, power, and
discretion to manage and control the business, property and affairs of the
Company, to make all decisions regarding those matters, and to perform any and
all other acts or activities customary or incident to the management of the
Company's business, property and affairs. Unless otherwise specifically
provided, in all matters in which a vote, approval, consent or act of the
Managers is allowed or required, the vote, approval, consent or act of all of
the Managers shall be required to authorize or approve such act.
5.1.2 AGENCY AUTHORITY OF MANAGERS. Subject to Section 5.3.2,
either Manager is authorized to endorse checks, drafts, and other evidences of
indebtedness made payable to the order of the Company, but only for the purpose
of deposit into the Company's accounts. All checks, drafts, and other
instruments obligating the Company to pay money may be signed by either Manager,
and either Manager is authorized to sign contracts and obligations on behalf of
the Company.
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5.2 ELECTION OF MANAGERS.
5.2.1 NUMBER, TERM AND QUALIFICATIONS. The Company shall
initially have two Managers. The number of Managers of the Company may be
changed from time to time with the consent of Members holding at least
two-thirds of the Membership Interests, provided that in no instance shall there
be less than one Manager. Unless a Manager resigns or is removed, the Manager
shall hold office until a successor shall have been elected and qualified.
Managers shall be elected by the affirmative vote or written consent of Members
holding at least two-thirds of the Membership Interests; provided, however, that
Neurocrine acting alone may elect a Manager to replace Nexus at any time after
Nexus has received the entire distributions required pursuant to Section 7.1(i)
through (iv), and payments required by Sections 5.9 and 8.3, of this Agreement,
and Nexus and its Affiliates have been released from any personal liability by
all lenders who have made loans secured by the Premises. A Manager need not be a
Member or an individual.
5.2.2 RESIGNATION. A Manager may resign at any time by giving
written notice to the Members without prejudice to the rights, if any, of the
Company under any contract to which the Manager is a party. The resignation of a
Manager shall take effect upon receipt of that notice or at such later time as
shall be specified in the notice; and, unless otherwise specified in the notice,
the acceptance of the resignation shall not be necessary to make it effective.
The resignation of a Manager who is also a Member shall not affect the Manager's
rights as a Member and shall not constitute a withdrawal of a Member, and
specifically shall not affect the right of Nexus to receive distributions under
Sections 7.1(i) through (iv), and payments required by Sections 5.9 and 8.3, of
this Agreement.
5.2.3 REMOVAL. A Manager may be removed at any time, with or
without cause, by the affirmative vote or written consent of Members holding
two-thirds of the Membership Interests; provided, however, that Neurocrine
acting alone may remove Nexus as Manager at any time (i) after Nexus has
received the entire distributions required pursuant to Sections 7.1(i) through
(iv), and payments required by Sections 5.9 and 8.3, of this Agreement, and
Nexus and its Affiliates have been released from any personal liability by all
lenders who have made loans secured by the Premises, (ii) in the event Nexus
files for Bankruptcy, or (iii) in the event of Nexus' fraud, willful misconduct
or gross negligence. Any removal shall be without prejudice to the rights, if
any, of Nexus or an Affiliate of Nexus (i) under any brokerage agreement,
construction management agreement, property management agreement, or other
contract between the Company and Nexus or an Affiliate of Nexus, or (ii) to
collect payments under Sections 5.9. Furthermore, the removal of a Manager who
is also a Member shall not affect the Manager's rights as a Member and shall not
constitute a withdrawal of a Member, and specifically shall not affect the right
of Nexus to receive distributions under Sections 7.1(i) through (iv) of this
Agreement.
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5.2.4 VACANCIES. Except as provided above, any vacancy
occurring for any reason in position of Manager may be filled by the affirmative
vote or written consent of Members holding at least two-thirds of the Membership
Interests.
5.3 POWERS OF MANAGERS.
5.3.1 POWERS OF MANAGERS. Without limiting the generality of
Section 5.1, but subject to the limitations of Section 5.3.2 and to the express
limitations set forth elsewhere in this Agreement, the Managers shall have all
necessary powers to manage and carry out the purposes, business, property, and
affairs of the Company, including, without limitation, the power to exercise on
behalf and in the name of the Company all of the powers described in
Corporations Code Section 17003.
5.3.2 LIMITATIONS ON POWER OF MANAGERS. The Managers shall
not have authority to cause the Company to engage in any of the following
transactions without first obtaining the affirmative vote or written consent of
Members holding at least two-thirds of the Membership Interests:
(i) The sale, exchange, leasing or other disposition
of all or substantially all of the Company's assets, except for the development,
financing, and construction of the Premises, and except for the orderly
liquidation and winding up of the business of the Company upon its duly
authorized dissolution.
(ii) The joint venture of the Company with another
entity for any purpose.
(iii) The merger of the Company with another entity;
provided, in no event shall a Member be required to become a general partner in
a merger with a partnership without such Member's express written consent or
unless the agreement of merger provides each Member with the dissenter's rights
described in the Act.
(iv) The establishment of different classes of Members.
(v) An alteration of the primary purpose of the
Company as set forth in Section 2.5.
(vi) Any act which would make it impossible to carry on
the ordinary business of the Company.
(vii) The confession of a judgment against the Company.
(viii) Any other transaction described in this Agreement
as requiring the vote, consent, or approval of the Members.
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(ix) Enter into contracts with the Company that would
bind the Company after the expulsion, Bankruptcy, or other cessation to exist of
the Manager, or to continue the business of the Company after the occurrence of
such event.
(x) Use or permit any other person to use Company
funds or assets in any manner except for the exclusive benefit of the Company.
(xi) Receive from the Company a rebate or give-up or
participate in any reciprocal business arrangements which would enable it or any
Affiliate to do so.
(xii) Borrowing or lending of any sum of money by the
Company, the extension of credit or becoming a surety, guarantor, endorser or
accommodation maker except as set forth in Article III.
(xiii) Admit another person as a Manager.
(xiv) Reinvest Distributable Cash in any additional
properties.
(xv) Approval of any proposed settlement with the
Internal Revenue Service or other taxing authority regarding any Company matter.
(xvi) The approval of any loan documents, including all
construction loans and any loan documents which pledge any portion of the
Premises as security.
(xvii) The commencement, settlement, assignment,
transfer, compromise, release or other action (including selection of counsel
for the Company) with respect to any claim of the Company or any legal,
judicial, arbitral or administrative proceeding with respect to any non-budget
claim; provided, however, that Neurocrine and Nexus, acting alone, shall have
the right to enforce the obligations of the other party under this Agreement.
(xviii) Selecting or varying accounting methods, filing
of federal or state income tax returns or other income tax filings and making
other decisions with respect to treatment of items for accounting, financial
reporting, or federal or state income tax purposes, or other matters in
connection therewith.
(xvix) Determining whether or not distributions should
be made to the Members.
(xx) Amendment of this Agreement.
(xxi) Dissolution of the Company.
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(xxii) Any transaction with a Member, Manager or an
Affiliate.
(xxiii) Approval of agreements relating to the design
and/or construction of the Building and Improvements, including, without
limitation, the budget for construction of the Building and Improvements, the
owner-contractor agreement, the owner-architect agreement, and any change
orders.
(xxiv) Matters relating to any lease affecting the
Premises.
5.4 OBLIGATIONS OF THE MANAGERS. The Managers shall:
5.4.1 Exercise its management powers in order to carry out
the purposes of the Company;
5.4.2 Implement the transactions approved by the Members;
5.4.3 Have a fiduciary responsibility to the Members in the
same manner as a general partner would have to limited partners in a limited
partnership and for the safekeeping and use of all the funds and assets of the
Company, whether or not in its immediate possession or control;
5.4.4 Keep all bank and other accounts and records in the name
of the Company;
5.4.5 Devote such of its time and business efforts to the
business of the Company as it shall in its discretion, exercised in good faith,
determine to be necessary to conduct the business of the Company for the benefit
of the Company and the Members;
5.4.6 Cause the Company to be protected by public liability,
property damage and other insurance determined by the Managers in their
discretion to be appropriate to the business of the Company;
5.4.7 At all times use its best efforts to meet applicable
requirements for the Company to be taxed as a partnership and not as an
association taxable as a corporation;
5.4.8 Manage, operate and generally maintain the Company;
5.4.9 Be responsible for and have authority to conduct the
day to day operations of the Company; and
5.4.10 Obtain insurance to the same extent and in the same
amount as is required by any law, rule, or regulation of the State of California
that would be applicable to
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the Company were it a corporation organized and existing or duly qualified for
the transaction of intrastate business under the General Corporation Law.
5.5 MEMBERS HAVE NO MANAGERIAL AUTHORITY. The Members shall have no
power to participate in the management of the Company except as expressly
authorized by this Agreement or the Articles and except as expressly required by
the Act. Unless expressly and duly authorized in writing to do so by the
Manager, no Member shall have any power or authority to bind or act on behalf of
the Company in any way, to pledge its credit, or to render it liable for any
purpose.
5.6 PERFORMANCE OF DUTIES; LIABILITY OF MANAGERS. No Manager shall be
liable to the Company or to any Member for any loss or damage sustained by the
Company or any Member, unless the loss or damage shall have been the result of
fraud, deceit, gross negligence, reckless or intentional misconduct or a knowing
violation of law by the Manager. The Managers shall perform their managerial
duties in good faith, in a manner it reasonably believes to be in the best
interests of the Company and its Members, and with such care, including
reasonable inquiry, as an ordinarily prudent person in a like position would use
under similar circumstances. No Manager shall have any liability by reason of
being or having been a Manager of the Company. In performing their duties, each
Manager shall be entitled to rely on information, opinions, reports, or
statements, including financial statements and other financial data, of any
attorney, independent accountant, or other licensed person as to matters which
the Manager reasonably believes to be within such person's professional or
expert competence, unless the Manager has knowledge concerning the matter in
question that would cause such reliance to be unwarranted, and provided that the
Manager acts in good faith and after reasonable inquiry when the need therefor
is indicated by the circumstances.
5.7 DEVOTION OF TIME. No Manager is obligated to devote all of its
time or business efforts to the affairs of the Company. The Managers shall
devote whatever time, effort, and skill as they deem appropriate for the
operation of the Company.
5.8 COMPETING ACTIVITIES. Any Manager and its officers, directors,
shareholders, agents, employees and Affiliates may engage or invest in,
independently or with others, any business activity of any type or description,
including without limitation those that might be the same as or similar to the
Company's business and that might be in direct or indirect competition with the
Company. Neither the Company nor any Member shall have any right in or to such
other ventures or activities or to the income or proceeds derived therefrom. No
Manager shall be obligated to present any investment opportunity or prospective
economic advantage to the Company, even if the opportunity is of the character
that, if presented to the Company, could be taken by the Company. A Manager
shall have the right to hold any investment opportunity or prospective economic
advantage for its own account or to recommend such opportunity to Persons other
than the Company. The Members acknowledge that the Managers and their Affiliates
own and/or manage other businesses, including businesses that may compete with
the Company and for the Manager's time. The Members
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hereby waive any and all rights and claims which they may otherwise have against
the Managers and their officers, directors, shareholders, agents, employees, and
Affiliates as a result of any of such activities.
5.9 TRANSACTIONS BETWEEN THE COMPANY AND THE MANAGERS. A Manager or
an Affiliate of the Manager may engage in any transaction (including, without
limitation, the purchase, sale, lease, or exchange of any property or the
rendering of any service, or the establishment of any salary, other
compensation, or other terms of employment) with the Company so long as the
terms and conditions of such transaction are approved by all of the Members. The
Members agree that Nexus or an Affiliate of Nexus shall provide development
services and receive compensation equal to *** from the Tokai Construction
Loan (the "general administration" or "g&a" line item on the pro forma which
serves as the basis for any construction loan and which shall be paid out of the
Tokai Construction Loan amortized over the estimated construction period).
5.10 ACTS OF MANAGERS AS CONCLUSIVE EVIDENCE OF AUTHORITY. Any note,
mortgage, evidence of indebtedness, lease, contract, certificate, statement,
conveyance, or other instrument or document in writing, and any assignment or
endorsement thereof, executed or entered into between the Company and any other
person, when signed by either Manager acting alone, is not invalidated as to the
Company by any lack of authority of the Manager in the absence of actual
knowledge on the part of the other person that the Manager had no authority to
execute the same.
5.11 LIMITED LIABILITY. No Manager shall be personally liable under
a ny judgment of a court, or in any other manner, for any debt, obligation, or
liability of the Company, whether that liability or obligation arises in
contract, tort, or otherwise, solely by reason of being a Manager.
5.12 RESOLUTION OF DISPUTES. In the event of a disagreement between
the Managers on a matter requiring the approval or consent of both Managers, the
dispute shall be submitted to binding arbitration in accordance with Section
15.9 hereof. In resolving any dispute, the arbitrator shall apply the standard
of what an institutional owner of real property acting in a commercially
reasonable manner would do under similar circumstances.
ARTICLE VI
ALLOCATIONS OF NET INCOME AND NET LOSS
6.1 ALLOCATION OF NET INCOME AND NET LOSS FROM OPERATIONS. For each
fiscal year, (i) Net Income from operations of the Company shall be allocated to
***.
* confidential treatment
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6.2 ALLOCATION OF NET INCOME AND NET LOSS FROM SALE OR EXCHANGE. For
each fiscal year, the Net Income and Net Loss from sale or exchange of the
Premises shall be allocated as follows:
6.2.1 NET INCOME ALLOCATIONS.***
(i)***
(ii)***
(iii)***
(iv)***
6.2.2 NET LOSS ALLOCATIONS.***
6.3 SPECIAL ALLOCATIONS.
6.3.1 QUALIFIED INCOME OFFSET. Except as provided in Section
6.3.3, in the event any Member unexpectedly receives any adjustments,
allocations, or distributions described in Treasury Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii) (d)(6),
items of Company income and gain shall be specially allocated to such Member in
an amount and manner sufficient to eliminate, to the extent required by the
Treasury Regulations, the Adjusted Capital Account Deficit created by such
adjustment, allocation or distribution as quickly as possible.
* confidential treatment
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6.3.2 GROSS INCOME ALLOCATION. Net Loss shall not be allocated
to any Member to the extent such allocation would cause any Member to have an
Adjusted Capital Account Deficit at the end of a fiscal year. In the event any
Member has an Adjusted Capital Account Deficit at the end of any fiscal year,
each such Member shall be specially allocated items of Company gross income and
gain in the amount of such Adjusted Capital Account Deficit as quickly as
possible.
6.3.3 COMPANY MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision of this Section 6, if there is a net decrease in Company Minimum Gain
during any fiscal year, each Member shall be specially allocated items of
Company income and gain for such year (and, if necessary, subsequent years) in
an amount equal to such Member's share of the net decrease in Company Minimum
Gain, determined in accordance with Treasury Regulations Section 1.704-2(g)(2).
This Section 6.3.3 is intended to comply with the Company Minimum Gain
chargeback requirement in the Treasury Regulations and shall be interpreted
consistently therewith. This provisions shall not apply to the extent the
Member's share of net decrease in Company Minimum Gain is caused by a guaranty,
refinancing, or other change in the debt instrument causing it to become
partially or wholly recourse debt or Member Nonrecourse Debt, and such Member
bears the economic risk of loss (within the meaning of Treasury Regulations
Section 1.752-2 for the newly guaranteed, refinanced or otherwise changed debt
or to the extent the Member contributes cash to the capital of the Company that
is used to repay the Nonrecourse Debt, and the Member's share of the net
decrease in Company Minimum Gain results from the repayment.
6.3.4 MEMBER MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision of this Section 6, except Section 6.3.3, if there is a net decrease in
Member Minimum Gain, any Member with a share of that Member Minimum Gain (as
determined under Treasury Regulations Section 704-2(i)(5)) as of the beginning
of the year shall be allocated items of Company income and gain for such year
(and, if necessary, subsequent years) in an amount equal to such Member's share
of the net decrease in Member Minimum Gain, determined in accordance with
Treasury Regulations Section 1.704-2(g)(2). This Section shall not apply to the
extent the net decrease in Member Minimum Gain arises because the liability
ceases to be Member Nonrecourse Debt due to conversion, refinancing or other
change in a debt instrument that causes it to become partially or wholly a
Nonrecourse Debt. This Section is intended to comply with the Member Minimum
Gain chargeback requirements in the Treasury Regulations and shall be
interpreted consistently therewith and applied with the restrictions
attributable thereto.
6.3.5 NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any
fiscal year or other period shall be allocated 100% to Neurocrine.
6.3.6 MEMBER NONRECOURSE DEDUCTIONS. Member Nonrecourse
Deductions for any fiscal year shall be allocated to the Member who bears the
economic risk of loss as set forth in Treasury Regulations Section 1.752-2 with
respect to the Member Nonrecourse
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Debt. If more than one Member bears the economic risk of loss for a Member
Nonrecourse Debt, any Member Nonrecourse Deductions attributable to that Member
Nonrecourse Debt shall be allocated among the Members according to the ratio in
which they bear the economic risk of loss.
6.3.7 CODE SECTION 754 ADJUSTMENTS. To the extent an adjustment
to the adjusted tax basis of any Company asset pursuant to Code Section 734(b)
or Code Section 743(b) is required, pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis), and such gain or loss shall be specially
allocated to the Members in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such section of the
Treasury Regulations.
6.3.8 CURATIVE ALLOCATIONS. Notwithstanding any other
provision of this Agreement, the Regulatory Allocations shall be taken into
account in allocating items of income, gain, loss and deduction among the
Members so that, to the extent possible, the net amount of such allocations of
other items and the Regulatory Allocations to each Member shall be equal to the
net amount that would have been allocated to each such Member if the Regulatory
Allocations had not occurred.
6.4 CONTRIBUTED PROPERTY. Notwithstanding any other provision of
this Section 6 to the contrary, the Members shall cause depreciation and cost
recovery deductions and gain or loss attributable to Property contributed by a
Member or revalued by the Company to be allocated among the Members for income
tax purposes in accordance with Section 704(c) of the Code and the Treasury
Regulations promulgated thereunder.
ARTICLE VII
DISTRIBUTIONS
7.1 DISTRIBUTION OF DISTRIBUTABLE CASH FROM SALE OR EXCHANGE OF THE
PREMISES.***
* confidential treatment
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***
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* confidential treatment
35
7.3 PERSONS TO RECEIVE DISTRIBUTIONS. All distributions shall be
made only to the Persons who, according to the books and records of the Company,
are the holders of record of the Economic Interests in respect of which such
distributions are made on the actual date of distribution. Neither the Company
nor the Members shall incur any liability for making distributions in accordance
with this Section 7.3.
7.4 FORM OF DISTRIBUTION. A Member or Economic Interest Owner has
no right to demand and receive any distribution from the Company in any form
other than money. No Member or Economic Interest Owner may be compelled to
accept from the Company a distribution of any asset in kind in lieu of a
proportionate distribution of money being made to other Members. Except upon a
dissolution and the winding up of the Company, no Member or Economic Interest
Owner may be compelled to accept a distribution of any asset in kind.
7.5 RESTRICTION ON DISTRIBUTIONS.
7.5.1 INSUFFICIENT ASSETS. No distribution shall be made if,
after giving effect to the distribution, (i) the Company would not be able to
pay its debts as they become due in the usual course of business, or (ii) the
Company's total assets would be less than the sum of its total liabilities.
7.5.2 BASIS OF DETERMINATION. The Members may base a
determination that a distribution is not prohibited on any of the following: (i)
financial statements prepared on the basis of accounting practices and
principles that are reasonable in the circumstances; (ii) a fair valuation; or
(iii) any other method that is reasonable in the circumstances. Except as
provided in Section 17254(e) of the Corporations Code, the effect of a
distribution is measured as of the date the distribution is authorized if the
payment occurs within 120 days after the date of authorization, or the date
payment is made if it occurs more than 120 days after the date of authorization.
7.6 RETURN OF DISTRIBUTIONS. Except for distributions made in
violation of the Act or this Agreement, no Member or Economic Interest Owner
shall be obligated to return any distribution to the Company or pay the amount
of any distribution for the account of the Company or to any creditor of the
Company. The amount of any distribution returned to the Company by a Member or
Economic Interest Owner or paid by a Member or Economic Interest Owner for the
account of the Company or to a creditor of the Company shall be added to the
account or accounts from which it was subtracted when it was distributed to the
Member or Economic Interest Owner.
7.7 OBLIGATIONS OF MEMBERS TO REPORT ALLOCATIONS. The Members are
aware of the income tax consequences of the allocations made by this Article VI
and hereby agree to be bound by the provisions of this Article VI in reporting
their shares of Company income and loss for income tax purposes. Further, the
Members agree to treat the Company as the
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owner of the Premises for income tax purposes and agree not to take any position
that is inconsistent with such treatment for income tax purposes.
ARTICLE VIII
COMPENSATION TO THE MANGERS, MEMBERS AND AFFILIATES
8.1 COMPENSATION OF MEMBERS. The Members, the Managers and their
Affiliates shall receive compensation from the Company for services rendered or
to be rendered only as specified in this Agreement.
8.2 COMPANY EXPENSES.
8.2.1 OPERATING EXPENSES. Subject to the limitations set forth
in Section 8.2.2, the Company shall pay directly, or reimburse the Members as
the case may be, for all of the costs and expenses of the Company's operations.
8.2.2 OVERHEAD OF MANAGERS. No Manager, Member nor any
Affiliate shall be reimbursed for overhead expenses incurred in connection with
the business of the Company.
8.3 PAYMENTS TO NEXUS. Nexus shall receive a Development Services Fee of
*** per year or *** per month beginning the first day of the month following the
later of the Lease Commencement Date or the date upon which Tokai Bank is
willing to fund the Permanent Loan and terminating at the earlier of (i) the
time, if at all, that Neurocrine purchases Nexus' membership interest pursuant
to Section 9.5, or purchases the Premises pursuant to the Option Agreement, or
(ii) the sale, exchange or transfer of the Project. Notwithstanding the above,
the *** amount shall be reduced to *** in the event Nexus has received the
Preferred Return and a cumulative amount of *** (excluding distributions
allocable to the Preferred Capital Return and the Unreturned Capital
Contribution) and Nexus and its Affiliates have been released from any personal
liability by all lenders who have made loans secured by the Premises. The ***
annual amount shall be increased on each anniversary date of the first payment
by *** over the amount of the fee for the prior year. The *** increase described
in the immediately preceding sentence shall not apply to the Development Service
Fee if and when the fee is reduced to ***. If due to the acts of Neurocrine, any
payment required hereunder is not paid within 10 days of the date due, it shall
thereafter bear interest at the rate of 8.5% until paid.
ARTICLE IX
TRANSFER AND ASSIGNMENT OF INTERESTS
9.1 TRANSFER AND ASSIGNMENT OF INTERESTS. No Member shall be entitled
to transfer, assign, convey, sell, encumber or in any way alienate all or any
part of such Member's Membership Interest without the prior written consent of
the other Members, which
* confidential treatment
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consent may be given, withheld, conditioned or delayed as the other Members may
determine in their sole discretion; provided, however, that Neurocrine may
transfer its Membership Interest to any entity by which it is acquired, or into
which it is merged or consolidated, or to which it has sold all or substantially
all of its assets. Transfers in violation of this Article X shall only be
effective to the extent set forth in Section 9.4. After the consummation of any
transfer of any part of a Membership Interest, the Membership Interest so
transferred shall continue to be subject to the terms and provisions of this
Agreement and any further transfers shall be required to comply with all the
terms and provisions of this Agreement.
9.2 FURTHER RESTRICTIONS ON TRANSFER OF INTERESTS. In addition to other
restrictions found in this Agreement, no Member shall transfer, assign, convey,
sell, encumber or in any way alienate all or any part of such Member's
Membership Interest (i) without compliance with Section 14.10, (ii) if the
Membership Interest to be transferred, assigned, sold or exchanged, when added
to the total of all other Membership Interests sold or exchanged in the
preceding 12 consecutive months prior thereto, would cause the termination of
the Company under the Code, or (iii) if the Membership Interest to be
transferred, assigned, sold or exchanged, when added to the total of all other
Membership Interests sold or exchanged prior thereto, would cause a reassessment
of the Premises as a "change of ownership" under the California Revenue and
Taxation Code. Any transferee of a Membership Interest shall take subject to the
restrictions on transfer imposed by this Agreement.
9.3 SUBSTITUTION OF MEMBERS. A transferee of a Membership Interest shall
have the right to become a Substituted Member only if (i) the requirements of
Sections 9.1 and 9.2, and the requirements of applicable securities and tax laws
are met, (ii) such Person executes an instrument satisfactory to the Managers
accepting and adopting the terms and provisions of this Agreement, (iii) such
Person pays any reasonable expenses in connection with admission as a new
Member, and (iv) the written consent of Members holding at least two-thirds of
the other Membership Interests is obtained to admit the Economic Interest Owner
as a Substituted Member; provided, however, that any permitted transferee of
Neurocrine described in the proviso to the first sentence of Section 9.1 shall
automatically be admitted as a Substituted Member upon completion of such
transfer and compliance with clauses (i) through (iii) of this sentence. The
granting or withholding of such consent shall be within the sole and absolute
discretion of the other Members. The admission of a Substituted Member shall not
result in the release of the Member who assigned the Membership Interest from
any liability that such Member may have to the Company.
9.4 NO EFFECT TO TRANSFERS IN VIOLATION OF AGREEMENT. Upon any transfer
of a Membership Interest in violation of this Article IX, the transferee shall
have no right to vote or participate in the management of the business, property
and affairs of the Company or to exercise any rights of a Member. Such
transferee shall only be entitled to become an Economic Interest Owner and
thereafter shall only receive the share of one or more of the Company's Net
Income, Net Losses and distributions of the Company's assets to which the
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transferor of such Economic Interest would otherwise be entitled.
Notwithstanding the immediately preceding sentences, if a transfer in violation
of this Article IX would cause the termination of the Company under the Code, or
a reassessment of the Premises under the California Revenue and Taxation Code,
the transfer shall be null and void and the purported transferee shall not
become either a Member or an Economic Interest Owner.
9.5 TRANSFER OF NEXUS' INTEREST TO NEUROCRINE. The entire Membership
Interest of Nexus and Crocker shall automatically become Neurocrine's interest
upon Neurocrine's payment of $1.00 to Nexus and Crocker at any time after Nexus
(A) has received the entire distribution required pursuant to Sections 7.1(i)
through (iv), (B) Nexus has received any payments due Nexus under Sections 5.9
and 8.3 of this Agreement and (C) Nexus and any Affiliate, are released from any
guaranty or personal liability for any loans to the Company, including any
construction or permanent loan secured by the Premises. Notwithstanding any
other provision of this Agreement, Neurocrine shall have the power and authority
to refinance any indebtedness on the Premises without any other Member's or the
Manager's consent as long as the proceeds of such financing would allow the
Company to satisfy the conditions set forth in this Section. If, by the end of
the 9th year of the term of the Neurocrine Lease, the Membership Interest of
Nexus does not become Neurocrine's Membership Interest under the terms of this
Section 9.5 or Neurocrine does not exercise its right to purchase the Premises
under the Option Agreement, Neurocrine shall extend the term of the Neurocrine
Lease for one period of five years pursuant to Section 40 of the Neurocrine
Lease.
ARTICLE X
CONSEQUENCES OF DEATH, DISSOLUTION,
RETIREMENT OR BANKRUPTCY OF MEMBER
10.1 DISSOLUTION EVENT. Upon the occurrence of a Dissolution Event,
the Company shall dissolve unless the remaining Members holding at least
two-thirds of the Membership Interests consent within 90 days of the Dissolution
Event to the continuation of the business of the Company.
10.2 NO EFFECT IF VIOLATION OF AGREEMENT. If the remaining Members
consent to the continuation of the business of the Company in accordance with
Section 10.1, the Member subject to the dissolution event shall thereafter have
no right to vote or participate in the management of the business, property and
affairs of the Company or to exercise any rights of a Member. Such transferee
shall only be entitled to become an Economic Interest Owner and thereafter shall
only receive the share of one or more of the Company's Net Income, Net Loss and
distributions of the Company's assets to which the transferor of such Economic
Interest would otherwise be entitled.
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ARTICLE XI
ACCOUNTING, RECORDS, REPORTING BY MEMBERS
11.1 BOOKS AND RECORDS. The books and records of the Company shall
be kept, and the financial position and the results of its operations recorded,
in accordance with the accounting methods followed for federal income tax
purposes. The books and records of the Company shall reflect all the Company
transactions and shall be appropriate and adequate for the Company's business.
The Company shall maintain at its principal office in California all of the
following:
A. A current list of the full name and last known business
or residence address of each Member and Economic Interest Owner set forth in
alphabetical order, together with the Capital Contributions, Capital Account and
Percentage Interest of each Member and Economic Interest Owner;
B. A current list of the full name and business or residence
address of each Manager;
C. A copy of the Articles and any and all amendments thereto
together with executed copies of any powers of attorney pursuant to which any
amendments to the Articles have been executed;
D. Copies of the Company's federal, state, and local income
tax or information returns and reports, if any, for the six most recent taxable
years;
E. A copy of this Agreement and any and all amendments
thereto together with executed copies of any powers of attorney pursuant to
which this Agreement or any amendments thereto have been executed;
F. Copies of the financial statements of the Company, if
any, for the six most recent Fiscal Years; and
G. The Company's books and records as they relate to the
internal affairs of the Company for at least the current and past four Fiscal
Years.
11.2 DELIVERY TO MEMBERS AND INSPECTION.
11.2.1 REQUESTS FOR INFORMATION. Upon the request of
any Member or Economic Interest Owner for purposes reasonably related to the
interest of that Person as a Member or Economic Interest Owner, the Managers
shall promptly deliver to the requesting Member or Economic Interest Owner, at
the expense of the Company, a copy of the information required to be maintained
by Sections 11.1A through F.
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11.2.2 INSPECTION OF RECORDS. Each Member, Manager and
Economic Interest Owner has the right, upon reasonable request for purposes
reasonably related to the interest of the Person as Member, Manager or Economic
Interest Owner, to inspect and copy during normal business hours any of the
Company records described at Sections 11.1A through G.
11.2.3 INSPECTION BY REPRESENTATIVE. Any request,
inspection or copying by a Member or Economic Interest Owner under this Section
11.2 may be made by that Person or that Person's agent or attorney.
11.3 FINANCIAL STATEMENTS/TAX RETURNS.
11.3.1 ANNUAL STATEMENTS. Neurocrine as Manager shall
cause annual income statements and balance sheets to be prepared and sent to
each of the Members as soon as reasonably practicable after the close of each
Fiscal Year reflecting the financial position of the Company for such Fiscal
Year.
11.3.2 TAX RETURNS. Neurocrine as Manager shall cause
to be prepared after the end of each Fiscal Year information necessary for the
preparation of the Members' and Economic Interest Owners' federal and state
income tax returns.
11.3.3 ANNUAL STATUTORY REPORT. Neurocrine as Manager
shall cause to be filed at least annually with the California Secretary of State
the statement required under California Corporations Code Section 17060.
11.4 FILINGS. Neurocrine as Manager shall cause the income tax returns
for the Company to be prepared and timely filed with the appropriate
authorities. Neurocrine shall also cause to be prepared and timely filed, with
appropriate federal and state regulatory and administrative bodies, amendments
to, or restatements of, the Articles and all reports required to be filed by the
Company with those entities under the Act or other then current applicable laws,
rules, and regulations. If Neurocrine as Manager is required by the Act to
execute or file any document and fails, after demand, to do so within a
reasonable period of time, or refuses to do so, the other Manager or any Member
may prepare, execute and file that document with the California Secretary of
State.
11.5 BANK ACCOUNTS. The Managers shall maintain the funds of the
Company in one or more separate bank accounts in the name of the Company, and
shall not permit the funds of the Company to be commingled in any fashion with
the funds of any other Person.
11.6 ACCOUNTING DECISIONS AND RELIANCE ON OTHERS. All decisions as
to accounting matters, except as otherwise specifically set forth herein, shall
be made by the Members. The Members may rely upon the advice of their
accountants as to whether such
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decisions are in accordance with accounting methods followed for federal income
tax purposes.
11.7 TAX MATTERS FOR THE COMPANY HANDLED BY MEMBERS AND TAX MATTERS
PARTNER. The Members shall from time to time cause the Company to make such tax
elections as they deem to be in the best interests of the Company. The Tax
Matters Partner, as defined in Code Section 6231, shall represent the Company
(at the Company's expense) in connection with all examinations of the Company's
affairs by tax authorities, including resulting judicial and administrative
proceedings, and shall expend the Company funds for professional services and
costs associated therewith. The Tax Matters Partner shall oversee the Company
tax affairs in the overall best interests of the Company. If for any reason the
Tax Matters Partner can no longer serve in that capacity or ceases to be a
Member or Manager, as the case may be, Members may designate another to be Tax
Matters Partner. The Company shall take the position that it is a "partnership"
for federal income tax purposes, and shall not file any federal income tax
election or other document that is inconsistent with such position.
ARTICLE XII
DISSOLUTION AND WINDING UP
12.1 DISSOLUTION. The Company shall be dissolved, its assets shall
be disposed of, and its affairs wound up on the first to occur of the following:
A. Upon the happening of any event of dissolution specified
in the Articles;
B. Upon the entry of a decree of judicial dissolution
pursuant to Section 17351 of the Corporations Code;
C. The occurrence of a Dissolution Event and the failure
of the remaining Members to consent in accordance with Section 10.1 to continue
the business of the Company within 90 days after the occurrence of such event;
or
D. The sale of all or substantially all of the assets of
Company.
12.2 CERTIFICATE OF DISSOLUTION. As soon as possible following the
occurrence of any of the events specified in Section 12.1, the Manager who has
not wrongfully dissolved the Company or, if none, the Members, shall execute a
Certificate of Dissolution in such form as shall be prescribed by the California
Secretary of State and file the Certificate as required by the Act.
12.3 WINDING UP. Upon the occurrence of any event specified in
Section 12.1, the Company shall continue solely for the purpose of winding up
its affairs in an orderly manner,
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liquidating its assets, and satisfying the claims of its creditors. The Manager
who has not wrongfully dissolved the Company or, if none, the Members, shall be
responsible for overseeing the winding up and liquidation of Company, shall take
full account of the liabilities of Company and assets, shall either cause its
assets to be sold or distributed, and if sold as promptly as is consistent with
obtaining the fair market value thereof, shall cause the proceeds therefrom, to
the extent sufficient therefor, to be applied and distributed as provided in
Section 12.5. The Persons winding up the affairs of the Company shall give
written notice of the commencement of winding up by mail to all known creditors
and claimants whose addresses appear on the records of the Company. The Manager
or Members winding up the affairs of the Company shall be entitled to reasonable
compensation for such services. 12.4 DISTRIBUTIONS IN KIND. Without the consent
of Members holding at least two-thirds of the Membership Interests, all
distributions to Members shall be in cash. Any non-cash asset distributed to one
or more Members shall first be valued at its fair market value to determine the
Net Profit or Net Loss that would have resulted if such asset were sold for such
value, such Net Profit or Net shall then be allocated pursuant to Article VI,
and the Members' Capital Accounts shall be adjusted to reflect such allocations.
The amount distributed and charged to the Capital Account of each Member
receiving an interest in such distributed asset shall be the fair market value
of such interest (net of any liability secured by such asset that such Member
assumes or takes subject to). The fair market value of such asset shall be
determined by the Members or if there is no agreement within thirty (30) days by
an independent appraiser (any such appraiser must be recognized as an expert in
valuing the type of asset involved) selected by the Members or liquidating
trustee. 12.5 ORDER OF PAYMENT OF LIABILITIES UPON DISSOLUTION. 12.5.1
DISTRIBUTION TO MEMBERS. After determining that all known debts and liabilities
of the Company in the process of winding-up, including, without limitation,
debts and liabilities to Members who are creditors of the Company, including
payments required pursuant to Section 8.3, have been paid or adequately provided
for, the remaining assets shall be distributed to the Members and Nexus in
accordance with Section 7.1. Such liquidating distributions shall be made by the
end of the Company's taxable year in which the Company is liquidated, or, if
later, within 90 days after the date of such liquidation.
12.5.2 PROVISION FOR LIABILITIES. The payment of a debt or
liability, whether the whereabouts of the creditor is known or unknown, has been
adequately provided for if the payment has been provided for by either of the
following means:
(i) Payment thereof has been assumed or guaranteed
in good faith by one or more financially responsible persons or by the United
States government or any agency thereof and the provision, including the
financial responsibility of the Person, was determined in good faith and with
reasonable care by the Members to be adequate at the time of any distribution of
the assets pursuant to this Section.
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(ii) The amount of the debt or liability has been
deposited as provided in Section 2008 of the Corporations Code.
This Section 12.5.2 shall not prescribe the exclusive means of making
adequate provision for debts and liabilities.
12.6 COMPLIANCE WITH REGULATIONS. All payments to the Members upon
the winding and dissolution of Company shall be strictly in accordance with the
positive capital account balance limitation and other requirements of
Regulations Section 1.704-1(b)(2)(ii)(d).
12.7 LIMITATIONS ON PAYMENTS MADE IN DISSOLUTION. Except as
otherwise specifically provided in this Agreement, each Member shall only be
entitled to look solely at the assets of Company for the return of the Member's
positive Capital Account balance and shall have no recourse for the Member's
Capital Contribution and/or share of Net Income (upon dissolution or otherwise)
against the Manager or any other Member except as provided in Article XIII.
12.8 CERTIFICATE OF CANCELLATION. The Manager or Members who filed
the Certificate of Dissolution shall cause to be filed in the office of, and on
a form prescribed by, the California Secretary of State, a certificate of
cancellation of the Articles upon the completion of the winding up of the
affairs of the Company.
12.9 NO ACTION FOR DISSOLUTION. Except as expressly permitted in
this Agreement, a Member shall not take any voluntary action that directly
causes a Dissolution Event. The Members acknowledge that irreparable damage
would be done to the goodwill and reputation of the Company if any Member should
bring an action in court to dissolve the Company under circumstances where
dissolution is not required by Section 12.1. This Agreement has been drawn
carefully to provide fair treatment of all parties and equitable payment in
liquidation of the Economic Interests. Accordingly, except where the Managers
have failed to liquidate the Company as required by this Article XII, each
Member hereby waives and renounces the Member's right to initiate legal action
to seek the appointment of a receiver or trustee to liquidate the Company or to
seek a decree of judicial dissolution of the Company on the ground that (a) it
is not reasonably practicable to carry on the business of the Company in
conformity with the Articles or this Agreement, or (b) dissolution is reasonably
necessary for the protection of the rights or interests of the complaining
Member. Damages for breach of this Section 12.9 shall be monetary damages only
(and not specific performance), and the damages may be offset against
distributions by the Company to which such Member would otherwise be entitled.
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ARTICLE XIII
INDEMNIFICATION AND INSURANCE
13.1 INDEMNIFICATION OF AGENTS. The Company shall indemnify any
Person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by reason of the
fact that such Person is or was a Member, Manager, officer, employee or other
agent of the Company (all such Persons being referred to hereinafter as an
"agent"), to the extent the claims underlying the action, suit or proceeding are
based on the agent's scope of employment or agency, or on the agent's good faith
discharge of duties under this Agreement, and which were not the result of gross
negligence, willful misconduct or breach of this Agreement or the terms of any
employment or agency. The Managers shall be authorized, on behalf of the
Company, to enter into indemnity agreements from time to time with any Person
entitled to be indemnified by the Company hereunder, upon such terms and
conditions as the Managers deem appropriate in its reasonable business judgment.
13.2 INSURANCE. The Company shall have the power to purchase and
maintain insurance on behalf of any Person who is or was an agent of the Company
against any liability asserted against such Person and incurred by such Person
in any such capacity, or arising out of such Person's status as an agent,
whether or not the Company would have the power to indemnify such Person against
such liability under the provisions of Section 13.1 or under applicable law.
ARTICLE XIV
INVESTMENT REPRESENTATIONS
Each Member hereby represents and warrants to, and agrees with, the
Manager, the other Members, and the Company as follows:
14.1 PREEXISTING RELATIONSHIP OR EXPERIENCE. (i) The Member has a
preexisting personal or business relationship with the Company or one or more of
its officers or control persons or the Managers or (ii) by reason of the
Member's business or financial experience, or by reason of the business or
financial experience of the Member's financial advisor who is unaffiliated with
and who is not compensated, directly or indirectly, by the Company or any
affiliate or selling agent of the Company, the Member is capable of evaluating
the risks and merits of an investment in the Membership Interest and of
protecting the Member's own interests in connection with this investment.
14.2 NO ADVERTISING. The Member has not seen, received, been
presented with, or been solicited by any leaflet, public promotional meeting,
newspaper or magazine article or advertisement, radio or television
advertisement, or any other form of advertising or general solicitation with
respect to the sale of the Membership Interest.
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14.3 INVESTMENT INTENT. The Member is acquiring the Membership
Interest for investment purposes for the Member's own account only and not with
a view to or for sale in connection with any distribution of all or any part of
the Membership Interest. No other person will have any direct or indirect
beneficial interest in or right to the Membership Interest other than a
shareholder of a corporation which is a Member or a beneficiary of a trust which
is a Member.
14.4 PURPOSE OF ENTITY. If the Member is a corporation, partnership,
limited liability company, trust, or other entity, it was not organized for the
specific purpose of acquiring the Membership Interest.
14.5 RESIDENCY. The Member is a resident of the state of California.
14.6 ECONOMIC RISK. The Member is financially able to bear the
economic risk of an investment in the Membership Interest, including the total
loss thereof.
14.7 NO REGISTRATION OF MEMBERSHIP INTEREST. The Member acknowledges
that the Membership Interest has not been registered under the Securities Act of
1933, as amended (the "Securities Act"), or qualified under the California
Corporate Securities Law of 1968, as amended, or any other applicable blue sky
laws in reliance, in part, on the Member's representations, warranties, and
agreements herein.
14.8 MEMBERSHIP INTEREST IN RESTRICTED SECURITY. The Member
understands that the Membership Interest is a "restricted security" under the
Securities Act in that the Membership Interest will be acquired from the Company
in a transaction not involving a public offering, and that the Membership
Interest may be resold without registration under the Securities Act only in
certain limited circumstances and that otherwise the Membership Interest must be
held indefinitely. In this connection, the Member understands the resale
limitations imposed by the Securities Act and is familiar with SEC Rule 144, as
presently in effect, and the conditions which must be met in order for that Rule
to be available for resale of "restricted securities," including the requirement
that the securities must be held for at least two years after purchase thereof
from the Company prior to resale (three years in the absence of publicly
available information about the Company) and the condition that there be
available to the public current information about the Company under certain
circumstances. The Member understands that the Company has not made such
information available to the public and has no present plans to do so.
14.9 NO OBLIGATION TO REGISTER. The Member represents, warrants, and
agrees that the Company and the Managers are under no obligation to register or
qualify the Membership Interest under the Securities Act or under any state
securities law, or to assist the Member in complying with any exemption from
registration and qualification.
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14.10 NO DISPOSITION IN VIOLATION OF LAW. Without limiting the
representations set forth above, and without limiting Article IX of this
Agreement, the Member will not make any disposition of all or any part of the
Membership Interest which will result in the violation by the Member or by the
Company of the Securities Act, the California Corporate Securities Law of 1968,
or any other applicable securities laws. Without limiting the foregoing, the
Member agrees not to make any disposition of all or any part of the Membership
Interest unless and until the Member has notified the Company of the proposed
disposition and has furnished the Company with a detailed statement of the
circumstances surrounding the proposed disposition, and if reasonably requested
by the Manager, the Member has furnished the Company with a written opinion of
counsel, reasonably satisfactory to the Company, that such disposition will not
require registration of any securities under the Securities Act or the consent
of or a permit from appropriate authorities under any applicable state
securities law.
14.11 LEGENDS. The Member understands that the certificates evidencing
the Membership Interest may bear the following legend:
The Membership Interests represented by this Certificate may not be
sold, transferred or otherwise disposed of except in accordance with and
subject to the restrictions, terms and conditions of the Operating
Agreement of the Company, a copy of which is on deposit with the Managers
of the Company. Furthermore, the securities represented by this
Certificate have not been registered under the Securities Act of 1933 nor
registered nor qualified under any state securities laws. Such securities
may not be offered for sale, sold, delivered after sale, transferred,
pledged, or hypothecated unless qualified and registered under applicable
state and federal securities laws or unless, in the opinion of counsel
satisfactory to the Company, such qualification and registration is not
required.
14.12 INVESTMENT RISK. The Member acknowledges that the Membership
Interest is a speculative investment which involves a substantial degree of risk
of loss by the Member of the Member's investment in the Company, that the Member
understands and takes full cognizance of the risk factors related to the
purchase of the Membership Interest, and that the Company is newly organized and
has no financial or operating history.
14.13 RESTRICTIONS ON TRANSFERABILITY. The Member acknowledges that
there are substantial restrictions on the transferability of the Membership
Interest pursuant to this Agreement, that there is no public market for the
Membership Interest and none is expected to develop, and that, accordingly, it
may not be possible to liquidate the investment in the Company.
14.14 INFORMATION REVIEWED. The Member has received and reviewed all
information the Member considers necessary or appropriate for deciding whether
to purchase the Membership Interest. The Member has had an opportunity to ask
questions and receive
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answers from the Company and its Managers regarding the terms and conditions of
purchase of the Membership Interest and regarding the business, financial
affairs, and other aspects of the Company and has further had the opportunity to
obtainall information (to the extent the Company possesses or can acquire such
information without unreasonable effort or expense) which the Member deems
necessary to evaluate the investment and to verify the accuracy of information
otherwise provided to such Member.
14.15 NO REPRESENTATIONS BY COMPANY. Neither the Managers nor any agent
or employee of the Company or of any Manager nor any other Person has at any
time expressly or implicitly represented, guaranteed, or warranted to the Member
that the Member may freely transfer the Membership Interest, that a percentage
of profit and/or amount or type of consideration will be realized as a result of
an investment in the Membership Interest, that past performance or experience on
the part of the Managers or their Affiliates or any other person in any way
indicates the predictable results of the ownership of the Membership Interest or
of the overall Company business, that any cash distributions from Company
operations or otherwise will be made to the Members by any specific date or will
be made at all, or that any specific tax benefits will accrue as a result of an
investment in the Company. Without limiting the generality of the foregoing, the
Member understands that any proforma distributed to the Members are estimates
only, and are not representations, guarantees or warranties of results.
14.16 CONSULTATION WITH ATTORNEY. The Member has had an opportunity to
consult with the Member's own attorney regarding all legal matters concerning an
investment in the Company and the tax consequences of participating in the
Company, and has done so to the extent the Member considers necessary.
14.17 TAX CONSEQUENCES. The Member acknowledges that the tax
consequences of investing in the Company will depend on the Member's particular
circumstances, and neither the Company, the Manager, the other Members, nor the
partners, shareholders, members, managers, agents, officers, directors,
employees, Affiliates, or consultants of any of them will be responsible or
liable for the tax consequences to the Member of an investment in the Company.
The Member will look solely to, and rely upon, the Member's own advisers with
respect to the tax consequences of this investment.
14.18 NO ASSURANCE OF TAX BENEFITS. The Member acknowledges that there
can be no assurance that the Code or the Regulations will not be amended or
interpreted in the future in such a manner so as to deprive the Company and the
Members of some or all of the tax benefits they might now receive, nor that some
of the deductions claimed by the Company or the allocations of items of income,
gain, loss, deduction, or credit among the Members may not be challenged by the
Internal Revenue Service
14.19 INDEMNITY. The Member shall indemnify and hold harmless the
Company, the Manager, each and every other Member, and any officers, directors,
shareholders, managers,
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members, employees, partners, agents, attorneys, registered representatives, and
control persons of any such entity who was or is a party or is threatened to be
made a party to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative, by reason
of or arising from any misrepresentation or misstatement of facts or omission to
represent or state facts made by such Member including, without limitation, the
information in this Agreement, against losses, liabilities, and expenses of the
Company, the Manager, each and every other Member, and any officers, directors,
shareholders, managers, members, employees, partners, attorneys, accountants,
agents, registered representatives, and control persons of any such Person
(including attorneys' fees, judgments, fines, and amounts paid in settlement,
payable as incurred) incurred by such Person in connection with such action,
suit, proceeding, or the like.
14.20 REPRESENTATIONS BY NEXUS. Nexus warrants and represents (each of
which warranty and representation shall be deemed to be a continuing warranty
and representation and a covenant that such warranty and representation shall
remain true and correct at all times during the term of this Agreement):
14.20.1 STATUS. Nexus is a California corporation duly formed
and organized, validly existing and in good standing under the laws of the State
of California and has the power and adequate authority to execute, deliver and
perform this Agreement, which upon such execution and delivery will be a valid
and binding obligation enforceable in accordance with its terms (subject only to
the application of bankruptcy, insolvency or other similar laws regarding the
rights of creditors generally and the exercise of judicial discretion in
equity).
14.20.2 DUE AUTHORIZATION. The execution, delivery and
performance of this Agreement by Nexus is duly authorized by all requisite
action of Nexus as of the date hereof, do not require the consent or approval of
any person that has not been obtained, and are not in contravention of or in
conflict with any term or provision of the articles of incorporation, bylaws and
charter documents of Nexus.
14.20.3 OTHER AGREEMENTS. The execution, delivery and
performance of this Agreement will not breach or constitute a default under any
agreement, indenture, undertaking or other instrument to which Nexus or any
Affiliate of Nexus is a party or by which any of such persons or any of their
respective properties may be bound or affected, which breach or default would
have a materially adverse effect on the financial condition, properties or
operations of this Company, and other than as contemplated by this Agreement,
such execution, delivery and performance will not result in the creation or
imposition of (or the obligation to create or impose) any lien or encumbrance on
any of the Company property.
14.21 REPRESENTATIONS OF NEUROCRINE. Neurocrine warrants and
represents (each of which warranty and representation shall be deemed to be a
continuing warranty and representation and a covenant that such warranty and
representation shall remain true and correct at all times during the term of
this Agreement):
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14.21.1 STATUS. Neurocrine is a Delaware corporation duly
formed and organized, validly existing and in good standing under the laws of
the State of Delaware and has the power and adequate authority to execute,
deliver and perform this Agreement, which upon such execution and delivery will
be a valid and binding obligation enforceable in accordance with its terms
(subject only to the application of bankruptcy, insolvency or other similar laws
regarding the rights of creditors generally and the exercise of judicial
discretion in equity).
14.21.2 DUE AUTHORIZATION. The execution, delivery and
performance of this Agreement by Neurocrine is duly authorized by all requisite
action of Neurocrine as of the date hereof, do not require the consent or
approval of any person that has not been obtained, and are not in contravention
of or in conflict with any term or provision of the articles of incorporation,
bylaws and charter documents of Neurocrine.
14.21.3 OTHER AGREEMENTS. The execution, delivery and
performance of this Agreement will not breach or constitute a default under any
agreement, indenture, undertaking or other instrument to which Neurocrine or any
Affiliate of Neurocrine is a party or by which any of such persons or any of
their respective properties may be bound or affected, which breach or default
would have a materially adverse effect on the financial condition, properties or
operations of this Company, and other than as contemplated by this Agreement,
such execution, delivery and performance will not result in the creation or
imposition of (or the obligation to create or impose) any lien or encumbrance on
any of the Company property.
ARTICLE XV
MISCELLANEOUS
15.1 REPRESENTATION BY COUNSEL. Counsel to the Company may also be
counsel to a Member or Manager of the Company. The Company has initially
selected Sullivan Wertz McDade & Wallace ("Company Counsel") as legal counsel to
the Company, to organize the Company, to represent the Company in the
development, leasing, financing, construction and sale of the Property, and to
provide such other legal services as the Company may request. Company Counsel
also represented Nexus in the preparation and negotiation of this Agreement, and
has represented, and will continue to represent, the Nexus and its Affiliates
with regard to real estate development and other activities both related and
unrelated to the Company. This representation involves potential conflicts of
interest in that the interests and objectives of Nexus may be or become
inconsistent with the interests and objectives of the Company or Neurocrine or
other Members. By signing this Agreement, the Members waive any conflicts of
interest in regard thereto.
15.2 BINDING EFFECT. Subject to the provisions of this Agreement
relating to transferability, this Agreement will be binding upon and inure to
the benefit of the Members, and their respective successors and assigns.
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15.3 PARTIES IN INTEREST. Except as expressly provided in the Act,
nothing in this Agreement shall confer any rights or remedies under or by reason
of this Agreement on any Persons other than the Members and the Managers and
their respective successors and assigns nor shall anything in this Agreement
relieve or discharge the obligation or liability of any third person to any
party to this Agreement, nor shall any provision give any third person any right
of subrogation or action over or against any party to this Agreement.
15.4 PRONOUNS: STATUTORY REFERENCES. All pronouns and all variations
thereof shall be deemed to refer to the masculine, feminine, or neuter, singular
or plural, as the context in which they are used may require. Any reference to
the Code, the Regulations, the Act, Corporations Code or other statutes or laws
will include all amendments, modifications, or replacements of the specific
sections and provisions concerned.
15.5 HEADINGS. All headings herein are inserted only for convenience and
ease of reference and are not to be considered in the construction or
interpretation of any provision of this Agreement.
15.6 INTERPRETATION. In the event any claim is made by any Member
relating to any conflict, omission or ambiguity in this Agreement, no
presumption or burden of proof or persuasion shall be implied by virtue of the
fact that this Agreement was prepared by or at the request of a particular
Member or such Member's counsel.
15.7 REFERENCES TO THIS AGREEMENT. Numbered or lettered articles,
sections and subsections herein contained refer to articles, sections and
subsections of this Agreement unless otherwise expressly stated.
15.8 GOVERNING LAW/JURISDICTION/VENUE. This Agreement shall be construed
in accordance with California law, and any arbitrator appointed hereunder shall
be required to apply such law. Each Member hereby consents to the exclusive
jurisdiction of the Superior Court of the State of California, County of San
Diego, on a claim arising out of, under or in connection with this Agreement or
the transactions contemplated by this Agreement, provided such claim is not
required to be arbitrated pursuant to Section 15.10.
15.9 ARBITRATION. Any dispute arising from or related to this Agreement,
the Company or the Premises shall be resolved by binding arbitration under the
Commercial Rules of the American Arbitration Association, and venue for any such
arbitration shall be the County of San Diego.
15.10 SEVERABILITY. If any provision of this Agreement or the
application of such provision to any person or circumstance shall be held
invalid, the remainder of this Agreement or the application of such provision to
persons or circumstances other than those to which it is held invalid shall not
be affected thereby.
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15.11 ADDITIONAL DOCUMENTS AND ACTS. Each Member agrees to execute and
deliver such additional documents and instruments and to perform such additional
acts as may be necessary or appropriate to effectuate, carry out and perform all
of the terms, provisions, and conditions of this Agreement and the transactions
contemplated hereby.
15.12 NOTICES. Any notice to be given or to be served upon the Company
or any party hereto in connection with this Agreement must be in writing (which
may include facsimile) and will be deemed to have been given and received when
delivered to the address specified by the party to receive the notice. Such
notices will be given to a Member or Manager at the last known business or
residence address of the Member or the Manager. Any party may, at any time by
giving five days' prior written notice to the other parties, designate any other
address in substitution of the foregoing address to which such notice will be
given.
15.13 AMENDMENTS. The consent of Members who are not the subject of a
Dissolution Event holding at least two-thirds of the Membership Interests shall
be required to amend this Agreement or the Articles. All amendments to this
Agreement or the Articles will be in writing and signed by all of the Members
whose consent is required.
15.14 RELIANCE ON AUTHORITY OF PERSON SIGNING AGREEMENT. If a Member is
not a natural person, neither the Company nor any Member will (a) be required to
determine the authority of the individual signing this Agreement to make any
commitment or undertaking on behalf of such entity or to determine any fact or
circumstance bearing upon the existence of the authority of such individual or
(b) be responsible for the application or distribution of proceeds paid or
credited to individuals signing this Agreement on behalf of such entity.
15.15 NO INTEREST IN COMPANY PROPERTY: WAIVER OF ACTION FOR PARTITION.
No Member or Economic Interest Owner has any interest in specific property of
the Company. Without limiting the foregoing, each Member and Economic Interest
Owner irrevocably waives during the term of the Company any right that the
Member may have to maintain any action for partition with respect to the
property of the Company.
15.16 MULTIPLE COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.
15.17 ATTORNEY FEES. In the event that any dispute between the Company
and the Members or among the Members should result in litigation or arbitration,
the prevailing party in such dispute shall be entitled to recover from the other
party all reasonable fees, costs and expenses of enforcing any right of the
prevailing party, including, without limitation, reasonable attorneys' fees and
expenses.
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15.18 TIME IS OF THE ESSENCE. All dates and times in this Agreement are
of the essence.
15.19 REMEDIES CUMULATIVE. The remedies under this Agreement are
cumulative and shall not exclude any other remedies to which any person may be
lawfully entitled.
15.20 NEUROCRINE DEFAULT. A ?Neurocrine Default? shall mean all of the
following have occurred: (i) there has been a continuous default in the payment
of Rent by Neurocrine under the Neurocrine Lease for a period of ninety (90)
days, and (ii) the Neurocrine Lease has been terminated in accordance with
Section 24.5 of the Neurocrine Lease prior to Neurocrine?s cure of the default
in the payment of Rent. In the event of a Neurocrine Default, the Deed of Trust
securing the Neurocrine Loan shall be released and reconveyed from the Premises
by the written request of Nexus to the Trustee under such Deed of Trust. Any
such release shall not affect any amounts due from the Company to Neurocrine
under the Promissory Note given for the Neurocrine Loan. In addition,
notwithstanding any other provision of this Agreement, if Neurocrine has been in
continuous default in the payment of Rent under the Neurocrine Lease for a
period of ninety (90) days, Neurocrine shall become an Economic Interest Owner
rather than a Member under this Agreement unless and until the default is cured,
although this Agreement may not thereafter be amended without the consent of
Neurocrine in a manner which would increase its obligations or liabilities.
IN WITNESS WHEREOF, the Members of Science Park Center LLC, a California
limited liability company, have executed this Agreement, effective as of the
date written above.
NEUROCRINE BIOSCIENCES, INC.
a Delaware Corporation
By: /s/ PAUL W. HAWRAN
---------------------------------
NEXUS PROPERTIES, INC.
a California Corporation
By: /s/ MICHAEL J. REIDY
---------------------------------
Michael J. Reidy
Chief Executive Officer
/s/ BRANDON CROCKER
- ------------------------------------
BRANDON CROCKER
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SCHEDULE 1
PROJECT BUDGET
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NEUROCRINE
*** SF R&D FACILITY
PRELIMINARY COST PRO FORMA
***
***
* confidential treatment
55
SCHEDULE 2
ESTIMATED CASH DISTRIBUTION SCHEDULE
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SCHEDULE 2
Page 1 of 2
NEUROCRINE
CASH FLOW SCHEDULE
***
* confidential treatment
57
SCHEDULE 2
Page 2 of 2
NEUROCRINE
CASH FLOW SCHEDULE
***
* confidential treatment
58
SCHEDULE 3
ESTIMATED OPTION PURCHASE PRICE
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SCHEDULE 3
NEUROCRINE
OPTION PRICE CALCULATION
***
* confidential treatment