LIMITED LIABILITY COMPANY AGREEMENT OF PERSEID THERAPEUTICS LLC

EXHIBIT 2.1.3

LIMITED LIABILITY COMPANY AGREEMENT

OF

PERSEID THERAPEUTICS LLC

TABLE OF CONTENTS

 

 

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TABLE OF CONTENTS

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This LIMITED LIABILITY COMPANY AGREEMENT (this “ Agreement ”) of Perseid Therapeutics LLC, a Delaware limited liability company (the “ Company ”), is dated as of September 18, 2009, by and between Maxygen, Inc., a Delaware corporation (“ Maxygen ”) and Astellas Bio Inc., a Delaware corporation (“ Bio ”).

WHEREAS, the Company has been formed as a limited liability company under the Delaware Limited Liability Company Act (6 Del. C. § 18 101, et seq.), as amended from time to time (the “ Delaware Act ”), pursuant to the Certificate of Formation, as filed in the office of the Secretary of State of the State of Delaware; and

WHEREAS, the Initial Members desire to enter into this Agreement to set forth certain agreements relating to the ownership, management and operation of the Company.

NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Members hereby agree as follows:

ARTICLE 1.

DEFINED TERMS

Unless the context otherwise requires, the terms defined in this Article 1 shall, for the purposes of this Agreement, have the meanings herein specified. All capitalized terms used and not defined herein shall have the meanings set forth in that certain Master Joint Venture Agreement (the “ Joint Venture Agreement ”) dated as of June 30, 2009 by and among Maxygen, Bio and Astellas Pharma Inc., a Japanese corporation.

“ Additional Common Units ” shall have the meaning set forth in Section 4.03(d)(i).

“ Additional Member ” shall have the meaning set forth in Section 3.01(b).

“ 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:

(a) the Capital Account shall be increased by any amounts that such Member is obligated to restore pursuant to any provision of this Agreement or is deemed to be obligated to restore pursuant to the penultimate sentence of each of Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

(b) the Capital Account shall be decreased by 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).

The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

“ Adoption Agreement ” shall mean an agreement confirming the agreement of a Person to be bound by the terms and provisions of this Agreement.

“ Agreement ” shall have the meaning set forth in the preamble hereof.

“ Annual Distribution Rate ” shall mean an annual rate of $0.08 per Series A Preferred Unit and $0.08 per Series B Preferred Unit (in each case subject to adjustment from time to time for Recapitalizations as set forth elsewhere herein).

“ Automatic Conversion Event ” shall have the meaning set forth in Section 4.03(b).

“ Bio ” shall have the meaning set forth in the preamble hereof.

“ Bio Manager ” shall have the meaning set forth in Section 4.03(d)(i)(2).

“ Board of Managers ” shall have the meaning set forth in Section 5.01(a).

“ Buy-Out Units ” has the meaning defined in the Investors’ Rights Agreement.

“ Capital Account ” shall mean, for each Member, a separate account that is:

(a) increased by: (i) the amount of such Member’s Capital Contribution and (ii) allocations of Profits and other items in the nature of income and gain to such Member pursuant to Article 7;

(b) decreased by: (i) the amount of cash distributed to such Member by the Company; (ii) the fair market value as of the time of Distribution, and net of liabilities secured by such property that the Member assumes or to which the Member’s ownership of the property is subject, of any other property distributed to such Member by the Company; and (iii) allocations of Losses and other items in the nature of expenses or losses to such Member pursuant to Article 7;

(c) otherwise adjusted in accordance with the provisions of this Agreement; and

(d) revalued in connection with any event described in paragraph (a) of the definition of “Gross Asset Value” to the extent it is determined in the discretion of the Managing Member in consultation with Bio prior to the Option Expiration Date that a revaluation is necessary to preserve the economic arrangement of the Members. In determining the amount of any liability for purposes of subparagraphs (a) and (b) above, there shall be taken into account Section 752(c) of the Code and any other applicable provisions of the Code and Treasury Regulations.

Capital Accounts shall be maintained in accordance with Treasury Regulations Section 1.704-1(b) and specifically in a manner consistent with the Member’s interest in the Company, and the provisions of this Agreement shall be interpreted and applied in a manner consistent with such regulations and intent.

 

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“ Capital Contribution ” shall mean, for any Member, the sum of the net amount of cash and the fair market value as of the time of contribution, and net of liabilities secured by such property that the Company assumes or to which the Company’s ownership of the property is subject, of any other property contributed by such Member to the capital of the Company. For purposes of this Agreement, each Capital Contribution shall be deemed to have been made at the later of: (a) the Close of Business on the due date of such Capital Contribution as determined in accordance with this Agreement; or (b) the Close of Business on the date on which such Capital Contribution is actually received by the Company.

“ Certificate of Formation ” shall mean the Certificate of Formation of the Company and any and all amendments thereto and restatements thereof filed on behalf of the Company with the office of the Secretary of State of the State of Delaware pursuant to the Delaware Act.

“ Company ” shall have the meaning set forth in the preamble hereof.

“ Conversion Price ” shall mean $1.00 per Series A Preferred Unit and $1.00 per Series B Preferred Unit (in each case subject to adjustment from time to time for Recapitalizations and as otherwise set forth elsewhere herein).

“ Conversion Rate ” shall have the meaning set forth in Section 4.03(a).

“ Convertible Securities ” shall mean any evidences of indebtedness, shares, membership units, or other securities convertible into or exchangeable for Common Units (as such term is defined in the Voting Agreement).

“ Delaware Act ” shall have the meaning set forth in the preamble hereof.

“ Depreciation ” means, for each Fiscal Year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such Fiscal Year or other period; provided , however , that if the Gross Asset Value of an asset differs from its adjusted basis for U.S. federal income tax purposes at the beginning of such Fiscal Year or other period, Depreciation shall be an amount that bears the same ratio to such beginning Gross Asset Value as the U.S. federal income tax depreciation, amortization or other cost recovery deduction with respect to such asset for such Fiscal Year or other period bears to such beginning adjusted tax basis; and provided further , that if the U.S. federal income tax depreciation, amortization or other cost recovery deduction for such Fiscal Year or other period is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Managing Member and in consultation with Bio prior to the Option Expiration Date.

 

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“ Distribution ” shall mean the transfer of cash or other property without consideration whether by way of dividend or otherwise (other than dividends on Common Units payable in Common Units), or the purchase or redemption of Units by the Company for cash or property.

“ Distribution Threshold ” shall have the meaning set forth in Section 4.02(c).

“ Equity Incentive Plan ” shall mean the Company 2009 Equity Incentive Plan under which Common Units shall be reserved for current or future grant for issuance to Managers, officers, employees, and other service providers as provided therein.

“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

“ Excluded Opportunity ” shall mean any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of, (i) any Manager of the Company who is not an employee of the Company or any of its Subsidiaries, or (ii) any Member holding Preferred Units or any Affiliate, partner, member, director, stockholder, employee, agent or other related person of any such Member, other than someone who is an employee of the Company or any of its Subsidiaries (collectively, “ Excluded Opportunity Persons ”), unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of, an Excluded Opportunity Person expressly in such Excluded Opportunity Person’s capacity as a Manager of the Company.

“ Exercise Price ” has the meaning defined in the Investors’ Rights Agreement.

“ Fair Market Value ” shall mean, as of any date prior to the expiration of the Buy-Out Option, the value of Profits Interest Units derived from the deemed value of the Company in light of the applicable Exercise Price for the Buy-Out Units, the applicable Distribution Threshold for the Profits Interest Units, the then fully-diluted capitalization of the Company, and the then liquidation preferences, participation rights and other terms and conditions of the Company’s Units and, as of the expiration of the Buy-Out Option and any date following such expiration, the fair market value of the Profits Interest Units determined in good faith by the Administrator (as defined in the Company’s 2009 Equity Incentive Plan).

“ Fiscal Period ” shall mean the Fiscal Year or such shorter period as necessary to take into account the Members’ varying interests in the Company.

“ Fiscal Year ” shall mean the fiscal year of the Company, initially the period commencing on January 1 in any calendar year and ending on December 31 in that calendar year, except as otherwise required by law, including the Code or Treasury Regulations.

“ Gross Asset Value ” shall mean, with respect to any asset, such asset’s adjusted basis for U.S. federal income tax purposes, except as follows:

(a) the Gross Asset Value of all Company assets shall be adjusted to equal their respective fair market values, taking Section 7701(g) of the Code into account, immediately prior to

 

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the following times: (i) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution; (ii) the distribution by the Company to a Member of more than a de minimis amount of Company assets as consideration for an interest in the Company; (iii) the grant of an interest in the Company (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Company by an existing Member acting in a Member capacity, or by a new Member acting in a Member capacity or in anticipation of becoming a Member; and (iv) the liquidation of the Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g); provided , however , that adjustments pursuant to clause (i), (ii) and (iii) of this sentence shall be made only if it reasonably determined by the Managing Member in consultation with Bio prior to the Option Expiration Date that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company; and

(b) the Gross Asset Value of any Company asset distributed to any Member shall be adjusted to equal the fair market value, taking Section 7701(g) of the Code into account, of such asset on the date of Distribution.

If the Gross Asset Value of an asset has been determined or adjusted pursuant to paragraph (a) or paragraph (b) above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses.

“ Initial Members ” shall mean Maxygen and Bio.

“ Lender ” shall have the meaning set forth in the Bridge Loan Agreement.

“ Liquidity Event ” shall be deemed to be occasioned by, or to include, (a) the acquisition of the Company by another entity by means of any transaction or series of related transactions to which the Company is party (including, without limitation, any acquisition of Units reorganization, merger or consolidation but excluding any sale of Units solely for capital raising purposes) other than (i) a transaction or series of related transactions in which the holders of the voting securities of the Company outstanding immediately prior to such transaction or series of related transactions retain, immediately after such transaction or series of related transactions, as a result of Units held by such holders prior to such transaction or series of related transactions, at least a majority of the total voting power represented by the outstanding voting securities of the Company or such other surviving or resulting entity (or if the Company or such other surviving or resulting entity is a wholly-owned Subsidiary immediately following such acquisition, its parent) or (ii) the consummation of the purchase of Units pursuant to the Buy-Out Option, as such term is defined in the Investors’ Rights Agreement; (b) a sale, lease or other disposition of all or substantially all of the assets of the Company and its subsidiaries taken as a whole by means of any transaction or series of related transactions, except where such sale, lease or other disposition is to a wholly-owned Subsidiary of the Company; or (c) any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary.

 

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“ Liquidation Preference ” shall mean $1.00 per Series A Preferred Unit and $1.00 per Series B Preferred Unit (in each case subject to adjustment from time to time for Recapitalizations as set forth elsewhere herein).

“ Liquidation Rights ” shall have the meaning set forth in Section 4.03(g).

“ Loan ” shall have the meaning set forth in the Bridge Loan Agreement.

“ Manager ” shall have the meaning set forth in Section 5.01(b).

“ Managing Member ” shall mean Maxygen, or its successor or assign.

“ Maxygen ” shall have the meaning set forth in the preamble hereof.

“ Maxygen Manager ” shall have the meaning set forth in Section 4.03(d)(i)(2).

“ Member ” shall mean any of the Initial Members and any Additional Member until such Person ceases to be a Member of the Company in accordance with the terms of this Agreement.

“ Member Minimum Gain ” means an amount, with respect to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as a nonrecourse liability, determined in accordance with Treasury Regulations Section 1.704-2(i)(3).

“ Member Nonrecourse Debt ” has the same meaning as the term “partner nonrecourse debt” in Treasury Regulations Section 1.704-2(b)(4).

“ Member Nonrecourse Deduction ” shall mean an item of loss, expense or deduction attributable to a nonrecourse liability of the Company for which a Member bears the economic risk of loss within the meaning of Treasury Regulations Section 1.704-2(i).

“ Minimum Gain ” of the Company or “ Company Minimum Gain ” shall, as provided in Treasury Regulations Section 1.704-2, mean the total amount of gain the Company would realize for federal income tax purposes if it disposed of all assets subject to nonrecourse liability for no consideration other than full satisfaction thereof.

“ Option Expiration Date ” shall have the meaning set forth in the Investors’ Rights Agreement.

“ Options ” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Units or Convertible Securities.

“ Original Issue Price ” shall mean $1.00 per Series A Preferred Unit and $1.00 per Series B Preferred Unit (in each case subject to adjustment from time to time for Recapitalizations as set forth elsewhere herein).

 

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“ Percentage Interest ” of any Member shall mean the product of (x) the quotient of the number of Common Units held by such Member (with the Preferred Units held by such Member being treated for this purpose as if they had been converted to Common Units at the then applicable Conversion Rate) divided by the total number of outstanding Units multiplied by (y) 100.

“ Permitted Equity Offering ” shall mean any offering of Units, securities linked to Units or any other equity security (including any security convertible into or exercisable for any equity security) of the Company that (a) are offered and sold to Maxygen or its Affiliates, (b) are offered and sold to any Person other than Maxygen or its Affiliates, provided that Maxygen and its Affiliates hold a majority of the outstanding Units immediately following such offering and sale or (c) are junior to the Series B Preferred Units.

“ Permitted Indebtedness ” shall mean (a) accounts payable to trade creditors for goods and services and current operating liabilities (not the result of the borrowing of money) incurred in the ordinary course of the Company’s or such Subsidiary’s business in accordance with customary terms and paid within the specified time, unless contested in good faith by appropriate proceedings and reserved for in accordance with GAAP; (b) indebtedness consisting of guarantees resulting from endorsement of negotiable instruments for collection by the Company or any such Subsidiary in the ordinary course of business; (c) interest rate swaps, currency swaps and similar financial products entered into or obtained in the ordinary course of business; (d) capital leases or other indebtedness incurred solely to acquire and secure the purchase price of equipment, computers, software or implement tenant improvements and is not in excess of the lesser of the purchase price or the fair market value of such equipment, computers, software or tenant improvements on the date of acquisition; and (e) unsecured indebtedness of the Company to any of its wholly owned Subsidiaries or of any of its wholly owned Subsidiaries to another of its wholly owned Subsidiaries that is not senior to any indebtedness outstanding under the Bridge Loan Agreement.

“ Person ” shall mean any individual, corporation, association, partnership (general or limited), joint venture, trust, estate, limited liability company or other legal entity or organization.

“ Profits Interest Unit ” shall have the meaning set forth in Section 4.02(c).

“ Profits and Losses ” shall mean, for each Fiscal Year or other Fiscal Period, an amount equal to the Company’s taxable income or loss for such Fiscal Year or other Fiscal Period, as applicable, determined in accordance with Section 703(a) of the Code (but including in taxable income or loss, for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code), with the following adjustments:

(a) any income of the Company exempt from U.S. federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this definition shall be added to such taxable income or loss;

(b) any expenditures of the Company described in Section 705(a)(2)(B) of the Code (or treated as expenditures described in Section 705(a)(2)(B) of the Code pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in computing Profits or Losses pursuant to this definition shall be subtracted from such taxable income or loss;

 

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(c) in the event that the Gross Asset Value of any Company asset is adjusted in accordance with paragraphs (a) or (b) of the definition of “Gross Asset Value,” the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses;

(d) gain or loss resulting from any disposition of any asset of the Company with respect to which gain or loss is recognized for U.S. federal income tax purposes shall be computed by reference to the Gross Asset Value of the asset disposed of, notwithstanding that the adjusted tax basis of such asset differs from its Gross Asset Value;

(e) in lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year or other Fiscal Period, computed in accordance with the definition of “Depreciation” above; and

(f) 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)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in complete liquidation of a Member’s interest, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Profits and Losses; and

(g) notwithstanding any other provision of this definition, any items which are specially allocated pursuant to Section 7.02(b) through Section 7.02(g) shall not be taken into account in computing Profits or Losses, but the amount thereof shall be determined under principles analogous to those set forth in clauses (a) through (f) of this definition.

“ Proposed Treasury Regulation ” shall have the meaning set forth in Section 4.02(d).

“ Qualified Public Offering ” shall have the meaning set forth in Section 4.03(b).

“ Recapitalization ” shall mean any Unit dividend, Unit split, combination of Units, reorganization, recapitalization, reclassification or other similar event.

“ Related Entity ” shall mean, with respect to any Member, (i) any corporation, trust, limited liability company, association or other entity in which such Member holds an 80% or greater equity interest, (ii) any parent corporation, trust, limited liability company or association, or other parent entity, of such Member or (iii) any liquidating trust or similar entity established for the benefit of such Member’s equityholders.

“ Safe Harbor ” shall have the meaning set forth in Section 4.02(d).

 

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“ Sarbanes-Oxley Act ” shall mean the Sarbanes-Oxley Act of 2002, as amended.

“ Securities Act ” shall mean the United States Securities Act of 1933, as amended.

“ Subsidiary ” shall have the meaning set forth in the Bridge Loan Agreement.

“ Treasury Regulations ” shall mean the regulations issued by the United States Treasury Department and relating to a matter arising under the Code.

“ Unit ” shall mean a unit of limited liability company interest in the Company and includes, without limitation, the Common Units and the Preferred Units.

“ Updated Capital Account ” shall mean, with respect to a Member, such Member’s Capital Account determined as if, immediately prior to the time of determination, all of the Company’s assets had been sold for fair market value and any previously unallocated Profits and Losses had been allocated pursuant to Article 7.

SECTION 1.02 Interpretation . Unless otherwise indicated herein, with respect to any reference made in this Agreement to a Section (or Article, Subsection, Paragraph, Subparagraph or Clause), Exhibit or Schedule, such reference shall be to a section (or article, subsection, paragraph, subparagraph or clause) of, or an exhibit or schedule to, this Agreement. The table of contents and any article, section, subsection, paragraph or subparagraph headings contained in this Agreement and the recitals at the beginning of this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed, as the context indicates, to be followed by the words “but (is/are) not limited to.” Words used herein, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate. Where specific language is used to clarify or illustrate by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict the construction of the general statement which is being clarified or illustrated. Unless otherwise specified, any reference to a time or date shall be with reference to the time or date, as the case may be, in Wilmington, Delaware.

ARTICLE 2.

GENERAL MATTERS

SECTION 2.01 Formation .

(a) Pursuant to the provisions of the Delaware Act, the Company was formed on September 8, 2009, by the filing in the Office of the Secretary of State of the State of Delaware of a Certificate of Formation (which filing is hereby approved and ratified in all respects). The sole organizer of the Company is hereby designated as an “authorized person,” within the meaning of Section 18-201 of the Delaware Act, and all acts of such sole organizer in forming and organizing the Corporation are hereby approved, ratified, and adopted as valid and binding acts of the Company.

 

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(b) Each officer of the Company appointed by the Board of Managers pursuant to Section 5.04 is hereby designated as an “authorized person,” within the meaning of Section 18-201 of the Delaware Act, to execute, deliver and file, or cause the execution, delivery and filing of, all certificates, notices or other instruments (and any amendments and/or restatements thereof) required or permitted by the Delaware Act to be filed in the office of the Secretary of State of the State of Delaware and any other certificates, notices or other instruments (and any amendments or restatements thereof) necessary for the Company to qualify to do business in a jurisdiction in which the Company may wish to conduct business.

SECTION 2.02 Name . The name of the Company shall be “Perseid Therapeutics LLC”. Without the need to amend this Agreement, the Board of Managers may change the name of the Company from time to time in its sole discretion.

SECTION 2.03 Term . The term of the Company commenced with the filing of the Certificate of Formation in the office of the Secretary of State of the State of Delaware, and shall continue perpetually unless the Company is dissolved pursuant to Section 9.01.

SECTION 2.04 Registered Agent and Registered Office . The Company’s registered agent for service of process is The Corporation Trust Company, and the address of the registered agent and the address of the registered office of the Company in the State of Delaware shall be The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, Wilmington, DE 19801. Such registered agent and such registered office may be changed from time to time by the Board of Managers.

SECTION 2.05 Principal Place of Business . As of the date of this Agreement, the principal place of business of the Company is located in Redwood City, California. Thereafter, the principal place of business of the Company shall be in such location as the Board of Managers may designate from time to time.

SECTION 2.06 Purposes and Powers . The Company is formed for the object and purpose of, and the nature of the business to be conducted and promoted by the Company is, engaging in any act or activity for which limited liability companies may be formed under the Delaware Act. The Company shall have the power and authority to take any and all actions necessary, appropriate, proper, advisable, incidental or convenient to or for the furtherance of the purposes set forth in this Section 2.06.

SECTION 2.07 Books and Records . At all times during the continuance of the Company, the Company shall maintain or cause to be maintained proper and complete books and records in which shall be entered fully and accurately all transactions and other matters relating to the Company’s business in the detail and completeness customary and usual for businesses of the type engaged in by the Company.

 

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ARTICLE 3.

MEMBERS

SECTION 3.01 Members .

(a) Upon the execution of this Agreement, the sole Members of the Company shall be the Initial Members. Following the execution of this Agreement, no Person shall be admitted as a Member and no Units shall be issued by the Company except as expressly provided in this Agreement.

(b) After the date of this Agreement, a Person shall only be admitted as a Member (such Person, an “ Additional Member ”) if such Person is issued any Units in accordance with Section 4.02 or is a valid assignee or transferee of any then outstanding Units in accordance with the relevant provisions of the Investors’ Rights Agreement and the Co-Sale Agreement, as applicable. Nothing in this Agreement shall require the consent or approval of any Member for the admission of any Additional Member.

(c) The name and mailing address of each Member and the number of Units held by such Member shall be listed on Schedule A . An officer designated by the Board of Managers pursuant to Section 5.04 shall update Schedule A from time to time as necessary to accurately reflect changes in the Units of any Member to reflect the consummation of any action taken in accordance with this Agreement. Any amendment or revision to Schedule A made to reflect an action taken in accordance with this Agreement shall not be deemed an amendment to this Agreement. Any reference in this Agreement to Schedule A shall be deemed to be a reference to Schedule A as amended and in effect from time to time. The Company shall provide the Members with any amendment or revision of Schedule A (including any subsequent amendments or revisions thereto) within three (3) days of such amendment or revision.

SECTION 3.02 Powers of Members . Members shall not have the authority to transact any business in the Company’s name or bind the Company by virtue of their status as Members.

SECTION 3.03 Voting Rights .

(a) The Members hereby delegate the management of the Company to the Managers except with respect to (i) the automatic conversion of the Preferred Units in accordance with Section 4.03(b), (ii) the waiver of adjustments to the Conversion Price in accordance with Section 4.03(i), (iii) the shortening or waiver of certain notice provisions pursuant to Section 4.03(j), (iv) the designation and removal of Managers in accordance with Section 5.01(b), (v) the approval of those matters specified in Section 5.05 and Section 5.06, (vi) the approval of certain matters in connection with a Liquidity Event in accordance with Section 8.02, (vii) the dissolution of the Company in accordance with Section 9.01 and (viii) any amendment of this Agreement in accordance with Section 10.09.

 

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(b) Other than as provided herein, the Members shall vote together as a single class on all matters on which they are specifically entitled to vote pursuant to this Agreement. Each Member holding Preferred Units shall be entitled to the number of votes equal to the number of Common Units into which such Preferred Units could be converted as of the record date. Fractional votes shall not, however, be permitted and any fractional voting rights resulting from the above formula (after aggregating all Common Units into which Preferred Units held by each Member could be converted), shall be disregarded.

(c) Notwithstanding anything in this Agreement to the contrary, the Profits Interest Units shall be non-voting and shall not entitle the holders of Profits Interest Units, as such, to act for the Company or vote upon or approve any matter submitted to the Members for approval.

SECTION 3.04 Meetings and Written Consents of Members .

(a) The Company shall provide written notice to all Members of any meeting at which a vote will be held not less than ten (10) nor more than sixty (60) calendar days at prior thereto, which notice shall describe the business to be considered, the actions to be taken and the matters to be voted on at the meeting in reasonable detail. At any meeting of the Members, the presence, in person or by proxy, of Members holding a majority of the votes which could be cast by the holders of all Units entitled to vote at the meeting shall be necessary and sufficient to constitute a quorum, subject in each case to the provisions of Section 5.05 and Section 5.06. Any action permitted or required to be taken by the Members may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of Units having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all Units entitled to vote thereon were present and voted. Within five (5) calendar days of taking of action by Members without a meeting by less than unanimous written consent, the Company shall provide written notice of the taking of such action to those Members who have not consented in writing to the taking of such action, which notice shall describe the actions taken in reasonable detail.

(b) In order that the Company may determine the Members entitled to notice of or to vote at any meeting of Members or any adjournment thereof, or entitled to express consent to Company action in writing without a meeting, or entitled to receive payment of any dividend or other Distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of Units or for the purpose of any other lawful action, the Board of Managers may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Managers and which record date:

(i) in the case of determination of Members entitled to notice of or to vote at any meeting of Members or adjournment thereof, shall, unless otherwise required by law, not be more than sixty nor less than ten days before the date of such meeting;

(ii) in the case of determination of Members entitled to express consent to Company action in writing without a meeting, shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Managers; and

 

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(iii) in the case of determination of Members for any other action, shall not be more than sixty (60) days prior to such other action.

If no record date is fixed by the Board:

(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 day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held;

(ii) the record date for determining Members entitled to express consent to Company action in writing without a meeting when no prior action of the Board of Managers is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Company in accordance with applicable law, or, if prior action by the Board of Managers is required by law, shall be at the close of business on the day on which the Board of Managers adopts the resolution taking such prior action; and

(iii) the record date for determining Members for any other purpose shall be at the close of business on the day on which the Board of Managers adopts the resolution relating thereto.

A 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, provided that the Board of Managers may fix a new record date for the adjourned meeting.

(c) Each Member entitled to vote at a meeting of Members or to express consent or dissent to Company action in writing without a meeting may authorize another Person or Persons to act for such Member by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period.

SECTION 3.05 Liability of Members, Managers, Etc .

(a) Except to the extent provided in the Delaware Act, none of the Members or any Manager shall have any personal liability for the debts, obligations or liabilities of the Company.

(b) To the fullest extent permitted by applicable law (including Section 18-1101 of the Delaware Act), notwithstanding any other provision of this Agreement or otherwise of applicable law, including any in equity or at law, no Member, Manager, officer or employee of the Company (collectively, the “ Covered Persons ”), shall have any fiduciary duty to the Company, the Members or the Managers (or any other person or entity bound by this Agreement) by reason of this Agreement or the Company or in its capacity as a Covered Person, except that a Covered Person shall be subject to the implied contractual covenant of good faith and fair dealing and (to the extent expressly specified herein or therein) to the covenants and express obligations set forth in this

 

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Agreement and the Transaction Agreements. To the fullest extent permitted by applicable law (including Section 18-1101 of the Delaware Act), no Member or Manager shall be liable, including under any legal or equitable theory of fiduciary duty or other theory of liability, to the Company, any Member, any Manager or any other person or entity bound by this Agreement for any losses, claims, damages or liabilities incurred by reason of any act or omission performed or omitted by such Member or Manager in its capacity as a Member or Manager, except that (i) a Member or Manager shall be liable for any act or omission that constitutes a bad faith violation of the implied contractual covenant of good faith and fair dealing and (ii) a Member shall be liable for any breach by such Member of the covenants and express obligations set forth in this Agreement or the Transaction Agreements. The provisions of this Agreement, to the extent that they restrict or eliminate the duties and liabilities of a Member or Manager otherwise existing at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of such Member or Manager. Without limitation to the foregoing, the Company renounces any interest, right or expectancy of the Company in, or in being offered an opportunity to participate in, or in being informed about, any Excluded Opportunity. A Member or Manager shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any Person as to matters which such Member or Manager reasonably believes are within such Person’s professional or expert competence.

(c) (i) Each Person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a Manager or officer of the Company or is or was serving at the request of the Company as a Manager, officer, employee or agent of another limited liability company or of a corporation, partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an “ Indemnitee ”), whether the basis of such proceeding is alleged action in an official capacity as a Manager, officer, employee or agent or in any other capacity while serving as a Manager, officer, employee or agent, shall be indemnified and held harmless by the Company if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful, against all expense, liability and loss (including attorneys’ fees, judgments, fines, excise taxes under the Employee Retirement and Income Security Act of 1974 or penalties and amounts paid in settlement) reasonably incurred or suffered by such Indemnitee in connection therewith; provided , however , that except as provided in Section 3.05(f) with respect to proceedings to enforce rights to indemnification, the Company shall indemnify any such Indemnitee in connection with a proceeding (or part thereof) initiated by such Indemnitee only if such proceeding (or part thereof) was authorized by the Board of Managers. This Section 3.05(c)(i) shall not apply to any action by or in the right of the Company.

(ii) The Company shall indemnify any Indemnitee who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that the Indemnitee is or was an Indemnitee, against expenses (including attorneys’ fees) actually and reasonably incurred by the Indemnitee in connection with the defense or settlement of such action or suit if the

 

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Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, except that no indemnification shall be made in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged to be liable to the Company unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such Indemnitee is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper.

(d) To the extent that a present or former Manager or officer of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding described in Section 3.05(c), or in defense of any claim, issue or matter therein, such Indemnitee shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such Indemnitee in connection therewith.

(e) The Company shall pay the expenses (including attorneys’ fees) incurred by a Manager in defending any Proceeding in advance of its final disposition; provided , however , that such payment of expenses incurred by an Indemnitee shall be made only upon receipt of an undertaking by such Manager to repay all amounts so advanced if it should be ultimately determined that such Indemnitee is not entitled to be indemnified under this Section 3.05(e) or otherwise. Such expenses (including attorneys’ fees) incurred by former Managers, officers or other employees and agents may be so paid upon such terms and conditions, if any, as the Company deems appropriate. The right to advancement of expenses shall not apply where indemnity is excluded pursuant to this Agreement. Notwithstanding the foregoing, unless otherwise determined pursuant to Section 3.05(j), no advance shall be made by the Company to an officer of the Company (except by reason of the fact that such officer is or was a Manager of the Company, in which event this sentence shall not apply) in any proceeding if a determination is reasonably and promptly made (i) by a majority vote of the Managers who are not parties to such proceeding, even though less than a quorum, or (ii) by a committee of such Managers designated by majority vote of such Managers, even though less than a quorum, or (iii) if there are no such Managers, or if such Managers so direct, by independent legal counsel in a written opinion, that facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the Company.

(f) Subject to the requirements in this Section 3.05, the Company shall not be obligated to indemnify any person in connection with any proceeding (or any part of any proceeding):

(i) for which payment has actually been made to or on behalf of such person under any statute, insurance policy, indemnity provision, vote or otherwise, except with respect to any excess beyond the amount paid;

 

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(ii) for an accounting or disgorgement of profits pursuant to Section 16(b) of the Exchange Act, or similar provisions of federal, state or local statutory law or common law, if such person is held liable therefor (including pursuant to any settlement arrangements);

(iii) for any reimbursement of the Company by such person of any bonus or other incentive-based or equity-based compensation or of any profits realized by such person from the sale of securities of the Company, as required in each case under the Exchange Act, as amended (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act, or the payment to the Company of profits arising from the purchase and sale by such person of securities in violation of Section 306 of the Sarbanes-Oxley Act), if such person is held liable therefor (including pursuant to any settlement arrangements);

(iv) initiated by such person, including any proceeding (or any part of any proceeding) initiated by such person against the Company or its directors, officers, employees, agents or other indemnitees, unless (a) the Board authorized the Proceeding (or the relevant part of the Proceeding) prior to its initiation, (b) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law, (c) otherwise required to be made under SECTION 3.05(g) or otherwise required by applicable law; or

(v) if prohibited by applicable law.

(g) If a claim under Section 3.05(c) or Section 3.05(d) is not paid in full by the Company within ninety (90) calendar days after a written claim has been received by the Company, the Indemnitee may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Company to recover an advancement of expenses pursuant to the terms of an undertaking, the Indemnitee shall also be entitled to be paid the expenses of prosecuting or defending such suit. In (i) any suit brought by the Indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit brought by the Company to recover an advancement of expenses pursuant to the terms of an undertaking, the Company shall be entitled to recover such expenses upon a final adjudication that, the Indemnitee has not met the applicable standard for indemnification set forth in Section 3.05(c) and Section 3.05(d). Neither the failure of the Company (including its Board of Managers, independent legal counsel, or its Members) to have made a determination prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the standard of conduct for entitlement to indemnification, nor an actual determination by the Company (including its Board of Managers, independent legal counsel, or its Members) that the Indemnitee has not met the standard of conduct for entitlement to indemnification, shall create a presumption that the Indemnitee has not met such standard of conduct or, in the case of such a suit brought by the Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Company to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the Indemnitee is not

 

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entitled to be indemnified, or to such advancement of expenses, under this Section 3.05 or otherwise shall be on the Company. The termination of a proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that a Manager or officer acted in such a manner as to make him or her ineligible for indemnification.

(h) The rights to indemnification and to the advancement of expenses conferred in this Section 3.05 shall not be exclusive of any other right which any Person may have or hereafter acquire under any statute, this Agreement, any other agreement, any vote of Managers or otherwise.

(i) The Company may maintain insurance, at its expense, to protect itself and any Member, Manager, officer, employee or agent of the Company or another limited liability company, corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Company would have the power to indemnify such Person against such expense, liability or loss under the Delaware Act.

(j) The Company may, to the extent authorized from time to time by the Board of Managers, grant rights to indemnification and to the advancement of expenses to any person or entity not mandatorily entitled to indemnification under this Section 3.05 and grant rights to indemnification and to the advancement of expenses in addition to those granted in this Section 3.05 to any person or entity mandatorily entitled to indemnification under this Section 3.05, in each case as long as such person or entity has met the standard of conduct set forth in the first sentence of Section 3.05(b).

(k) The rights to indemnification and advancement of expenses conferred by this Section 3.05 shall continue as to a person who has ceased to be a Manager, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Any amendment, alteration or repeal of this Section 3.05 shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to such amendment, alteration or repeal.

SECTION 3.06 Resignation . Other than by transferring all of its Units, a Member may not resign from the Company.

ARTICLE 4.

NEW ISSUANCES; UNITS; CONVERSION

SECTION 4.01 New Issuances of Equity Capital . Subject to the terms of this Agreement (including Section 5.05 and Section 5.06), the Board of Managers may determine the form, timing and terms of any new issuance of equity capital (including Units) of the Company to any Person and, other than with respect to issuances of Common Units to eligible Persons pursuant to the terms of the Equity Incentive Plan, will notify the Members of such decision. Any such Person shall be required to become a party to this Agreement as a Member, and shall have all the rights and obligations of a Member hereunder, by executing an Adoption Agreement in form satisfactory to the Board of Managers.

 

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SECTION 4.02 Units .

(a) Interests in the Company are represented by one or more classes of Units. The Units shall for all purposes be personal property in accordance with Section 18-701 of the Delaware Act. No holder of a Unit or Member shall have any interest in specific Company assets, including any assets contributed to the Company by such Member as part of any capital contribution. Each Member waives any and all rights that it may have to maintain an action for partition of the Company’s property.

(b) The Units initially will be divided into Preferred Units and Common Units. The first series of Preferred Units will be designated as Series A Preferred Units and the second series of Preferred Units will be designated as Series B Preferred Units. Each Unit shall have the rights and privileges set forth in this Agreement.

(c) Subject to Section 5.05 and Section 5.06, upon the issuance of any Common Units to Managers, officers, employees or other service providers, the Board of Managers may specify a “ Distribution Threshold ,” if any, applicable to such Common Units, which shall be equal to the minimum amount determined by the Board of Managers in its reasonable discretion to be necessary to cause such Common Unit to constitute a “profits interest” for U.S. federal income tax purposes (a “ Profits Interest Unit ”) or such greater amount as the Board of Managers, in its reasonable discretion, may determine. All vested Profits Interest Units shall terminate no later than the Option Closing (as such term is defined in the Investors’ Rights Agreement), with the unvested Profits Interest Units to terminate subsequently in accordance with the Equity Incentive Plan, and in each case all such terminated Profits Interest Units shall be exchanged for a cash payment as provided for under the Investors’ Rights Agreement and the Equity Incentive Plan. Immediately upon receipt of a Profits Interest Unit, the recipient will have no initial Capital Account balance and the Profits Interest Unit received shall not entitle such Person to any portion of the capital of the Company at the time of such Person’s admission to the Company as a Member, such that if the Company’s assets were sold at fair market value immediately after the grant to such Member of a Profits Interest Unit and the proceeds distributed in complete liquidation of the Company, the Profits Interest Unit so received would entitle such Member to receive no share of those proceeds. The grant of a Profits Interest Unit to a Member is intended to comply with Rev. Proc. 93-27, 1993-2 C.B. 343 (1993) and Rev. Proc. 2001-43, 2001-2 C.B. 191 (2001) and shall be interpreted consistently therewith.

(d) Each Member authorizes the Managing Member to elect to apply the safe harbor (the “ Safe Harbor ”) set forth in proposed Treasury Regulation Section 1.83-3(l) and proposed IRS Revenue Procedure published in Notice 2005-43 (together, the “ Proposed Treasury Regulation ”) (under which the fair market value of an interest in an entity taxable as a partnership that is transferred in connection with the performance of services is treated as being equal to the liquidation value of the interest) if such Proposed Treasury Regulation or a similar Treasury Regulation is promulgated as a final or temporary Treasury Regulation. If the Managing Member determines that

 

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the Company should make such election, the Managing Member is hereby authorized to amend this Agreement without the consent of any Member or other Person to provide that (i) the Company is authorized and directed to elect the Safe Harbor, (ii) the Company and each Member (including any Person to whom an Unit is transferred in connection with the performance of services) will comply with all requirements of the Safe Harbor with respect to all Units transferred in connection with the performance of services while such election remains in effect and (iii) the Company and each Member will take all actions necessary, including providing the Company with any required information, to permit the Company to comply with the requirements set forth or referred to in the applicable Treasury Regulations for such election to be effective such time (if any) as the Managing Member determines, in his sole discretion, that the Company should terminate such election. Notwithstanding anything to the contrary in this Agreement, each Member expressly confirms and agrees that it will be legally bound by any such amendment. Notwithstanding the preceding sentences, no election or amendment shall be made pursuant to this Section 4.02(d) if the Safe Harbor, when finalized, is substantially different from the one included in the Proposed Treasury Regulation, unless the Managing Member has determined that the application of the Safe Harbor would not result in materially adverse tax consequences to the Members.

(e) All Units other than the Profits Interest Units shall be evidenced by certificat