Limited Liability Company Operating Agreement

Exhibit 10.6


LIMITED LIABILITY COMPANY OPERATING AGREEMENT


OF


[NAME NEEDED], LLC


a Delaware limited liability company


Dated as of ___________, 1998


LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF
[NAME NEEDED], LLC


PREAMBLE


THIS LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement") is made and entered into and effective as of the ____ day of _____________, 1998, by and among Beckman Coulter, Inc., a Delaware corporation ("BCI") , and Affymetrix, Inc., a _____________ corporation ("Affymetrix") (together, the "Members"), for the purpose of forming [NAME NEEDED], LLC (the "Company"), a limited liability company organized under the Delaware Limited Liability Company Act (the "Act").


ARTICLE I


ORGANIZATIONAL MATTERS


SECTION 1.1 FORMATION. The Members hereby form the Company under the Act for the purposes and upon the terms and conditions hereinafter set forth. The rights and liabilities of the Members and of the Members of the Board of the Company shall be as provided in the Act, except as otherwise expressly provided herein or in the Certificate. In the event of any inconsistency between any terms and conditions contained in this Agreement and any non-mandatory provisions of the Act, the terms and conditions contained in this Agreement shall govern.


SECTION 1.2 NAME. The name of the Company shall be "[NAME NEEDED], LLC" The Company may also conduct business at the same time under one or more fictitious names if the Board determines that such is in the best interests of the Company. The Board may, from time to time, change the name of the Company in accordance with the Act and other applicable law.


SECTION 1.3 PRINCIPAL PLACE OF BUSINESS; OTHER PLACES OF BUSINESS. The principal place of business of the Company is located at 4300 N. Harbor Boulevard, Fullerton, California 92834-3100, or such other place within or without the State of Delaware as the Board may from time to time designate. The Company may maintain offices and places of business at such other place or places within or outside the State of Delaware as the Board deems advisable.


SECTION 1.4 BUSINESS PURPOSE. The Company may (i) engage in the business of conducting research, and developing, creating, implementing, promoting, and marketing products and services in the fields [ ](1) and, in connection therewith, (ii) make, have made, import, use, sell and distribute arrays of polynucleotide sequences for all fields, uses and applications, and systems, instruments, kits, and consumables for use therewith, and (iii) subject to and in accordance with the terms of this Agreement do any thing necessary and incidental to the foregoing practices, uses, and applications.


(1) CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.


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SECTION 1.5 SPECIFIED PURPOSE. The Company shall be a limited liability company and its sole purposes shall be those specified in Section 1.4, and this Agreement shall not be deemed to create a company, venture, or partnership between or among the Members with respect to any other activities whatsoever. Except as otherwise provided in this Agreement, no Member shall have any authority to act for, bind, commit, or assume any obligation or responsibility on behalf of the Company, its properties, or any other Member.


SECTION 1.6 CERTIFICATE OF FORMATION; FILINGS. The Board shall cause to be executed and filed a Certificate of Formation in the Office of the Secretary of State of the State of Delaware as required by the Act. The Board may cause to be executed and filed any duly authorized amendments to the Certificate from time to time in a form prescribed by the Act.


SECTION 1.7 FICTITIOUS BUSINESS NAME STATEMENTS. Following the execution of this Agreement, fictitious business name statements shall be filed and published when and if the Board determines it necessary. Any such statement shall be renewed as required by applicable law.


SECTION 1.8 REGISTERED OFFICE; DESIGNATED AGENT FOR SERVICE OF PROCESS. The address of the registered office of the Company in the State of Delaware is located at 1013 Centre Road, Wilmington, Delaware 19805, and the registered agent for service of process on the Company in the State of Delaware at such registered office is The Prentice-Hall Corporation System, Inc. The Company will continuously maintain a registered office for, and a designated and duly qualified agent for service of process on, the Company in the State of Delaware.


SECTION 1.9 TERM. The Company shall commence on the date that the Certificate is filed with the Office of the Delaware Secretary of State, and shall continue until terminated pursuant to this Agreement.


SECTION 1.10 LIMITATION ON LIABILITY. Except as otherwise provided by the Act or as otherwise expressly set forth herein, the debts, obligations, and liabilities of the Company, whether arising in contract, tort, or otherwise, shall be solely the debts, obligations, and liabilities of the Company, and no Member, Board Member, officer (if any be appointed), or agent of the Company shall be obligated personally for any such debt, obligation, or liability of the Company solely by reason of being a Member of the Company or acting as a Board Member, officer, or agent of the Company.


ARTICLE II


DEFINITIONS


The following capitalized words and phrases used in this Agreement shall have the following meanings:


"ACT" is defined in the Preamble.


"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, 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:


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(a) Add to such Capital Account the following items:


(i) The amount, if any, that such Member is obligated to contribute to the Company upon liquidation of such Member's Membership Interest; and


(ii) The amount that such Member is obligated to restore or is deemed to be obligated to restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and


(b) Subtract from such Capital Account such Member's share of the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6).


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


"AFFILIATE" means, with reference to a specified Person, a Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the specified Person. For purposes of the foregoing definition, the word and root "control", in the context of a limited liability entity, such as a corporation or limited liability company, means the ownership, directly or indirectly, of more than fifty percent (50%) of the voting shares or other interests, however designated, entitled to vote for members of the board of directors, management committee, or other principal governing body of the organization with direct fiduciary duties to the owners of the entity, however designated. For purposes of the foregoing definition, the word and root "control", in the context of a limited liability business enterprise that is a pass-through entity for tax purposes, such as a partnership, joint venture, or limited liability company, also means the right to receive at least fifty percent (50%) of the net proceeds of such enterprise.


"AFFYMETRIX" shall mean Affymetrix, Inc., a California corporation.


"AGREEMENT" is defined in the Preamble.


"ASSIGNEE" means a Person to whom one or more Units have been Transferred as permitted under this Agreement, but who has not become a Substituted Member.


"BOARD" means the Board of Directors of the Company, who have the sole and complete charge of the affairs of the Company.


"BOARD MEMBER" means a duly elected or appointed member of the Board.


"BCI" shall mean Beckman Coulter, Inc., a Delaware corporation.


"CAPITAL ACCOUNT" means the Capital Account maintained for each Member on the Company's books and records in accordance with the following provisions:


(a) To each Member's Capital Account there shall be added (a) such Member's Capital Contributions, (b) such Member's allocable share of Net Profits and any items


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in the nature of income or gain that are specially allocated to such Member pursuant to Article 5 hereof or other provisions of this Agreement, and (c) the amount of any Company liabilities assumed by such Member or that are secured by any property distributed by the Company to such Member, calculated by reference to Code Section 752.


(b) From each Member's Capital Account there shall be subtracted (a) the amount of (i) cash and (ii) the Gross Asset Value of any Company Property (other than cash) distributed to such Member (other than any payment of principal and/or interest to such Member pursuant to the terms of a loan made by such Member to the Company) pursuant to any provision of this Agreement, (b) such Member's allocable share of Net Losses and any other items in the nature of expenses or losses that are specially allocated to such Member pursuant to Article 5 hereof or other provisions of this Agreement, and (c) liabilities of such Member assumed by the Company or that are secured by any property contributed by such Member to the Company, calculated by reference to Code Section 752. With respect to distributions of Company Property, Capital Accounts shall first be adjusted to reflect the manner in which the unrealized income, gain, loss, and deduction inherent in such property (that has not been previously reflected in Capital Accounts) would be allocated, pursuant to Article 5 hereof, to the Members if there were a taxable disposition of such property for its fair market value (taking Code Section 7701(g) into account) on the date of distribution.


(c) In the event that any interest in the Company is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent that such Capital Account relates to the transferred interest.


(d) The Board, in its discretion and in accordance with the Code and Regulations, may increase or decrease the Capital Accounts of the Members to reflect a revaluation of Company Property on the Company's books and records. Any such adjustments shall be made in accordance with Regulations Section 1.704-1(b)(2)(iv)(g).


(e) Additional adjustments shall be made to the Members' Capital Accounts as required by Regulations Sections 1.704-1(b) and 1.704-2 or, as permitted but not required, in the discretion of the Board. Adjustments to Capital Accounts in respect to Company income, gain, loss, deduction, and non-deductible expenditures (or any item thereof) shall be made with reference to the federal tax treatment of such items (and, in the case of book items, with reference to federal tax treatment of the corresponding tax items) at the Company level, without regard to any requisite or elective tax treatment of such items at the Member level.


(f) The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Sections 1.704-1(b) and 1.704-2 and shall be interpreted and applied in a manner consistent with such Regulations. In the event that the Board shall determine that it is prudent to modify the manner in which the Capital Accounts, or any additions or subtractions thereto, are computed in order to comply with such Regulations, the Board may make such modification, provided that it is not likely to have a material effect on the amounts distributable to any Member pursuant to Article 11 hereof upon the dissolution of the Company. The Board shall also make (a) any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of Company capital reflected on the Company's balance sheet,


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as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q), and (b) any appropriate modifications in the event that unanticipated events might otherwise cause this Agreement not to comply with Regulations Sections 1.704-1(b) and 1.704-2.


"CAPITAL CONTRIBUTIONS" means, with respect to any Member, the initial Gross Asset Value of property (other than money) contributed to the capital of the Company by such Member, whether as an initial Capital Contribution or as an additional Capital Contribution.


"CASH AVAILABLE FOR DISTRIBUTION" means, with respect to any fiscal year or other period, all Company cash receipts (but excluding any proceeds from a Terminating Capital Transaction), after deducting payments for operating cash expenses, debt service, capital expenditures, and any other amounts set aside for the restoration, increase, or creation of reasonable Reserves.


"CERTIFICATE" means the certificate of formation of the Company filed under the Act in the Office of the Secretary of State of the State of Delaware for the purpose of forming the Company as a Delaware limited liability company, and includes any duly executed and filed amendments.


"CODE" means the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of succeeding law).


"COMPANY" is defined in the Preamble.


"COMPANY MINIMUM GAIN" has the meaning set forth in Regulations Sections 1.704-2(b)(2) and 1.704-2(d)(1) for the phrase "partnership minimum gain."


"COMPANY PROPERTY" means all direct and indirect interests in real and personal property owned by the Company from time to time, and shall include both tangible and intangible property (including cash and intellectual property).


"DEPRECIATION" means, for each fiscal year or other period, an amount equal to the federal income tax depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for 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 federal income tax depreciation, amortization, or other cost recovery deduction for such fiscal year or other period bears to such beginning adjusted tax basis; provided, however, that if the 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 Board.


"ECONOMIC INTEREST" means a Person's right to share in the Net Profits, Net Losses, or similar items of, and to receive distributions from, the Company, but does not include any other rights of a Member, including, without limitation, the right to vote or to participate in the management of the Company, or, except as specifically provided in this Agreement or


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required under the Act, any right to information concerning the business and affairs of the Company.


"GAAP" shall mean generally accepted accounting principals.


"GROSS ASSET VALUE" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows:


(a) The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross fair market value of such asset, as determined by the Board and the contributing Member.


(b) The Gross Asset Values of all Company assets immediately prior to the occurrence of any event described in subsection (a), subsection (b), subsection (c), or subsection (d) below shall be adjusted to equal their respective gross fair market values, as determined by the Board using such reasonable method of valuation as it may adopt, as of the following times:


(i) the acquisition of an additional interest in the Company (other than in connection with the execution of this Agreement) by a new or existing Member in exchange for more than a de minimis Capital Contribution, if the Board reasonably determines that such adjustment is necessary or appropriate to reflect the relative Economic Interests of the Members in the Company;


(ii) the distribution by the Company to a Member of more than a de minimis amount of Company Property as consideration for an interest in the Company, if the Board reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company;


(iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); and


(iv) at such other times as the Board shall reasonably determine necessary or advisable in order to comply with Regulations Sections 1.704-1(b) and 1.704-2.


(c) The Gross Asset Value of any Company asset distributed to a Member shall be the gross fair market value of such asset on the date of distribution as determined by the Board.


(d) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted pursuant to this subsection (d) to the extent that the Board reasonably determines that an adjustment pursuant to subsection (b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subsection (d).


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


"IMMEDIATE FAMILY" means, and is limited to, an individual Member's current spouse, parents, current parents-in-law, grandparents, children, siblings, and grandchildren, or a trust or estate all of the beneficiaries of which consist of such Member or members of such Member's Immediate Family.


"INDEMNITEE" is defined in Section 6.8 hereof.


"ISIS AGREEMENT" shall mean that certain Agreement between BCI and Isis Innovation Limited, revised as of April 17, 1996.


"MAJORITY IN INTEREST" means Members holding in the aggregate greater than two-thirds (2/3) of the aggregate outstanding Units.


"MANAGEMENT COMPANY" means the Person selected by the Board to operate the Company pursuant to the Management Agreement to be entered into between the Board and the Management Company.


"MEMBER" means a Person who owns Units representing a Membership Interest, including an Assignee of a Membership Interest, but not merely of an Economic Interest, and who has been duly admitted as a member of the Company. Initially, the Members shall be the Persons subscribing to this Agreement as set forth in Exhibit "A" hereof.


"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 Regulations Section 1.704-2(i) with respect to "partner minimum gain."


"MEMBER NONRECOURSE DEBT" has the meaning set forth in Regulations Section 1.704-2(b)(4) for the phrase "partner nonrecourse debt."


"MEMBER NONRECOURSE DEDUCTIONS" has the meaning set forth in Regulations Section 1.704-2(i) for the phrase "partner nonrecourse deductions."


"MEMBERSHIP INTEREST" means the entire ownership interest of a Member in the Company at any particular time, including, without limitation, the Member's Economic Interest, any and all rights to vote and otherwise participate in the Company's affairs, and the rights to any and all benefits to which a Member may be entitled as provided in this Agreement or by law, together with the obligations of such Member to comply with all of the terms and provisions of this Agreement or law.


"NET PROFITS" or "NET LOSSES" means, for each fiscal year or other period, an amount equal to the Company's taxable income or loss for such fiscal year or other period determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain,


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loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:


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


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


(c) Gain or loss resulting from any disposition of Company Property where such gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the Company Property disposed of, notwithstanding that the adjusted tax basis of such Company Property differs from its Gross Asset Value;


(d) In lieu of depreciation, amortization, or cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such taxable year;


(e) To the extent an adjustment to the adjusted tax basis of any asset included in Company Property pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to 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 liquidation of a Member's Membership 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 the purposes of computing Net Profits and Net Losses;


(f) If the Gross Asset Value of any Company Property is adjusted in accordance with the terms of this Agreement, the amount of such adjustment shall be taken into account in the taxable year of such adjustment as gain or loss from the disposition of such asset for purposes of computing Net Profits or Net Losses; and


(g) Notwithstanding any other provision of this definition, any items that are specially allocated pursuant to Section 5.2 hereof shall not be taken into account in computing Net Profits or Net Losses.


"NONRECOURSE DEDUCTIONS" has the meaning set forth in Regulations Sections 1.704-2(b)(1) and 1.704-2(c).


"NONRECOURSE LIABILITY" has the meaning set forth in Regulations Sections 1.704-2(b)(3) and 1.752-1(a)(2).


"PERCENTAGE INTEREST" means, with respect to each Member, the percentage set forth opposite such Member's name on Exhibit "A" attached hereto as it may be amended or supplemented from time to time.


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"PERSON" means and includes an individual, a corporation, a partnership, a joint venture, a limited liability company, a trust, an unincorporated organization, a government or any department or agency thereof, or any entity similar to any of the foregoing.


"QUALIFIED TRANSFEREE" means (i) an "accredited investor" as defined in Rule 501 promulgated under the Securities Act or (ii) a Person who is acquiring its Membership Interest in a transaction that does not constitute a "sale" within the meaning of Section 2(3) of the Securities Act.


"RECOURSE LIABILITY" has the meaning set forth in Regulations Section 1.752-1(a)(1).


"REGULATIONS" means proposed, temporary, and final Treasury Regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding Treasury Regulations).


"REGULATORY ALLOCATIONS" is defined in Section 5.2.(j) hereof.


"RESERVES" means, with respect to any fiscal year or other period, funds set aside or amounts allocated during such period to reserves that shall be maintained in amounts deemed sufficient by the Board for working capital, to pay taxes, insurance, debt service and other costs or expenses incident to the ownership of the Company Property and the conduct of business by the Company as contemplated hereunder.


"RESPONSIBLE PARTY" is defined in Section 6.8(h) hereof.


"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.


"SUBSTITUTED MEMBER" means an Assignee who is admitted as a Member to the Company pursuant to Section 9.3 hereof.


"TERMINATING CAPITAL TRANSACTION" means any sale or other disposition of all or substantially all of the assets of the Company or a related series of transactions that, taken together, result in the sale or other disposition of all or substantially all of the assets of the Company.


"TRANSFER" means, with respect to any interest in the Company (including, without limitation, any part of a Membership Interest), a sale, conveyance, exchange, assignment, pledge, encumbrance, gift, bequest, hypothecation, or other transfer or disposition by any other means, whether for value or no value and whether voluntary or involuntary (including, without limitation, by operation of law), or an agreement to do any of the foregoing.


"UNIT" means a _____% fractional share of the Membership Interests of all Members issued pursuant to Section 3.1 hereof. The ownership of Units may (but need not, in the sole and absolute discretion o ...