Exhibit 10.2
AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
AMENDED AND RESTATED OPERATING AGREEMENT
OF
COBASYS LLC
Dated as of December 2, 2004
By and Between
ChevronTexaco Technology Ventures, LLC
And
Ovonic Battery Company, Inc.
AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
TABLE OF CONTENTS
ARTICLE 1 SUBJECT MATTER, DEFINITIONS AND RULES OF CONSTRUCTION..............1
Section 1.1 Subject Matter...........................................1
Section 1.2 Definitions..............................................1
Section 1.3 Other Definitions.......................................11
Section 1.4 Rules of Construction...................................12
ARTICLE 2 CONTINUATION AND OPERATIONS.......................................13
Section 2.1 Company.................................................13
Section 2.2 Place of Business.......................................13
Section 2.3 Purpose.................................................13
Section 2.4 Operations..............................................13
Section 2.5 Reduced Funding.........................................14
Section 2.6 Valuation Procedures....................................14
Section 2.7 Deadlock................................................15
ARTICLE 3 CAPITAL STRUCTURE.................................................18
Section 3.1 Members' Capital Contributions and Percentage Interests.18
Section 3.2 Funding Alternatives....................................19
Section 3.3 Additional Capital Contributions........................19
Section 3.4 Payment of Capital Contributions........................19
Section 3.5 Option to Purchase Preferred Interest...................20
Section 3.6 Member Loans; Preferred Interests.......................20
Section 3.7 Capital Accounts........................................22
Section 3.8 Capital Account Adjustments.............................22
Section 3.9 Return of Capital.......................................23
ARTICLE 4 ALLOCATIONS AND DISTRIBUTIONS.....................................24
Section 4.1 Distributions...........................................24
Section 4.2 Profits, Losses and Distributive Shares of Tax Items....24
Section 4.3 Compliance with Code....................................28
Section 4.4 Allocations upon Disposition of Interest................28
Section 4.5 Tax Matters.............................................28
ARTICLE 5 MANAGEMENT........................................................30
Section 5.1 Management of the Business of the Company...............30
Section 5.2 The Management Committee................................30
Section 5.3 Power and Authority of the Management Committee.........31
Section 5.4 Matters Requiring Unanimous Vote of the Management
Committee...............................................33
Section 5.5 Meetings of Management Committee/Conduct of Business....35
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
Section 5.6 Remuneration of Management Committee....................36
Section 5.7 Officers of the Company; President......................36
Section 5.8 Authority and Duties of Officers; Standing Delegation
of Authority............................................36
ARTICLE 6 INDEMNIFICATION...................................................36
Section 6.1 Exculpation.............................................36
Section 6.2 Indemnification.........................................36
Section 6.3 Liability for Debts of the Company; Limited Liability...37
Section 6.4 Company Expenses........................................38
ARTICLE 7 TRANSFER OF INTERESTS.............................................38
Section 7.1 Restrictions on Transfer................................38
Section 7.2 Change of Control.......................................40
Section 7.3 Waiver of Partition.....................................41
Section 7.4 Covenant Not to Withdraw or Dissolve....................41
Section 7.5 Substituted Members.....................................41
Section 7.6 Deliveries..............................................42
Section 7.7 Approvals...............................................42
Section 7.8 Liquidated Damages......................................42
ARTICLE 8 DEFAULT...........................................................42
Section 8.1 Default.................................................42
Section 8.2 Options of Nondefaulting Member.........................44
Section 8.3 No Limitation or Right of Set-Off.......................45
Section 8.4 Security Interest.......................................45
ARTICLE 9 DISSOLUTION.......................................................48
Section 9.1 Dissolution.............................................48
Section 9.2 Winding Up..............................................48
Section 9.3 Distributions upon Liquidation..........................49
Section 9.4 Claims of the Members...................................49
Section 9.5 Rights and Obligations of Members.......................50
ARTICLE 10 FINANCIAL MATTERS................................................50
Section 10.1 Books and Records.......................................50
Section 10.2 Financial Reports.......................................50
Section 10.3 Company Funds...........................................50
ARTICLE 11 MISCELLANEOUS....................................................51
Section 11.1 Notices.................................................51
Section 11.2 Modification............................................52
Section 11.3 Governing Law...........................................52
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
Section 11.4 Assignment, Binding Effect..............................52
Section 11.5 No Third Party Rights...................................52
Section 11.6 Counterparts............................................52
Section 11.7 Invalidity .............................................52
Section 11.8 Entire Agreement........................................52
Section 11.9 Expenses................................................53
Section 11.10 Waiver..................................................53
Section 11.11 Dispute Resolution......................................53
Section 11.12 Disclosure..............................................53
Section 11.13 Non-Compete.............................................53
Section 11.14 Further Assurances......................................55
Section 11.15 Press Releases..........................................55
Section 11.16 CTTV Non-Assertion......................................55
Section 11.17 ECD/OBC Non-Assertion...................................55
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
EXHIBITS
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A. Budget Protocol
B. Dispute Resolution Procedure
C. Reduced Funding Guidelines
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
AMENDED AND RESTATED OPERATING AGREEMENT
AMENDED AND RESTATED OPERATING AGREEMENT ("Agreement"), dated and
effective December 2 2004, by and between ChevronTexaco Technology Ventures LLC,
successor to Texaco Energy Systems Inc. ("CTTV"), a Delaware limited liability
company, having an office at 0000 Xxxxx, Xxxxxxx, Xxxxx 00000, and Ovonic
Battery Company, Inc. ("OBC"), a Delaware corporation, having an office at 0000
Xxxxxxxxx, Xxxx, Xxxxxxxx 00000.
WHEREAS, CTTV and OBC are parties to that certain Amended and Restated
Operating Agreement of Texaco Ovonic Battery Systems LLC dated as of July 17,
2001 (the "Prior Operating Agreement");
WHEREAS, CTTV and OBC desire to amend and restate the Prior Operating
Agreement as set forth herein;
WHEREAS, concurrent with the execution of this Agreement, OBC has granted
the Company (as hereinafter defined) a royalty-free, worldwide, exclusive
license to certain technology owned by ECD (as hereinafter defined) and OBC
related to nickel metal hydride batteries ("ECD/OBC Technology"), which grant
extends the Company's preexisting license rights in ECD/OBC Technology to a
number of new fields and limits ECD's and OBC's rights in ECD/OBC Technology to
other specifically identified fields, such exclusive license being subject to
all preexisting agreements ECD and OBC have with other entities regarding
ECD/OBC Technology; and
WHEREAS, concurrent with the execution of this Agreement, the Company has
granted to CTTV a security interest in all of its general intangibles and
substantially all of its intellectual property assets to secure OBC's
performance of its obligations hereunder;
NOW, THEREFORE, in consideration of the covenants and agreements set forth
in this Agreement, the parties agree as follows:
ARTICLE 1
SUBJECT MATTER, DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1. Subject Matter. This Agreement sets forth the terms and conditions
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upon which the parties shall operate the Company.
Section 1.2. Definitions. For purposes of this Agreement, including the
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Exhibits hereto, except as otherwise expressly provided or unless the context
otherwise requires, the terms defined in this Section 1.2 shall have the
meanings herein assigned to them and the capitalized terms defined elsewhere in
this Agreement, by inclusion in quotation marks and parentheses, shall have the
meanings so ascribed to them.
"Acceptable Transferee" means a Person proposed by the Selling
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Member in accordance with Section 7.1(c) and either accepted or not
objected to by the Offeree
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
Member within the time period set forth in such Section.
"Adjusted Capital Account" means, with respect to any Member, such
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Member's Capital Account as of the end of any relevant date after giving
effect to the following adjustments:
(i) Credit to such Capital Account any amounts which such
Member is deemed to be obligated to restore pursuant to Treasury
Regulations Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and
1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described in
Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
"Adjusted Capital Account Deficit" means, with respect to any
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Member, the deficit balance, if any, in that Member's Adjusted Capital
Account.
"Administrator" means the director of the Michigan Department of
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Consumer and Industry Services, or such other person or agency as shall
be provided for in the Michigan Act for the filing of articles of
organization and other documents relating to the organization and
continuation of limited liability companies in Michigan.
"Affiliate" means with respect to any specified Person, any other
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Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified Person. For the purposes of
this definition, "control" means the ownership, directly or indirectly, of
more than 50% of the Voting Securities, of such Person; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Annual Budget" means the budget for operating expenses and capital
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expenditures of the Company for any Fiscal Year prepared in accordance
with the Budget Protocol.
"Annual Operating Plan" means the detailed written description of
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the Company's Objectives for a Fiscal Year and the actions the Company
intends to take in furtherance of such Objectives.
"Approved Annual Budget" means an Annual Budget approved by the
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Management Committee or the Members in accordance with this Agreement.
"Articles" means the Articles of Organization of the Company, as
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amended or amended and restated from time to time, filed in the office of
the Administrator in accordance with the Michigan Act.
"Associated Agreements" means the Technology Agreement, the
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Confidentiality Agreement and the Articles.
"Available Funds" means Company cash on hand, as of the date of
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computation, including (without limitation) cash derived from any one or
more of the following sources: (i) the Capital Contributions of the
Members made pursuant to the terms of this Agreement, (ii) the proceeds of
any Disposition of all or any portion of the assets of the Company,
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
including any insurance proceeds, (iii) any distributions (including
liquidating distributions) received from any Person in which the Company
holds an interest, and (iv) all Company operating income.
"Bankruptcy" means (i) the filing of any petition or the
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commencement of any suit or proceeding by an individual or entity pursuant
to Bankruptcy Law seeking an order for relief, liquidation, reorganization
or protection from creditors, (ii) the entry of an order for relief
against an individual or entity pursuant to Bankruptcy Law or (iii) the
appointment of a receiver, trustee or custodian for a substantial portion
of the individual's or entity's assets or property, provided such order
for relief, liquidation, reorganization or protection from creditors is
not dismissed within sixty (60) days after such appointment of a receiver,
trustee or custodian.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal or
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state law for the relief of debtors.
"Battery Business" means the research, development, manufacturing,
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marketing and servicing of COBASYS Licensed Products and Ovonic Materials
for use in COBASYS Licensed Products (as such terms are defined in the
Technology Agreement).
"Beneficial Ownership" shall have the meaning set forth in
--------------------
Regulation 13D under the Exchange Act, and derivative terms such as
"Beneficially Own" shall be given corresponding meanings.
"Book Value" means, with respect to any asset, the asset's adjusted
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basis for federal income tax purposes, except (i) the initial Book Value
of any asset contributed by a Member to the Company shall be the fair
market value of such asset, as determined by the Management Committee;
(ii) the Book Value of all Company assets shall be adjusted in the event
of a revaluation as provided in Section 3.8(d) as determined by the
Management Committee; (iii) the Book Value of any Company asset
distributed to any Member shall be the fair market value of such asset on
the date of distribution as determined by the Management Committee; and
(iv) such Book Value shall be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing Profits and
Losses.
"Business Day" means any day other than a Saturday, Sunday or other
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day on which banks in the State of New York are permitted or required to
close.
"Buyout Closing" means the consummation of any purchase and sale of
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a Member's Interest pursuant to Section 2.7.
"Capital Contribution" means, with respect to any Member, the amount
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of capital contributed by such Member to the Company in accordance with
Article 3 of this Agreement.
"Change of Control" means the occurrence of any of the following at
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any time after the date hereof:
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
(i) in the case of the OBC Member, (A) any Person or "Group"
(within the meaning of Regulation 13D under the Exchange Act) of
Persons shall have become the Beneficial Owner, directly or
indirectly, of more than Fifty Percent (50%) of the then outstanding
Voting Securities of ECD or OBC, or (B) the Board of Directors of
ECD shall approve the sale of all or substantially all the assets of
ECD to any third party or third parties in a transaction or a
series of related transactions; and
(ii) in the case of a ChevronTexaco Member, (A) any Person or
"Group" (within the meaning of Regulation 13D under the Exchange
Act) of Persons shall have become the Beneficial Owner of more than
Fifty Percent (50%) of the then outstanding Voting Securities of
ChevronTexaco Corporation, or (B) the Board of Directors of
ChevronTexaco Corporation shall approve the sale of all or
substantially all the assets of ChevronTexaco Corporation to
any third party or third parties in a transaction or a series of
related transactions.
"ChevronTexaco Group Entity" means, at any time, ChevronTexaco
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Corporation and each Subsidiary of ChevronTexaco Corporation of which
ChevronTexaco Corporation, directly or indirectly through Subsidiaries,
Beneficially Owns 100% of the outstanding Voting Securities (other than
nominee shares) at such time.
"ChevronTexaco Member" means any Member that is a ChevronTexaco
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Group Entity.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Collateral" means (i) any and all Interest in the Company owned by
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OBC, whether now or hereafter acquired, as such Interest is defined in
this Agreement (the "Pledged Interest"), (ii) all certificates and
instruments, if any, representing or evidencing the Pledged Interest,
(iii) any and all rights, powers, remedies and privileges of OBC under
this Agreement, (iv) any and all rights, powers, remedies and privileges
of OBC as a member of the Company, including all voting, management and
other rights under this Agreement and applicable law, (v) all of OBC's
rights to receive its share of profits, income, capital distributions and
surplus from the Company, whether in the form of cash, properties or other
assets, and whether upon a sale or refinancing of any of the Company's
assets, in the ordinary course of business, upon dissolution and
liquidation or otherwise, (vi) any and all proceeds and products of any of
the foregoing, whether now held and existing or hereafter acquired or
arising, including any and all cash, securities, instruments and other
property from time to time paid, payable or otherwise distributed in
respect of or in exchange for any or all of the foregoing (collectively,
the "Proceeds") and (vii) all of OBC's right, title and interest in
general intangibles, whether now owned or hereafter acquired (including,
without limitation all patents, patent applications and any unpatented
developments and inventions and all rights corresponding thereto
throughout the world, including without limitation all patents and patent
applications; all trademarks, service marks, logos, trade names, trade
dress, and all United States, state and/or foreign applications for
registration and registrations thereof, and all property of OBC necessary
to produce any products sold under any of the above; all copyrights and
copyrighted works and all derivative works,
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
modifications and improvements thereof, and all United States and/or
foreign applications for registration and registrations thereof; all
computer software programs and all modifications, improvements and
derivative works thereof, all personal property, including but not
limited to source codes, object codes or similar information, which is
necessary to the practical utilization of such programs and all tangible
property of OBC embodying or incorporating any such programs; all trade
secrets, proprietary information, customer lists, instructional materials,
working drawings, manufacturing techniques, process. technology
documentation, and product formulations; and all renewals, modifications,
amendments, re-issues, divisions, continuations in whole or part, and
extensions of any such Collateral), which general intangibles are owned by
OBC or which OBC has a right to use or OBC is permitted to use and which
the Company has a right to use or is permitted to use. "Proceeds" shall
include (x) any options, warrants, membership interests, other securities
or other property issued or delivered by the issuer of or obligor on any
Collateral as a dividend or distribution in connection with any
reclassification, increase or reduction of capital issued or delivered in
connection with any merger or other reorganization and (y) any property
received upon the liquidation or dissolution of any issuer of or obligor
on any Collateral or upon or in respect of any distribution of capital.
"Company" means COBASYS LLC, a limited liability company formed
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under the Michigan Act.
"Company Technology Assets" means all technology owned by the
-------------------------
Company including, Foreground Technology, OBC Licensed Technology, Texaco
Technology and/or Texaco Improvement Technology whether acquired by the
Company through assignment, transfer, license and /or sublicense as of the
time of any calculation of Default Purchase Price, Fair Market Value or
Distributions upon Liquidation.
"Confidentiality Agreement" means the Confidentiality Agreement
-------------------------
dated as of July 17, 2001 among CTTV, OBC and the Company.
"Default Purchase Price" means:
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(i) 80% of the Fair Market Value of the Company,
(ii) minus the Fair Market Value of the Company Technology
Assets, if any, to be transferred to Defaulting Member pursuant to
Section 4.2 of the Technology Agreement,
(iii) multiplied by the Defaulting Member's Percentage Interest,
multiplied by the percentage of the Defaulting Member's Interest
that the Default Purchaser wishes to purchase;
(iv) plus, if the Defaulting Member has a Preferred Interest,
the Preferred Interest Amount with respect to the Preferred Interest
held by such Member;
provided that the Default Purchase Price shall in no case be less than
zero.
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
"Depreciation" means, for each Fiscal Year or other period, an
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amount equal to the depreciation, amortization or other cost recovery
deduction allowable with respect to an asset for such year or other
period, except that if the Book Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such
year or other period (as a result of property contributions or adjustments
to such values), Depreciation shall be adjusted as necessary so as to be
an amount which bears the same ratio to such beginning Book Value as the
federal income tax depreciation, amortization, or other cost recovery
deduction for such 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 year or other
period is zero, Depreciation for such year or other period shall be
determined with reference to such beginning Book Value using any
reasonable method selected by the Management Committee.
"Disbursement and Commitment Schedule" means a schedule of required
------------------------------------
disbursements and commitments for expenditures for a calendar quarter
approved by the Management Committee.
"Disposition", "Disposing", "Dispose" or "Disposed" means, with
----------- --------- ------- --------
respect to any asset (including Members' Interests or any portion
thereof), a sale, assignment, transfer, conveyance, gift, exchange or
other disposition of such asset.
"Distributable Cash Flow" means any Available Funds after (i) paying
-----------------------
the ordinary and necessary expenses of the Company, (ii) paying any debts
or liabilities of the Company to the extent required under any agreement
with any lender or creditor (including any Member, but not including any
amounts payable in respect of the Preferred Interest(s) outstanding, if
any) and (iii) establishing reserves to meet current or reasonably
expected obligations of the Company as the Management Committee determines
in its sole discretion.
"ECD" means Energy Conversion Devices, Inc., a Delaware
---
corporation.
"Exchange Act" means the Securities Exchange Act of 1934.
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"Fair Market Value" means, as of any determination time, (i) with
-----------------
respect to the Company as a whole, the price at which a willing seller
under no compulsion to sell would sell, and a willing buyer under no
compulsion to purchase would purchase, 100% of the Interests in the
Company, but before giving effect to any transfer of Company Technology
Assets pursuant to Section 4.2 of the Technology Agreement (subject to all
indebtedness, liabilities and other obligations of the Company outstanding
at such time; provided that for such purposes the aggregate Preferred
Interest Amount(s) shall be treated as indebtedness of the Company), and
(ii) with respect to any individual asset, the price at which a willing
seller under no compulsion to sell would sell, and a willing buyer under
no compulsion to purchase would purchase, such asset (or the relevant
portions of such rights). Any determination of Fair Market Value under
this Agreement shall be made as set forth in Section 2.6.
"Fiscal Year" means (i) the period of time commencing as of July 1,
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2004 and
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
ending on December 31, 2004, in the case of the current Fiscal Year of
the Company, and (ii) any subsequent calendar year.
"GAAP" means generally accepted accounting principles in the United
----
States, consistently applied.
"Governmental Body" means a government organization, subdivision,
-----------------
agency or authority thereof, whether foreign or domestic.
"Independent Director" means an independent director within the
--------------------
meaning of Nasdaq Marketplace Rule 4200, and any successor rule.
"Interest" means the rights of a Member in the Company (which shall
--------
be considered intangible personal property for all purposes) consisting of
(i) such Member's interest in profits, losses, allocations and
distributions as set forth in this Agreement, (ii) such Member's right to
vote or grant or withhold consents with respect to Company matters as
provided herein or in the Michigan Act, and (iii) such Member's other
rights and privileges as provided herein or by the Michigan Act.
"Laws" means all applicable statutes, laws, rules, regulations,
----
orders, ordinances, judgments and decrees of any Governmental Body,
including the common or civil law of any Governmental Body.
"Lien" shall mean any lien, encumbrance, security interest, charge,
----
mortgage, option, pledge or restriction on transfer of any nature
whatsoever.
"Losses" shall mean any and all damages, losses, deficiencies,
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liabilities, taxes, obligations, penalties, judgments, settlements,
claims, payments, fines, interest, costs and expenses (including, without
limitation, the costs and expenses of any and all Proceedings and
demands, assessments, judgments, settlements and compromises relating
thereto and the costs and expenses of attorneys', accountants',
consultants' and other professionals' fees and expenses incurred in the
investigation or defense thereof or the enforcement of rights hereunder),
but excluding consequential damages and punitive damages (other than such
damages awarded to any third party against an Indemnitee).
"Management Committee" means the committee comprised of the
--------------------
individuals designated as representatives by the Members pursuant to
Section 5.2 hereof and all other individuals who may from time to time be
duly elected or appointed to serve as representatives on the Management
Committee in accordance with the provisions hereof, in each case so long
as such individual shall continue in office in accordance with the terms
hereof.
"Material Adverse Effect" means an event or non-event which can
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reasonably be expected to result in a material adverse effect on the
business, assets, properties, condition (financial or otherwise), results
of operations, prospects or customer or supplier relationships of the
Company within the agreed scope of the Company's business. For purposes of
the foregoing sentence, an event or non-event shall be deemed to have such
a
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
material adverse effect if (but only if) it has a reasonably estimable
present value in excess of the greater of (i) ten percent (10%) of the
Company's fair market value as a going concern, estimated in good faith
(without any requirement of any determination pursuant to Section 2.6 of
this Agreement) (provided that the aggregate Preferred Interest Amount(s)
shall be treated as indebtedness of the Company in any such estimate of
fair market value) or (ii) ten percent (10%) of the Company's gross
revenues or assets as reported on the Company's most recent financial
statements.
"Maturity Date" means the date that is the tenth (10th) anniversary
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from the date that CTTV makes its first Capital Contribution in respect of
its Preferred Interest.
"Members" means CTTV, OBC and such other Persons who are admitted as
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Members pursuant to this Agreement.
"Member Nonrecourse Debt" means any nonrecourse debt of the Company
-----------------------
for which any Member bears the economic risk of loss.
"Member Nonrecourse Debt Minimum Gain" means, for each Member, the
------------------------------------
amount of Minimum Gain for the Fiscal Year or other period attributable to
such Member's "partner nonrecourse debt," determined in accordance with
Treasury Regulations Section 1.704-2(i)(2).
"Michigan Act" means the Michigan Limited Liability Company Act,
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P.A. 1993, No. 23, as amended from time to time.
"Minimum Gain" means, with respect to all nonrecourse liabilities of
------------
the Company, the minimum amount of gain that would be realized by the
Company if the Company Disposed of the Company property subject to such
liability in full satisfaction thereof computed in accordance with
Treasury Regulations Section 1.704-2(d).
"Minimum Gain Share" means, for each Member, such Member's share of
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Minimum Gain for the Fiscal Year (after taking into account any decrease
in Minimum Gain for such year), such share to be determined under Treasury
Regulations Section 1.704-2(g).
"Nonrecourse Deductions" means, for each Fiscal Year or other
----------------------
period, an amount of Company deductions that are characterized as
"nonrecourse deductions" under Treasury Regulations Section 1.704-2(c).
"Objectives" means business objectives (each of which shall include
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a scheduled completion date) by which the Company's performance will be
measured, as shall be included in Annual Operating Plans or as otherwise
approved by the Management Committee from time to time.
"OBC Group Entity" means, at any time, Energy Conversion Devices,
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Inc. ("ECD") and each Subsidiary of ECD (including OBC) of which ECD,
directly or indirectly through Subsidiaries, Beneficially Owns 100% (or,
with respect to OBC, at least 91%) of the
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
outstanding Voting Securities (other than nominee shares) at such time.
"OBC Member" means any Member that is an OBC Group Entity.
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"Percentage Interest" means, for each Member as of the date hereof,
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the percentage set forth opposite such Member's name in Section 3.1(b), as
such may be adjusted from time to time pursuant to the provisions of this
Agreement.
"Person" means any individual, corporation, partnership, joint
------
venture, association, joint stock company, limited liability company,
trust, estate, unincorporated organization or Governmental Body.
"Preferred Adjusted Capital" means, with respect to the Preferred
--------------------------
Interest(s) outstanding, if any, the Capital Contribution made in exchange
for or on account of such interest, reduced by the amount of all
Distributions made in respect of such Preferred Interest (or portion
thereof) under Section 4.1(b)(ii).
"Preferred Capital Contribution" means, with respect to the
------------------------------
Preferred Interest, the Capital Contribution made in consideration of such
Interest pursuant to the terms hereof.
"Preferred Interest" means an Interest in the Company issued
------------------
pursuant to Section 3.2 and having the terms set forth herein.
"Preferred Interest Amount" means the amount of any outstanding
-------------------------
Preferred Interest, together with all accrued and unpaid distributions
thereon (determined as if the Company had sufficient Profits for all
periods to enable distributions under Section 4.1(b) to be made in full
with respect to the Preferred Return and Preferred Adjusted Capital).
"Preferred Member" means any Member that is the Holder of a
----------------
Preferred Interest.
"Preferred Return" means as of a given date, with respect to the
----------------
Preferred Interest(s) outstanding, if any, the amount accruing daily for
each fiscal year from and after the date of the first issuance of such
Preferred Interest, at the rate per annum equal to the Prime Rate plus
2.0% (subject to adjustment pursuant to Section 3.6(b)(ii)), compounded
monthly, on (a) the Preferred Adjusted Capital of such interest (or
portion thereof) and (b) Unpaid Preferred Return on such interest (or
portion thereof) as of such date.
"Prime Rate" means the corporate base rate per annum in effect as
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published by Citibank, N.A. from time to time for domestic unsecured
commercial loans.
"Prior Operating Agreement" means that certain Amended and Restated
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Operating Agreement of Texaco Ovonic Battery Systems LLC (f/k/a GM Ovonic
L.L.C.) dated as of July 17, 2001 by and between CTTV and OBC, as
originally executed.
"Proceeding" means any action, claim, suit, arbitration, subpoena,
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discovery request, proceeding or investigation by or before any court or
grand jury, any Governmental Body or arbitration tribunal.
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
"Profits" and "Losses" means, for purposes of Article 4, an amount
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equal to the Company's taxable income or loss for each Fiscal Year or
other period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, 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:
(i) Any income of the Company that is exempt from 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;
(ii) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
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;
(iii) Gain or loss resulting from any Disposition of Company
property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the
Book Value of the property Disposed of, notwithstanding that the
adjusted tax basis of such property differs from such Book Value;
(iv) 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 period, computed in accordance with the
definition of "Depreciation" herein; and
(v) Notwithstanding any other provision of this definition,
any items which are specifically allocated pursuant to Section
4.2(c) shall not be taken into account in computing Profits or
Losses.
"Subsidiary" means, with respect to any Person, any other Person of
----------
which a majority of the Voting Securities are at the time directly or
indirectly owned by such Person.
"Technology Agreement" means the Amended and Restated Intellectual
--------------------
Property License Agreement dated as of the date hereof among OBC, CTTV and
the Company.
"Transfer" means any sale, transfer, exchange, assignment or other
--------
disposition, by operation of law or otherwise.
"Treasury Regulations" means the Treasury Regulations promulgated
--------------------
under the Code, as from time to time in effect.
"Unallocated Preferred Return" means with respect to the Preferred
----------------------------
Interest(s), if any, outstanding as of the determination date, an amount
equal to the excess, if any, of (i) the Preferred Return accruing on such
interest(s) (or portion thereof) for all periods over
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
(ii) the cumulative allocations made under Section 4.2(a)(ii) on such
interest(s) (or portion thereof) for all periods.
"Unanimous Approval" means a unanimous vote approving an action by
------------------
the Members then entitled to vote with respect to such action.
"Uniform Commercial Code" means the Uniform Commercial Code as in
-----------------------
effect in the State of Michigan from time to time.
"Unpaid Preferred Return" means with respect to the Preferred
-----------------------
Interest(s), if any, outstanding as of the determination date, an amount
equal to the excess, if any, of (i) the cumulative allocations made in
respect of such interest (or portion thereof) under Section 4.2(a)(ii) for
all periods, over (ii) the aggregate amount of prior distributions made in
respect of such interest (or portion thereof) by the Company under Section
4.1(b)(i) for all periods.
"Voting Securities" means any Person's securities or other ownership
-----------------
interests which have ordinary voting power under ordinary circumstances
for the election of directors (or the equivalent) of such Person.
Section 1.3 Other Definitions. The following terms have the meanings ascribed
-----------------
to them in the Sections noted:
"Accepting Member" 2.7
"Agreement" Opening Paragraph
"Appraisers" 2.6
"Authorized Person" 6.1
"Capital Account" 3.7
"Change Price" 7.2
"Changed Member" 7.2
"Common Adjusted Capital Account 4.2(b)(i)
"Deadlock" 2.7
"Deadlock Event" 2.7
"Deadlock Notice" 2.7
"Deadlock Price" 2.7
"Default" 8.1
"Default Purchase" 8.2
"Default Purchaser" 8.2
"Defaulting Member" 8.1
"Designated Valuation" 2.7
"Dissolution Event" 9.1
"Effective Time" Article 12
"Electing Member" 2.7
"Event of Default" 8.1(c)
"First Appraiser" 2.6
"IB Firm" 2.6
"Indemnitee" 6.2
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
"Liquidation Event" 3.6(b)(iv)
"Loan Account" 3.6
"Nondefaulting Member" 8.1
"Offeree Member" 7.1(c)
"Offeree Member's Acceptance Notice" 7.1(c)
"Offeree Member Response Date" 7.1(c)
"Original Funding Amount" 3.1(a)
"Preferred Entitlement Commitment" 4.2(c)(xi)
"Pro Rata Allocation" 4.2(c)(xi)
"Regulatory Allocations" 4.2(a)
"Remaining Funding Commitment" 3.1(a)
"Sale Materials" 7.1(c)
"Second Appraiser" 2.6
"Secretary" 5.5(b)
"Selling Member" 7.1(c)
"Selling Member's Offer Notice" 7.1(c)
"September Number" 3.1(a)
"Tax Matters Member" 4.5(a)
"Tax Return" 4.5(b)
"Third Appraiser" 2.6
"Traditional Method" 4.2(d)(ii)
"Unchanged Member" 7.2
Section 1.4 Rules of Construction. For purposes of this Agreement, including
---------------------
the Exhibits hereto:
(a) General. Unless the context otherwise requires, (i) "or" is not
-------
exclusive; (ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP; (iii) words in the
singular include the plural and words in the plural include the
singular; (iv) words in the masculine include the feminine and words in
the feminine include the masculine; (v) any date specified for any
action that is not a Business Day shall be deemed to be the first
Business Day after such date; (vi) the words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation"; (vii) the words "hereof," "herein" and "hereunder" and words
of similar import shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; and (vii) a reference to a Party
includes its successors and assigns.
(b) Articles, Parts and Sections. References in this Agreement to
----------------------------
Articles; Parts, Sections or other subdivisions are unless otherwise
specified, to corresponding Articles, Parts, Sections or other
subdivisions of this Agreement. Neither the captions to Articles, Parts,
Sections or other subdivisions of this Agreement or the section headings
of this Section 1.4, nor any Table of Contents shall be deemed to be a
part of this Agreement or this Section 1.4.
(c) Exhibits and Schedules. The Exhibits and Schedules to this
----------------------
Agreement form part of this Agreement and shall have the same force and
effect as if set out in the body of this Agreement. References to this
Agreement include the attachments thereto and
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
all Exhibits and Schedules incorporated therein. All references in this
Agreement to Exhibits and Schedules refer to Exhibits and Schedules to
this Agreement, unless expressly provided otherwise.
(d) Other Agreements. References herein to any agreement or other
----------------
instrument shall, unless the context otherwise requires (or the definition
thereof otherwise specifies), be deemed references to such agreement or
other instrument as it may from time to time be changed, amended or
extended.
(e) Certain Terms. The words "best efforts" shall mean the use of
-------------
reasonable best efforts conducted in good faith in a commercially
reasonable manner. Whenever any Person is permitted or required to
make a decision or act in its "sole discretion" or "discretion" or
under a grant of similar authority or latitude, such Person shall be
entitled to consider only such interest and factors as it desires,
including its own interest, and shall not be subject to any other or
different standard imposed by the relevant agreement or by relevant
provisions of law or in equity or otherwise. Whenever any Person is
permitted or required to make a decision or act in its "good faith,"
such Person shall act under such standard and shall not be subject to
any other or different standard imposed by the relevant agreement or by
relevant provisions of law or in equity or otherwise.
ARTICLE 2
CONTINUATION AND OPERATIONS
Section 2.1 Company. Subject to the terms and conditions of this Agreement,
-------
the Members shall continue and jointly operate the Company, a limited liability
company organized pursuant to the Michigan Act, which shall engage in the
business described herein.
Section 2.2 Place of Business. The principal place of business of the Company
-----------------
shall be in Troy, Michigan or such other place as the Management Committee
may from time to time determine. The registered office of the Company in the
State of Michigan shall be 000 Xxxxxx Xxxx, Xxxx Xxxxxxx, Xxxxxxxx 00000 and the
registered agent for service of process on the Company shall be CSC-Lawyers
Incorporating Service (Company), whose business address is the same as the
Company's registered office (or such other registered office and registered
agent as the Management Committee may from time to time select).
Section 2.3 Purpose. The business and purposes of the Company shall be (i) to
-------
carry on the Battery Business and (ii) to engage in such other business
activities that may be undertaken by a limited liability company under the
Michigan Act as the Members may from time to time determine by Unanimous
Approval.
Section 2.4 Operations. The Company shall operate in accordance with an Annual
----------
Operating Plan and Annual Budget as described in and adopted pursuant to the
provisions of Exhibit A and Section 5.4(a) and Disbursement and Commitment
Schedules approved in accordance with Section 2.4(a) and Section 5.4(a).
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
(a) Quarterly Reviews. Insofar as practicable, meetings of the
-----------------
Management Committee shall be held on dates that correspond to the
completion dates for Objectives and in any event no less often than once
every calendar quarter. At such meetings, the Management Committee will
review progress to date and determine whether any Objectives that were
scheduled to be completed since its last meeting have been satisfied,
and determine whether to approve a Disbursement and Commitment Schedule
for the next succeeding calendar quarter.
(b) Review of Objectives. For each Objective, the President shall
--------------------
promptly notify the Management Committee as to whether such Objective has
been satisfied prior to its scheduled completion date as soon as the
President has such information and in any event no later than 30 days
following the scheduled completion date for such Objective. If, within
10 Business Days following receipt of such notification (or, if no such
notification is given, within 10 Business Days following the applicable
scheduled completion date), the Management Committee shall not have
determined that the Company has met such Objective, the President shall,
by no later than 45 days following the scheduled completion date for such
Objective, submit to the Management Committee for approval a written
recovery plan, including any proposed revisions to such Objective. The
Management Committee shall review such plan and the President shall
consult with the Management Committee as requested.
Section 2.5 Reduced Funding. The Company shall use diligent efforts to
---------------
minimize costs and expenditures, and all funding for the Company, including
funding approved pursuant to the then-current Disbursement and Commitment
Schedule, shall be subject to the Reduced Funding Guidelines set forth on
Exhibit C effective immediately upon the earlier of (i) the date on which the
Management Committee determines that the Company has not met such Objective, or
(ii) the expiration of the applicable period for making such determination under
Section 2.4(b) above. If (x) the Management Committee shall not have approved a
recovery plan within 28 days after its submission or (y) the President shall not
have submitted a recovery plan pursuant to Section 2.4(b) within 30 days
following the scheduled completion date for such Objective, the Members shall
follow the deadlock procedures set forth in Section 2.7 and reduced funding for
the Company shall continue as provided in this Section until such time as the
deadlock is resolved or a Buyout Closing occurs, which ever is earlier.
Section 2.6 Valuation Procedures. Any determination of Fair Market Value under
--------------------
this Agreement shall be made as follows:
(a) The Members will first seek to agree on such Fair Market Value.
(b) If the Members cannot agree on the Fair Market Value within 30 days
of an event giving rise to the need to determine Fair Market Value, OBC
will promptly select an independent investment banking firm (an "IB Firm")
of recognized international standing (the "First Appraiser") and CTTV will
select an IB Firm (the "Second Appraiser" and, together with the First
Appraiser, the "Appraisers") to determine the Fair Market Value. The fees
and expenses of each Appraiser will be borne by each of the Members that
have retained such Appraiser.
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
(c) Within 45 days of the date of selection of the Appraisers, each of
the First Appraiser and the Second Appraiser will determine the Fair
Market Value and will notify the Members of such determination (specifying
the Fair Market Value as determined by such Appraiser and setting forth,
in reasonable detail, the basis for such determination). If the Fair
Market Value as determined by one Appraiser is not more than 110% of the
Fair Market Value as determined by the other Appraiser, the Fair Market
Value will be the average of the two amounts. In all other cases, the
Appraisers will jointly select a third IB Firm (the "Third Appraiser").
The fees and expenses of the Third Appraiser will be borne by the Members
equally.
(d) The Third Appraiser will, within 45 days of its retention, determine
its view of the Fair Market Value, and the Fair Market Value will
thereupon be the average of (i) the Fair Market Value as determined by the
Third Appraiser and (ii) whichever of the Fair Market Values as determined
by the First Appraiser and the Second Appraiser is closer to the Fair
Market Value as determined by the Third Appraiser; provided that if Fair
Market Values as determined by the First Appraiser and the Second
Appraiser differ by the same amount from the Third Appraiser's
determination of Fair Market Value, the Fair Market Value will be as
determined by the Third Appraiser. The determination of Fair Market
Value in accordance with this Section 2.6 will be final, binding and
conclusive upon the Members.
(e) Each Member will share with the other Member any written
communication it has with the Third Appraiser and will not communicate
other than in writing with the Third Appraiser without giving the other
Member an opportunity to be present at any such communication.
(f) The aggregate Preferred Interest Amount(s) shall be treated as
indebtedness of the Company in any determination of Fair Market Value
under this Agreement.
Section 2.7 Deadlock.
--------
(a) If at any time there is an inability of the Members to agree,
despite good faith efforts to reach agreement, on a course of action in
respect of any material matter and such inability persists for at least
30 days after such inability first arises and if any Member reasonably
believes that such inability to agree has had or is reasonably expected
to result in a Material Adverse Effect (a "Deadlock Event"), then either
Member may request that such Deadlock Event be immediately submitted for
resolution to the Chairman of ECD and the President of CTTV (or such other
senior executive of CTTV or its Affiliates as CTTV may designate). Such
request shall be in writing and shall be accompanied by the requesting
Member's statement of the matter and its position with respect thereto.
The other Member shall have the right to submit to such officers its own
statement of the matter and its position with respect thereto.
(b) If such matter is not resolved within thirty (30) days of the
submission of such matter to such officers, then:
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
(i) no action will be taken with respect to such matter and the
status quo shall be maintained in respect thereof, and
(ii) either Member (the "Electing Member") who is not a Defaulting
Member may declare a deadlock (a "Deadlock") by delivering a written
notice (a "Deadlock Notice") to the other Member at any time for a
period of sixty (60) days beginning at the end of such 30-day period
stating that a Deadlock has occurred and specifying the valuation of
the Company (as to which the aggregate Preferred Interest Amount(s)
shall be treated as a liability of the Company) (the "Designated
Valuation") based on which the Electing Member (or any Affiliate of
the Electing Member designated by it) agrees that it will either
purchase for cash all of the other Member's (the "Accepting Member")
Interest or sell for cash all of the Electing Member's Interest to
the Accepting Member (or any Affiliate of the Accepting Member
designated by it); provided that if the Members are unable to agree
whether such persistent inability to agree has had or will have a
Material Adverse Effect, such question shall be determined in the
affirmative pursuant to Section 11.11 before any purchase of a
Member's Interest may occur pursuant to this Section 2.7. If the
Accepting Member has reasonable grounds for insecurity regarding the
ability of the Electing Member to pay the Deadlock Price (as
hereinafter defined) pursuant to any Deadlock Notice delivered by
the Electing Member, the Accepting Member may demand Adequate
Assurance of Performance from the Electing Member. "Adequate
Assurance of Performance" shall mean evidence demonstrating to the
reasonable satisfaction of the Member making such demand that the
other Member has sufficient funds available to it to allow it to
pay in cash the Deadlock Price when due in accordance with the
applicable Deadlock Notice. In the event the Electing Member shall
fail to deliver Adequate Assurance of Performance within thirty (30)
days of any such demand, such Deadlock Notice delivered by the
Electing Member shall be deemed to be void and of no further force
or effect. In the event more than one Deadlock Notice shall be
delivered with respect to any Deadlock, the Deadlock Notice
specifying the higher Deadlock Price shall control and any other
Deadlock Notice shall be disregarded (unless the Deadlock Notice
specifying the higher Deadlock Price shall be deemed void pursuant
to the preceding sentence, in which case such other Deadlock Notice
shall not be disregarded).
(c) The Accepting Member shall have forty-five (45) days from the
receipt of the Deadlock Notice to notify the Electing Member in writing
of the Accepting Member's decision to either purchase the Electing
Member's Interest or sell the Accepting Member's Interest, in each case
for the applicable Deadlock Price (the "Election Notice"). If the
Accepting Member does not deliver an Election Notice within such forty-
five (45) days, it shall be obligated to sell its Interest to the Electing
Member at the applicable Deadlock Price. In the event the Accepting
Member shall elect to purchase the Electing Member's Interest pursuant to
the first sentence of this Section 2.7(c), and the Electing Member has
reasonable grounds for insecurity regarding the ability of the Accepting
Member to pay the Deadlock Price, the Electing Member may demand Adequate
Assurance of Performance from the Accepting Member. In the event the
Accepting Member shall fail to deliver
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
Adequate Assurance of Performance within thirty (30) days of any such
demand, such election to purchase shall be deemed to be an election to
sell and the Accepting Member shall be obligated to sell its Interest
pursuant to such Deadlock Notice at the applicable Deadlock Price. If the
selling Member is the holder of a Preferred Interest, the purchasing
Member shall be obligated to pay the Deadlock Price plus the Preferred
Interest Amount with respect to the Selling Member. In the event of any
purchase and sale pursuant to this Section 2.7, the Deadlock Price shall
be payable in cash.
(d) "Deadlock Price" means a price equal to (i) the Designated Valuation
multiplied by (ii) the Percentage Interest of the selling Member;
provided that in the event the Accepting Member delivers an Election
--------
Notice in which it agrees to sell its Interest pursuant to Section 2.7(c),
at the Accepting Member's option, such Election Notice may include an
irrevocable election that the Deadlock Price shall instead mean a price
equal to (i) Fair Market Value of the Company (calculated in accordance
with Section 2.6) multiplied by (ii) the Percentage Interest of the
selling Member. If such an election is made, within thirty (30) days
after such determination of the Deadlock Price, the Electing Member may
by written notice to the Accepting Member elect to (x) purchase the
Accepting Member's Interest at such Deadlock Price (any such notice, a
"FMV Confirmation") or (y) irrevocably withdraw its Deadlock Notice
with respect to the applicable Deadlock Event.
(e) Within thirty (30) days after identification of the purchasing
Member pursuant to subsection (c) above (or, if applicable, the date the
Electing Member delivers a FMV Confirmation), the selling Member shall
deliver its Interest, free and clear of all Liens (other than any Lien
created under any financing to which the Company is a party and any Lien
granted to the other Member pursuant to this Agreement), together with
duly executed written instruments of transfer with respect thereto, in
form and substance reasonably satisfactory to the purchasing Member or its
designee, against payment of the applicable Deadlock Price (plus the
selling Member's Preferred Interest Amount, if applicable).
(f) Notwithstanding any other provision of this Agreement, no transfer
of the selling Member's Interest shall occur pursuant to this Section 2.7
unless and until any and all necessary consents and approvals have been
obtained from any Governmental Body with authority with respect thereto,
including any required approvals under the HSR Act. The Members agree to
cooperate and to cause their Affiliates to cooperate in the preparation
and filing of any and all reports or other submissions required in
connection with obtaining such consents and approvals.
(g) Notwithstanding any other provision of this Agreement, in no event
shall a Deadlock Event be deemed to result from the refusal of either
party or any of its Affiliates to agree or consent to any amendment,
modification or waiver of or under this Agreement or any other agreement
between the parties or their respective Affiliates.
- 17 -
AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
ARTICLE 3
CAPITAL STRUCTURE
Section 3.1 Members' Capital Contributions and Percentage Interests.
-------------------------------------------------------
(a) CTTV and OBC shall use reasonable efforts to assist the Company in
securing funding for its operations from sources other than CTTV and OBC.
If despite such efforts the Company is unable to obtain such funding on
terms acceptable to the Members, subject to Section 3.2, CTTV and OBC
shall be responsible for making Capital Contributions, as are required to
fund the Company's operations in accordance with the applicable Approved
Annual Budgets, but only to the extent such funding requirements exceed
cash available from the Company's operations. The parties acknowledge
that (a) in Section 3.1(a) of the Prior Operating Agreement, CTTV agreed
to contribute a fixed amount of cash in order to fund the Company's
operations during the Limited Production Phase (as such term is defined in
the Prior Operating Agreement) (the "Original Funding Commitment") and (b)
as of September 30, 2004, the aggregate amount of cash so contributed to
the Company by CTTV was $143,585,000 (the "September Number"). The
parties agree that CTTV will contribute an amount equal to the Remaining
Funding Commitment (as hereinafter defined) on substantially the same
terms as prior contributions by CTTV pursuant to the Original Funding
Commitment. The term "Remaining Funding Commitment" shall mean an amount
equal to (x) $160,000,000 minus (y) the September Number minus (z) the
amount of any contributions made by CTTV pursuant to the Original Funding
Commitment between September 30, 2004 and the date of this Agreement. At
all times after such time as CTTV shall have satisfied the Remaining
Funding Commitment, CTTV and OBC shall fund the costs and expenses
necessary in proportion to their respective Percentage Interests. The
Members' obligations to make Capital Contributions are subject to Section
3.2. The Members acknowledge that the initial Book Value of the
intellectual property and know how contributed by OBC pursuant to the
Technology Agreement as in effect on July 17, 2001, was, as set forth in
such agreement, equal to $160,000,000 plus the difference between CTTV's
Capital Account and OBC's Capital Account as of July 17, 2001 and that,
taking into account all Capital Account adjustments made as of the date
of this Agreement, such Book Value has been included in the balance of
OBC's Capital Account.
(b) Percentage Interests. The Percentage Interests assigned to the
--------------------
Members in consideration of their Capital Contributions heretofore made
and CTTV's agreement to contribute an additional amount equal to the
Remaining Funding Commitment are as follows:
Member Percentage Interest
----- -------------------
CTTV 50%
OBC 50%
The Management Committee shall amend the foregoing table of Members and
Percentage
- 18 -
AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
Interests from time to time as necessary to reflect any admission of
additional or substituted Members, in each case as permitted herein, and
to reflect any adjustment of the Members' Percentage Interests upon
conversion of Preferred Interests. Except as otherwise required by
the foregoing sentence, no adjustment to the Capital Account of a Member
in accordance with Section 3.8 shall affect the Percentage Interest of
such Member.
Section 3.2 Funding Alternatives. In the event the Members shall agree that
--------------------
any Capital Contribution shall be made, by the approval of a Disbursement and
Commitment Schedule, from the date CTTV shall have contributed an amount equal
to the Remaining Funding Commitment until January 1, 2008 and ECD and OBC fail
to fund their share of such Capital Contribution, CTTV may at its option
purchase a Preferred Interest in the Company in an amount equal to the Capital
Contribution that OBC and ECD failed to fund. Any purchase of Preferred Interest
by CTTV may, at its option, also include CTTV's share of such Capital
Contribution. In no event shall CTTV be obligated to purchase any Preferred
Interests pursuant to this Section 3.2 after December 31, 2007. At all times on
or after January 1, 2008, in the event the Members shall agree that any Capital
Contribution shall be made, each Member shall use diligent efforts to meet its
funding obligations in cash from its own corporate resources and ECD shall use
diligent efforts to cause OBC to meet its funding requirements in cash from
ECD's corporate resources. If (a) OBC and ECD reasonably determine that, despite
such efforts, OBC will not be able to fund in cash its share of the funding
required, and (b) CTTV shall so request in writing, OBC and ECD shall diligently
explore other reasonable sources of OBC's share of such funding, including
equity or debt financing of OBC or ECD from independent third parties. ECD shall
be deemed to have made a reasonable determination for purposes of the foregoing
sentence in the event ECD shall have delivered to CTTV a written description of
such determination setting forth in reasonable detail the basis therefor and
signed by each director of ECD that is an Independent Director. Neither OBC nor
CTTV shall be responsible for making any Capital Contributions otherwise
required pursuant to Section 3.1(a) that are funded with Preferred Interests
purchased by CTTV pursuant to this Section 3.2. In no event shall OBC purchase
or otherwise acquire any Preferred Interest (except as contemplated by Section
3.5). Prior to January 1, 2008, OBC shall not be deemed to be in default of its
obligations under this Agreement based on its failure to make its share of
Capital Contributions as contemplated by this Section 3.2. At all times on or
after January 1, 2008, OBC shall not be deemed to be in default of its
obligations under this Agreement provided ECD's Independent Directors have made
a reasonable determination of OBC's inability to meet its funding obligations
and shall have delivered to CTTV a written description of such determination as
contemplated by this Section 3.2.
Section 3.3 Additional Capital Contributions. Subject to Section 3.2, in the
--------------------------------
event that the Members shall agree that Capital Contributions in addition to the
Capital Contributions provided for in Section 3.1 shall be made, each Member
shall contribute to the capital of the Company an amount calculated by
multiplying such Member's Percentage Interest by the aggregate amount of
additional Capital Contributions so determined by the Members.
Section 3.4 Payment of Capital Contributions. The Management Committee shall
--------------------------------
issue or cause to be issued a written request to each Member for payment of any
Capital Contributions to be made in accordance with Section 3.3 at such times
and in such amounts as the Members shall agree, provided that the due date for
any such Contributions shall be not less than 10 Business
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
Days following the date of such request. All Capital Contributions received
by the Company after the date specified in such written request shall be
accompanied by interest on such overdue amounts, which interest shall be
payable to the Company and shall accrue from and after such specified date until
paid at an annual rate equal to 2% over the Prime Rate.
Section 3.5 Option to Purchase Preferred Interest.
-------------------------------------
(a) CTTV hereby grants to OBC the right to purchase from CTTV (the
"Option"), at any time during the period from and including January 1,
2008 until the date that is thirty (30) days prior to the Maturity Date of
the Preferred Interest, up to an aggregate of one-half (1/2) of CTTV's
outstanding Preferred Interest. The purchase price with respect to any
portion of such outstanding Preferred Interest (a "Portion") shall be the
sum of (i) an amount equal to CTTV's Preferred Capital Contribution with
respect to the Portion, plus (ii) the "Option Premium" (as hereinafter
defined), less (iii) an amount equal to the sum of any Preferred Return
previously paid with respect to such Portion. The Option Premium shall be
an amount determined by crediting the Preferred Capital Contribution with
respect to such Portion with a return calculated in the same manner as
simple interest at the rate of ten percent (10%) per annum calculated on
the basis of a 365-day year. The purchase price shall be paid at closing
in immediately available funds.
(b) If OBC purchases a Preferred Interest from CTTV, OBC shall
succeed to a ratable portion of the Preferred Adjusted Capital, Preferred
Return, Unpaid Preferred Return, and Unallocated Preferred Return in
respect of such transferred portion of the Preferred Interest. In
accordance with the terms of Section 4.1(a) hereof, any distributions on
the Preferred Interests held by CTTV and OBC shall be made ratably in
accordance with the respective Preferred Interest Amounts of OBC and CTTV,
respectively. For the avoidance of doubt, as provided in Section 4.1(b),
if the Company makes a distribution exceeding the amount of the Unpaid
Preferred Return with respect to the Preferred Interest of OBC and CTTV,
then the balance of any such distribution shall be ratably applied to the
reduction of the Preferred Adjusted Capital of OBC and CTTV in accordance
with their respective Preferred Interest Amounts, until the Preferred
Adjusted Capital of each such Member has been reduced to zero and as a
result all Preferred Interests have been redeemed.
(c) Notwithstanding any provision herein to the contrary, no
acquisition by OBC of a Preferred Interest pursuant to the exercise of the
Option by OBC shall (i) entitle OBC or any transferee to any additional
votes under Section 5.2(c) by virtue of its ownership of a Preferred
Interest, whether previously owned by CTTV or otherwise, or (ii) divest
CTTV of such votes.
(d) No Member shall make any Capital Contributions to the Company
except pursuant to this Article 3. No Member shall be entitled to payment
by the Company of interest on its Capital Contributions.
Section 3.6 Member Loans; Preferred Interests.
---------------------------------
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AMENDED AND RESTATED OPERATING AGREEMENT
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(a) With the prior approval of the other Member, a Member may lend to
the Company funds needed by the Company for working capital purposes
(which shall not include amounts due under Sections 3.1, 3.2 and 3.3). An
account shall be established and maintained for such lending Member
separate from such Member's Capital Account, such account being herein
referred to as such Member's "Loan Account." Any Loan made by a Member
to the Company shall be credited to such Member's Loan Account. Interest
on any Loan made by a Member to the Company shall accrue on the unpaid
balance thereof at the Prime Rate and shall be repaid by the Company prior
to any distributions to the Members pursuant to Section 4.1. A credit
balance in the Loan Account of a Member shall constitute a liability of
the Company and shall not constitute a part of such Member's Capital
Account.
(b) Preferred Interests.
-------------------
(i) Preferred Interest. The original amount of a Preferred
------------------
Interest shall equal the amount of the Capital Contribution made in
consideration of such Preferred Interest pursuant to Section 3.2 of
the Agreement.
(ii) Mandatory Redemption. The Preferred Interest shall be
--------------------
redeemed by the Company on the Maturity Date at a redemption price
equal to the Member's Preferred Interest Amount as of the Maturity
Date. If the Company shall fail to redeem the Preferred Interest as
required in this Section 3.6(b)(ii), then, not in limitation of any
rights available to the Preferred Member in law or equity, the rate
used to calculate the Preferred Return for all purposes of this
Agreement shall thereafter be the Prime Rate plus 4%. For the
avoidance of doubt, such increase in the rate used to calculate the
Preferred Return shall be prospective and shall not be applied
retroactively with respect to periods prior to the Maturity Date.
(iii) Preferred Interest Distributions. The Preferred Interest
--------------------------------
holder is entitled to receive distributions in respect of such
interest as provided in Articles 4 and 9 of this Agreement.
(iv) Rank. Without the prior written consent of all holders of
----
Preferred Interests, the Company shall not issue any class or series
of Interest in the Company that is senior to the Preferred Interest
with respect to distribution rights or rights upon liquidation,
dissolution or winding up of the affairs of the Company, whether
voluntary or involuntary, sale of substantially all of the Company's
assets or sale of the Company (each, a "Liquidation Event").
(v) Liquidation Preference. As provided in Section 9.3(c), upon
----------------------
the occurrence of a Liquidation Event, each holder of a Preferred
Interest shall be entitled to receive, before any assets are
distributed to the Members, an amount equal to the Preferred
Interest Amount with respect to such holder.
(vi) Conversion.
----------
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AMENDED AND RESTATED OPERATING AGREEMENT
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(A) Optional Conversion. Upon the Company's failure to
-------------------
redeem the Preferred Interest on the Maturity Date, the
holder of a Preferred Interest shall have the right to
convert its Preferred Interest Amount into additional
Interest in the Company, based on the Fair Market Value on
the date of such conversion. Upon the occurrence and during
the continuance of any Default by OBC hereunder, CTTV shall
have the right to convert its Preferred Interest Amount into
additional Interest in the Company, based on the Fair Market
Value on the date of such conversion.
(B) Adjustment to Percentage Interests. In the event of
----------------------------------
any conversion of Preferred Interests pursuant to this
Section 3.6(b)(vi), the Percentage Interests of the Members
shall be adjusted accordingly in accordance with Section
3.1(b).
(vii) Prohibition on Distributions. As provided in Section 4.1,
----------------------------
at any time while any Preferred Interest shall be outstanding, the
Company shall not make any distributions other than distributions
on the Preferred Interest pursuant to Section 4.1(b).
Section 3.7 Capital Accounts. The Company shall maintain a separate capital
----------------
account ("Capital Account") for each Member, which shall be maintained and
adjusted as described in Section 3.8.
Section 3.8 Capital Account Adjustments.
---------------------------
(a) Notwithstanding any provision in this Agreement to the contrary,
each Member's Capital Account shall be maintained and adjusted in
accordance with the Code and the Treasury Regulations thereunder,
including without limitation (i) the adjustments permitted or required by
Code Section 704(b) and (ii) the adjustments required to maintain Capital
Accounts in accordance with the "substantial economic effect test" set
forth in the Treasury Regulations under Code Section 704(b).
(b) A Member's Capital Account shall be increased by (i) the amount of
cash and the initial Book Value of any property contributed by such Member
to the Company, (ii) such Member's allocable share of Profits, income and
gain and (iii) the amount of any Company liabilities that are expressly
assumed by such Member or that are secured by any Company property
distributed to such Member.
(c) A Member's Capital Account shall be decreased by (1) the amount of
cash and the Book Value of any Company property distributed to such Member
pursuant to any provision of this Agreement, (2) such Member's allocable
share of Losses, deductions and other losses and (3) the amount of any
liabilities of such Member that are expressly assumed by the Company or
that are secured by any property contributed by such Member to the
Company.
(d) Upon the occurrence of certain events described in Treasury
Regulations Section 1.704-1(b)(2)(iv)(f) (including, for the avoidance of
doubt, in connection with the
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
liquidation of the Company), the Management Committee shall increase or
decrease the Capital Accounts of the Members to reflect a revaluation of
Company property on the Company's books and any unrealized gain or loss
shall be allocated in accordance with Article 4; provided that no such
adjustment shall be required if the Management Committee unanimously
determines that such adjustment would be de minimis or would otherwise
have no effect on the distributions (including liquidating distributions)
to which each Member is entitled hereunder.
(e) The Capital Account of each Member shall be determined after giving
effect to all transactions which have been effected prior to the time when
such determination is made giving rise to the allocation of Profits and
Losses and to all contributions and distributions theretofore made. Any
Person who acquires an Interest directly from a Member, or whose
Percentage Interest shall be increased by means of a Disposition to
it of all or part of the Interest of another Member, shall have a Capital
Account which includes all or part of the Capital Account balance of the
Interest so acquired or Disposed of.
(f) Any fees, salary or similar compensation payable to a Member
pursuant to this Agreement shall be deemed a guaranteed payment for
federal income tax purposes and not a distribution to such Member for
such purposes. Such payments to a Member shall not reduce the Capital
Account of such Member, except to the extent of its distributive share of
any Losses or other downward capital adjustment resulting from such
payment.
(g) No Member with a deficit balance in its Capital Account shall have
any obligation to the Company or any other Member to restore such deficit
balance. In addition, no venturer or partner in any Member shall have any
liability to the Company or any other Member for any deficit balance in
such venturer's or partner's Capital Account in the Member in which it is
a partner or venturer. Furthermore, a deficit Capital Account balance of a
Member (or a deficit Capital Account of a venturer or partner in a Member)
shall not be deemed to be a Company asset or Company property.
(h) In the event of the conversion of a Preferred Interest pursuant to
Section 3.6, Capital Accounts shall be adjusted and maintained to reflect
such conversion in accordance with Proposed Treasury Regulations under
Sections 704, 721, and 761 of the Code addressing partnership
noncompensatory options (the "NCO Regulations") or such other reasonable
method established by the Management Committee consistent with the
Members' economic agreement; provided, that the NCO Regulations shall be
applied (pursuant to their terms) from and after their adoption in
temporary or final form.
Section 3.9 Return of Capital. Except to the extent permitted in Article 9
-----------------
upon a dissolution of the Company, no Member shall have the right to demand a
return of such Member's Capital Contribution (or the balance of such Member's
Capital Account). Further, except as provided in Article 4, no Member shall have
the right (i) to demand and receive any distribution from the Company in any
form other than cash or (ii) to bring an action of partition against the Company
or its property. The Management Committee shall have no personal liability for
the repayment of the capital contributed by Members.
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
ARTICLE 4
ALLOCATIONS AND DISTRIBUTIONS
Section 4.1 Distributions. Except as provided in Article 9 upon dissolution of
-------------
the Company, Distributable Cash Flow shall be distributed at such time and in
such amounts as the Management Committee may determine as follows (provided,
that the Company shall be required to make distributions under Section 4.1(b) no
less frequently than the last Business Day of each year, to the extent of
Distributable Cash Flow computed as of such time):
(a) first, if the Company shall have outstanding any debt owing to its
Members, then to such Members in repayment of such debt;
(b) second, if the Company shall have outstanding any Preferred
Interest, then to the Preferred Member(s) in payment of (i) first, the
Unpaid Preferred Return, and (ii) then, the Preferred Adjusted Capital;
in each case, to the extent such amount(s) are outstanding at the time of
the distribution and to each such Member pro rata in accordance with such
amounts; and
(c) then, to the Members, pro rata, in accordance with their respective
Percentage Interests, determined as of the date of such distribution.
Notwithstanding anything to the contrary in this Agreement, no distribution may
be made to a Member that would create or increase an Adjusted Capital Account
Deficit with respect to such Member.
Section 4.2 Profits, Losses and Distributive Shares of Tax Items.
----------------------------------------------------
(a) Profits. Except as provided in Section 4.2(c), Profits for any
-------
Fiscal Year or other period will be allocated to the Members as follows:
(i) first, to the Preferred Member(s), if any, in proportion to
their Preferred Interest Amounts, until the cumulative allocations
of Profits to such Member(s) under this Section 4.2(a)(i) for all
periods equals the cumulative allocations of Losses made under
Section 4.2(b)(ii) for all periods;
(ii) second, to the Preferred Member(s), if any, in proportion to
the Unallocated Preferred Return(s) of such Member(s), until the
cumulative allocations of Profits in respect of the Preferred
Interest held by each such Member under this Section 4.2(a)(ii) for
all periods equals the cumulative Preferred Returns in respect of
such interest for all periods;
(iii) then, to the Members in accordance with their Percentage
Interests.
(b) Losses. Except as provided in Section 4.2(c), Losses for any Fiscal
------
Year or other period will be allocated to the Members as follows:
- 24 -
AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
(i) First, to the Members in proportion to their respective Common
Adjusted Capital Accounts, until such time that the Adjusted
Capital Account of the Preferred Member(s), if any, has been reduced
to an amount equal to such Member(s)' Preferred Adjusted Capital
plus Unpaid Preferred Return (solely for the purposes of this
Section 4.2(b)(i), each Member's "Common Adjusted Capital Account"
shall equal such Member's Adjusted Capital Account less the
Preferred Adjusted Capital and Unpaid Preferred Return, if any,
attributable to such Member);
(ii) Second, to the Preferred Member(s) if any, in proportion to
their positive Adjusted Capital Account balances, until the Adjusted
Capital Account of each such Member has been reduced to zero;
(iii) And third, to the Members in accordance with their respective
Percentage Interests.
(c) Special Allocations. Except as otherwise provided in this
-------------------
Agreement, the following special allocations will be made in the following
order and priority:
(i) Company Minimum Gain Chargeback. Notwithstanding any other
-------------------------------
provision of this Section, if there is a net decrease in Minimum
Gain during any taxable year or other period for which allocations
are made, the Members will be specially allocated items of Company
income and gain for that period (and, if necessary, subsequent
periods). The amount allocated to each Member under this Section
shall be an amount equal to the total net decrease in the Member's
Minimum Gain Share at the end of the immediately preceding taxable
year. The items to be allocated will be determined in accordance
with Treasury Regulations Section 1.704-2(g)(2). This Section
4.2(c)(i) is intended to comply with the "partnership minimum gain
chargeback" requirements of the Treasury Regulations and the
exceptions thereto and will be interpreted consistently therewith.
(ii) Member Nonrecourse Debt Minimum Gain Chargeback.
-----------------------------------------------
Notwithstanding any other provision of this Section (other than
Section 4.2(c)(i) which shall be applied first), if there is a net
decrease in Member Nonrecourse Debt Minimum Gain during any taxable
year or other period for which allocations are made, any Member
with a share of such Member Nonrecourse Debt Minimum Gain
attributable to any Member Nonrecourse Debt (determined under
Treasury Regulations Section 1.704-2(i)(5)) as of the beginning of
the year shall be specially allocated items of Company income and
gain for that period (and, if necessary, subsequent periods) in
proportion to the portion of such Member's share of the net decrease
in the Member Nonrecourse Debt Minimum Gain with respect to such
Member Nonrecourse Debt that is allocable to the Disposition of
Company property subject to such Member Nonrecourse Debt. The items
to be so allocated shall be determined in accordance with Treasury
Regulations Section 1.704-2(g). This Section is intended to comply
with the "partner minimum gain chargeback" requirements of the
Treasury Regulations and the exceptions thereto and shall be
interpreted-consistently therewith.
- 25 -
AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
(iii) Qualified Income Offset. A Member who unexpectedly receives
-----------------------
any adjustment, allocation or distribution described in Treasury
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) will be
specially allocated items of Company income and gain in an amount
and manner sufficient to eliminate, to the extent required by the
Treasury Regulations, the Adjusted Capital Account Deficit of the
Member as quickly as possible.
(iv) Nonrecourse Deductions. Nonrecourse Deductions for any
----------------------
taxable year or other period for which allocations are made will be
allocated among the Members in proportion to their respective
Percentage Interests in the Company.
(v) Member Nonrecourse Deductions. Notwithstanding anything to
-----------------------------
the contrary in this Agreement, any Member Nonrecourse Deductions
for any taxable year or other period for which allocations are made
will be allocated to the Member who bears the economic risk of loss
with respect to the Member Nonrecourse Debt to which the Member
Nonrecourse Deductions are attributable in accordance with Treasury
Regulations Section 1.704-2(i).
(vi) Code Section 754 Adjustments. To the extent an adjustment to
----------------------------
the adjusted tax basis of any Company asset under Code Sections
734(b) is required to be taken into account in determining capital
accounts under Treasury Regulations Section 1.704-1(b)(2)(iv)(m),
the amount of the adjustment to the capital accounts will be treated
as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases the basis), and the gain
or loss will be specially allocated to the Members in a manner
consistent with the manner in which their capital accounts are
required to be adjusted under Treasury Regulations Section
1.704-1(b)(2)(iv)(m).
(vii) Depreciation Recapture. In the event there is any recapture
----------------------
of Depreciation, the allocation of gain or income attributable to
such recapture shall be shared by the Members in the same proportion
as the deduction for such Depreciation was shared.
(viii) Reallocation. To the extent Losses allocated to a Member
------------
would cause the Member to have an Adjusted Capital Account Deficit
at the end of any Fiscal Year, the Losses will be allocated to the
other Member. If any Member receives an allocation of Losses
otherwise allocable to the other Member in accordance with this
Section, such Member shall be allocated Profits in subsequent Fiscal
Years necessary to reverse the effect of such allocation of Losses.
Such allocation of Profits (if any) shall be made before any
allocations under Section 4.2(a) but after any other allocations
under Section 4.2(c).
(ix) Curative Allocations. The allocations set forth in Sections
--------------------
4.2(c)(i) through (vii) (the "Regulatory Allocations") are intended
to comply with certain requirements of Treasury Regulations Section
1.704-1(b) and 1.704-2. Accordingly, the Management Committee is
authorized to further allocate Profits, Losses, and other items
among the Members so as to prevent the Regulatory
- 26 -
AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
Allocations from distorting the manner in which Company
distributions would be divided among the Members under Sections 4.1
and 9.3 but for application of the Regulatory Allocations; taking
into account whether Regulatory Allocations in subsequent periods
may offset Regulatory Allocations made in the current and prior
periods. In general, the reallocation will be accomplished by
specially allocating other Profits, Losses and items of income,
gain, loss and deduction, to the extent they exist, among the
Members so that the net amount of the Regulatory Allocations and the
special allocations to each Member is zero. The Management Committee
will have discretion to accomplish this result in any reasonable
manner that is consistent with Code Section 704 and the related
Treasury Regulations.
(x) Guaranteed Payment. If any amount distributable to a Member
------------------
under Articles 4 or 9 hereof is required to be treated as a
"guaranteed payment" within the meaning of Section 707(c) of the
Code, the deduction for such guaranteed payment shall be allocated
among the Members so that the net Profits or Losses recognized by
each Member from the Company, taking into account such guaranteed
payment and the Member's allocable share of Company Profits and
Losses, is equal to the net Profits and Losses that such Members
would have recognized if such guaranteed payment were treated
instead as a distribution of Company Profits and such Company
Profits had been allocated in accordance with Article 4 hereof.
(xi) Extraordinary Gain/Loss Allocations. Profit or Loss from the
-----------------------------------
sale of the Company's assets (other than in the ordinary course of
business), the revaluation of the Company's assets as provided for
in Section 3.8(d), and all Profits and Losses (and if necessary,
items of income, gain, loss, and deduction) arising in the taxable
year(s) in which the liquidation and winding up of the Company
occurs, shall be allocated among the Members in amounts sufficient
to place the Members' relative Capital Account balances, as nearly
as possible, in the same proportion as their respective Percentage
Interests (the "Pro Rata Allocation"); provided, that (i) to the
extent possible, such allocations shall first be made among the
Members in a manner such that each Preferred Member's Capital
Account balance is increased, if necessary, to an amount equal to
the sum of the Preferred Adjusted Capital, the Unpaid Preferred
Return, and the Unallocated Preferred Return amounts, if any, with
respect to such Member (together, the "Preferred Entitlement
Amount"), and (ii) after performing the allocations required in the
foregoing clause (i), the Pro Rata Allocation shall be performed
by disregarding the Preferred Entitlement Amount(s), if any,
reflected in the Preferred Member(s)' Capital Account(s).
(d) Federal Income Tax Allocations.
------------------------------
(i) Except as provided in the following clause (ii) or as required
by the Code or Treasury Regulations, all items of income, gain,
loss, deduction, credit, and any other items of the Company shall
be allocated among the Members for federal and state income tax
purposes in the same manner as such items are allocated for
purposes of allocating Profits and Losses.
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
(ii) In accordance with Code Section 704(c) and the related
Treasury Regulations, income, gain, loss and deduction with respect
to any property contributed to the capital of the Company, solely
for tax purposes, will be allocated among the Members using the
"Traditional Method" as set forth in Treas. Reg. Section 1.704-3(b),
unless otherwise determined by the Management Committee, acting
unanimously. If the Book Value of any Company asset is adjusted,
subsequent allocations of income, gain, loss and deduction with
respect to that asset will take account of any variation between
the adjusted basis of the asset for federal income tax purposes
and its Book Value in the same manner as under Code Section 704(c)
and the related Treasury Regulations. Allocations under this Section
are solely for purposes of federal, state and local taxes and will
not affect, or in any way be taken into account in computing, any
Member's Capital Account or share of Profits, Losses or other items
or distributions under any provision of this Agreement.
(e) Member Acknowledgment. The Members agree to be bound by the
---------------------
provisions of this Section in reporting their shares of Company income
and loss for federal and state income tax purposes.
Section 4.3 Compliance with Code. The foregoing provisions of this Article
--------------------
relating to the allocation of Profits, Losses and other items for federal income
tax purposes are intended to comply with Treasury Regulations Sections
1.704-1(b) and 1.704-2, and shall be interpreted and applied in a manner
consistent with such Treasury Regulations. The Management Committee will have
the discretion to allocate items of income, gain, loss and deduction among the
Members to ensure that this Article complies with such Treasury Regulations.
Section 4.4 Allocations upon Disposition of Interest. Profits or Losses
----------------------------------------
attributable to any Interest which has been Disposed of shall be allocated (i)
to the transferor for the days prior to and including the date of the
Disposition; and (ii) to the transferee for the days subsequent to the date of
the Disposition.
Section 4.5 Tax Matters.
-----------
(a) Tax Matters Member. The tax matters partner for purposes of Section
------------------
6231 of the Code (the "Tax Matters Member") shall be CTTV. The Tax
Matters Member is specifically directed and authorized to take whatever
steps such Member, in its discretion, deems necessary or desirable to
perfect such designation, including filing any forms or documents with the
Internal Revenue Service and taking such other action as may from time to
time be required. The Tax Matters Member shall not be liable to the
Company or the other Members for any act or omission taken or suffered by
it in its capacity as Tax Matters Member in good faith and in the belief
that such act or omission is in accordance with the directions of the
Members; provided that such act or omission is not in willful violation
of this Agreement and does not constitute fraud or a willful violation
of applicable Laws.
(b) Tax Returns. After consultation and the consent of the other Member
-----------
and subject to Section 5.3 hereof, at the expense of the Company, the Tax
Matters Member
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
shall cause to be prepared and timely filed all tax returns (including
amended returns) required to be filed by the Company. The Tax Matters
Member shall maintain or cause to be maintained the Capital Accounts of
the Members as described in Section 3.7. On or prior to the August 15
following the end of each Fiscal Year of the Company, the Tax Matters
Member shall provide to the other Member for its review a draft Form 1065
of the Company and related Schedules K-1 of the Members for such Fiscal
Year. At least twenty (20) days prior to filing any Company tax return,
including any information returns, estimated returns and any other
statement, report or form, with respect to United States federal income
taxes, or any state or local income tax returns for jurisdictions in which
the Company is treated as a partnership (each, a "Tax Return"), the Tax
Matters Member shall provide a copy of such Tax Return to the other Member
for its review. The Members agree not to take any position in their
respective tax returns that is inconsistent with the Tax Returns filed by
the Company. The Members intend that the Company shall be classified as a
partnership for federal income tax purposes under Treasury Regulations
Section 301.7701-3.
(c) Tax Elections. After consultation and consent of the other Member
-------------
(which consent shall not be unreasonably withheld) and subject to Section
5.3, the Tax Matters Member shall make any tax elections the Members agree
to be appropriate to utilize the alternate test for economic effect
contained in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) provided
that the Company shall make (or continue in effect) the following
elections (and any comparable state or local elections) effective from the
Company's first taxable year:
(i) to amortize start-up expenditures, if any, over a 60-month
period in accordance with Section 195 of the Code;
(ii) to amortize Company organizational expenses, if any, over a
60-month period in accordance with Section 709(b) of the Code;
(iii) To elect the most accelerated method of depreciation and
amortization for any Company asset acquired by the Company;
(iv) To elect under Section 6231(a)(1)(B)(ii) of the Code not to
have clause (i) of Section 6231(a)(1)(B) of the Code apply, it
being agreed that the Company will be audited at the Company level.
(v) In addition, notwithstanding Section 5.3, upon written request
by any Member to the Tax Matters Member for a Section 754 election
under the Code, the Members agree that the Tax Matters Member shall
make such election.
(d) Audits. Subject to Section 5.3, all matters relating to all Tax
------
Returns filed by the Company, including tax audits and related matters and
controversies, shall be conducted, at the expense of the Company, by the
Tax Matters Member after consultation and consent of the other Member
(which consent shall not be unreasonably withheld). The Tax Matters
Member will keep the other Member and the Management Committee fully
advised of all actions taken and proposed to be taken by it in its
capacity as Tax Matters
- 29 -
AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
Member. The Tax Matters Member shall give prompt notice to the other
Member of any audit or examination of the Company's books and records to
be conducted by any taxing authority or other governmental Person. In the
event any such examination results in a proposed adjustment, the Tax
Matters Member may after consultation with and the consent of the other
Member (which consent shall not be unreasonably withheld), settle or
compromise any issue arising from such examination or audit. In the event
of any audit or administrative or judicial proceeding that involves an
issue that may have a material adverse impact on a Member, such Member
may, at its option and at the expense of the Company, assume control of
all or such portion of such audit or proceeding.
(e) Survival. The provisions of this Section 4.5 shall survive the
--------
dissolution of the Company or the termination of any Member's Interest
and shall remain binding on all Members for a period of time necessary to
resolve with the applicable federal, state, local or foreign taxing
authorities all matters (including any litigation) regarding federal,
state or local taxation, as the case may be, of the Company or any Member
with respect to the Company.
ARTICLE 5
MANAGEMENT
Section 5.1 Management of the Business of the Company. The Members shall
-----------------------------------------
manage the business of the Company, and shall have all powers and rights
necessary, appropriate or advisable to effectuate and carry out the purposes and
business of the Company. The Members may appoint, employ or otherwise contract
with any Persons for the transaction of the business of the Company or the
performance of services for or on behalf of the Company, and the Members may
delegate to any such Person (who, if an individual, may be designated an officer
of the Company) such authority to act on behalf of the Company as the Members
may from time to time deem appropriate. No single Member, solely by reason of
its status as such, shall (i) transact any business on behalf of the Company or
(ii) possess any authority or power to sign for or bind the Company.
Section 5.2 The Management Committee.
------------------------
(a) Purpose. Pursuant to Section 5.1, and subject to the delegation of
-------
rights and powers as provided for herein, the Members shall manage the
business of the Company by and through their respective representatives on
the Management Committee, which representatives shall constitute agents of
the appointing Member and shall not constitute managers of the Company
within the meaning of the Michigan Act.
(b) Composition. Each Member shall be represented at Management
-----------
Committee meetings by individuals designated by them to serve as
representatives on the Management Committee. The Management Committee
shall be comprised of four (4) representatives, with two representatives
to be designated by each Member. Each representative shall be an employee
of the appointing Member or one of its Affiliates and shall serve for
an indefinite term at the pleasure of the appointing Member. Any
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
appointment or replacement (with or without cause) of a representative by
a Member shall be effective upon notice of such appointment or replacement
given to the Company and the other Member. Upon the death, resignation
or removal of any representative, the appointing Member shall promptly
appoint a successor.
(c) Voting. Any approval, vote, or consent of the Members under this
------
Agreement shall be taken at a meeting of the Management Committee or by
written consent, in each case pursuant to this Section 5.2(c) and Section
5.5. Each Member shall be entitled to one vote, which may be exercised
by either Management Committee representative appointed by such Member.
If both such representatives are present at a meeting, such Member shall
appoint one such representative to exercise such Member's vote. Except
to the extent expressly otherwise provided herein, each Member, when
exercising any voting right hereunder or under the Michigan Act or
determining to grant or withhold its consent to any matter involving the
Company, may exercise such rights or make such determinations as it in its
sole discretion deems appropriate, and each of the representatives on the
Management Committee shall have the right to act in the interests and at
the discretion of the Member that appointed such representative. Any
reference in this Agreement to the approval, vote, or consent of the
Management Committee shall mean the approval, vote, or consent of the
Members in accordance with this Agreement. Notwithstanding the foregoing,
if at any time CTTV shall be a Preferred Member, CTTV shall have two
votes. Notwithstanding any provision herein to the contrary, the
acquisition of CTTV's Preferred Interest pursuant to the exercise of the
Option by OBC under Section 3.5 shall not entitle OBC or any transferee
to any additional votes under this Section 5.2(c) by virtue of its
ownership of a Preferred Interest, whether previously owned by CTTV or
otherwise.
Section 5.3 Power and Authority of the Management Committee. Except as
-----------------------------------------------
otherwise provided herein, or as may otherwise be required by the Michigan Act,
all approvals and other actions by the Members shall be taken by majority vote
of the Members taken at a meeting of the Management Committee or by written
consent, in each case pursuant to Sections 5.2(c) and 5.5. Matters requiring the
approval of the Management Committee shall include but not be limited to any of
the following to the extent not incorporated in an Annual Budget, Annual
Operating Plan or Disbursement and Commitment Schedule approved pursuant to
Section 5.4(a):
(a) Acquisition by purchase, lease, or otherwise of any real or personal
property which may be necessary, convenient, or incidental to the Battery
Business;
(b) Operation, maintenance, improvement, construction, ownership, grant
of options with respect to, sale, conveyance, assignment, and lease of any
real or personal property necessary, convenient, or incidental to the
Battery Business;
(c) Execution of any and all agreements, contracts, documents,
certification, and instruments necessary or convenient in connection with
the management, maintenance, and operation of the Company's assets and
business, or in connection with management of the Company's affairs;
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(d) Contracting on behalf of the Company for the services of independent
contractors, and delegation to such Persons the duty to manage or
supervise any of the assets or operations of the Company;
(e) Deleted;
(f) Assessment, collection, and receipt of any rents, issues and profits
or income from any assets, or any part or parts thereof, and the
disbursement of Company funds for Company purposes to those Persons
entitled to receive same;
(g) Payment of all taxes, license fees, or assessments of whatever kind
or nature, imposed upon or against the Company or its assets, and for such
purposes to file such returns and do all other such acts or things as may
be deemed necessary and advisable by the Company;
(h) Establishment, maintenance, and supervision of deposits of any
monies or securities of the Company in accounts with federally insured
banking institutions, or other institutions, as may be selected by the
Management Committee, provided that such accounts are in the name of the
Company;
(i) Initiation, defense, settlement and compromise of lawsuits (subject
to Section 5.4(d)(viii)) or other judicial or administrative proceedings
brought by or against the Company or the Members in connection with
activities arising out of, connected with, or incidental to this Agreement
and/or the business of the Company;
(j) Execution for and on behalf of the Company of all such applications
for permits and licenses as the Management Committee deems necessary and
advisable with respect to the Company's assets and business, and
execution, filing and recordation of all such subdivisions, parcels, or
similar maps covering or relating to the Company's assets or business;
(k) Performance of all ministerial acts and duties relating to the
payment of all indebtedness, taxes, and assessments due or to become due
with regard to the Company's assets or business, and the delivery and
receipt of notices, reports, and other communications arising out of or in
connection with the ownership, indebtedness, or maintenance of the
Company's assets or business;
(l) Negotiation of and entry into leases for space necessary for the
Company's assets or business on terms consistent with the then applicable
Annual Operating Plan;
(m) Approval of operating expenditures in excess of those in an approved
Disbursement and Commitment Schedule or an Approved Annual Budget;
(n) Establishment, appointment and removal of the Company officers,
subject to Section 5.7;
(o) Deleted;
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(p) Establishment of bidding procedures for procurement of goods and
services; and
(q) Deleted;
(r) Any amendment of any Associated Agreement to which the Company is
a party;
(s) A change of the name of the Company;
(t) Engaging in a business other than the Battery Business;
(u) Any borrowing, leasing or other financings by the Company, or the
creation of security interests, liens or mortgages in or on any property
or assets of the Company;
(v) Making any loan, advance or other extensions of credit;
(w) Decisions as to the giving of any guarantee or indemnity to secure
the liabilities or obligations of any other Person;
(x) The engagement of counsel and others in connection with the
prosecution, defense, settlement and compromise of lawsuits or other
judicial or administrative proceedings initiated by the Company or brought
against the Company or the Members in connection with activities arising
out of, connected with, or incidental to this Agreement and/or the
business of the Company;
(y) Deleted.
(z) Decisions with respect to any derivative activities to which the
Company may be a party;
(aa) Deleted.
(bb) The voting of all stocks or other equity or debt interests the
Company may own in other entities, or the giving of consents or approvals
with respect to such interests.
Section 5.4 Matters Requiring Unanimous Vote of the Management Committee.
------------------------------------------------------------
Approval of the following matters shall require the Unanimous Approval of the
Management Committee taken at a meeting of the Management Committee or by
written consent, in each case pursuant to Sections 5.2(c) and 5.5:
(a) Approval of the Annual Budgets, Annual Operating Plans and
Disbursement and Commitment Schedules;
(b) Determination as to whether the Company has satisfied the
Objectives, approval of a recovery plan with respect to any Objectives
that are not satisfied and any modifications of Objectives;
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(c) Appointment and removal of the President of the Company, including
entry into, and any amendment to or termination or extension of the term
of, any employment agreement with any President of the Company;
(d) any of the following not incorporated in an Annual Budget, Annual
Operating Plan or Disbursement and Commitment Schedule approved pursuant
to Section 5.4(a):
(i) Any lease, sale, exchange, conveyance or other transfer or
disposition of all, or substantially all, of the assets of the
Company;
(ii) Payment of distributions to the Members except in connection
with the dissolution and winding up of the Company and except as
required under Section 4.1(b);
(iii) Any merger, conversion or consolidation of or involving
the Company;
(iv) The assignment of any Company property in trust for the
benefit of creditors, or the making or filing, or acquiescence in
the making or filing by any other Person, of a petition or other
action requesting the reorganization or liquidation of the Company
under the Bankruptcy Law;
(v) The issuance of any additional Interests (other than
Preferred Interests) or, except as otherwise provided in Article 7
in connection with the transfer of an Interest, the admission of
additional or substituted Members;
(vi) Entering into any contract with a Member or an Affiliate
of a Member having a value in excess of $100,000, including
determining the fair market value of in-kind Capital Contributions
by the Members;
(vii) Licensing, sale or other disposition of any material item
of intellectual property; and
(viii) Initiation and settlement (but not including the
prosecution or defense) of lawsuits or other proceedings relating to
intellectual property. Notwithstanding the foregoing, if at any time
while CTTV is a Preferred Member, the Management Committee fails to
agree on a plan or proposal submitted by CTTV to the Management
Committee for settlement of such lawsuit or proceeding, then CTTV
shall have the right to declare an impasse. In the event CTTV
declares an impasse, OBC shall have the option of either accepting
CTTV's plan or proposal for settlement or requiring that COBASYS
continue the prosecution or defense of such lawsuit or proceeding,
in which case OBC shall be required to reimburse COBASYS on a
quarterly basis for one-half of all of the costs of such prosecution
or defense, including all legal fees, expert fees, internal COBASYS
manpower costs, time and materials and all disbursements to
third-party service or materials providers, incurred after such
impasse is declared; and
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AMENDED AND RESTATED OPERATING AGREEMENT
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(e) Requiring Capital Contributions from the Members other than as
contemplated by Sections 3.1 and 3.2.
Notwithstanding the above, if CTTV is a Preferred Member at any time after
January 1, 2010, the matters set forth in Sections 5.4(b) and (c) shall be
determined by majority vote of the Members in accordance with Section 5.3.
Section 5.5 Meetings of Management Committee/Conduct of Business.
----------------------------------------------------
(a) The Management Committee shall meet at least once during each
calendar quarter subject to more frequent meetings upon approval of the
Management Committee. Notice of and an agenda for all Management Committee
meetings shall be provided to all Management Committee representatives by
the Secretary at least ten (10) Business Days prior to the date of such
meetings. Special meetings of the Management Committee may be called at
the direction of any Member upon no less than five (5) Business Days
notice to the other Member.
(b) Except as otherwise provided herein, the Management Committee shall
conduct its meetings in accordance with such rules as it may from time to
time establish and shall keep minutes of its meetings and issue
resolutions evidencing the actions taken by it. A secretary elected by the
Management Committee (the "Secretary") shall keep the minutes of all such
meetings.
(c) Unless otherwise agreed, all meetings of the Management Committee
shall be held at the principal offices of the Company or by conference
telephone or similar means of communication by which all representatives
can participate in the meeting.
(d) Any action required or permitted to be taken by the Members, either
at a meeting or otherwise, may be taken without a meeting if each of the
Members' representatives on the Management Committee consents thereto in
writing and the writing or writing are filed with the minutes of
proceedings of the Management Committee.
(e) The Members may, by Unanimous Approval, delegate such of their
powers and authority to one or more representatives serving on, or a
subcommittee or subcommittees of, the Management Committee, the officers
of the Company, or such other Person or Persons as the Members may deem
advisable.
(f) At all meetings of the Management Committee, representatives of a
majority of the voting power of the Members present in person or by proxy
and entitled to vote thereat shall constitute a quorum for the transaction
of business. In the absence of a quorum, a majority of the Management
Committee so present or represented and entitled to vote may adjourn the
meeting from time to time and from place to place, without further notice,
other than by oral announcement at the meeting, until a quorum is
obtained. At any such adjourned meeting at which a quorum is present, any
business may be transacted which might have been transacted at the meeting
as originally called.
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Section 5.6 Remuneration of Management Committee. The Management Committee
------------------------------------
representatives shall receive no compensation from the Company for performing
services in their capacity as such representatives. Each of the Members shall be
responsible for the payment of the salaries, benefits, retirement allowances and
travel and lodging expenses for its Management Committee representatives.
Section 5.7 Officers of the Company; President. The officers of the Company
----------------------------------
(other than the President) shall be nominated by the President and appointed by
the Management Committee in accordance with Section 5.3.
Section 5.8 Authority and Duties of Officers; Standing Delegation of Authority.
------------------------------------------------------------------
The officers of the Company shall have such authority and shall perform such
duties as may be determined by the Members. Pursuant to this Article 5, the
Members hereby authorize the President to take any of the following actions
identified in Sections 5.3(a), (b), (c), (d), (f), (g), (h), (j) and (p) and to
delegate such authority to one or more officers, employees and agents of the
Company; provided that in each case (i) such action is not inconsistent with an
Annual Budget, Annual Operating Plan or Disbursement and Commitment Schedule
approved pursuant to Section 5.4(a), (ii) the President shall promptly report
each such action to the Management Committee and (iii) if CTTV is a Preferred
Member at any time after January 1, 2010, CTTV may revoke such any and all such
delegations.
ARTICLE 6
INDEMNIFICATION
Section 6.1 Exculpation. To the fullest extent permitted by the Michigan Act,
-----------
no Member, Affiliate of a Member, representative of either Member on the
Management Committee, officer of the Company or other Person to whom the
Management Committee has delegated its authority to act on behalf of the Company
("Authorized Person") shall have any liability to the Company or the Members for
any Losses incurred as a result of any act or omission of such Member,
representative, officer or Authorized Person if (i) such Member, representative,
officer or Authorized Person acted in good faith and (ii) the conduct of such
Member, representative, officer or Authorized Person did not constitute actual
fraud, gross negligence or willful misconduct; provided that nothing contained
herein shall protect any Member against any liability to the Company or the
other Members for failure to perform the obligations of such Member expressly
set forth in this Agreement or the Associated Agreements.
Section 6.2 Indemnification.
---------------
(a) Indemnification. To the fullest extent permitted by the Michigan
---------------
Act, the Company shall defend, protect, indemnify and hold harmless each
Member, Affiliate of a Member, Management Committee representative,
officer of the Company and Authorized Person (each individually, an
"Indemnitee") from and against any and all Losses arising from any and
all Proceedings in which an Indemnitee may be involved, or threatened to
be involved, as a party or otherwise, arising out of or incidental to the
business of the Company (excluding in the case of a Member, Losses for
loss of profit or return on any
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AMENDED AND RESTATED OPERATING AGREEMENT
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Indemnitee's direct or indirect investment in the Company), if (i) the
Indemnitee acted in good faith and in a manner such Indemnitee reasonably
believed to be in, or not opposed to, the interests of the Company, and,
with respect to any criminal proceeding, had no reason to believe the
conduct in question was unlawful and (ii) the Indemnitee's conduct did not
constitute actual fraud, gross negligence or willful misconduct.
(b) Rights of Indemnitee. The Company will periodically reimburse each
--------------------
Indemnitee for all Losses (including fees and expenses of counsel)
indemnified pursuant to Section 6.2(a) as such Losses are incurred in
connection with investigating, preparing, pursuing or defending any
Proceeding; provided that such Indemnitee shall promptly repay to the
Company the amount of any such reimbursed expenses paid to it if it
shall be judicially determined by judgment or order not subject to further
appeal or discretionary review that such Indemnitee is not entitled to be
indemnified by the Company in connection with such matter. The
indemnification and advancement of expenses provided by, or granted
pursuant to, this Section 6.2 shall not be deemed exclusive of, and shall
not limit, any other rights or remedies to which any Indemnitee may be
entitled or which may otherwise be available to any Indemnitee at law or
in equity, (ii) shall continue as to a Person notwithstanding that such
Person has ceased to be an Indemnitee, and (iii) shall inure to the
benefit of the heirs, successors, assigns and administrators of the
Indemnitee. Subject to the foregoing sentence, the provisions of this
Section 6.2 are solely for the benefit of the Indemnitees and shall not
be deemed to create any rights for the benefit of any other Persons.
Each Indemnitee shall have a claim against the property and assets of the
Company for payment of any indemnity amounts from time to time due
hereunder, which amounts shall be paid or properly reserved for prior to
the making of distributions by the Company to Members.
(c) Further Indemnification. The Company may, to the extent authorized
-----------------------
from time to time by Unanimous Approval, grant rights to indemnification
and to advancement of expenses to any employee or agent of the Company to
the fullest extent of the provisions of this Section 6.2 with respect to
the indemnification and advancement of expenses of Members and officers
of the Company.
Section 6.3 Liability for Debts of the Company; Limited Liability.
-----------------------------------------------------
(a) Except as otherwise provided in the Michigan Act, 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 shall be obligated personally for any such
debt, obligation or liability of the Company solely by reason of being a
Member.
(b) Except as provided by applicable Laws, a Member, in its capacity as
such, shall have no liability to the Company or to any other Member in
excess of payments required to be made by such Member under this
Agreement.
(c) The provisions of this Agreement are intended solely to benefit the
Members and, to the fullest extent permitted by applicable Laws, shall not
be construed as conferring any benefit upon any creditor of the Company
(and no such creditor shall be a
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
third-party beneficiary of this Agreement), and no Member shall have any
duty or obligation to any creditor of the Company to make any
contributions or payments to the Company.
Section 6.4 Company Expenses. The Company shall indemnify, hold harmless, and
----------------
pay all expenses, costs, or liabilities of any Member who for the benefit of the
Company and with the prior approval of the Management Committee makes any
deposit, acquires any option, or makes any other similar payment or assumes any
obligation in connection with any property proposed to be acquired by the
Company and who suffers any financial loss as the result of such action.
ARTICLE 7
TRANSFER OF INTERESTS
Section 7.1 Restrictions on Transfer.
------------------------
(a) Each of OBC and CTTV agrees and acknowledges that the identity of
the other is an essential element of this Agreement and accordingly the
parties agree as follows:
(i) Except as expressly permitted by this Article 7, no Member
may at any time Transfer all or any part of any of such Member's
Interest without the express written consent of the other Member,
which consent may be granted or withheld by any such Member in its
full and absolute discretion. Nothing in this Article 7 shall be
construed to permit any Member at any time to, and no Member shall,
create or suffer to exist any Lien upon, in, or in respect of all
or any part of any of such Member's Interest without the express
written consent of the other Member, which consent may be granted
or withheld by any such Member in its full and absolute discretion;
provided that OBC shall be permitted at any time to grant to CTTV
a Lien upon its Interest. Any offer or purported Transfer of a
Member's Interest in violation of the terms of this Agreement shall
be void.
(ii) Each Member hereby agrees that if such Member ceases to be an
OBC Group Entity or a ChevronTexaco Group Entity, as the case may
be, but no Change of Control shall have otherwise occurred with
respect to such Member, the Interest held by such Member first shall
be transferred to another OBC Group Entity or ChevronTexaco Group
Entity, as the case may be, and such Interest shall continue to be
subject to (i) this Section 7.1(a)(ii), and (ii) Section 7.1(c)
(when, as and if it is applicable).
(b) Upon giving 30 days notice to the other Member, any OBC Member may
Transfer all or any part of its Interest to an OBC Group Entity, and any
ChevronTexaco Member may Transfer all or any part of its Interest to a
ChevronTexaco Group Entity, provided that the transferee of such Interest
shall be bound by the terms of Section 7.1(a)(ii) above, when, as and if
it becomes applicable to such transferee. After giving effect to any such
permitted transfer of an Interest, any obligation of the transferring
Member hereunder
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AMENDED AND RESTATED OPERATING AGREEMENT
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shall be a joint and several obligation of the transferring Member and
such transferee, notwithstanding the fact that the transferring Member may
no longer continue to have any Interest.
(c) A ChevronTexaco Member may Transfer all or any part of its Interest
to a Person that is not a ChevronTexaco Group Entity, and an OBC Member
may Transfer all or any part of its Interest to a Person that is not an
OBC Group Entity, provided that such Transfer is made in compliance with
the procedures set forth in this Section 7.1(c).
(i) A Member intending to Transfer its Interest (the "Selling
Member") shall deliver a notice to the Other Member (the "Offeree
Member") which shall (x) state such intent, and (y) set forth a list
of proposed Acceptable Transferees, together with such information
regarding each Person on such list as may be reasonably required to
determine whether such Person is an Acceptable Transferee.
(ii) The Offeree Member shall, within 30 days after receipt of such
notice, deliver to the Selling Member a written response to such
list, setting forth its position with respect to the acceptability
of the Persons named therein, which shall be determined by such
Offeree Member in its sole discretion exercised in good faith, for
any reason other than for the purpose of frustrating all Transfers.
The procedure set forth in this subsection (ii) may be repeated by
the Selling Member as often as may be reasonably required for the
Selling Member's marketing of the Selling Member's Interest.
(iii) The Selling Member shall have a period of no more than 270
days after the Acceptable Transferees have either been accepted or
not objected to, to execute and deliver a definitive agreement with
any Acceptable Transferee committing the Selling Member to sell and
such Acceptable Transferee to purchase the Selling Member's
Interest, and to complete such sale (subject to reasonable extension
if required to satisfy the condition set forth in Section 7.7). If
the Selling Member fails to complete such sale within such period,
the Selling Member must again invoke the offer procedure set forth
in this Section 7.1(c) in order to Transfer its Interest pursuant
to this Section 7.1(c). From time to time, the Selling Member will
furnish to the Offeree Member such information respecting Selling
Member's marketing of the Selling Member's Interest as the Offeree
Member reasonably requests for any purpose reasonably related to
Offeree Member's exercise of its rights under Section 7.1(c)(iv).
(iv) Prior to consummating a proposed sale of the Interest of the
Selling Member to any Acceptable Transferee pursuant to Section
7.1(c)(v), the Selling Member shall deliver a second notice (the
"Selling Member's Offer Notice") to the Offeree Member which shall
(x) state the intention of the Selling Member to sell its Interest,
(y) describe the material terms and conditions of the proposed sale
to the Acceptable Transferee (including the proposed purchase price
and structure), together with any letter of intent or definitive
agreement relating to such proposed sale if executed as of such
date ("Sale Materials") and (z) offer to sell such Interest to
such Offeree Member on the same terms and conditions as proposed to
sell such
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AMENDED AND RESTATED OPERATING AGREEMENT
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Interest to the Acceptable Transferee; provided, however, that the
Offeree Member may substitute cash of equal value in the event that
the Acceptable Transferee offers consideration of a type that is
not readily available to the Offeree Member. If the Offeree Member
desires to purchase the Interest so offered, it shall, within 10
days of the receipt by the Offeree Member of the Selling Member's
Offer Notice ("Offeree Member Response Date"), deliver a notice
(the "Offeree Member's Acceptance Notice") to the Selling Member.
The Offeree Member's Acceptance Notice shall set forth an
irrevocable commitment by the Offeree Member to purchase the
Interest so offered on the terms and conditions set forth in the
Sale Materials and in Section 7.7.
(v) If the Offeree Member so delivers the Offeree Member's
Acceptance Notice, the closing of such purchase shall take place
within 30 days after delivery of the Offeree Member's Acceptance
Notice, subject to reasonable extension if required to satisfy the
conditions set forth in Section 7.7. If the Offeree Member either
notifies the Selling Member in writing that it has elected not to
purchase the Interest of the Selling Member or fails to provide the
Offeree Member's Acceptance Notice on or prior to the Offeree Member
Response Date, the Selling Member shall be free to consummate its
proposed sale to the Acceptable Transferee on the terms and
conditions set forth in the Sale Materials and in Section 7.7.
(d) Notwithstanding anything to the contrary contained herein, unless
all of the Members shall consent, no Member may Transfer all or any
portion of its Interest if such Transfer, when added to the total of all
other Dispositions of Interests within the preceding twelve (12) months,
would result in the Company being considered to have terminated within the
meaning of Code Section 708.
Section 7.2 Change of Control.
-----------------
(a) Each of OBC and CTTV agrees and acknowledges that the identity of
the other (and the identity of any entity possessing control over the
other) is an essential element of this Agreement and accordingly the
parties agree as follows: In the event of a Change of Control of any
Member (the "Changed Member"), the Changed Member shall, following such
Change of Control, promptly notify the other Member (the "Unchanged
Member") of such event, setting forth the date and circumstances of the
Change of Control and the identity of the Person that has acquired control
of the Changed Member. If the Changed Member fails to give such notice,
the Unchanged Member may give such notice. Promptly after delivery of any
such notice, or after otherwise ascertaining that such Change of Control
has occurred, the Members shall cause the Fair Market Value of the Company
to be determined in accordance with the procedures set forth in Section
2.6.
(b) Within 30 days following the determination of Fair Market Value of
the Company, the Unchanged Member may provide a notice to the Changed
Member indicating its desire to acquire the Interest of the Changed Member
for the Change Price (plus the Preferred Interest Amount with respect to
such Member, if applicable), and setting forth the date on which such
Unchanged Member intends to acquire such Interest
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AMENDED AND RESTATED OPERATING AGREEMENT
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pursuant to this Section 7.2(b), which date shall be as soon as
practicable after delivery of the notice pursuant to this Section 7.2(b).
If the Unchanged Member provides such notice, it shall have the right to
acquire all but not less than all of the Interest of the Changed Member,
subject to the provisions of Section 7.7, for the Change Price. As used in
this Agreement, the term "Change Price" means, with respect to any
Member's Interest, (x) the Fair Market Value of the Company multiplied by
(y) such Member's Percentage Interest. If the selling Member is the holder
of a Preferred Interest, the purchasing Member shall be obligated to pay
the Change Price plus the Preferred Interest Amount of the selling Member.
Section 7.3 Waiver of Partition.
-------------------
(a) All Company assets, whether real, personal or mixed, tangible or
intangible, shall be owned by the Company as an entity. All the Company
assets shall be recorded as the property of the Company on its books and
records, irrespective of the name in which legal title to such Company
assets is held.
(b) The assets, property and cash contributed to the Company, as well as
all other property and assets acquired by the Company, shall be owned by
the Company. No Member shall, either directly or indirectly, take any
action to require partition, and notwithstanding any provisions of
applicable Laws to the contrary, each Member (and each of its legal
representatives, successors, or assigns) hereby irrevocably
waives any and all rights it may have to maintain any action for partition
or to compel any sale with respect to its Interest, or with respect to any
assets or properties of the Company, except as expressly provided in this
Agreement, until the termination of this Agreement.
Section 7.4 Covenant Not to Withdraw or Dissolve. Notwithstanding any
------------------------------------
provision of the Michigan Act, except as expressly provided above, each Member
hereby covenants and agrees that the Members have entered into this Agreement
based on their mutual expectation that both Members will continue as Members and
carry out the duties and obligations undertaken by them hereunder and that,
except as otherwise expressly required or permitted hereby, each Member hereby
covenants and agrees not to (i) take any action to file a certificate of
dissolution or its equivalent with respect to itself; (ii) take any action that
would cause a Bankruptcy of such Member; (iii) withdraw or attempt to withdraw
funds or assets from the Company, except as otherwise expressly permitted by the
Michigan Act; (iv) exercise any power under the Michigan Act to dissolve the
Company; (v) Transfer all or any portion of its Interest, except as expressly
provided herein; or (vi) demand a return of such Member's contributions or
profits (or a bond or other security for the return of such contributions of
profits), in each case without Unanimous Approval.
Section 7.5 Substituted Members. Any transferee acquiring the Interest of a
-------------------
Member as permitted under this Agreement shall be deemed admitted as a
substituted Member with respect to the Interest transferred concurrently with
the effectiveness of the Transfer without any further vote or approval of any
Member, provided such transferee shall have executed and delivered to the other
Member a counterpart of this Agreement and such other documents or agreements as
shall be reasonably requested by such other Member to confirm such transferee's
admission as a Member and its agreement to be bound by and assume the
obligations of the transferor in accordance with the terms of this Agreement and
any Associated Agreement under which such transferor has any
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AMENDED AND RESTATED OPERATING AGREEMENT
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rights or obligations. The transferor shall not be relieved of any obligation or
liability hereunder arising prior to the consummation of such Transfer but shall
be relieved of all future obligations with respect to the Interest so
Transferred. No purported Transfer of any Interest, or any portion thereof or
interest therein, in violation of the terms of this Agreement (including any
Transfer occurring by operation of law) shall vest the purported transferee with
any rights, powers or privileges hereunder, and no such purported transferee
shall be deemed for any purposes as a Member hereunder or have any right to vote
or consent with respect to Company matters, to maintain any action for an
accounting or to exercise any other rights of a Member hereunder or under the
Michigan Act.
Section 7.6 Deliveries. Upon the consummation of any purchase and sale
----------
pursuant to this Article 7, the transferring Member shall deliver the Interest
of the transferring Member, free and clear of all Liens (other than any Lien
created under any financing to which the Company is a party), together with duly
executed written instruments of transfer with respect thereto, in form and
substance reasonably satisfactory to the purchaser of such Interests, against
(x) delivery of the cash portion of the applicable price for such Interest by
wire transfer, in immediately available funds, to the account of the
transferring Member designated for such purpose, and (y) delivery of any other
consideration as may be provided for such purchase and sale.
Section 7.7 Approvals. Notwithstanding any other provision of this Agreement,
---------
no Transfer of an Interest pursuant to this Article 7 shall occur unless and
until any and all necessary consents and approvals have been obtained from any
Governmental Body with authority with respect thereto, including any required
approvals under the HSR Act. The Members agree to cooperate and to cause their
Affiliates to cooperate in the preparation and filing of any and all reports or
other submissions required in connection with obtaining such consents and
approvals.
Section 7.8 Liquidated Damages. OBC and CTTV agree that if either OBC or CTTV
------------------
shall Transfer its Interest in the Company in violation of such party's
agreements in Sections 2.7, 7.1, 7.2, or 7.4 or of OBC's agreement in Section
8.4(c), then such transferring party shall immediately pay to the
non-transferring party, as liquidated damages, an amount equal to one-third of
CTTV's Capital Contributions measured as of the date of such Transfer (for
example, as of September 30, 2004, such liquidated damages amount would be
one-third of $143,585,000, or approximately $47,861,667). The parties agree that
in any such event, the actual damages to the non-transferring party will be
difficult or impossible to measure and that such amount represents the parties'
reasonable estimate as of the date of this Agreement of such damages and that
this Section 7.8 is intended to compensate such non-transferring party for such
damages and not as a penalty.
ARTICLE 8
DEFAULT
Section 8.1 Default.
-------
(a) Default. If any of the following events occur:
-------
(i) the Bankruptcy of a Member; or
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AMENDED AND RESTATED OPERATING AGREEMENT
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(ii) any part of the Interest of a Member is seized by a creditor
of such Member, and the same is not released from seizure or bonded
out within thirty (30) days from the date of notice of seizure; or
(iii) a Member fails to (x) provide any Capital Contribution
required under Article 3 within ten (10) days after the due date
thereof, (y) provide any other funding required by this Agreement
within ten (10) days after the due date thereof, or (z) perform any
material obligation imposed upon such Member under any agreement
relating to borrowed money to which the Company is a party which
results in a default by, or acceleration of indebtedness of, the
Company thereunder, and such failure continues unremedied for ten
(10) days after the occurrence of such failure; or
(iv) a Member (y) fails to perform any material provision or
obligation imposed on such Member in this Agreement other than those
described in Section 8.1(a)(iii); or (z) attempts to transfer any of
its Interest in the Company except as permitted under Article 7, and
in each such case such failure continues unremedied for thirty (30)
days after receipt of notice from the other Member, or
(v) a Member fails to perform any material provision or obligation
imposed on such Member in the Technology Agreement and such failure
continues unremedied for ten (10) days after receipt of notice from
the other Member;
then a "Default" shall be deemed to have occurred with respect to such
Member, who shall be referred to as the "Defaulting Member," and the other
Member shall be referred to as a "Nondefaulting Member". Subsequent to the
occurrence of a Default, the Defaulting Member shall continue to be a
Member and shall continue to be obligated to make all Capital
Contributions as provided in Article 3.
(b) Continuation of the Company. If an event described in Section 8.1(a)
---------------------------
occurs, it is the intent of the Members that the Company shall continue to
exist and operate without interruption, dissolution or termination, and
without impairing or reducing in any manner the Company's rights and
obligations to third parties unless the Nondefaulting Member elects to
dissolve the Company pursuant to Section 8.2(a).
(c) Suspension and Assignment of Distributions. Notwithstanding
------------------------------------------
anything in this Agreement to the contrary, effective upon the occurrence
of an event which, but for the expiration of any applicable grace period,
would constitute a Default with respect to a Member ("Event of Default"),
no distribution shall be made by the Company to such Member until such
Event of Default has been cured and the Nondefaulting Member has been
reimbursed for all direct costs and expenses incurred as a result of the
Event of Default. Effective upon the expiration of such grace period, the
Defaulting Member assigns to the Nondefaulting Member its right to receive
any and all distributions from the Company to which it would otherwise be
entitled under this Agreement or the Michigan Act (including any
distributions suspended during the grace period in accordance with the
preceding sentence) until such time as the Nondefaulting Member has been
reimbursed in full for all such costs and expenses.
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AMENDED AND RESTATED OPERATING AGREEMENT
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Section 8.2 Options of Nondefaulting Member. If a Default occurs and is
-------------------------------
continuing then the Nondefaulting Member shall have the right, in its sole and
absolute discretion, to:
(a) dissolve the Company in accordance with Article 9;
(b) expel the Defaulting Member from the Company by giving written
notice specifying the expulsion date and purchasing, designating another
Person to purchase or causing the Company to purchase the Interest of the
Defaulting Member as of the expulsion date in such percentage as the
Nondefaulting Member shall determine (the Nondefaulting Member, such other
Person or the Company, as the case may be, the "Default Purchaser"), at
the Default Purchase Price, less all costs and expenses incurred or
reasonably anticipated to be incurred by the Default Purchaser as a result
of the Default (a "Default Purchase"). At the Default Purchaser's
election, payment to the Defaulting Member may take the form of a ten (10)
year note from the Default Purchaser secured by the Interest purchased and
payable in equal annual installments of principal plus interest at the
Prime Rate. In the event the Default Purchaser incurs costs or expenses in
respect of the Defaulting Member's default in addition to those which were
previously deducted from the Default Purchase Price, any such note shall
be reduced by an amount equal to such additional costs or expenses, or the
Default Purchaser may offset such amount against any other sums owed by
the Default Purchaser to the Defaulting Member;
(c) Cure the default and cause the cost thereof to be charged against a
special loan account established for the Nondefaulting Member until the
entire cost thereof plus interest on the unpaid balance at an annual rate
equal to 2% over the Prime Rate shall have been paid or reimbursed to the
Nondefaulting Member from any subsequent distributions made pursuant to
this Agreement to which the Defaulting Member would otherwise have been
entitled, which amounts shall be paid first as interest and then
principal, until the loan is paid in full;
(d) Cure the Default and credit the Nondefaulting Member's Capital
Account with an amount equal to the sum of the costs of such cure and all
other costs and expenses incurred by the Nondefaulting Member as a result
of the Default and cause the Percentage Interests of the Members to be
adjusted to reflect the additional Interest in the Company of the
Nondefaulting Member as a result of such credit based on the Fair Market
Value of the Company as of the date of such cure; provided, however, that
any such cure by the Nondefaulting Member shall not affect the liability
of the Defaulting Member for any other obligations to the Company or the
Nondefaulting Member, whether attributable to periods prior to or
following such cure. The Nondefaulting Member's additional Interest shall
be equal to the percentage calculated by dividing the amount of the cure
by the Fair Market Value of the Company. Correspondingly, the Defaulting
Member's Interest shall be reduced by such percentage; or
(e) exercise any and all rights of a secured creditor under the Uniform
Commercial Code with respect to the Collateral.
Following the occurrence and during the continuance of a Default, the Defaulting
Member (and its Management Committee representatives) shall have no vote on any
matter before the Management
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
Committee, other than those matters set forth in Section 5.4(a), Section
5.4(d)(i) through (viii), and Section 5.4(e).
Section 8.3 No Limitation or Right of Set-Off. Each Member agrees that the
---------------------------------
obligation to make payment to the Company as provided in this Agreement is a
covenant of each Member to the other Member and any Default entitles the
Nondefaulting Member to take the actions set forth in Section 8.2 which shall be
in addition to, and not in substitution for, any other rights or remedies which
the Nondefaulting Member may have at law or equity or pursuant to the other
provisions of this Agreement or any Associated Agreement. Any Member which
becomes a Defaulting Member undertakes that, in respect of any exercise by the
Nondefaulting Member of any rights under or the application of any of the
provisions of Section 8.2, such Defaulting Member shall not raise by way of set
off, or invoke as a defense or assert as a claim, whether in law or equity, any
failure by any other Member to pay amounts due and owing under this Agreement or
any alleged or unliquidated claim that such Defaulting Member may have against
the Company or any Member, whether such claim arises under this Agreement or
otherwise. Such Defaulting Member further undertakes not to raise by way of
defense, whether in law or in equity, that the nature or the amount of the
remedies granted to the Nondefaulting Member is unreasonable or excessive.
Section 8.4 Security Interest.
-----------------
(a) Grant of Security Interest by OBC. All of OBC's obligations under
---------------------------------
this Agreement (including without limitation OBC's obligations under
Sections 2.7, 3.2, 3.4, 7.1, 7.2, and 7.4) shall be secured by, and OBC
hereby grants to CTTV, a first priority security interest in all right,
title, claim and interest of OBC in and to the Collateral. OBC hereby
authorizes CTTV, its counsel and its representatives, at any time and from
time to time, to file financing statements and amendments in such
jurisdictions as CTTV may deem necessary or desirable in order to perfect
the security interests granted by OBC under this Agreement.
Notwithstanding the foregoing, so long as no Default with respect to OBC
shall have occurred and be continuing, OBC shall be entitled to exercise
any and all rights relating to the Collateral otherwise available to it
under the terms of this Agreement.
(b) Representations and Warranties regarding the Collateral. OBC
-------------------------------------------------------
represents and warrants to CTTV as of the date hereof as follows:
(i) OBC is a corporation organized under the laws of the State
of Delaware. OBC's mailing address is 0000 Xxxxxxxxx Xxxxx,
Xxxxxxxxx Xxxxx, Xxxxxxxx 00000. OBC's chief executive office is
0000 Xxxxxxxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxxxxxx 00000. OBC's
organizational identification number is 2075852.
(ii) "Ovonic Battery Company, Inc." is the correct legal name
of OBC indicated on the public record of OBC's jurisdiction of
organization which shows OBC to be organized.
(iii) All names and tradenames that OBC has used within the
five years prior to the date hereof are as set forth on
Schedule OBC-8.4(b)(iii).
------------------------
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AMENDED AND RESTATED OPERATING AGREEMENT
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(iv) OBC has good and marketable title to all the Collateral owned
by it and will have good and marketable title to all Collateral
hereafter acquired upon acquisition thereof. The security interests
granted pursuant to this Section 8.4 constitute (in the case of
Collateral now owned) and will constitute upon acquisition thereof
(in the case of Collateral hereafter acquired), valid, first
priority Liens in such Collateral.
(v) The Collateral is (in the case of Collateral now owned) and
(in the case of Collateral hereafter acquired) will be upon
acquisition thereof, free and clear of all Liens other than the
Liens granted under this Agreement.
(vi) OBC is solvent and is paying its debts as they become due and
owing insofar as this affects the Collateral, and OBC shall remain
solvent upon the execution of and compliance with the terms of this
Agreement and OBC's obligations under this Agreement, such that
execution of this Agreement does not render OBC insolvent.
(vii) There are no actions or proceedings that are pending or, to
OBC's knowledge, threatened against OBC that might adversely affect
the Collateral.
(viii) No security agreement, financing statement, or equivalent
security or lien instrument or continuation statement covering all
or any part of the Collateral is on file or of record in any public
office, except such as may have been filed in favor of CTTV pursuant
to this Agreement or with respect to the Liens granted to CTTV under
this Agreement.
(c) Covenants with respect to the Collateral. OBC hereby covenants and
----------------------------------------
agrees with CTTV that during the term of this Agreement:
(i) OBC shall not (A) adopt a trade name or change its name, or
(B) change its identity, jurisdiction, structure or tax
identification number, unless in any case OBC (x) provides CTTV no
less than 30 days' prior written notice thereof and (y) makes all
filings under applicable law and takes all other actions that are
required so that such change will not at any time adversely affect
the validity, perfection or priority of CTTV's Lien on any of the
Collateral.
(ii) OBC shall not sell, lease or otherwise dispose of any of the
Collateral, or any interest therein.
(iii) OBC shall not grant or suffer to exist any Lien on any of the
Collateral other than the Liens granted under this Agreement.
(iv) At any time and from time to time, upon the request of CTTV,
and at the sole expense of OBC, OBC will promptly execute and
deliver any and all such further documents and take such further
actions as CTTV may deem desirable in obtaining the full benefits of
the security interest granted pursuant to this Section 8.4 and of
the rights and powers herein granted, including, without limitation,
the
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
filing of any financing or continuation statements under the
Uniform Commercial Code in effect in any jurisdiction with respect
to the liens and security interests granted hereby and, if
applicable, transferring any Collateral to CTTV's possession in
order to perfect or enhance the priority thereof. If any amount
payable under or in connection with any Collateral shall be or
become evidenced by any promissory note or other instrument (other
than an instrument that constitutes chattel paper), such note or
instrument shall be immediately pledged to CTTV hereunder, and shall
be endorsed in a manner satisfactory to CTTV and delivered to CTTV.
(v) OBC irrevocably appoints CTTV, with full power of
substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of OBC and in
the name of OBC or in its own name, from time to time in CTTV's
discretion, for the purpose of carrying out the terms of this
Article 8, to exercise any of the rights and remedies granted to
CTTV under this Article 8, and to take any and all other appropriate
action and to execute any and all documents and instruments that may
be necessary or desirable under this Article 8. All powers,
authorizations, and agencies contained in this Section 8.4 with
respect to the Collateral are irrevocable and powers coupled with an
interest. OBC ratifies all that the attorney shall lawfully do or
cause to be done by virtue hereof.
(d) Sale of Collateral. If a Default with respect to OBC shall have
------------------
occurred and be continuing, then CTTV shall have the right to sell the
Collateral (in addition to exercising any other remedies available to it
under applicable law or this Agreement). CTTV shall not be required to
register or qualify any of the Collateral that constitutes securities
under applicable state or federal securities laws in connection with any
sale or other disposition thereof if such disposition is effected in a
manner that complies with all applicable federal and state securities
laws. CTTV shall be authorized at any such disposition (if it deems it
advisable to do so) to restrict the prospective bidders or purchasers to
persons who will represent and agree that they are "accredited investors"
or "qualified institutional buyers" under applicable law and purchasing
the Collateral for their own account for investment and not with a view to
the distribution or sale thereof. OBC agrees that if any such Collateral
is sold in a manner that CTTV in good faith believes to be reasonable
under the circumstances then existing, then (A) the sale shall be deemed
to be commercially reasonable in all respects and (B) CTTV shall not incur
any liability or responsibility to OBC in connection therewith,
notwithstanding the possibility that a substantially higher price might
have been realized at a public sale. OBC recognizes that a ready market
may not exist for such Collateral and that a sale by CTTV of any such
Collateral for an amount substantially less than the price that might have
been achieved had the Collateral been publicly traded may be commercially
reasonable in view of the difficulties that may be encountered in
attempting to sell Collateral that is not publicly traded. CTTV or any
ChevronTexaco Group Entity may purchase any of the Collateral at any sale
of Collateral hereunder. In addition, OBC recognizes that, in connection
with any sale of the Collateral, CTTV has certain rights of first refusal
to purchase the Collateral pursuant to Section 7.1 of this Agreement, and
that such rights of first refusal may result in a sale of the Collateral
(including a sale of all or part of the Collateral to CTTV) for an amount
less than the price that might have been achieved had the Collateral not
been
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
subject to such rights of first refusal. Notwithstanding anything to
the contrary in this Section 8.4(d), neither CTTV nor any ChevronTexaco
Group Entity shall be entitled to purchase the Interest of the Defaulting
Member (or any portion thereof) in a sale of Collateral under this Section
8.4(d) for a price less than the minimum price at which CTTV or any
ChevronTexaco Group Entity would be entitled to purchase such Interest (or
any portion thereof) under Section 8.2(b). TO THE MAXIMUM EXTENT
PERMISSIBLE UNDER APPLICABLE LAW, OBC HEREBY WAIVES ANY OBJECTION OR CLAIM
BASED UPON ANY OF THE FOREGOING AND AGREES THAT ANY SALE OR OTHER
DISPOSITION EFFECTED IN ACCORDANCE WITH THE FOREGOING (INCLUDING PURSUANT
TO ANY SUCH RIGHT OF FIRST REFUSAL) SHALL BE CONCLUSIVELY DEEMED
COMMERCIALLY REASONABLE WITHIN THE MEANING OF THE UNIFORM COMMERCIAL CODE.
(e) The provisions of this Section 8.4 shall terminate and shall be of
no further force or effect on the first date after January 1, 2008 on
which (A) no Preferred Interest is outstanding and (B) no Default with
respect to OBC has occurred and is continuing. Upon the termination of the
provisions of this Section 8.4, CTTV shall cooperate with the reasonable
requests of OBC to release any Collateral in the possession of CTTV and to
file appropriate termination statements and other documents evidencing and
giving effect to the termination of the security interest in the
Collateral granted hereunder.
ARTICLE 9
DISSOLUTION
Section 9.1 Dissolution. The Company shall dissolve and commence winding up
-----------
upon the first to occur of any of the following events (each, a "Dissolution
Event"):
(a) a decision by Unanimous Approval to dissolve, wind up and terminate
the Company;
(b) upon a Default, the Nondefaulting Member elects to dissolve the
Company pursuant to Section 8.2(a); or
(c) the entry of a decree of judicial dissolution pursuant to Section
18-802 of the Michigan Act.
Section 9.2 Winding Up. The Members shall be responsible for overseeing the
----------
winding up and dissolution of the Company. A reasonable amount of time shall be
allowed for the period of winding up in light of prevailing market conditions
and so as to avoid undue loss in connection with any sale of the Company's
assets. Upon the occurrence of a Dissolution Event, the Company shall continue
solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying or making reasonable provision for the
satisfaction of the claims of its creditors and Members, and no Member shall
take any action that is inconsistent with, or not necessary to or appropriate
for, the winding up of the Company's business and affairs; provided that all
covenants contained in this Agreement and obligations provided for in this
Agreement shall continue to be fully binding upon the Members until such time as
the assets or property or the
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
proceeds from the sale thereof have been distributed pursuant to this Article 9
and the existence of the Company has been terminated by the filing by the
Members of a Certificate of Dissolution with the Administrator.
Section 9.3 Distributions upon Liquidation.
------------------------------
(a) In connection with the winding up of the Company, first the Fair
Market Value of the Company's assets shall be determined as provided
in Section 2.6. Such Fair Market Value shall then be used as a basis
for computing the Profit or Loss, if any, arising as a result of the
operation of, and subject to allocation under, Section 3.8(d) and
Article 4 (including without limitation Section 4.2(c)(xi)),
respectively.
(b) In connection with the winding up of the Company, the Company's
assets constituting Company Technology Assets shall first be applied
and distributed to the maximum extent permitted by applicable Laws
in accordance with Section 4.2 of the Technology Agreement.
(c) Thereafter, in connection with the winding up of the Company, the
Company's assets or the proceeds from the sale thereof shall be applied
and distributed to the maximum extent permitted by applicable Laws as
follows:
(i) To creditors, including Members who are creditors (other than
by reason of the operation and effect of Sections 304 and 305 of
the Michigan Act), to the extent otherwise permitted by law, in
satisfaction of liabilities of the Company (whether by payment or
the making of reasonable provision for payment thereof);
(ii) To the Preferred Member(s), an amount equal to such Member(s)'
Preferred Interest Amounts, pro rata in accordance with such
amounts;
(iii) With respect to any assets not distributed pursuant to (b)
above, to those Persons entitled to such assets in accordance with
Section 4.2 of the Technology Agreement;
(iv) To Members in satisfaction of liabilities for distributions
under the Michigan Act; and
(v) Thereafter to Members in proportion to their respective
Capital Account balances, to the extent the same are positive, up to
the full amount thereof (after giving effect to adjustments to
Capital Account balances under Section 3.8 and, as applicable,
Article 4, through the date of distribution); with any remaining
assets to be distributed to Members in accordance with their
respective Percentage Interests.
Section 9.4 Claims of the Members. The Members will look solely to the
---------------------
Company's assets for the return of their contributions to their Capital
Accounts, and if the assets of the Company remaining after payment of or due
provision for all debts, liabilities and obligations of the Company are
insufficient to return such contributions, the Members will have no recourse
therefor
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
against the Company or any other Member or any other Person. No Member shall
have any obligation to restore, or otherwise pay to the Company, the other
Member or any third party, the amount of any deficit balance in such Member's
Capital Account upon dissolution and liquidation.
Section 9.5 Rights and Obligations of Members. Dissolution of the Company for
---------------------------------
any cause shall not release a Member from any liability which such Member had
already incurred at the time of dissolution and termination or affect in any way
the survival of the rights, duties and obligations of a Member provided for in
Section 4.5, Article 8, Section 11.11 or Section 11.13 of this Agreement.
ARTICLE 10
FINANCIAL MATTERS
Section 10.1 Books and Records. The Company shall maintain, at the Company's
-----------------
principal place of business and at the Company's expense, accurate and complete
books and records, on the accrual basis, in accordance with GAAP (the
application of which, having been adopted, shall not be changed without the
prior written consent of the Management Committee), showing all costs,
expenditures, sales, receipts, assets and liabilities, and profits and losses
and all other records necessary, convenient or incidental to recording the
Company's business and affairs. Such books and records shall be audited at least
annually, at the Company's expense, by independent certified public accountants
selected by the Management Committee. The initial certified public accountants
for the Company shall be Deloitte & Touche LLP. The books and records of the
Company shall be open to inspection by each Member or its designated
representatives at the inspecting Member's expense at any reasonable time during
business hours for any proper purpose.
Section 10.2 Financial Reports. The Management Committee shall cause to be
-----------------
prepared (a) as of the end of each calendar month or quarter as appropriate, (b)
as of the end of each Fiscal Year, (c) as of the date of dissolution of the
Company, and (d) as of such additional dates as the Management Committee may
direct, in accordance with GAAP, appropriate financial statements showing the
assets, liabilities, capital, profits, expenses, losses and recovered and
unrecovered capital expenditures of the Company and a statement showing all
amounts credited and debited to each Member's capital account (for both GAAP and
Capital Accounts) and of each Member's distributive share, for federal income
tax purposes, of income, gains, deductions, losses and credits (or items
thereof) arising out of the Company's operations, as required by law, and a
further statement reconciling any difference between the Member's respective
capital accounts as shown in such financial statements and their capital
accounts as determined in accordance with the provisions of this Agreement. A
copy of each such report shall be delivered to each Member within ninety (90)
days after each such applicable date.
Section 10.3 Company Funds. Pending application or distribution, the funds of
-------------
the Company shall be deposited in such bank accounts, or invested in such
interest-bearing or non-interest-bearing investments, including without
limitation, federally insured checking and savings accounts, certificates of
deposit, government issued or backed securities, or mutual funds investing
primarily in such types of securities, as shall be designated by the Management
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AMENDED AND RESTATED OPERATING AGREEMENT
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Committee. Such funds shall not be commingled with the funds of any other
Person. Withdrawals therefrom shall be made upon such signatures as the
Management Committee may designate.
ARTICLE 11
MISCELLANEOUS
Section 11.1 Notices. All notices, notifications, consents, requests, demands
-------
and other communications to be provided to any Person pursuant to the terms
hereof shall be in writing and shall be deemed to have been duly given or
delivered upon the date of receipt if: (a) delivered personally; (b) telecopied
or telexed with transmission confirmed; (c) mailed by registered or certified
mail return receipt requested; or (d) delivered by a recognized commercial
courier to the Person as follows (or to such other address as any Person shall
have last designated by fifteen (15) days written notice to the other Persons):
If to CTTV: ChevronTexaco Technology Ventures LLC
0000 Xxxxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
With copies of notices for CTTV to:
ChevronTexaco Corporation
0000 Xxxxxxxxx Xxxxxx Xxxx, Xxxxxxxx X
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Chief Corporate Counsel
Attention: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
If to OBC: Ovonic Battery Company, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
With copies of notices for OBC to:
General Counsel
Ovonic Battery Company, Inc. 0000
Xxxxxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
Energy Conversion Devices, Inc. 0000
Xxxxxxxxx Xxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Section 11.2 Modification. This Agreement, including this Section 11.2 and the
------------
Exhibits to this Agreement, shall not be modified except by a written instrument
signed by or on behalf of the Members.
Section 11.3 Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the State of Michigan as applied to
contracts made and performed within the State of Michigan, without regard to
principles of conflict of laws.
Section 11.4 Assignment, Binding Effect. This Agreement shall not be assigned
--------------------------
by any Member directly or indirectly to any other Person (whether by the sale of
stock or other transfer of ownership interest in a Person, or the sale or
transfer by a Person that has an indirect stock or ownership interest in a
Person or otherwise). This Agreement shall be binding upon and inure to the
benefit of the Members and their respective successors and permitted assigns.
Section 11.5 No Third Party Rights. Nothing in this Agreement shall create or
---------------------
be deemed to create any third party beneficiary rights in any Person (including
any employee of any Person) not party to this Agreement, except that the
Indemnitees may be third party beneficiaries pursuant to Article 6 of this
Agreement in which instance their rights are subject to the terms of such
Article 6, and the Company and its Members may be third party beneficiaries to
Section 11.13(a) and (b) of this Agreement in which instance their rights are
subject to the terms of Section 11.13(a) and (b).
Section 11.6 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 11.7 Invalidity. If any of the provisions of this Agreement including
----------
the Exhibits hereto is held invalid or unenforceable, such invalidity or
unenforceability shall not affect in any way the validity or enforceability of
any other provision of this Agreement. In the event any provision is held
invalid or unenforceable, the Members shall attempt to agree on a valid or
enforceable provision which shall be a reasonable substitute for such invalid or
unenforceable provision in light of the tenor of this Agreement and, on so
agreeing, shall incorporate such substitute provision in this Agreement.
Section 11.8 Entire Agreement. This Agreement and the Associated Agreements
----------------
contain the entire agreement between the parties hereto with respect to the
matters contemplated herein and therein and all prior or contemporaneous
understandings and agreements shall merge herein. There are no additional terms,
whether consistent or inconsistent, oral or written, which are intended to be
part of the parties' understandings which have not been incorporated into this
Agreement or the Associated Agreements.
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Section 11.9 Expenses. Except as the parties may otherwise agree or as
--------
otherwise provided herein, each party shall bear their respective fees, costs
and expenses in connection with this Agreement and the transactions contemplated
hereby.
Section 11.10 Waiver. No waiver by any party, whether express or implied, of
------
any right under any provision of this Agreement shall constitute a waiver of
such party's right at any other time or a waiver of such party's rights under
any other provision of this Agreement unless it is made in writing and signed by
the president or a vice president of the party waiving the condition. No failure
by any party hereto to take any action with respect to any breach of this
Agreement or default by another party shall constitute a waiver of the former
party's right to enforce any provision of this Agreement or to take action with
respect to such breach or default or any subsequent breach or default by such
other party.
Section 11.11 Dispute Resolution. Any claim, controversy or dispute arising
------------------
out of, relating to, or in connection with this Agreement, or the agreements and
transactions contemplated hereby, including the interpretation, validity,
termination or breach thereof, shall be resolved solely in accordance with the
dispute resolution procedures set forth in Exhibit B.
Section 11.12 Disclosure. Each Member is acquiring its Interest in the Company
----------
based upon its own independent investigation, and the exercise by such Member of
its rights and the performance of its obligations under this Agreement are based
upon its own investigation, analysis and expertise. Each Member's acquisition of
its Interest in the Company is being made for its own account for investment,
and not with a view to the sale or distribution thereof.
Section 11.13 Non-Compete.
------------
(a) Each of OBC and ECD agrees, for the benefit of the Company and its
Members, that it shall not and shall not permit any of its Affiliates to
compete in any way against the Company in the Battery Business, except as
may be permitted by the Technology Agreement; provided that
(i) if the Members decide by Unanimous Approval to dissolve, wind
up and terminate the Company, the obligations of OBC and ECD under
this Section 11.13(a) shall terminate, effective upon the
termination of the Company;
(ii) if there is a Default by OBC (or a subsequent OBC Member) that
results in a Default Purchase or in an election by the Nondefaulting
Member to dissolve the Company pursuant to Section 8.2(a)(i), the
obligations of OBC and ECD under this Section 11.13(a) shall
terminate, effective upon the later of (x) three years after the
Default Purchase or the termination of the Company, as applicable,
and (y) six years after the date of this Agreement;
(iii) if each OBC Member Transfers all of its Interest to a Person
that is not an OBC Group Entity either in compliance with Section
7.1(c) or earlier with consent, the obligations of OBC and ECD under
this Section 11.13(a) shall terminate, effective three years after
Transfer.
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
During the period prior to the termination of the obligations of OBC and
ECD under this Section 11.13(a) as provided in subsections (ii) and (iii)
above, each of OBC and ECD shall use its best efforts to enable the
Company to utilize all technology which OBC and/or ECD has given the
Company rights to use pursuant to the Technology Agreement. In this
regard, each of OBC and ECD shall make available to the Company and its
Affiliates all personnel, services and facilities necessary for this
purpose. Any personnel so provided by OBC and/or ECD shall be subject to
appropriate confidentiality obligations in favor of the Company. During
this period, the Company and its Affiliates may offer employment to any
OBC or ECD employees who are associated with the Company's Battery
Business.
(b) CTTV agrees, for the benefit of the Company and its Members, that
CTTV shall not and shall not permit any of its Affiliates to compete in
any way against the Company in the Battery Business, except as may be
permitted by the IP Agreement; provided that
(i) if the Members decide by Unanimous Approval to dissolve, wind
up and terminate the Company, CTTV's obligations under this Section
11.13(b) shall terminate, effective upon the termination of the
Company;
(ii) if there is a Default by CTTV (or a subsequent ChevronTexaco
Member) that results in a Default Purchase or in an election by the
Nondefaulting Member to dissolve the Company pursuant to Section
8.2(a)(i), CTTV's obligations under this Section 11.13(b) shall
terminate, effective upon the later of (x) three years after the
Default Purchase or the termination of the Company, as applicable,
and (y) six years after the date of this Agreement;
(iii) if each ChevronTexaco Member Transfers all of its Interest to
a Person that is not a ChevronTexaco Group Entity either in
compliance with Section 7.1(c) or earlier with consent, CTTV's
obligations under this Section 11.13(a) shall terminate, effective
three years after Transfer.
During the period prior to the termination of CTTV's obligations under
this Section 11.13(b) as provided in subsections (ii) and (iii) above,
CTTV shall use its best efforts to enable the Company to utilize all
technology which CTTV has given the Company rights to use pursuant to the
Technology Agreement. In this regard, CTTV shall make available to the
Company and its Affiliates all personnel, services and facilities
necessary for this purpose. Any personnel so provided by CTTV shall be
subject to appropriate confidentiality obligations in favor of the
Company. During this period, the Company and its Affiliates may offer
employment to any CTTV employees who are associated with the Company's
Battery Business.
(c) For the avoidance of doubt, for purposes of Sections 11.13(a) and
(b), activities conducted outside the scope of the Battery Business shall
be deemed not to be in competition with the Battery Business. Except as
provided herein, each Member shall otherwise have the unqualified right to
conduct its business as it may choose, whether or not in competition with
the Company, without incurring any liability to the Company or to the
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
other Member and wholly free from any right or privilege of the Company or
the other Member.
Section 11.14 Further Assurances. The Members shall provide to each other such
------------------
information with respect to the transactions contemplated hereby (including
sales or transfers of Interests in the Company) as may be reasonably requested,
and shall execute and deliver to each other such further documents and take such
further action as may be reasonably requested by any party to this Agreement in
order to document, complete or give full effect to the terms and provisions of
this Agreement and the transactions contemplated herein.
Section 11.15 Press Releases. The Members agree to consult with each other
--------------
before issuing any press release or making any public statement with respect to
this Agreement and the transactions contemplated hereby. Neither Member shall
make any press release or other announcement respecting this Agreement without
the consent of the other unless a Member refuses to consent and the Member
desiring to make the release or other announcement is advised by its counsel
that the release or other announcement is required to comply with any Law.
Section 11.16 CTTV Non-Assertion. CTTV agrees that with respect to any
------------------
intellectual property right, including any United States patent which, on the
date of this Agreement, it or Texaco Inc. ("Texaco") owns or under which it or
Texaco has the right to grant licenses of the scope of the licenses granted in
the Technology Agreement, or any intellectual property right, including any
United States patent which may later issue on an application for patent, which
was filed during the term of the Technology Agreement, it or Texaco owns or
under which it or Texaco has the right to grant licenses of the scope of the
license granted in the Technology Agreement, CTTV will not, and will not permit
Texaco to, assert against the Company, or its vendees, mediate or immediate, any
claims for infringement based on the manufacture, use, or sale of any apparatus
made or sold by the Company within the Battery Business.
Section 11.17 ECD/OBC Non-Assertion. Each of ECD and OBC agrees that with
---------------------
respect to any intellectual property right, including any United States patent
which, on the date of this Agreement, it owns or under which it has the right to
grant licenses of the scope of the licenses granted in the Technology Agreement,
or any intellectual property right, including any United States patent which may
later issue on an application for patent, which was filed during the term of the
Technology Agreement, it owns or under which it has the right to grant licenses
of the scope of the license granted in the Technology Agreement, it will not
assert against the Company, or its vendees, mediate or immediate, any claims for
infringement based on the manufacture, use, or sale of any apparatus made or
sold by the Company within the Battery Business.
Signatures on following page
- 55 -
AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CHEVRONTEXACO TECHNOLOGY VENTURES, LLC
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------------------
Xxxxxxx X. Xxxxx
President
OVONIC BATTERY COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxxx
Chairman
ENERGY CONVERSION DEVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Xxxxxx X. Xxxxxxx
Chairman and Chief Executive Officer
AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
EXHIBIT A
TO AMENDED AND RESTATED OPERATING AGREEMENT
BUDGET PROTOCOL
1. Authority. Authority for expenditures resides in the Management Committee.
---------
2. Presentation of Budget Documents. Three months before the start of each
--------------------------------
Fiscal Year, the President will submit to the Management Committee a proposed
Annual Budget and a proposed Annual Operating Plan for that Fiscal Year.
A. Proposed Annual Budget
----------------------
The proposed Annual Budget shall contain estimates of the monthly
research and development, capital and operating expenditures required
for execution of the proposed Annual Operating Plan for each of the
twelve months in the Fiscal Year to which it applies, as well as
estimates of the annual expenditures for the following 3 Fiscal Years.
Each proposed Annual Budget shall be in substantially the same format
as the Initial Annual Budget, unless the Management Committee requests
otherwise.
B. Proposed Annual Operating Plan
------------------------------
The proposed Annual Operating Plan shall, in detail acceptable to the
Management Committee, describe the Company's Objectives for the Fiscal
Year to which it applies and the actions the Company intends to take
in furtherance of these Objectives.
3. Approval of the Budget Documents. The Management Committee shall use
--------------------------------
diligent efforts to approve an Annual Budget and Annual Operating Plan no
later than 30 days prior to the start of each Fiscal Year. Upon approval by
the Management Committee of the proposed Annual Budget and Annual Operating
Plan, the President and other authorized officers of the Company are
authorized to make expenditures and commitments in accordance with
Disbursement and Commitment Schedules approved by the Management Committee on
the activities described therein.
4. Monitoring and Cash Calls. The President will monitor the Company's actual
-------------------------
cash balances and expected monthly expenditures on a regular basis. No less
than 10 Business Days prior to the first of each month, the President shall
provide written notice to the appropriate funding Member(s) of the amount of
cash the Company requires from such Member(s) as set forth in the applicable
Disbursement and Commitment Schedule, and the funding Member(s) shall provide
or make available to the Company immediately available funds in the amount
set forth in such notice on or before the first Business Day of that month.
The President will also monitor actual and forecasted expenditures of the
Company against the forecasts contained in the Approved Annual Budget and
Annual Operating Plan and provide the Members with a written summary of this
information as of the end of each month by no later than the 15th of the
following month. In addition, the President shall present status reports on
actual versus forecasted expenditures at each Management Committee meeting.
The aggregate amount of cash requested by the President to meet the Company's
expenditures for any calendar quarter or any Fiscal Year shall not exceed the
aggregate amount covered by the applicable Disbursement and Commitment
Schedule or the applicable Approved Annual Budget, as the case may be,
without the prior approval of the Management Committee.
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
5. Adjustments to Plans and Budgets. In the event the President determines that
--------------------------------
changes beyond his delegated authority are required in the current schedule
for the Company's operations (whether as set forth in the then applicable
Disbursement and Commitment Schedule, the Annual Operating Plan or the
Approved Annual Budget), he will present his recommendations for adjustments
thereto to the Management Committee and seek its approval. Only the
Management Committee can authorize spending in excess of previously approved
levels. Such expenditures, if approved, will be authorized by the approval of
a revised Disbursement and Commitment Schedule or Annual Budget, as the case
may be.
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
EXHIBIT B
TO AMENDED AND RESTATED OPERATING AGREEMENT
DISPUTE RESOLUTION
1. The parties shall attempt to amicably settle any dispute, controversy or
claim related to this Agreement, including any dispute over the breach,
interpretation, or validity of this Agreement (all of which such possible
disputes are hereinafter collectively referred to as a "Dispute"); provided
that in no event shall either party be obligated to attempt to reach such a
settlement for more than fifteen (15) days from the date either party gives
written notice to the other party specifying that it is a Notice of Dispute
and setting forth a brief description of such Dispute (the "Issue Date").
2. If the parties are unsuccessful in their attempt to settle the Dispute, the
Dispute shall be submitted to, and settled by, binding arbitration in
Houston, Texas in accordance with this paragraph; unless the parties agree to
seek a negotiated resolution using a mediator. The arbitration shall be
conducted under the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") before a single arbitrator (the "Arbitrator") who shall
be a retired U.S. District Court judge and shall not be the mediator (if
any). In the event the parties shall not have agreed on a choice of
Arbitrator within thirty (30) days from the Issue Date, the AAA shall furnish
to each party a list of three names (each of whom shall be a retired U.S.
District Court judge) and within three (3) business days after receipt of
such list, CTTV shall strike one name and OBC and/or ECD shall strike one
name, thereby nominating the remaining person as the Arbitrator. If more than
one name remains at the end of such three business day period, the AAA will
choose an Arbitrator from the list of remaining names. In no event is the
Arbitrator authorized or empowered to award punitive or consequential damages
or damages in excess of actual direct damages. The arbitration award shall be
in writing and shall specify the factual and legal basis for the award.
Unless otherwise awarded by the Arbitrator, the cost of the arbitration will
be split equally between (a) ECD and its affiliates and (b) CTTV and its
affiliates. Judgment upon any award rendered by the Arbitrator may be entered
in any court with jurisdiction. The prevailing party shall be entitled to
reasonable attorneys' fees in any court proceeding relating to the
enforcement or collection of any award or judgment rendered by the Arbitrator
under this Agreement. To the extent any issue relating to the arbitration is
not otherwise covered by the choice of law provisions of this Agreement or
the applicable AAA rules, the law of the State of Texas shall govern such
issue.
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
3. Notwithstanding any of the foregoing, any party may request injunctive
relief and/or equitable relief from the Arbitrator or the court in order to
protect the rights or property of such party pending the resolution of the
Dispute as provided hereunder.
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AMENDED AND RESTATED OPERATING AGREEMENT
COBASYS LLC
EXHIBIT C
TO AMENDED AND RESTATED OPERATING AGREEMENT
REDUCED FUNDING GUIDELINES
The President will cause spending to be reduced as follows when an event
has occurred that requires the Company to follow "Reduced Funding Guidelines",
unless the Management Committee grants specific permission for a variance:
o No purchase orders for new capital assets or real property shall be
issued.
o All purchases of materials, supplies, outside services, etc. will be
minimized or eliminated, as appropriate, including the elimination
of non-essential expenditures.
o Out-of-pocket expenses will be minimized or eliminated, as
appropriate, including the elimination of non-essential expenditures.
o No new employees will be hired. Current employees will be retained
but non-essential overtime will be eliminated.
o No leases for facilities or equipment will be entered into and no
debt will be incurred.
The guidelines above shall apply to all expenditures in connection with the
Company's operations.
- 1 -
