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EXHIBIT 3.11
OPERATING AGREEMENT
OF
KEY MEXICO A, L.L.C.
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TABLE OF CONTENTS
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Article 1 Organization of Company 1
1.1 Formation 1
1.2 Name and Office 1
1.3 Duration 1
1.4 Registered Office and Resident Agent 1
Article 2 Definitions 1
Article 3 Purposes 5
Article 4 Capital Contributions; Borrowings 6
4.1 Initial Contributions of Members 6
4.2 Additional Capital Contributions 6
4.3 Withdrawals 6
4.4 Borrowings 6
4.5 Additional Members 6
Article 5 Management 6
5.1 Powers of the Members 6
5.2 Limitations on Powers 7
5.3 Self Dealing 7
5.4 Standard of Care; Liability 8
5.5 Reimbursement 8
5.6 Delegation of Authority 8
Article 6 Meetings of Members 9
6.1 Voting 9
6.2 Meetings 9
6.3 Consent 9
Article 7 Capital Accounts; Profits and Losses;
Distributions 10
7.1 Capital Accounts 10
7.2 Allocation of Profits and Losses 10
7.3 Distributions 11
7.4 Other Allocations 11
7.5 Share of Excess Nonrecourse Liabilities 14
Article 8 Limitation of Liability; Indemnification 15
8.1 Limitation of Liability 15
8.2 Liability of Member to the Company 15
8.3 Indemnification 15
(i)
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Article 9 Term of Company 16
9.1 Commencement 16
9.2 Dissolution 16
Article 10 Application of Assets 16
Article 11 Assignability of Interests 17
11.1 Permitted Assignments 17
11.2 Admission of Assignees as Members 17
11.3 Restrictions on Transfers 18
11.4 Section 754 Election 18
Article 12 Arbitration 18
Article 13 Investment Representation 19
Article 14 Amendments 19
Article 15 Miscellaneous Provisions 19
15.1 Books of Account; Reports 19
15.2 Bank Accounts and Investment of Funds 20
15.3 Accounting Decisions 20
15.4 Federal Income Tax Elections 20
15.5 Entire Agreement 20
15.6 Notices 20
15.7 Further Execution 21
15.8 Binding Effect 21
15.9 Severability 21
15.10 Captions 21
15.11 Counterparts 21
15.12 Michigan Law to Control 21
Exhibit A A-1
(ii)
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OPERATING AGREEMENT
OF
KEY MEXICO A, L.L.C.
THIS OPERATING AGREEMENT of KEY MEXICO A, L.L.C., a Michigan limited
liability company ("Company"), is made and entered into as of March 27, 1997 by
and among the Company and those persons whose names are set forth on attached
Schedule A and are made a part of this Operating Agreement and those persons
who are later admitted as members (individually, "Member," and collectively,
"Members") who agree as follows:
ARTICLE 1
ORGANIZATION OF COMPANY
1.1 Formation. The Company has been organized as a Michigan limited
liability company pursuant to the provisions of the Act and this Agreement.
1.2 Name and Office. The name of the Company shall be Key Mexico A,
L.L.C., and its office shall be located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place as the Majority Interest may
determine from time to time.
1.3 Duration. The Company shall continue in existence for the period
fixed in the Articles for the duration of the Company or until the Company
shall be sooner dissolved and its affairs wound up in accordance with the Act
or this Agreement.
1.4 Registered Office and Resident Agent. The Company's initial
registered office shall be at the office of its resident agent at ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and the name of its initial
resident agent at such address shall be ▇▇▇▇▇ ▇. ▇▇▇▇▇▇. The registered office
and resident agent may be changed from time to time in accordance with the Act.
If the resident agent shall ever resign, the Company shall promptly appoint a
successor.
ARTICLE 2
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
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The "Act" means the Michigan Limited Liability Company Act being Act No.
23, Public Acts of 1993, as amended.
"Adjusted Deficit Capital Account Balance" means, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of the
end of the relevant Company Fiscal Year, (1) increased by any amounts which
such Member is obligated to restore under Treasury Regulation Section
1.704-1(b)(2)(ii)(c), plus an amount equal to such Member's share of Company
Minimum Gain and such Member's share of Member Nonrecourse Debt Minimum Gain
and (2) decreased by the items described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6). This definition of Adjusted Capital
Account Deficit is intended to comply with the provisions of Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d) and 1.704-2, and will be interpreted
consistently with those provisions.
"Affiliate" means (i) any person directly or indirectly controlling,
controlled by or under common control with another person, (ii) a person owning
or controlling ten percent (10%) or more of the outstanding voting securities
of such other person, (iii) any officer, director, member or partner of such
person, or (iv) a person who is an officer, director, member, partner or holder
of ten percent (10%) or more of any of the voting interests of any person
described in clauses (i) through (iii) of this sentence.
"Agreement" means this Operating Agreement and amendments adopted in
accordance with this Agreement and the Act.
The "Articles" means the Articles of Organization, including any
restatements or amendments, which are filed with the Michigan Department of
Consumer & Industry Services.
"Book Value" means with respect to any asset, the asset's adjusted basis
for federal income tax purposes, except as follows:
(a) the initial Book Value of any asset contributed (or deemed
contributed) to the Company shall be such asset's gross fair
market value at the time of such contribution;
(b) the Book Value of all Company assets shall be adjusted to equal
their respective gross fair market values at the times specified
in Treasury Regulations under Code Section 704(b) if the
Company so elects;
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(c) if the Book Value of an asset has been determined pursuant to
clause (a) or (b), such Book Value shall thereafter be adjusted
by the Depreciation taken into account with respect to such
asset for purposes of computing Profits and Losses.
"Capital Accounts" shall have the meaning set forth in Section 7.1 of this
Agreement.
"Capital Contributions" means the amount of cash, property, or services
contributed or obligated to be contributed to the Company by a Member.
The "Code" means the Internal Revenue Code, as amended.
"Company Minimum Gain" means an amount determined in accordance with
Treasury Regulation Section 1.704-2(d) for partnership minimum gain by
computing, with respect to each nonrecourse liability of the Company (as
defined in Treasury Regulation Section 1.752-1(a)(2)), the amount of gain (of
whatever character), if any, that would be realized by the Company if (in a
taxable transaction) it disposed of property subject to such liability in full
satisfaction thereof, and by then aggregating the amounts so computed.
"Depreciation" means for each Fiscal Year of the Company or other period,
an amount equal to the depreciation, amortization or other cost recovery
deduction allowable under the Code 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, Depreciation shall 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 is
zero, Depreciation shall be determined with reference to such beginning Book
Value using any reasonable method selected by the Majority Interest.
"Distributable Cash" means, at any time, that portion of the cash and cash
equivalent assets of the Company which, in light of the Company's then current
and foreseeable sources of, and needs for, cash, exceeds the amount of cash
needed by the Company, as determined by the Majority Interest, to (i) service
its debts and obligations in a timely fashion, (ii) maintain adequate working
capital and reserves, and (iii) conduct its business and carry out its
purposes.
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The "Fiscal Year" of the Company, and its taxable year for Federal income
tax purposes, shall be the calendar year.
"Insolvent" means such time as when the value of the Company's assets
become less than the sum of its liabilities or the Company becomes unable to
pay its debts as they become due in the usual course of business.
"Majority Interest" means those Members holding more than 50% of the
Membership Percentages held by the Members.
"Majority Interest of the Remaining Members" means Members holding more
than 50% of the Membership Percentages and Capital Account Balances of the
Members entitled to vote (other than the Member triggering dissolution under
Section 9.2(d)).
"Member Nonrecourse Debt" shall have the meaning, and be determined in the
same manner as, partner nonrecourse debt pursuant to Treasury Regulation
Section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" means the amount, with respect to
each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a nonrecourse liability
of the Company, determined in the same manner as partner nonrecourse debt
minimum gain in accordance with Treasury Regulation Section 1.704-2(i)(3).
"Member Nonrecourse Deductions" shall have the meaning, and be determined
in the same manner as, partner nonrecourse deduction pursuant to Treasury
Regulation Section 1.704-2(i)(2).
"Members" are the persons designated as such in Exhibit A. Any reference
to a Member shall, unless the context clearly requires otherwise, include a
reference to his predecessor and successor (other than a mere assignee not made
a substitute Member) in interest.
"Membership Percentages" means the Members' respective interests in the
Company as set forth in Exhibit A, as amended from time to time. "Nonrecourse
Deductions" shall have the meaning set forth in Treasury Regulation Section
1.704-2(c).
"Profits and Losses" means the Company's taxable income or loss for each
Fiscal Year (or other period) determined in accordance with the accounting
methods followed by the Company for federal income tax purposes (for this
purpose all items of income, gain, loss or deduction required to be separately
stated pursuant to Code Section 703(a)(1)
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shall be included in taxable income or loss) as determined by the independent
certified public accountants employed by the Company, with the following
adjustments:
(a) any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Profits and Losses
shall be added to such taxable income or loss:
(b) any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures under Code
Section 704(b) and not otherwise taken into account in computing Profits and
Losses shall be subtracted from such taxable income or loss;
(c) in the event the Book Value of any Company asset is
adjusted, the amount of such adjustment shall be taken into account as gain or
loss from the disposition of such asset for purposes of computing Profits or
Losses;
(d) any 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 such
property rather than its adjusted tax basis;
(e) in lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year or other
period; and
(f) notwithstanding the foregoing, any items which are
specially allocated pursuant to Section 7.4 shall not be taken into account in
computing Profits and Losses.
"Treasury Regulations" includes proposed, temporary and final regulations
promulgated under the Code and the corresponding sections of any regulations
subsequently issued that amend or supersede such regulations.
All references to statutory provisions shall be deemed to include
reference to corresponding provisions of subsequent law.
ARTICLE 3 PURPOSES
The Company may engage in any lawful business permitted by the Act or the
laws of any jurisdiction in which the Company may do business. The Company
shall have the authority to do all things necessary or convenient to
accomplishment of its purposes and to operate its business,
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including all powers granted by the Act.
ARTICLE 4
CAPITAL CONTRIBUTIONS; BORROWINGS
4.1 Initial Capital Contributions of Members. Each of the Members
has made an initial capital contribution and owns a Membership Percentage in
the Company as set forth on Schedule A, as amended. No interest shall accrue
on any Capital Contribution made to the Company unless otherwise agreed by the
Members in writing or otherwise provided in this Agreement.
4.2 Additional Capital Contributions. Additional Capital
Contributions shall be made by the Members to the Company only upon the
unanimous consent of the Members.
4.3 Withdrawals. No Member shall be entitled to be repaid any
portion of his Capital Contribution or withdraw from the Company except as
provided in this Agreement. A Member who withdraws in violation of this
Agreement shall not be entitled to receive the fair market value of his
interest after the withdrawal but shall only be entitled to distributions he
otherwise would have received as a non-withdrawing Member.
4.4 Borrowings. The Company may borrow sums for Company purposes
from any source, including any Member, provided that such borrowing is not
prohibited by any applicable law or regulation and is approved as required
under Section 5 of this Agreement.
4.5 Additional Members. No additional Members shall be admitted to
the Company without the unanimous consent of all Members.
ARTICLE 5
MANAGEMENT
5.1 Powers of the Members.
(a) The Company shall be managed by the Members in proportion to
their Membership Percentages. Each Member shall have the power to do all
things appropriate to the accomplishment of the purposes of the Company,
including (but not limited to): (1) entering into any and all agreements and
executing contracts, notes, mortgages and other writings; (2) paying all
Company obligations including construction cost expenditures and property
management fees; (3) purchasing and maintaining insurance on behalf of the
Company and its Members and employees or agents against any liability or
expense asserted against or incurred by the Company or such persons; (4)
transacting the Company's business under an assumed name or name other than its
name as set forth in the Articles and
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filing a Certificate of Assumed Name with the Michigan Department of Commerce;
(5) appointing any Member or other person as agent for service of process on
the Company as required by the law of any state in which the Company transacts
business; (6) commencing, prosecuting or defending any proceeding in the
Company's name; (7) participating with others in partnerships, joint ventures,
and other associations of any kind; and (8) doing such other acts as may
facilitate the Company's business.
(b) Every contract, lease, deed or other instrument executed
by a Member or Members holding a Majority Interest of the Membership
Percentages shall be conclusive evidence, at the time of execution, that this
Company was then in existence, that this Agreement had not theretofore been
terminated or amended in any manner not disclosed in the Articles and that the
execution and delivery of such instrument was duly authorized by the Members.
(c) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall act as "tax matters Partner" of the
Company, as defined in Code Section 6231(a)(7).
5.2 Limitations on Powers. Notwithstanding the foregoing and any
other provision contained in this Agreement to the contrary, no act shall be
taken, sum expended, decision made, obligation incurred or power exercised by
any Member on behalf of the Company except by the consent of all of the Members
with respect to (a) the assignment, transfer, pledge, compromise or release of
any of the claims of or debts due the Company (except upon payment in full) or
arbitrate or consent to the arbitration of any of the disputes or controversies
of the Company; (b) any merger of the Company; (c) a transaction involving an
actual or potential conflict of interest between a Member and the Company; (d)
any change in the character of the business and affairs of the Company; (e) the
commission of any act which would make it impossible for the Company to carry
on its ordinary business and affairs; or (f) any act that would contravene any
provision of the Articles or this Agreement or the Act.
5.3 Self Dealing. Any Member and any Affiliate of a Member may deal
with the Company, directly or indirectly, as vendor, purchaser, employee, agent
or otherwise. No contract or other act of the Company shall be voidable or
affected in any manner by the fact that a Member or his Affiliate is directly
or indirectly interested in such contract or other act apart from his interest
as a Member, nor shall any Member or his Affiliate be accountable to the
Company or the other Members in respect of any profits directly or indirectly
realized by him by reason of such contract or other act, and such interested
Member shall be eligible to vote or take any
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other action as a Member in respect of such contract or other act as it would
be entitled were he or his Affiliate not interested therein. Notwithstanding
the foregoing provisions of this Section 5.3, (a) any direct or indirect
interest of a Member or Affiliate of a Member in any contract or other act,
other than his interest as a Member, shall be disclosed to all other Members,
(b) such contract or other act shall be approved by a Majority Interest of the
Members unless the same is specifically authorized herein, and (c) the Members
shall not receive or hold any property of the Company as collateral security in
respect of any claim against the Company.
5.4 Standard of Care; Liability. Each Member shall discharge his
management duties in good faith, with the care an ordinarily prudent person in
a like position would exercise under similar circumstances, and in a manner he
reasonably believes to the be in the best interests of the Company as required
by the Act. A Member shall not be liable for monetary damages to the Company
for any breach of any such management duties except for (i) actions
constituting fraud, willful misconduct or gross negligence, (ii) actions taken
by a Member in violation of this Agreement, (iii) the receipt of a financial
benefit to which the Member is not entitled, (iv) voting for or assenting to a
distribution to Members in violation of this Agreement or the Act, or (v) a
knowing violation of the law.
5.5 Reimbursement. Members shall receive no compensation for
managing the affairs of the Company unless approved by an affirmative vote of a
Majority Interest. Members shall be entitled to reimbursement from the Company
of all expenses of the Company reasonably incurred and paid for by such Member
on behalf of the Company.
5.6 Delegation of Authority. The Members, acting by Majority
Interest and by a written instrument, may from time to time delegate all or any
of their powers or duties hereunder to one or more Members. Any Member may by
written instrument delegate any of his powers and duties to any other Member,
in which event any exercise or performance of such powers or duties by such
Member shall be treated as the action of the delegating Member as well as the
acting Member. Any Member making such delegation shall be permitted to revoke
the delegation at any time by written notice to the other Members and the
Company.
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ARTICLE 6
MEETINGS OF MEMBERS
6.1 Voting. All Members shall be entitled to vote on any matter
submitted to a vote of the Members. Unless a greater vote is required by the
Act, the Articles, or this Agreement, the affirmative vote or consent of a
Majority Interest of all the Members entitled to vote or consent on such matter
shall be required.
6.2 Meetings. An annual meeting of Members for the transaction of
such business as may properly come before the Meeting, shall be held at such
place, on such date and at such time as the Majority Interest shall determine.
Special meetings of Members for any proper purpose or purposes may be called at
any time by the holders of at least twenty-five percent (25%) of the Membership
Percentages of all Members. The Company shall deliver or mail written notice
stating the date, time, place and purposes of any meeting to each Member
entitled to vote at the meeting. Such notice shall be given not less than ten
(10) nor more than sixty (60) days before the date of the meeting. Meetings
may be conducted in person or by telephone conference of the Members upon the
consent of the Majority Interest.
6.3 Consent. Any action required or permitted to be taken at an
annual or special meeting of the Members may be taken without a meeting,
without prior notice, and without a vote, if consents in writing, setting forth
the action so taken, are signed by the Members having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all Members entitled to vote on the action were present and
voted. Every written consent shall bear the date and signature of each Member
who signs the consent. Prompt notice of the taking of action without a meeting
by less than unanimous written consent shall be given to all Members who have
not consented in writing to such action. In addition, the Company may give all
the Members written notice of the action, event or agreement and state in the
notice that any Member who does not indicate his disapproval by written notice
to the Company within a specified period of time (not less than 30 days after
mailing of the notice) shall be deemed to have given his consent or approval to
the action or event or to have made the agreement referred to in the notice.
In such event, any Member who does not indicate his disapproval by written
notice to the Company within the time specified shall be deemed to have given
his written consent, approval or agreement.
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ARTICLE 7
CAPITAL ACCOUNTS; PROFITS AND LOSSES; DISTRIBUTIONS
7.1 Capital Accounts. A capital account shall be maintained for each
Member, to which contributions, Profits and any items of income and gain under
Section 7.4 shall be credited and against which distributions and Losses and
any items of deduction and loss under Section 7.4 shall be charged. Capital
accounts shall be maintained in accordance with the accounting principles of
Code Section 704 and the regulations thereunder.
7.2 Allocation of Profits and Losses. Except as provided in Section
7.2(c) and (d) and after giving effect to the special allocations set forth in
Section 7.4, to the extent applicable, Profits and Losses for any Fiscal Year
shall be allocated to the Members:
(a) First, in the case of Profits, to any Member in an amount
up to, but not exceeding, the aggregate amount of Losses previously allocated
to that Member in accordance with the second sentence of Section 7.2(c); and
(b) Second, in the case of either Profits or Losses, to the
Members in accordance with their Membership Percentages.
(c) The Losses allocated pursuant to Section 7.2(b) shall not
exceed the maximum amount of Losses that can be so allocated without causing
any Member to have an Adjusted Capital Account Deficit at the end of any Fiscal
Year. In the event some but not all of the Members would have Adjusted Capital
Account Deficits as a consequence of an allocation of Losses pursuant to
Section 7.2(b), the limitation set forth in this Section 7.2(c) will be applied
on a Member by Member basis so as to allocate the maximum permissible Losses to
each Member under Treasury Regulations Section 1.704-1(b)(2)(ii)(d). In the
event all Members have Adjusted Capital Account Deficits, Losses shall be
allocated in accordance with Section 7.2(b) hereof.
(d) If there is an addition, withdrawal or substitution of,
or any other change in the interest of, any Member during the period covered by
an allocation, then subject to any agreement between the persons affected, the
Profits and Losses for the period shall be allocated among the varying
interests consistent with the provisions of Code Section 706(d) and any
regulations promulgated thereunder. If Code Section 706(d) or any regulation
thereunder allow alternative methods of allocation, the Majority Interest shall
determine, in its
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sole discretion, which alternative methods to use in allocating Profits and
Losses among the varying interests.
7.3 Distributions. (a) The Company shall distribute to the Members
from time to time, as determined by the Majority Interest, Distributable Cash
of the Company. Except as provided in Section 10, all distributions shall be
made to the Members in proportion to their respective Membership Percentages on
the date of the distribution.
(b) No distributions shall be declared and paid unless, after
the distribution is made, the Company would be able to pay its debts as they
become due in the usual course of business and the assets of the Company are in
excess of the sum of: (i) the Company's liabilities, plus (ii) the amount that
would be needed to satisfy the preferential rights of other Members upon
dissolution that are superior to the rights of the Members(s) receiving the
distribution.
7.4 Other Allocations. Notwithstanding the foregoing provisions of
this Section 7 or any other provision of this Agreement, the following
provisions shall apply:
(a) Compliance With Treasury Regulations. It is anticipated
that the Company will be treated as a partnership for federal income tax
purposes and, accordingly, the partnership tax provisions of the Code shall
apply to the Company and its Members. It is the intent of the Members that
each Member's distributive share of income, gain, loss, deduction, or credit
(or item thereof) shall be determined and allocated in accordance with this
Section 7 to the fullest extent permitted by Section 704(b) of the Code. In
order to preserve and protect the determinations and allocations provided for
in this Section 7, the Majority Interest is authorized and directed to allocate
income, gain, loss, deduction, or credit (or item thereof) arising in any year
differently than otherwise provided for in this Section 7 to the extent that
allocating income, gain, loss, deduction, or credit (or item thereof) in the
manner provided for in this Section 7 would cause the determinations and
allocations of each Member's distributive share of income, gain, loss,
deduction, or credit (or item thereof) not to be permitted by Section 704(b) of
the Code and Treasury Regulations promulgated thereunder. Any allocation made
pursuant to this Section 7.4 shall be deemed to be a complete substitute for
any allocation otherwise provided for in this Section 7 and no amendment of
this Agreement or approval of any Member shall be required. The terms used in
this Section 7 shall have the same meaning as in such Treasury Regulations.
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(b) Only Required Modifications. In making any allocation
(the "new allocation") under Section 7.4, the Majority Interest is authorized
to act only after having been advised by the Company's accountants that, under
Section 704(b) of the Code and the Treasury Regulations thereunder (i) the new
allocation is necessary, and (ii) the new allocation is the minimum
modification of the allocations otherwise provided for in this Section 7
necessary in order to assure that, either in the then current year or in any
preceding year, each Member's distributive share of income, gain, loss,
deduction, or credit (or item thereof) is determined and allocated in
accordance with this Section 7 to the fullest extent permitted by Section
704(b) of the Code and the Treasury Regulations thereunder.
(c) Company Minimum Gain Chargeback. If there is a net
decrease in Company Minimum Gain during a Company Fiscal Year so that an
allocation is required by Treasury Regulation Section 1.704-2(f), then each
Member shall be specially allocated items of income and gain for such year
(and, if necessary, subsequent years) equal to such Member's share of the net
decrease in Company Minimum Gain as determined by Treasury Regulation Section
1.704-2(g)(2). Such allocations shall be made in a manner and at a time which
will satisfy the requirements of Treasury Regulation Section 1.704-2(f)(1) and
shall be interpreted consistently therewith.
(d) Member Minimum Gain Chargeback. If there is a net
decrease in the Member Nonrecourse Debt Minimum Gain during any Fiscal Year,
any Member who has a share of such Member Nonrecourse Debt Minimum Gain (as
determined in the same manner as partner nonrecourse debt minimum gain under
Treasury Regulation Section 1.704-2(i)(5)) shall be specially allocated items
of income or gain for such year (and, if necessary, subsequent Fiscal Years)
equal to such Member's share of the net decrease in the Member Nonrecourse Debt
Minimum Gain in the manner and to the extent required by Treasury Regulation
Section 1.704-2(i)(4) and shall be interpreted consistently therewith.
(e) Qualified Income Offset. If a Member unexpectedly
receives an adjustment, allocation, or distribution described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), any of which causes or
increases an Adjusted Deficit Capital Account Balance in such Member's capital
account, then he will be specially allocated items of income and gain in an
amount and manner sufficient to eliminate such deficit balance created or
increased by such adjustment, allocation, or distribution as quickly as
possible; provided, however, an allocation pursuant to this Section 7.4(e) will
be made if and only to the extent that such Member would have an Adjusted
Capital Account Deficit after all other
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allocations provided for in Section 7 have been tentatively made as if this
Section 7.4(e) were not in the Agreement.
(f) Gross Income Allocation. If a Member has an Adjusted
Deficit Capital Account Balance at the end of a Company taxable year, such
Member shall be allocated items of income and gain in the amount of such
Adjusted Deficit Capital Account Balance as quickly as possible in order to
eliminate it.
(g) Allocation of Nonrecourse Deductions. Nonrecourse
Deductions shall be allocated among the Members in proportion to their
respective Membership Percentages.
(h) Member Nonrecourse Deductions. Any Member Nonrecourse
Deductions shall be allocated to the Member who bears the economic risk of loss
with respect to the Member Nonrecourse Debt to which such Member Nonrecourse
Deductions are attributable in accordance with Treasury Regulation Section
1.704-2(i)(1).
(i) Curative Allocations. If the Company is required by
Section 7.4(a),(c),(d),(e),(f),(g), or (h) to make any new allocation in a
manner other than as provided for in this Section 7 without regard thereto,
then the Majority Interest is authorized and directed, insofar as it is
permitted to do so by Section 704(b) of the Code, to allocate income, gain,
loss, deduction, or credit (or item thereof) arising in the current Fiscal Year
(or subsequent Fiscal Years, if necessary) in such manner so as to bring the
proportions of income, gain, loss, deduction, or credit (or item thereof)
allocated to the Members as nearly as possible to the proportion otherwise
contemplated by this Section 7 without regard thereto; provided, however, that
Nonrecourse Deductions shall not be taken into account except to the extent
that there has been a reduction in Company Minimum Gain and Member Nonrecourse
Deductions shall not be taken into account except to the extent that there has
been a reduction in Member Minimum Gain and provided further that such
Nonrecourse Deductions and Member Nonrecourse Deduction shall not in any event
be taken into account to the extent that the Majority Interest reasonably
determines that such allocations are likely to be offset by subsequent
allocations pursuant to Section 7.4(c) or (d).
(j) Advice of Accountants. Allocations made by the Majority
Interest under this Section 7.4 in reliance upon the advice of the Company's
accountants shall be deemed to be made pursuant to any fiduciary obligation to
the Company and the Members.
(k) Section 754 Election. To the extent an adjustment to the
adjusted tax basis of any Company asset
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pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining capital accounts, the amount of such adjustment to the capital
accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreased such basis) and such
gain or loss shall be specially allocated to the Members in a manner consistent
with the manner in which their capital accounts are required to be adjusted
pursuant to such Section of the Regulations.
(l) Imputed Interest. If any Member makes a loan to the
Company, or the Company makes a loan to any Member, and interest in excess of
the amount actually payable is imputed under Code Sections 7872, 483, or 1271
through 1288 or corresponding provisions of subsequent Federal income tax law,
then any item of income or expense attributable to any such imputed interest
shall be allocated solely to the Member who made or received the loan and shall
be credited or charged to his capital account, as appropriate.
(m) Contributed Property. Income, gain, loss or deduction
with respect to any property contributed by a Member shall, solely for tax
purposes, be allocated among the Members, to the extent required by Code
Section 704(c) and the related Treasury Regulations, to take account of the
variation between the adjusted tax basis of such property and its Book Value at
the time of contribution to the Company. If the Book Value of any Company
property is adjusted as provided in Treasury Regulation Section
1.704-1(b)(2)(iv), subsequent allocations of income, gain, loss and deduction
and the Book Value of such property shall be adjusted as provided in Code
Section 704(c) and the related Treasury Regulations. If Code Section 704(c)
and the regulations thereunder allow alternative methods of making such
acquired allocations, the Majority Interest shall determine, in their sole
discretion, which alternative method to use. Allocations under this Section
7.4(m) are solely for purposes of federal, state and local taxes and shall 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.
7.5 Share of Excess Nonrecourse Liabilities. For purposes of
calculating the Members' shares of "excess nonrecourse liabilities" of the
Company (within the meaning of Treasury Regulation Section 1.752-3(a)(3)), the
Members intend that they be considered as sharing profits of the Company in
proportion to their respective Membership Percentages.
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ARTICLE 8
LIMITATION OF LIABILITY; INDEMNIFICATION
8.1 Limitation of Liability. Unless otherwise provided by this
Agreement, the Act, or expressly assumed, a person who is a Member shall not be
liable for the acts, debts or liabilities of the Company beyond his respective
Capital Contribution.
8.2 Liability of Member to the Company. A Member who knowingly
receives a distribution made by the Company which is either in violation of
this Agreement or when the Company is Insolvent, is liable to the Company for
the repayment of the distribution.
8.3 Indemnification. Except as otherwise provided in this Section
8.3, the Company shall indemnify any Member (and may indemnify any employee or
agent of the Company), who was or is a party or is threatened to be made a
party to a threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative, or investigative, and whether formal or
informal (other than an action by or in the right of the Company) by reason of
the fact that such person is or was a Member, employee or agent of the Company
against expenses (including attorneys' fees), judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with the action, suit or proceeding, if the person acted in good
faith, with the care an ordinarily prudent person in a like position would
exercise under similar circumstances, and in a manner that such person
reasonably believed to be in the best interests of the Company, and with
respect to a criminal action or proceeding, if such person had no reasonable
cause to believe such person's conduct was unlawful. To the extent that a
Member, employee or agent of the Company has been successful on the merits or
otherwise in defense of an action, suit or proceeding referred to in this
Section 8.3, or in defense of any claim, issue or other matter in the action,
suit or proceeding, such person shall be indemnified against actual and
reasonable expenses (including attorneys' fees) incurred by such person in
connection with the action, suit or proceeding and any action, suit or
proceeding brought to enforce the mandatory indemnification provided herein.
Any indemnification permitted under this Section 8.3 (unless ordered by a
court) shall be made by the Company only as authorized in the specific case
upon a determination that the indemnification is proper under the circumstances
because the person to indemnify has met the applicable standard of conduct and
upon an evaluation of the reasonableness of expenses and amount paid in
settlement. This determination and evaluation shall be made by the Majority
Interest of the Members who are not parties or threatened to be made parties to
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the action, suit or proceeding. Notwithstanding anything in this Section 8.3
to the contrary, no indemnification shall be provided to any Member, employee
or agent of the Company for or in connection with the receipt of a financial
benefit to which such person is not entitled, voting for or assenting to a
distribution to Members in violation of this Agreement or Act, or a knowing
violation of law.
ARTICLE 9
TERM OF COMPANY
9.1 Commencement. The term of the Company began on the date the
Articles of Organization were filed with the Michigan Department of Consumer &
Industry Services and became effective under the Act, March 27, 1997.
9.2 Dissolution. The Company shall be dissolved and its affairs be
wound up upon the occurrence of any of the following events:
(a) December 31, 2035;
(b) The sale or other disposition of substantially all of the
assets of the Company;
(c) By the written consent of Members holding at least 75% of
the Membership Percentages in the Company;
(d) The death, withdrawal, expulsion, bankruptcy, or
dissolution of a Member or the occurrence of any other event that terminates
the continued membership of a Member in the Company; provided, however, that
the Company's existence shall not terminate if within 90 days after such event,
a Majority Interest of the Remaining Members elect to reconstitute and continue
the business of the Company and to the admission of one or more Members as
necessary; or
(e) Upon entry of a decree of judicial dissolution.
ARTICLE 10
APPLICATION OF ASSETS
Upon dissolution of the Company, the Company shall cease carrying on its
business and affairs and shall commence winding up of the Company's business
and affairs and complete the winding up as soon as practicable. The Company
affairs shall be concluded by a Member or Members selected in writing by the
Majority Interest. The assets of the Company may be liquidated or distributed
in kind, as determined by the Majority Interest, and the same shall first be
applied to the
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payment of, or to a reserve for the payment of Company liabilities (including
such provision for contingent or unforeseen liabilities as the Majority
Interest deems appropriate) and then to the Members in accordance with their
respective positive Capital Accounts after allocations pursuant to Sections 7.2
and 7.4 for the current Fiscal Year. If Company assets are distributed in
kind, the assets so distributed shall be valued at their current fair market
values and the unrealized appreciation or depreciation in value of the assets
shall be allocated to the Members' Capital Accounts in the manner described in
Section 7.2 and 7.4 as if such assets had been sold, and such assets shall then
be distributed to the Members in accordance with their respective positive
Capital Accounts as so adjusted. To the extent that Company assets cannot
either be sold without undue loss or readily divided for distribution in kind
to the Members, then the Company may, as determined by the Majority Interest,
convey those assets to a trust or other suitable holding entity established for
the benefit of the Members in order to permit the assets to be sold without
undue loss and the proceeds thereof distributed to the Members at a future
date. The legal form of the holding entity, the identity of the trustee or
other fiduciary, and the terms of its governing instrument shall be determined
by the Majority Interest.
ARTICLE 11
ASSIGNABILITY OF INTERESTS
11.1 Permitted Assignments. Subject to the provisions of Section 11,
a Member may assign his interest in the Company in whole or part. Such
assignment shall not of itself substitute the assignee as a Member or entitle
the assignee to participate in the management of the Company. Such assignee is
only entitled to receive, to the extent assigned, the distributions the
assigning Member would otherwise be entitled to. Unless otherwise provided,
the assignor shall remain a Member liable for payment of any remaining
installments of Capital Contributions due with respect to the interest
assigned. No assignment of a Company interest shall be effective with respect
to the Company until written notice is given to the Company.
11.2 Admission of Assignees as Members. Except as provided in
Sections 11.3 and 12.1, an assignee shall be admitted as a Member only upon the
unanimous written consent of all the Members. As a condition of such consent,
the Members may require a substitute Member to comply with the following
requirements: (i) the assignment instrument being in form and substance
satisfactory to the Majority Interest and the Company's counsel; (ii) the
assignor and assignee named therein having executed and acknowledged such other
instrument or
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instruments as the Majority Interest may deem necessary or desirable to
effectuate such admission; (iii) the assignee having accepted and adopted all
of the terms and provisions of the Agreement, as the same may have been
amended, as if the assignee were a party who joined in the execution of this
Agreement; and (iv) such assignee having paid or acknowledged an obligation to
pay, as the Majority Interest may determine, all reasonable expenses (including
attorneys' fees) connected with such admission. If admitted, the substitute
Member has, to the extent assigned, all of the rights and powers, and is
subject to all the restrictions and liabilities of a Member.
11.3 Restrictions on Transfers. Notwithstanding the other provisions
of this Section 11, no Member shall sell, assign, transfer, exchange, mortgage,
pledge, grant, hypothecate, or otherwise dispose of any interest in the Company
except in compliance with Section 11.3. No Member shall dispose of his
interest in Company without the prior written consent of all the Members (1) if
the effect of the assignment would be to terminate the Company within the
meaning of Code Section 708(b), or (2) without an opinion of counsel in form
and substance satisfactory to counsel for the Company that registration is not
required under the Securities Act of 1933 and applicable state law. In no
event shall any Member assign his interest in the Company if such assignment
would violate any applicable state or Federal securities law. The Members
acknowledge that their interests in the Company have not been registered under
the Michigan Uniform Securities Act and agree that such interests will not be
transferred without registration under said Act or exemption therefrom. Any
attempted disposition of a Member's interest in the Company in violation of
Section 11 shall be null and void ab initio.
11.4 Section 754 Election. In the event of the transfer of a Member's
interest in the Company by sale or exchange, or upon the death of a Member, the
Company, if the person acquiring such interest so requests, shall elect
pursuant to Code Section 754, to adjust the basis of the Company property.
Each Member hereby agrees to provide the Company with all information necessary
to give effect to such election. The transferee shall reimburse the Company
for any reasonable costs incurred as a result of such election, as determined
by the Majority Interest.
ARTICLE 12
ARBITRATION
Any disputes arising out of this Agreement which cannot be resolved by the
Members themselves or pursuant to the terms of this Agreement shall be
submitted to arbitration in accordance with the rules of the American
Arbitration Association, and judgment may be entered upon the award of the
arbitrators in a court of competent jurisdiction.
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ARTICLE 13
INVESTMENT REPRESENTATION
Each Member represents and warrants to each other and to the Company he is
acquiring his respective interest in the Company for his own personal account
for investment, and without a view to transferring, reselling, or distributing
such interest. In addition, no Member shall sell or dispose of his interest in
the Company in a manner that violates any Federal or state securities laws.
Each Member shall indemnify and hold the Company harmless from and against all
liability, costs and expenses, including reasonable attorneys' fees, incurred
by the Company or the Members, as a result of a breach of the representations
and warranties made in this Section 14 by such Member.
ARTICLE 14
AMENDMENTS
This Agreement may be amended only by written agreement of all the
Members; provided, however, that this Agreement may be amended by the Majority
Interest to the extent necessary to permit the allocations and distributions
contained in this Agreement to be sustained under existing or future Federal
income tax laws and regulations.
ARTICLE 15
MISCELLANEOUS PROVISIONS
15.1 Books of Account; Reports. (a) The Company shall keep true and
complete books of account and records of all Company's business and affairs as
required by the Act. The books of account and records shall be kept at the
principal office of the Company. The Company shall maintain at such office (i)
a list of names and addresses of all Members; (ii) a copy of the Articles
together with executed copies of all powers of attorney pursuant to which the
Articles have been executed; (iii) copies of the Company's Federal, state and
local income tax returns and reports for the three most recent years; (iv)
copies of the Company's current Agreement and (v) copies of the financial
statements of the Company for the three most recent years. Such Company
records shall be available to any Member or his designated representative
during ordinary business hours at the reasonable request and expense of such
Member.
(b) The Company will use its best efforts to furnish, or
cause to be furnished, the following items on the dates indicated:
(1) an annual report consisting of an income statement
for the prior year and a balance sheet as of the year ended - annually.
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(2) Member information tax returns (Schedule K-1) -
March 15.
15.2 Bank Accounts and Investment of Funds. All funds of the Company
shall be deposited in its name in such checking accounts, savings accounts,
time deposits, or certificates of deposit or shall be invested in such other
manner, as shall be designated by the Majority Interest from time to time.
Withdrawals shall be made upon such signature or signatures as the Majority
Interest may designate.
15.3 Accounting Decisions. All decisions as to accounting matters,
except as specifically provided to the contrary herein, shall be made by the
Majority Interest in accordance with generally accepted accounting principles
consistently applied. Such decisions shall be acceptable to the accountants
retained by the Company, and the Majority Interest may rely upon the advice of
the accountants as to whether such decisions are in accordance with generally
accepted accounting principles.
15.4 Federal Income Tax Elections. The Company shall, to the extent
permitted by applicable law and regulations and upon obtaining any necessary
approval of the Commissioner of Internal Revenue, elect to use such methods of
depreciation, and make all other Federal income tax elections in such manner,
as the Majority Interest determine to be most favorable to the Members. The
Majority Interest may rely upon the advice of the accountants retained by the
Company as to the availability and effect of all such elections.
15.5 Entire Agreement. This Agreement constitutes the entire
Agreement between the parties and may be modified only as provided herein. No
representations or oral or implied agreements have been made by any party
hereto or his agent, and no party to this Agreement relies upon any
representation or agreement not set forth in it. This Agreement supersedes any
and all other agreements, either oral or written, by and among the Company and
its Members.
15.6 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if (i) physically delivered, telephonically transmitted by telecopier or
other similar means, (ii) one (1) day after having been delivered to Federal
Express or other delivery courier for next day delivery, with proof of delivery
to the recipient received by the courier in the form of a signature of
recipient, or (iii) three (3) days after having been deposited in the United
States Mail, as certified mail with return receipt requested and with postage
prepaid, addressed to the Members at the addresses listed in Exhibit A. The
addresses and other information so indicated for any Member may be changed by a
Member by written notice to the Company.
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15.7 Further Execution. Upon request of the Company from time to
time, the Members shall execute and swear to or acknowledge any amended
Articles and any other writing which may be required by any rule or law or
which may be appropriate to the effecting of any action by or on behalf of the
Company or the Members which has been taken in accordance with the provisions
of this Agreement.
15.8 Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties, their successors and permitted assigns.
None of the provisions of this Agreement shall be construed as for the benefit
of or as enforceable by any creditor of the Company or the Members or any other
person not a party to this Agreement.
15.9 Severability. The invalidity or unenforceability of any
provision of this Agreement in a particular respect shall not affect the
validity and enforceability of any other provision of this Agreement or of the
same provision in any other respect.
15.10 Captions. All captions are for convenience only, do not form a
substantive part of this Agreement and shall not restrict or enlarge any
substantive provisions of this Agreement.
15.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one instrument. The Company shall have custody of counterparts
executed in the aggregate by all Members.
15.12 Michigan Law to Control. The validity and interpretation of, and
the sufficiency of performance under, this Agreement shall be governed by
Michigan law.
The parties have executed this Agreement to be effective on the date first
above written.
MEMBERS:
KEY PLASTICS, INC.
By: ▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Its:
--------------------------------
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KEY PLASTICS TECHNOLOGY, L.L.C.
By: Key Plastics, Inc., Member
By: ▇▇▇▇ ▇. ▇▇▇▇
------------------------------
Its:
-----------------------------
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KEY MEXICO A, L.L.C.
EXHIBIT A
Initial Capital Membership
Name and Address Contributions Percentages
---------------- ---------------- -----------
Members
-------
Key Plastics, Inc. $ 990 99%
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Key Plastics Technology, 10 1%
L.L.C.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------- ---
Totals $ 1,000 100%
======== ===
A-1