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EXHIBIT 10.1
OPERATING AGREEMENT
OF
TWB COMPANY, L.L.C.
A Michigan Limited Liability Company
Dated as of April 15, 1997
THE INTERESTS CREATED BY THIS OPERATING AGREEMENT HAVE NOT BEEN AND WILL NOT BE
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR WITH THE SECURITIES AUTHORITIES
OF ANY STATE UNDER ANY STATE SECURITIES LAWS. AS A CONSEQUENCE, THE INTERESTS
MAY NOT BE SOLD, ASSIGNED, CONVEYED, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED BY A HOLDER THEREOF EXCEPT: (1) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT REGISTERING THE INTERESTS UNDER THE SECURITIES ACT
AND/OR UNDER APPLICABLE STATE SECURITIES LAWS, OR (2) PURSUANT TO AN OPINION OF
COUNSEL WHICH HAS BEEN OBTAINED BY SUCH HOLDER AND WHICH IS SATISFACTORY TO THE
MANAGER, OR PURSUANT TO SUCH OTHER EVIDENCE WHICH HAS BEEN OBTAINED BY THE
HOLDER AND WHICH IS SATISFACTORY TO THE MANAGER, THAT SUCH REGISTRATION UNDER
THE SECURITIES ACT AND/OR UNDER APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED FOR SUCH HOLDER TO LAWFULLY EFFECT SUCH SUBSEQUENT SALE, ASSIGNMENT,
CONVEYANCE, PLEDGE, HYPOTHECATION OR OTHER TRANSFER. INVESTORS SHOULD BE AWARE
THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION
OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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OPERATING AGREEMENT
OF
TWB COMPANY, L.L.C.
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS
-----------
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
FORMATION AND NAME, OFFICE, STATUTORY AGENT,
PURPOSE, PARTNERSHIP STATUS, POWERS AND TERM
--------------------------------------------
2.1 Formation and Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Registered Office and Resident Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.5 Partnership Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.6 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.7 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
MEMBERS AND CAPITAL
-------------------
3.1 Initial Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Additional Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Loans by Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 No Priority Among Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.5 No Interest on Capital Contributions; No Withdrawal of Capital . . . . . . . . . . . . . . 11
3.6 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.7 Actions of Members; Meetings of Members . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.8 No Requirement to Restore Deficit in Capital Account . . . . . . . . . . . . . . . . . . . 12
3.9 Limited Liability of Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.10 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.11 Competition Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.12 Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.13 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.14 Geographic Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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ARTICLE IV
ALLOCATIONS AND DISTRIBUTIONS
-----------------------------
4.1 Allocation of Profits and Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 Special Allocations and Other Provisions Relating to Allocations . . . . . . . . . . . . . 18
4.3 Cash Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.4 Distributions of Liquidation Proceeds Upon Liquidation . . . . . . . . . . . . . . . . . . 20
4.5 Distributions in Kind on Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.6 Certain Provisions of the Act Superseded . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V
POWER, AUTHORITY, RIGHTS, DUTIES AND OBLIGATIONS
OF THE MANAGERS AND THE EXECUTIVE MANAGER
5.1 Management and Control of Company's Business and Affairs by Managers . . . . . . . . . . . 21
5.2 Power and Authority of Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.3 Executive Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.4 Management Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.5 Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.6 Administrative Services Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.7 Meetings of Managers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.8 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.9 Reimbursements and Executive Manager Fee . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.10 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.11 Tax Matters Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.12 Certain Provisions of the Act Superseded . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VI
TRANSFERS OF INTERESTS BY MEMBERS; SUBSTITUTION OF MEMBERS
----------------------------------------------------------
6.1 Transfer of Interests by Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.2 Additional Restrictions on Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.3 Requirements for Substitution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.4 Obligations and Rights of Transferees . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.5 Distributions and Allocations in Respect of Transferred Interests . . . . . . . . . . . . . 33
6.6 Continuation After Retirement of Member . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.7 Restrictions Reasonable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.8 Certain Provisions of the Act Superseded . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.9 Special Withdrawal Rights of Minority Members . . . . . . . . . . . . . . . . . . . . . . . 34
6.10 Transfers to Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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ARTICLE VII
PROCEDURE ON DISSOLUTION
------------------------
7.1 Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.2 Operations During Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.3 Time for Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.4 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.5 Certificate of Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VIII
Books and Records, Bank Accounts
--------------------------------
8.1 Maintenance of Books and Accounting Method . . . . . . . . . . . . . . . . . . . . . . . . 36
8.2 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.3 Reports to the Members, Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.4 Tax Elections; Special Basis Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IX
AMENDMENTS
----------
9.1 Amendments Which May be Made With the Consent of Members Holding a
Majorit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.2 Amendments Requiring Consent of Members Holding Eighty-Five Percent of the
Percentage Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.3 Amendments Requiring Approval of Affected Member . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE X
GENERAL PROVISIONS
------------------
10.1 Non-Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.2 Additional Documents and Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.3 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.5 Provisions Binding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.6 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.8 Word Meanings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.9 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.10 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Schedule A -- Members, Capital Contributions and Percentage Interests
Schedule B -- Form of Administrative Services Agreement
Schedule C -- Arbitration Provisions
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OPERATING AGREEMENT OF TWB COMPANY, L.L.C.
THIS OPERATING AGREEMENT OF TWB COMPANY, L.L.C. (this "Agreement"),
entered into as of April 15, 1997 by and between Thyssen Inc., a Delaware
corporation ("TINC"), and Worthington Steel of Michigan, Inc., a Michigan
corporation ("WSMI");
W I T N E S S E T H:
WHEREAS, the Members desire to enter into this Agreement and to cause
articles of organization to be filed with the Administrator of the Michigan
Department of Commerce, Corporations and Securities Bureau, Corporation
Division, thereby forming a limited liability company under the laws of the
State of Michigan; and
WHEREAS, this Agreement shall constitute the "operating agreement" of
TWB Company, L.L.C., within the meaning of that term as used in the Act;
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings ascribed to them as follows:
Act means the Michigan Limited Liability Company Act, Mich. Corp. Xxxx
Xxx. Section 450.4101 et seq., Mich. Stat. Xxx. Section 21.198 et seq.,
governing, among other matters, certain aspects of the formation, operation and
dissolution of limited liability companies in Michigan, as the same may be
amended.
Additional Contributions has the meaning specified in Section 3.2.
Additional Contribution Notice has the meaning specified in Section
3.2(a).
Additional Member means any Person admitted to the Company as an
Additional Member pursuant to Section 3.1.
Adjusted Capital Account Deficit means the deficit balance, if any, in
a Member's Capital Account at the time in question, after (i) reducing the
amount of such deficit by the amount, if any, of such Member's Restoration
Obligation and (ii) increasing the amount of such deficit by the amount, if
any, of the items described in paragraphs (4), (5) and (6) of Section
1.704-1(b)(2)(ii)(d) of the Allocation Regulations. The determination of a
Member's Adjusted Capital Account Deficit is made for purposes of Section
1.704-1(b)(2)(ii)(d) of the Allocation Regulations and shall be made
consistently therewith.
Affiliate of a Person means a Person who, directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such Person.
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Agreed Value has the meaning set forth in Section 6.1(e)(iii).
Agreement means this Operating Agreement, as the same may be
modified, amended, supplemented and/or restated from time to time in accordance
with its terms and applicable law.
Allocation Regulations means the Income Tax Regulations promulgated
under Code Section 704(b) (regarding partners' distributive shares of
partnership tax items), as currently in effect, and as modified and clarified
by amendment, successor regulation, ruling, court decision or other Income Tax
Regulation relating to partners' distributive shares.
Articles of Organization means the Articles of Organization of the
Company filed with the Department of Commerce upon execution of this Agreement
as required by the Act, as amended and/or restated from time to time in
accordance with the terms of this Agreement and applicable law.
Bankruptcy, in reference to a Member, means that event and date when
(i) the Member makes an assignment for the benefit of creditors; (ii) the
Member files a voluntary petition in bankruptcy; (iii) the Member is
adjudicated a bankrupt or insolvent; (iv) the Member files a petition or answer
seeking for itself any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law, or
regulation; (v) the Member files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against it in
any proceeding of the type referred to in clause (iv); (vi) the Member seeks,
consents to, or acquiesces in the appointment of a trustee, receiver, or
liquidator of such Member or of all or any substantial part of its property;
(vii) ninety (90) days or more have elapsed after the commencement of any
proceeding against the Member seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute,
law, or regulation, if the proceeding has not been dismissed prior thereto;
(viii) ninety (90) days or more have elapsed after the appointment without its
consent or acquiescence of a trustee, receiver, or liquidator of the Member or
of all or any substantial part of its property, if such appointment has not
been vacated or stayed prior thereto; or (ix) ninety (90) days have elapsed
after the expiration of any such stay, if such appointment has not been
vacated.
Capital Account has the meaning specified in Section 3.6.
Capital Contribution means the total amount of cash and/or property
contributed to the Company by each Member as shown in Schedule A, as such
Schedule A may be modified, supplemented or amended from time to time in
accordance with this Agreement and applicable law, plus any other contributions
to the capital of the Company made by a Member, in such Member's capacity as a
Member, pursuant to the terms of this Agreement, in respect of the Interest of
such Member in the Company. Any reference in this Agreement to the Capital
Contribution of a Member shall include a Capital Contribution previously made
by any predecessor Member with respect to the Interest owned by the Member.
Code means the Internal Revenue Code of 1986, as amended, or the
corresponding provisions of any subsequent federal income tax law.
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Company means TWB Company, L.L.C., a Michigan limited liability
company.
Company Minimum Gain means "partnership minimum gain" as set forth in
Sections 1.704-2(b)(2) and 1.704-2(d) of the Allocation Regulations.
Confidential Information means all records and accounts of the Company,
and any technical data or other know-how or information which, prior to or
subsequent to the date of this Agreement, has been or may be disclosed by a
Member or any of its Affiliates, directly or indirectly, to any other Member or
an Affiliate of any other Member (a) in writing and identified in writing as
being confidential at the time of or prior to such disclosure or (b) orally and
identified at the time of disclosure as confidential and promptly thereafter
identified and described in writing as confidential or (c) is so obviously
confidential that no such identification is necessary.
Consent of a Member or a Manager means the consent of such Member or
Manager, which shall be deemed to have been given if: (a) such consent is given
in a vote (either in person or by proxy) at a duly called meeting of the Member
or Managers, as the case may be, called and held in accordance with the
provisions of this Agreement, or (b) such consent is delivered in writing to
each other Member, in the case of a Member, or to each other Manager, in the
case of a Manager. Such consent may be withheld by any Member or Manager, in
such Member's or Manager's sole and absolute discretion, for any reason or for
no reason at all.
Contributing Member has the meaning specified in Section 3.2(c).
Contribution Shortfall has the meaning specified in Section 3.2(c).
Deemed Withdrawal, means with respect to a Member, and subject to the
provisions of Section 6.1(b)(ii), (i) the death, incapacity, or bankruptcy of
such Member, (ii) the Member's retirement, resignation or expulsion from the
Company (for reasons other than a Voluntary or Forced Withdrawal), (iii) if
such Member is a trustee of a trust, the termination of the trust but not
merely the substitution of a new trustee; (iv) if such Member is a corporation,
the filing of a certificate of dissolution, or its equivalent, for said
corporation, or the revocation of its charter; (v) if such Member is a separate
limited liability company or partnership, the dissolution and termination of
such separate limited liability company or partnership; or (vi) if such Member
is an estate, the distribution by the fiduciary of the estate's entire Interest
in the Company.
Department of Commerce means the Administrator of the Michigan
Department of Commerce, Corporations and Securities Bureau, Corporation
Division.
Determined Value has the meaning specified in Section 3.2(e).
Entity means any limited liability company, general partnership,
limited partnership, corporation, joint venture, trust, real estate investment
trust, business trust, estate or association.
Executive Manager means the Executive Manager appointed and serving
from time to time in accordance with Section 5.3, if any.
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Forced Default Withdrawal means a Forced Withdrawal due to a Forced
Withdrawal Event described in Section 6.1(b)(iii)(C).
Forced Non-Default Withdrawal means a Forced Withdrawal due to a
Forced Withdrawal Event described in Section 6.1(b)(iii)(A) or (B).
Forced Withdrawal means the Withdrawal of a Member following a Forced
Withdrawal Event with respect to such Member and the Consent of the holders of
a majority of the Percentage Interest, excluding the Member in question,
pursuant to Section 6.1(b)(iii).
Improvements has the meaning specified in the Thyssen License
Agreement and the Worthington License Agreement.
Incapacity means, with respect to any Member who is an individual, any
adjudication by a court of competent jurisdiction of such Member's incompetency
to manage his person or his estate.
Income Tax Regulations means those regulations promulgated under the
Code. Whenever reference is made to any Income Tax Regulation, unless
otherwise specified, such reference shall include any amendments or successor
regulations thereto.
Interests means the interests in the Company of the Members, including
such Members' respective shares of, and rights to receive distributions and
allocations of, the business, property, assets, capital, profits and losses of
the Company, subject to and as provided in this Agreement and the Act. The
holder of an Interest shall have no right to participate in the management of
the business and affairs of the Company under the terms of this Agreement unless
such holder is also a Member.
Losses means the net losses of the Company for federal income tax
purposes (or as may be otherwise required to comply with the Allocation
Regulations) as determined as of the close of the Company's fiscal year and,
when the context requires, related items of deduction or loss, tax preference,
credits and depreciation, provided that "Losses" shall include items described
in Code Section 705(a)(2)(B) or required by the Income Tax Regulations to be
treated as so described.
Major Member means a Member owning 20% or more of the total Percentage
Interest.
Manager means an individual appointed and serving as a Manager in
accordance with Section 5.1 of this Agreement. The Managers shall be deemed to
be the "managers" in respect of the Company, within the meaning of that term as
used in the Act.
Member means each Person identified as a member on Schedule A hereto,
as such Schedule A may be modified, supplemented or amended from time to time
in accordance with this Agreement and applicable law, and any Person who may be
admitted as an additional or Substitute Member as provided herein. Unless the
context otherwise requires, the term "Member" refers to any one of the Members
and to all the Members.
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Member License Agreement shall mean the Thyssen License Agreement, the
Worthington License Agreement, and any other License Agreements between the
Company and a Member relating to technology being licensed by a Member to the
Company.
Member Loan shall mean a loan made by a Member to the Company in
accordance with the provisions of this Agreement.
Member Nonrecourse Debt shall mean "partner nonrecourse debt" as set
forth in Section 1.704-2(b)(4) of the Allocation Regulations.
Member Nonrecourse Debt Minimum Gain shall mean "partner nonrecourse
debt minimum gain" as set forth in Section 1.704-2(i) of the Allocation
Regulations.
Member Nonrecourse Deductions shall mean "partner nonrecourse
deductions" as set forth in Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the
Allocation Regulations.
Member Technology means the technology of a Member which is the
subject of a Member License Agreement.
Minority Member means a Member owning less than 20% of the total
Percentage Interests.
Non-Contributing Member has the meaning specified in Section 3.2(c).
Non-Contribution Notice has the meaning specified in Section 3.2(c)
Nonrecourse Deductions has the meaning set forth in Sections
1.704-2(b)(1) and 1.704-2(c) of the Allocation Regulations.
Nonrecourse Liability has the meaning set forth in Section
1.704-2(b)(3) of the Allocation Regulations and Section 1.752-1(a)(2) of the
Income Tax Regulations.
Notice of Withdrawal means the written notice given to the Company
and/or to the Members of the Withdrawal of a Member.
Owning Party has the meaning specified in Section 3.10(a).
Percentage Interests means the percentage interests of the Members in
the Company as set forth on Schedule A, as amended from time to time.
Person means any natural person or Entity.
Pre-Contribution Value has the meaning specified in Section 3.2(d).
Profits means the net profits of the Company for federal income tax
purposes (or as may otherwise be required to comply with the Allocation
Regulations) as determined as of the close
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of the Company's fiscal year, and, when the context requires, related items of
income or gain, provided that Profits shall include income exempt from tax.
Restoration Obligation means, with respect to any Member, the sum of
(i) the amount of any express, unconditional obligation of such Member pursuant
to this Agreement to restore to the Company the amount of any deficit in such
Member's Capital Account, which meets the timing requirements of the Allocation
Regulations, and (ii) the amount of any deficit balance in such Member's
Capital Account which such Member is treated as obligated to restore pursuant
to (A) Section 1.704-1(b)(2)(ii)(c) of the Allocation Regulations and (B) the
penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Allocation Regulations. Computation of the amount of a Member's Restoration
Obligation, and any determinations related thereto, shall be made in accordance
with the Allocation Regulations.
Retirement means, with respect to any Member, the Member's Withdrawal
from the Company or the Transfer by the Member of all of the Member's Interest
in compliance with the Agreement (other than (a) an assignment merely of its
right to receive distributions or (b) a pledge, hypothecation or other
collateral assignment of its rights before the time such pledge, hypothecation
or other collateral assignment becomes absolute).
Substitute Member means any Person who acquires an Interest from a
Member and is admitted to the Company as a Member.
Tax Matters Member means the Person at the time designated as such
pursuant to Section 5.11 of this Agreement.
Thyssen License Agreement shall mean the Patent and Technology License
for Laser Welding dated April 23, 1991 between TINC and the Company, together
with Amendment No. 1 thereto of even date herewith, by which certain laser
welding technology is being licensed to the Company.
Thyssen Technology means the technology which is the subject of the
Thyssen License Agreement.
Total Value has the meaning specified in Section 3.2(d).
Transfer means a sale, assignment, transfer, conveyance, pledge,
encumbrance, grant, gift or other disposition, whether direct or indirect,
voluntary, involuntary or by operation of law, or with or without
consideration.
Voluntary Withdrawal means the voluntary withdrawal of a Minority
Member in accordance with Section 6.1(b)(i), or the withdrawal of a Major
Member pursuant to a Notice of Withdrawal given under Section 6.1(b)(i).
Welded Blanks means (i) laser welded blanks, (ii) blanks welded by
technology other than lasers which technologies are then being used, installed
or purchased by the Company, (iii) blanks welded by technologies which the
Company intends and has the financial capability to
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pursue and which would be an upgrade or replacement of the technologies listed
in (i) or (ii); and (iv) welded blanks which could be directly competitive with
welded blanks listed in (i), (ii) or (iii) above, as determined in good faith
by the Company's Board of Managers, with the Consent of Members holding seventy
percent (70%) of the Percentage Interests.
Withdrawal means a Voluntary Withdrawal, a Deemed Withdrawal, or a
Forced Withdrawal.
Withdrawing Member means a Member who is Withdrawing from the Company
or who has given notice of its desire to Transfer its interest pursuant to
Section 6.1.(b).
Worthington License Agreement shall mean the agreement between
Worthington and the Company by which certain laser welding technology is being
licensed to the Company.
Worthington Technology means the technology which is the subject of
the Worthington License Agreement.
ARTICLE II
FORMATION AND NAME, OFFICE, REGISTERED OFFICE AND RESIDENT AGENT,
PURPOSE, PARTNERSHIP STATUS, POWERS AND TERM
2.1 FORMATION AND NAME. The Company shall be and is formed upon
the filing of the original Articles of Organization with the Department of
Commerce in accordance with the provisions of the Act, under the name of TWB
Company, L.L.C., as a limited liability company under the Act.
2.2 OFFICE. The principal offices of the Company at which its
books and records shall be kept shall be maintained at 0000 Xxxxxx Xxxx,
Xxxxxx, Xxxxxxxx 00000, or at such other location as the Managers may from
time to time determine. The Managers shall notify the Members of any change in
the principal offices of the Company.
2.3 REGISTERED OFFICE AND RESIDENT AGENT. The Registered Office
of the Company shall be maintained at 0000 Xxxxxx Xxxx, Xxxxxx, Xxxxxxxx
00000. The Resident Agent of the Company shall be Xxxx XxXxxxxxx, an
individual resident of Michigan whose business address is 0000 Xxxxxx Xxxx,
Xxxxxx, Xxxxxxxx 00000. The Managers have the right, power and authority to
change the location of the Registered Office and to revoke the appointment of
the Resident Agent of the Company from time to time, and to appoint a
substitute or replacement Resident Agent, in accordance with applicable law.
The Managers shall notify the Members of any change in the Registered Office of
Resident Agent of the Company.
2.4 PURPOSE. The purpose of the Company is to own and operate one
or more facilities to produce and sell Welded Blanks and the performance of
additional processing services designed to support the production of Welded
Blanks, and to engage in specific projects and activities in the field of
Welded Blanks as determined by the Managers, from time to time, in
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accordance with this Agreement, and to engage in any and all acts or activities
incidental thereto for which limited liability companies legally may be formed
in the State of Michigan.
2.5 PARTNERSHIP STATUS. It is intended that the Company be
treated as a partnership for federal income tax purposes (but not for liability
purposes). Accordingly, this Agreement shall be construed in a manner that
ensures the Company's classification as a partnership for federal income tax
purposes at all times, and any provision of this Agreement that would have the
effect of preventing the Company from being classified as a partnership for
federal income tax purposes shall be null and void. The Members shall not
unreasonably fail to take appropriate actions or to execute documents, which in
the judgment of the Managers, or in the opinion of counsel satisfactory to the
Managers, are necessary or desirable to obtain and/or maintain the Company's
classification as a partnership for such purposes.
2.6 POWERS. In furtherance of the Company's purposes, the Company
shall have all of the powers granted or permitted to a limited liability
company under the laws of the State of Michigan, including, without limitation,
the powers specifically enumerated in the Act.
2.7 TERM. The term of the Company commenced with the filing of
Articles of Organization with the Department of Commerce. The Company shall
continue until dissolved upon the occurrence of the earliest of (a) December
31, 2045, (b) the passage of ninety (90) days from the sale or other
disposition of all or substantially all of the assets of the Company unless the
Managers elect to continue the Company for the sole purpose of collecting the
proceeds of such sale or other disposition, (c) the Retirement of any Member,
unless the Company is continued as provided in Section 6.6; (d) the Consent of
Members holding eighty-five percent (85%) of the Percentage Interests to
dissolve the Company; (e) at any time when there are less than two (2) Members
of the Company, unless the sole remaining Member admits a Substitute Member to
the Company; or (f) the entry of a judicial decree of dissolution; and shall
terminate as soon as the winding up of its affairs upon such dissolution has
been completed. The provisions of this Section 2.7 are intended to and shall,
to the fullest extent permitted by law, supersede the provisions of the Act
regarding the dissolution of limited liability companies.
ARTICLE III
MEMBERS AND CAPITAL
3.1 INITIAL CAPITAL CONTRIBUTIONS
(a) Initial Members; Contributions; Loan Guarantees;
Additional Borrowings. TINC and WSMI have contributed to the capital of the
Company, as applicable, the amount of cash and/or the property set forth
opposite their respective names on Schedule A in consideration for their
respective Interests in the Company as set forth on Schedule A and as described
herein. In addition, each of TINC and WSMI have guaranteed $12.5 million
(total $25.0 million) of existing loans to the Company. Both TINC and WSMI
agree to continue to guarantee $12.5 million (total $25.0 million) of loans to
the Company until March 31, 2001. At that time, the Company shall repay such
loans or refinance such loans without guarantees by WSMI or TINC.
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It is the intent of the Members that any additional borrowings of the Company
would be done by the Company based on the Company's credit, without Member
guarantees.
(b) Additional Members. The Company may offer, issue and
sell additional Interests and admit Persons as additional Members of the
Company with the Consent of Members holding eighty-five percent (85%) of the
Percentage Interests, on terms and subject to conditions as shall have been
approved by such Members. Each Member hereby waives and releases the Company
and any Member or Manager of the Company from any cause of action for breach of
fiduciary duty on the part of the Company or such Member or Manager that the
Member might or could claim as a result of any dilution of its Interest as a
Member due to the sale of additional Interests.
3.2 ADDITIONAL CAPITAL CONTRIBUTIONS. It is understood that the
Company may from time to time require funds from capital contributions by the
Members following the date of this Agreement ("Additional Contributions") to
meet its cash needs for the ongoing operation of the Company for which
sufficient funds are not otherwise available to it. In order to help insure
that the Company will have funds in amounts sufficient to meet its cash needs
at all times, from and after the date of the Agreement, the Members agree as
follows:
(a) The Members may at any time, by the Consent of
Members holding the requisite Percentage Interests as set forth below,
determine that Additional Contributions are appropriate to meet the cash needs
of the Company, and upon such determination may request Additional
Contributions from the Members. The Consent of Members holding sixty percent
(60%) of the Percentage Interests shall be necessary for a determination that
Additional Contributions are appropriate; provided, however, that if
substantially all of the Additional Contributions are to pay costs associated
with an expansion of the Company's facilities designed primarily to benefit a
Major Member (if, for example, such Member would be supplying the steel to be
used for the business for which the expansion is being made), then the
determination would require also the Consent of Members holding a majority of
the Percentage Interests held by Members other than the Member to be benefited.
In the event that the Consent of Members holding the requisite Percentage
Interests is obtained in respect of a determination that Additional
Contributions are appropriate, the Members so Consenting shall give notice of
such action to the Executive Manager. Upon receipt of such Notice, the
Executive Manager shall give notice to all of the Members (an "Additional
Contribution Notice") specifying the total amount of the Additional
Contributions, the amount of the Additional Contributions to be made by each
such Member, in proportion to each Member's respective Percentage Interests,
and the manner in which the Additional Contributions will be applied. Within
thirty (30) business days after the date of the giving of the Additional
Contribution Notice, each Member shall give notice to the Executive Manager of
whether such Member will make its pro rata share of the Additional
Contributions or will decline to do so. A Member failing to give such notice
shall be deemed to have elected not to make its share of the Additional
Contribution.
(b) If all Members agree to contribute their respective
shares of the Additional Contributions, the Executive Manager shall establish a
date (not later than thirty (30) days after the date on which such date is
established) on or prior to which the Additional Contributions
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shall be made, and shall give notice of such date to all Members. Each Member
shall then make its respective share of the Additional Contributions on or
prior to such date.
(c) If any Member elects not to advance all or any part
of its respective share of the Additional Contributions (a "Non-Contributing
Member"), then the Executive Manager shall give notice (a "Non-Contribution
Notice") to each of the other Members (each, a "Contributing Member"),
specifying which Members have elected to make their respective shares of the
Additional Contributions and which Members have elected not to make such
respective shares, including the total amount not being contributed by
Non-Contributing Members (the "Contribution Shortfall"). Within ten (10)
business days after the giving of the Non-Contribution Notice by the Executive
Manager, each Contributing Member may elect to make all or any part of the
Contribution Shortfall by the giving of notice to that effect to the Executive
Manager. If the Executive Manager receives notices from the Members to make
contributions for the Contribution Shortfall in excess of the amount of the
Contribution Shortfall, then the amount of the Contribution Shortfall to be
made shall be allocated among the Members pro rata according to their
proportionate Percentage Interests (excluding the Percentage Interests of the
Non-Contributing Members), determined prior to the making of such Additional
Contributions.
(d) Adjustment of Percentage Interests.
(i) If all Members make the Additional Contributions
pro rata according to their Percentage Interests, then the Percentage
Interests of each Member shall remain the same as prior to the
Additional Contributions.
(ii) In the event there is any Non-Contributing
Member, then the Percentage Interests of the Members shall be revised
(and Schedule A shall be amended accordingly) as follows:
(A) The Percentage Interests of each Member shall
be multiplied by the Determined Value, as defined in Section
3.2(e), to determine the value of each Member's Percentage
Interests prior to the Additional Contributions (the
"Pre-Contribution Value").
(B) The amount of the Additional Contributions
being made by each Member shall then be added to such Member's
Pre-Contribution Value to determine the total imputed
contribution in respect of each Member (the "Total Value").
(C) The Total Value in respect of each Member
shall then be divided by the sum of the Determined Value and
the total Additional Contributions to determine the new
Percentage Interests of such Member in the Company.
(e) Valuation.
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(i) At the time the Members determine to request an
Additional Contribution, the Members shall attempt also to agree upon
the value of all of the Percentage Interests in the Company prior to
the Additional Contributions, which value shall be fixed for purposes
of this Section 3.2 in respect of such request for Additional
Contributions by Consent of the Members holding eighty-five percent
(85%) of the Percentage Interests.
(ii) In the event the Members fail to agree upon a
value within sixty (60) days after the giving of the Additional
Contribution Notice, then an independent appraiser shall be selected
by Consent of the Members holding a majority of the Percentage
Interests. The value so determined by the Members or such appraiser
shall be the "Determined Value." If Members holding a majority of
the Percentage Interests cannot agree on an appraiser, the appraiser
shall be selected in accordance with the dispute resolution
provisions of this Agreement.
(f) No Other Capital Contributions Required. Except as
expressly provided in this Article III, no Member shall be required to make any
Capital Contributions or loans to the Company.
3.3 LOANS BY MEMBERS. Any Member may, but is not obligated to,
loan to the Company such sums as the Managers determine to be appropriate for
the conduct of the Company's business. Any such Member Loans shall be made on
such terms and for such maturities as are approved by the Consent of the
Managers designated by Members holding a majority of the Percentage Interests
held by Members other than the Member making the Member Loan. If Member Loans
to be made by more than one Member are being considered by the Members, each
Member Loan shall be considered and Consented to separately.
3.4 NO PRIORITY AMONG MEMBERS. No Member shall have priority over
any other Member either as to the return of its Capital Contribution or as to
distributions by the Company, except as specifically provided in this
Agreement.
3.5 NO INTEREST ON CAPITAL CONTRIBUTIONS; NO WITHDRAWAL OF
CAPITAL. No interest shall be paid by the Company to any Member with respect
to any capital contribution. Except as otherwise specifically set forth in
this Agreement, no Member shall have the right to (a) demand to receive
property other than cash in return for its Capital Contribution or as
distributions of income, (b) withdraw any part of its Capital Contribution
(regardless of whether or not such Member has withdrawn from the Company), or
(c) demand to receive any funds or property of the Company.
3.6 CAPITAL ACCOUNTS. A single Capital Account shall be
established, determined and maintained for each Member on the books and records
of the Company in accordance with the provisions of the Allocation Regulations.
The property of the Company shall be revalued on the books of the Company in
any case in which such revaluation is required by the Allocation Regulations
and may be revalued in any case where such revaluation is permitted by the
Allocation Regulations and such revaluation is determined to be appropriate by
the Members. In the event any Company property is revalued on the books of the
Company in accordance with the
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Allocation Regulations, the Members' Capital Accounts shall be adjusted in
accordance with the Allocation Regulations to reflect such revaluations and for
allocations to them of Profits and Losses, and items thereof, as computed for
book purposes, with respect to such property. In the event the property of the
Company is revalued on the books of the Company, all Company property shall be
valued for such purpose at its fair market value, as determined by the Members.
3.7 ACTIONS OF MEMBERS; MEETINGS OF MEMBERS. Except in cases
where a greater proportion is required under the provisions of this Agreement,
any action or inaction by Consent of Members holding a majority of the
Percentage Interests shall constitute an action of the Members. In the event
of a deadlock by the Members, then the subject of such deadlock may be
addressed under the Dispute Resolution Procedures referred to in Section 10.10.
No Member, acting alone, shall have the power or authority to bind the Members,
the Managers or the Company. The Executive Manager or Members holding
Percentage Interests of at least 10% in the aggregate, may from time to time by
written notice to each other Member call a meeting of all the Members. Upon
receipt of a written request for such a meeting, the Members shall promptly,
and in any event not later than ten (10) days after receipt of such request,
fix a place and time for such meeting. To the extent possible, such meeting
shall be held at a place convenient to all the Members. Such meeting shall be
held not less than fifteen (15) nor more than sixty (60) days after receipt of
a request for a meeting. In the absence of agreement of Members holding a
majority of the Percentage Interests, such meeting shall be held at 10:00 a.m.
local time on the first business day falling on or after the fifteenth (15th)
day after receipt of a request for a meeting at the principal place of business
of the Company. Meetings of the Members may be held through any communications
equipment if all those participating can hear each other and participation in
any such meeting shall constitute presence thereat.
3.8 NO REQUIREMENT TO RESTORE DEFICIT IN CAPITAL ACCOUNT. Nothing
contained in this Agreement shall be construed to require any Member to restore
any deficit in its Capital Account.
3.9 LIMITED LIABILITY OF MEMBERS. Subject to the provisions of
the Act, the liability of a Member for the debts and obligations of the Company
shall be limited to the amount of such Member's Capital Contribution, and no
Member shall be obligated to contribute money to the Company or to otherwise
answer for an obligation of the Company beyond such Member's obligation to pay
such Member's Capital Contribution, except to the extent required by law.
3.10 CONFIDENTIALITY.
(a) Restrictions on Disclosure. Each Member, on behalf
of itself and its Affiliates, agrees with respect to the Confidential
Information of the Company or another Member (the "Owning Party"), to:
(i) treat in strict confidence such Confidential
Information and use reasonable efforts to ensure that its employees and
others subject directly or indirectly to its control shall not
reproduce, disclose or make available to any third party any of such
Confidential Information;
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(ii) limit access to such Confidential Information to
such of its employees and representatives, including without
limitation members of each Member's outside law and accounting firms,
as may be reasonably required in connection with the activities of the
Company as contemplated by this Agreement; and
(iii) not use such Confidential Information for any
purpose other than the activities of the Company as contemplated by
this Agreement;
unless the Owning Party otherwise consents thereto in writing. Without
limiting the generality of the foregoing, each Member and its Affiliates
specifically agrees not to directly or indirectly use or disclose Confidential
Information in any judicial or administrative proceeding, unless (i) served
with compulsory process or otherwise required by law, or (ii) consented to by
the other Member.
(b) Exceptions. The obligations of each Member and its
Affiliates set forth in Section 3.10(a) shall not apply to Confidential
Information which:
(i) is or becomes generally available to the public other
than as a result of disclosure by the Member or its Affiliates in whom
the Confidential Information is confided;
(ii) becomes available to the confidant Member on a
non-confidential basis from a source other than the Owning Party, or
its Affiliates, and provided that such source has represented to the
confidant Member (and which confidant Member has no reason to
disbelieve after due inquiry) that it is entitled to disclose the
Confidential Information; or
(iii) was known to the confidant Member on a
non-confidential basis prior to the disclosure thereof to the
confidant Member by the Owning Party or its Affiliates.
(c) Return of Confidential Information. All Confidential
Information furnished by any Member to the other Member shall be returned by
such other Member to the Owning Party immediately upon the request of the
Owning Member. The confidentiality obligations and restrictions on use
contained in this Section 3.10 shall survive this Agreement.
3.11 COMPETITION MATTERS.
(a) Acknowledgment of Competitive Situation. Each Member
acknowledges that it and its Affiliates now are and/or hereinafter may be
engaged in businesses which compete with, relate to or are similar to the
businesses of each other. Each Member acknowledges that it may compete with or
potentially may compete with other Members in the manufacture or sale or
processing of steel products and services. Because the Members do compete with
each other in various areas, no Member shall be obligated to render any
information to any other Member, on demand or otherwise, if the Member
reasonably believes it to be inappropriate to disclose such information to a
competitor.
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(b) Non-Competition in Welding. (i) Section 3.11(a)
notwithstanding, but subject to Section 3.11(c), each Member (on behalf of
itself and its Affiliates) expressly agrees that it will not compete with the
Company in the production of Welded Blanks in the United States, Canada and
Mexico, inasmuch as it is the specific intent of the Members and their
Affiliates that this Company shall be the sole vehicle for their production of
Welded Blanks in the United States, Canada and Mexico. The non-competition
restrictions set forth in this Section 3.11(b) shall apply to the Members (and
their Affiliates) until the earlier of: (i) such time as the Company is
dissolved, terminated and liquidated and the Company is not continued or
reformed as provided in this Agreement, or (ii) the lapse of three years from
the date on which the Member ceases to be a Member of Company, unless the
Member is bought out by the Company pursuant to Section 6.1(b)(iii)(A) or (B),
in which case the three year period shall be reduced to one year. Competing
with the Company shall include not only operating a facility in the United
States, Canada or Mexico which produces Welded Blanks, but also owning an
interest in excess of 10% in the voting rights, equity or profits of an Entity
involved in the production of Welded Blanks in the United States, Canada or
Mexico.
(c) Exception to Section 3.11(b). (i) Section 3.11(b)
notwithstanding, a Member may compete with the Company in the production of
Welded Blanks under the following circumstances:
(A) a bona fide prospective user of Welded Blanks
seeks offers to supply Welded Blanks on a long-term basis;
(B) the fulfillment by the Company of such
business would require a capital expenditure by the Company of in
excess of $15,000,000 for welding and related equipment;
(C) the Company has declined to pursue such
business, whether by affirmative action of the Managers or by the
failure of the Managers to authorize the pursuit of such business
within a commercially reasonable time after being made aware of the
opportunity;
(D) such Member (or its Manager) has not voted
against and not abstained from voting in favor of (where such
abstension would have the same effect as a vote against) the Company
pursuing such business; and
(E) such Member enters the business of the
production of Welded Blanks primarily to obtain such business in order
to supply such Member's or its Affiliates' own steel, and not the
steel of non-Affiliates of the Member.
In the event a Member elects to avail itself of the provisions of this
Section 3.11(c)(i), such Member shall be entitled to compete with the
Company from the facility constructed, equipped or operated by such
Member in order to obtain the business referred to in this Section,
but only from such facility. In the event that a Member does
construct, equip or operate such a facility which competes with the
Company, then the other Members may, by the Consent of Members holding
a majority of the Percentage
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Interests excluding those of the competing Member, require that the
competing Member withdraw from the Company, the provisions of
6.1(b)(iii)(B) hereof being applicable in the case of such a
withdrawal.
(ii) If a Member believes there is Welded Blank
business in a geographic region of North America which is not then
being reasonably serviced by the Company and which the Member would
like to pursue, it shall provide such information to the Board of
Managers. If such Member believes production of Welded Blanks in such
region to be in its interest and/or the interest of Company it shall
make a request in writing to the Board of Managers to create a
facility to produce Welded Blanks in such region. In the event the
Company votes not to proceed with such a facility or in the event it
fails to act on such a request within 120 days after it is made, then
any Member may elect to create, operate, and/or invest in a facility
for Welded Blanks in such region free of the restrictions of Section
3.11(b) provided that such facility would not generally compete with
the Company due to its geographic location and that of the Company's
facilities, and provided that the Member in question (or its Manager)
has not voted against the Company proceeding with such facility.
(iii) A Member shall not be deemed in violation of
the non-competition provision it if acquires an interest in an Entity
which at the time of such acquisition, operates or has ownership
interest in a Welded Blank facility provided that the Welded Blank
business was not the focus of the acquisition and the Member is not
using the acquisition to circumvent the restrictions of the
non-competition provisions. In the event a Member does acquire an
interest in a Welded Blank business as a result of an acquisition, it
agrees to hold discussions with the Company concerning selling and/or
combining the welding business with that of the Company, but neither
the Company nor the Member is required to enter into such a
transaction. Also, the non-competition restrictions shall not be
violated if an Entity in which a Member has an interest (but does not
control) builds or acquires a competing facility if such Member in
good faith exercises such voting and contractual rights as it may have
in such entity to block the building or acquiring by such Entity of
the competing facility but is unable to do so.
(d) Dealing with Company.
(i) General. Nothing in this Agreement shall be
construed to prevent a Member, or its Affiliates, or entity in which a
Member, or its Affiliates, shall have an interest, from dealing with
the Company in good faith as vendor, customer or otherwise in a manner
not specifically covered by this Agreement, provided the Member or
entity shall have given notice of such interest to the Managers, and
the Managers shall have approved or ratified such dealing by Consent
of those Managers designated by Members holding a majority of the
Percentage Interests of the Members excluding those of such affected
Member.
(ii) Cooperation With Members. The Members and
the Company acknowledge that some or all of the Members are engaged in
or will engage in the steel
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business. The Company shall cooperate and provide commercially
reasonable support to the Members in connection with proposals by the
Members to sell Welded Blanks, which are to be processed by the
Company, to third-parties. The parties acknowledge, however, that the
Company shall accept such jobs and shall set the Company's pricing
based on commercially reasonable, arm's-length business
considerations, including competitive factors and cost and production
capacity considerations. The Company is not required to accept any or
all jobs offered to it by the Members, and no Member is required to
direct any or all of such Member's business for Welded Blanks to the
Company. To the extent that the Company offers to provide its
products and services to Members which are bidding for the same job,
the Company's pricing offers to those Members shall be equivalent,
subject to adjustment for differing costs associated with the
provision of products or services to one or the other of the Members.
(e) Agreement with Volkswagen. The Members acknowledge
that Thyssen Xxxxx, X.X. (an Affiliate of TINC) is a party to an agreement with
Volkswagen to supply, inter alia, Welded Blanks for models produced by
Volkswagen at its plant in Mexico. The Company and the Members agree that such
arrangement or any amendment, renewal or extension thereof will not violate the
non-competition provisions in this Agreement.
(f) Rights in Technology.
(i) Ownership of Technology. Except as set forth
in Section 3.11(f)(ii), all Member Technology licensed to the Company
pursuant to a Member License Agreement shall remain the sole and
exclusive property of the Member or its Affiliates, and the rights of
the Company to use such technology shall be only in accordance with
the Member License Agreement. Nothing in this Agreement or the Member
License Agreement shall be interpreted as a license to any other
Member (or its Affiliates) of the Member Technology. To the extent
the Company develops Improvements to the Member Technology, the
licensing of those Improvements to the Member shall be either royalty
free or subject to fees or royalties according to the standards set
forth in the Member License Agreement. The Members shall be entitled
to licenses from the Company to use, make and sell products which
embody such Improvements anywhere in the world, including, from and
after the dissolution and termination of the Company, the United
States, Canada and Mexico; provided, however, that this sentence shall
not apply with respect to the United States, Canada and Mexico until
the expiration of the non-competition provisions of Section 3.11(b) if
other Members continue the business of the Company pursuant to the
provisions of this Agreement. The second sentence of the Section
shall remain unaffected, and nothing in the foregoing sentence shall
be interpreted as a license to any Member or any other party to make
use of Member Technology.
(ii) Notwithstanding Section 3.11(b), TINC and its
Affiliates shall retain the right to grant non-exclusive,
non-transferable licenses (without the ability to sub-license) with
respect to the Member Technology, to General Motors Corporation, Ford
Motor Company, Chrysler Corporation and The Xxxx Co. solely for the
internal use
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of those entities in producing parts and assemblies consistent with
their current businesses (internal shall mean that the Welded Blanks
can only be manufactured by such companies using their employees and
such Welded Blanks can be used only by those companies). Any such
licenses shall prohibit those entities from selling Welded Blanks
produced with the licensed technology. It is understood, however,
that The Xxxx Co. may make and sell processed parts made from Welded
Blanks.
(iii) Except as provided in Sections 3.11(e) and
(f), no Member shall, and no Member shall suffer or permit any of its
Affiliates to, grant any license to make or sell Welded Blanks in the
United States, Canada or Mexico without approval by the Members having
a majority of the Percentage Interests, such restriction to apply
until the non-competition provisions of Section 3.11(b) would no
longer apply to such Member.
3.12 ADDITIONAL AGREEMENTS.
(a) Leased Employees. In order to support the operations
of the Company, it is recognized that certain employees of Members or their
Affiliates may work for the Company on a lease-type basis whereby the Company
would reimburse the Member supplying such employees for all costs related to
such employees.
(b) Engineering Support. Until March 31, 2001, TINC and
WSMI agree to make available to the Company engineering support, in a manner
previously made available to the Company, on a fee basis to be agreed upon by
the party supplying the engineering support and by the Managers of the Company.
3.13 INVESTMENT REPRESENTATIONS.
(a) Each Member represents and warrants to each other
Member and the Company as follows: (i) such Member is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization; (ii) such Member has full power and authority to execute, deliver
and perform such Member's obligations under this Agreement; (iii) such Member
has duly authorized, executed and delivered this Agreement and has duly
authorized the performance of such Member's obligations under this Agreement;
and (iv) such Member's authorization, execution, delivery and performance under
this Agreement do not and will not conflict with any organizational document,
agreement or law applicable to such Member or by which such Member is bound.
(b) Each Member further represents and warrants to the
Company that such Member is acquiring such Member's Interest for such Member's
own account and not with a view toward the gifting, distribution or resale
thereof, and each Member agrees that such Member will not sell or offer to sell
all or any portion of its Interest, or negotiate in respect thereof with any
Person or Persons whomsoever, so as thereby to bring the transaction in which
such Member acquired such Member's Interest or any other offering of interests
in the Company within the provisions of Section 5 of the Securities Act of
1933, as amended, or the registration requirement of any other federal or state
securities statute.
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(c) Each Member further represents and warrants to each
other Member and the Company that (i) such Member has been given access to all
information concerning the Company and the terms and conditions of the Interest
such Member is purchasing hereby; (ii) such Member understands and acknowledges
that the Interest such Member is purchasing hereby is a speculative security
and involves a high degree of risk and that no federal or state agency has made
any finding or determination as to the fairness for public or private
investment in, nor any recommendations or endorsement of, such Interest as an
investment; (iii) such Member has such knowledge and experience in business and
financial matters that such Member is capable of evaluating the merits and
risks of an investment in such Interest; and (iv) such Member's financial
situation is such that such Member can afford the risks of an investment in
such Interest.
(d) Each Member and the Company consents to the current
legal representation by Vorys, Xxxxx, Xxxxxxx and Xxxxx, Columbus, Ohio
("VSS&P") of WSMI with respect to the formation of the Company, and WSMI and
its affiliates with respect to other activities. Each Member and the Company
represents and warrants that the Member and the Company understands and
acknowledges the differing interests involved in VSS&P's representation of WSMI
and the Company and their affiliates. Each Member has been advised to obtain
and has obtained and utilized the Member's own legal counsel with respect to
the Member's investment in the Company. Each Member other than WSMI
acknowledges and agrees that VSS&P does not represent the Member or the
interests of the Member. VSS&P may rely upon the representations, warranties
and agreements set forth in this Section 3.13(d).
3.14 GEOGRAPHIC EXPANSION. If the Members vote to expand the
Company into a new geographic region and two or more of the Members vote
against the expansion, then, at the request of any Member, the parties shall
consider creating a separate entity to do the Welded Blank business in that
region. The terms of the relationship between the new entity and the Company
would be reasonably negotiated and subject to the Consent of Members holding
eighty-five percent (85%) of the Percentage Interests. If agreement on
creating a new entity is not reached, then the Company may proceed with the
expansion as proposed. In no event shall the Members be required to create a
separate entity rather than expanding through the Company.
ARTICLE IV
ALLOCATIONS AND DISTRIBUTIONS
4.1 ALLOCATION OF PROFITS AND LOSSES. Except as provided in
Section 4.2, Profits and Losses shall be allocated among the Members in
proportion to their respective Percentage Interests.
4.2 SPECIAL ALLOCATIONS AND OTHER PROVISIONS RELATING TO
ALLOCATIONS.
(a) Any Member Nonrecourse Deductions for any fiscal year
shall be specially allocated to the Members who bear the economic risk of loss
with respect to the
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Member Nonrecourse Debt to which such Member Nonrecourse Deductions are
attributable in accordance with the Allocation Regulations. Such Members shall
be specially allocated items of Company income and gain as are required by the
"chargeback of partner nonrecourse debt minimum gain" requirements of the
Allocation Regulations.
(b) Nonrecourse Deductions for any fiscal year shall be
specially allocated to the Members (with the Members intending to satisfy the
reasonable consistency requirement contained in the Allocation Regulations as a
result of this allocation) in proportion to their respective Percentage
Interests. Such Members shall be specially allocated items of Company income
and gain as are required by the "minimum gain chargeback" requirements of the
Allocation Regulations.
(c) If the deduction of all or any part of any fee paid
by the Company to a Member is disallowed by recharacterizing such fee as a
distribution to such Member, such Member shall be, to the extent permitted by
the Code, allocated items of Company income and gain for the taxable year in
which such disallowed deduction was claimed by the Company in the amount of
such disallowed deduction.
(d) Qualified Income Offset. In the event any Member's
unexpected receipt of any adjustments, allocations or distributions described
in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or
1.704-1(b)(2)(ii)(d)(6) of the Allocation Regulations causes such Member to
have (or increases) an Adjusted Capital Account Deficit, items of Company
income and gain shall be specially allocated to each such Member in an amount
and manner sufficient to eliminate, to the extent required by the Allocation
Regulations, the Adjusted Capital Account Deficit of such Member as quickly as
possible, provided that an allocation pursuant to this Section 4.2(d) shall be
made only if and to the extent that such Member would have an Adjusted Capital
Account Deficit after all other allocations provided for in this Article IV
have been tentatively made as if this Section 4.2(d) were not in the Agreement.
(e) Curative Allocations. The allocations set forth in
paragraphs (a), (b) and (d) of this Section 4.2 (the "Regulatory Allocations")
are intended to comply with certain requirements of the Allocation Regulations.
It is the intent of the Members that, to the extent possible, all Regulatory
Allocations will be offset either with other Regulatory Allocations or with
special allocations of other items of Company income, gain, loss or deduction
pursuant to this Section 4.2(e). Therefore, notwithstanding any other
provision of this Article IV (other than the Regulatory Allocations), the
Members shall make such offsetting special allocations in whatever manner the
Members determine appropriate so that, after such offsetting allocations are
made, each Member's Capital Account balance is, to the extent possible, equal
to the Capital Account balance such Member would have had if the Regulatory
Allocations were not part of this Agreement and all Company items were
allocated pursuant to Section 4.1. In exercising its discretion under this
Section 4.2(e), the Members may take into account future Regulatory Allocations
under the last sentence of each of Sections 4.2(a) and 4.2(b) that, although
not yet made, are likely to offset other Regulatory Allocations previously made
under the first sentence of each of Sections 4.2(a) and 4.2(b), respectively.
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4.3 CASH DISTRIBUTIONS. Cash shall be distributed to the Members
from the Company in such amounts and at such times as the Managers may
determine, consistent with the Act. Each distribution of cash shall be made to
the Members in proportion to their respective Percentage Interests in the
Company at the time of such distribution. It is the intent of the Company, to
the extent cash is available, to make sufficient cash distributions to the
Members to fund federal income tax payments which may become owing by the
Members on the Company's Profits. It is further the intent of the Company and
the Members to distribute available cash of the Company to the Members to the
extent the Board of Managers reasonably determines that such cash is not
needed, currently or in the foreseeable future, for operations, for payment of
debt, for capital expenditures or for other needs of the Company, taking into
account the Company's borrowing capabilities while maintaining reasonable
coverage ratios.
4.4 DISTRIBUTIONS OF LIQUIDATION PROCEEDS UPON LIQUIDATION. Upon
the liquidation of the Company, the Managers shall attempt to liquidate the
assets of the Company and the proceeds of such liquidation shall be applied and
distributed in the following order of priority:
(a) First, to creditors, including Members who are
creditors, to the extent permitted by law, in satisfaction of liabilities of
the Company (other than liabilities to Members for distributions of cash to
which they may be entitled), and to the expenses of liquidation;
(b) Second, to the setting up of reserves that the
Managers determine are necessary to pay all contingent, conditional or
unmatured claims and obligations that are known to the Company and all claims
and obligations that are known to the Company but with respect to which the
claimant or obligee is unknown; such reserves may be paid over by the Managers
to any attorney at law or other party selected by the Managers, as escrow agent
to be held for disbursement in payment of any of the aforementioned liabilities
or obligations, or at the expiration of such period as shall be deemed
advisable by the Managers, for distribution in accordance with clause (c) of
this Section 4.4;
(c) Thereafter, to the Members in accordance with their
respective positive Capital Account balances, determined after all allocations
pursuant to Sections 4.1 through 4.2 (including, without limitation,
allocations to reflect the gain or loss recognized upon the sale of the
Company's assets) and all distributions pursuant to Section 4.3 have been made,
but before any distributions pursuant to this Section 4.4(c) are made.
4.5 DISTRIBUTIONS IN KIND ON LIQUIDATION. Upon the liquidation of
the Company, to the extent the Company's assets are not sold or otherwise
disposed of, such assets (if any) may be distributed in kind to the Members as
follows: the value of such assets shall be appraised (by an appraiser selected
by the Managers) to determine the Profits and Losses that would have resulted
if such assets had been sold; the Capital Account of each Member shall be
credited or debited with such Member's respective share of the hypothetical
gains or losses resulting from such assumed sales in the same manner as such
Capital Account would have been credited or debited on the actual disposition
of such assets; and such assets shall be distributed in accordance with the
Members' Capital Account balances as thus adjusted, each Member taking an
undivided interest in such assets subject to a pro rata share of the Company's
liabilities.
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4.6 CERTAIN PROVISIONS OF THE ACT SUPERSEDED. The provisions of
this Agreement regarding allocations and distributions among the Members are
intended to and should, to the fullest extent permitted by law, supersede the
provisions of the Act regarding allocations and distributions.
ARTICLE V
POWER, AUTHORITY, RIGHTS, DUTIES AND OBLIGATIONS OF THE MANAGERS AND THE
EXECUTIVE MANAGER
5.1 MANAGEMENT AND CONTROL OF COMPANY'S BUSINESS AND AFFAIRS BY
MANAGERS. Subject to the restrictions hereinafter set forth, the Managers shall
have full and exclusive right, power and authority to conduct the business and
manage the affairs of the Company in accordance with the terms and conditions
of this Agreement. Except in cases where a greater proportion is required
under the provisions of this Agreement, any action or inaction by Consent of
Managers designated by Members holding a majority of the Percentage Interests
shall constitute the action of the Managers and shall bind all of the Managers
and the Company. In the event of a deadlock by the Managers, then the subject
of such deadlock may be addressed under the Dispute Resolution Procedures
referred to in Section 10.10. No Manager, acting alone, shall have the power
or authority to bind the Managers or the Company. The Managers may delegate
such power and authority by Consent of Managers designated by Members holding a
majority of the Percentage Interests. Each Member having Percentage Interests
of more than five percent (5%) shall be entitled to designate a Manager. Each
Member having Percentage Interests of twenty percent (20%) or more shall be
entitled to designate a total of two Managers. Each Manager shall serve at the
pleasure of the Member entitled to designate such Manager. All designations
and removals of Managers shall be made by written notice by the designating or
removing Member, as the case may be, to the other Members.
Except as otherwise provided in Section 5.2(c) of this Agreement,
whenever the Managers or Members are required by the provisions of this
Agreement to consent to, vote upon, approve or take other action with respect
to a transaction or other matter in which a Member or an Affiliate of a Member
has an interest, in addition to any vote otherwise required hereunder, such
consents, vote, approval or action shall require the affirmative action of a
majority of the Percentage Interests of the disinterested Members or the
Managers appointed by them.
5.2 POWER AND AUTHORITY OF MANAGERS. Subject to the following
sentence, the Managers shall have all power and authority necessary to carry
out the purposes, business and objectives of the Company. Notwithstanding the
preceding sentence, the Managers shall not cause the Company to take any of the
following actions without the indicated consents:
(a) without the Consent of Members holding eighty-five
percent (85%) of the Percentage Interests:
(i) change the nature of the business of the
Company or enter into any business other than or in addition to that
contemplated by this Agreement, including
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without limitation the modification of the types of processing
services to be performed by the Company;
(ii) sell, exchange, transfer, convey, assign,
mortgage, lease or otherwise dispose of all or substantially all of
the assets of the Company;
(iii) entering into any merger of or consolidation
involving the Company, whether or not the Company shall be the
survivor thereof;
(iv) production of Welded Blanks outside the
United States, Canada and Mexico;
(v) selling Welded Blanks into a country, not
previously sold to by the Company, outside the United States, Canada
and Mexico (i) which would cause a Member to be in violation of a
non-competition agreement which the Member has with a third party; or
(ii) in which a Member is engaged in production activities either
alone or through a joint venture.
(b) without the Consent of Members holding sixty percent
(60%) of the Percentage Interests:
(i) borrow money, give any guarantee or surety,
or mortgage, grant security interests in or pledge all or any portion
of the Company's assets, other than in the ordinary course of business
or in accordance with budgets as shall have been approved by Consent
of Members holding sixty percent (60%) of the Percentage Interests;
(ii) authorize or undertake a major capital
expansion of the Company's facilities; provided, however, that, if
such expansion of the Company's facilities is designed primarily to
benefit a Major Member (if, for example, such Member is the
contractual supplier of the steel which would be used in the business
for which the expansion is being made), then, in such event, such
action also would require the Consent of Members holding a majority of
the Percentage Interests held by Members other than such benefited
Member;
(c) without the Consent of Members holding a majority of
the Percentage Interests of the Members excluding those of the Member or
Members party to the contract or agreement, enter into any contract or
agreement between the Company and any Member, other than those which are
permitted to be approved by the Executive Manager pursuant to Section
5.3(b)(vii);
(d) amend this Agreement or the Articles of Organization,
except as provided in Article IX;
(e) issue any Interests to any Person or admit any
additional Member, except as provided in Article III;
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(f) consent to any transfer of Interests or admit any
Substitute Member, except as provided in Article VI; or
(g) consent to continue the Company following the
Retirement of a Member, except as provided in Section 6.6.
5.3 EXECUTIVE MANAGER.
(a) General. WSMI is hereby designated as the
Executive Manager of the Company, to serve as such until its resignation or
removal. The Executive Manager may resign at any time and may be removed as
Executive Manager upon the Consent of Members holding sixty percent (60%) of
the Percentage Interests. In the event that the Executive Manager resigns or
is removed, a successor Executive Manager may be designated by Consent of
Members holding sixty percent (60%) of the Percentage Interests. In the event
that no such successor Executive Manager is so designated, all of the
responsibilities and authority of the Executive Manager set forth in this
Agreement shall be exercised by the Managers, until such time as a successor
Executive Manager is so designated.
(b) Responsibilities and Authority. Subject to the
limitations set forth in Section 5.3(c), and in addition to the authority set
forth in Section 5.5 and the other responsibilities and authority as the
Managers shall from time to time assign to the Executive Manager, the Executive
Manager shall have the following delegated responsibilities and authority:
(i) oversee the operations of the business of the
Company and supervise the management of the Company;
(ii) oversee the preparation of financial statements
and tax information concerning the Company and its business, and the
preparation and filing of all Company tax returns;
(iii) authorize the employment and dismissal from
employment of any and all Company management personnel, subject to the
power of the Managers to reject individual candidates for such
positions for legitimate business reasons;
(iv) supervise the procurement, construction,
erection and installation of major facilities of and improvements to
the facilities of the Company, consistent with approved budgets;
(v) supervise the preparation of and provide initial
approval of annual budgets, business objectives and policies, and
manufacturing, marketing and operational plans of the Company;
(vi) authorize general policies concerning personnel
matters, including hiring, personnel levels, salaries, benefits and
terms and conditions of employment, consistent with approved budgets;
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(vii) authorize the execution, delivery and performance of
any contract or agreement, (A) to be entered into by the Company in
the ordinary course of business, or (B) involving an aggregate amount
not exceeding the dollar limitation as set by the Managers, or (C)
consistent with approved budgets; including in each case without
limitation processing contracts with Members other than the Executive
Manager arising in the ordinary course of business and not requiring
expansion of the Company's existing equipment or facilities;
(viii) authorize the making of unbudgeted capital
expenditures in amounts not exceeding the dollar limitations as set by
the Managers;
(ix) authorize the obtaining of insurance by the Company;
(x) authorize the employment and dismissal from
employment of any and all Company agents, independent contractors,
consultants, attorneys and accountants for amounts not in excess of
the dollar limitations as set by the Managers;
(xi) authorize the initiation in the name or on the
account of the Company of any lawsuit or other judicial proceeding
involving the collection of an account receivable, or otherwise in the
ordinary course of the Company's business and not exceeding the dollar
limitations as set by the Managers in claimed damages; provided,
however, that the Executive Manager shall notify the Members prior to
instituting suit against a customer;
(xii) authorize the opening of bank accounts and the
establishment of other depository relationships on behalf of the
Company with such signatories and on such terms as the Executive
Manager shall deem appropriate; and
(xiii) authorize the drawing down of advances under
revolving credit and other credit and loan arrangements of the Company.
(c) Limitations. Notwithstanding the provisions of Section
5.3(b), the Executive Manager shall not cause the Company to take any of the
following actions without the Consent of those Managers designated by Members
holding a majority of the Percentage Interests (or, in the case of clause (i),
without the Consent of Members holding a majority of the Percentage Interests
excluding those of the interested Member):
(i) authorize any contract or agreement between the
Company and any Member; other than those processing contracts with
Members (excluding the Executive Manager) arising in the ordinary
course of business and not requiring expansion of the Company's
existing equipment or facilities, which may be authorized by the
Executive Manager;
(ii) approve any tax elections to be made by the Company,
except as provided in Section 8.4;
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(iii) approve any distributions to the Members, except
as provided in Sections 4.3 and 4.4; or
(iv) take advantage on behalf of the Company of any
federal or state bankruptcy or insolvency law or similar law for the relief of
debtors.
5.4 MANAGEMENT PERSONNEL. The Executive Manager shall have the
authority to employ and dismiss from employment of any and all Company
management personnel, subject to the power of the Managers to reject individual
candidates for such positions for legitimate business reasons. Company
management personnel shall serve at the pleasure of the Executive Manager and
may be removed at any time by the Executive Manager. Subject at all times to
the authority and oversight of the Executive Manager, such management personnel
shall provide general management and supervision for the Company and have such
power and duties as the Executive Manager may assign. Initially, the Company's
General Manager shall have the powers and duties set forth in Section 5.5 and
those described as follows:
(a) execute and implement the plans and policies of the
Managers and the Executive Manager;
(b) authorize the execution, delivery and performance of
any contract or agreement to be entered into by the Company in the ordinary
course of business, involving an aggregate amount of not more than the dollar
limitations set by the Managers, or consistent with approved budgets;
(c) execute and deliver on behalf of the Company any and
all contracts and agreements as shall have been approved by the Managers, if
required under this Agreement, or by the Executive Manager;
(d) approve all expenditures and the payment of all
obligations of the Company, consistent with approved budgets and the plans and
policies of the Managers and the Executive Manager;
(e) employ and dismiss from employment any and all
Company personnel, other than management personnel designated from time to time
by the Executive Manager;
(f) propose and prepare annual budgets, business
objectives and policies, personnel policies and manufacturing, marketing and
operational plans of the Company; and
(g) prepare financial statements concerning the Company;
(h) make recommendations to the Executive Manager
concerning appropriate policies, procedures, facilities and equipment.
5.5 BUDGETS. The Managers shall consider and approve from time to
time budgets for the Company, acting by Consent of those Managers designated by
Members holding a majority of the Percentage Interests. Upon approval of a
budget by the Managers, the management
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personnel of the Company, under the supervision of the Executive Manager, shall
have the right, without further consent or approval by the Managers, to incur
and pay on behalf of the Company the expenses set forth in such approved
budget.
5.6 ADMINISTRATIVE SERVICES AGREEMENT. The Company and WSMI shall
enter into an Administrative Services Agreement in the form of Schedule B
attached hereto and made a part hereof, whereby WSMI may administer for the
Company items such as retirement plans, insurance, and other items, and perform
such other services as the Company and WSMI may from time to time determine.
WSMI will be paid a reasonable fee for such services as approved by the Company
and agreed to by WSMI. This fee shall include the monthly fee referred to in
Section 5.9 hereof. In addition, WSMI shall be reimbursed for expenses and for
the time of its employees who may perform services for the Company in
accordance with the Administrative Services Agreement. Modification or
amendments of such Administrative Service Agreement, and the approval of such
services, shall require the Consent of Managers representing a majority of the
Percentage Interests other than those of WSMI, and the approval of WSMI. The
Company shall, if requested by any Manager, provide to all Members a quarterly
recap of payments made to WSMI.
5.7 MEETINGS OF MANAGERS. Any Manager or Managers designated by
Members holding at least 10% in the aggregate of the Percentage Interests may
by written notice to each other Manager call a meeting of all the Managers.
Upon receipt of a written request for such a meeting, the Managers shall
promptly, and in any event not later than ten (10) days after receipt of such
request, fix a place and time for such meeting. To the extent possible, such
meeting shall be held at a place convenient to all the Managers. Such meeting
shall be held not less than fifteen (15) nor more than sixty (60) business days
after receipt of a request for a meeting. In the absence of agreement by the
Managers designated by Members holding a majority of the Percentage Interests,
such meeting shall be held at 10:00 a.m. local time on the fifteenth (15th)
business day after receipt of a request for a meeting at the principal place of
business of the Company. Meetings of the Managers may be held through any
communications equipment if all those participating can hear each other and
participation in any such meeting shall constitute presence thereat.
5.8 LIABILITY. When acting with respect to the Company, the
Managers and the Executive Manager shall not be liable to the Company or to any
Member for any mistake or error in judgment or for any act or omission believed
in good faith to be within the scope of the authority conferred by this
Agreement. When acting with respect to the Company, the Managers and the
Executive Manager shall be liable only for willful misconduct or failure to act
in good faith.
5.9 REIMBURSEMENTS AND EXECUTIVE MANAGER FEE. The Members hereby
acknowledge that WSMI and/or its affiliates have incurred, and may in the
future incur, in their separate capacities and/or in WSMI's capacities as
Executive Manager, out of pocket expenses, costs, fees and other obligations in
connection with (a) the organization and/or formation of the Company, (b) the
ownership, operation, maintenance and/or repair of the Company's property
and/or (c) the conduct of the Company's business and/or affairs. The Company
shall (prior to any distributions to the Members) reimburse WSMI and its
affiliates for all such amounts, "provided
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that such amounts are not incured in contravention of WSMI's authority
hereunder in which case such amounts are payable only upon approval of the
expenditure or the reimbursement by the Managers. In addition, the Company
shall pay WSMI, so long as WSMI is the Executive Manager, an amount per month
to be agreed upon by WSMI and the Managers, which is designed to cover the time
of the employees of the Executive Manager not charged on an hourly basis and
expenses not directly reimbursed.
5.10 INDEMNIFICATION. The Company shall, to the fullest extent
permitted under the Act and other applicable law, indemnify any Person who is a
party, or is threatened to be made a party, to any threatened, pending or
completed civil, criminal, administrative or investigative action, suit or
proceeding because such Person is or was a Member, Manager, Executive Manager,
officer, employee or agent of the Company or is or was serving at the request
of the Company as a member, manager, director, trustee, partner, officer,
employee or agent of another limited liability company, corporation,
partnership, joint venture, trust or other enterprise, against costs, claims,
damages, losses, judgments, fines and expenses (including without limitation,
reasonable attorneys' fees, filing fees, court reporters' fees and transcript
costs) actually and reasonably incurred by such Person in connection with such
action, suit or proceeding if such Person's act or omission giving rise to any
claim for indemnification under this Section 5.10 was not occasioned by such
Person's fraud, willful misconduct, gross negligence or intent to cause injury
to the Company or by such Person's reckless disregard for the best interests
of the Company, and in respect of any criminal action or proceeding, such
Person had no reasonable basis to believe such Person's conduct was unlawful.
5.11 TAX MATTERS MEMBER. The Tax Matters Member (referred to as
the "tax matters partner" in Section 6231(a)(7) of the Code) initially shall be
WSMI. The Tax Matters Member may at any time resign as the Tax Matters Member,
and the Tax Matters Member may be removed as the Tax Matters Member with the
Consent of Members holding sixty percent (60%) of the Percentage Interests. In
the event that the Tax Matters Member resigns or is removed, a new Tax Matters
Member shall be appointed with the Consent of Members holding a majority of the
Percentage Interests. The Tax Matters Member shall represent the Company and
the Members, at Company expense, in any administrative or judicial proceeding
with the Internal Revenue Service. Any other Member may, at such Member's own
expense, participate in such proceeding to the extent permitted by the Code.
If an administrative proceeding results in the issuance of a "final partnership
administrative adjustment" ("FPAA"), as that term is used in Sections 6223 et
seq. of the Code, the Tax Matters Member shall determine whether the Company
shall seek judicial review of such FPAA. If the Tax Matters Member determines
that the Company shall not seek judicial review, such Member shall promptly
notify all the other Members of this determination and each Member shall be
entitled, at such Member's own expense, to pursue whatever rights such Member
may have under the Code. Any amounts paid by the Tax Matters Member on behalf
of the Company in connection with any administrative or judicial proceeding
shall be considered a loan to the Company, and not a contribution to capital.
The Tax Matters Member shall not be liable to the Company or the other Members
for any action such Member takes or fails to take in connection with any such
judicial or administrative proceeding, including, without limitation, the
agreement to or failure to agree to a settlement or
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the extension of, or failure to extend the relevant statutes of limitations,
unless such action or failure constitutes willful misconduct or failure to act
in good faith.
5.12 CERTAIN PROVISIONS OF THE ACT SUPERSEDED. The provisions of
this Agreement regarding the management of the Company and the power,
authority, rights, duties and obligations of the Members are intended to and
shall, to the fullest extent permitted by law, supersede the provisions of the
Act regarding the management of a limited liability company and the power,
authority, rights, duties and obligations of limited liability company members
set forth in the Act.
ARTICLE VI
TRANSFERS OF INTERESTS BY MEMBERS; SUBSTITUTION OF MEMBERS
6.1 TRANSFER OF INTERESTS BY MEMBERS
(a) General. Except pursuant to a Withdrawal as provided
in Section 6.1(b) or of the right to Transfer described in Section 6.1(h), no
Member may Transfer its Interest to any Person without the Consent of holders
of sixty percent (60%) of the Percentage Interests of the non-transferring
Members. Any transfer permitted by this Section 6.1 shall be subject to the
further limitations set forth in Section 6.2 and the admission of a Substitute
Member shall be subject to Section 6.3.
(b) Withdrawal.
(i) Member Voluntarily Withdrawal.
(A) A Minority Member may elect to
withdraw or retire from the Company at any time after
December 31, 1999, by giving a Notice of Withdrawal to the
Company and all other Members at least 120 days prior to the
effective date of Withdrawal.
(B) A Major Member may at any time after
December 31, 1999 provide a Notice of Withdrawal stating its
desire to Withdraw from the Company and Transfer its
Percentage Interest. Such notice shall be provided to the
Company and all other Members.
(ii) Deemed Withdrawal. In the event of a Deemed
Withdrawal of a Member, the Company shall provide a Notice of
Withdrawal to all Members of such event promptly after it becomes
aware of the Deemed Withdrawal; provided, however, that the
retirement, resignation or other voluntary act of a Major Member shall
not be a Deemed Withdrawal.
(iii) Forced Withdrawal. If any of the following occur (a
"Forced Withdrawal Event"):
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(A) a Member's Percentage Interest is reduced to
5% or less;
(B) a Member becomes a participant in a Competing
Facility as permitted under Section 3.11(c)(i) hereof; or
(C) a Member materially defaults in the
observance or performance of any material agreement, covenant
or condition contained in this Agreement or in any material
agreement with or relating to the Company and such default
shall continue to exist for a period of thirty (30) days after
the Managers give such Member or its Affiliate written notice
of such default;
then the Company may force such Member to withdraw from the Company upon the
Consent of holders of a majority of the Percentage Interests, excluding the
Member in question, which action must be taken within 120 days after the Member
provides notice to the Company and all other Members of the Forced Withdrawal
Event. The Company shall give a Notice of Withdrawal to all Members promptly
after it becomes aware of such Consent.
(c) Remaining Members Option to Purchase on Withdrawal.
Upon the receipt of a Notice of Withdrawal relating to a Member (the
"Withdrawing Member") each other Member shall have the right, but not the
obligation, to purchase and to receive an assignment of a Percentage Interest
of such Withdrawing Member for a purchase price determined and paid in
accordance with Section 6.1(e) and (f). If any of such other Members elect to
exercise such purchase right (an "Electing Member"), such Electing Member shall
notify each other Member in writing of its decision within forty-five (45) days
after it receives the Notice of Withdrawal. If more than one of such other
Members elects to exercise their respective purchase rights, each of them shall
be entitled to purchase a portion of the Percentage Interest of the Withdrawing
Member that bears the same proportion to the Percentage Interest of the
Withdrawing Member as the Percentage Interest of the Electing Member bears to
the aggregate Percentage Interest of all Electing Members, or such other
portion as shall have been agreed upon by the Electing Members, for a purchase
price equal to the proportionate amount of the purchase price determined in
accordance with Section 6.1(e).
(d) Company Purchase on Withdrawal. If no Member elects
to purchase the Percentage Interest of a Withdrawing Member pursuant to Section
6.1(c), (i) the Company shall purchase and receive an assignment of the
Percentage Interest of the Withdrawing Minority Member, and (ii) the Company
may elect to purchase and receive an assignment of the Percentage Interest of a
Withdrawing Major Member, in each case for a purchase price determined and paid
in accordance with Section 6.1(e) and (f); provided, however, that, except in
the event of a Forced Non-Default Withdrawal, the Company shall have no
obligation to purchase the Percentage Interest of a Minority Member at any time
during the existence of an Applicable Restriction or a Determination of Adverse
Consequences.
An "Applicable Restriction" shall mean any covenant or
restriction contained in a credit agreement of the Company or any provisions of
the Act which would restrict redemptions or distributions by the Company to or
for the benefit of a Member. A "Determination of Adverse Consequences" shall
mean a reasonable determination by the Board of Managers, made in good
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faith, that proceeding with the purchase could result in the Company being
either unable to borrow necessary funds on reasonable terms to meet its
expected cash needs based on its business obligations or commitments, or unable
to fund its obligations on an ongoing basis.
(e) Calculation of Purchase Price.
(i) The Purchase Price shall be: (A) in the case
of a Voluntary Withdrawal or a Deemed Withdrawal of a Minority Member,
the lesser of (1) the Agreed Value or (2) the Formula Price; (ii) in
the case of a Forced Non-Default Withdrawal of a Minority Member, the
greater of (1) the Agreed Value or (2) the Formula Price; (iii) in the
case of a Forced Default Withdrawal, 85% of the lesser of (1)the
Agreed Value or (2) the Formula Price and (iv) in the case of a
Voluntary or Forced Non-Default Withdrawal of a Majority Member, the
Agreed Value.
(ii) "Formula Price", with respect to the Total
Percentage Interest owned by a Member, shall equal (i) the total
Capital Contributions made by the Member with respect to its then
Percentage Interest minus (ii) all cash or in kind distributions
received by the Member, both adjusted upward to reflect the Annual
Return Rate (i.e. the rate of return on its Capital Contributions
minus cash or in kind distributions) set forth below. In the case of
a Voluntary Withdrawal, a Deemed Withdrawal or a Forced Default
Withdrawal, the Annual Return Rate shall equal 10%, and in the case of
a Forced Non-Default Withdrawal, the Annual Return Rate shall equal
15%, in both cases compounded annually.
(iii) The "Agreed Value" of the Percentage
Interests of a Selling Member described in this Section 6.1(b) shall
be the fair market value which the Selling Member and the purchaser or
purchasers shall assign to the Percentage Interests of the Selling
Member, by using their commercially reasonable best efforts and by
negotiating in good faith. If the Selling Member and the purchaser or
purchasers do not agree on such a value within seventy-five (75) days
after Notice of Withdrawal, the Agreed Value shall be the fair market
value which an appraiser mutually chosen by the Selling Member and the
purchaser or purchasers shall assign to the Percentage interests of
the Selling Member. If the Selling Member and the purchaser or
purchasers do not mutually agree on an appraiser within ninety (90)
days the Notice of Withdrawal, the Selling Member shall appoint a
reputable independent appraiser and the purchaser or purchasers,
collectively, shall appoint a reputable independent appraiser, and the
two appraisers so appointed shall appoint a third appraiser. The
three appraisers then shall determine and assign the Percentage
Interests of the Selling Member in good faith a fair market value,
with such determination to be due within one hundred twenty (120) days
after Notice of Withdrawal. In the event the appraisers are unable to
agree upon a fair market value, each of the three appraisers shall set
forth, in good faith, their own valuation, and the highest and lowest
valuations shall be discarded and the middle of the three valuations
shall be the Agreed Value.
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If it is clear that the Agreed Value (i) is less than
the Formula Price in the case of a Forced Non-Default Withdrawal or
(ii) is greater than the Formula Price in the case of a Voluntary
Withdrawal, a Forced Deemed Withdrawal or a Default Withdrawal, then
the Agreed Value need not be determined since the Formula Price will
be applicable.
(f) Payment of the Purchase Price. In the event
of a purchase upon a Voluntary or Deemed Withdrawal, the Purchase
Price shall be payable as agreed by the parties, or if no agreement is
reached, in substantially equal quarterly installments of principal
over a period of up to five (5) years, as determined by the purchaser
or purchasers, the unpaid principal amount thereof bearing interest at
a variable rate per annum, compounded and payable quarterly, equal to
the publicly announced prime rate of First Chicago NBD (or its
successor). In the event that a Selling Member's Percentage Interests
are to be purchased for any other reason pursuant to Section 6.1(b),
then the Purchase Price therefor shall be payable in immediately
available funds upon the consummation of the purchase.
(g) Closing of Purchase. The closing of a
purchase and sale of the Percentage Interests of the Selling Member
pursuant to Section 6.1(b) shall be consummated at the business office
of the Company at 10:00 a.m., local time on the date agreed upon by
the Selling Member and the purchaser or purchasers (or, in the absence
of such agreement, the first business day which is at least seven (7)
days after the date the Purchase Price is determined). At the
closing, each purchaser shall pay to the Selling Member its share of
the (or, if applicable, the entire) purchase price determined under
Section 6.1 or if applicable, deliver to the Selling Member a
promissory note in form reasonably satisfactory to the Selling Member
in respect of any installment payments, and the Selling Member shall
effectively transfer to the order of such electing purchaser or
purchaser its Percentage Interests, free and clear of all liens or
encumbrances of any kind. At and subsequent to, closing, each Member
and the Company shall execute, deliver and acknowledge any and all
documents, agreements, and statements and certificates, and shall take
or refrain from taking actions, as shall be commercially reasonable,
necessary or appropriate in connection with the consummation of the
transfer(s) contemplated by this Section 6.1.
(h) Right to Transfer. In the event that, due to
agreement of the parties or otherwise, neither the Company nor the
other Members will purchase the Withdrawing Member's Percentage
Interest pursuant to this Section 6.1, then such Member shall
thereupon be free to sell and assign its Percentage Interests to any
Person for a period of one hundred eighty (180) days following the
date it is determined that no purchase will be made, provided that (A)
the provisions of Section 6.2 are complied with in respect of such
assignment and (B) the admission of a Substitute Member remains
subject to the provisions of Section 6.3.
(i) Exercise of Purchase Rights by Company.
During any period in which the Company may be entitled to purchase the
Percentage Interests of a Member pursuant to Section 6.1, the Managers
designated by the other Members shall be entitled
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to exercise the exclusive right, power and authority, to the exclusion
of any other person, with respect to the Company in connection with
the purchase of such Percentage Interests. Any determination by the
Company in connection with a purchase described in Section 6.1 shall
be deemed made by the Company upon the Consent of Managers designated
by holders of a majority of the Percentage Interests held by Members
other than the affected Member.
6.2 ADDITIONAL RESTRICTIONS ON TRANSFERS. Notwithstanding
anything in this Article VI to the contrary, the following additional
restrictions apply to the Interests:
(a) No Member shall make any assignment or transfer of
any Interest if the transfer would, when considered with all other assignments
and transfers during the same applicable twelve-month period, cause a
termination of the Company for federal income tax purposes.
(b) No Member shall make any assignment or transfer of
any Interest to a minor or to an incompetent; except that an assignment or
transfer may be made to a trustee, custodian or guardian for the benefit of a
minor or an incompetent, if such assignment or transfer is effected in
accordance with applicable law. No Member shall make an assignment or transfer
to a tax-exempt Entity under Section 168(h) of the Code.
(c) No Member shall make any assignment or transfer of
any Interest unless such Member gives a copy of this Agreement to the assignee
or transferee before such assignment or transfer is effected.
(d) The Managers may require, as a condition to the
assignment or transfer of any Interest, that the assigning or transferring
Member and/or the assignee or transferee (i) assume all costs, including
reasonable attorneys' fees and expenses, incurred by the Company in connection
therewith (not to exceed an amount equal to two percent (2%) of the aggregate
purchase price of the Interest being transferred in the case of a transfer
pursuant to a purchase right described in Section 6.1(b); and (ii) furnish
reasonable assurances to the Managers, including the provision of any factual
information and/or legal opinions satisfactory in all respects to the Managers,
that such assignment or transfer complies in all respects with applicable
federal and state securities laws.
6.3 REQUIREMENTS FOR SUBSTITUTION. Notwithstanding anything in
this Article VI to the contrary, upon the assignment or transfer of any
Interest, no assignee or transferee shall have the right to become a Substitute
Member in place of its assignor or transferor unless the conditions of Sections
6.1 and 6.2 have been satisfied and:
(a) the assignor or transferor has evidenced in a written
instrument of assignment or transfer its intention that the assignee or
transferee be admitted as a Substitute Member pursuant to the provisions
hereof;
(b) Consent shall have been given by Members holding
sixty percent (60%) of the Percentage Interests other than the Percentage
Interests intended to be assigned or transferred,
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which consent may be withheld by any Member in its sole and absolute
discretion, for any reason or for no reason at all, except as provided in
Section 6.10;
(c) the assignee or transferee has adopted and agreed in
writing to be bound by all of the provisions hereof, as the same may have been
amended; and
(d) all documents reasonably required by the Managers to
effect the substitution of the assignee or transferee as a Member shall have
been executed.
When and if all of the provisions of this Section 6.3 have been complied with,
the assignee or transferee shall thereupon become a Member of the Company.
To the extent the Act requires unanimous consent of the Members for the
admission of a Substitute Member, all Members agree to consent to such
admission if the provisions of this Section 6.3 have been met.
6.4 OBLIGATIONS AND RIGHTS OF TRANSFEREES. Whether or not a
Person who acquires an interest in the Company has accepted in writing the
terms and provisions of this Agreement and assumed in writing the obligations
hereunder of its predecessor in interest, such Person shall be deemed, by such
acquisition of such interest, to have agreed to be subject to and bound by all
the obligations of this Agreement with the same effect as any predecessor in
interest of such Person. A Person acquiring an interest in the Company shall
have only such rights and shall be subject to all the obligations as provided
in this Agreement, and, without limiting the foregoing, such Person shall not
have the right to have the value of its interest ascertained or receive the
value of such interest or, in lieu thereof, profits attributable to any right
in the Company, except as set forth in this Agreement.
6.5 DISTRIBUTIONS AND ALLOCATIONS IN RESPECT OF TRANSFERRED
INTERESTS. If any Interest is sold, assigned or transferred during any
accounting period in compliance with the provisions of this Article VI,
Profits, Losses, each item thereof and all other items attributable to such
Interest for such period shall be divided and allocated between the transferor
and the transferee by taking into account their varying interests during the
period in accordance with Code Section 706(d), using any conventions permitted
by law and selected by the Managers. Unless otherwise determined by Managers,
all distributions made on or before the date thirty (30) days following the
date on which the Company receives written notice of such transfer (accompanied
by the transfer documents) shall be made to the transferor, and all
distributions made thereafter shall be made to the transferee. Solely for
purposes of making such allocations and distributions, the Company shall
recognize such transfer not later than the end of the calendar month during
which it is given notice of such transfer, provided that if the Company does
not receive a notice stating the date such Interest was transferred and such
other information as the Managers may reasonably require within thirty (30)
days after the end of the accounting period during which the transfer occurs,
then, at the Managers' option, all of such items shall be allocated, and all
distributions shall be made, to the Person who, according to the books and
records of the Company, on the last day of the accounting period during which
the transfer occurs, was the owner of the Interest. Neither the Company nor
the Managers shall incur any liability for making allocations and distributions
in accordance with the provisions of this
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Section 6.5, whether or not the Managers or the Company have knowledge of any
transfer of ownership of any Interest.
6.6 CONTINUATION AFTER RETIREMENT OF MEMBER. The Company shall
be dissolved upon the Retirement of a Member; provided, however, that the
Company and its business shall be continued after such Retirement if, within 90
days or such longer time as permitted by the Act, the written Consent of
Members holding Percentage Interests representing a majority of the capital
interests and a majority of the profits interests in the Company of the
remaining Members has been obtained, which consent may be withheld by any
Member, in its sole and absolute discretion, for any reason or for no reason at
all. In the event that the Company's business has been validly continued as
provided in the preceding sentence, such business shall be continued in the
form of a successor limited liability company, which shall be deemed
constituted and continued on the terms and conditions set forth in this
Agreement, except as may be modified by agreement of the Members as provided in
Article IX hereof; and the assets of the Company shall not be liquidated. Each
Member hereby agrees to execute and deliver all documents necessary to
effectuate the purposes of this Section.
6.7 RESTRICTIONS REASONABLE. Each Member acknowledges and agrees
that the restrictions or the transfer of Interests imposed by this Agreement
are imposed to accomplish legitimate purposes of the Company, and that such
restrictions are not more restrictive than necessary to accomplish those
purposes.
6.8 CERTAIN PROVISIONS OF THE ACT SUPERSEDED. The provisions of
this Agreement regarding the Transfer of a Member's Interest or the Retirement
of a Member are intended to and shall, to the fullest extent permitted by law,
supersede the provisions of the Act regarding the withdrawal of a member set
forth in the Act.
6.9 SPECIAL WITHDRAWAL RIGHTS OF MINORITY MEMBERS. In the event
WSMI is unable to transfer the land in Monroe, Michigan on which the TWB plant
currently sits to TWB on or before December 31, 1997 and a satisfactory lease
or other arrangement is not reached within 60 days between TWB and WSMI, then a
Minority Member may elect to withdraw from the Company by giving a Notice of
Withdrawal to the Company and all other Members no later than June 30, 1998.
Upon such a withdrawal, the option to purchase and the mandatory purchase
provisions of Section 6.1(c) and 6.1(d) shall be applicable but Section 6.1(e)
and (f) shall not apply. Instead, the Purchase Price shall equal the Formula
Price as defined in Section 6.1(e)(ii) but with an Annual Rate of Return of
6.25%. The Closing of the purchase and the payment of the Purchase Price shall
occur at a time agreed upon by the parties to the purchase and sale, but in any
event within 30 days after the purchaser is identified pursuant to Section
6.1(c) and (d).
6.10 TRANSFERS TO AFFILIATES. Each Member agrees not to
unreasonably withhold its consent (i) to an assignment or transfer of a
Member's Interest to an Affiliate of the transferring Member, and (ii) to such
Affiliate becoming a Substitute Member; provided that the provisions of Section
6.2 and 6.3 of this Article VI (other than Section 6.3(b)) are complied with.
Any transfer to an Affiliate of the transferring Member which receives the
necessary Consent of the other Members shall not be subject to the provisions
of Section 6.1.
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ARTICLE VII
PROCEDURE ON DISSOLUTION
7.1 LIQUIDATION. Upon the dissolution of the Company, unless the
Company is continued or reformed as provided in this Agreement, the Members
shall proceed to liquidate the Company and to apply and distribute the proceeds
of liquidation as set forth in Sections 4.4 and 4.5 and as is consistent with
the Act.
7.2 OPERATIONS DURING LIQUIDATION. Upon the determination that
the Company is to be dissolved and liquidated, the business of the Company
during the period of liquidation shall be carried on by the Managers, or by a
designee of the Managers, who shall possess all the powers of the Managers to
the extent necessary to wind up the business and affairs of the Company.
7.3 TIME FOR LIQUIDATION. In the event the Company is "liquidated"
within the meaning of the Allocation Regulations, distributions shall be made
pursuant to Section 4.4 in compliance with the timing requirements of the
Allocation Regulations; provided, however, that if, in the opinion of counsel
satisfactory to the Managers, failure to comply with the Allocation Regulations
would not cause the allocations of Profits and Losses (or any item thereof) to
the respective Members to lack substantial economic effect within the meaning
of Section 704(b) of the Code, then distributions need not be made in
compliance with the timing requirements of the Allocation Regulations.
7.4 TERMINATION. Upon compliance with the foregoing distribution
plan (including payment over to an escrow agent or trustee, if deemed
appropriate by the Managers and if there be sufficient funds therefor), the
Company shall cease to be such.
7.5 CERTIFICATE OF DISSOLUTION. Upon dissolution of the Company,
the Managers and/or the Members shall execute, acknowledge and cause to be
filed a certificate of dissolution of the Company with the Department of
Commerce, including the name of the Company and the effective date of its
dissolution subject to and in accordance with applicable law.
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ARTICLE VIII
BOOKS AND RECORDS, BANK ACCOUNTS
8.1 MAINTENANCE OF BOOKS AND ACCOUNTING METHOD. The Managers
shall keep or cause to be kept the following: (i) a current list of the full
names, in alphabetical order, and last known business or residence addresses of
all Members and Managers; (ii) a copy of the Articles of Organization,
including any amendments thereof and any written powers of attorney relating to
the execution thereof; (iii) a copy of this Agreement, including any amendments
thereof and any written powers of attorney relating to the execution thereof;
(iv) copies of federal, state and local income tax returns and reports of the
Company for the three (3) most recent years; (v) copies of any financial
statements of the Company for the three (3) most recent years; (vi) copies of
any records that would enable a Member to determine the Member's relative share
of the Company's distributions and the Member's relative voting rights; and
(vii) such other books and records as may be required by law or as are
otherwise deemed appropriate. Such books and records shall be maintained at
the Registered Office of the Company and be available upon reasonable notice,
at reasonable times, for inspection and examination by the Members or their
duly authorized agents or representatives. The books and records of the
Company shall be kept in accordance with accounting methods selected by the
Managers.
8.2 FISCAL YEAR. The fiscal year of the Company shall end on
May 31.
8.3 REPORTS TO THE MEMBERS, AUDIT.
(a) On a quarterly basis (or on a monthly basis if the
Managers so determine), the Managers shall cause to be prepared and shall send
to each Member: (i)(A) a statement of operations of the Company and (B) a
statement of cash flows of the Company for the preceding period (and
year-to-date through and including such period); and (ii) a balance sheet of
the Company as of the close of such period. The annual financial statements of
the Company will be audited by an independent accounting firm as may be
selected by the Managers, unless there is a unanimous consent of all Members
owning ten percent (10%) or more of the Percentage Interests that an audit is
not necessary. Any Member shall have the right of access to and review of the
work papers of such independent auditor. If any Member disagrees with a
significant accounting position taken by the Company and if such position is
reflected in such audited statement, such Member shall have the right to have
such accounting issue submitted for review and assessment to another big six
accounting firm not performing substantial services to such disagreeing
partner. Such review request by a disagreeing Member shall set forth all
relevant details and justification for such review request. The Members will
use their best efforts to see that the annual financial statements are
completed and distributed to all Members within 90 days after the Company's
fiscal year end.
(b) The Managers shall cause to be prepared and timely
distributed to each Member, the Member's Schedule K-1 (Form 1065) and all other
information reasonably necessary for the preparation of such Member's federal,
state and local tax returns.
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(c) No cause of action shall accrue to any Member under
this Section 8.3 if the Managers shall have acted in good faith in attempting
to meet its obligations under this Section yet failed to deliver any required
statements, reports, returns or information within the specified time period.
(d) In the event of any dispute among the Members
relating to the financial statements or accounting for the Company, the dispute
shall be submitted, at the request of any Member involved, to the public
accounting firm which has been engaged to audit the books of the Company, or if
no accounting firm has been so engaged, then to a public accounting firm to be
selected as provided in Section 8.3(a). In the case of any such disputes, the
determination of the accounting firm shall be final and binding on the Members.
8.4 TAX ELECTIONS; SPECIAL BASIS ADJUSTMENTS. The Tax Matters
Member shall make all tax elections on behalf of the Company. In the event of
a transfer of all or any part of the Interest of any Member for an amount in
excess of the adjusted basis for such interest for federal income tax purposes,
the Managers may elect, pursuant to Section 754 of the Code (or corresponding
provisions of succeeding law), to enable an adjustment to be made to the basis
of the Company's property. Any costs incurred by the Company in connection
with such Section 754 election shall be borne by the Member seeking a transfer
of its Interest. Any adjustments made pursuant to an election under Section
754 shall affect only the successor in Interest to the transferring Member.
Each Member will furnish the Company with all information necessary to give
effect to such election.
ARTICLE IX
AMENDMENTS
9.1 AMENDMENTS WHICH MAY BE MADE WITH THE CONSENT OF MEMBERS
HOLDING A MAJORITY OF THE PERCENTAGE INTERESTS. Subject to Section 9.3, the
Members, by Consent of Members holding a majority of the Percentage Interests,
shall have the power and authority to amend this Agreement or the Articles of
Organization from time to time for any of the following reasons:
(a) to reflect the admission, substitution, removal or
withdrawal of a Member in accordance with the terms of this Agreement
(including, without limitation, an amendment to effect the admission of
additional Members pursuant to this Agreement), or a change in the name of the
Company;
(b) to reflect the occurrence of a return of all or part
of any Member's paid-in Capital Contribution or to reflect additional
contributions to the Company;
(c) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision herein or
to clarify this Agreement, provided such amendment does not change the
substance of this Agreement;
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(d) an amendment which is, in the opinion either of
counsel to the Company or of the Company's then-serving accountants, necessary
or appropriate to satisfy requirements of the Code or of any other federal or
any state tax laws or regulations with respect to partnerships and does not
increase or extend any financial obligation or liability of the Members, or
reduce the obligations of the Managers hereunder;
(e) subject to section 9.2(c), to add or delete any
provision which the Managers determine to be necessary to comply with the
requirements of the Code or Income Tax Regulations or in order for the
allocations of Profits and Losses made in this Agreement to be held valid,
provided that an amendment for such purposes is accompanied by an opinion of
counsel or the Company's then-serving accountants to the effect that such
amendment is necessary or appropriate in order that, or would improve the
likelihood that, the allocations of Profits and Losses made in this Agreement,
or allocations as close thereto as possible, will be held valid; and
(f) to delete or add any provision required to be so
deleted or added by any federal agency or by a state "blue sky" administrator
or similar such official, which deletion or addition is deemed by such official
or administrator to be for the benefit or protection of the Members.
9.2 AMENDMENTS REQUIRING CONSENT OF MEMBERS HOLDING EIGHTY-FIVE
PERCENT OF THE PERCENTAGE INTERESTS. Except as otherwise provided in Sections
9.1 and 9.3, the Members shall amend this Agreement or the Articles of
Organization only with the Consent of Members holding eighty-five percent (85%)
of the Percentage Interests.
9.3 AMENDMENTS REQUIRING APPROVAL OF AFFECTED MEMBER. The Members
shall not amend this Agreement or the Articles of Organization without the
approval of each of the Members materially adversely affected thereby if any
such amendment would:
(a) materially expand the purposes of the Company, or the
character of its business;
(b) impose any new or additional liability on any
existing Member or enlarge the obligation of any existing Member to make
contributions to the capital of the Company, other than as provided in this
Agreement;
(c) alter the order of distribution and the allocation of
Profits and Losses set forth in this Agreement, unless such alteration is made
in connection with the admission of one or more substitute Members in
accordance with this Agreement; or
(d) modify or amend this Article IX.
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ARTICLE X
GENERAL PROVISIONS
10.1 NON-WAIVER. No provision of this Agreement shall be deemed to
have been waived unless such waiver is contained in a written notice given by
the party granting such waiver to the party claiming such waiver and no such
waiver shall be deemed to be a waiver of any other or further obligation or
liability of the party or parties in whose favor the waiver was given or a
waiver by any party not executing such waiver of any of its rights.
10.2 ADDITIONAL DOCUMENTS AND INSTRUMENTS. The Members shall
execute and deliver to each other such other and further documents and
instruments as may be necessary to carry out the purposes of this Agreement and
which are required by the Manager, or any federal, state or local governmental
agency having jurisdiction over the Company.
10.3 SEVERABILITY. If any provision or provisions of this
Agreement (or any part thereof) or the application thereof to any particular
facts or circumstances shall be illegal and unenforceable by reason of any
statute or rule of law, or shall be deemed null and void pursuant to Section
2.5 of this Agreement, the remaining provisions (or parts thereof) of this
Agreement or the application of the particular provision or provisions (or
parts thereof) to other facts or circumstances shall not be affected thereby
and shall remain in full force and effect. It is the intention of the
provisions of this Section to make clear that the agreement of the parties to
this Agreement is that this Agreement shall be enforced insofar as it may be
enforced consistent with applicable statutes and rules of law.
10.4 ENTIRE AGREEMENT. This Agreement and any schedules annexed
hereto, each of which is made a part hereof by this reference, constitute the
entire operating agreement of the Company within the meaning of the Act and
contain the entire understanding and agreement between the parties upon the
subject matter of this Agreement and may only be amended or changed in a
writing executed by Members holding the requisite Percentage Interests as
specified in Article IX. Any prior understandings and agreements between the
parties are merged herein, except only as herein otherwise expressly stated.
10.5 PROVISIONS BINDING. This Agreement shall inure to the benefit
of and be binding upon the parties and their respective heirs, executors,
administrators, successors and assigns and any additional or Substitute Members
(except as may otherwise be specifically provided herein).
10.6 CAPTIONS. The table of contents and captions set forth herein
are for convenience and reference only and are not intended to modify, limit,
describe or affect in any way the contents, scope or intent of this Agreement.
10.7 COUNTERPARTS. This Agreement may be executed in several
counterparts and all so executed shall constitute one and the same agreement
binding on all parties hereto, notwithstanding that all parties have not signed
the same counterpart or that any such counterpart
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does not have attached copies of all signature pages attached hereto that
constitute part of this Agreement.
10.8 WORD MEANINGS. The words such as "herein," "hereinafter,"
"hereof" and "hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise requires.
The singular shall include the plural, and the masculine gender shall include
the feminine and neuter, and vice versa, unless the context otherwise requires.
10.9 APPLICABLE LAW. This Agreement and the rights of the parties
hereto shall be interpreted in accordance with the laws of the State of
Michigan.
10.10 DISPUTE RESOLUTION.
(a) Initial Procedure. Any claim, dispute, difference or
controversy arising out of or relative to this Agreement or the operation of
the Company which cannot be settled by mutual understanding between the parties
involved, will first be submitted to the managers or to the Managers
representing each of the parties involved in such dispute, who will meet and
attempt to resolve such dispute.
(b) CEO Dispute Resolution. Should said claim, dispute,
difference or controversy not be resolved as above provided within sixty (60)
days after submission to the named persons, then at the written request of the
Company or any Member involved, the said claim, dispute, difference or
controversy shall be submitted to the CEO's of each Member, or of the Members
involved in the dispute, who will meet and attempt to resolve the dispute.
(c) Binding Arbitration. Should said claim, dispute,
difference or controversy not be resolved by the CEO's as above provided within
sixty (60) days after submission to the CEO's then at the written request of
the Company or any Member involved, the said claim, dispute, difference or
controversy shall be submitted to binding arbitration in accordance with the
procedure set forth in Schedule C.
IN WITNESS WHEREOF, the undersigned have duly executed this Operating
Agreement of TWB Company, L.L.C.
THYSSEN, INC., a Delaware corporation WORTHINGTON STEEL OF
MICHIGAN, INC., a Michigan corporation
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxx X. XxXxxxxxx
----------------------------------- --------------------------------
Printed Name: Xxxxxx X. Xxxxxx Printed Name: Xxxx X. XxXxxxxxx
-------------------------- ----------------------
Title: Executive Vice President Title: Chairman
-------------------------------- -----------------------------
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