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EXHIBIT 3.6
OPERATING AGREEMENT
FOR
LDM HOLDINGS, L.L.C.
A MICHIGAN LIMITED LIABILITY COMPANY
THIS OPERATING AGREEMENT is made and entered into as of December 10, 1996,
by and among LDM Holdings, L.L.C., a Michigan limited liability company
("Company") and LDM Technologies, Inc., a Michigan corporation f/k/a LDM
Industries Inc., and LDM Holding Canada, Inc., a Michigan corporation
(individually "Member" and collectively "Members") who agree as follows:
ARTICLE I
ORGANIZATION
1.1 FORMATION
The Company has been organized as a Michigan limited liability company
pursuant to the Michigan Limited Liability Company Act, 1993 PA 23 ("Act") by
the filing of Articles of Organization ("Articles") with the Michigan Department
of Consumer and Industry Services-Corporation and Land Development Bureau.
1.2 NAME
The name of the Company is LDM Holdings, L.L.C. The Company may also
conduct its business under one or more assumed names.
1.3 PURPOSES
The purpose of the Company is to engage in any activity for which limited
liability companies may be formed under the Act. The Company shall have all the
powers necessary or convenient to effect any purpose for which it is formed,
including all powers granted by the Act.
1.4 DURATION
The Company shall continue in existence for the period fixed in the
Articles for the duration of the Company or until the Company dissolves and its
affairs are wound up in accordance with the Act or this Operating Agreement.
1.5 REGISTERED OFFICE AND RESIDENT AGENT
The Registered Office and Resident Agent of the Company shall be as
designated in the initial or amended Articles. The Registered Office and/or
Resident Agent may be changed from
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time to time. Any such change shall be made in accordance with the Act. If the
Resident Agent resigns, the Company shall promptly appoint a successor.
1.6 INTENTION FOR COMPANY
The Members have formed the Company as a limited liability company under
the Act. The Members specifically intend and agree that the Company shall not
be a partnership (including a limited partnership), association or any other
venture, but a limited liability company under and pursuant to the Act. No
Member or Manager shall be construed to be a partner or agent in the Company or
a partner of any other Member, or person, and the Articles, this Operating
Agreement, and the relationships created by and arising from them shall not be
construed to suggest otherwise.
ARTICLE II
MEMBERSHIP INTERESTS, CAPITAL ACCOUNTS, CAPITAL CONTRIBUTIONS
2.1 MEMBERSHIP INTERESTS
Each of the Members has made an initial capital contribution, and owns a
membership interest in the Company ("Membership Interest") as specified below:
Initial Capital
Name of Member Contribution Membership Interest
LDM Technologies, Inc. $200 66-1/3 %
LDM Holding Canada, Inc. $l00 33-1/3 %
---- ------
Total $300 100%
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2.2 MEMBER'S CAPITAL ACCOUNTS
2.2.1 The Company shall maintain a separate Capital Account for each
Member, which Capital Account shall be:
A. Increased for the amount of cash and fair market value of
any property (net of any liabilities secured by the property that the
Company assumes or takes subject to) contributed by the Member and for
the Member's share of any income or gain of the Company; and
B. Decreased for the amount of any cash and fair market value of
any property (net of any liabilities secured by the property that the
Member assumes or takes subject to) distributed to the Member, for the
Member's share
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of any losses and deductions of the Company and for any expenditures
under IRC Section 705(a)(2)(B).
2.2.2 In the event that a Membership Interest, or any portion
thereof, shall be transferred in accordance with this Operating Agreement,
the transferee shall succeed to the Capital Account of the transferor
Member or any portion thereof so transferred.
2.2.3 All of the foregoing provisions regarding the establishment and
maintenance of Capital Accounts are intended to comply with Treas Reg
Section 1.704-1(b)(2)(iv) and shall be interpreted and applied to comply
with said Treasury Regulation. The Members further agree to make such
adjustments to the Capital Accounts as may be necessary or appropriate in
order to comply with said Treasury Regulation.
2.2.4 Except as otherwise expressly provided herein or under the Act,
no Member shall be entitled to receive any interest or return on any
contributions to the Company or on the Members' Capital Accounts, nor shall
any Member have any interest, right or claim in or to any assets of the
Company.
2.3 ADDITIONAL CONTRIBUTIONS BY MEMBERS
Although no Member shall be required to contribute additional funds to the
Company, the Members acknowledge that the business of the Company may not
produce sufficient income to discharge its operating costs and that additional
cash contributions may be necessary to pay the obligations of the Company as
they become due. Accordingly, should the Members determine that it is necessary
or appropriate to raise additional funds, then the following provisions shall
apply:
2.3.1 The Company shall issue a written notice of capital
request ("Notice of Capital Request") to each Member to contribute
additional funds to the Company. The Notice of Capital Request shall
include the following information:
A. The total amount of capital requested from all of the
Members ("Total Capital Request");
B. Each Member's share of the Total Capital Request, which
shall be determined by multiplying the Total Capital Request by the
Membership Interest of each Member ("Member Capital Contribution");
and
C. The date on or before which the Member Capital
Contribution shall be due, which date shall not be less than thirty
(30) days from the date of the Notice of Capital Request.
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2.3.2 Should any Member neglect, fail or refuse to timely
contribute any portion of such Member's Capital Contribution ("Delinquent
Member"), then the Company shall so notify the other Members ("Member
Notice") and the other Members who have paid their Member's Capital
Contribution in full ("Non-Delinquent Members") shall have the option to
contribute the Delinquent Member's Capital Contribution on a pro-rata basis
(in accordance with the then respective Membership Interest of each other
Non-Delinquent Member as compared to the total Membership Interests of all
Non-Delinquent Members). In the event that any Non-Delinquent Member
neglects, fails or refuses to contribute the Member's pro-rata share of the
Delinquent Member's Capital Contribution within thirty (30) days of the
Member Notice, then all other Non-Delinquent Members shall have the right
to contribute the remaining deficiency in the Delinquent Member's Capital
Contribution on a pro-rata basis (as to all such other Non-Delinquent
Members and in the manner hereinabove provided), which procedure shall be
repeated until the Delinquent Member's Capital Contribution is satisfied or
all Non-Delinquent Members fail to contribute any additional capital.
2.3.3 The Membership Interests of the Members shall be adjusted
so that the Membership Interest of each Member shall equal an amount
determined by the following formula:
Aggregate Capital Contributions of Member
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Aggregate Capital Contributions of All Members X 100
ARTICLE III
ADMINISTRATIVE PROVISIONS
3.1 BOOKS OF ACCOUNT
At all times during the continuance of the Company, the Company shall keep
or cause to be kept full and true books of account, which shall reflect each
transaction of the Company. Such books of account, together with a list of the
names and addresses of each Member, a copy of the Articles, copies of the
Company's financial statements and federal, state and local tax returns and
reports for the three most recent fiscal years, and copies of records that would
enable a Member to determine the Member's Membership Interests and relative
voting rights, shall be maintained at all times at the registered office of the
Company and shall be open to reasonable inspection and examination of the
Members or their duly authorized representatives at the registered office of the
Company during reasonable business hours upon reasonable notice to the Company.
The Company may engage certified public accountants to assist in the preparation
of the Company's books and financial statements, and to render such other
services requested by the Company.
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3.2 REPORTS
The Company shall endeavor to furnish to each Member within ninety (90)
days after the end of each fiscal year or as soon as practical after such ninety
(90) day period, an annual report of the business and operations of the Company
during such year, together with such information as may be necessary for the
preparation of each Member's federal and state income or other tax returns.
Such annual report shall contain a copy of the annual financial statement of the
Company showing the gross receipts and expenses and profit or loss and
allocation thereof to each Member for the year.
3.3 FISCAL YEAR AND ACCOUNTING METHOD
The fiscal year of the Company shall be the calendar year. The books and
records of the Company shall be kept on the accrual method.
3.4 TAX MATTERS MEMBER; MEMBER TAX RETURNS
3.4.1 As used in this Operating Agreement, "Tax Matters Member" has
the same meaning as the term "tax matters partner" as set forth in the
Internal Revenue Code of 1986 or successor law ("IRC"), Section 6231(a)(7).
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ is hereby designated Tax Matters Member for the Company.
3.4.2 The Tax Matters Member designated pursuant to subsection 3.4.1
hereof shall have full power and authority to act as such for the Company
and the Members, with all the rights and responsibilities of that position
described in IRC Section 6222 through IRC Section 6233, except, however, to
the extent IRC Section 6224(c)(3)(B) provides certain rights and privileges
to the non-tax matters partners of a Company. The duty of the Tax Matters
Member to keep each Member informed of administrative and judicial
proceedings involving tax issues relating to the Company, its property or
business shall be limited to a duty to inform each Member of the beginning,
completion and results of such proceedings.
3.4.3 The Tax Matters Member shall in no event be liable for loss or
damage to the Company or any Member arising from the exercise of any of the
Members' rights and/or the performance of any of the Members'
responsibilities referred to in this Section. To the fullest extent
permitted by law, the Company shall indemnify the Tax Matters Member from
any and all claims, liabilities, costs and expenses, including, without
limitation, reasonable attorney fees, incurred by him or her in connection
with any act or omission as the Tax Maters Member other than acts or
omissions which constitute fraud, breach of fiduciary duty, willful or
intentional misconduct, gross misconduct or a breach of this Operating
Agreement.
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3.4.4 Each Member shall reflect on the Member's individual
income tax returns all items of income, gain, loss deduction or credit
relating to the Company, its property or business in a manner which is
consistent with the treatment of such items on the Company returns.
3.5 BANK ACCOUNTS
One or more Company bank accounts may be established, and checks issued on
such accounts shall be signed by one or more Members who shall be designated by
the Members.
ARTICLE IV
TAX ALLOCATIONS
4.1 ALLOCATION OF PROFITS AND LOSSES
4.1.1 Profit and loss from Operations. After giving effect to the
allocations set forth in Sections 4.2, 4.3 and 4.4 hereof, any income,
gain, loss, deduction or credit of the Copmany ("Profits and
Losses"), except as otherwise provided under Sections 4.1.2 and 4.1.3
hereof, shall be allocated among the Members in accordance with their
Membership Interests.
4.1.2 Income and Gain from Capital Sale. Any income or gain arising
from the sale of all or substantially all of the assets of the Company
("Capital Sale") shall be allocated in the following order:
A. First, to those Members having negative Capital Account
balances, pro-rata in proportion to their respective negagive Capital
Account balances, to the extent of such negative Capital Account
balances;
B. Second, to the Members in proportion to their respective
unreturned capital contributions, until their Capital Account balances
shall equal the amount of their respective unreturned capital
contributions;
C. Third, to the Members, so that their Capital Account
balances are, as nearly as possible, in the same ratios as their
respective Membership Interests; and
D. Last, to the Members in proportion to their respective
Membership Interests.
4.1.3 Loss from Capital Sale. Any loss arising from a Capital
Sale shall be allocated in the following order:
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A. First, to the Members so that their Capital Account
balances are, as nearly as possible, in the same ratio as their
respective Membership Interests;
B. Second, to those Members having positive Capital Account
balances, in proportion to and to the extent of, their respective
positive Capital Account balances; and
C. Last, to the Members in accordance with their respective
Membership Interests.
4.2 REGULATORY ALLOCATIONS
The following regulatory allocations shall be made as follows:
4.2.1 Minimum Gain Chargeback. To the extent and in the manner
required by Treasury Regulation Section 1.704-2(f), if there is a net
decrease in Company Minimum Gain during any fiscal year, each Member
shall be allocated items of Company income or gain for such fiscal year
(and, if necessary, subsequent fiscal years) equal to such Member's share
of the net decrease in Company Minimum Gain determined under Treasury
Regulation Section 1.704-2(g). This Section 4.2.1 is intended to comply
with the minimum gain Chargeback requirements of Treasury Regulation
Section 1.704-2(f) and shall be interpreted consistently therewith.
4.2.2 Member Minimum Gain Chargeback. To the extent and in the
manner required by Treasury Regulation Section 1.704-2(i)(4), if there is a
net decrease in Member Minimum Gain, each Member with a share of such
Member Minimum Gain shall be allocated items of Company income and gain
for such fiscal year (and, if necessary, subsequent fiscal years) in
amount equal to such Member's share of the net decrease in Member Minimum
Gain. The items to be so allocated shall be determined in accordance with
Treasury Regulations 1.704-2(i)(4) and 1.704-2(j)(2). This section 4.2.2
is intended to comply with the minimum gain Chargeback requirement of
Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
4.2.3 Qualified Income Offset. Any Member who unexpectedly
receives any adjustment, allocation or distribution described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), shall be allocated
items of Company income and gain in amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations, any
deficit in the Capital Account of such Member as quickly, as possible.
4.2.4 Company Non-Recourse Deductions. Any Company Non-Recourse
Deductions shall be allocated among the Members in accordance with Treasury
Regulation Section 1.704-2(e).
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4.2.5 Member Non-Recourse Deductions. Member Non-Recourse
Deductions shall be allocated to the Members who bear the economic risk of
loss with respect to the Member Non-Recourse Debt to which Member
Non-Recourse Deductions are attributable in accordance with Treasury
Regulation Section l.704-2(i)(1).
4.3 ALLOCATIONS REGARDING CONTRIBUTED PROPERTY
Items of income, gain, loss and deduction with respect to any property
contributed to the Company by any Member shall, solely for tax purposes, be
allocated among the Members so as to take account of any variation between the
adjusted basis of such propery to the Company for federal income tax purposes
and its value for Capital Account purposes in accordance with IRC Section
704(c) and the Treasury Regulations thereunder. In the event the value of said
property is later adjusted, subsequent allocations of income, gain, loss and
deduction with respect to such property shall take account of any variation
between the adjusted basis of such asset for federal income tax purposes and
such adjusted value in accordance with any method permitted by IRC Section
704(c) and the Treasury Regulations thereunder.
4.4 CURATIVE ALLOCATIONS
4.4.1 The allocations contained in Section 4.2 hereof (the
"Regulatory Allocations") are necessary to comply with the requirements of
the Treasury Regulations. To the maximum extent possible, the Regulatory
Allocations shall be offset by other items of Company income, gain, loss or
deduction so that, after such offsetting allocations are made, the Members'
Capital Account balances are, to the extent possible, equal to the Capital
Account balances the Members would have if the Regulatory Allocations were
not made and all items of Profit and Loss were allocated in accordance with
each Member's respective Membership Interest.
4.4.2 The tax allocation provisions under this Article IV are
intended to produce final Capital Account balances upon liquidation of the
Company ("Target Final Balances") that will cause all liquidating
distributions under Section 5.2 of this Operating Agreement to be
allocated to the Members in the same manner as non-liquidating
distributions under Section 5.1 hereof. To the extent that the tax
allocation provisions under this Article IV would not produce such result,
the Members agree to any special and/or corrective allocations of one or
more items of the Profits and Losses necessary to produce the Target Final
Balances and avoid any distortion in the manner in which the Members intend
to share distributions from the Company.
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4.5 DEFINITIONS
For purposes of this Operating Agreement, the following definitions shall
apply:
4.5.1 "Company Non-Recourse Deductions" has the same meaning as
provided in Treasury Regulation Section 1.704-2(b)(1).
4.5.2 "Member Non-Recourse Deductions" has the same meaning as
provided in Treasury Regulation Section 1.704-2(i)(2).
4.5.3 "Member Non-Recourse Debt" has the same meaning as provided
in Treasury Regulation Section 1.704-2(b)(4).
4.5.4 "Member Minimum Gain" means an amount, with respect to any
Member Non-Recourse Debt, as determined in accordance with Treasury
Regulation Section l.704-2(i)(3).
4.5.5 "Company Minimum Gain" has the same meaning as provided in
Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d).
4.6 INTERPRETATION
The Members intend that the allocations of the Profits and Losses of the
Company shall be applied in a manner consistent with IRC Section 704 and the
Treasury Regulations thereunder, and the provisions of this Article IV shall be
interpreted in a manner consistent therewith.
ARTICLE V
DISTRIBUTIONS
5.1 NON-LIQUIDATING DISTRIBUTIONS
The Members may, in their discretion, make distributions to the Members
from time to time. Distributions may be made only after the Members determine
that the Company has cash on hand exceeding the Company's current and
anticipated needs (including operating expenses, debt service, capital
expenditures, establishment of reserves and other needs) which shall not be
retained in order to pursue any existing, potential or future business or
investment opportunities. All non-liquidating distributions shall be made to the
Members in accordance with their Membership Interests. Distributions shall be
in cash or property, or both, as the Members determine. No distribution shall
be declared or made if, after giving it effect, the Company would
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not be able to pay its debts as they became due in the usual course of
business, or the Company's total assets would be less than the sum of its total
liabilities.
5.2 LIQUIDATING DISTRIBUTIONS
Notwithstanding Section 4.2.1 of this Operating Agreement, in the event
that the Company is liquidated under Section 9.3 hereof or is "liquidated"
within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g), then
all distributions shall be made to the Members who have positive Capital
Accounts in compliance with Treasury Regulation Section 1.704-1(b)(2)(ii)(b)(2),
but only after such Capital Accounts have been adjusted for all contributions
and distributions, and all allocations under Article IV for all periods.
ARTICLE VI
MANAGEMENT
6.1 MANAGEMENT OF COMPANY
The business and affairs of the Company shall be managed by the Members in
accordance with the affirmative vote or written consent of any Member(s) holding
a majority of the total Membership votes entitled to vote. Unless a greater
vote is expressly provided for herein, all approvals, consents, decisions,
actions and determinations by the Members, whether required or provided under
this Operating Agreement or the Act, shall be made upon and require the approval
of the affirmative vote or written consent of a majority of all votes held by
the Members entitled to vote thereon as provided under Section 6.2 hereof.
Without limiting the generality of the foregoing, subject to the limitations and
restrictions set forth in this Operating Agreement, the business and affairs of
the Company, including, without limitation, the following specific rights,
actions and powers, shall be conducted by the affirmative vote or written
consent of a majority of all votes held by the Members entitled to vote thereon:
6.1.1 Acquire by purchase, lease or otherwise any real or
personal property which may be necessary, convenient or incidental to the
accomplishment of the purposes of the Company;
6.1.2 Operate, maintain, finance, improve, construct, own, grant
options with respect to, sell, convey, assign, mortgage or lease any real
estate and any personal property necessary, convenient or incidental to the
accomplishment of the purposes of the Company;
6.1.3 Execute any and all agreements, contracts, documents,
certifications and instruments necessary or convenient in connection with
the management, maintenance, and operation of property, or in connection
with managing the affairs of the Company,
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including executing amendments to this Operating Agreement in accordance
with the terms of this Operating Agreement;
6.1.4 Borrow money and issue evidences of indebtedness
necessary, convenient or incidental to the accomplishment of the
purposes of the Company, and secure the same by mortgage, pledge or other
lien on any property;
6.1.5 Execute, in furtherance of any or all of the purposes
of the Company, any deed, lease, mortgage, deed of trust, mortgage note,
promissory note, ▇▇▇▇ of sale, contract or other instrument purporting to
convey or encumber property of the Company;
6.1.6 Maintain, invest and/or distribute funds to the
Members in accordance with the provisions of this Operating Agreement;
6.1.7 Contract on behalf of the Company for the employment
and service of employees and/or independent contractors, such as lawyers,
consultants and accountants;
6.1.8 Engage in any kind of activity and perform and carry
out contracts of any kind (including contracts of insurance covering risks
to property and Member's liability) necessary or incidental to, or in
connection with, the accomplishment of the purposes of the Company, as may
be lawfully carried on or performed under the Act;
6.1.9 Institute, prosecute, defend, settle, compromise or
dismiss lawsuits or other judicial or administrative proceedings brought on
or in behalf of, or against the Company, the property of the Company, in
connection with activities arising out of, connected with, or incidental to
this Operating Agreement, the Company or the business of the Company, and
to engage counsel or others in connection therewith.
6.2 MEMBER VOTING; CONSENT
For purposes of voting and acting by written consent on any matter
submitted to the Members as provided under this Operating Agreement or the
Act, each Member shall have the right to vote that number of votes determined by
multiplying the Membership Interest of each Member by one hundred (100).
Notwithstanding anything contained in this Operating Agreement to the contrary,
any approval, consent, action, decision or determination required or permitted
under this Operating Agreement or the Act to be taken by a vote of the Members
may be taken without a meeting, without prior notice and without a vote, if
consents in writing, setting forth the action so taken, are signed by any
Member(s) having a majority of the total Membership votes.
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6.3 OPERATING RESTRICTIONS
6.3.1 Except as may otherwise be approved by a vote of the
Members entitled to vote thereon, no loans or guarantees of loans shall be
made by the Company to any Member.
6.3.2 No rebates, kickbacks, or reciprocal arrangements may be
received or entered into by any Member.
6.3.3 Except as may otherwise be approved by a vote of the
Members entitled to vote thereon, all property in the form of cash not
otherwise invested shall be deposited for the benefit of the Company in
one or more accounts of the Company, maintained in such financial
institutions as the Member shall determine or shall be invested in
short-term liquid securities or other cash-equivalent assets, and
withdrawals shall be made only in the regular course of Company business on
such signature or signatures as the Members may determine from time to
time.
6.4 RESTRICTIONS ON MEMBERS
Each Member hereby covenants and agrees that he shall not engage in any
of the following acts without the prior vote or written consent of
Members:
6.4.1 Cause or permit the Company to engage in any activity that
is not consistent with the purpose of the Company as set forth in Section
1.3 of this Operating Agreement;
6.4.2 Engage in any act or cause the Company to engage in any act
or otherwise operate in any manner, which is in contravention of this
Operating Agreement; and
6.4.3 Engage in any act or transaction on behalf of or otherwise
binding the Company.
6.5 COMPENSATION AND EXPENSES
Except as approved by a vote of the Members entitled to vote thereon, no
Member shall receive any salary, fee, or draw for services rendered to or on
behalf of the Company, nor shall any Member be reimbursed for any expenses
incurred by such Member on behalf of the Company.
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6.6 RELATED PARTY TRANSACTIONS
The Company may engage any Member, or persons or firms affiliated or
associated with any Member for specific purposes and may otherwise deal with the
Members on such terms and compensation as established by the Members.
6.7 MEETINGS OF MEMBERS
Meetings of the Members of the Company may be called at any time by Members
holding at least 25% of the total Membership votes for any purpose. Such
Member(s) shall give written notice to the Members that a meeting will be held
at a time and place fixed in the notice, which is not less than fifteen (15)
days nor more than sixty (60) days after the receipt of such request and stating
the purpose(s) of the meeting.
ARTICLE VII
MEMBER LIABILITY AND INDEMNIFICATION
7.1 LIABILITY OF MEMBERS
No Member shall have any personal liability whatsoever to the Company or to
its Members or creditors for any debts, liabilities or obligations of the
Company except as expressly provided in this Operating Agreement or as under the
Act. Notwithstanding anything contained in this Operating Agreement to the
contrary, no Member shall be personally liable for either the return of the
capital contributions of any other Member or the repayment of loans or advances
(or any interest thereon) to the Company by any Member, it being expressly
understood that any such return or repayment shall be made solely from the
Company assets. No Member shall be liable to the Company or any Member for any
loss on account of any action or inaction by a Member provided such action or
inaction was taken in good faith and does not constitute willful misconduct or
gross negligence.
7.2 INDEMNIFICATION OF MEMBERS
7.2.1 In any threatened, pending or completed action, suit or
proceeding, or other civil, criminal, investigative or administrative
action, brought by or in the name or right of the Company, to which any
Member was or is a party or is threatened to be made a party, the
Company shall indemnify the Member against the expenses, including
attorneys' fees, actually and reasonably incurred by the Member in
connection with the defense or settlement of such action, suit or
proceeding if such Member acted in good faith and in a manner the Member
reasonably believed to be in or not opposed to the best interests of the
Company; provided, however, that no indemnification shall be made in
respect to any claim, issue or matter as to which the Member shall have
been adjudged to be liable for fraud, gross negligence, breach of this
Operating Agreement, willful or
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wanton misconduct, the receipt of a financial benefit which the Member is
not entitled, the liability of a Member for a violation of Section 4308 of
the Act, any act or omission occurring prior to the date of this Operating
Agreement or breach of fiduciary obligation in the performance of any duty
to the Company, or, with respect to any knowing violation of law or any
criminal action or proceeding, where the Member had reasonable cause to
believe the Member's conduct was unlawful, except to the extent that the
court in which such action, suit or proceeding was brought shall determine
upon application that, despite such adjudication of liability, in view of
all circumstances of the case, the Member is fairly and reasonably entitled
to indemnity for such expenses as such court shall deem proper. Any
indemnification shall only be made from Company assets.
7.2.2 In any threatened, pending or completed action, suit or
proceeding to which the Member was or is a party or is threatened to be
made a party by reason of the fact that the Member is or was a Member of
the Company (other than an action by or in the right of the Company)
involving an alleged cause of action for damages arising from the
activities relative to management and disposition of the Company properties
and business, the Company shall indemnify the Members against expenses,
including attorneys' fees, judgments and amounts paid in settlement,
actually and reasonably incurred by him in connection with such action,
suit or proceeding if the Member acted in good faith and in a manner the
Member reasonably believed to be in or not opposed to the best interests of
the Company and provided that the Member's conduct does not constitute
fraud, gross negligence, breach of this Operating Agreement, willful or
wanton misconduct, the receipt of a financial benefit which the Member is
not entitled, the liability of a Member for a violation of Section 4308 of
the Act, any act or omission occurring prior to the date of this Operating
Agreement or a breach of any fiduciary obligation to the Company. The
termination of any action, suit or proceeding by settlement shall not, of
itself, create a presumption that the Member did not act in good faith and
in a manner which the Member reasonably believed to be in or not opposed to
the best interest of the Company. Any indemnification shall only be made
from Company assets.
7.2.3 The termination of any action, suit or proceeding
by judgment, order, conviction or upon a plea of nolo contendere,
or its equivalent, shall create a presumption that the act or omission was
done fraudulently or in bad faith, or as a result of wanton or willful
misconduct, or with respect to any criminal action or proceeding, that the
person had reasonable cause to believe that the Member's conduct was
unlawful.
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ARTICLE VIII
TRANSFERS OF MEMBERSHIP INTERESTS
ADMISSION OF MEMBERS
8.1 RESTRICTIONS ON TRANSFERS
The Members agree that they will not, whether voluntarily, involuntarily or
by operation of law, sell, transfer, assign, encumber, pledge, convey or
otherwise dispose of part or all of the Membership interests owned by them, or
hereafter acquired by them, except pursuant to the terms of this Operating
Agreement. Any encumbrance, pledge, assignment, sale, transfer or other
disposition of such Membership Interest contrary to this Operating Agreement
shall be null and void and of no effect whatsoever.
8.2 SALE PURSUANT TO BONAFIDE OFFER
In the event that any Member ("Selling Member") shall desire for any reason
to sell part or all of such Member's Membership Interest pursuant to a bonafide
offer, the Selling Member shall immediately provide the Company and each of the
Members with written notice of such bonafide offer, along with copies of all
agreements and documents related thereto. For a period of thirty (30) days
following the receipt of such written notice and documents, the Company shall
have the exclusive right and option ("First Option") to elect to purchase and
liquidate the Membership Interest subject to the bonafide offer at the same
price and terms as contained in the bonafide offer. If the Company shall fail
to exercise the First Option, then for an additional thirty (30) day period, the
other Members of the Company shall have the exclusive right and option to elect
to purchase the Membership Interest subject to the bonafide offer ("Second
Option") upon the terms as contained in the bonafide offer, which Members shall
purchase such interest on a "Pro-Rata Basis" (as hereinafter defined). If the
other Members shall fail to exercise the Second Option, then the Selling Member
may sell the Membership Interest subject to the bonafide offer to the purchaser
named therein ("Purchaser"), but only strictly in accordance with all of the
terms and provisions of said bonafide offer and only upon compliance with all of
the following conditions:
8.2.1 Prior to the sale of any Membership Interest, the Selling
Member shall provide to the Company, an opinion of counsel, in form and
substance satisfactory to counsel for the Company, that neither the
offering nor the sale of such Membership Interest (i) violates any
provision of federal or state securities laws or comparable laws or causes
the loss of any exemption from federal or state securities laws which may
be available with respect to any of the Membership Interests, (ii) violates
the Act or other laws of the state governing the Company, or (iii) results
in the termination of the Company for federal income tax purposes;
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8.2.2 The Purchaser shall furnish to the Company, the Purchaser's
taxpayers' identification number and any and all other information
necessary or appropriate for the Company to file all required federal and
state tax returns;
8.2.3 The Purchaser shall execute and deliver to the Company, an
agreement, in form and substance satisfactory to the Company, whereby the
Purchaser agrees to be bound by all of the terms and provisions of this
Article VIII and agrees that the Membership Interest acquired by the
Purchaser shall be subject to all of the transfer restrictions herein;
8.2.4 The Selling Member or Purchaser shall reimburse the Company
for all reasonable costs and expenses incurred by the Company in connection
with the transfer of the Membership Interest and/or in assuring compliance
with the terms and provisions of this Article VIII in connection with said
transfer; and
8.2.5 In the event that the sale of the Membership Interest
subject to the bonafide offer is not consummated within sixty (60) days
following the expiration of the Second Option, the Selling Member must
again comply with all the terms and provisions of Section 8.2 (including,
without limitation, the First Option and Second Option) prior to any sale
or disposition of such Membership Interest.
Notwithstanding compliance with all of the provisions of this Section 8.2,
no Purchaser shall be admitted as a Member of the Company except pursuant to
Section 8.6 hereof.
8.3 MANDATORY OFFER UPON DEATH OR WITHDRAWAL
Upon the death or withdrawal of any Member ("Terminating Member"), the
Company shall have the option for a period of sixty (60) days to elect to
purchase and liquidate the Membership Interest of the Terminating Member for the
purchase price and upon the terms as hereinafter provided. In the event that
the Company shall fail to exercise the foregoing option, the remaining Members
shall, for an additional thirty (30) day period, have the option to elect to
purchase the Membership Interest of the Terminating Member on a Pro-Rata Basis
as hereinafter defined. The purchase price for the purchase of a Terminating
Member's Membership Interest shall be equal to the fair market value of such
Membership Interest on the date of the Terminating Member's death, and shall be
payable by the delivery of ten (10) percent of the purchase price payable in
cash at the closing, with the unpaid balance of the purchase price payable in
twenty (20) equal quarterly installments, together with interest thereon at the
prime rate of interest as established by Comerica Bank, which rate shall be
adjusted annually to said prime rate in effect on each anniversary of the
closing date. The unpaid balance of the purchase price shall be evidenced by a
non-negotiable promissory note of the purchaser(s) which shall provide for
commercially reasonable terms and provisions, including, without limitation, the
right of the maker to prepay part or all of the note at any time without
penalty, and the right of the holder thereof to accelerate the balance due upon
a default which remains uncured for a period of forty-five (45) days. The
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closing on the sale of the Membership Interest pursuant to this Section shall
take place within thirty (30) days following the exercise of the option
to purchase the Membership Interest or the establishment of the purchase price
for the Membership Interest as provided herein, if later.
If the Terminating Member (or the Member's representative) and the
purchaser(s) of the Terminating Member's Membership Interest cannot agree upon
the fair market value of the Terminating Member's Membership Interest within ten
(10) days following the exercise of the option to purchase same, then the
Terminating Member (or the Member's representative) and the purchaser(s) (and in
the event of more than one (1) purchaser, all the purchasers shall be treated as
one (1) party for purposes of the balance of this Section) shall each appoint a
mutually agreeable appraiser to establish the fair market value of said
Membership Interest, which fair market value shall be the purchase price
thereof. Such appraiser shall submit a written appraisal of the fair market
value of the Terminating Member's Membership Interest within thirty (30) days
after the appraiser's appointment, which appraisal shall be final and binding
upon the parties and enforceable by the issuance of appropriate orders by a
court of competent jurisdiction. If the parties cannot agree upon a mutually
agreeable appraiser within the allotted time period, then each party shall,
within fifteen (15) days thereafter, designate one (1) qualified independent
appraiser by written notice to the other party containing the name of such
appraiser. The appraisers so designated shall themselves, within ten (10) days,
designate a third qualified independent appraiser ("Independent Appraiser").
Each of the three (3) appraisers shall submit, within thirty (30) days after all
the appraisers have been designated, a written appraisal of the fair market
value of the Terminating Member's Membership Interest. The numerical average of
the two (2) closest appraisals shall determine the fair market value of same and
shall be final and binding upon the parties and enforceable by the issuance of
appropriate orders by a court of competent jurisdiction. The appraisal which is
not one of the two (2) numerically closest appraisals shall be rejected. Each
party shall pay the costs and expenses of the respective appraiser and the party
whose appraisal is rejected shall pay the costs and expenses of the Independent
Appraiser.
In the event that the appraisal of the Independent Appraiser is rejected,
then the costs and expenses of such appraiser shall be borne by the parties
equally. In the event that one (1) party fails, refuses, or otherwise neglects
to appoint an appraiser, the other party's appraiser shall solely determine the
fair market value of the Terminating Member's Membership Interest and such
determination shall be final and binding upon the parties. In the event that
the Membership Interest of a deceased Member is not purchased pursuant to the
foregoing options, the Membership Interest may be validly transferred and
conveyed to such Terminating Member's successor, estate, beneficiaries or heirs,
as applicable ("Successor"), but such Membership Interest shall be and remain
subject to all of the terms, provisions and restrictions of this Article VIII,
and such Successor shall not be admitted as a Member except pursuant to
Section 8.6 hereof. In the event that the Membership Interest of a withdrawn or
expelled Member is not purchased pursuant to the foregoing option, then such
Member shall remain a Member in the Company and such withdrawal or expulsion
shall have no effect.
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8.4 INVOLUNTARY TRANSFERS
The Membership Interests of the Members shall not be subject to any
involuntary transfer whatsoever. In the event that any Member suffers any
involuntary transfer or purported involuntary transfer of part or all of the
Member's Membership Interest, including, but not limited to, transfers resulting
from bankruptcy, creditor attachment, insolvency, divorce or separation, then
the Company shall have the option for a period of six (6) months to elect to
purchase and liquidate said Membership Interest pursuant to the terms and
provisions of Section 8.3 hereof, on the same basis as if the Member suffering
such involuntary transfer or purported involuntary transfer became a Terminating
Member. In the event the Company shall not exercise the foregoing option, then
the remaining Members shall have the option pursuant to the terms and provisions
of Section 8.3 hereof for an additional period of ninety (90) days, to elect to
purchase said Membership Interest, on the same basis as if the Member suffering
such involuntary transfer or purported involuntary transfer became a Terminating
Member.
8.5 TRANSFEREE'S RIGHTS
Notwithstanding the voluntary or involuntary sale, transfer, assignment,
encumbrance, pledge, conveyance or other disposition of part or all of any
Membership Interest, whether or not in compliance with the provisions of this
Article VIII, under no circumstances shall any actual or purported purchaser,
assignee, transferee, Successor, creditor or other party (collectively
"Transferee") be admitted as a substitute Member, except in accordance with
Section 8.6. No Transferee shall have any right to vote or participate in the
affairs of the Company, to receive any Company information or an accounting of
Company funds or affairs, or to be admitted as a Member, nor shall such
Transferee have any rights as a Member under the Act or this Operating
Agreement. Any Transferee acquiring a Membership Interest in compliance with
Article VIII ("Qualifying Transferee") shall be entitled only to the allocations
and distributions provided to such Membership Interest in accordance with this
Operating Agreement.
8.6 ADMISSION AS MEMBER
A Qualifying Transferee shall be admitted to the Company as a substitute
Member only upon satisfaction of all of the following terms and conditions:
8.6.1 The Members shall unanimously consent to the admission of
the Qualifying Transferee as a Member;
8.6.2 The Qualifying Transferee shall execute an amendment to this
Operating Agreement agreeing to be bound by all the terms and provisions of
this Operating Agreement; and
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8.6.3 The Qualifying Transferee shall reimburse the Company for
all reasonable costs and expenses incurred by the Company in connection
with the Member's admission to the Company.
8.7 RIGHT OF WITHDRAWAL
The Members have agreed to the provisions of this Article VIII which shall
govern the disposition of their Membership Interests to the exclusion of any
other rights the Members may have under the Act to receive any payment or
distribution upon the disposition of their Membership Interests or upon the
death, expulsion or withdrawal of any Member. The Members hereby waive any right
under the Act to receive any payment or distribution upon any actual or
purported withdrawal and agree not to withdraw from the Company unless the
Membership Interest of the withdrawing Member is acquired pursuant to Section
8.3.
8.8 DEFINITION OF "PRO-RATA BASIS"
For purposes of this Operating Agreement, the term "Pro-Rata Basis" with
reference to the purchase of any Membership Interest by any of the Members
("Remaining Members") shall mean (i) pursuant to the unanimous written agreement
of the Remaining Members, or (ii) pursuant to each of the Remaining Members'
respective Membership Interests in the total outstanding Membership Interests of
the Company (excluding any Membership Interest owned by the Selling Member or
Terminating Member), and in the event that one (1) or more of the Remaining
Members shall decline to purchase the Member's entire share of the Membership
Interest being sold ("Declining Member"), then such unpurchased Membership
Interest shall again be offered to the Remaining Members (other than any
Declining Member), in accordance with their respective Membership Interests in
the total outstanding Membership Interests of the Company (excluding the
Membership Interests of any Selling, Terminating or Declining Member), and the
foregoing process shall be repeated until none of the Remaining Members wishes
to purchase any additional Membership Interest.
ARTICLE IX
DISSOLUTION AND LIQUIDATION
9.1 DISASSOCIATION OF A MEMBER
For purposes of this Operating Agreement, the "Disassociation" of a Member
shall mean the death, withdrawal, expulsion, bankruptcy, dissolution of any
Member or any other event that terminates the continued membership of the Member
in the Company.
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9.2 DISSOLUTION
The Company shall be dissolved upon the occurrence of any of the following
events:
9.2.1 The Disassociation of a Member.
9.2.2 The arrival of the termination date specified in Section 1.4;
9.2.3 Any event in which causes there to be only one (1) Member;
9.2.4 The affirmative vote of the Members holding more than 50% of
all Membership votes to dissolve, wind up and liquidate the Company; or
9.2.5 Any other event making it unlawful or impossible for the
Company to conduct business or causing the dissolution or the Company under
the laws of the State of Michigan.
9.3 LIQUIDATION UPON DISSOLUTION
Upon the dissolution of the Company by the occurrence of any event
described in Section 9.2 hereof, the Member or such other person, who shall be
designated within 60 days of such event by the Members (which Member or
designated person shall, for purposes hereof, be referred to as the
"Liquidation"), shall wind up its affairs and apply and distribute the proceeds
of such liquidation: first, to discharge and/or establish reserves for the
obligations of the Company to creditors other than the Members; second, to
discharge the obligations of the Company to Members who are creditors of the
Company; and third, to the Members as provided in Section 5.2 hereof.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 AMENDMENTS
Amendments to this Operating Agreement may be proposed by any Member by
submitting to the Members a verbatim statement of any proposed amendment.
Any such proposed amendment shall become effective upon approval by Members
owning a seventy five percent (75%) of the total Membership votes.
Notwithstanding the foregoing, unless unanimously approved by all Members, no
amendment to this Operating Agreement shall (i) cause the Company to lose its
status as a limited liability company under the Act or be taxed for federal
income tax purposes as a corporation or association, (ii) change the term of the
Company, (iii) change any Member's Membership Interest (except in accordance
with Section 3.2 hereof) or
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directly and adversely impact any Member's Membership Rights, or (iv) change the
provisions of this Section 10.2.
10.2 INVESTMENT AND SECURITY MATTERS
Each of the Members hereby represent, acknowledge and agree as of the date
of this Operating Agreement and as of the date on which any of them may acquire
additional Membership Interests in the Company under this Operating Agreement
that:
10.2.1 Each of the Members is a resident of the state of Michigan
and that the principal office and place of business of the Company is also
in the state of Michigan.
10.2.2 The Membership Interests in the Company are not and will not
be registered under either the Securities Act of 1933 or any applicable
state securities law and, therefore, cannot be resold or transferred unless
registered or unless an exemption from registration is available
thereunder.
10.2.3 The Company has not agreed to register any of the
Membership Interests in the Company for distribution in accordance with the
provisions of the Securities Act of 1933 or any applicable state securities
law and, the Company has not agreed to comply with any exemption from
registration under the Securities Act of 1933 or any applicable state
securities law for the sale or transfer of such Membership Interests.
Consequently, the Members may be required to hold the Membership Interests
indefinitely, unless and until registered under the Securities Act of 1933
and any applicable state securities law, or unless and until an exemption
from registration is available, in which case the Members may still be
limited as to the amount of Membership Interests that may be sold or
transferred. In any case, the Members each agree that they will not sell,
assign, pledge, hypothecate, donate or otherwise transfer any membership
interest in the Company unless in compliance with this Operating Agreement
and, in no case, whether or not for consideration, unless and until such
membership interest is registered or determined to be exempt from
registration on the basis of a favorable opinion of the Company's counsel
and/or submission to the Company of such other evidence as may be
satisfactory to such counsel that any such transfer shall not be in
violation of the Securities Act of 1933 or any applicable state securities
law.
10.2.4 Each Member has had full and complete access to any and
all of the information pertaining to the Company and the Member's
investment in the Membership Interests in the Company has considered
appropriate. Each Member has received and reviewed, to the Member's
satisfaction, and is familiar with, the contents of all the agreements,
reports, financial statements and other materials relating to the Company
and the Membership Interests which the Member has considered appropriate.
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10.2.5 Each Member has had an opportunity to ask questions and
receive answers concerning their investment in the Membership Interests in
the Company and to obtain any additional information which the Company
possesses or can obtain without unreasonable effort and expense that might
be necessary in the Member's judgment to verify any information which has
been provided to the Member.
10.2.6 There are restrictions on the transferability of the
Membership Interests in the Company, there is no established public market
for such Membership Interests and, accordingly, it may not be possible to
liquidate such Membership Interests readily, or at all, in case of an
emergency or otherwise.
10.2.7 An investment in the Membership Interests in the Company
involves a certain degree of risk and each Member has taken full cognizance
of and understands all of the risks associated with the investment. The
investment will be highly speculative and no assurance has or can be given
with respect to the suitability or performance of the investment.
10.2.8 Each Member has such knowledge and experience in financial
and business matters that each Member is capable of evaluating the merits
and risks associated with the investment in the Membership Interests in the
Company or that each Member has obtained the advice of an attorney,
certified public accountant or registered investment advisor with respect
to the investment.
10.2.9 Each Member has adequate means of providing for the Member's
own current needs and possible personal contingencies and the Member has no
need for liquidity in the Member's investment in the Membership Interests
in the Company and the Member is able to bear the economic risks of the
investment for an indefinite period.
10.2.10 Each Member has acquired Membership Interests in the Company
for the Member's own account for investment purposes only and not for the
account of others and not with a view to the distribution or transfer
thereof.
10.2.11 No federal or state agency has made any finding or
determination as to the fairness for investment, nor any recommendation or
endorsement of the Membership Interests of the Company.
10.2.12 The Membership Interests in the Company have not been
offered or sold by means of any general advertising or general
solicitation.
10.2.13 No commission has not been paid or given directly or
indirectly for soliciting any Member's investment in the Membership
Interests in the Company.
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10.3 GOVERNING LAW
This Operating Agreement shall be governed by and construed in accordance
with the laws of the State of Michigan notwithstanding the fact that any party
is or may hereafter become domiciled in a different state or jurisdiction.
10.4 WAIVER OF BREACH
The waiver of breach of any provision of this Operating Agreement shall not
operate or be construed as a waiver of any subsequent breach. Each and every
right, remedy and power hereby granted to any party or allowed it by law shall
be cumulative and not exclusive of any other.
10.5 SEVERABILITY
If any of the provisions of this Operating Agreement or the application
thereof to any party under any circumstances is adjudicated to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Operating Agreement or the application thereof.
10.6 ENTIRE AGREEMENT
This Operating Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof. This Operating Agreement
supersedes and terminates any and all other previous or contemporaneous
communications, representations, understandings, agreements, negotiations and
discussions, either oral or written, between the parties with respect to the
subject matter hereof. The parties acknowledge and agree that there are no
written or oral agreements, understandings, or representations, directly or
indirectly related to this Operating Agreement or the subject matter hereof that
are not expressly set forth herein.
10.7 INTERPRETATION
Where appropriate in this Operating Agreement, words used in the singular
shall include the plural, and words used in the masculine shall include the
feminine and neuter.
10.8 SURVIVAL OF PROVISIONS
The rights and obligations of the parties under this Operating Agreement
may not be assigned or delegated, except for the assignment of a Membership
Interest in compliance with and subject to the terms and conditions of Article
VIII hereof.
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10.9 NOTICE
All notices required to be sent by this Operating Agreement shall be
personally delivered or mailed by certified or registered mail to the addresses
of the Members indicated in the books of the Company. Notice of any change of
address by a Member shall be mailed to the Company by certified mail to the
registered office of the Company.
10-10 COUNTERPARTS
This Operating Agreement may be executed in duplicate original counterparts
and all copies of this Operating Agreement so executed shall be deemed to be one
Agreement.
IN WITNESS WHEREOF, the Members have signed this Operating Agreement
effective the day and year first above written.
WITNESSES: THE COMPANY:
LDM HOLDINGS, L.L.C.,
A MICHIGAN LIMITED LIABILITY COMPANY
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: President
▇▇▇▇▇ ▇. Christians
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▇▇▇▇▇ ▇. Christians Date: December 10, 1996
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MEMBERS:
LDM TECHNOLOGIES, INC., F/K/A
LDM INDUSTRIES INC.,
A MICHIGAN CORPORATION
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------- ----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: President
▇▇▇▇▇ ▇. Christians
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▇▇▇▇▇ ▇. Christians Date: December 10 , 1996
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LDM HOLDING CANADA, INC.,
A MICHIGAN CORPORATION
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------ --------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: President
▇▇▇▇▇ ▇. Christians
------------------------------------
▇▇▇▇▇ ▇. Christians Date: December 10, 1996
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