Limited Liability Company (LLC) Operating Agreement

Two Person Member Managed Limited Liability Company Operating Agreement

This Agreement, dated , made and entered into between

, a limited liability company organized pursuant to the Limited Liability Company Act, hereinafter called the Company, , of , and , of , hereinafter jointly called the Members.

In consideration of the mutual benefits and obligations set forth in this Agreement, the parties agree as follows:

I. Definition of Terms

Unless the context otherwise requires, the terms defined in this Section I shall, for the purposes of this Agreement, have the following meanings:

A. Act means the limited liability company statute, , as amended from time to time.

B. Additional Members has the meaning set forth in Section XIII.

C. Agreement means this Limited Liability Company Agreement of the Company, as amended, modified, supplemented or restated from time to time.

D. Capital Account means, with respect to any Member, the account maintained for such Member in accordance with the provisions of Section IV.

E. Capital Contribution means, with respect to any Member, the aggregate amount of money and the fair market value of any property (other than money) contributed to the Company pursuant to Section IV with respect to such Member's Interest.

F. Certificate means the Certificate of Formation of the Company and any and all amendments to the Certificate of Formation and restatements of the same filed on behalf of the Company with the office of the Secretary of State of the State of pursuant to the Act.

G. Code means the Internal Revenue Code of 1986, as amended from time to time, or any corresponding federal tax statute enacted after the date of this Agreement.

H. Company means , the limited liability company formed and continued under and pursuant to the Act and this Agreement.

I. Covered Person means a Member, any officers, directors, shareholders, partners, employees, representatives or agents of a Member, or any employee or agent of the Company.

J. Fiscal Year means:

1. The period commencing upon the formation of the Company and ending on ;

2. Any subsequent 12-month period commencing on and ending on ; or

3. Any portion of the period described in Clause 2 above which the Company is required to allocate Profits, Losses and other items of Company income, gain, loss or deduction pursuant to Section VIII.

K. Interest means a Member's limited liability company interest in the Company which represents such Member's share of the profits and losses of the Company and a Member's right to receive distributions of the Company's assets in accordance with the provisions of this Agreement and the Act.

L. Member means each of and , and includes any Person admitted as an Additional Member pursuant to the provisions of this Agreement, in such Person's capacity as a Member of the Company.

M. Net Cash Flow means, for each Fiscal Year or other period of the Company, the gross cash receipts of the Company from all sources...

N. Percentage Interest means the Interest of a Member, expressed as a portion of one hundred percent, as shown on Schedule A.

O. Person includes any individual, corporation, association, partnership, joint venture, trust, estate, limited liability company, or other legal entity or organization.

P. Profits and Losses means, for each Fiscal Year, an amount equal to the Company's taxable income or loss for such Fiscal Year...

Q. Tax Matters Partner has the meaning set forth in Section XI-A.

R. Treasury Regulations means the income tax regulations, including temporary regulations, promulgated under the Code...

II. Formation and Term

A. Formation

1. The Members have formed the Company as a limited liability company under and pursuant to the provisions of the Act.

2. Upon the execution of this Agreement or a counterpart of this Agreement, and shall be admitted as Members of the Company.

3. The name and mailing address of each Member and the amount contributed to the capital of the Company shall be listed on the attached Schedule A.

4. , as an authorized person within the meaning of the Act, shall execute, deliver and file the Certificate.

B. Name.

The name of the Company is .

C. Term.

The term of the Company shall commence on the date the Certificate is filed in the office of the Secretary of State of the State of and shall continue until , unless the Company is dissolved before such date in accordance with the provisions of this Agreement.

D. Registered Agent and Office.

The Company's registered agent and office in the State of shall be , of .

E. Principal Place of Business.

The principal place of business of the Company shall be at .

F. Qualification in Other Jurisdictions.

The Members shall, if required by law or if deemed advisable by the Members, cause the Company to be qualified, formed or registered under assumed or fictitious name statutes or similar laws in any jurisdiction in which the Company transacts business.

III. Purpose and Powers of the Company

A. Purpose. The Company is formed for the object and purpose of, and the nature of the business to be conducted and promoted by the Company is, engaging in any lawful act or activity for which limited liability companies may be formed under the Act.

B. Powers of the Company.

The Company shall have the power and authority to take any and all actions necessary, appropriate, proper, advisable, incidental or convenient to or for the furtherance of the purpose set forth in Section III-A.

IV. Capital Contributions; Interests; Capital Accounts; Advances

A. Capital Contributions.

1. Each Member has contributed or is deemed to have contributed to the capital of the Company the amount set forth opposite the Member's name on the attached Schedule A.

2. No Member shall be required to make any additional capital contribution to the Company. However, a Member may make additional capital contributions to the Company with the written consent of all of the Members.

B. Member's Interest. A Member's Interest shall for all purposes be personal property. A Member has no interest in specific Company property.

C. Status of Capital Contributions.

1. Except as otherwise provided in this Agreement, the amount of a Member's Capital Contributions may be returned to it, in whole or in part, at any time, but only with the consent of all of the Members.

2. No Member shall receive any interest, salary or drawing with respect to its Capital Contributions or its Capital Account or for services rendered on behalf of the Company or otherwise in its capacity as a Member, except as otherwise specifically provided in this Agreement.

3. Except as otherwise provided in this Agreement and by applicable state law, the Members shall be liable only to make their capital contributions pursuant to Section IV-A.

D. Capital Accounts.

1. An individual Capital Account shall be established and maintained for each Member.

2. The Capital Account of each Member shall be maintained in accordance with the following provisions:

a. To such Member's Capital Account there shall be credited such Member's Capital Contributions and such Member's distributive share of Profits and other items of income, gain or credits; and

b. To such Member's Capital Account there shall be debited the amount of cash and the fair market value of property distributed by the Company to such Member and such Member's distributive share of Losses and other items of loss or deduction.

E. Advances. If any Member shall advance any funds to the Company in excess of its Capital Contributions, the amount of such advance shall neither increase its Capital Account nor entitle it to any increase in its share of the distributions of the Company.

V. Members

A. Powers of Members. The Members shall have the power to exercise any and all rights or powers granted to the Members pursuant to the express terms of this Agreement and the Act.

B. Reimbursements. The Company shall reimburse the Members for all ordinary and necessary out-of-pocket expenses incurred by the Members on behalf of the Company.

C. Partition. Each Member waives any and all rights that it may have to maintain an action for partition of the Company's property.

D. Resignation. A Member may not resign from the Company without the written consent of all of the other Members.

VI. Management

A. Management of the Company.

1. In accordance with Section of the limited liability act, management of the Company shall be vested in the Members.

2. The Members shall have full, exclusive and complete discretion to manage the business and affairs of the Company.

3. With respect to third parties, each Member is an agent of the Company's business, and each Member may bind the Company.

C. Reliance by Third Parties.

Any Person dealing with the Company or any Member may rely upon a certificate signed by any Member as to the identity of a Member and other matters involving the Company or any Member.

VII. Amendments and Meetings

A. Amendments. Any amendment to this Agreement shall be adopted and be effective if it receives the affirmative vote of all of the Members, provided that such amendment be in writing and executed by all of the Members.

B. Meetings of the Members.

1. Meetings of the Members may be called at any time by any Member. Notice of any meeting shall be given to all Members not less than or more than prior to the date of such meeting.

2. The Members shall establish all other provisions relating to meetings of Members.

3. The Company may take any action contemplated by this Agreement as approved by the unanimous written consent of the Members.

VIII. Allocations

A. Profits and Losses.

1. Profits for any Fiscal Year shall be allocated among the Members in proportion to the Percentage Interests.

2. Losses for any Fiscal Year shall be allocated among the Members in proportion to the Percentage Interests.

B. Allocation Rules.

1. For purposes of determining the Profits, Losses or any other items allocable to any period, Profits, Losses and any such other items shall be determined on a daily, monthly or other basis, as determined by the Members.

2. Except as otherwise provided in this Agreement, all items of Company income, gain, loss, deduction and any other allocations not otherwise provided for shall be divided among the Members in the same proportions as they share Profits and Losses for the Fiscal Year in question.

3. The Members are aware of the income tax consequences of the allocations made by this Article VIII and agree to be bound by the provisions of this Article VIII.

4. The Members intend that the allocation provisions set forth in this Agreement are intended to comply with Section 704(b) of the Code and the Treasury Regulations issued under that Section.

C. Tax Allocations; Section 704(c) of the Code. In accordance with Section 704(c) of the Code and the Treasury Regulations under that Section, income, gain, loss and deduction with respect to any property contributed to the capital of the Company shall be allocated among the Members so as to take account of any variation between adjusted basis and fair market value.

IX. Distributions

A. Net Cash Flow. Except as otherwise provided in Article XV, any distribution of the Net Cash Flow during any Fiscal Year shall be made to the Members in proportion to the Percentage Interests.

B. Distribution Rules. All distributions pursuant to Section IX-A shall be at such times and in such amounts as shall be determined by the Members.

C. Limitations on Distribution. The Company shall not make a distribution to any Member if such distribution would violate the Limited Liability Company Act or other applicable law.

X. Books and Records

A. Books, Records and Financial Statements.

1. At all times during the continuance of the Company, the Company shall maintain separate books of account for the Company in accordance with generally accepted accounting principles consistently applied.

2. The Members shall prepare and maintain, or cause to be prepared and maintained, the books of account of the Company and shall prepare and file all applicable federal and state tax returns.

B. Accounting Method. The books and records of the Company shall be kept on the accrual method of accounting applied in a consistent manner.

C. Annual Audit. At any time at a Member's sole discretion, the financial statements of the Company may be audited by an independent certified public accountant.

XI. Tax Matters

A. Tax Matters Partner.

1. is designated as Tax Matters Partner of the Company for purposes of Section 6231(a)(7) of the Code.

2. The Tax Matters Partner shall, within days of receipt of any notice from the Internal Revenue Service, mail or otherwise deliver a copy of such notice to each Member.

B. Taxation as Partnership. The Company shall be treated as a partnership for U.S. federal income tax purposes.

XII. Liability; Exculpation; Indemnification

A. Liability. Except as otherwise provided by the Act, the debts, obligations and liabilities of the Company shall be solely the debts, obligations and liabilities of the Company.

B. Exculpation. No Covered Person shall be liable to the Company or any other Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted in good faith, except for gross negligence or willful misconduct.

C. Fiduciary Duty. A Covered Person acting under this Agreement shall not be liable to the Company or to any Member for its good faith reliance on the provisions of this Agreement.

D. Indemnification. To the fullest extent permitted by applicable law, a Covered Person shall be entitled to indemnification from the Company for any loss, damage or claim incurred in good faith.

E. Expenses. Expenses incurred by a Covered Person in defending any claim shall be advanced by the Company upon receipt of an undertaking to repay if not entitled to indemnification.

F. Insurance. The Company may purchase and maintain insurance on behalf of Covered Persons.

G. Outside Businesses. Any Member may engage in or possess an interest in other business ventures independently or with others.

XIII. Additional Members.

A. Admission. By approval of all of the Members, the Company is authorized to admit any Person as an additional member of the Company.

B. Allocations. Additional Members shall not be entitled to any retroactive allocation of the Company's income, gains, losses, deductions, credits or other items.

XIV. Assignability and Substitute Members

A. Assignability of Interests. No Member may assign the whole or any part of its Interests.

B. Recognition of Assignment by Company. No assignment or pledge of any Interest that is in violation of this Article XIV shall be valid or effective.

C. Pledge. No Member may pledge or otherwise encumber the whole or any part of its Interests.

XV. Dissolution, Liquidation and Termination

A. No Dissolution. The Company shall not be dissolved by the admission of Additional Members in accordance with the terms of this Agreement.

B. Events Causing Dissolution.

1. The expiration of the term of the Company, as provided in Section II-C;

2. The written consent of all Members;

3. The death, retirement, resignation, expulsion, bankruptcy or dissolution of a Member or the occurrence of any other event under the Act that terminates the continued membership of a Member in the Company unless, within days, all remaining Members agree in writing to continue the business of the Company; or

4. The entry of a decree of judicial dissolution under Section of the Limited Liability Company Act.

C. Liquidation. Upon dissolution of the Company, the Members shall carry out the winding up of the Company and shall immediately commence to wind up the Company's affairs.

D. Termination. The Company shall terminate when all of the assets of the Company have been distributed and the Certificate shall have been canceled in the manner required by the Act.

E. Claims of the Members. The Members and former Members shall look solely to the Company's assets for the return of their Capital Contributions.

XVI. Miscellaneous

A. Notices. All notices provided for in this Agreement shall be in writing, duly signed by the party giving such notice.

B. Failure to Pursue Remedies. The failure of any party to seek redress for violation of, or to insist upon the strict performance of, any provision of this Agreement shall not prevent a subsequent act from having the effect of an original violation.

C. Cumulative Remedies. The rights and remedies provided by this Agreement are cumulative.

D. Binding Effect. This Agreement shall be binding upon and inure to the benefit of all of the parties.

E. Severability. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions.

F. Counterparts. This Agreement may be executed in any number of counterparts with the same effect as if all parties had signed the same document.

G. Governing Law. This Agreement and the rights of the parties under this Agreement shall be interpreted in accordance with the laws of the State of .