LIMITED LIABILITY COMPANY OPERATING AGREEMENTFOR
___________________________________________
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LIMITED LIABILITY COMPANY OPERATING AGREEMENTFOR
___________________________________________ (Name of Company)
THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT (the
"Agreement") is entered into the ____ day of _______________, 20____, by and among the
"Members" listed here:
Name of member: ___________________________________________
Name of member: ___________________________________________
Name of member: ___________________________________________
Name of member: ___________________________________________
Name of member: ___________________________________________
Name of member: ___________________________________________
Name of member: ___________________________________________
Name of member: ___________________________________________
Name of member: ___________________________________________
Name of member: ___________________________________________
In consideration of the mutual promises contained herein, the parties agree as follows: ARTICLE 1: FORMATION OF THE COMPANY
1.01 Formation. The parties have formed a limited liability company under the name
___________________________________________ (the "LLC") upon the terms and conditions
provided in this Agreement, subject to the provisions of the [state] _________________ Limited
Liability Company Act, as amended (the "Act"). If there is a conflict between the provisions of
this Agreement and the Act and if permitted by law, the provisions of this Agreement sha ll
control except that if the conflict is with respect to a provision that would ca use the LLC to be
taxed as an association for federal income tax purposes, then the provisions of the Act shall
control. The parties intend that the LLC shall be taxed as a partnership.
1.02 Articles of Organization. The Members acting through one of its Members,
___________________________________________ , filed Articles of Organization ("Articles")
for record in the office of the Secretary of State of the State of ___________________
("Secretary of State"), on ___________________, thereby creating the LLC.
1.03 Business. The business of the LLC shall be to engage in any and all lawful
business activities and other lawful actions in furtherance of said business. The LLC m ay sell or
otherwise dispose of all or substantially all of its assets, subject to any restricti ons set out in this
Agreement, and any such sale or disposition shall be considered to be within the scope of the
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LLC's business.1.04 Offices; Agents. The LLC's place of business shall be:
_____________________________________________________________________________
or such other place as the Members may select from time to time. The LLC's registered agent
for service of process shall be __________________________________, and the registered
office of the LLC in [state] _________________________ is: [address] _____________________________________________________________________________.
1.05 Term. The LLC commenced on _________________________, the date the
original Articles of Organization was filed in the Secretary of State's office, and will continue
until dissolved as provided for in Article 9.
1.06 Fiscal/Tax Year. The LLC's fiscal and tax year shall end December 31.
ARTICLE 2: MEMBERS
2.01 Initial Members. The initial Members of the LLC are identified at Exhibit "A".
2.02 New Members. Other persons may become members only as set out in this
Article 2.02 as follows. In the case of a person acquiring a LLC interest directly from the LLC,
new members may be admitted only upon the consent of a majority of the Members. In the case
of an assignee of a LLC interest, new members may be admitted only upon compliance with
Article 7.
ARTICLE 3: MANAGEMENT
3.01 Managers. The Members have delegated the responsibility for managing the
LLC to Manager(s), subject to the limitations set out in Article 3.03. The Membe rs shall elect
the Manager(s) by majority vote and can remove the Manager(s) by majority vote. The
Manager(s) shall have the authority to take all necessary and proper actions in order to conduct
the business of the LLC, as set out in Article 1.03. Except for decisions concerning distribut ions,
any one Manager (if more than one) can take any appropriate action on behalf of the L LC, such
as signing checks, executing leases, and signing loan documents. In determining the timi ng and
total amount of distributions to the Members under Article 4.06, however, the action of the
Managers (if more than one) shall be based on a majority vote of the Managers, with or wit hout a
meeting.
3.02 Initial Managers. There shall be
_____ initial Managers. The initial Managers
are: Name of Initial Manager: ____________________________________
Name of Initial Manager: ____________________________________
Name of Initial Manager: ____________________________________
Name of Initial Manager: ____________________________________
These Managers shall serve until any successors or successor are elected by the Members.
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3.03 Prohibited Actions. Notwithstanding anything above, the Manager(s) cannot take
any of the following actions without the consent of a majority of the Members: (a) sell or
encumber (but not lease) the LLC Property (as defined in Article 1.03), or (b) incur debt, expend
funds, or otherwise obligate the LLC if the debt, expenditure, or other obligation exceeds $________.
3.04 Compensation. The Manager(s) may receive a reasonable compensation for their
services as agreed to by a majority of the Members.ARTICLE 4: CONTRIBUTIONS PROFITS & LOSSES. AND DISTRIBUTIONS
4.01 Percentage Interests. Each Member's share of contributions, profits and losses,
and distributions shall be based on the Member's percentage interest in the LLC. The percentage
interest shall be based on the amount of cash or other property that the Member has cont ributed
to the LLC.
4.02 Initial Contributions. The initial contributions of the Members are as set out in
Exhibit "A". The Members' initial percentage interests in the LLC are based on t he initial
contributions and are also set out in Exhibit "A", attached hereto.
4.03 Additional Contributions. Additional contributions will not be made except as
provided in this Article 4.03. The Managers may call on the Members to make additional cash
contributions as may be necessary to carry on the LLC's business. The amount of any additi onal
cash contribution shall be based on the Member's then existing percentage interest. To t he extent
a Member is unable to meet a cash call, the other Members can contribute t he unmet call on a pro
rata basis based on the Members' percentage interests at that time, and the pe rcentage interest of
each Member will be adjusted accordingly.
4.04 Record of Contributions/Percentage Interests. Writings setting out the amount of
cash and a description and statement of the value of other property contributed by each Me mber
shall be kept at the LLC's place of business. Exhibit "A" to this Agreement, which sets out the
Members' initial contributions and percentage interests in the LLC, shall be updated to accurately
reflect any subsequent contributions of cash or other property by the Members, and shall also be
updated to accurately reflect any assignments or other changes in ownership of LLC interests.
4.05 Profits and Losses. The profits and losses and all other tax attributes of the LLC
shall be allocated among the Members on the basis of the Members' percentage intere sts in the
LLC.
4.06 Distributions. Distributions of cash or other assets of the LLC (other than in
dissolution of the LLC) shall be made in the total amounts and at the tim es as determined by a
majority of the Managers. Any such distributions shall be allocated among the Members on the
basis of the Members' percentage interests in the LLC.
4.07 Change in Interests. If during any year there is a change in a Member's
percentage interest, the Member's share of profits and losses and distributions in that year shall
be determined under a method which takes into account the varying interests during the year.
ARTICLE 5: VOTING; CONSENT TO ACTION
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5.01 Voting by Members. Each Member shall be entitled to vote on any matter
entitled to be voted on by the Members. Voting shall be based on the percentage interest owned
by each Member.
5.02 Majority Required. Any action that requires the vote or consent of the Members
may be taken upon a majority vote of the Members based on the Members’ percentage inte rests
unless unanimous consent is required by this Agreement. The action may be taken with or
without a meeting.
5.03 Written Consent. Any vote or consent required by the Members, or a majority
thereof, shall be evidenced by a writing signed by each consenting Member, with or without a
meeting.
5.04 Meetings. Meetings of the Members shall be held as determined by the
Managers or as may be called by a majority of the Members.ARTICLE 6: DISSOCIATION OF MEMBERS
6.01 Termination of Membership. A Member ceases to be a Member of the LLC upon
the occurrence of one or more of the following events: (a) The Member withdraws by giving 30 days' written notice to the LLC. A
withdrawal by a Member will not be considered a breach of the Articles of Organization or this
Agreement
(b) The Member ceases to be a Member due to an assignment of his entire (but
not partial) interest in the LLC as provided in Article 7.
(c) The Member dies or there is an entry of an order by a court of competent
jurisdiction adjudicating the Member incompetent to manage his person or his estate.
(d) In the case of an estate that is a Member, the distribution by the fiduciary
of the estate's entire interest in the LLC.
(e) Unless the action is consented to by a majority of the other Members, the
Member (1) makes an assignment for the benefit of creditors; (2) files a voluntary petition in
bankruptcy; (3) is adjudicated a bankrupt or insolvent; (4) files a petition or answer seeking for
himself any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or
similar relief under any statute, law or regulation; (5) files an answer or other pl eading admitting
or failing to contest the material allegations of a petition filed against him in any proceeding of
the nature described in this paragraph; (6) seeks, consents to, or acquiesces in the appointme nt of
a trustee, receiver, or liquidator of the Member or of all or any substantial part of his properties;
or (7) if any creditor permitted by law to do so should commence foreclosure or take any other
action to seize or sell any Member's interest in the LLC.
(f) Unless the action is consented to by a majority of the other Members, if
one hundred twenty (120) days 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, the proceeding has not been di smissed, or if
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within ninety (90) days after the appointment without his consent or acquiescence of a trustee,
receiver, or liquidator of the Member or of all or any substantial part of his properties, t he
appointment is not vacated or stayed or within ninety (90) days after the expiration of any st ay,
the appointment is not vacated.
(g) Any of the events provided in applicable code provisions that are not
inconsistent with the dissociation events identified above.
6.02 Effect of Dissociation. Any dissociated Member shall not be entitled to receive
the fair value of his LLC interest solely by virtue of his dissociation. A dissociated Member that
still owns an interest in the LLC shall be entitled to continue to recei ve such profits and losses, to
receive such distribution or distributions, and to receive such allocations of income, gai n, loss,
deduction, credit or similar items to which he would have been entitled if still a Member. For all
other purposes, a dissociated Member shall no longer be considered a Member and shall have no
rights of a Member. (See Article 8 for dissociated Member's obligation to sell upon the
occurrence of the dissociation event.)
ARTICLE 7: RESTRICTIONS ON TRANSFERABILITY OF LLC INTEREST;
SET PRICE FOR LLC INTEREST
7.01 LLC Interest. The LLC interest is personal property. A Member has no interest
in property owned by the LLC.
7.02 Encumbrance. A Member can encumber his LLC interest by a security interest
or other form of collateral only with the consent of a majority of the other Members. Such
consent shall not be withheld if the proceeds of the encumbrance are contributed to the LLC to
respond to a cash call of the LLC under Article 4.03.
7.03 Assignment. A Member can assign his LLC interest only as follows:
(a) If a Member desires to assign his interest, in whole or in part, he must first
offer the interest to the LLC which shall have the option to buy the offered interest at the then
existing Set Price as provided in Article 7.04. The assigning Member shall give written not ice to
the LLC of his desire to sell all or part of his interest. The LLC shall have thirty (30) days from
the receipt of the assigning Member's notice to give the assigning Member written notice of its
intention to buy all, some, or none of the offered interest. The decision to buy shall be made by a
majority of the Members. Closing on the sale shall occur within sixty (60) days from the da te
that the LLC gives written notice of its intention to buy. The purchase price shall be paid in cash
at closing unless the total purchase price is in excess of $100,000.00 in which event the purcha se
price shall be paid in twelve (12) equal quarterly installments beginning with the da te of closing.
The installment amounts shall be computed by applying the following interest factor t o the
principal amount: interest compounded quarterly at the Quarterly Federal Short-Term Rate
existing at closing under the Applicable Federal Rates used for purposes of Internal Revenue
Code § 1 274(d), or any successor provision.
(b) To the extent the LLC does not buy the offered interest of the assigning
Member, the non-assigning Members shall have the option to buy the offered interest at the Set
Price on a pro rata basis based on the members' percentage interests at that time . If any non-
assigning Member does not desire to buy up to his proportional part, the other non-assigning
Members can buy the remaining interest on the same pro rata basis. The non-assigning Members
shall have fifteen (15) days from the date the LLC gives its written notice to the assigning
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Member under Article 7.03(a) to give the assigning Member notice in writing of their intention
to buy all, some, or none of the offered interest. Closing on the sales shall occur within sixty
(60) days from the date that the non-assigning Members give written notice of their intention to
buy. The purchase price from each purchasing Member shall be paid in cash at closing.
(c) To the extent the LLC or non-assigning Members do not buy the offered
interest, the assigning Member can then assign the interest to a non-member. The assi gning
Member must close on the assignment within ninety (90) days of the date that he gave noti ce to
the LLC under Article 7.03(a). If he does not close by that time, he must again give t he notice
and options to the LLC and the non-assigning Members as set out in Article 7.03(a) and (b)
before he assigns the interest.
(d) A non-member assignee cannot exercise any rights of a Member unless a
majority of the non-selling Members consent to him becoming a Member. The non-member
assignee will be entitled, however, to share in such profits and losses, to receive such
distributions, and to receive such allocation of income, gain, loss, deduction, credit or sim ilar
items to which the assignor would be entitled, to the extent of the interest assi gned, and will be
subject to calls for contributions under Article 4.03. The assignor by accepting the assignme nt
agrees to be subject to all the terms of this Agreement as if he were a Member.
7.04 Set Price. The Set Price for purposes of this Article and Article 8 shall be a pric e
fixed by consent of a majority of the Members. The Set Price shall be memorialized and made a
part of the LLC records. The initial Set Price for each Member's interest is the amount of the
Member's contribution(s) to the LLC as set out in Exhibit "A" as updated under Article 4.04.
Any future changes in the Set Price by the Members shall be based upon net equity in the assets
of the LLC (fair market value of the assets less outstanding indebtedness), considering the most
recent appraisal obtained by the LLC for its assets, as may be adjusted by the Membe rs in their
discretion. The initial Set Price shall be adjusted no later than __________________. This basi s
for determining the Set Price shall remain in effect until changed by consent of a m ajority of the
Members. The Members will consider revising the basis for determining the Set Price at least
annually.
ARTICLE 8: OBLIGATION TO SELL ON A DISSOCIATION EVENT
CONCERNING A MEMBER
8.01 Dissociation. Except as provided in this Article 8.01, upon the occurrence of a
dissociation event with respect to a Member under Article 6, the LLC and the rem aining
Members shall have the option to purchase the dissociated Member's interest at the Se t Price in
the same manner as provided in Article 7 as if the dissociated Member had notifie d the LLC of
his desire to assign all of his LLC interest. The date the LLC received the notice under Article
7.03(a) and (b) triggering the options shall be deemed to be the date that the LLC re ceives actual
notice of the dissociation event. Notwithstanding anything in this Article 8.01, the dissociat ion
events set out in Article 6.01(c) or (d) shall not trigger the options to purchase set out in this
Article 8.01.
ARTICLE 9: DISSOLUTION
9.01 Termination of LLC. The LLC will be dissolved and its affairs must be wound
up only upon the written consent of a majority of the Members.
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9.02 Final Distributions. Upon the winding up of the LLC, the assets must be
distributed as follows: (a) to the LLC creditors; (b) to Members in satisfaction of liabilities for
distributions; and (c) to Members first for the return of their contributions and secondly
respecting their LLC interest, in the proportions in which the Members share in profits a nd
losses.
ARTICLE 10: TAX MATTERS
10.01 Capital Accounts. Capital accounts shall be maintained consistent with Interna l
Revenue Code § 704 and the regulations thereunder.
10.02 Tax Matters Partner. The Members hereby designate
______________________ as the "tax matters member" for purposes of representing the LLC
before the Internal Revenue Service if necessary.
10.03 Partnership Election. The Members elect that the LLC be taxed as a partne rship
and not as an association taxable as a corporation.
ARTICLE 11: RECORDS AND INFORMATION
11.01 Records and Inspection. The LLC shall maintain at its place of business the
Articles of Organization, any amendments thereto, this Agreement, and all other LLC records
required to be kept by the Act, and the same shall be subject to inspection and c opying at the
reasonable request, and the expense, of any Member.
11.02 Obtaining Additional Information. Subject to reasonable standards, each Member
may obtain from the LLC from time to time upon reasonable demand for any purpose reasonabl y
related to the Member's interest as a Member in the LLC: (1) information regardi ng the state of
the business and financial condition of the LLC; (2) promptly after becoming availa ble, a copy of
the LLC's federal, state, and local income tax returns for each year; and (3) other i nformation
regarding the affairs of the LLC as is just and reasonable.
ARTICLE 12: MISCELLANEOUS PROVISIONS 12.01 Amendment. Except as otherwise provided in this Agreement, any amendment to
this Agreement may be proposed by a Member. Unless waived by the Members, the proposing
Member shall submit to the Members any such proposed amendment together with an opinion of
counsel as to the legality of such amendment and the recommendation of the Member as to its
adoption. A proposed amendment shall become effective at such time as it has bee n approved in
writing by all of the Members. This Agreement may not be amended nor may any rights
hereunder be waived except by an instrument in writing signed by the party sought to be charged
with such amendment or waiver, except as otherwise provided in this Agreement.
12.02 Applicable Law. To the extent permitted by law, this Agreement shall be
construed in accordance with and governed by the laws of the State of __________________.12.03 Pronouns, Etc. References to a Member or Manager, including by use of a
pronoun, shall be deemed to include masculine, feminine, singular, plural, individuals,
partnerships or corporations where applicable.
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12.04 Counterparts. This instrument may be executed in any number of counterparts
each of which shall be considered an original.12.05 Specific Performance. Each Member agrees with the other Members that the
other Members would be irreparably damaged if any of the provisions of this Agreement are not
performed in accordance with their specific terms and that monetary damages would not provide
an adequate remedy in such event. Accordingly, it is agreed that, in addition to a ny other remedy
to which the non-breaching Members may be entitled, at law or in equity, the non-breachi ng
Members shall be entitled to injunctive relief to prevent breaches of this Agreement and,
specifically, to enforce the terms and provisions of this Agreement in any action inst ituted in any
court of the United States or any state thereof having subject matter jurisdiction thereof.
12.06 Further Action. Each Member, upon the request of the LLC, agrees to perform
all further acts and to execute, acknowledge and deliver any documents which may be necessary,
appropriate, or desirable to carry out the provisions of this Agreement.
12.07 Method of Notices. All written notices required or permitted by this Agreement
shall be hand delivered or sent by registered or certified mail, postage prepaid, addressed to the
LLC at its place of business or to a Member as set forth on the Member's signature pa ge of this
Agreement (except that any Member may from time to time give notice changing his address for
that purpose), and shall be effective when personally delivered or, if mailed, on the date set forth
on the receipt of registered or certified mail.
12.8 Computation of Time. In computing any period of time under this Agreement,
the day of the act, event or default from which the designated period of time begins to run shall
not be included. The last day of the period so computed shall be included, unless it is a Saturday,
Sunday or legal holiday, in which event the period shall run until the end of the next da y which is
not a Saturday, Sunday or legal holiday.
WHEREFORE, the parties have executed this Agreement on the dates stated below their
signatures on the attached signature page for each individual party.
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EXHIBIT “A”
MEMBERS – INITIAL CONTRIBUTION – PERCENTAGE INTEREST
- Name of Member - - Initial Contribution - - Percentage Interest -
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INDIVIDUAL ACCEPTANCE AND SIGNATURE PAGE
I, ______________________________________, hereby certify that I have received a
copy of the Limited Liability Company Operating Agreement and Articles of Organization of
______________________________________, a _______________ limited liability company.
I realize that an investment in this Company is speculative and involves substantial risk. I am
aware and consent to the fact that the interests in the Company have not been registered under
the Securities Act of 1933 or other Securities Acts. I agree to be bound by all of the terms and
conditions of the Articles of Organization and Limited Liability Company Operating Agreement of ______________________________________.
Signed: __________________________________ Date: _______________
Member
Type/Print Name: __________________________
Address: ________________________________________________________________________________________________________
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INDIVIDUAL ACCEPTANCE AND SIGNATURE PAGE
I, ______________________________________, hereby certify that I have received a
copy of the Limited Liability Company Operating Agreement and Articles of Organization of
______________________________________, a _______________ limited liability company.
I realize that an investment in this Company is speculative and involves substantial risk. I am
aware and consent to the fact that the interests in the Company have not been registered under
the Securities Act of 1933 or other Securities Acts. I agree to be bound by all of the terms and
conditions of the Articles of Organization and Limited Liability Company Operating Agreement of ______________________________________.
Signed: __________________________________ Date: _______________
Member
Type/Print Name: __________________________
Address: ________________________________________________________________________________________________________
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INDIVIDUAL ACCEPTANCE AND SIGNATURE PAGE
I, ______________________________________, hereby certify that I have received a
copy of the Limited Liability Company Operating Agreement and Articles of Organization of
______________________________________, a _______________ limited liability company.
I realize that an investment in this Company is speculative and involves substantial risk. I am
aware and consent to the fact that the interests in the Company have not been registered under
the Securities Act of 1933 or other Securities Acts. I agree to be bound by all of the terms and
conditions of the Articles of Organization and Limited Liability Company Operating Agreement of ______________________________________.
Signed: __________________________________ Date: _______________
Member
Type/Print Name: __________________________
Address: ________________________________________________________________________________________________________
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INDIVIDUAL ACCEPTANCE AND SIGNATURE PAGE
I, ______________________________________, hereby certify that I have received a
copy of the Limited Liability Company Operating Agreement and Articles of Organization of
______________________________________, a _______________ limited liability company.
I realize that an investment in this Company is speculative and involves substantial risk. I am
aware and consent to the fact that the interests in the Company have not been registered under
the Securities Act of 1933 or other Securities Acts. I agree to be bound by all of the terms and
conditions of the Articles of Organization and Limited Liability Company Operating Agreement of ______________________________________.
Signed: __________________________________ Date: _______________
Member
Type/Print Name: __________________________
Address: ________________________________________________________________________________________________________
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INDIVIDUAL ACCEPTANCE AND SIGNATURE PAGE
I, ______________________________________, hereby certify that I have received a
copy of the Limited Liability Company Operating Agreement and Articles of Organization of
______________________________________, a _______________ limited liability company.
I realize that an investment in this Company is speculative and involves substantial risk. I am
aware and consent to the fact that the interests in the Company have not been registered under
the Securities Act of 1933 or other Securities Acts. I agree to be bound by all of the terms and
conditions of the Articles of Organization and Limited Liability Company Operating Agreement of ______________________________________.
Signed: __________________________________ Date: _______________
Member
Type/Print Name: __________________________
Address: ________________________________________________________________________________________________________
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INDIVIDUAL ACCEPTANCE AND SIGNATURE PAGE
I, ______________________________________, hereby certify that I have received a
copy of the Limited Liability Company Operating Agreement and Articles of Organization of
______________________________________, a _______________ limited liability company.
I realize that an investment in this Company is speculative and involves substantial risk. I am
aware and consent to the fact that the interests in the Company have not been registered under
the Securities Act of 1933 or other Securities Acts. I agree to be bound by all of the terms and
conditions of the Articles of Organization and Limited Liability Company Operating Agreement of ______________________________________.
Signed: __________________________________ Date: _______________
Member
Type/Print Name: __________________________
Address: ________________________________________________________________________________________________________
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INDIVIDUAL ACCEPTANCE AND SIGNATURE PAGE
I, ______________________________________, hereby certify that I have received a
copy of the Limited Liability Company Operating Agreement and Articles of Organization of
______________________________________, a _______________ limited liability company.
I realize that an investment in this Company is speculative and involves substantial risk. I am
aware and consent to the fact that the interests in the Company have not been registered under
the Securities Act of 1933 or other Securities Acts. I agree to be bound by all of the terms and
conditions of the Articles of Organization and Limited Liability Company Operating Agreement of ______________________________________.
Signed: __________________________________ Date: _______________
Member
Type/Print Name: __________________________
Address: ________________________________________________________________________________________________________
