Long Form Operating Agreement for Member-Managed Limited Liability Company
Operating Agreement made this _____________________ (date),
between _____________________ (Name of Limited Liability Company) , a limited
liability company (sometimes referred to herein as the LLC) organized pursuant to
the _____________________ (name of state’s limited liability company act), herein a fter
sometimes referred to herein as the Company , _____________________ (Name of
First Member) , of _________________________________________ (street address,
city, county, state, zip code) , _____________________ (Name of Second Member) ,
of _________________________________________ (street address, city, county,
state, zip code) , and _____________________ (Name of Third Member) ,
of _________________________________________ (street address, city, county,
state, zip code) , hereinafter called the Members.
For and in consideration of the mutual covenants contained in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned Members agree as follows:
Article I. Definitions of Terms.
A. Definitions. Unless the context otherwise requires, the terms defined in this
Article I shall, for the purposes of this Agreement, have the following meanings:
1. _____________________ (Name of State) Act means
the _____________________ (name of state) limited liability company
act, _____________________ (citation of act) , as amended from time to time
2. Additional Members has the meaning set forth in Article XIII-A.
3. Affiliate means, with respect to a specified Person, any Person that
directly or indirectly controls, is controlled by, or is under common control with,
the specified Person. As used in this definition, the term control means the
possession, directly or indirectly, of the power to direct or cause the direction of
the management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
4. Agreement means this Operating Agreement of the Company, as
amended, modified, supplemented or restated from time to time.
5. Capital Account means, with respect to any Member, the account
maintained for such Member in accordance with the provisions of Article IV-D.
6. 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 Article IV-A with respect to such
Member's Interest.
7. 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 _____________________ (name of state) pursuant to
the _____________________ (name of state) Act.
8. 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. A reference to a specific section of the Code refers not only to such
specific section but also to any corresponding provision of any federal tax statute
enacted after the date of this Agreement, as such specific section or
corresponding provision is in effect on the date of application of the provisions of
this Agreement containing such reference.
9. Company means _____________________ (Name of LLC) , the limited
liability company formed and continued under and pursuant to
the _____________________ (Name of State) Act and this Agreement.
10. Covered Person means a Member, any Affiliate of a Member, any
officers, directors, shareholders, partners, employees, representatives or agents
of a Member, or their respective Affiliates, or any employee or agent of the
Company or its Affiliates.
11. Fiscal Year means: (i) the period commencing upon the formation of the
Company and ending on _____________________ (month, day and year); (ii)
any subsequent 12-month period commencing on _____________________
(beginning month and day) , and ending on _____________________ (ending
month and day) ; or (iii) any portion of the period described in clause (ii) of this
sentence for which the Company is required to allocate Profits, Losses and other
items of Company income, gain, loss or deduction pursuant to Article VIII.
12. 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 _____________________ (name of state) Act.
13. Member means each of _____________________ (name of first
member) , _____________________ (name of second
member) and _____________________ (name of third member) , 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; Members
means _____________________ (number of members) or more of such
Persons when acting in their capacities as members of the Company. For
purposes of the _____________________ (name of state) Act, the Members
shall constitute one class or group of members.
14. Net Cash Flow means, for each Fiscal Year or other period of the
Company, the gross cash receipts of the Company from all sources, but
excluding any amounts, such as gross receipts taxes, that are held by the
Company as a collection agent or in trust for others or that are otherwise not
unconditionally available to the Company, less all amounts paid by or for the
account of the Company during the same Fiscal Year or other period (including,
but not limited to, payments of principal and interest on any Company
indebtedness and expenses reimbursed to the Members under Article V-B ), and
less any amounts determined by the Members to be necessary to provide a
reasonable reserve for working-capital needs or any other contingencies of the
Company. Net Cash Flow shall be determined in accordance with the cash
receipts and disbursements method of accounting and otherwise in accordance
with generally accepted accounting principles, consistently applied. Net Cash
Flow shall not be reduced by depreciation, amortization, cost recovery
deductions, depletion, similar allowances or other noncash items, but shall be
increased by any reduction of reserves previously established.
15. Percentage Interest means the Interest of a Member, expressed as a
portion of one hundred percent, as shown on Schedule A.
16. Person includes any individual, corporation, association, partnership
(general or limited), joint venture, trust, estate, limited liability company, or other
legal entity or organization.
17. Profits and Losses means, for each Fiscal Year, an amount equal to the
Company's taxable income or loss for such Fiscal Year, determined in
accordance with
Section 703(a) of the Code.
18. Tax Matters Partner has the meaning set forth in Article XI-A.
19. Treasury Regulations means the income tax regulations, including
temporary regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
B. Headings. The headings and subheadings in this Agreement are included for
convenience and identification only and are in no way intended to describe, interpret,
define or limit the scope, extent or intent of this Agreement or any provision of this
Agreement.
Article 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 _____________________ (name of
state) Act and agree that the rights, duties and liabilities of the Members shall be
as provided in the _____________________ (name of state) Act, except as
otherwise provided in this Agreement.
2. Upon the execution of this Agreement or a counterpart of this
Agreement, _____________________ (Name of First Member) ,
_____________________ (N ame of Second
Member) and _____________________ (Name of Third Member) 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. The Members shall be required to update Schedule A from time to
time as necessary to accurately reflect the information in the Schedule. Any
amendment or revision to Schedule A made in accordance with this Agreement
shall not be deemed an amendment to this Agreement. Any reference in this
Agreement to Schedule A shall be deemed to be a reference to Schedule A as
amended and in effect from time to time.
4. _____________________ (Name of Member), as an authorized person
within the meaning of the _____________________ (name of state) Act, shall
execute, deliver and file the Certificate.
B. Name. The name of the Company is _____________________ (Name of
Limited Liability Company) . The business of the Company may be conducted upon
compliance with all applicable laws under any other name designated by the Members.
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 _____________________ (name of
state) and shall continue until _____________________ (date of termination) , unless
the Company is dissolved before such date in accordance with the provisions of this
Agreement. The existence of the Company as a separate legal entity shall continue until
cancellation of the Certificate in the manner required by the _____________________
(name of state) Act.
D. Registered Agent and Office. The Company's registered agent and office
in _____________________ (name of state) shall be _____________________ (Name
of Agent) , of _________________________________________ (street address, city,
county, state, zip code) . At any time, the Members may designate another registered
agent or registered office.
E. Principal Place of Business. The principal place of business of the Company
shall be at _________________________________________ (street address, city,
county, state, zip code) . At any time, the Members may change the location of the
Company's principal place of business.
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. _____________________ (Name of Member),
as an authorized person within the meaning of the _____________________ (name of
state) Act, shall execute, deliver and file any certificates (and any amendments or
restatements of such certificates) necessary for the Company to qualify to do business
in a jurisdiction in which the Company may wish to conduct business.
Article 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
_____________________ (name of state) Act and engaging in any and all activities
necessary, convenient, desirable or incidental to the foregoing, including, but not limited
to, acquiring, holding, managing, operating and disposing of securities of corporations,
partnerships, limited liability companies and trusts.
B. Powers of the Company.
1. 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 Article III-A, including, but not
limited to, the power:
a. To conduct its business, carry on its operations and have and
exercise the powers granted to a limited liability company by
the _____________________ (name of state) Act in any state, territory,
district or possession of the United States, or in any foreign country that
may be necessary, convenient or incidental to the accomplishment of the
purpose of the Company;
b. To acquire by purchase, contribution of property or otherwise, own,
hold, operate, maintain, finance, sell, convey, transfer, or dispose of any
securities or other personal property that may be necessary, convenient or
incidental to the accomplishment of the purpose of the Company;
c. To enter into, perform and carry out contracts of any kind, including,
but not limited to, contracts with any Member, any Affiliate of a Member, or
any agent of the Company necessary to, in connection with, convenient to,
or incidental to the accomplishment of the purpose of the Company;
d. To purchase, take, receive, subscribe for or otherwise acquire,
own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise
dispose of, and otherwise use and deal in and with, shares or other
interests in or obligations of domestic or foreign corporations,
associations, general or limited partnerships (including, but not limited to,
the power to be admitted as a partner and to exercise the rights and
perform the duties created by such partnerships), trusts, limited liability
companies (including, but not limited to, the power to be admitted as a
member or appointed as a manager and to exercise the rights and
perform the duties created by such admission or appointment), or
individuals or direct or indirect obligations of the United States or of any
government, state, territory, governmental district or municipality or of any
instrumentality of any of them;
e. To lend money for its proper purpose, to invest and reinvest its
funds, to take and hold real and personal property for the payment of
funds so loaned or invested;
f. To sue and be sued, complain and defend, and participate in
administrative or other proceedings, in its name;
g. To appoint employees and agents of the Company, and define their
duties and fix their compensation;
h. To indemnify any Person in accordance with
the _____________________ (name of state) Act and to obtain any and
all types of insurance;
i. To cease its activities and cancel its Certificate;
j. To negotiate, enter into, renegotiate, extend, renew, terminate,
modify, amend, waive, execute, acknowledge or take any other action with
respect to any lease, contract or security agreement in respect of any
assets of the Company;
k. To borrow money and issue evidences of indebtedness, and to
secure the same by a mortgage, pledge or other lien on the assets of the
Company;
l. To pay, collect, compromise, litigate, arbitrate or otherwise adjust or
settle any and all other claims or demands of or against the Company or
to hold such proceeds against the payment of contingent liabilities; and
m. To make, execute, acknowledge and file any and all documents or
instruments necessary, convenient or incidental to the accomplishment of
the purpose of the Company.
2. The Company may merge with, or consolidate into,
another _____________________ (name of state)
limited liability company or other business entity [as defined
in _____________________ (citation of statute)] upon
the approval of all of the Members.
Article 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. The agreed value of the Capital Contributions made or
deemed to have been made by each Member shall be set forth on 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 property of the Company.
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. Any such returns of Capital
Contributions shall be made to all Members in proportion to the Percentage
Interests. Notwithstanding the foregoing, no return of a Member's Capital
Contributions shall be made if such distribution would violate applicable state
law. Under circumstances requiring a return of any Capital Contribution, no
Member shall have the right to demand or receive property other than cash,
except as may be specifically provided in this Agreement.
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 Article IV-A, and no Member shall be required to lend any funds to the
Company or, after a Member's Capital Contributions have been fully paid
pursuant to Article IV-A, to make any additional capital contributions to the
Company. No Member shall have any personal liability for the repayment of any
Capital Contribution of any other Member.
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 (consisting of cash or the fair market value
of any property net of any liabilities secured by such contributed property
that the Company is considered to assume or take subject to under 26
U.S.C.A. § 752 of the Code); such Member's distributive share of Profits;
and such Member's distributive share of 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 (net of liabilities secured by such distributed
property which the Member is considered to assume or take subject to
under 26 U.S.C.A. § 752 of the Code); such Member's distributive share of
Losses; and such Member's distributive share of 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. The amount of any such advance shall be a debt obligation of the Company
to such Member and shall be subject to such terms and conditions acceptable to the
Company and each Member. Any such advance shall be payable and collectible only
out of Company assets, and the other Members shall not be personally obligated to
repay any part of such advance. No Person who makes any nonrecourse loan to the
Company shall have or acquire, as a result of making such loan, any direct or indirect
interest in the profits, capital or property of the Company, other than as a creditor.
Article 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 _____________________ (name of state) 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. Such reimbursement shall be treated as an expense of the Company that
shall be deducted in computing the Net Cash Flow and shall not be deemed to
constitute a distributive share of Profits or a distribution or return of capital to any
Member.
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 _____________________ (citation of statute) ,
management of the Company shall be vested in the Members. Except as
otherwise expressly provided in this Agreement, whenever this Agreement
requires or permits actions to be taken by the Members, the decision by
Members owning more than _________ % of the Percentage Interests shall
control.
2. The Members shall have full, exclusive and complete discretion to
manage the business and affairs of the Company, to make all decisions affecting
the business and affairs of the Company and to take such actions as they deem
necessary or appropriate to accomplish the purpose of the Company as set forth
in this Agreement. There shall not be a manager [within the meaning of
the _____________________ (name of state) Act] 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. If a Member binds the
Company, but did not have the authority to so act under this Agreement
(including by failing to obtain necessary consents from other Members), in
addition to any other remedy (at law or in equity) that may be available against
such Member, such Member shall be liable for all damages caused by breaching
this Agreement.
B. Reliance by Third Parties. Any Person dealing with the Company or any
Member may rely upon a certificate signed by any Member as to:
1. The identity of a Member;
2. The existence or nonexistence of any fact or facts which constitute a
condition precedent to acts by the Members or in any other manner germane to
the affairs of the Company;
3. The Persons who are authorized to execute and deliver any instrument or
document of, or on behalf of, the Company; or
4. Any act or failure to act by the Company or as to any other matter
whatsoever involving the Company or any Member.
Article VII. Amendments and Meetings
A. Amendments. Any amendment to this Agreement shall be adopted and be
effective as an amendment to the Agreement 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 _________
(minimum number of days) days nor more than _________ (maximum number of
days) days prior to the date of such meeting. Each Member may authorize any
Person to act for it by proxy on all matters in which a Member is entitled to
participate, including waiving notice of any meeting, or voting or participating at a
meeting. Every proxy must be signed by the Member or its attorney-in-fact.
2. The Members shall establish all other provisions relating to meetings of
Members, including notice of the time, place or purpose of any meeting at which
any matter is to be voted on by any Members, waiver of any such notice, action
by consent without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with respect to the
exercise of any such right to vote.
3. The Company may take any action contemplated by this Agreement as
approved by the unanimous written consent of the Members.
Article VIII. Allocations.
A. Profits and Losses.
1. Subject to the allocation rules of Article VIII-B, Profits for any Fiscal Year
shall be allocated among the Members in proportion to the Percentage Interests.
2. Subject to the allocation rules of Article VIII-B , 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 using any method
that is permissible under 26 U.S.C.A. § 706 of the Code and the Treasury
Regulations under that Section.
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 Eight and agree to be bound by the provisions of
this Article Eight in reporting their shares of Company income and loss for
income tax purposes.
4. The Members intend that the allocation provisions set forth in this
Agreement are intended to comply with 26 U.S.C.A. § 704(b) of the Code and
the Treasury Regulations issued under that Section and the provisions are to be
interpreted in a manner consistent with those Treasury Regulations.
C. Tax Allocations; 26 U.S.C.A. § 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, solely for income tax purposes, be allocated among the Members so as to take
account of any variation between the adjusted basis of such property to the Company
for federal income tax purposes and its initial fair market value.
Article IX. Distributions.
A. Net Cash Flow. Except as otherwise provided in Article XV (relating to the
dissolution of the Company), 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 Article IX-A shall be at such
times and in such amounts as shall be determined by the Members.
C. Limitations on Distribution. Notwithstanding any provision to the contrary
contained in this Agreement, the Company shall not make a distribution to any Member
on account of its interest in the Company if such distribution would
violate _____________________ (citation of statute) or other applicable law.
Article X. Books and Records.
A. Books, Records and Financial Statements.
1. At all times during the continuance of the Company, the Company shall
maintain, at its principal place of business, separate books of account for the
Company that shall show a true and accurate record of all costs and expenses
incurred, all charges made, all credits made and received and all income derived
in connection with the operation of the Company business in accordance with
generally accepted accounting principles consistently applied, and, to the extent
inconsistent with such principles, in accordance with this Agreement. Such books
of account, together with a copy of this Agreement and of the Certificate, shall at
all times be maintained at the principal place of business of the Company and
shall be open to inspection and examination at reasonable times by each
Member and its duly authorized representative for any purpose reasonably
related to such Member's interest in the Company.
2. The Members shall prepare and maintain, or cause to be prepared and
maintained, the books of account of the Company. The Members shall prepare
and file, or cause to be prepared and filed, all applicable federal and state tax
returns.
B. Accounting Method. For both financial and tax reporting purposes and for
purposes of determining Profits and Losses, the books and records of the Company
shall be kept on the accrual method of accounting applied in a consistent manner and
shall reflect all Company transactions and be appropriate and adequate for the
Company's business.
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, selected by such Member, with such audit to be accompanied by a report of
such accountant containing its opinion. The cost of such audits will be an expense of
the Company. A copy of any such audited financial statements and accountant's report
will be made available for inspection by the Members.
Article XI. Tax Matters.
A. Tax Matters Partner.
1. _____________________ (Name of Member) is designated as Tax
Matters Partner of the Company for purposes of 26 U.S.C.A. § 6231(a)(7) of the
Code. _____________________ (Name of Member) may not choose a forum for
the resolution of tax matters or extend any statute of limitation without the written
consent of all of the Members.
2. The Tax Matters Partner shall, within _____________________
(number) days of the receipt of any notice from the Internal Revenue Service in
any administrative proceeding at the Company level relating to the determination
of any Company item of income, gain, loss, deduction or credit, 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.
Article XII. Liability; Exculpation; Indemnification.
A. Liability. Except as otherwise provided by the _____________________ (name
of state) Act, the debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the
Company, and no Covered Person shall be obligated personally for any such debt,
obligation or liability of the Company solely by reason of being a Covered Person.
B. Exculpation.
1. 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 by such Covered Person in good faith on behalf of the
Company and in a manner reasonably believed to be within the scope of
authority conferred on such Covered Person by this Agreement, except that a
Covered Person shall be liable for any such loss, damage or claim incurred by
reason of such Covered Person's gross negligence or willful misconduct.
2. A Covered Person shall be fully protected in relying in good faith upon the
records of the Company and upon such information, opinions, reports or
statements presented to the Company by any Person as to matters the Covered
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of
the Company, including information, opinions, reports or statements as to the
value and amount of the assets, liabilities, Profits, Losses or Net Cash Flow or
any other facts pertinent to the existence and amount of assets from which
distributions to Members might properly be paid.
3. Fiduciary Duty. To the extent that, at law or in equity, a Covered Person
has duties (including fiduciary duties) and related liabilities to the Company or to
any other Covered Person, 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. The provisions of this Agreement, to the extent that
they restrict the duties and liabilities of a Covered Person otherwise existing at
law or in equity, are agreed by the parties to replace such other duties and
liabilities of such Covered Person.
4. 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 by such Covered Person by reason of any act or
omission performed or omitted by such Covered Person in good faith on behalf of
the Company and in a manner reasonably believed to be within the scope of
authority conferred on such Covered Person by this Agreement, except that no
Covered Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Covered Person by reason of gross
negligence or willful misconduct with respect to such acts or omissions; provided,
however, that any indemnity under this Article XII-D shall be provided out of and
to the extent of Company assets only, and no Covered Person shall have any
personal liability on account of the same.
5. Expenses. To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by a Covered Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Company prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Company of an undertaking by or on behalf of the
Covered Person to repay such amount if it shall be determined that the Covered
Person is not entitled to be indemnified as authorized in Article XII-D.
6. Insurance. The Company may purchase and maintain insurance, to the
extent and in such amounts as the Members shall, in its sole discretion, deem
reasonable, on behalf of Covered Persons and such other Persons as the
Members shall determine, against any liability that may be asserted against or
expenses that may be incurred by any such Person in connection with the
activities of the Company or such indemnities, regardless of whether the
Company would have the power to indemnify such Person against such liability
under the provisions of this Agreement. The Members and the Company may
enter into indemnity contracts with Covered Persons and such other Persons as
the Members shall determine and adopt written procedures pursuant to which
arrangements are made for the advancement of expenses and the funding of
obligations under Article XII-E and containing such other procedures regarding
indemnification as are appropriate.
7. Outside Businesses. Any Member or Affiliate of a Member may engage
in or possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Company, and the Company and the Members shall have no rights by virtue of
this Agreement in and to such independent ventures or the income or profits
derived from such ventures, and the pursuit of any such venture, even if
competitive with the business of the Company, shall not be deemed wrongful or
improper. No Member or Affiliate of a Member shall be obligated to present any
particular investment opportunity to the Company even if such opportunity is of a
character that, if presented to the Company, could be taken by the Company,
and any Member or Affiliate of a Member shall have the right to take for its own
account (individually or as a partner or fiduciary) or to recommend to others any
such particular investment opportunity.
Article 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 (each, an Additional
Member and collectively, the Additional Members ). Each such Person shall be admitted
as an Additional Member at the time such Person: (i) executes this Agreement or a
counterpart of this Agreement; and (ii) is named as a Member on the attached
Schedule A. The legal fees and expenses associated with such admission shall be
borne by 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;
provided that, subject to the restrictions of 26 U.S.C.A. § 706(d) of the Code, Additional
Members shall be entitled to their respective share of the Company's income, gains,
losses, deductions, credits and other items arising under contracts entered into before
the effective date of the admission of any Additional Members to the extent that such
income, gains, losses, deductions, credits and other items arise after such effective
date. To the extent consistent with 26 U.S.C.A. § 706(d) of the Code and Treasury
Regulations promulgated under that Section, the Company's books may be closed at
the time Additional Members are admitted (as though the Company's tax year had
ended) or the Company may credit to the Additional Members pro rata allocations of the
Company's income, gains, losses, deductions, credits and items for that portion of the
Company's Fiscal Year after the effective date of the admission of the Additional
Members.
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, or any part of an Interest, that is in violation of this Article XIV shall be valid or
effective, and neither the Company nor the Members shall recognize the same for the
purpose of making distributions pursuant to this Agreement. Neither the Company nor
the Members shall incur any liability as a result of refusing to make any such
distributions to the assignee of any such invalid assignment.
C. Pledge. No Member may pledge or otherwise encumber the whole or any part of
its Interests.
Article 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. The Company shall be dissolved and its affairs
shall be wound up upon the occurrence of any of the following events:
1. The expiration of the term of the Company, as provided in Article 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 _____________________ (name of state) Act that terminates the continued
membership of a Member in the Company unless,
within _____________________ (number) days after the occurrence of such an
event, all of the remaining Members agree in writing to continue the business of
the Company; or
4. The entry of a decree of judicial dissolution
under _____________________ (citation of statute) .
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; provided, however, that a reasonable time shall be allowed for the orderly
liquidation of the assets of the Company and the satisfaction of liabilities to creditors so
as to enable the Members to minimize the normal losses attendant upon a liquidation.
The Members shall continue to share Profits and Losses during liquidation in the same
proportions, as specified in Article VIII , as before liquidation. The proceeds of
liquidation shall be distributed in the following order and priority:
1. To creditors of the Company, including Members who are creditors, to the
extent otherwise permitted by law, in satisfaction of the liabilities of the Company
(whether by payment or the making of reasonable provision for payment); and
2. To the Members in accordance with their Capital Account balances, after
giving effect to all contributions, distributions and allocations for all periods.
D. Termination. The Company shall terminate when all of the assets of the
Company, after payment of or due provision for all debts, liabilities and obligations of
the Company, shall have been distributed to the Members in the manner provided for in
this Article 15 and the Certificate shall have been canceled in the manner required by
the (name of state) 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, and if the assets of
the Company remaining after payment of or due provision for all debts, liabilities and
obligations of the Company are insufficient to return such Capital Contributions, the
Members and former Members shall have no recourse against the Company or any
other Member.
Article XVI. Miscellaneous.
A. Notices. All notices provided for in this Agreement shall be in writing, duly signed
by the party giving such notice, and shall be delivered, mailed via an overnight courier
service, telecopied or mailed by registered or certified mail, as follows:
1. If given to the Company, at the address specified in Article II-E of this
Agreement; or
2. If given to any Member, at the address set forth opposite its name on the
attached Schedule A, or at such other address as such Member may designate
in the future by written notice to the Company. All such notices shall be deemed
to have been given when received.
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, which would have originally constituted a violation,
from having the effect of an original violation.
C . Cumulative Remedies. The rights and remedies provided by this Agreement are
cumulative and the use of any one right or remedy by any party shall not preclude or
waive its right to use any or all other remedies. The rights and remedies are given in
addition to any other rights the parties may have by law, statute, ordinance or otherwise.
D. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
all of the parties and, to the extent permitted by this Agreement, their successors, legal
representatives and assigns.
E. Interpretation. Throughout this Agreement, nouns, pronouns and verbs shall be
construed as masculine, feminine, neuter, singular or plural, whichever shall be
applicable. All references in this Agreement to Articles, Sections and Paragraphs shall
refer to corresponding provisions of this Agreement.
F. Severability. The invalidity or unenforceability of any particular provision of this
Agreement shall not affect the other provisions of this Agreement, and this Agreement
shall be construed in all respects as if such invalid or unenforceable provision was
omitted.
G. Counterparts. This Agreement may be executed in any number of counterparts
with the same effect as if all parties had signed the same document. All counterparts
shall be construed together and shall constitute one instrument.
H. Integration. This Agreement constitutes the entire agreement among the parties
pertaining to the subject matter of this Agreement and supersedes all prior agreements
and understandings pertaining to such subject matter.
I. Governing Law. This Agreement and the rights of the parties under this
Agreement shall be interpreted in accordance with the laws
of _____________________ (name of state) , and all rights and remedies shall be
governed by such laws without regard to principles of conflict of laws.
The parties have executed this Agreement the day and year first above written.
(Name of LLC)
By: ____________________________ _________________________
(Signature of Member) (Signature of Member)
_____________________ _____________________
(Printed Name of Member) (Printed Name of Member)
_______________________________ __________________________
(Signature of Member) (Signature of Member)
_____________________ _____________________
(Printed Name of Member) (Printed Name of Member)
Schedule(s)
