Limited Liability Operating Agreement for Manager-Managed
Real Estate Development with Specification of Different Amounts
of Capital Contributions by Members
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.
Whereas, the parties have formed a limited liability company under
the _____________________ (name of state’s limited liability company act), hereinafter
referred to as the Act, and upon the terms and conditions of this Agreement; and
Whereas, the Members wish to set forth their agreement as to how the business and
affairs of the Company shall be managed and their rights and obligations with respect to
the Company;
NOW, THEREFORE, 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 Name; Duration; Purpose and Powers.
1.1. Name. The name of the LLC shall be _____________________ (name of limited
liability company) .
1.2. Duration. The LLC’s period of duration shall be _____________________
(number) years.
1.3. Registered Office. The registered office of the LLC shall
be _________________________________________ (street address, city, county,
state, zip code) .
1.4. Mailing Address. The mailing address of the LLC shall
be _________________________________________ (street address, city, county,
state, zip code) .
1.5. Purpose. The primary purpose for which the LLC is organized
is _________________________________________ (description of purpose) , with the
main sources of income being _____________________ (sources of income) , with
ancillary income derived from _____________________ (sources of ancillary income) .
Without being limited by the above, the LLC may transact all lawful business for which
limited companies may be organized under _____________________ (name of
state) law.
1.6. Powers. The powers, duties and obligations of the LLC shall include, but not be
limited to, all of the powers, duties and obligations allowed a limited liability company,
pursuant to (name of state) law.
Article II Management.
2.1. Managers.
(i) The LLC's everyday business and affairs shall be vested in managers (the
Initial Managers ).
(ii) The names and addresses of the Initial Managers of the LLC
are: _________________________________________ (names
and addresses of initial managers) . Managers shall serve until their successors
are elected and qualified, or until they are otherwise discharged, pursuant to this
Agreement. Managers may be discharged, for any reason, on a majority vote of
the voting interests of the members at an annual meeting of the members, or at
any time, by unanimous written consent.
(iii) The number of managers shall be initially _____________________
(number) , as determined initially by the Articles of Organization, and as
determined from time to time by the members of the LLC.
(iv) Newly created managerial positions resulting from any increase in the
authorized number of managers may be filled by a vote
of _____________________ (fraction of voting interest) of the voting interest of
the members, then existing, though less than a quorum, or by a sole remaining
member; and the managers so chosen shall hold office until the next annual
election and until their successor has been duly elected and qualified, unless
sooner discharged, pursuant to the terms of this Agreement. If there are no
managers in office, then an election of managers shall be held by a special
meeting of the members.
(v) The ordinary, everyday business of the LLC, as it relates to the operation,
maintenance and construction of _____________________ (description of
property) , shall be managed by its managers, who may exercise all powers
necessary to carry on the ordinary, everyday business of the LLC and do all
lawful acts and things, relating to it, as are directed by this Agreement and the
Articles of Organization and are not, by statute or by the Articles of Organization
or by this Agreement, prohibited. Any expenditure related to other (future)
business ventures shall be first approved by unanimous vote of the voting
interests of the members. Similarly, any leases or licenses at the premises and
any capital expenditures over $ _____________________ (other than as
specifically provided for in this Agreement) shall be subject to approval by
unanimous vote of the voting interests of the members.
(vi) A manager of the LLC who is either present at a meeting of the managers
at which action on any LLC matter is taken, or who is absent but has notice of the
action, shall be presumed to have assented to the action taken unless his or her
dissent shall be entered in the minutes of the meeting, or unless he or she shall
file a written dissent to the action with all other managers of the LLC before the
adjournment of the meeting, or shall forward the dissent by certified mail to all
other managers of the LLC immediately after the adjournment of the meeting or
within _____________________ (number) days after notification of the action.
The objection shall be deemed made when mailed by certified mail. The right to
dissent shall not apply to a manager who voted in favor of the action.
(vii) Regular meetings of the managers may be held, with notice to all
managers, at a time and place as shall from time to time be determined by the
managers.
(viii) Special meetings of the managers may be called by any manager with
one day's notice to each manager, either personally, by mail or by facsimile.
(ix) At all regular and special meetings of the managers, a majority of the
managers shall constitute a quorum for the transaction of business. The act of a
majority of the managers present at any meeting at which there is a quorum shall
be the act of all the managers, except as may be otherwise specifically provided.
If a quorum shall not be present at any meeting of the managers, the managers
present may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
(x) Unless otherwise restricted by the Articles of Organization or this
Agreement, any action required or permitted to be taken at any meeting of the
managers or committee may be taken without a meeting, if all managers or
members of the committee, as the case may be, consent to it in writing.
(xi) Managers may participate in a meeting by means of a telephone
conference call or similar communications equipment which enables all
participants in the meeting to hear each other, and participation in the meeting
pursuant to this subsection shall constitute presence in person at the meeting.
(xii) When called for by a vote of the members, the managers shall present at
any annual meeting or at any special meeting of the members, a full and clear
statement of the business and condition of the LLC.
(xiii) No loan shall be contracted on behalf of the LLC and no evidence of
indebtedness shall be issued in its name unless authorized by unanimous
resolution of all the managers, or pursuant to a general or special meeting of the
managers, as provided in this Agreement. The authority may be general or
confined to specific instances. Notwithstanding the above, any loans, lines of
credit, purchases or equipment leases which exceed $
_____________________ (other than as specifically otherwise provided in this
Agreement) shall be subject to approval by a unanimous vote of the members.
(xiv) Any manager or agent authorized by a manager may enter into any
contract or execute and deliver any instrument on behalf of the LLC, consistent
with the terms of this Agreement. This authority may be general or confined to
specific instances.
(xv) No contract or transaction between the LLC and one or more of its
managers or members, or between the LLC and any other LLC, partnership,
association, corporation, or other organization in which one or more of its
managers or members are managers, shareholders or officers, or have a
financial interest, shall be void or voidable solely for this reason or solely
because the manager or member is present at or participates in the meeting of
the board or committee of the board which authorizes the contract or transaction,
or solely because their votes are counted for such purpose, if:
(a) The material facts regarding his or her relationship or interest and
regarding the contract or transaction are disclosed or are known to any
disinterested managers and members and the disinterested managers
and members authorize the contract or transaction by the affirmative votes
of a majority, even though they are less than a quorum; or
(b) The material facts regarding his or her relationship or interest and
regarding the contract or transaction are disclosed or are known to the
members entitled to vote on it, and the contract or transaction is
specifically approved in good faith by vote of the members.
2.2. Responsibility and Functions.
(i) Management responsibility and functions shall include the following:
(a) What accounts payable to pay.
(b) Whether or not the LLC should borrow and under what terms and
conditions (not inconsistent with the terms of this Agreement).
(c) Borrowing money and giving security for it (not inconsistent with the
terms of this Agreement).
(d) Determining requirements for the number and type of salaried staff
and their hiring and firing (other than mangers and members of the
managers' families, which requires a determination by a majority vote of
the voting interests of the members).
(e) What salary and fringe benefits to pay salaried staff (other than
managers and members of the managers' families, which requires a
determination by a majority vote of the voting interests of the members).
(f) Maintenance of the books.
(g) Preparation and filing of the tax returns.
(h) Depositing and withdrawing LLC funds (not inconsistent with the
terms of this Agreement).
(i) Determining what sales effort will be conducted and how it will be
conducted.
(j) Advertising.
(k) Determining hours of operation and otherwise conducting the
everyday business and affairs.
(l) Purchasing, constructing and leasing any and all equipment (not
inconsistent with the terms of this Agreement).
(ii) All management functions shall be held jointly by all of the managers and
they may do any other things, not inconsistent with this Agreement, as they may
deem necessary to successfully establish, operate and manage the ordinary,
everyday affairs of the LLC.
(iii) The determination of when to temporarily replace any manager who is
temporarily disabled or otherwise temporarily unwilling or unable to serve, shall
be made by the unanimous decision of all other managers; or if none, by
a _____________________ (fraction of voting interest) vote of the voting
interests of the members. The manager's temporary replacement shall be
selected as otherwise provided for in this Agreement.
2.3. Election of Managers. At the first annual meeting of the members and at each
annual meeting of members after that, the members shall elect managers to hold office.
Each manager shall hold office for the term for which he or she is elected and until his
or her successor has been elected and qualified, or until the manager is otherwise
discharged, as set out in this Agreement.
2.4. Vacancies. Any vacancies occurring in the group of managers shall be filled by
a _____________________ (fraction of voting interest) vote of the voting interests of
the members. The manager chosen to fill the vacancy shall serve the unexpired term of
his or her predecessor in office. Notwithstanding the above, all managers or any lesser
number may be removed in the manner previously provided for in this Agreement.
2.5. Salary.
(i) The LLC shall employ _____________________ (Name of Member) as a
Manager of the LLC for a period of not less than _____________________
(number) year(s) (unless discharged earlier in accordance with the terms of this
Agreement) and shall pay _____________________
(him/her) $ _____________________ per year for _____________________
(his/her) services. The amount shall be paid in _____________________
(number) installments of $ _____________________ , with the first payment to be
made _____________________ (number) weeks from the date on which
_____________________ (Name of Member) makes the initial deposit of
$ _____________________ into the LLC, as set out below.
(ii) The LLC shall employ _____________________ (Name of Member) as a
Manager of the LLC for a period of not less than _____________________
(number) year(s) (unless discharged earlier in accordance with the terms of this
Agreement) and shall pay _____________________
(him/her) $ _____________________ per year for _____________________
(his/her) services. The amount shall be paid in _____________________
(number) installments of $ _____________________ , with the first payment to be
made _____________________ (number) weeks from the date on which
_____________________ (Name of Member) makes the initial deposit of
$ _____________________ into the LLC, as set out below.
(iii) Except as provided in Sections 2.5(i) and (ii) above, no members shall be
entitled to receive any salary from the LLC, nor shall any member receive a
drawing account from the LLC.
2.6. Indemnification of Managers.
(i) The LLC shall indemnify against liability incurred, in any proceeding, by an
individual made a party to the proceeding because he or she is or was a
manager if:
(a) He or she conducted himself or herself in good faith;
(b) He or she reasonably believed, in the case of conduct in his or her
official capacity, that his or her conduct was in the LLC's best interests and
was not contrary to the grant of powers specified in this Agreement in any
material aspect; and
(c) In the case of any criminal proceeding, he or she acted in good
faith and had no reasonable cause to believe that his or her conduct was
unlawful.
(ii) The LLC shall indemnify a manager who is wholly successful, on the
merits or otherwise, in defense of any proceeding in which he or she was a party,
against reasonable expenses incurred by him or her in connection with the
proceeding, unless his or her conduct was in violation of (a) above.
(iii) A manager who is or was a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another court of
competent jurisdiction.
(iv) The LLC shall pay for or reimburse the reasonable expenses incurred by a
manager who is a party to a proceeding in advance of the final disposition of the
proceeding if:
(a) The manager furnishes the LLC with a written affirmation of his or
her good-faith belief that he or she has met the standard of conduct
required;
(b) He or she furnishes the LLC with a written undertaking, executed
personally or on his or her behalf, to repay the advance if it is determined
that he or she did not meet the standard of conduct; and
(c) A determination is made by the LLC that the facts then known to
those making the determination would not preclude indemnification.
III. Members.
3.1. Initial Members
(i) Within _____________________ (number) days after the execution of this
Agreement by all parties to it (the Effective Date ), and simultaneously with the
transfer of the Real Estate (described below), _____________________ (Name
of Member) shall deposit $ _____________________ into the LLC's account,
which shall represent said Member’s first contribution, in order to allow for the
following purchases and construction items to occur: (description of items to be
purchased or constructed) . On discharge of the _____________________
(name of bank) Mortgage, as set out in Section 3.1(vi) of this Agreement, said
Member shall deposit an additional $ _____________________ into the LLC's
account.
(ii) On the completion by the LLC of the items set out in Section 3.1(i) above,
the completion of any necessary permitting, and the institution of any necessary
insurance coverages by the LLC, which shall all occur
within _____________________ (number) days of the date on
which _____________________ (Name of Member) ’s first contribution
($ _____________________ ), is deposited into the LLC's account, the LLC, or its
agent, shall notify _____________________ (Name of Member) of the
occurrence, by sending _____________________ (Name of Member) a
certificate of completion, which shall specify the work completed, together with
the associated costs, and _____________________ (Name of Member) shall
have _____________________ (number) days to deposit into the LLC's account
a second contribution of $ _____________________ . If, within
the _____________________ (number) -day time period, the LLC is unable to
sufficiently illustrate to _____________________ (Name of Member) the
occurrence or _____________________ (Name of Member) is not satisfied that
the above-referenced contingencies have been
completed, _____________________ (Name of Member) shall so notify the LLC,
in writing, and any Initial Member may withdraw from the LLC, pursuant to
Section 3.5 below.
(iii) Within _____________________ (number) months of the date on
which _____________________ (Name of Member) ’s first contribution of
$ _____________________ is deposited into the LLC's account, the LLC, or its
agent, shall notify _____________________ (Name of Member) that the LLC
(description of work to be completed) , by sending _____________________
(Name of Member) a certificate of completion, which shall specify the work
completed, together with the cost of it.
(iv) _____________________ (Description of obligations) are not in default
and are in the approximate amount of $ _____________________ , with the exact
amount due set out in Exhibit A.
(v) On or before the Effective Date of this Agreement,
_____________________ (Name of Member) shall, at __________________
(his/her) sole expense, deliver to the LLC, as well as to _________________
(Name of Member) and _____________________ (his/her) attorney, a title
insurance commitment, issued by a licensed title insurer, agreeing to issue to the
LLC, on recording of the warranty deed, an owner's policy of title insurance in the
amount of $ _____________________ , insuring the LLC's title to the Real Estate.
The owner's title policy premium shall be paid by _____________________
(Name of Member) , on the recording of the warranty deed and issuance of the
title policy. Title to the Real Estate shall be good and marketable. Attached to this
Agreement as Exhibit B is a copy of the title commitment, together with the
endorsement and the exceptions marked to be omitted from the policy of
insurance, when issued. Title in accordance with it shall be acceptable to the LLC
and _____________________ (Name of Member) .
(vi) The mortgage held by (name of bank) , dated (date) and recorded in
Book _____________________ , page _____________________ , of the Public
Records of _____________________ (name of county) County
_____________________ [the ( name of bank) Mortgage ], shall constitute a title
exception, but shall be discharged and satisfied by _____________________
(Name of Member) at _____________________ (his/her) sole expense, as soon
as practicable, not to exceed _____________________ (number) days from the
Effective Date of this Agreement. If the _____________________ (name of
bank) Mortgage is not timely discharged, _____________________ (Name of
Member) shall have the right to withdraw from the LLC, in which event the LLC
shall dissolve and liquidate and _____________________ (Name of
Member) shall have a priority right to the return of all monies contributed
by _____________________ (him/her) to the LLC.
(vii) Prior to any investments of monies or property, as set out in this
Agreement, the LLC and _____________________ (Name of Member) shall
review the title insurance commitment and exceptions and notify
_____________________ (Name of Member) that the LLC
and _____________________ (Name of Member) each accept title and the
conditions on which title will be accepted. Should either the LLC or
_____________________ (Name of Member) fail to accept title, as shown on the
title commitment, either Member may declare this Agreement null and void,
which will discharge all parties from any further obligations or duties under the
Agreement.
(viii) The legal description, attached to this Agreement as Exhibit C, illustrates
the approximate boundaries of the property. The legal description shall be
supplemented with a survey of the property, which shall be obtained prior to the
Effective Date of this Agreement.
(ix) Property taxes shall be prorated, based on the current year's taxes. If
closing occurs at a date when the current year's millage is not fixed and the
current year's assessment is available, taxes will be prorated based on the
assessment and the prior year's millage. If the current year's assessment is not
available, then taxes will be prorated on the prior year's tax. At the request of
either the LLC or _____________________ (Name of Member), any tax
proration based on an estimate shall be subsequently readjusted on receipt of
the tax bill.
(x) _____________________ (Name of Member) shall pay for the
documentary stamps on the warranty deed. The LLC shall pay for the cost of
recording them.
(xi) The LLC acknowledges receipt of _____________________ (description
of attached document) , which is attached to this Agreement as Exhibit D.
(xii) If, before the recording of the warranty deed, the subject property is
substantially damaged by fire or other casualty, _____________________
(Name(s) of Members), may withdraw from the LLC, pursuant to Section 3.5
below.
3.2. Within _____________________ (number) days of the Effective Date of this
Agreement, _____________________ (Name of Member), shall deposit
$ _____________________ into the LLC's account, representing
_____________________ [his/her] capital contribution.
3.3. Members/General.
(i) Except as otherwise specifically provided for in this Agreement, each
Member shall have a voting interest in matters affecting the LLC (the Voting
Interest ) and an interest in the assets, gains, income, profits, and losses and
deductions of the LLC (inclusive of all distributions on liquidation) (Member's
Share) in the following proportions and percentages:
Member's Name Interest/Member's Share
_____________________ _________ %
_____________________ _________ %
_____________________ _________ %
(ii) The Member's share, and Voting Interest, set forth in Subsection 3.3(a)
above, for each Member, shall remain constant, unless amended or modified in a
writing signed by each Member. Any payments made by a Member to the LLC, in
addition to those specifically set forth in this Agreement as a contribution, shall
be deemed a loan by the Member to the LLC, unless agreed to be otherwise by
all members in writing.
3.4. Distributions.
(i) At the end of the first year of existence of the LLC, which shall be
on _____________________ (date) , and after that, any member may declare a
distribution, consistent with that member's Member Share, as set out in this
Agreement. Any member may, by written notice to the other members given prior
to _____________________ (month and day) , declare a distribution of cash flow
to the members for the preceding year in the following amounts: (a) not to
exceed _____________________ % of cash flow from the Effective Date
through _____________________ (date of end of first year of existence of LLC) ;
(b) not to exceed _____________________ % of cash flow for the following
calendar year; and (c) for each calendar year after that, not to
exceed _____________________ % of the cash flow. The term Cash Flow shall
mean the gross revenues from operations for the applicable period reduced by all
operating expenditures, including, but not limited to, salaries, taxes paid or to be
paid by the LLC, utilities, fuel, repairs, renovations, insurance, replacements,
capital improvements, and supplies, and shall include all those expenditures
which were due during the applicable period even if not made. Gross revenues
shall further be reduced by the amount of any reserve, established by unanimous
vote of the members, for contingencies, replacements, or repairs, or such other
purpose as the members unanimously deem appropriate. Gross revenues shall
not include proceeds of loans, nor shall it be reduced by depreciation,
amortization or other such allowances. Notwithstanding the above, the members
may, at any time, by unanimous vote, increase or decrease annual distributions.
(ii) Notwithstanding the above, no minimum distribution shall be made if it
shall: (a) result in a reduction of the capital account for any member; (b) render
the LLC insolvent under either federal or state insolvency laws; or (c) result in the
LLC being unable to meet its debts and obligations as they become due.
3.5. Withdrawal.
(i) Except as provided in Section 3.5(ii) below, no member may resign,
dissolve or otherwise voluntarily withdraw from the LLC unless: (a) the
resignation, dissolution or withdrawal has been approved in writing by all of the
other members; or (b) the member has, together with a notice of intent to
withdraw, given to and received by each non-withdrawing
member _____________________ (number of months) months in advance,
specified his or her agreement to accept as full payment for his or her interest in
the LLC, payment as provided in Section 3.5(iii). Unless the members (other
than the withdrawing member) unanimously agree to continue the business of
the LLC and pay the withdrawing member pursuant to Section 3.5(iii), notice of
which is to be made within _____________________ (number) days of the
issuance by the withdrawing member of his or her notice of intent to withdraw,
the member shall be permitted to withdraw and the LLC shall be dissolved.
(ii) If _____________________ (Name of Member) fails to
make _____________________ (his/her) full anticipated contribution of
$ _____________________ , except as agreed to by the unanimous written
consent of all of the other members except _____________________ (Name of
Member) , any member shall have the right to withdraw from the LLC, in which
event the LLC shall be dissolved and liquidated. Distributions to the members, on
the liquidation, shall be made in accordance with Section 4.1 of this Agreement,
excepting that the Member's Share, as provided in Section 3.3(i), shall be
adjusted to proportionately reflect the lesser investment
by _____________________ (Name of Member) . The reduction shall be based
on the percentage ratios as reflected in Section 3.3(i) as Member's Share. This
adjusted percentage shall be for purposes of liquidation pursuant to this Section
3.5(ii) only and shall not affect Member's Share as it relates to distributions of the
gains, income and losses. On _____________________ (Name of
Member) _____________________ ( his/her) full contribution, this Section 3.5(ii)
shall terminate and be of no further force and effect, notwithstanding that there
may be reductions in the capital account of _____________________ (Name of
Member) , or other members, later.
(iii) In the event of a withdrawal, as provided in Section 3.5(i), or in the event
of the filing of a petition of bankruptcy or an insolvency pursuant to state or
federal laws, and an election of the remaining members pursuant to it to continue
the business of the LLC, the withdrawing member shall receive as full payment
for his or her interest in the LLC, his or her Member's Share multiplied by the
book value of the LLC. Book value is based on the value of assets less liabilities
as reflected on the books of the LLC and shall not include any provision for good
will. On the remaining member's voting to continue the business of the LLC, the
withdrawing member shall execute and deliver any documents as may be
required to effectuate a transfer and assignment of the member's interest in the
LLC and simultaneously, the withdrawing member shall receive payment equal
to _____________________ % of the Purchase Price of his or her interest, with
the balance to be paid in (number) equal installments in
_____________________ (number) months from the date of transfer. Each
payment shall bear interest at the rate of _____________________ % per year.
(iv) Pursuant to this Section, any payments to withdrawing members shall be
solely in the form of cash returns.
3.6. Meetings of Members.
(i) Meetings of members may be held at a place, either in or out of [name of
state] , as may be stated in or fixed in accordance with this Agreement. If no other
place is stated or so fixed, all meetings shall be held at the registered office of
the LLC.
(ii) An annual meeting of the members shall be held at a time as may be
stated or fixed in accordance with this Agreement.
(iii) Special meetings of the members may be called by any members or
managers.
(iv) Whenever the vote of the members is required or permitted to be taken for
or in connection with any LLC action, the meeting and vote of members may be
dispensed with if all of the members who would have been entitled to vote on the
action, if the meeting were held, consent in writing to the action taken by the LLC.
(v) Members may have any meetings provided for in this Agreement, via
telephone conference call or similar communications equipment, as provided for
in Section 2.1(xi).
3.7. Notice.
(i) Written notice stating the place, day, and hour of the meeting and, in case
of a special meeting, the purpose for which the meeting is called, shall be
delivered not less than _____________________ (number) days nor more
than _____________________ (number) days before the date of the meeting,
either personally or by mail, by or at the direction of any manager or member
calling the meeting, to each member of record entitled to vote at the meeting.
(ii) Notice to members, if mailed, shall be deemed delivered when deposited
in the United States mail, addressed to the member, with postage prepaid.
If _____________________ (number) successive letters mailed to the last
known address of any member are returned as undeliverable, no further notices
to the member shall be necessary until another address for the member is made
known to the LLC.
(iii) When a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place of it is announced at the
meeting which the adjournment is taken. At the adjourned meeting, the LLC may
transact any business which might have been transacted at the original meeting.
If the adjournment is for more than _____________________ (number) days, a
notice of the adjourned meeting shall be given to each member entitled to vote at
the meeting.
(iv) A waiver in writing, signed by the person entitled to such notice, whether
before, at, or after the time stated in it, shall be equivalent to the giving of notice.
This applies when any notice is required to be given to any member of a LLC
under the provisions of this Agreement or under the provisions of the Articles of
Organization.
(v) By attending a meeting, a member: (a) waives objection to lack of notice
or defective notice of the meeting unless the member, at the beginning of the
meeting, objects to the holding of the meeting or the transacting of business at
the meeting; and (b) waives objection to consideration at the meeting of a
particular matter not within the purpose or purposes described in the meeting
notice, unless the member objects to considering the matter when it is presented.
3.8. Voting.
(i) Unless this Agreement provides otherwise, any member may vote in
person or by proxy.
(ii) Unless otherwise provided by this Agreement, a majority of the members
entitled to vote shall constitute a quorum of the members. If a quorum is present,
the affirmative vote of the majority of the members represented at the meeting
and entitled to vote on the subject matter shall be the act of the members. If a
quorum is not represented at any meeting of the members, the meeting may be
adjourned for a period not to exceed _____________________ (number) days at
any one adjournment.
IV. Action without Meeting ; Dissolution; Amendment.
4.1. Action by Members without a Meeting.
(i) Action required or permitted by this Agreement to be taken at a members'
meeting may be taken without a meeting if the action is evidenced
by _____________________ (number) or more written consents describing the
action taken, and signed by each member entitled to vote. Action taken under
this subsection is effective when all members entitled to vote have signed the
consent, unless the consent specifies a different effective date.
(ii) Written consent of the members entitled to vote has the same force and
effect as a unanimous vote of the members and may be stated in any document.
4.2. Dissolution.
(i) The LLC shall be dissolved on the occurrence of any of the following
events: (a) when the period fixed for the duration of the LLC expires; (b) by the
unanimous written agreement of all members; (c) on the death, retirement, notice
of resignation, notice of intent to withdraw, expulsion, bankruptcy or dissolution of
a member; or (d) the occurrence of any other event which terminates the
membership of a member in the LLC. However, there shall be no dissolution if
the business of the LLC is continued by the consent of all the remaining
member(s) under a right to do so stated in the Articles of Organization of the
LLC, within _____________________ (number) days after the occurrence of
either (c) or (d), above. In the event of the death of a member, or death
of _____________________ (Name of Member) , the legal representative of the
deceased shall be entitled to consent on behalf of the deceased member to
continue the business. It is understood that the LLC shall dissolve on the death
of _____________________ (Name of Member) unless the members
[including (Name of Member) ] unanimously agree to continue the business.
(ii) Payments made to any member shall be in the amount of, and in
accordance with Section 4.2(iv), on the death of a member and the remaining
members' unanimous vote to continue the business of the LLC. In the event of a
liquidation, distribution of all assets and liabilities or the proceeds of it shall be in
accordance with the Member's Share and in the manner provided in Section
4.2(v).
(iii) As soon as possible following the occurrence of any of the events
specified in this Section affecting the dissolution of the LLC, the LLC shall
execute a statement of intent to dissolve in the form as shall be prescribed by the
Secretary of State. The statement of intent to dissolve shall be executed by any
manager of the LLC.
(iv) In the event of the death of a member _____________________
[or (Name of Member) ] , and if the other members unanimously agree,
within _____________________ (number) days after death, to continue the
business of the LLC, payment to the deceased member's legal representative
shall be based on the fair market value of the member's interest, as determined
by appraisals. Both the LLC and the deceased member's legal representative
shall select an appraiser qualified and experienced in evaluating similar
businesses and properties. If they are unable to agree
within _____________________ (number) days as to the value, they shall select
a third appraiser, whose decision shall be binding. Payment shall be made in full
within (number) days after that, at which time the interest of the deceased
member, or _____________________ (Name of Member) , shall be transferred.
(v) If the LLC is dissolved, the remaining members shall wind up its affairs.
On the winding up of the LLC, the assets of the LLC shall be distributed as
follows: first, to creditors, including members and managers who are creditors, to
the extent otherwise permitted by law, in satisfaction of liabilities of the LLC,
other than liabilities for which reasonable provision has been made; second, to
members for unpaid distributions to which they have become entitled prior to
dissolution or resignation, as applicable; and third, to members in proportion to
their respective Member's Share.
4.3. Amendment. This Agreement may be altered or amended by a unanimous vote of
all of the members, at any regular meeting of the members or at any special meeting of
the members, if notice of the alteration or amendment is contained in the notice of the
special meeting.
V. Miscellaneous Provisions.
5.1. Regulatory Allocations.
(i) Minimum Gain Chargeback. Except as set forth
in _____________________ (citation of regulation) , if during any taxable year
there is a net decrease in minimum gain, each member, prior to any other
allocation under this Section 5.1, shall be specially allocated items of gross
income and gain for the taxable year (and, if necessary, subsequent taxable
years) in an amount equal to that member's share of the net decrease of
minimum gain, computed in accordance with _____________________ (citation
of regulation) . Allocations of gross income and gain recognized from the
disposition of LLC assets subject to nonrecourse liabilities, to the extent of the
minimum gain attributable to those assets, and subsequently, from a pro-rata
portion of the LLC's other items of income and gain for the taxable year. It is the
intent of the parties that any allocation under this Subsection 5.1(i) shall
constitute a minimum gain chargeback under (citation of regulation) .
(ii) Member Minimum Gain Chargeback. Except as otherwise provided
in _____________________ (citation of regulation) , if during any taxable year
there is a net decrease in member minimum gain attributable to member
nonrecourse liability during any taxable year, each member who has a share of
the member minimum gain attributable to the member nonrecourse liability shall
be specially allocated items of gross income and gain for the taxable year (and, if
necessary, subsequent taxable years) in an amount equal to that member's
share of the net decrease in the member minimum gain. This allocation shall be
made after the allocation under Subsection 5.1(i), and prior to any other
allocation under this Section 5.1. Allocations of gross income and gain under this
Subsection 5.1(ii) shall be made first from gain recognized from the disposition
of LLC assets subject to member nonrecourse liabilities to the extent of member
minimum gain attributable to those assets, and after that, from a pro-rata portion
of the LLC's other items of income and gain for the taxable year. It is the intent of
the parties that any allocation under this Subsection 5.1(ii) shall constitute a
minimum gain chargeback under _____________________ (citation of
regulation) .
(iii) Qualified Income Offset. If any Member unexpectedly receives any
adjustments, allocations, or distribution, items of gross income and gain shall be
specially allocated to each such member in an amount and manner sufficient to
eliminate, to the extent required by _____________________ (citation of
regulation) , the adjusted capital account deficit of the member as quickly as
possible. An allocation under this Subsection 5.1(iii) shall be made only if and to
the extent that the member would have any adjusted capital account deficit after
all other allocations provided for under this Subsection 5.1(iii) have been
tentatively made as if this Section 5.1 were not in the Agreement.
(iv) Nonrecourse Deductions. Nonrecourse deductions for a taxable year or
other period shall be specially allocated among the members in accordance with
their percentages.
(v) Member Nonrecourse Deductions. Any member nonrecourse deduction
for any taxable year or other period shall be specially allocated to the member
who bears the risk of loss with respect to the member nonrecourse liability to
which the member nonrecourse deduction is attributable, as determined in
accordance with _____________________ (citation of regulation) .
(vi) Code Adjustment. To the extent an adjustment to the tax basis of any
LLC asset under (citation of statute or regulation) is to be taken into account in
determining capital accounts, the amount of the adjustment to the capital
accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases basis), and the gain or
loss shall be specially allocated to the members in a manner consistent with the
manner in which their capital accounts are required to be adjusted under that
section of the regulations.
(vii) Contributed Property and Book-Ups. In accordance
with _____________________ (citation of regulation) , income, gain, loss, and
deduction with respect to any property contributed (or deemed contributed) to the
LLC shall, solely for tax purposes, be allocated among the members so as to
take account of any variation between the adjusted basis of the property to the
LLC for federal income tax purposes and its fair market value at the date of
contribution (or deemed contributed). If the adjusted book value of any LLC asset
is adjusted as provided in this Agreement, subsequent allocations of income,
gain, loss, and deduction with respect to the asset shall take account of any
variation between the adjusted basis of the asset for federal income tax purposes
and its adjusted book value in the manner required under (citation of regulation) .
Allocations under this Subsection 5.1(vii) are solely for the purpose of federal,
state, and local taxes, and shall not be taken into account in determining any
member's capital account, allocable share of profits and losses, Member's Share
or amount of distribution on liquidation.
(viii) Withholding. All amounts required to be withheld
under _____________________ (citation of statute) or any other provision of
federal, state, or local law, shall be treated as amounts actually distributed to the
affected members for all purposes under this Agreement.
5.2. Agreement Binding. This Agreement shall be binding on the parties and their
heirs, executors, administrators, successors or assigns; and the parties agree for
themselves and their heirs, executors, administrators, successors and assigns to
execute any and all instruments in writing which are or may become necessary or
proper to carry out the purpose and intent of this Agreement
5.3. Banking. The LLC shall maintain a bank account or bank accounts in the LLC's
name in a national or state bank in _____________________ (name of state) . Checks
and drafts shall be drawn on the LLC's bank account for LLC purposes only and shall be
signed by the manager(s).
5.4. Titles and Subtitles. Titles of the Articles, Sections, paragraphs and
subparagraphs are placed in this Agreement for convenient reference only and shall not
to any extent have the effect of modifying, amending or changing the express terms and
provisions of this Agreement.
5.5. Rules of Construction. As used in this Agreement, unless the context clearly
indicated the contrary, the singular number shall include the plural, the plural the
singular, and the use of any gender shall be applicable to all genders.
5.6. Execution in Counterpart. This LLC Agreement may be executed in any number
of counterparts, each of which shall be taken to be an original.
5.7. Severability. If any parts of this Agreement are found to be void, the remaining
provisions of this Agreement shall nevertheless be binding with the same effect as
though the void parts were deleted.
5.8. Effective Date. This Agreement shall be effective only on execution by all of the
proposed Members.
5.9. Assignability. Except as otherwise specifically provided in this Agreement to the
contrary, a member may only assign his or her interest in the LLC, in whole or in part,
by unanimous consent of all nonassigning member(s), except for an assignment to the
spouse or child of a member or to the spouse or child of a majority shareholder of a
member.
5.10. Execution. This Agreement may be executed by each of the Members on a
separate signature page.
5.11. Waiver. No waiver of any provisions of this Agreement shall be valid unless in
writing and signed by the person or party against who charged.
5.12. Arbitration. Any controversy or claim arising out of or relating to this Agreement
shall only be settled by arbitration in accordance with the rules of the American
Arbitration Association, by _____________________ (number) arbitrator(s), and shall
be enforceable in any court having competent jurisdiction.
The parties have executed this Agreement the day and year first above written.
_____________________
(Name of LLC)
By: ________________________________
(Signature of Officer)
_____________________
(Title)
____________________________________
(Signature of First Member)
_____________________
(Name of First Member)
____________________________________
(Signature of Second Member)
_____________________
(Name of Second Member)
____________________________________
(Signature of Third Member)
_____________________
(Name of Third Member)
Exhibits
