PROFESSIONAL LIMITED LIABILITY COMPANY
for LICENSED PROFESSIONALS
STATE OF TENNESSEE
Electronic Version
STATUTORY REFERENCES
TENNESSEE CODE, Title 48, Chapters 249 (Revised Limited Liability Company Act)
TENNESSEE CODE, Title 48, Chapter 249, Part 11 (Professional Limited Liability Companies)
http://www.tennesseeanytime.org/laws/laws.html
(Select ‘Tennessee Code’ from menu)
INTRODUCTORY NOTES AND LAW SUMMARY
In the State of Tennessee a professional limited liability company (PLLC) is controlled generally
by those provisions of the TENNESSEE CODE contained in Title 48, Chapter 249. There are
specific provisions of Chapter 249, Part 11, which are applicable to professional limited liability
companies.
In addition to the statutory provisions applicable to limited liability companies and professional
limited liability companies, a PLLC organized to engage in any professional practice is also
subject to the rules and regulations of the state governing/examining board/agency for that
specific profession.
Prior to filing Articles of Organization for a PLLC organized to engage in a professional
practice, you should check with the governing/examining board/agency for your profession
to confirm that you are in compliance with all of their rules and regulations.
One or more persons acting as organizers may form a PLLC to practice a state-licensed
profession by delivering to the secretary of state for filing articles of organization stating that as
the purpose of the PLLC. The articles must also state that the PLLC has one or more qualified
members and that it has no disqualified (unlicensed, either temporarily or permanently)
members.
If a PLLC is organized to practice a state-licensed profession in states other than Tennessee, the
PLLC may elect professional PLLC status only as permitted by the licensing boards of the states
in which it will operate.
A PLLC organized to engage in a professional practice may render professional services in
Tennessee only through individuals licensed or otherwise authorized in Tennessee to render the
services. This restriction does not:
1. Require that an individual employed by a PLLC be licensed to perform services for the
PLLC if a license is not otherwise required.
2. Prohibit a licensed individual from engaging in the licensed practice in the individual's
individual capacity, although the individual is a member, manager, employee or agent
of a PLLC; or
3. Prohibit an individual licensed in another state from rendering professional services for
the PLLC in Tennessee, IF THAT IS ALLOWED BY THE TENNESSEE LICENSING
AUTHORITY.
A PLLC organized to engage in a specific professional practice may not render any professional
service other than that practice. However, a PLLC is not prohibited from investing its funds in
real estate, mortgages, securities or any other type of investment. A PLLC for the purpose of
rendering professional services within two (2) or more professions is allowed only if the
combination of professional purposes or of professional and business purposes is specifically
authorized by the licensing law of Tennessee applicable to each profession in the combination.
A PLLC organized to engage in the practice of a specific profession may have persons not
licensed to practice that profession as members ONLY if the appropriate licensing authority
specifically authorizes membership of non-licensed individuals.
A member of a PLLC organized to engage in a specific profession may transfer, assign or pledge
her/his financial rights, governance rights, or membership interest in the PLLC only to
individuals, general partnerships, professional corporations, and other PLLCs which are licensed
to engage in the practice of the same profession. Any such transfer, except one made by
operation of law or court judgment, is void. A member may, however, pledge her/his financial
interest to a financial institution as collateral for a loan.
If a member of a PLLC becomes disqualified to engage in the practice of the profession, that
member is deemed to have resigned and wrongfully withdrawn from the PLLC and has no
further interests as a member in the PLLC other than the right to receive any distribution to
which that member is entitled under the articles or an operating agreement or applicable law. A
disqualified member MUST immediately sever all professional employment and professional
relationships with, and financial interests in, the PLLC. A PLLC's failure to require compliance
with this provision constitutes a ground for the forfeiture of its articles and its dissolution by the
secretary of state.
If persons other than qualified persons are permitted by the licensing authority to serve as
managers of a PLLC, not less than one half (1/2) of all managers except the secretary and
treasurer, if any, of a PLLC shall be qualified persons with respect to the PLLC (i.e.- must be a
licensed practitioner of the profession.)
A PLLC organized to engage in the practice of a profession may not render professional
services in Tennessee until it delivers a certified copy of its articles of organization to the
licensing authority with jurisdiction over it.
No statutory provision restricts the jurisdiction of the applicable licensing authority over
individuals engaging in the licensed profession.
PLLC Name
The name of a domestic PLLC organized to engage in the practice of a profession:
1. Must contain the words "professional limited company," "professional limited liability
company" or "professional PLLC," "limited liability professional company" or the
abbreviations "P.L.C.," "P.L.L.C.," or such abbreviations without punctuation, or
"L.L.P.C."
2. Must not contain the word "corporation" or "incorporated" or an abbreviation of either or
both of these words.
3. May not contain language stating or implying that it is organized for a purpose other than
that authorized by statute and its articles.
STEPS TO FORM PLLC
The following guidelines, instructions, and forms are in compliance with the statutory provisions
of the TENNESSEE CODE. HOWEVER, YOU SHOULD CONTACT THE
LICENSING/EXAMINING AGENCY/BOARD FOR YOUR PROFESSION TO
CONFIRM YOUR COMPLIANCE WITH THEIR RULES, REGULATIONS, AND
REQUIREMENTS.
Step 1: See FORM 1 - APPLICATION FOR RESERVATION OF PLLC NAME
It is recommended that you reserve a PLLC name in order to assure that your
Articles of Organization are not rejected because the name you have selected is
not available. This is done using the LLC name reservation form herein (see
download page).
You may skip this step and go to Step 2, but if the name you have selected is
not available, the Articles of Organization will be rejected and returned to
you.
The Application for Reservation of LLC Name MUST by typewritten or
printed legibly in black ink.
Enter the PLLC name you want to reserve. You must comply with the
restrictions set out in the introduction above (see last item, PLLC Name )
Provide the name and address of the Applicant.
Provide the date.
If the Applicant is a business, provide the information requested. If the
Applicant is an individual, provide that information.
File the original and one copy of the Application.
A name may be reserved, as explained in the application.
A preliminary check for name availability can be made by telephoning the
Division of Business Services at 615-741-2286. This preliminary check is not
a statutory requirement, does not guarantee that the name will be deemed
distinguishable at the time of filing, and does not convey any rights to the use
of the name.
Mail the original and one copy of the Application for Reservation of Limited
Liability Company Name along with the filing fee (Make check payable to the
Secretary of State) to:
State of Tennessee
Department of State
Corporate Filing Services
312 Rosa L. Parks Av.
6 th
Floor, William R. Snodgrass Tower
Nashville, TN 37243
Telephone: 615-741-2286
FAX: 615-741-7310
Step 2a: SEE FORM 2 –ARTICLES OF ORGANIZATION
Once you have reserved the company name, or if you have chosen to proceed
without reserving a name, you are ready to complete the Articles of Organization.
Instructions to complete the Articles of Organization:
(Ignore that the form mentions only LLC’s and not PLLC’s.)
The Articles of Organization MUST by typewritten or printed legibly in
black ink.
1. Provide the PLLC name you have chosen.
2. Provide the name and COMPLETE address of the Registered Agent for the
PLLC.
3. Provide the name and COMPLETE address of each Organizer of the PLLC.
NOTE: you only need one Organizer.
4. Mark whether the PLLC will be "Board Managed" or Member Managed."
SPECIAL NOTE: Read carefully the Operating Agreement included with
this packet. There are a number of serious considerations when making a
decision as to the management of a PLLC.
5.Provide the number of members in the PLLC as of the date of filing the
Articles of Organization.
6. The existence of a PLLC begins as of the date of filing unless there is a
later effective date requested. Unless you have a specific reason to do
otherwise, you will probably want the PLLC to become effective as of the
date of filing.
7. Provide the COMPLETE address of the PLLC's principal executive office.
8. Unless you have a specific reason to end the existence of the PLLC on a
specific date, the write "In Perpetuity" in this space.
9. There is nothing to add to this section.
Have an authorized person date and sign the Articles of Organization and
provide information as to the capacity in which he/she is signing (usually this
is an Organizer, but may be a member).
Have the signer type or print his/her name.
Include the filing fee as instructed on the form.
File the Original and one copy.
Step 2b: Complete FORM 2b “REQUEST FOR COPY OF DOCUMENTS” and
include with your Articles of Organization for filing. Request at least one certified
copy of the Articles of Organization. You must file this certified copy with the
governing/examining agency/board for your profession before conducting
business (contact your governing board for details). Include a check for the proper
amount PER COPY requested (make check payable to Secretary of State).
Step 3: Mail or deliver the original and one copy of the ARTICLES OF
ORGANIZATION (and the REQUEST FOR COPY) and the appropriate
filing fee (make check payable to Secretary of State) to:
State of Tennessee
Department of State
Corporate Filing Services
312 Rosa L. Parks Av.
6 th
Floor, William R. Snodgrass Tower
Nashville, TN 37243
Telephone: 615-741-2286
FAX: 615-741-7310
A sample cover letter to send with the Articles of Organization is included in this
packet.
SEE FORM 3 – SAMPLE TRANSMITTAL LETTER
Step 4: Upon return of the Articles of Organization complete an Operating Agreement.
SEE FORM 4 – SAMPLE OPERATING AGREEMENT (attached below)
Step 5: Apply for a Federal Tax Identification Number. This is done with form SS-4.
Mail to your regional IRS office.
SEE FORM 5 – IRS-SS-4 & IRS-SS-4-I (instructions)
Step 6: When the certified copy of your Articles of Organization is returned to you,
deliver it to the licensing authority with jurisdiction over your profession.
Step 7: Open a bank account and conduct business.
* * *
Disclaimer: If you are not an attorney, you are advised to seek the advice of an attorney
for all serious legal matters. The information and forms contained herein are
not legal advice and are not to be construed as such. Although the
information contained herein is believed to be correct, no warranty of fitness
or any other warranty shall apply. All use is subject to the U.S. Legal Forms,
Inc. Disclaimer and License located at http://www.uslegalforms.com/disclaimer.htm
FORMS DOWNLOAD
To access the download page please do the following:
IMPORTANT NOTE : WRITE DOWN THE USERNAME AND PASSWORD SHOWN
BELOW BECAUSE YOU WILL NEED TO ENTER IT EXACTLY (case sensitive) TO
DOWNLOAD THE FORMS.
The download page you will access by using the link below contains links to download the forms
for this package, as well as a brief description of each form. Once you reach the download page,
the easiest procedure to download the forms is to right-click on the form links and select “save
target as” to save each form to your hard drive.
To access the download page you are required to use the following login (PLEASE WRITE
THIS DOWN):
USERNAME: gye787
PASSWORD: fme378
The download link can be accessed by any of the following methods:
- Copy the link below and paste into your browser URL location.
- Type the link below exactly (case sensitive) as shown into your browser.
- Click on the highlighted link below.
Download Link:
http://www.uslegalforms.com/data/corp/TN-00PLLC/TN-00PLLC.htm
http://www.uslegalforms.com/data/corp/TN-00PLLC/TN-00PLLC.htm
FORM 4
OPERATING AGREEMENT
Read carefully and make appropriate changes to suit your
individual needs and purposes.
You must insert the name of your profession in the blanks provided.
SPECIAL NOTE
This agreement is a sample operating agreement and should be modified to
meet your needs. In Tennessee you have a choice of managing your LLC -
either by member management or by Board of Governor(s) management. If
you elect to mange by a Board of Governors, you must still have one or more
managers and you are bound by much stricter guidelines and rules than if you
manage by members. You may want to seek professional advice before
deciding how the LLC will be managed.
OPERATING AGREEMENT
OF
______________________________________
A PROFESSIONAL LIMITED LIABILITY COMPANY
THIS OPERATING AGREEMENT ("Agreement") is entered into the __________ day of
_____________________, 20______, by and between the following persons:
1. _______________________________________________________________
2. _______________________________________________________________
3. _______________________________________________________________
4. _______________________________________________________________
hereinafter, ("Members" or “Parties”).
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby
acknowledged, the Parties covenant, contract and agree as follows:
ARTICLE I
FORMATION OF PROFESSIONAL LIMITED LIABILITY COMPANY
1. Formation of PLLC . The Parties have formed a ______________________
limited liability company named _______________________________________________
("PLLC"). The operation of the PLLC shall be governed by the terms of this Agreement and the
provisions of the Tennessee Limited Liability Company Act (Tennessee Code, Title 48, Chapter
249), hereinafter referred to as the "Act". To the extent permitted by the Act, the terms and
provisions of this Agreement shall control if there is a conflict between such Law and this
Agreement. The Parties intend that the PLLC shall be taxed as a partnership. Any provisions of
this Agreement, if any, that may cause the PLLC not to be taxed as a partnership shall be
inoperative.
2. Articles or Organization . The Members acting through one of its Members,
_____________________________________, filed Articles of Organization, ("Articles") for
record in the office of the Tennessee Secretary of State on _________________________,
thereby creating the PLLC.
3. Business . The business of the PLLC shall be to engage in the practice of
____________. The PLLC's activities shall be conducted in compliance with all applicable
provisions of the TENNESSEE CODE as well as the various regulations, restrictions, and rules,
current and future, of the [list all entities with legal authority over the profession, i.e. the
governing board] .
4. Registered Office and Registered Agent . The registered office and place of
business of the PLLC shall be ___________________________________________________
______________________________________ and the registered agent at such office shall be
__________________________________________________________________. The
Members may change the registered office and/or registered agent from time to time.
5. Duration . The PLLC will commence business as of the date of filing and will
continue in perpetuity.
6. Fiscal Year . The PLLC's fiscal and tax year shall end December 31.
ARTICLE II
MEMBERS
7. Initial Members . The initial members of the PLLC, their initial capital
contributions, and their percentage interest in the PLLC are:
Initial Percentage Interest Capital
Members in PLLC Contribution
________________________ _________________ ___________________
________________________ _________________ ___________________
________________________ _________________ ___________________
________________________ _________________ ___________________
8. Members.
(a) Each member of the PLLC and each of the employees of the PLLC engaged in
the practice of _________________ shall be licensed to practice
_________________.
(b) One or more members of the PLLC shall be licensed to practice
_________________ in the State of Tennessee and shall be engaged in the
practice of _________________ in Tennessee.
(c) No member of the PLLC, or the PLLC itself, shall do any act which would
violate the standards of professional conduct applicable to members of the
profession.
(d) New members may be admitted only upon the consent of a majority of the
Members and upon compliance with the provisions of this agreement.
ARTICLE III
MANAGEMENT
9. Management . The Members have elected to manage the PLLC as follows (check
as appropriate):
The management of the PLLC shall be vested in the Members without an
appointed manager. The members shall elect officers who shall manage the company. The
President and Secretary may act for and on behalf of the PLLC and shall have the power and
authority to bind the PLLC in all transactions and business dealings of any kind except as
otherwise provided in this Agreement.
The Members hereby delegate the management of the PLLC to a Board of
Governors and the Manager(s) it appoints, subject to the limitations set out in this agreement.
a) Each Manager shall be licensed to practice _________________.
b) The Members shall elect and may remove any member of the Board of
Governors by majority vote.
c) A Manager shall serve until a successor is appointed by the Board
d) The Board shall have the authority to take all necessary and proper actions
in order to conduct the business of the PLLC.
e) Except for decisions concerning distributions, the Board, through its
manager(s) can take any appropriate action on behalf of the PLLC, including, but not limited to
signing checks, executing leases, and signing loan documents.
f) In determining the timing and total amount of distributions to the
Members, the action of the Board shall be based on a majority vote of the Members, with or
without a meeting.
g) The c ompensation to the Board members and the Manager(s) shall be in
the discretion of the majority of the Members of the PLLC.
h) There shall be _________ initial Board members.
i) The initial members are:
_________________________________________________________
_________________________________________________________
_________________________________________________________
10. Officers and Relating Provisions . In the event the Members elect to manage the
PLLC, rather than appointing a Board of Governors, the Members shall appoint officers for the
PLLC and the following provisions shall apply:
Officers . The officers of the PLLC shall consist of a president, a treasurer and a
secretary, or other officers or agents as may be elected and appointed by the Members. A
Member may hold more than one or all offices. The officers shall act in the name of the PLLC
and shall supervise its operation under the direction and management of the Members, as further
described below.
(a) All officers of the PLLC shall be licensed to practice _________________.
(b) Election and Term of Office . The officers of the PLLC shall be elected
annually by the Members by a majority vote. Vacancies may be filled or new offices created and
filled at any meeting of the Members. Each officer shall hold office until his/her death, until
he/she shall resign, or until he/she is removed from office. Election or appointment of an officer
or agent shall not of itself create a contract right.
(c) Removal . Any officer or agent may be removed by a majority of the
Members whenever they decide that the best interests of the Company would be served thereby.
Such removal shall be without prejudice to the contract rights, if any, of the person so removed.
(d) Vacancies . A vacancy is any office because of death, resignation, removal,
disqualification or otherwise may be filled by the Members for the unexpired portion of the term.
(e) President . The President shall be the chief executive officer of the PLLC and
shall preside at all meetings of the Members. The President shall have such other powers and
perform such duties as are specified in this Agreement and as may from time to time be assigned
by the Members of the PLLC.
(f) The Treasurer . The Treasurer shall be the chief financial officer of the PLLC.
The Treasurer shall not be required to give a bond for the faithful discharge of his/her duties. The
Treasurer shall: (i) have charge and custody of and be responsible for all funds and securities of
the PLLC; (ii) in the absence of the President, preside at meetings of the Members; (iii) receive
and give receipts for moneys due and payable to the PLLC from any source whatsoever, and
deposit all such moneys in the name of the PLLC in such banks, trust companies or other
depositaries as shall be selected by the Members of the PLLC; and (iv) in general perform all the
duties incident to the office of treasurer and such other duties as from time to time may be
assigned by the President or by the Members of the PLLC.
(g) Secretary . The secretary shall: (i) keep the minutes of the Members meetings
in one or more books provided for that purpose; (ii) see that all notices are duly given in
accordance with the provisions of this Agreement or as required by law; (iii) be custodian of
PLLC records; (iv) keep a register of the post office address of each Member; (v) certify the
Member’s resolutions; and other documents to the PLLC as true and correct; (vi) in the absence
of the President and Treasurer, preside at meetings of the Members and (vii) in general perform
all duties incident to the office of secretary and such other duties as from time as may be
assigned by the President or the Members.
11. Member Only Powers . Notwithstanding any other provision of this Agreement,
only a majority of the Members may: (a) sell or encumber (but not lease) any real estate owned
by the PLLC, or (b) incur debt, expend funds, or otherwise obligate the PLLC if the debt,
expenditure, or other obligation exceeds $_____________________.
ARTICLE IV
CONTRIBUTIONS, PROFITS, LOSSES, AND DISTRIBUTIONS
12. Interest of Members . Each Member shall own a percentage interest (sometimes
referred to as a share) in the PLLC. The Member’s percentage interest shall be based on the
amount of cash or other property that the Member has contributed to the PLLC and that
percentage interest shall control the Member’s share of the profits, losses, and distributions of the
PLLC.
13. Contributions . The initial contributions and initial percentage interest of the
Members are as set out in this Agreement.
14. Additional Contributions . Only a majority of the Members of the PLLC may call
on the Members to make additional cash contributions as may be necessary to carry on the
PLLC's business. The amount of any additional cash contribution shall be based on the
Member's then existing percentage interest. To the extent a Member is unable to meet a cash
call, the other Members can contribute the unmet call on a pro rata basis based on the Members'
percentage interests at that time, and the percentage interest of each Member will be adjusted
accordingly.
15. Record of Contributions/Percentage Interests . This Agreement, any
amendment(s) to this Agreement, and all Resolutions of the Members of the PLLC shall
constitute the record of the Members of the PLLC and of their respective interest therein.
16. Profits and Losses . The profits and losses and all other tax attributes of the PLLC
shall be allocated among the Members on the basis of the Members' percentage interests in the
PLLC.
17. Distributions . Distributions of cash or other assets of the PLLC (other than in
dissolution of the PLLC) shall be made in the total amounts and at the times as determined by a
majority of the Members. Any such distributions shall be allocated among the Members on the
basis of the Members' percentage interests in the PLLC.
18. 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 V
VOTING; CONSENT TO ACTION
19. Voting by Members . Members shall be entitled to vote on all matters which
provide for a vote of the Members in accordance with each Member’s percentage interest.
20. Majority Required . Except as otherwise provided and delegated to the Officers or
Managers, a majority of the Members, based upon their percentage ownership, is required for
any action.
21. Meetings - Written Consent . Action of the Members or Officers may be
accomplished with or without a meeting. If a meeting is held, evidence of the action shall be by
Minutes or Resolution reflecting the action of the Meeting, signed by a majority of the Members,
or the President and Secretary. Action without a meeting may be evidenced by a written consent
signed by a majority of the Members, or the President and Secretary.
22. Meetings . Meetings of the Members may be called by any Member owning 10%
or more of the PLLC, or, if a Board of Governors was selected, by any member of the Board, or
if Officers were elected, by any officer.
23. Majority Defined . As used throughout this agreement the term “Majority” of the
Members shall mean a majority of the ownership interest of the PLLC as determined by the
records of the PLLC on the date of the action.
ARTICLE VI
DUTIES AND LIMITATION OF LIABILITY MEMBERS, OFFICERS, AND PERSONS
SERVING ON ADVISORY COMMITTEES; INDEMNIFICATION
24. Duties of Members: Limitation of Liability . The Members, Board members,
Managers and officers shall perform their duties in good faith, in a manner they reasonably
believe to be in the best interests of the PLLC, and with such care as an ordinarily prudent person
in a like position would use under similar circumstances. No Member or officer, by reason of
being or having been a Member or officer, shall be liable to the PLLC or to any other Member or
officer for any loss or damage sustained by the PLLC or any other Member or officer unless the
loss or damage shall have been the result of fraud, deceit, gross negligence, willful misconduct,
or a wrongful taking by that Member or officer.
25. Members Have No Exclusive Duty to PLLC . The Members shall not be required
to participate in the PLLC as their sole and exclusive business. Members may have other
business interests and may participate in other investments or activities in addition to those
relating to the PLLC. No Member shall incur liability to the PLLC or to any other Member by
reason of participating in any such other business, investment or activity.
26. Protection of Members and Officers .
(a) As used herein, the term “Protected Party” refers to the Members and officers
of the Company.
(b) To the extent that, at law or in equity, a Protected Party has duties (including
fiduciary duties) and liabilities relating thereto to the PLLC or to any other Protected Party, a
Protected Party acting under this Agreement shall not be liable to the PLLC or to any other
Protected Party for good faith reliance on:
(i) the provisions of this Agreement;
(ii) the records of the PLLC; and/or
(iii) such information, opinions, reports or statements presented to the
PLLC by any person as to matters the Protected Party 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 PLLC.
(c) The provisions of this Agreement, to the extent that they restrict the duties
and liabilities of a Protected Party to the PLLC or to any other Protected Party otherwise existing
at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of
such Protected Party.
27. Indemnification and Insurance .
(a) Right to Indemnification .
(i) Any person who is or was a member or officer of the PLLC and
who is or may be a party to any civil action because of his/her participation in or with the PLLC,
and who acted in good faith and in a manner which he/she reasonably believed to be in, or not
opposed to, the best interests of the PLLC may be indemnified and held harmless by the PLLC.
(ii) Any person who is or was a member or officer of the PLLC and
who is or may be a party to any criminal action because of his/her participation in or with the
PLLC, and who acted in good faith and had reasonable cause to believe that the act or omission
was lawful, may be indemnified and held harmless by the PLLC.
(b) Advancement of Expenses . Expenses (including attorney’s fees) incurred
by an indemnified person in defending any proceeding shall be paid in advance of the
proceedings conclusion. Should the indemnified member or officer ultimately be determined to
not be entitled to indemnification, that member or officer agrees to immediately repay to PLLC
all funds expended by the PLLC on behalf of the member or officer.
(c) Non-Exclusivity of Rights . The right to indemnification and payment of
fees and expenses conferred in this section shall not be exclusive of any right which any person
may have or hereafter acquire under any statute, provision of this Agreement, contract,
agreement, vote of Members or otherwise. The Members and officers are expressly authorized to
adopt and enter into indemnification agreements for Members and officers.
(d) Insurance . The Members may cause the PLLC to purchase and maintain
insurance for the PLLC, for its Members and officers, and/or on behalf of any third party or
parties whom the members might determine should be entitled to such insurance coverage.
(e) Effect of Amendment . No amendment, repeal or modification of this
Article shall adversely affect any rights hereunder with respect to any action or omission
occurring prior to the date when such amendment, repeal or modification became effective.
ARTICLE VII
MEMBERS INTEREST TERMINATED
28. Termination of Membership . A Member’s interest in the PLLC shall cease upon
the occurrence of one or more of the following events:
(a) A Member provided notice of withdrawal to the PLLC thirty (30) days in
advance of the withdrawal date. Withdrawal by a Member is not a breach of this Agreement
(b) A Member assigns all of his/her interest to a qualified third party.
(c) A Member dies.
(d) There is an entry of an order by a court of competent jurisdiction adjudicating
the Member incompetent to manage his/her person or his/her estate.
(e) In the case of an estate that is a Member, the distribution by the fiduciary
of the estate's entire interest in the PLLC.
(f) A Member, without the consent of a majority of the Members: (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 pleading 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 appointment 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 PLLC.
(g) If within one hundred twenty (120) days after the commencement of any
action against a Member seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any statute, law, or regulation, the action has not
been dismissed and/or has not been consented to by a majority of the members.
(h) If within ninety (90) days after the appointment, without a member’s consent
or acquiescence, of a trustee, receiver, or liquidator of the Member or of all or any substantial
part of the member’s properties, said appointment is not vacated or within ninety (90) days after
the expiration of any stay, the appointment is not vacated and/or has not been consented to by a
majority of the members.
(i) Any of the events provided in applicable code provisions that are not
inconsistent with the dissociation events identified above.
29. Effect of Dissociation . Any dissociated Member shall not be entitled to receive
the fair value of his PLLC interest solely by virtue of his dissociation. A dissociated Member that
still owns an interest in the PLLC shall be entitled to continue to receive such profits and losses,
to receive such distribution or distributions, and to receive such allocations of income, gain, 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.
ARTICLE VIII
RESTRICTIONS ON TRANSFERABILITY OF PLLC INTEREST;
SET PRICE FOR PLLC INTEREST
30. PLLC Interest . The PLLC interest is personal property. A Member has no
interest in property owned by the PLLC.
31. Encumbrance . A Member can encumber his PLLC interest by a security interest
or other form of collateral only with the consent of a majority of the other Members. Such
consent shall only be given if the proceeds of the encumbrance are contributed to the PLLC to
respond to a cash call of the PLLC.
32. Sale of Interest . A Member can sell his PLLC interest only as follows:
(a) If a Member desires to sell his/her interest, in whole or in part, he/she shall
give written notice to the PLLC of his desire to sell all or part of his/her interest and must first
offer the interest to the PLLC. The PLLC shall have the option to buy the offered interest at the
then existing Set Price as provided in this Agreement. The PLLC 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 other Members. Closing on the sale shall occur within sixty (60) days from
the date that the PLLC 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 $_______________ in
which event the purchase price shall be paid in __________ (____) equal quarterly installments
beginning with the date of closing. The installment amounts shall be computed by applying the
following interest factor to 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 PLLC does not buy the offered interest of the selling
Member, the other 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 Member does not desire
to buy up to his/her proportional part, the other Members can buy the remaining interest on the
same pro rata basis. Members shall have fifteen (15) days from the date the PLLC gives its
written notice to the selling Member to give the selling 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 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 PLLC or the Members do not buy the offered interest, the
selling Member can then assign the interest to a non-member. The selling Member must close
on the assignment within ninety (90) days of the date that he gave notice to the PLLC. If he does
not close by that time, he must again give the notice and options to the PLLC and the PLLC
Members before he sells the interest.
(d) The selling Member must close on the assignment within ninety (90) days of
the date that he gave notice to the PLLC. If he does not close by that time, he must again give
the notice and options to the PLLC and the PLLC Members before he sells the interest.
(e) A non-member purchaser of a member’s interest cannot exercise any rights of
a Member unless a majority of the non-selling Members consent to him becoming a Member.
The non-member purchaser 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 similar items to which the selling member would be entitled, to the extent of the interest
assigned, and will be subject to calls for contributions under the terms of this Agreement. The
purchaser, by purchasing the selling member’s interest, agrees to be subject to all the terms of
this Agreement as if he were a Member.
33. Set Price . The Set Price for purposes of this Agreement shall be the price fixed
by consent of a majority of the Members. The Set Price shall be memorialized and made a part
of the PLLC records. The initial Set Price for each Member's interest is the amount of the
Member's contribution(s) to the PLLC as provided above, as updated in accordance with the
terms hereof. Any future changes in the Set Price by the Members shall be based upon net
equity in the assets of the PLLC (fair market value of the assets less outstanding indebtedness),
considering the most recent appraisal obtained by the PLLC for its assets, as may be adjusted by
the Members in their discretion. The initial Set Price shall be adjusted upon demand by a
Member but not more than once a year unless all Members consent. This basis for determining
the Set Price shall remain in effect until changed by consent of a majority of the Members. The
Members will consider revising the basis for determining the Set Price at least annually.
ARTICLE IX
OBLIGATION TO SELL ON A DISSOCIATION
EVENT CONCERNING A MEMBER
34. Dissociation . Except as otherwise provided, upon the occurrence of a dissociation
event with respect to a Member, the PLLC and the remaining Members shall have the option to
purchase the dissociated Member's interest at the Set Price in the same manner as provided in
ARTICLE VIII and as if the dissociated Member had notified the PLLC of his desire to sell all of
his PLLC interest. The date the PLLC received the notice as provided in ARTICLE VIII
triggering the options shall be deemed to be the date that the PLLC receives actual notice of the
dissociation event.
ARTICLE X
DISSOLUTION
35. Termination of PLLC . The PLLC will be dissolved and its affairs must be wound
up only upon the written consent of a majority of the Members.
36. Final Distributions . Upon the winding up of the PLLC, the assets must be
distributed as follows: (a) to the PLLC 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 PLLC interest, in the proportions in which the Members share in profits and
losses.
ARTICLE XI
TAX MATTERS
37. Capital Accounts . Capital accounts shall be maintained consistent with Internal
Revenue Code § 704 and the regulations thereunder.
38. Partnership Election . The Members elect that the PLLC be taxed as a partnership
and not as an association taxable as a corporation.
ARTICLE XII
RECORDS AND INFORMATION
39. Records and Inspection . The PLLC shall maintain at its place of business the
Articles of Organization, any amendments thereto, this Agreement, and all other PLLC records
required to be kept by the Act, and the same shall be subject to inspection and copying at the
reasonable request, and the expense, of any Member.
40. Obtaining Additional Information . Subject to reasonable standards, each Member
may obtain from the PLLC from time to time upon reasonable demand for any purpose
reasonably related to the Member's interest as a Member in the PLLC: (1) information regarding
the state of the business and financial condition of the PLLC; (2) promptly after becoming
available, a copy of the PLLC's federal, state, and local income tax returns for each year; and (3)
other information regarding the affairs of the PLLC as is just and reasonable.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
41. 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 been approved in
writing by a majority 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.
42. 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 Tennessee.
43. Pronouns, Etc . References to a Member or Board member or Manager, including
by use of a pronoun, shall be deemed to include masculine, feminine, singular, plural,
individuals, partnerships or corporations where applicable.
44. Counterparts . This instrument may be executed in any number of counterparts
each of which shall be considered an original.
45. 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 any other
remedy to which the nonbreaching Members may be entitled, at law or in equity, the
nonbreaching 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
instituted in any court of the United States or any state thereof having subject matter jurisdiction
thereof.
46. Further Action . Each Member, upon the request of the PLLC, 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.
47. 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
PLLC at its place of business or to a Member as set forth on the Member's signature page 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.
48. Facsimiles . For purposes of this Agreement, any copy, facsimile,
telecommunication or other reliable reproduction of a writing, transmission or signature may be
substituted or used in lieu of the original writing, transmission or signature for any and all
purposes for which the original writing, transmission or signature could be used, provided that
such copy, facsimile telecommunication or other reproduction shall have been confirmed
received by the sending Party.
49. 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 day 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.
NOTICE: EACH MEMBER HEREBY CERTIFIES THAT HE OR SHE HAS RECEIVED A
COPY OF THIS OPERATING AGREEMENT AND FORMATION DOCUMENT OF
________________________________________________________________________, A
TENNESSEE PROFESSIONAL LIMITED LIABILITY COMPANY. EACH MEMBER
REALIZES THAT AN INVESTMENT IN THIS COMPANY IS SPECULATIVE AND
INVOLVES SUBSTANTIAL RISK. EACH MEMBER IS AWARE AND CONSENTS TO
THE FACT THAT THE INTERESTS IN THE COMPANY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY SECURITIES ACT OF THE STATE OF
TENNESSEE. EACH MEMBER AGREES TO BE BOUND BY ALL OF THE TERMS AND
CONDITIONS OF THIS AGREEMENT AND THE FORMATION CERTIFICATE OR
ARTLCLES.
Members:
__________________________________
Name
__________________________________
Name
__________________________________
Name
__________________________________
Name
Print Name of Member: _______________________
Address: ___________________________________
City, State, Zip: _____________________________
Phone: ____________________________________
Print Name of Member: _______________________
Address: ___________________________________
City, State, Zip: _____________________________
Phone: ____________________________________
Print Name of Member: _______________________
Address: ___________________________________
City, State, Zip: _____________________________
Phone: ____________________________________
Print Name of Member: _______________________
Address: ___________________________________
City, State, Zip: _____________________________
Phone: ____________________________________
Print Name of Member: _______________________
Address: ___________________________________
City, State, Zip: _____________________________
Phone: ____________________________________
Print Name of Member: _______________________
Address: ___________________________________
City, State, Zip: _____________________________
Phone: ____________________________________
This page intentionally left blank. Please discard. – USLF
Ownership Ledger
Name and Residence
Address of PLLC
Member Date of
Transfer %
Ownership Amount Paid Subsequen
t Transfer
Show on
separate line
Accessories
U. S. Legal Forms, Inc. offers the following accessories:
See http://www.uslegalbookstore.com/officeproducts/
The certificate below is optional.
Membership Certifiate
No. ____ PROFESSIONAL LIMITED LIABILITY COMPANY- STATE OF
TENNESSEE Perientage: ___
This Certifiatee iertifes that ___________________________e is a true and
lawful owner of ____ perient ownership of
__________________________________e a Tennessee Professional Limited
Liability Company. Suih ownership interest is only transferable in
aiiordanie with the Operating Agreement between the Memberse and
aiiording to law.
This iertifiate is issued by the PLLC by its duly
authorized ofiers on this the ____ date of
_________e 20___.
__________________ ____________________
Manager Manager (if more than one)
