Operating Agreement Template of a Member-Managed Limited Liability Company - Iowa

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OPERATING AGREEMENT
OF
[name of your group here]
A MEMBER-MANAGED LIMITED LIABILITY COMPANY
OPERATING AGREEMENT made as of this __ day of ______2014, by and among the
parties identified on Schedule A attached hereto (hereinafter individually referred to as a
“Member” and collectively with any additional parties admitted as the “Members”).
W I T N E S S E T H:
WHEREAS, the initial Members formed _______________ LLC, a member-managed
limited liability company (the "Company") by filing a certificate of organization with the Office
of the Iowa Secretary of State on ________, 2013, pursuant to the provisions of the State of Iowa
Revised Limited Liability Company Act (the "Act"); and
WHEREAS, the Members of the Company desire to set forth in writing their
understandings and agreements as to the operation of the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained, the Members agree as follows:
ARTICLE 1
Formation, Name, Purpose, Location, Registered Office
1.1 Formation. The Company was formed on ___________, 2013.
1.2 Name. The name of the Company is _________________ LLC.
1.3 Purpose. The Company is organized for all lawful purposes. The principal purpose
of the Company is to invest the assets of the Company in local sustainable food enterprises for
the education and benefit of its Members including all activities reasonably related or incidental
thereto. Under no circumstances will the Company make investments, loans or make use of its
assets for the benefit of an individual or individuals, other than in connection with an individual's
bona fide sustainable food enterprise or business.
1.4 Place of Business. The initial principal office of the Company shall be --------------.
1.5 Registered Office and Registered Agent. The address of the Company's initial
registered office shall be ---------------------------------------. The name of the Company's initial
registered agent shall be --------------. The registered office and registered agent may be changed
from time to time as the Members deem advisable by filing notice of such changes with the
Secretary of State in accordance with the Act. It will not be necessary to amend this provision if
such a change is made.
OPERATING AGREEMENT
OF
[name of your group here]
A MEMBER-MANAGED LIMITED LIABILITY COMPANY
OPERATING AGREEMENT made as of this __ day of ______2014, by and among the
parties identified on Schedule A attached hereto (hereinafter individually referred to as a
“Member” and collectively with any additional parties admitted as the “Members”).
W I T N E S S E T H:
WHEREAS, the initial Members formed _______________ LLC, a member-managed
limited liability company (the "Company") by filing a certificate of organization with the Office
of the Iowa Secretary of State on ________, 2013, pursuant to the provisions of the State of Iowa
Revised Limited Liability Company Act (the "Act"); and
WHEREAS, the Members of the Company desire to set forth in writing their
understandings and agreements as to the operation of the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained, the Members agree as follows:
ARTICLE 1
Formation, Name, Purpose, Location, Registered Office
1.1 Formation. The Company was formed on ___________, 2013.
1.2 Name. The name of the Company is _________________ LLC.
1.3 Purpose. The Company is organized for all lawful purposes. The principal purpose
of the Company is to invest the assets of the Company in local sustainable food enterprises for
the education and benefit of its Members including all activities reasonably related or incidental
thereto. Under no circumstances will the Company make investments, loans or make use of its
assets for the benefit of an individual or individuals, other than in connection with an individual's
bona fide sustainable food enterprise or business.
1.4 Place of Business. The initial principal office of the Company shall be --------------.
1.5 Registered Office and Registered Agent. The address of the Company's initial
registered office shall be ---------------------------------------. The name of the Company's initial
registered agent shall be --------------. The registered office and registered agent may be changed
from time to time as the Members deem advisable by filing notice of such changes with the
Secretary of State in accordance with the Act. It will not be necessary to amend this provision if
such a change is made.
1.6 Nonliability of Members. No Member shall be personally liable for the expenses,
debts, obligations or liabilities of the LLC, or for claims against it.
1.7
Representations and Warranties. Each Member represents and warrants to the
Company and each other Member and agrees that: (a) he or she has the authority and power to
execute this Operating Agreement and to perform its obligations hereunder; (b) that the Member
is acquiring his or her interest in the Company for the Member's own account as an investment
and without an intent to distribute the interest; and (c) the interests have not been registered
under the Securities Act of 1933 or any state securities laws, and may not be resold or transferred
by the Member without appropriate registration or the availability of an exemption from such
requirements.
ARTICLE 2
Terms; Dissolution
2.1 Term. The term of the Company shall continue until the Company is dissolved in
accordance with either the provisions of this Operating Agreement or the Act.
2.2 Dissolution. The Company shall be dissolved upon the occurrence of any of the
following events:
(a) The written agreement of at least two thirds of all the Members;
(b) The sale or other disposition of all or substantially all of the assets of the
Company or the permanent cessation of the Company's business operations.
Upon the occurrence of any dissolution hereunder, the affairs of the Company shall be
wound up in accordance with Article 9 and, immediately thereafter, the Company shall
terminate.
ARTICLE 3
Capital
3.1 Member's Capital Contributions. Each Member will pay $________ to fund its
initial capital account with an initial commitment of five (5) years. Each Member may make
additional capital contributions of at least $1,000.00 in increments of $1,000.00 at any time.
However, no Member's capital account shall exceed 25% of the capital accounts of all Members,
unless from time to time approved by a majority vote of all Members. Each Member’s Capital
Contribution will be set forth in Schedule A. Members who wish to dissociate early will be
penalized twenty percent (20%) for each year they dissociate prior to the expiration of their five-
year commitment.
3.2 Membership Interests. The Members shall have the membership interests in the
Company specified on Schedule A ("Membership Interests"). Schedule A shall be amended
from time to time to reflect the dissociation or admission of Members and/or any changes in the
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Membership Interest held by a Member arising from the transfer of Membership Interests to or
by such Member.
3.3 Capital Accounts. A capital account shall be maintained for each Member, in
accordance with tax accounting principles, which shall reflect his or her initial capital
contribution as set forth in Schedule A, and shall be adjusted and maintained as follows:
(a)
As of the end of each fiscal year of the Company, each Member's
opening capital account for such year shall be increased by an amount
equal to: (i) the cash and the agreed fair market value of property (net of
any liabilities assumed by the Company or to which such property is
subject) contributed to the capital of the Company by such Member for
such year; and (ii) such Member's allocable share of Company taxable
income for such year, including income and gain exempt from tax; and
(b)
As of the end of each fiscal year of the Company, each Member's
opening capital account for such year shall be decreased by an amount
equal to: (i) the aggregate amount of cash distributions and the agreed fair
market value of any property (net of any liabilities assumed by such
Member or to which such property is subject) distributed to such Member
during each year, (ii) his or her share of expenditures of the Company not
deductible and not properly chargeable as capital expenditures; and (iii)
his or her share of Company losses for such year.
Provided, however, that if it is necessary to determine the capital account of any Member
during the fiscal year, the capital account of the Member shall be determined after giving effect
to all allocations of taxable income, gain, and loss attributable to transactions effected prior to
the time such determination is made and all distributions of cash theretofore made for such year.
3.4 Change in Tax Law. Notwithstanding anything to the contrary herein, it is the
intention of the Company that it be classified as a partnership for federal and, if applicable, state
income tax purposes and that it conform to the requirements of the Internal Revenue Code with
respect to the validity of the allocation of items, income, gain, loss, and tax credits. In the event
of a change in the Internal Revenue Code or Treasury Regulations, the Members hereby agree to
consult with tax counsel and advisers to determine whether an amendment to this Operating
Agreement is required and, if it is, to adopt such amendment. The parties do not intend that the
Company be classified or treated as a partnership for any other reason.
3.5 Interest on Capital; Loans by or to Members. No interest or other compensation shall
be allowed to any Member with respect to his or her capital account, except his or her share of
the profits, losses and distributions of the Company as hereinafter provided.
3.6 Withdrawal of Capital. Except as may be specifically provided in this Operating
Agreement, no Member shall have the right to withdraw from the Company all or any part of his
or her capital contribution nor shall he or she have any right to demand and receive property or
cash of the Company in return of his or her capital contribution.
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3.7 Liability of Members for Repayment of Capital. No Member shall have any personal
liability for the repayment of any capital contribution of any other Member.
3.8 Priority and Return of Capital. No Member shall have priority over any other
Member either as to the return of capital contributions or as to net profits or losses of the
Company; provided that this Section shall not apply to approved loans (as distinguished from
capital contributions) which a Member has made to the Company.
ARTICLE 4
Profits, Losses and Cash Distributions
4.1 Company Profits, Losses and Cash Distributions. All profits, losses and distributions
of cash or other property from the Company to the Members shall be allocated or distributed in
accordance with each Member's Membership Interest set forth on Schedule A, provided that
upon the dissolution of the Company all distributions of cash shall be made in accordance with
Article 9.
4.2 Priority & Timing. No Member shall have priority over any other Member with
regard to allocations of profit or losses or distributions from the Company. All distributions of
Company funds to the Members shall be made at such times as the Members may determine.
4.3 Tax Allocations. Tax allocations shall be made in compliance with applicable
provisions of the Internal Revenue Code of 1986, as amended, including Code Sections 704(c)
and 754, based upon the economic substance of each transaction.
ARTICLE 5
Meetings of Members
5.1 Meetings. Meetings of the Members for any purpose may be called by any Member
or Members holding at least ten percent (10%) of the Membership Interests.
5.2 Place of Meetings. The Members may designate any place, either within or outside
the State of Iowa, as the place of meeting for any meeting of the Members including meetings by
telephone or video conference call in which each participating Member may be heard by all other
participating Members. If no designation is made, the place of meeting shall be the principal
executive office of the Company.
5.3 Notice of Meetings. Written notice stating the place, day and hour of the meeting
and the purpose or purposes for which the meeting is called shall be delivered not less than three
(3) nor more than sixty (60) days before the meeting, either personally, by email, or by mail, by
or at the direction of the person calling the meeting, to each Member entitled to vote at such
meeting.
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5.4 Meeting of all Members. If all of the Members owning Membership Interests shall
meet at any time and place and consent to the holding of a meeting at such time and place, such
meeting shall be valid without call or notice, and at such meeting lawful action may be taken.
5.5 Record Date. For the purpose of determining Members entitled to notice of or to
vote at any meeting of Members or any adjournment thereof, or Members entitled to receive
payment of any distribution, or in order to make a determination of Members for any other
purpose, the date on which notice of the meeting is mailed or the date on which the resolution
declaring such distribution is adopted, as the case may be, shall be the record date for such
determination of Members. When a determination of Members entitled to vote at any meeting of
Members has been made as provided in this Section, such determination shall apply to any
adjournment thereof.
5.6 Quorum. A majority of all of the Members represented in person or by proxy shall
constitute a quorum at any meeting of Members. In the absence of a quorum at any such
meeting, a majority of the Members so represented may adjourn the meeting from time to time
for a period not to exceed sixty (60) days without further notice. However, if the adjournment is
for more than sixty (60) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each Member of record
entitled to vote at the meeting. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at the meeting as
originally noticed. The Members present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal during such meeting of that number
of Members whose absence would cause less than a quorum.
5.7 Manner of Acting. If a quorum is present, the affirmative vote of a majority of the
Members represented in person or by proxy shall be the act of the Members, unless the vote of a
greater or lesser proportion or number is otherwise required by the Act, by the Certificate of
Organization, or by this Operating Agreement. Each Member shall have one (1) vote, regardless
of the Membership Interest owned or the size of the Member’s capital account. Unless otherwise
expressly provided herein or required under the applicable law, only Members owning
Membership Interests may vote or consent upon any such matter and their vote or consent, as the
case may be, shall be counted in the determination of whether the requisite matter was approved
by the Members.
All decisions relating to 1) the making of loans, 2) the renewal or modification of loan
terms relating to existing loans and 3) the payment of any distributions to Members shall be
decided by the affirmative vote of a majority of all Members and not by a majority of Members
represented by a quorum.
5.8 Proxies. At all meetings of Members a Member owning a Membership Interest may
vote in person or by proxy executed in writing by the Member or by a duly authorized attorney-
in-fact, however no more than one proxy may be accepted or voted by any Member. Such proxy
shall be filed with the Company before or at the time of the meeting. No proxy shall be valid
after eleven (11) months from the date of its execution, unless otherwise provided in the proxy.
5.9 Action by Members without a Meeting. Action required or permitted to be taken at a
meeting of Members may be taken without a meeting if the action is evidenced by one or more
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