LLC Operating Agreement Template

ADVERTISEMENT
OPERATING AGREEMENT
OF
________________
LLC,
[Instructions: Insert LLC name]
a ______________
Limited Liability Company
[Instructions: Insert state]
THIS
OPERATING
AGREEMENT
(the
“Agreement”)
is
entered
into
as
of
__________________, [Instructions: Insert the date of this agreement] by and between the
members listed herein (henceforth, the “Members”), the signatories to this Agreement.
WHEREAS, on ________________ [Instructions: Insert the date of LLC formation]
____________________ [Instructions: Insert LLC name] LLC (the “Company”) was formed
as a limited liability company in the State of ________________ [Instructions: Insert the state
of LLC formation] under the ____________________ [Instructions: Insert the state’s LLC
statute] (the “Act”);
WHEREAS, the Members desire to enter into this Agreement to provide for the governance and
management of the Company and set forth in detail forth their rights and liabilities as members,
and to provide for certain other matters, all as permitted under the Act.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and undertakings
specified herein with the intent to be obligated both legally and equitably, the parties agree as
follows:
1.
COMPANY
a.
Formation. The Members formed a _______________ [Instructions: Insert the
state of LLC formation] limited liability company pursuant to the Act and that they are the
initial Members of the limited liability company known as ______________ [Instructions:
Insert LLC name] LLC, organized under the laws of the State of _______________,
[Instructions: Insert the state of LLC formation] whose articles of organization (the
“Articles”) were filed with the Secretary of State, effective ________________. [Instructions:
Insert the date the articles of organization were filed with the state] In connection with the
execution of this Agreement, the Members will execute any further documents and take further
actions as are appropriate to comply with the requirements of law for the formation and
operation of a limited liability company in all places where Company may conduct its business.
b.
Name. The name of the Company is __________________ [Instructions: Insert
LLC name] LLC.
c.
Required Number of Members. Company will at all times have at least of
__________ (___) [Instructions: Insert the minimum number of members the LLC must
have] members.
1
OPERATING AGREEMENT
OF
________________
LLC,
[Instructions: Insert LLC name]
a ______________
Limited Liability Company
[Instructions: Insert state]
THIS
OPERATING
AGREEMENT
(the
“Agreement”)
is
entered
into
as
of
__________________, [Instructions: Insert the date of this agreement] by and between the
members listed herein (henceforth, the “Members”), the signatories to this Agreement.
WHEREAS, on ________________ [Instructions: Insert the date of LLC formation]
____________________ [Instructions: Insert LLC name] LLC (the “Company”) was formed
as a limited liability company in the State of ________________ [Instructions: Insert the state
of LLC formation] under the ____________________ [Instructions: Insert the state’s LLC
statute] (the “Act”);
WHEREAS, the Members desire to enter into this Agreement to provide for the governance and
management of the Company and set forth in detail forth their rights and liabilities as members,
and to provide for certain other matters, all as permitted under the Act.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and undertakings
specified herein with the intent to be obligated both legally and equitably, the parties agree as
follows:
1.
COMPANY
a.
Formation. The Members formed a _______________ [Instructions: Insert the
state of LLC formation] limited liability company pursuant to the Act and that they are the
initial Members of the limited liability company known as ______________ [Instructions:
Insert LLC name] LLC, organized under the laws of the State of _______________,
[Instructions: Insert the state of LLC formation] whose articles of organization (the
“Articles”) were filed with the Secretary of State, effective ________________. [Instructions:
Insert the date the articles of organization were filed with the state] In connection with the
execution of this Agreement, the Members will execute any further documents and take further
actions as are appropriate to comply with the requirements of law for the formation and
operation of a limited liability company in all places where Company may conduct its business.
b.
Name. The name of the Company is __________________ [Instructions: Insert
LLC name] LLC.
c.
Required Number of Members. Company will at all times have at least of
__________ (___) [Instructions: Insert the minimum number of members the LLC must
have] members.
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d.
Term.
The
Company’s
existence
commenced
on
_______________
[Instructions: Insert the date of LLC formation] and shall continue for the term stated in the
Articles unless sooner terminated pursuant hereto or as set forth in the Act.
e.
Purpose. The general purpose of the Company will be to transact any and all
businesses for which limited liability companies may be formed under ________________
[Instructions: Insert the state of LLC formation] law, to engage in all activities reasonably
necessary or incidental thereto, and to engage in any or all businesses and related activities
approved by the Members as set forth herein.
f.
Registered Office; Agent. The Company shall maintain an office in
_________________ [Instructions: Insert the state where the LLC’s office will be located] as
required by the Act at which it shall maintain the records required to be maintained there by the
Act. The Company may have such other offices as the Members may determine, within or
without the State of _________________ [Instructions: Insert the state where the LLC’s
office will be located] and any such office may be the Company’s principal place of business, as
determined by the Members. The Company’s initial agent for service of process required by the
Act is as set forth in the Articles and may be changed if and as determined by the Members.
g.
Management of Business. As more fully set forth herein, the business of the
Company will be conducted by the Members as a member-managed limited liability company.
h.
Tax Classification. The Members intend the Company to be classified as a
partnership for federal and, to the maximum extent possible, state income taxes. This
classification for tax purposes does not create or imply a general partnership, limited partnership,
or joint venture between the Members for state law or any other purpose. Instead, the Members
acknowledge the Company’s status as a limited liability company formed under the Act.
2.
MEMBERS
a.
Initial Members. The name, social security number, business or residence street
address, initial capital contribution, and percentage interest in the Company (the “Sharing
Ratio”) of each Member are as follows:
Name
Social Security
Address
Initial Capital
Sharing
Number
Contribution
Ratio
__________
__________
__________
$__________
___%
[Instructions:
[Instructions:
[Instructions: Insert
[Instructions:
[Instructions
Insert name]
Insert SSN]
address]
Insert
: Insert
amount]
percent]
__________
__________
__________
$__________
___%
[Instructions:
[Instructions:
[Instructions: Insert
[Instructions:
[Instructions
Insert name]
Insert SSN]
address]
Insert
: Insert
amount]
percent]
__________
__________
__________
$__________
___%
[Instructions:
[Instructions:
[Instructions: Insert
[Instructions:
[Instructions
2
Insert name]
Insert SSN]
Address]
Insert
: Insert
Amount]
Percent]
__________
__________
__________
$__________
___%
[Instructions:
[Instructions:
[Instructions: Insert
[Instructions:
[Instructions
Insert name]
Insert SSN]
address]
Insert
: Insert
amount]
percent]
__________
__________
__________
$__________
___%
[Instructions:
[Instructions:
[Instructions: Insert
[Instructions:
[Instructions
Insert name]
Insert SSN]
address]
Insert
: Insert
amount]
percent]
__________
__________
__________
$__________
___%
[Instructions:
[Instructions:
[Instructions: Insert
[Instructions:
[Instructions
Insert name]
Insert SSN]
address]
Insert
: Insert
amount]
percent]
Each such Member shall make the Initial Capital Contribution and have the Sharing Ratio set
forth above. The Initial Capital Contribution shall be in the form of cash, unless otherwise set
forth in Exhibit “A,” attached hereto and incorporated herein. The cash equivalent of any Initial
Capital Contribution that is in the form of assets other than cash will be as set forth in Exhibit
“A.”
b.
New Members. If any person subsequently becomes a Member of the Company,
that person shall become a party to this Agreement by executing and delivering to the Members a
membership supplement (the “Membership Supplement”) to this Agreement in such form as the
Members prescribe. The Membership Supplement shall include: (i) the full name, business or
residence street address and social security number of the new Member; (ii) the initial capital
contribution, if any, to be made by the new Member; (iii) the Sharing Ratio of the new Member;
and (iv) any adjustments in the Sharing Ratios of other Members resulting from the admission of
the new Member. By executing and delivering the Membership Supplement, the new Member
shall become a party to this Agreement without further action.
c.
Spousal Consent. In the event that any Member is married as of the date on
which such Member becomes a party to this Agreement, such Member’s spouse shall execute
and deliver to the Company the Spousal Consent attached hereto as Exhibit “B” and incorporated
herein (“Spousal Consent”), effective as of such date. If any Member should marry or remarry
after the date on which such Member becomes a party to this Agreement, such Member shall,
within __________ (__) [Instructions: Insert the number of days after marriage that a
member’s spouse must submit the “Spousal Consent”] days thereafter, obtain his/her new
spouse’s acknowledgement of and consent to the existence and binding effect of all restrictions
contained in this Agreement by causing such spouse to execute and deliver a Consent of Spouse
acknowledging the restrictions and obligations contained in this Agreement and agreeing and
consenting to the same.
d.
Additional Capital Contributions.
Any Members may make a subsequent
additional capital contribution in the form of money (including promissory notes), property, and
services rendered or to be rendered, provided that such contribution is previously approved in
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writing by Members whose Sharing Ratios equal more than __________ percent (___%)
[Instructions: Insert the percentage of Sharing Ratios that must approve additional capital
contributions] of the Sharing Ratios of all Members. No Member will be obligated to make any
additional capital contribution to the Company. However, if Company's revenues are insufficient
to pay Company’s expenses, the Members have the opportunity, but not the obligation, to
contribute additional capital in cash to Company on a pro-rata basis in accordance with their
respective Sharing Ratio. Each Member will receive a credit to that Member’s Capital Account
(as defined below) in the amount of any additional capital that the Member contributes to
Company. Immediately following such capital contributions, the Sharing Ratio’s will be adjusted
to reflect the new relative proportions of the Members' Capital Accounts.
e.
Member Loans to Company. No Member will be required to loan any funds to
Company.
Notwithstanding the foregoing, any Member may loan funds to the Company,
provided that such loan is previously approved in writing by Members whose Sharing Ratios
equal more than __________ percent (___%) [Instructions: Insert the percentage of Sharing
Ratios that must approve member loans] of the Sharing Ratios of all Members. All loans must
be evidenced by a promissory note (each a “Note”) payable by Company to the lending Member.
f.
Liability for Company Obligations.
Except as otherwise provided in this
Agreement, or required by law, no Member shall be personally liable for any debt, obligation, or
liability of the Company, whether that debt, obligation, or liability arises in contract, tort, or
otherwise.
3.
PROFITS, LOSSES AND DISTRIBUTIONS
a.
Capital Accounts. A Capital Account shall be maintained for each Member. The
Capital Account of each Member will be credited initially with the amount of the Initial Capital
Contribution by that Member. Thereafter, each Member’s Capital Account will be credited with
that Member’s Sharing Ratio of Profits and the amount of any additional capital contributed to
the Company by that Member, and will be debited with that Member’s Sharing Ratio of Losses
and the amount of any capital distributed to that Member. Each Capital Account shall be
maintained in accordance with the requirements of Internal Revenue Code of 1986 (“IRC”) §
704(b) and all other applicable local, state and/or federal regulations. In the event that the
Members determine that it is necessary to modify the manner in which the Capital Accounts are
computed to comply with local, state and/or federal regulations in order to reflect the agreed
allocations, the Members may make a modification, provided that such allocation is not likely to
have a material effect on the amounts distributable to any member upon the dissolution of
Company. No interest will be paid to the Members on capital contributions or on Capital
Account balances.
b.
Profits and Losses. The Profits and Losses of the Company shall be allocated
among the Members in accordance with their Sharing Ratios.
c.
Distributions.
Annually or at more frequent intervals, the Members shall
distribute available funds to the Members, in proportion to their Sharing Ratios. As used herein,
“Available funds” shall mean the Company’s gross cash receipts (other than cash funds obtained
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as contributions to the Company by its Members and cash funds, if any, obtained from loans to
the Company), less the Company’s operating expenses including provisions for payment of
outstanding and unpaid current obligations of the Company as of such time, and less the amount
that, in the Members’ reasonable judgment, the Company should retain in order to maintain a
reasonable reserve and to satisfy Company’s current obligations (including the current portion of
long term debt) and fulfill Company’s business purposes.
4.
MANAGEMENT
a.
Management by Members.
The Members, as managers, will manage the
Company. Except as otherwise provided in this Agreement, the Members shall have equal rights
in and the exclusive authority to manage the operations and affairs of the Company and to make
all decisions regarding the Company and its business. The Members will take all actions that
may be necessary or appropriate for the continuation of the Company’s valid existence as a
limited liability company under the Act, and for the acquisition, development, maintenance,
preservation, and operation of Company property in accordance with the provisions of this
Agreement and applicable laws and regulations. Except as otherwise provided herein, any action
approved by Members whose Sharing Ratios equal more than __________ percent (___%)
[Instructions: Insert the percentage of Sharing Ratios that must approve a Company
action] of the Sharing Ratios of all Members will constitute the act of and serve to bind the
Company. The signature of any Member authorized to do so by such approval is sufficient to
bind the Company with respect to the matter or matters so approved. No member acting alone
without such approval may bind the Company to any agreement with or obligation to any third
party or represent or claim to have the ability to do so and all statements of the Company filed or
recorded by the Members or by the Company, if possible, must so state. The Members will not
be required to hold meetings to make management decisions but may do so if and as desired and
appropriate, as provided herein.
b.
Major Decisions. Except as otherwise provided in this paragraph, decisions shall
be made by the prior written consent of Members whose Sharing Ratios equal more than
__________ percent (___%) [Instructions: Insert the percentage of Sharing Ratios that must
approve a Company action] of the Sharing Ratios of all Members. Notwithstanding the
foregoing, however, to the fullest extent permitted by law, the following major decisions require
the prior written consent of Members whose Sharing Ratios equal more than __________
percent (___%) [Instructions: Insert the percentage of Sharing Ratios that must approve a
“major decision”] of the Sharing Ratios of all Members:
i.
A change in the purposes or the nature of the business of the Company;
ii.
The merger of Company with any other limited liability company, limited
partnership, or corporation;
iii.
The transfer, exchange, or other disposition of all Company’s assets, any
significant portion thereof, or any significant interest in Company assets occurring as part of a
single transaction or plan;
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