Operating Agreement Template for Member-Managed Limited Liability Company

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OPERATING AGREEMENT FOR MEMBER-MANAGED LIMITED LIABILITY COMPANY
I. PRELIMINARY PROVISIONS
___________________________________________________
(1) Effective Date: This operating agreement of
_________________
effective
, is adopted by the members whose signatures appear at the end of this agreement (the
“Agreement”).
(2) Formation: This limited liability company (LLC) was formed by filing Articles of Organization, a Certificate of
____________________
Formation or a similar organizational document with the LLC filing office of the state of
on
____________________
. A copy of this organizational document has been placed in the LLC's records book.
(3) Name: The formal name of this LLC is as stated above. However, this LLC may do business under a different name
by complying with the state's fictitious or assumed business name statutes and procedures.
(4) Registered Office and Agent: The registered office of this LLC and the registered agent at this address are as
follows:
____________________________________________
____________________________________________
____________________________________________
The registered office and agent may be changed from time to time as the members may see fit, by filing a change of
registered agent or office form with the state LLC filing office. It will not be necessary to amend this provision of the
operating agreement if and when such a change is made.
(5) Business Purposes: The specific business purposes and activities contemplated by the founders of this LLC at the
time of initial signing of this agreement consist of the following:
____________________________________________________________________________________
It is understood that the foregoing statement of purposes shall not serve as a limitation on the powers or abilities of this
LLC, which shall be permitted to engage in any and all lawful business activities. If this LLC intends to engage in
business activities outside the state of its formation that require the qualification of the LLC in other states, it shall
obtain such qualification before engaging in such out-of-state activities.
_____________________
(6) Duration of LLC: The duration of this LLC shall be
. Further, this LLC shall terminate
when a proposal to dissolve the LLC is adopted by the membership of this LLC or when this LLC is otherwise
terminated in accordance with law.
II. MEMBERSHIP PROVISIONS
(1) Non-liability of Members: No member of this LLC shall be personally liable for the expenses, debts, obligations or
liabilities of the LLC, or for claims made against it.
(2) Reimbursement for Organizational Costs: Members shall be reimbursed by the LLC for organizational expenses
paid by the members. The LLC shall be authorized to elect to deduct organizational expenses and start-up expenditures
ratably over a period of time as permitted by the Internal Revenue Code and as may be advised by the LLC's tax
advisor.
(3) Management: This LLC shall be managed exclusively by all of its members
(4) Members' Percentage Interests: A member's percentage interest in this LLC shall be computed as a fraction, the
numerator of which is the total of a member's capital account and the denominator of which is the total of all capital
accounts of all members. This fraction shall be expressed in this agreement as a percentage, which shall be called each
member's "percentage interest" in this LLC.
 
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OPERATING AGREEMENT FOR MEMBER-MANAGED LIMITED LIABILITY COMPANY
I. PRELIMINARY PROVISIONS
___________________________________________________
(1) Effective Date: This operating agreement of
_________________
effective
, is adopted by the members whose signatures appear at the end of this agreement (the
“Agreement”).
(2) Formation: This limited liability company (LLC) was formed by filing Articles of Organization, a Certificate of
____________________
Formation or a similar organizational document with the LLC filing office of the state of
on
____________________
. A copy of this organizational document has been placed in the LLC's records book.
(3) Name: The formal name of this LLC is as stated above. However, this LLC may do business under a different name
by complying with the state's fictitious or assumed business name statutes and procedures.
(4) Registered Office and Agent: The registered office of this LLC and the registered agent at this address are as
follows:
____________________________________________
____________________________________________
____________________________________________
The registered office and agent may be changed from time to time as the members may see fit, by filing a change of
registered agent or office form with the state LLC filing office. It will not be necessary to amend this provision of the
operating agreement if and when such a change is made.
(5) Business Purposes: The specific business purposes and activities contemplated by the founders of this LLC at the
time of initial signing of this agreement consist of the following:
____________________________________________________________________________________
It is understood that the foregoing statement of purposes shall not serve as a limitation on the powers or abilities of this
LLC, which shall be permitted to engage in any and all lawful business activities. If this LLC intends to engage in
business activities outside the state of its formation that require the qualification of the LLC in other states, it shall
obtain such qualification before engaging in such out-of-state activities.
_____________________
(6) Duration of LLC: The duration of this LLC shall be
. Further, this LLC shall terminate
when a proposal to dissolve the LLC is adopted by the membership of this LLC or when this LLC is otherwise
terminated in accordance with law.
II. MEMBERSHIP PROVISIONS
(1) Non-liability of Members: No member of this LLC shall be personally liable for the expenses, debts, obligations or
liabilities of the LLC, or for claims made against it.
(2) Reimbursement for Organizational Costs: Members shall be reimbursed by the LLC for organizational expenses
paid by the members. The LLC shall be authorized to elect to deduct organizational expenses and start-up expenditures
ratably over a period of time as permitted by the Internal Revenue Code and as may be advised by the LLC's tax
advisor.
(3) Management: This LLC shall be managed exclusively by all of its members
(4) Members' Percentage Interests: A member's percentage interest in this LLC shall be computed as a fraction, the
numerator of which is the total of a member's capital account and the denominator of which is the total of all capital
accounts of all members. This fraction shall be expressed in this agreement as a percentage, which shall be called each
member's "percentage interest" in this LLC.
 
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(5) Membership Voting: Except as otherwise may be required by the Articles of Organization, Certificate of Formation
or a similar organizational document, other provisions of this operating agreement, or under the laws of this state, each
member shall vote on any matter submitted to the membership for approval in proportion to the member's percentage
interest in this LLC. Further, unless defined otherwise for a particular provision of this operating agreement, the phrase
"majority of members" means the vote of members whose combined votes equal more than 50% of the votes of all
members in this LLC.
(6) Compensation: Members shall not be paid as members of the LLC for performing any duties associated with such
membership, including management of the LLC. Members may be paid, however, for any services rendered in any other
capacity for the LLC, whether as officers, employees, independent contractors or otherwise.
(7) Members' Meetings: The LLC shall not provide for regular members' meetings. However, any member may call a
meeting by communicating his or her wish to schedule a meeting to all other members. Such notification may be in
person or in writing, or by telephone, facsimile machine, or other form of electronic communication reasonably
expected to be received by a member, and the other members shall then agree, either personally, in writing, or by
telephone, facsimile machine or other form of electronic communication to the member calling the meeting, to meet at a
mutually acceptable time and place. Notice of the business to be transacted at the meeting need not be given to members
by the member calling the meeting, and any business may be discussed and conducted at the meeting. If all members
cannot attend a meeting, it shall be postponed to a date and time when all members can attend, unless all members who
do not attend have agreed in writing to the holding of the meeting without them. If a meeting is postponed, and the
postponed meeting cannot be held either because all members do not attend the postponed meeting or the non-attending
members have not signed a written consent to allow the postponed meeting to be held without them, a second postponed
meeting may be held at a date and time announced at the first postponed meeting. The date and time of the second
postponed meeting shall also be communicated to any members not attending the first postponed meeting. The second
postponed meeting may be held without the attendance of all members as long as a majority of the percentage interests
of the membership of this LLC is in attendance at the second postponed meeting. Written notice of the decisions or
approvals made at this second postponed meeting shall be mailed or delivered to each non-attending member promptly
after the holding of the second postponed meeting. Written minutes of the discussions and proposals presented at a
members' meeting, and the votes taken and matters approved at such meeting, shall be taken by one of the members or a
person designated at the meeting. A copy of the minutes of the meeting shall be placed in the LLC's records book after
the meeting.
(8) Membership Certificates: This LLC shall be authorized to obtain and issue certificates representing or certifying
membership interests in this LLC. Each certificate shall show the name of the LLC, the name of the member, and state
that the person named is a member of the LLC and is entitled to all the rights granted members of the LLC under the
Articles of Organization, Certificate of Formation or a similar organizational document, this operating agreement and
provisions of law. Each membership certificate shall be consecutively numbered and signed by one or more officers of
this LLC. The certificates shall include any additional information considered appropriate for inclusion by the members
on membership certificates. In addition to the above information, all membership certificates shall bear a prominent
legend on their face or reverse side stating, summarizing or referring to any transfer restrictions that apply to
memberships in this LLC under the Articles of Organization, Certificate of Formation or a similar organizational
document and/or this operating agreement, and the address where a member may obtain a copy of these restrictions
upon request from this LLC. The records book of this LLC shall contain a list of the names and addresses of all persons
to whom certificates have been issued, show the date of issuance of each certificate, and record the date of all
cancellations or transfers of membership certificates.
(9) Other Business by Members: Each member shall agree not to own an interest in, manage or work for another
business, enterprise or endeavor, if such ownership or activities would compete with this LLC’s business goals, mission,
profitability or productivity, or would diminish or impair the member's ability to provide maximum effort and
performance in managing the business of this LLC.
III. TAX AND FINANCIAL PROVISIONS
(1) Tax Classification of LLC: The members of this LLC intend that this LLC be initially classified as a
____________________________
for federal and, if applicable, state income tax purposes. It is understood that all
members may agree to change the tax treatment of this LLC by signing, or authorizing the signature of, IRS Form 8832,
 
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Entity Classification Election, and filing it with the IRS and, if applicable, the state tax department within the prescribed
time limits.
______________________
(2) Tax Year and Accounting Method: The tax year of this LLC shall be
. The LLC shall
__________________
use the
method of accounting. Both the tax year and the accounting period of the LLC may be
changed with the consent of all members if the LLC qualifies for such change, and may be effected by the filing of
appropriate forms with the IRS and state tax authorities.
(3) Tax Matters Partner: If this LLC is required under Internal Revenue Code provisions or regulations, it shall
designate from among its members a "tax matters partner" in accordance with Internal Revenue Code Section 6231 (a)
(7) and corresponding regulations, who will fulfill this role by being the spokesperson for the LLC in dealings with the
IRS as required under the Internal Revenue Code and Regulations, and who will report to the members on the progress
and outcome of these dealings.
(4) Annual Income Tax Returns and Reports: Within 60 days after the end of each tax year of the LLC, a copy of the
LLC's state and federal income tax returns for the preceding tax year shall be mailed or otherwise provided to each
member of the LLC, together with any additional information and forms necessary for each member to complete his or
her individual state and federal income tax returns. If this LLC is classified as a partnership for income tax purposes,
this additional information shall include a federal (and, if applicable, state) Form K-1 (Form 1065 - Partner's Share of
Income, Credits, Deductions) or equivalent income tax reporting form. This additional information shall also include a
financial report, which shall include a balance sheet and profit and loss statement for the prior tax year of the LLC.
(5) Bank Accounts: The LLC shall designate one or more banks or other institutions for the deposit of the funds of the
LLC, and shall establish savings, checking, investment and other such accounts as are reasonable and necessary for its
business and investments. One or more members of the LLC shall be designated with the consent of all members to
deposit and withdraw funds of the LLC, and to direct the investment of funds from, into and among such accounts. The
funds of the LLC, however and wherever deposited or invested, shall not be commingled with the personal funds of any
members of the LLC.
(6) Title to Assets: All personal and real property of this LLC shall be held in the name of the LLC, not in the names of
individual members.
IV. CAPITAL PROVISIONS
(1) Capital Contributions by Members: Members shall make the following contributions of cash, property or services as
shown next to each member's name below. Unless otherwise noted, cash and property described below shall be paid or
____________________
delivered to the LLC on or by
. The fair market values of items of property or services as
agreed between the LLC and the contributing member are also shown below. The percentage interest in the LLC that
each member shall receive in return for his or her capital contribution is also indicated for each member.
NAME & ADDRESS
CONTRIBUTION
% INTEREST IN LLC
(1)__________________________
_________________
_____________________
_____________________________
_____________________________
(2)__________________________
_________________
_____________________
_____________________________
_____________________________
 
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(3)__________________________
_________________
_____________________
_____________________________
_____________________________
(2) Additional Contributions by Members: The members may agree, from time to time by unanimous vote, to require
the payment of additional capital contributions by the members, on or by a mutually agreeable date.
(3) Failure to Make Contributions: If a member fails to make a required capital contribution within the time agreed for
a member's contribution, the remaining members may, by unanimous vote, agree to reschedule the time for payment of
the capital contribution by the late-paying member, setting any additional repayment terms, such as a late payment
penalty, rate of interest to be applied to the unpaid balance, or other monetary amount to be paid by the delinquent
member, as the remaining members decide. Alternatively, the remaining members may, by unanimous vote, agree to
cancel the membership of the delinquent member, provided any prior partial payments of capital made by the delinquent
member are refunded promptly by the LLC to the member after the decision is made to terminate the membership of the
delinquent member.
(4) No Interest on Capital Contributions: No interest shall be paid on funds or property contributed as capital to this
LLC, or on funds reflected in the capital accounts of the members.
(5) Capital Account Bookkeeping: A capital account shall be set up and maintained on the books of the LLC for each
member. It shall reflect each member's capital contribution to the LLC, increased by each member's share of profits in
the LLC, decreased by each member's share of losses and expenses of the LLC, and adjusted as required in accordance
with applicable provisions of the Internal Revenue Code and corresponding income tax regulations.
(6) Consent to Capital Contribution Withdrawals and Distributions: Members shall not be allowed to withdraw any part
of their capital contributions or to receive distributions, whether in property or cash, except as otherwise allowed by this
agreement and, in any case, only if such withdrawal is made with the written consent of all members.
(7) Allocations of Profits and Losses: No member shall be given priority or preference with respect to other members in
obtaining a return of capital contributions, distributions or allocations of the income, gains, losses, deductions, credits or
other items of the LLC. The profits and losses of the LLC, and all items of its income, gain, loss, deduction and credit
shall be allocated to members according to each member's percentage interest in this LLC.
(8) Allocation and Distribution of Cash to Members: Cash from LLC business operations, as well as cash from a sale or
other disposition of LLC capital assets, may be distributed from time to time to members in accordance with each
____________
member's percentage interest in the LLC, as may be decided by
of the members.
(9) Allocation of Noncash Distributions: If proceeds consist of property other than cash, the members shall decide the
value of the property and allocate such value among the members in accordance with each member's percentage interest
in the LLC. If such noncash proceeds are later reduced to cash, such cash may be distributed among the members as
otherwise provided in this agreement.
(10) Allocation and Distribution of Liquidation Proceeds: Regardless of any other provision in this agreement, if there
is a distribution in liquidation of this LLC, or when any member's interest is liquidated, all items of income and loss
shall be allocated to the members' capital accounts, and all appropriate credits and deductions shall then be made to
these capital accounts before any final distribution is made. A final distribution shall be made to members only to the
extent of, and in proportion to, any positive balance in each member's capital account.
V. MEMBERSHIP WITHDRAWAL AND TRANSFER PROVISIONS
(1) Withdrawal of Members: A member may withdraw from this LLC by giving written notice to all other members at
__________
least
days before the date the withdrawal is to be effective.
 
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(2) Restrictions on the Transfer of Membership: A member shall not transfer his or her membership in the LLC unless
all non-transferring members in the LLC first agree to approve the admission of the transferee into this LLC. Further, no
member may encumber a part or all of his or her membership in the LLC by mortgage, pledge, granting of a security
interest, lien or otherwise, unless the encumbrance has first been approved in writing by all other members of the LLC.
Notwithstanding the above provision, any member shall be allowed to assign an economic interest in his or her
membership to another person without the approval of the other members. Such an assignment shall not include a
transfer of the member's voting or management rights in this LLC, and the assignee shall not become a member of the
LLC.
VI. DISSOLUTION PROVISIONS
(1) Events That Trigger Dissolution of the LLC: The following events shall trigger dissolution of the LLC, except as
provided:
(a) the death, permanent incapacity, bankruptcy, retirement, resignation or expulsion of a
____________
member, except that within
of the happening of any of these events, all remaining members
of the LLC may vote to continue the legal existence of the LLC, in which case the LLC shall not dissolve;
(b) the expiration of the term of existence of the LLC if such term is specified in the Articles of Organization,
Certificate of Formation or a similar organizational document, or this operating agreement;
(c) the written agreement of all members to dissolve the LLC;
(d) entry of a decree of dissolution of the LLC under state law.
VII. GENERALPROVISIONS
(1) Officers: The LLC may designate one or more officers, such as a President, Vice President, Secretary and Treasurer.
Persons who fill these positions need not be members of the LLC. Such positions may be compensated or non-
compensated according to the nature and extent of the services rendered for the LLC as a part of the duties of each
office. Ministerial services only as a part of any officer position will normally not be compensated, such as the
performance of officer duties specified in this agreement, but any officer may be reimbursed by the LLC for out-of-
pocket expenses paid by the officer in carrying out the duties of his or her office.
(2) Records: The LLC shall keep at its principal business address a copy of all proceedings of membership meetings, as
well as books of account of the LLC's financial transactions. A list of the names and addresses of the current
membership of the LLC also shall be maintained at this address, with notations on any transfers of members' interests to
nonmembers or persons being admitted into membership in the LLC.
Copies of the LLC's Articles of Organization, Certificate of Formation or a similar organizational document, a
signed copy of this operating agreement, and the LLC's tax returns for the preceding three tax years shall be kept at the
principal business address of the LLC. A statement also shall be kept at this address containing any of the following
information that is applicable to this LLC:
• the amount of cash or a description and value of property contributed or agreed to be contributed as capital to
the LLC by each member;
• a schedule showing when any additional capital contributions are to be made by members to this LLC;
• a statement or schedule, if appropriate, showing the rights of members to receive distributions representing a
return of part or all of members' capital contributions; and
• a description of, or date when, the legal existence of the LLC will terminate under provisions in the LLC's
Articles of Organization, Certificate of Formation or a similar organizational document, or this operating
agreement.
If one or more of the above items is included or listed in this operating agreement, it will be sufficient to keep a copy of
this agreement at the principal business address of the LLC without having to prepare and keep a separate record of
such item or items at this address. Any member may inspect any and all records maintained by the LLC upon
reasonable notice to the LLC. Copying of the LLC's records by members is allowed, but copying costs shall be paid for
by the requesting member.
 
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