Operating Agreement for [Any State] Limited Liability Company (LLC)

VIEWS: 4,097 PAGES: 13

More Info
									This is a sample Limited Liability Company Operating Agreement that can be modified
to fit any type of business. Limited Liability Companies (“LLC”) are often the most
beneficial classification for business entities because they provide for the limited liability
of corporations while having the benefits of partnership taxation. In order for the LLC to
be valid, it must have an operating agreement and must file the Articles of Organization
with the Secretary of State. This sample operating agreement is ideal for small
businesses that want to operate as an LLC.
       OPERATING AGREEMENT FOR A ________________
      [Comment: insert state] LIMITED LIABILITY COMPANY
      This Operating Agreement, dated ___________________ (the “Agreement”), is between
___________________ [Comment: insert names of all members] (collectively referred to as
the “Members” and individually as a “Member”).

       The Members desire to form a limited liability company pursuant to the laws of the State
of ________________________ and hereby agree as follows:

                      I.      THE LIMITED LIABILITY COMPANY


       A limited liability company (the “Company”) subject to the provisions of the
____________________________________________ [Comment: insert name of governing
Act related to limited liability companies in your state] (the “Act”) as currently in effect
___________________ [Comment: insert “has been” or “will be”] is hereby formed under the


        In connection with the execution of this Agreement, the Members
___________________ [Comment: insert “have caused” or “will cause”] Articles of
Organization (the “Articles”) that comply with the Act to be properly filed with the
_____________________________ Secretary of State, and will execute such further documents
(including amendments to the Articles) and take such further action as is appropriate to comply
with the requirements of law for the formation and operation of a limited liability company in all
places where the Company may conduct its business.

C.     NAME

        The name of the Company is _____________________, LLC.               The Company will
transact business under that name.


      The purpose of the Company is to engage in __________________ [Comment: user
may state “any business activity permitted by the Act” or explicitly name the business].


       The provisions of this Agreement shall take effect on _______ [Comment: insert date].


© Copyright 2013 Docstoc Inc.                                                            2
       The Company shall maintain an office in _______________ [Comment: insert location]
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 __________________, and any such office may be the Company’s principal
place of business, as determined by the Managers referenced below.

G.     AGENT

        The Company’s initial agent for service of process, as required by the Act, is as set forth
in the Articles and may be changed if, and as determined by, the Managers referenced below.


       The Company shall be dissolved on the date set forth in the Articles, if any, unless sooner
dissolved by:

       1.      The happening of events specified in this Agreement;

      2.   The affirmative vote of ___________________ [all Members or Members
whose Membership Interest equals more than ____________________    percent]; or

       3.    Any event that makes it unlawful for the business of the Company to be carried
on by the Members.


       As used in this Agreement, the following terms have the following meanings:

       1.      “Act” is defined in Paragraph 1.

       2.     “Code” means the Internal Revenue Code of 1986, as it may be amended or
superseded from time to time.

      3.     “Manager” means a person or persons elected by the Members of the Company to
manage the Company as provided in Paragraph IV.

        4.      “Membership Interest,” as to each Member, means each Member’s percentage
interest in the Company as set forth in ___________________ Annex “1” attached hereto.

                                       II.    MEMBERS


     The name, full business or residence street address, initial capital contribution, and
Membership Interest of each Member are as set forth in Annex “1” attached hereto.

© Copyright 2013 Docstoc Inc.                                                             3
        Each Member shall make an Initial Capital Contribution and have the Membership
Interest set forth above.

        If a person becomes a Member by admission as such pursuant to action of the Members
or as a Member’s assignee as provided in Paragraph VIII, that person becomes a party to this
Agreement by executing and delivering to the Managers a supplement to this Agreement in such
form as determined by the Managers. The supplement shall show: (1) the full name and address
of the new Member; (2) the Capital Contribution, if any, to be made by the new Member; (3) the
Membership Interest of the new Member; and (4) any adjustments in the Membership Interests
of other Members resulting from the admission of the new Member. By executing and
delivering the supplement, the new Member becomes a party to this Agreement without further


       No Member shall be obligated to make any additional contribution to the Company. No
Member may make an additional contribution to the Company without the prior written consent
of ___________________ [all other Members or other Members whose Membership
Interests equal more than ____________________ percent (__%) of the Membership
Interests of all Members].


        A Capital Account shall be maintained for each Member. The Capital Account of each
Member will be credited initially with the amount of capital contributed to the Company by that
Member. Thereafter, each Member’s Capital Account will be credited with that Member’s share
of Profits and the amount of any additional capital contributed to the Company by that Member,
and will be debited with that Member’s share of Losses and the amount of any cash distributed to
that Member.



       The Profits and Losses of the Company shall be allocated among the Members in
accordance with their Membership Interests.


       The Managers shall distribute available funds to the Members, in proportion to their
Membership Interests, as determined by the Managers. “Available funds,” for this purpose,
means the Company’s gross cash receipts (other than cash funds obtained 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

© Copyright 2013 Docstoc Inc.                                                          4
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 fulfill its business purposes.

                                  IV.     MANAGEMENT


       The liability of the Members shall be limited as provided by the Act, which generally
provides that no Member is personally liable for the debts, obligations, or liabilities of the


       The business of the Company shall be conducted under the exclusive management of a
Board of Managers (the “Managers”) consisting of ___________________ (__) [Comment:
insert number] Managers elected by the Members. The initial Board of Managers shall consist
of the following __________ [Comment: insert number] persons: ___________________,
___________________, and ___________________.

        The Managers shall act on behalf of the Company, only on the consent or approval of a
majority of the Managers; provided, however, that the signature of only one Manager is
sufficient to bind the Company as long as that Manager has the actual consent or approval of a
majority of the Managers. The Managers may, but need not, act at meetings.

        The authority of the Managers does not include the following, which require the approval
of ___________________ [all members or members whose Membership Interests equal
more than ___________________ (__%) percent of all Membership Interests]:
___________________ [Comment: user may revise as appropriate by including: (1) a
change in the business purpose of the Company; (2) the admission of members or a change
in Members’ Membership Interests in any manner other than as otherwise expressly set
forth in this Agreement; (3) the dissolution of the Company other than in accordance with
this Agreement; (4) any amendment to this Agreement; (5) borrowings in excess of
____________________ dollars ($__); (6) merger of the Company with any other entity; (7)
sale of all or substantially all of the Company’s assets; (8) acquisition by the Company of
the assets or business of any other entity or enterprise in excess of ____________________
dollars ($__); and (7) ___________________].


       Subject to Paragraph IV(B), the Managers are authorized on the Company’s behalf to
make all decisions as to: ___________________ [Comment: user should include and revise as
appropriate: (1) management of all or any part of the Company’s assets and business; (2)
borrowing money (including borrowing from Members) and the granting of security
interests in the Company’s assets; (3) prepayment, refinancing, or extension of any
indebtedness of the Company for borrowed money; (4) compromise or release of any of the

© Copyright 2013 Docstoc Inc.                                                          5
Company’s claims or debts; (5) employment of persons, firms, or corporations for the
operation and management of the Company’s business; and (6) ___________________].

        In the exercise of their management powers, the Managers are authorized to execute and
deliver on behalf of the Company and in its name: (1) contracts, conveyances, assignments,
leases, subleases, franchise agreements, licensing agreements, management contracts, and
maintenance contracts covering or affecting the Company’s business and assets; (2) checks,
drafts, and other orders for the payment of the Company’s funds; (3) promissory notes,
mortgages, deeds of trust, security agreements, and other similar documents; and (4) other
instruments of any kind or character relating to the Company’s affairs, whether like or unlike the


        The Managers shall devote such time to the business of the Company as they, in their
discretion, deem necessary for the efficient operation of the Company’s business.


        Upon request, the Managers shall supply, to any Member, information regarding the
Company or its activities. Each Member or authorized representative of a Member shall be
given access to and may inspect and copy all books and records in the Managers’ possession
regarding the Company. The requesting Member shall be responsible for all such expenses
related to the rights contained in this Paragraph.


      No act or omission of the Managers, the effect of which may cause or result in loss or
damage to the Company or the Members, if done in good faith to promote the best interests of
the Company, shall subject the Managers to any liability to the Members.


       The Managers shall cause the Company to keep, at its principal place of business, the

       1.      A current list in alphabetical order of the full name and last known business or
residence street address of each Member and each holder of an economic interest in the
Company, together with the contribution and share in profits and losses of each Member and
holder of an economic interest;

       2.      A current list of the full name and address of each Manager;

       3.     A copy of the Articles and all amendments to them, together with executed copies
of any powers of attorney pursuant to which the Articles or any amendments to them have been

© Copyright 2013 Docstoc Inc.                                                            6
         4.      Copies of the Company’s federal, state, and local income tax returns and reports,
if any, for the _____ (__) most recent years;

       5.      A copy of this Agreement;

       6.      Copies of financial statements of the Company for the ___ (__) most recent years;

        7.      The books and records of the Company as they relate to its internal affairs for at
least the current and past ____ (__) fiscal years.

                                  V.         COMPENSATION


      Any Manager rendering services to the Company is entitled to compensation in an
amount approved by Members holding a majority of all Membership Interests.


       The Company shall reimburse the Managers for all reasonable out-of-pocket expenses
incurred by the Managers in managing the Company.


      Unless otherwise specifically agreed among the Members, no Member shall receive any
payment or compensation for performing their obligations under this Agreement or for providing
management services to the Company.


     Subject to reasonable regulations adopted by the Managers, the Company shall reimburse
Members for all reasonable direct out-of-pocket expenses incurred by them at the request of the

                                       VI.    ACCOUNTS

A.     BOOKS

       Complete and accurate accounting books for the Company shall be maintained by the
Managers at the Company’s principal place of business. These books are to be kept on an
accounting method acceptable for tax or other applicable regulatory purposes as the Managers
may select. The Company’s accounting period is the _______ year.


© Copyright 2013 Docstoc Inc.                                                            7
       The books of account shall be closed promptly by the Managers after the close of each
____ year, and the Managers shall prepare and send to each Member a statement of the
Member’s distributive share of income and expense for federal and state income tax reporting


       ___________________ [Comment: insert name] shall be the tax matters partner for all
purposes of the Code.

                             VII.    MEETINGS OF MEMBERS


       Actions of Members may be taken at meetings, by written consent of all Members, or
otherwise as agreed among the Members. If action is taken at a meeting, an appropriate record
of the action taken shall be made and retained in the Company’s records. If the action is by
written consent, executed copies shall be maintained in the Company’s records. Meetings of
Members may be called by ___________________ (__) [any ____________________ (__)
(number) Members or not less than ____________________ (%__) percent of the Members
measured by Membership Interests of the Members] or by ___________________ [any
Manager or a majority of the Managers] [Comment: specify any other provision for which
may call meetings, as desired]. Reasonable notice shall be given to each Member of any
meeting of the Members, and such notice is deemed reasonable if it specifies briefly the nature of
all matters to be presented at the meeting, and is sent or delivered in a manner that in the
ordinary course of business would be received by each Member not less than
___________________ (__) [Comment: specify number of days] before the date of the

                           VIII. TRANSFERS; NEW MEMBERS


       A Member’s interest in the Company may be assigned only with the consent of
___________________ [all or ____________________ percent measured by Membership
Interests] of the other Members.


        Notwithstanding anything to the contrary in this Agreement, no transferee, assignee,
purchaser, designee, or legal representative of a Member may become a Member without the
consent of ___________________ [all or a majority measured by Membership Interests] of
the other Members. If consent is not granted, the transferee, assignee, purchaser, designee, or
legal representative of a Member, except as otherwise required by law, shall have no right to
participate in the management of the business and affairs of the Company and shall be entitled

© Copyright 2013 Docstoc Inc.                                                            8
only to receive the economic interest to which that Member would otherwise be entitled and was

        As further conditions to admission as a Member, any transferee, assignee, purchaser,
designee, or legal representative of a Member shall: (1) execute and deliver such instruments, in
form and substance satisfactory to the Managers, as the Managers deem necessary or desirable to
cause the transferee to become a Member, including the supplement to this Agreement, and (2)
pay all reasonable expenses in connection with admission as a Member, including but not limited
to, the cost of preparation and filing of any supplement to this Agreement referred to above and
any other amendment of this Agreement, the Articles of the Company, or taking of any other
action necessary or desirable in connection therewith.


        Additional persons may be admitted as Members of the Company upon the affirmative
vote of ___________________ [all Members or Members whose Membership Interests
equal more than ____________________ (__%) percent of all Membership Interests].
Concurrently with admission of a person as a Member, that new Member shall execute and
deliver the supplement described in Section II(A).

                       IX.     DISSOLUTION AND TERMINATION


        In case of the Company’s dissolution, an accounting shall be made from the date of the
last previous accounting to the date of dissolution.


        On the Company’s dissolution, the Managers or, if none, a person selected by a majority
measured by Membership Interests of the then-Members, will act as liquidator to wind up the
Company. The person acting as liquidator must act pursuant to and in accordance with the Act.
The liquidator will have full power and authority to sell, assign, and encumber any or all of the
Company’s assets and to wind up and liquidate the Company’s affairs in an orderly and prudent
manner. The liquidator must distribute all proceeds from liquidation to the Members, after
payment or provision for all obligations of the Company, in accordance with their Membership


        If the liquidator, with the consent of a majority measured by Membership Interests of all
Members, determines that a portion of the Company’s assets should be distributed in kind to the
Members, the liquidator must distribute the same to the Members in undivided interests as
tenants in common in proportion to their Membership Interests.


© Copyright 2013 Docstoc Inc.                                                           9
        Upon dissolution of the Company, as required by the Act, the Members shall cause a
certificate of dissolution to be filed. On completion of the Company’s winding up the and
distribution of its assets, the Company shall be terminated, and a majority measured by
Membership Interests of all Members shall cause a certificate of cancellation of articles to be
filed as required by the Act and take such other actions as may be necessary to terminate the

                                        X.      NOTICES


       Except as otherwise expressly provided in this Agreement, all notices hereunder shall be
sent by first class mail, postage prepaid, and addressed to a Member or Manager at the current
address of the Member or Manager, as set forth in the records of the Company (except that any
Member or Manager may change the address for such purpose by providing written notice to the
Company), and are effective on the date of receipt or on the ___ (__th) day after mailing,
whichever is earlier.


        In computing any period of time under this Operating Agreement, the day of any act,
event, or default from which the designated period of time begins to run, is not included. The
last day of the period so computed is included, unless it is a Saturday, Sunday, or legal holiday,
in which event the period will run until the end of the next day that is not a Saturday, Sunday, or
legal holiday.

                          XI.     MISCELLANEOUS PROVISIONS


        This Operating Agreement: (1) contains the entire agreement among the parties; (2)
except as otherwise expressly provided in this Agreement, may not be amended and no rights
hereunder be waived except by an instrument in writing signed by the party sought to be charged
with such amendment or waiver; (3) will be construed in accordance with, and governed by, the
laws of the State of _____________________, and (4) is binding on and inures to the benefit of
the Parties and their respective personal representatives, successors, and assigns, except as above
set forth. No document that purports to amend, supplement, or replace this Agreement will be
effective to do so unless it specifically refers to this Agreement, specifically states its effect on
this Agreement, and is signed by all Members of the Company.


       Words in any gender herein are deemed to include the other genders. The singular is
deemed to include the plural and vice versa. The headings and paragraph titles are for guidance
only and have no significance in the interpretation of this Operating Agreement.

© Copyright 2013 Docstoc Inc.                                                             10
        IN WITNESS WHEREOF, the Members have signed this Operating Agreement as of
the date first above written.

___________________ [signature]
___________________ [print name]

___________________ [signature]
___________________ [print name]

___________________ [signature]
___________________ [print name]

© Copyright 2013 Docstoc Inc.                                            11
                                   ANNEX “1”

     Name            Address      Initial Capital   Membership Interest

_____________     _____________   $____________     ____________________
    ______            ______         ________              percent

_____________     _____________   $____________     ____________________
    ______            ______         ________              percent

_____________     _____________   $____________     ____________________
    ______            ______         ________              percent

© Copyright 2013 Docstoc Inc.                                              12

To top