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.
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. FORMATION 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 Act. B. FILING 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. D. COMPANY PURPOSE 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]. E. OPERATIVE DATE OF AGREEMENT The provisions of this Agreement shall take effect on _______ [Comment: insert date]. F. REGISTERED OFFICE © 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. H. DURATION; EVENTS OF DISSOLUTION 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. I. DEFINITIONS 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 A. NAMES, ADDRESSES, CONTRIBUTIONS, MEMBERSHIP INTERESTS, AND CAPITAL ACCOUNTS OF 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 action. B. ADDITIONAL CONTRIBUTIONS 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]. C. 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 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. III. PROFITS, LOSSES, AND DISTRIBUTIONS A. PROFITS AND LOSSES The Profits and Losses of the Company shall be allocated among the Members in accordance with their Membership Interests. B. DISTRIBUTIONS 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 A. MEMBERS 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 Company. B. MANAGERS TO MANAGE BUSINESS 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) ___________________]. C. POWERS OF MANAGERS 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 foregoing. D. TIME DEVOTED TO BUSINESS 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. E. INFORMATION RELATING TO COMPANY 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. F. EXCULPATION 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. G. RECORDS AT PRINCIPAL PLACE OF BUSINESS The Managers shall cause the Company to keep, at its principal place of business, the following: 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 executed; © 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 A. MANAGEMENT FEE Any Manager rendering services to the Company is entitled to compensation in an amount approved by Members holding a majority of all Membership Interests. B. REIMBURSEMENT OF MANAGERS The Company shall reimburse the Managers for all reasonable out-of-pocket expenses incurred by the Managers in managing the Company. C. COMPENSATION 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. D. REIMBURSEMENT OF EXPENSES 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 Company. 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. B. REPORTS © 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 purposes. C. TAX MATTERS ___________________ [Comment: insert name] shall be the tax matters partner for all purposes of the Code. VII. MEETINGS OF MEMBERS A. MEETINGS AND CONSENTS 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 meeting. VIII. TRANSFERS; NEW MEMBERS A. ASSIGNMENT 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. B. SUBSTITUTION OF TRANSFEREE AS MEMBER 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 assigned. 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. C. ADMISSION OF NEW MEMBERS 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 A. FINAL ACCOUNTING 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. B. LIQUIDATION 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 Interests. C. DISTRIBUTION IN KIND 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. D. CERTIFICATES OF DISSOLUTION AND CANCELLATION © 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 Company. X. NOTICES A. METHOD FOR 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. B. COMPUTATION OF TIME 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 A. ENTIRE AGREEMENT 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. B. CONSTRUCTION PRINCIPLES 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 Contribution _____________ _____________ $____________ ____________________ ______ ______ ________ percent _____________ _____________ $____________ ____________________ ______ ______ ________ percent _____________ _____________ $____________ ____________________ ______ ______ ________ percent © Copyright 2013 Docstoc Inc. 12
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