Operating Agreement for LLC Company

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Operating Agreement for LLC Company Powered By Docstoc
					This is a sample LLC Agreement that can be modified to fit any type of business. LLCs
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 LIMITED
                  LIABILITY COMPANY
       This Limited Liability Operating Agreement (the “Agreement”) of _________________,
LLC (“the Company”) is entered into by its Members, ______ [Insert Names of all Members]
(“Members”). Members hereby form this limited liability company pursuant to and in
accordance with the _______ Limited Liability Company Act, as amended from time to time
(“the Act”) and hereby agree as follows:

1. Formation

    The Company was formed on [Insert Date Articles of Organization were filed], by the filing
of the Articles of Organization with the Secretary of State of the State of ______ (the “Articles”).
Except as otherwise provided in this Agreement, the rights, duties, liabilities, and obligations of
the Members, and all other persons who become Members of the Company in the manner set
forth herein, and the administration, dissolution, winding up and termination of the Company
shall be governed by the Act.

2. Offices

    The principal office of the Company shall be located at __________________. The
Company's registered office and the name of its initial registered agent at such address shall be
as set forth in the initial Articles filed with the State of _____. The Company's registered office
and registered agent may be changed from time to time by filing the address of the new
registered office and/or the name and the acceptance of the new registered agent with the
_______ Secretary of State pursuant to the Act.

3. Purpose

    The Company is formed for the object and purpose of [Insert stated Purpose of the
Company]. The business of the Company may be conducted and promoted by the Company and
it may engage in any lawful activity for which limited liability companies may be formed under
the Act and in any and all activities necessary or incidental to the foregoing.

4. Registered Agent

  The name and address of the registered agent of the Company for service of process on the
Company in the State of ________ is [Insert Name and Address of the registered Agent].

5. Members

    The names and the residence addresses of the Members are as follows:
[Insert Names and Address of all Members]

6. Ownership


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   Ownership of the Company shall be equally shared between the Members unless otherwise
specifically agreed to in writing. [Instruction: If the ownership is not equally shared, detail the
ownership of each Member]

7. Powers—Scope of Members’ Authority

    Except as otherwise expressly and specifically provided in this Agreement, no Member shall
have authority to bind, act for, or assume any obligations or responsibilities on behalf of, any
other Member or the Company. Neither the Company nor any Member shall be responsible or
liable for any indebtedness or obligation of any other Member incurred or arising either before or
after the execution of this Agreement, except as to such joint responsibilities, liabilities,
indebtedness, or obligations incurred after the date hereof pursuant to a written instrument. This
Agreement shall not be deemed to create a partnership or other affiliation between the Members
with respect to any activities whatsoever, other than activities within the purpose of the
Company as specified in Paragraph 4 above.

8. Management of the Company

    The Members shall manage the business and affairs of the Company as Managers on an
equal basis. The Managers shall have the power to do any and all acts necessary or convenient
to or for the furtherance of the purposes described herein, including all powers, statutory or
otherwise, possessed by Members under the laws of the State of _______. [Insert Name of
Organizer (individual who signed Articles of Organization)], is hereby designated as the
Organizer, within the meaning of the Act, to execute, deliver and file the Articles (and any
amendments and/or restatements thereof) and any other certificates (and any amendments and/or
restatements thereof) necessary for the Company to qualify to conduct business in a jurisdiction
in which the Company may wish to so do.

9. Confidential Information

    The Company and each Member shall not use or disclose to others any confidential
information received from the Company or any other Member which is not otherwise available
to the public (or any confidential information made available to the public as a result of a breach
of this Agreement by the breaching party) for any purpose other than for the benefit of the
Company, as determined by the Members/Managers, or as required by law.

10. Dissolution

    The Company shall dissolve, and its affairs shall be wound upon the first to occur of the
following: (a) the written consent of the Members, (b) the death, retirement, resignation,
expulsion, or bankruptcy of a Member, or (c) upon the entry of a judicial dissolution under the
laws of the State of ____.

11. Capital Contributions



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    The Members have contributed cash and work product totaling ____________ dollars ($__).
[Instruction: It is permissible to list the cash and work product contribution of each Member
separately]

12. Additional Contributions

   Members may only authorize Additional Capital Contributions to the Company that will be
applied specifically towards working capital of the Company. In the event of such authorization,
each Member shall contribute to the capital of the Company (an “Additional Capital
Contribution”) in its proportionate share, based on its Percentage Interest, of the aggregate
amount of any additional cash contributions called for by the Members/Managers in accordance
with this Agreement, and/or any subsequent business plan. All Members/Managers of the
Company must agree upon Additional Capital Contributions in writing. Except as specifically
provided herein, no additional equity interest in the Company shall be issued upon receipt of any
Additional Capital Contribution.

13. Use of Capital Contributions

    All contributions to capital of the Company shall be available to the Company to carry out
the purposes of the Company.

14. Allocation of Profits and Losses

    The Company’s profits and losses shall be allocated in proportion to the ownership of the
Members. Accordingly, because ownership is equally held between the Members of the
Company, profits and losses shall be evenly attributed to all Members. In the event that the
Company should increase its number of Members from two to any other number, the allocation
will be in equal parts to each Member unless specifically agreed to by the current Members prior
to the admission of additional Members.

15. Ownership by Member of Company

  No Member shall have any right of partition with respect to any property or assets of the
Company.

16. Return of Capital

    Except as expressly provided herein, no Member shall have the right to demand or receive a
distribution of any capital prior to the dissolution of the Company, and no Member shall have the
right to demand or receive property other than cash in return for any contribution to the capital of
the Company.

17. No Interest

    No Member shall be entitled to receive any interest with respect to its Capital Contributions
or Capital Account.



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18.      Accounting

        The Members/Managers, or their designees, shall keep books of account in which will be
entered fully and accurately every transaction of the Company. The books of account shall be
kept on the accrual method of accounting and in accordance with GAAP. Such books of
account, together with all correspondence, papers and other documents, shall be kept at such
offices of the Company as the Members/ Managers shall designate and shall, upon reasonable
notice shall be open to the examination of any Member, Manager, or authorized representative
thereof, who will be permitted to make copies of all or any part thereof at such Member's or
Manager's cost.

19. Distributions

    Distributions shall be made to the Members at the times and in the aggregate amounts
determined by the Members. Such distributions shall be allocated among the Members in equal
proportion unless otherwise agreed to in writing by all Members.

20. Rights and Obligations of Members

    Except as expressly set forth in this Agreement or mandated by the Act, no Member shall
have any liability to the Company in excess of such Member's Capital Contributions, and no
Member shall have any liability to any other Member for the return or repayment of the Capital
Contributions of such other Member or for the repayment of any loan by such other Member to
the Company. A Member will not be personally liable for any debts or losses of the Company
beyond the Member's obligation under paragraphs 12 and 13 to make Capital Contributions or as
otherwise required by the Act.

21. Assignments

  A Member may not assign in whole or in part his or her limited liability interest in the
Company to any third party.

22. Resignation

      A Member may only resign from the Company with the consent of all of the other Members.

23. Admission of Additional Members

  _______ (___) or more additional members of the Company may be admitted to the
Company with the consent of the Members.

24. Indemnification

  The Company shall indemnify, to the fullest extent now or hereafter permitted by law, each
Member/Manager of the Company who was or is made a party to or a witness in or is threatened



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to be made a party to or a witness in any threatened, pending, or completed action or proceeding,
whether civil, criminal, administrative, or investigative, by reason of the fact that such
Member/Manager is or was an authorized representative of the Company, against all expenses
(including attorneys' fees and disbursements), judgments, fines (including excise taxes and
penalties), and amounts paid in settlement actually and reasonably incurred by such
Member/Manager in connection with such action or proceeding. Indemnification under this
Paragraph shall not be made by the Company in any case where a court determines that the
alleged act or failure to act giving rise to the claim for indemnification (i) is expressly prohibited
by the Act or any successor statute in effect at the time of such alleged action or failure to take
action, (ii) constitutes willful misconduct, bad faith, gross negligence or reckless disregard of a
Member/Manager duties or (iii) is outside the scope of such Member/Manager duties performed
in his or her official capacity or in another capacity at the Company's request.

25. Personal Indemnification

   No Member shall have any obligation to indemnify any other Member, Manager, officer,
employee, agent, or other authorized representative of the Company under any circumstances.

26. Insurance

    The Company may purchase and maintain insurance on behalf of any person who is or was a
Manager, or is or was an authorized representative of the Company, against any liability asserted
against or incurred by such person in any such capacity, or arising out of the status of such
person as such, whether or not the Company would have the power to indemnify such person
against such liability under the provisions of this Agreement.

27. Liability

   The Members shall not have any liability for the obligations or liabilities of the Company
except to the extent provided in the Act.

28. Governing Law
    The laws of the State of _________ shall govern this Agreement.


         Executed this _____ day of ____________, 20____, at ______________, ___________.


By: ___________________________
    [Insert Name of Each Member/Manager]


By: ___________________________
    [Insert         Name                               of                 Each    Member/Manager]




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e of his election until the next annual meeting and until
his successor has been elected, unless he sooner resigns or is removed.

7.3 RESIGNATIONS AND REMOVAL.

Any Officer may resign at any time by giving written notice to the Operating Manager or to all
of the Members and, unless otherwise specified therein, the acceptance of the resignation will not




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be necessary to make it effective. Any Officer may be removed at any time by the Members
with or without cause.

7.5 VACANCIES.

A vacancy in any office may be filled for the unexpired portion of the term by the Members.

7.6SALARIES.

The salaries of the officers will be fixed from time to time by the Members and no officer may
be prevented from receiving such salary by reason of the fact that he is also a Member of the
Company.

                                         ARTICLE VIII

                                      MISCELLANEOUS

8.1 NOTICE.

Any notice required or permitted to be given pursuant to the provisions of the Statute, the
Articles of Organization of the Limited Liability Company or this Operating Agreement will be
effective as of the date personally delivered, or if sent by mail, on the date deposited with United
States Postal Service, prepaid and addressed to the intended receiver at his last known address as
shown in the records of the Limited Liability Company.

8.2 WAIVER OF NOTICE.

Whenever any notice is required to be given pursuant to the provisions of the Statute, the
Articles of Organization of the Limited Liability Company or this Operating Agreement, a
waiver of the notice, in writing, signed by the persons entitled to the notice, whether before or
after the time stated therein, will be deemed equivalent to the giving of the notice.

8.3 INDEMNIFICATION BY COMPANY.

The Limited Liability Company may indemnify any person who was or is a party defendant or is
threatened to be made a party defendant to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in
the right of the Limited Liability Company) by reason of the fact that he is or was a Member of
the Company, Officer, employee or agent of the Company, or is or was serving at the request of
the Company, against expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with the action, suit or
proceeding if the Members determine that he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interest of the Limited Liability Company, and with
respect to any criminal action or proceeding, has no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement,
conviction, or on a plea of ‘nolo contendere’ or its equivalent, will not in itself create a



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presumption that the person did or did not act in good faith and in a manner which he reasonably
believed to be in the best interest of the Limited Liability Company, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

8.4 INDEMNIFICATION FUNDING.

The Company will fund the indemnification obligations provided by Section 8.3 in the manner
and to the extent the Members may from time to time deem proper.

8.5 DUALITY OF INTEREST TRANSACTIONS.

Members of this Company have a duty of undivided loyalty to this Company in all matters
affecting this Company's interests.

8.6 ANTICIPATED TRANSACTIONS.

Notwithstanding the provision of Section 8.5, it is anticipated that the Members and Officers will
have other legal and financial relationships. Representatives of this Company, along with
representatives of other entities, from time to time may participate in the joint development of
contracts and transactions designed to be fair and reasonable to each participant and to afford an
aggregate benefit to all participants. Therefore, it is anticipated that this Company will desire to
participate in these contracts and transactions and, after ordinary review for reasonableness, that
the participation of the Company in these contracts and transactions may be authorized by the
Members.

8.7 GENDER AND NUMBER.

Whenever the context requires, the gender of all words used this Agreement will include the
masculine, feminine and neuter, and the number of all words will include the singular and plural.

8.8 ARTICLES AND OTHER HEADINGS.

 The Articles and other headings contained in this Operating Agreement are for reference
purposes only and will not affect the meaning or interpretation.

8.9 REIMBURSEMENT OF OFFICERS AND MEMBERS.

Officers and Members will receive reimbursement for expenses reasonably incurred in the
performance of their duties.

                                          ARTICLE IX

                                        AMENDMENTS

9.0 AMENDMENTS.




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This Operating Agreement may be altered, amended, restated, or repealed and a new Operating
Agreement may be adopted by three-fourths action of all of the Members, after notice and
opportunity for discussion of the proposed alteration, amendment, restatement, or repeal.

                                   CERTIFICATION

       THE UNDERSIGNED, being all of the Members of ______________ LIMITED
LIABILITY COMPANY, A _______________ Limited Liability Company, evidence their
adoption and ratification of the foregoing Operating Agreement of the Company.




EXECUTED by each Member on the Date indicated.


________________________________          ______________________________


Date:___________________________          Date:_________________________


________________________________          ______________________________


Date:___________________________          Date:_________________________




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lity or effectiveness of its documents. Users should consult with a lawyer if
there is any question as to the appropriateness of the documents for their particular situation.”




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Description: This is a sample LLC Agreement that can be modified to fit any type of business.  LLCs 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.
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This document is also part of a package LLC Operating Agreement Starter Kit 14 Documents Included