Sample Operating Agreement
For Discussion Only
*Seek competent legal assistance when advising clients on
drafting Operating Agreements for Limited Liability Companies,
Proposed Regulation 1.1402(a)(13) – John M. Cunningham’s book –
“Drafting Limited Liability Company Operating Agreements” Aspen
Publishing (800_ 638-8437.
Two classes of interest. Operating agreement for the LLC shall hae
two classes of interest. One shall be called the Manager Class and
the other the Investor Class. For purposes of allocating profits,
losses and distributions under this Agreement, these interests shall
be divided in units.
Manager Class. Only individuals who have contract authority for the
LLC shall be entitled to hold units of the Manager Class.
Allocations of profits and losses to holders of units of a Manager
Class. The LLC shall allocate the first $ of its profits for
each calendar year to holders of units of the Management Class in
proportion to their holdings of these units.
Issuance of one unit of Manager Class to .
Upon its formation the LLC shall issue one unit of the Manager Class
to in exchange for $ .
Rights of members of Investor Class, including righs to allocations
of profits and losses; restrictions on issuance of units of Investor
Class. The rights of holders of units of the Investor Class shall be as
o General rule. Except as otherwise provided in the second
point, holders of units of the Investor Class shall have the
right of nonmanager members under this Agreement.
o Votes. Only holders of units of the Investor Class may vote on
LLC matters. Holders of units of the Investor Class shall have
one vote on each LLC matter for each such unit.
o Allocations of profits and losses. Except as provided in the
third point, the LLC shall allocate all of its profits for each
calendar year (or, if it incurs losses, all of its losses) to
holders of units of the Investor Class in proportion to their
holdings of these units.
o Restrictions on ownership of units of Investor Class. At least
20 percent of all outstanding units of the Investor Class shall
at all times during the term of this Agreement be issued and
outstanding to persons:
1. Who lack authority to sign contracts on behalf of the LLC;
2. Who have no personal liability (except liabilities in the form
of personal guarantees) for obligations of the LLC; and
3. Who provide no more than 500 hours of service to or on
behalf of the LLC in any calendar year.
Issuance of units of Investor Class. Upon its formation, the LLC
shall issue 80 units of the Investor Class to
in exchange for $ and 20 units of the Investor Class to
in exchange for $ .