LIMITED LIABILITY COMPANY OPERATING AGREEMENT FOR __________________________________________
THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT made as of the ____ day of ______ 2006 among ______(Name) _____ said (“Investor”) who resides at ___________________, _____________, ______________, Cetterra Luxury Home Builders, L.L.C., an Arizona corporation having offices at 11459 E. Via Linda, Scottsdale, Arizona 85259 (“Cetterra”), and Paul E. Merrill, residing at 13824 N. Arrowweed Drive, Fountain Hills, Arizona 85268 (“Merrill”). Whereas, (“Investor”), Cetterra and/or nominees, have obtained all financing necessary to purchase the property and build the home on behalf of the Joint Venture. “Investor” and Cetterra will be co-holders of the title of said property.
Whereas, Paul E. Merrill and Liza E.L. Merrill, as the sole stockholders of Cetterra, are engaged in the business of constructing, marketing and selling custom homes; and
Whereas, the parties hereto desire to form a joint venture for the construction, marketing and sale of a custom home on said property, for sale to the public;
Now, therefore, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
1. Joint Venture/Development of Property. Cetterra and Merrill will proceed as the general contractor for the construction of the custom home on the Property. 2. Construction Costs. (Investor’s Name) will advance the capital to acquire the Property. The Joint Venture will obtain the full construction loan through use of combined credit and collateral profiles from all parties, if needed, defined in
this agreement. Cetterra and Merrill agree to serve as the general contractor, supervising all aspects of the design and construction. A monthly payment of ________ for a period of not more than 15 months will be paid to Cetterra for managing; this amount will be deducted from Cetterra’s portion of the profits upon completion of the project. Cetterra in this regard shall specifically include, but shall not be limited to, the following:
a. Ensuring that the property is properly insured at all times, including fire insurance and liability insurance, costs of these policies shall be part of the construction costs and be regarded as an expense of the Joint Venture:
b. Ensuring that all subcontractors engaged by Cetterra have proper insurance and licenses – and that all subcontractors are paid for their services:
c. Securing all necessary permits and approvals for the construction of the home and ensuring that the home is built in conformity with all permits and approvals as filed:
d. Overall responsibility for the design and construction of the home, in such manner as he deems appropriate and in the best interest of this Joint Venture.
e. Cetterra shall be responsible for all aspects of marketing and sales of the property. The Joint Venture is further responsible for payment of
commission to real estate agents involved in the sale and all usual and customary closing costs.
f. In accordance with the Arizona Registrar of Contractors, Cetterra will be responsible for a 2 year warrantee on the home past the sales date.
3. Sale of Homes/Allocation of Profits. a. The home shall be offered for sale as soon as practicable prior to its completion. The sale price of the home shall be determined by Paul E. Merrill of Cetterra, taking into consideration existing homes in the area and the prevailing market. Upon sale of the home, the net profits – after payment of all construction costs and related expenses incurred in connection with the project – shall be allocated and paid according to Schedule A attached hereto.
b. In the case that the project yields a net loss or zero profit, initial capital contributions provided by (Investor’s Name) plus 40 percent will be returned to (Investor’s Name) according to the personal guarantee granted by Merrill set forth in this operating agreement. In the case of a net project profit, (Investor’s Name) has first access to profits until 40 percent return is satisfied. Any profits in excess shall be disbursed according to Schedule A.
c. In the case that the joint venture is unable to provide credit backing that will facilitate the approval of the full construction loan, an outside party may be brought in for sole purpose of co-signing for loan approval. A maximum co-signer contingency payment will be made to this credit backing party, where this payment is to be included in total project costs.
4. General. a. From time to time each of the Shareholders shall, without consideration, execute such other instruments and agreements and take each other and further action or forebear form taking action, as the situation may require, as may reasonable be required to effect purposes hereof.
b. This Agreement, and each and all of the terms and provisions hereof, shall be binding upon, and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators and assigns.
c. The terms of this Agreement shall not be changed, modified, or cancelled except by written agreement of all the parties hereto.
d. In case any one or more of the provisions shall for any reason be held unenforceable, such provisions shall be deemed deleted from this
Agreement, and the remainder shall nevertheless be enforceable.
e. Except as otherwise provided, any controversy or claim arising out of or resulting from this Agreement, or the breach of it, shall be settled by arbitration in accordance with the rules and regulations of the American Arbitration Association, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
(Investor)
Cetterra Luxury Home Builders, LLC
________________________
By: __________________________
_____________________________ Paul E. Merrill
_____________________________ Liza E. L. Merrill
Schedule A [SAMPLE]
Initial Investor Capital Contribution: $500k
(in 000's) Net Project Profit profit share $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 $1,300 $1,400 $1,500 $1,600 $1,700 Investor(s) 40% $200 $200 $200 $200 $200 $200 $240 $280 $320 $360 $400 $440 $480 $520 $560 $600 $640 $680 Cetterra / Merrill 60% -$200 -$100 $0 $100 $200 $300 $360 $420 $480 $540 $600 $660 $720 $780 $840 $900 $960 $1,020