THIS OPERATING AGREEMENT (the "Agreement")
of __________________, LLC (the "Company"), a limited liability
company organized pursuant to the ____________ Limited Liability Company Act
(the "Act"), is executed effective as of the __________ day of
_____________________, by and among the Organizing and Initial Members.
I: Formation of
The parties hereto hereby establish
____________________________, LLC to engage in any lawful business for which
limited liability companies may be organized under the
___________________________ Limited Liability Company Act as the same may be
amended from time to time. The
principal place of business of the Company shall be at * or such other place as
the Manager shall determine from time to time.
1.2 Nature of
The interests of the Members in the Company shall be
personal property for all purposes.
Legal title to all Company assets shall be held in the name of the
Company. Neither any Member nor a
successor, representative or assign of such Member, shall have any right, title
or interest in or to any Company property or the right to partition any real
property owned by the Company.
2.1 Names and
Addresses of Members:
The names, addresses, and Membership Interests of the
Initial Members, following the admission of Initial Members by the Organizing
Members, are as reflected in Exhibit A attached hereto and made a part hereof,
which Exhibit shall be as amended by the Company as of the effective date of
any redemption or issuance of any Membership Interest.
The Members of the Company shall hold their meetings,
both regular and special, according to such Bylaws as they may adopt from time
of Membership Interests:
No Membership Interest shall be transferred
voluntarily or involuntarily by sale, assignment, gift, pledge, exchange or
other disposition, except as provided herein below.
No Membership Interest shall be transferred
voluntarily by sale, assignment, gift, pledge, exchange or other disposition,
except as provided in Paragraph 1 of this Exhibit C, or with the prior written
approval of the Managers. The Members
acknowledge that any transfer of a Membership Interest may involve
considerations of laws and regulations, including, but not limited to, laws and
regulations governing limited liability companies as business organizations,
taxation of the Company as a partnership, and treatment of Membership Interests
and transfers of such interests as securities, the effect of which on the
Company and its Members may vary depending on the circumstances, all of which
cannot be anticipated at this time.
Therefore, the Members agree that the Managers may approve or
disapprove, or set conditions on approval, of the transfer of any Membership
Interest as the Managers, in their sole and complete discretion, may decide,
provided, however, that the Managers may not approve any transfer that will
violate any Federal or applicable state securities law or that would adversely
affect the Company from being taxed as a partnership for Federal income tax
purposes. Any attempted transfer
without the Managers express written approval shall be void.
If the Membership Interest of any Member is purported
to be transferred involuntarily, including, without limitation, any purported
transfer by or pursuant to bankruptcy, receivership, attachment, divorce,
equitable distribution, inheritance or operation of law; then, and in that
event, the Company shall purchase the Membership Interest purportedly
transferred at its Purchase Value as determined as provided in Paragraph 4
2.3.3 Method of
Determining Purchase Value:
Value as used herein shall mean the Purchase Value of the Membership Interests
of the Company established by a Certificate of Agreed Value signed by each
Member and filed with the Company. If,
at any time when it becomes necessary to determine Purchase Value of the
Membership Interests of the Company, a Certificate of Agreed Value is in
existence and such certificate of agreed value is dated less than two (2) years
before the date as of which the Purchase Value is to be determined, then the
agreed value set forth in such certificate shall be conclusive as to the
Purchase Value and shall be accepted as the Purchase Value as of the date on
which Purchase Value is to be determined, and no accountant's determination of
book value shall be required or made.
In no event shall a Certificate of Agreed Value be effective unless
signed by all the Members. The Members
may at any time execute a new Certificate of Agreed Value which shall
automatically replace all prior Certificates of Agreed Value and in no event
shall any but the last Certificate of Agreed Value be effective, if at all, for
the purpose herein specified.
the event there is no Certificate of Agreed Value or in the event the same is
more than two (2) years old, then the Purchase Value of a Membership Interest
for the purposes of this Exhibit C shall be the amount that would be received by
the owner of such Membership Interest if all the assets of the Company were
sold for cash equal to their fair market value, the Company paid all of its
liabilities including reasonable costs of liquidation, and liquidated in
accordance with this Agreement, all as of the last day of the calendar month
immediately prior to the occurrence of the event triggering the Company’s
obligation to purchase the Members Membership Interest. The determination of the fair market value
of a Membership Interest by the accountant shall be binding on all parties.
2.3.3 Payment of
under this Agreement the Company or the Members exercise any option or right to
redeem or purchase Membership Interests of any Member, the Purchase Value shall
be paid immediately upon the receipt by
the Company of the proceeds of any insurance on the life of a deceased Member
owned by and payable to the Company, to the extent of such proceeds.
under this Agreement the Company exercises any option or right to redeem or
purchase Membership Interests of any Member, the Purchase Value shall be paid
to the Member whose Membership Interests have been redeemed or purchased in
cash within thirty (30) days after notice to the affected Member.
of New Members:
Unless and until admitted as a Member of the Company,
the transferee of a Membership Interest shall not be entitled to any of the
rights, powers, or privileges of a Member, except that the transferee shall be
entitled to receive the distributions and allocations to which the Member would
be entitled but for the transfer of his Membership Interest.
In the case of a person acquiring a Membership
Interest after the admission of Initial
Members, the person shall only be admitted to Membership in the sole and
exclusive discretion of the Managers and upon compliance with all the terms
specified by the Managers, including but not limited to such additional
Member's execution of and becoming a party to this Agreement.
III: Management of the Company
The business and affairs of the Company shall be
managed by the Managers, who shall be elected by the Members and shall serve at
their pleasure thereafter. In addition
to the powers and authorities expressly conferred by this Agreement upon the
Managers, they shall have full and complete authority, power and discretion to
manage and control the business of the Company, to make all decisions and to
perform all acts customary or incident to the management of the Company's
business, except only as to those acts and things as to which approval by the
Members is expressly required by the Articles of Organization, this Agreement,
the Act or other applicable law. Any
one Manager may take any action permitted to be taken by the Managers, unless
the approval of more than one of the Managers is expressly required pursuant to
this Agreement or the Act. The Managers
may elect one or more officers, who may, but need not be, Members of the Company,
with such titles, duties and compensation as may be designated by the Managers,
subject to any applicable restrictions specifically provided in this Agreement
or contained in the Act.
on Managers Authority:
Notwithstanding anything to the contrary elsewhere in
this Agreement, no Manager shall take or agree to take any of the following
actions without the consent of all the Members:
(a) Sell, transfer, or otherwise dispose of all
or substantially all of the Company’s assets.
(b) Merge the Company into or with another
limited liability company.
The compensation of the Managers shall be fixed from
time to time by an affirmative vote of a majority in interest of the Members,
or by contract approved by an affirmative vote of a majority in interest of the
Members. No Manager shall be prevented
from receiving such compensation by reason of the fact that he or she is also a
Member of the Company.
The Managers of the Company shall hold their meetings,
both regular and special, according to Bylaws as they shall adopt from time to
IV: Limitation of Liability and Indemnification of Members
0004.1 Limitation of
No Manager or Member of the Company shall be liable to
the Company or its Members for monetary damages for any act or omission in such
person's capacity as a Manager or Member, except as provided in the Act. If the Act is amended to authorize action further
eliminating or limiting the liability of Managers and Members, then the
liability of a Manager or Member shall be eliminated or limited to the fullest
extent permitted by the Act as so amended.
Any repeal or modification of this section shall not adversely affect
the right or protection of a Manager or Member existing at the time of such
repeal or modification.
The Company shall indemnify the Managers and Members
to the fullest extent permitted or required by the Act, as amended from time to
time. The Company may advance expenses
incurred by the Managers or Members upon the approval of the Managers, provided
such Manager or Member agrees to reimburse the Company unless it is finally
determined that such Manager or Member is entitled to be indemnified by the
Company against such expenses. The
Company may also indemnify its employees and other agents to the fullest extent
permitted by the law, provided that a Majority in Interest of the Members first
approve such indemnification. The
indemnification provided herein shall be deemed exclusive of any other rights
to which a person seeking indemnification may otherwise be entitled, shall
continue as to a person who ceases to be a Manager or Member, shall inure to
the benefit of the estate, heirs, personal representatives or other successors
of the indemnity, and shall not be deemed to create any rights for the benefit
of any other person or entity.
Accounts and Tax Matters
Upon execution of this Agreement, each Initial Member
agrees to contribute cash or property to the Company in the amount set forth on
Exhibit A attached hereto.
Any Member may make a loan to the Company upon
commercially reasonable terms, upon approval of such terms by the
Managers. Loans by a Member shall not
be considered capital contributions.
The Company shall maintain a separate capital account
for each Member pursuant to the principles of this section and applicable
Treasury Regulations. The initial
capital account of each Member, which shall be the Member's initial capital
contribution, shall be increased by the amount of such Member's subsequent
capital contributions and by such Member's allocable share of Company Income and
Net Income as hereinafter provided, and each Member's capital account shall be
decreased by the amount of cash distributed to the Member by the Company and by
such Member's allocable share of Loss and Net Loss as hereinafter provided.
of Taxable Income and Tax Losses:
Taxable Income and Tax Losses of the Company for each
fiscal year shall be determined as of the end of each fiscal year and shall be
allocated as set forth herein below:
of Taxable Income and Loss:
For purposes of this Agreement, net profits or net
losses shall be determined as required by the regulations promulgated under
Section 704 of the Internal Revenue Code, as it may be amended from time to
time. Taxable Income and Tax Losses of
the Company for each fiscal year shall be determined as of the end of each
fiscal year and shall be allocated as herein below set forth, and shall be
subject to the rules for special allocations set forth in Paragraph 2 hereof.
(a) Taxable Income shall first be allocated to
the Members to the extent of, and in proportion to, the excess of prior
cumulative allocations of Tax Losses over prior cumulative allocations of
(b) The balance of Taxable Income shall then be
allocated to the Members in proportion to their Capital Accounts.
(c) Tax Losses shall first be allocated to the
Members to the extent of, and in proportion to, the excess of prior cumulative
allocations of Taxable Income over prior cumulative allocations of Tax Losses.
(d) The balance of Tax Losses shall be allocated
in proportion to the Capital Contributions of the Members, until any Members
Capital Account is reduced to zero (0).
(e) To the extent remaining, Tax Losses shall be
allocated to the Members in proportion to their adjusted tax basis in the
Company as determined for Federal income tax purposes.
(f) Notwithstanding the foregoing provisions,
if Taxable Income to be allocated includes income treated as ordinary income
for income tax purposes because it is attributable to the recapture of
Depreciation and/or Amortization under Section 1245 or Section 1250 of the
Internal Revenue Code, or any other similar provision, such Taxable Income, to
the extent it is treated as ordinary income, shall be allocated to and reported
by the Members in proportion to their accumulated depreciation allocations, and
the Company shall keep records of such allocations.
(g) In the event of a transfer of, or other
change in, an interest in the Company during a fiscal year, each item of taxable
income or loss shall be prorated in accordance with Section 706 of the Internal
Revenue Code, using any convention permitted by law and selected by the
(h) Notwithstanding any other provisions of this
Agreement to the contrary, no allocation of any item of income or loss shall be
made to a Member if such allocation would not have economic effect pursuant to
Treasury Regulations. To the extent an
allocation cannot be made to a Member due to the application of such Treasury
Regulations, such allocation shall be made to the other Members entitled to
receive such allocation hereunder.
with Tax Code:
Each Member hereby recognizes that the Company will be
subject to all provisions of Subchapter X of the Internal Revenue Code. The provisions of this Agreement relating to
the proper maintenance of capital accounts and allocation of income, gains,
deductions, and losses are designed to cause the overall allocations of items
to have substantial economic effect and are intended to comply with, and to be
interpreted and applied in a manner consistent with the requirements of
applicable Treasury Regulations, as they may be amended from time to time. The Managers are authorized to modify the
manner in which the capital accounts are maintained and items of income, gain,
deductions, and losses are allocated if they determine that such modification
is required or prudent to comply with the Treasury Regulations, and is not
likely to have a material effect on the amounts distributable to any Member
upon dissolution of the Company.
Tax Returns and Annual Statements:
The Managers shall cause the Company to file all tax
returns required to be filed for the Company for each fiscal year or part
thereof, and shall provide each person who at any time during the fiscal year
was a Member with an annual statement (including a copy of Schedule K-1 to
Internal Revenue Service Form 1065) indicating such Member's share of the
Company's income, loss, gain, expense and other items relevant for income tax purposes. Such annual statement may be audited or
unaudited as required by the Managers.
One of the Managers who is also a Member shall act as the "Tax Matters Member"
for Federal and state income tax purposes.
The Tax Matters Member shall have the final decision with respect to all
Federal and state income tax matters involving the Company, and shall represent
the Company in connection with all examinations of the Company's affairs by tax
authorities, including resulting administrative and judicial proceedings. The Members agree to cooperate with the Tax
Matters Member and to do or refrain from doing any and all things reasonably
required by the Tax Matters Member to conduct such proceedings. The Tax Matters
Member is authorized to expend Company funds for professional services and
costs associated with tax matters. Any
direct out-of-pocket expense incurred by the Tax Matters Member in carrying out
the obligations hereunder shall be reimbursed by the Company.
or Reduction of Contributions to Capital:
No Member shall have the right to withdraw any part of
his capital contribution or to receive any return on any portion of his capital
contribution, except as may be otherwise specifically provided in this
Agreement. Under circumstances
involving a return of any capital contribution, no Member shall have the right
to receive property other than cash. No
Member shall have priority over any other Member, either as to the return of
capital contributions or as to net income, net losses or distributions; provided that this subsection shall not
apply to loans which a Member has made to the Company.
The Managers shall distribute Distributable Cash and
other property at such times and in such amounts as may be determined, in the
sole discretion of the Managers.
"Distributable Cash" means, with respect to the Company for a
period of time, all funds of the Company which, in the discretion of the
Managers, are available for distribution to Members after provision has been
made for payment of all operating expenses and of all outstanding and unpaid
current obligations of the Company as of such time, and for such reserves as
the Managers deem appropriate or necessary.
Distributable Cash shall be distributed on a
cumulative basis, as follows:
(a) First, to the Members to the extent of, and
in proportion to, their Capital Contributions.
(b) Then, to the Members to the extent of, and
in proportion to, prior cumulative allocations of Taxable Income over
cumulative allocations of Tax Losses.
(c) Then, to the Members in a manner similar to
the allocations set forth in Paragraph 1.
shall be declared and paid if payment of such distribution would cause
the Company to violate any limitation on distributions provided in the
and Reports; Books of Account:
The Company shall maintain the Company's books and
records and shall determine all items of income, loss, net income and net loss
in accordance with the method of accounting selected by the Managers,
consistently applied. All records and
books of account of the Company, in whatever form maintained, shall be kept at
the principal office of the Company at all times and shall be open to
inspection of the Members or their agents during reasonable business
hours. Such right may be exercised on
behalf of a Member by an attorney, certified public accountant, or any other
agent or employee designated by such Member. Such Member shall bear all
expenses incurred in any examination made on behalf of such Member. All expenses of keeping the books and
records of the Company and the preparation of financial statements required to
implement the provisions of this Agreement or otherwise needed for the conduct
of the Company's business shall be borne by the Company.
The Bank account or accounts of the Company shall be
maintained in the bank or other financial institution approved by the
Managers. The terms governing such
accounts shall be determined by the Managers, and withdrawals from such
accounts shall only be made by such parties as may be approved by the Managers.
No Member shall be liable for the debts, liabilities
or obligations of the Company, except to the extent of the Member's capital
contributions. Except as otherwise
expressly provided herein, no Member shall be required to contribute to the
capital of, or to loan any funds to,
VII: Dissolution and Termination
Except as otherwise provided in this Agreement, no
Member shall at any time retire or withdraw from the Company or withdraw any
amount out of his capital account. Any
Member retiring or withdrawing in contravention of this section shall
indemnify, defend and hold harmless the Company and all other Members (other
than a Member who is, at the time of such withdrawal, in default under this
Agreement) from and against any losses, expenses, judgments, fines, settlements
or damages suffered or incurred by the Company or any such other Member arising
out of or resulting from such retirement or withdrawal.
The Company shall be dissolved upon the first of the
following to occur: (i) expiration of
the period fixed for the duration of the Company in the Articles of
Organization as amended; (ii) election
by all the Members to dissolve the Company;
(iii) the happening of any event of withdrawal (as defined by the
Limited Liability Company Act) with respect to any Member, unless there is at
least one remaining Member and the business of the Company is continued by
written consent of all the remaining
Members holding a Majority in Interest within ninety (90) days of the
action by or affecting the withdrawing Member;
or (iv) the entry of a decree of judicial dissolution or the issuance of
a certificate for administrative dissolution under the Act.
Upon dissolution of the Company, the business and
affairs of the Company shall terminate and be wound up and the assets of the
Company shall be liquidated, provided, however, that the Managers may
distribute assets of the Company in kind to the Members to the extent
practical. Dissolution shall be
effective as of the day on which the event occurs giving rise to the
dissolution, but the Company shall not terminate until there has been a winding
up of the Company's business and affairs, and the assets of the Company have
of Assets Upon Dissolution:
000In settling accounts after dissolution, the assets of the Company shall
be paid in the following order: first,
to creditors, in order of priority as provided by law including any loans to
the Company from Members, but excepting those to Members on account of their
capital contributions; second, an
amount equal to the then remaining credit balances in the capital accounts of
the Members shall be distributed to the Members in proportion to the amount of
such balances; and third, any remainder shall be distributed to Members of the
Company, pro rata to their respective Membership Interests.
VIII: Miscellaneous Provisions
Except as otherwise expressly provided in this
Agreement or the Act, neither the Members nor their shareholders, directors,
officers, employees, partners, agents, family members or affiliates, shall be
prohibited or restricted from investing in or conducting, either directly or
indirectly, businesses of any nature whatsoever, including the ownership and
operation of businesses similar to or in the same geographical area as those
held by the Company; and any investment
in or conduct of any such businesses by any such person or entity shall not
give rise to any claim for an accounting by any Member or the Company or any
right to claim any interest therein or the profits therefrom.
All Notices, demands or requests provided for or
permitted to be given pursuant to this Agreement must be in writing. All notices, demands and requests to be sent
to any Member or Members pursuant to this Agreement shall be deemed to have
been properly given or served if addressed to such person at the address as it
appears on the Company records and personally delivered, deposited for next day
delivery by an overnight courier service, deposited in the United States mail,
prepaid and registered or certified with return receipt requested, or
transmitted via telecopier or other similar device to the attention of such
person with receipt acknowledged.
The Members shall have the right, at any time during
the term of this Agreement, to change their respective addresses by delivering
to the other Members and the Managers written notice of such change. All distributions to any Member shall be
made at the address to which notices are sent unless otherwise specified in writing
by any such Member.
shall be interpreted, construed and enforced in accordance with the laws
of the State of _____________________.
No consent or waiver, express or implied, by any
Member to or for the breach or default by any other Member in the performance
by such other Member of his or its obligations under this Agreement shall be
deemed or construed to be a consent or waiver to or of any other breach or
default in the performance by such other Member of the same or any other
obligations of such other Member under this Agreement. Failure on the part of any Member to
complain of any act or failure to act of any of the other Members or to declare
any of the other Members in default, regardless of how long such failure
continues, shall not constitute a waiver by such Member of his or its rights
Subject to the restrictions on transferability set
forth in this Agreement, this Agreement shall inure to the benefit of and be
binding upon the undersigned Members and their respective legal
representatives, successors and assigns.
Nothing in this Agreement, expressed or implied, is intended or shall be
construed to give any creditor of the Company or any creditor of any Member or
any other person or entity whatsoever, other than the Members and the Company,
any legal or equitable right, remedy or claim under or in respect of this
Agreement or any covenant, condition or provisions herein contained, and such
provisions are and shall be held to be for the sole and exclusive benefit of
the Members and the Company.
Agreement; Amendments; Severability; General:
This Agreement, including all exhibits and schedules
hereto, as amended from time to time in accordance with the terms of this
Agreement, contains the entire agreement between the parties relative to the
subject matters hereof. This Agreement
or the Articles of Organization may only be amended or modified by a writing
executed and delivered by Members owning not less than seventy-five percent
(75%) of the Membership Interests, provided, however, that the provision in
Paragraph 3.1 concerning appointment and election of Managers shall not be
amended without the consent of the persons then entitled to serve as Managers. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provisions to other persons or circumstances shall not be
affected thereby, and the intent of this Agreement shall be enforced to the
greatest extent permitted by law. The
designations of Members and Managers as used herein shall include singular,
plural, masculine, feminine or neuter as required by context.
IN WITNESS WHEREOF, the undersigned, being all Members
of the Company, have caused this Agreement to be duly adopted by the Company as
of the day and year first above written and do hereby assume and agree to be
bound by and to perform all of the terms and provisions set forth in this Agreement.
All of the Members.
Table of Membership Interests
This Exhibit A is a part of that certain Operating
Agreement of ______________, LLC made the ________ day of _______________, 19__
and is incorporated therein by reference as if fully set forth therein.
The names, addresses, social security numbers, capital
contributions, and percentage of Membership Interest of each Member is as
Name Social Security Capital Contribution % of Interest
-240-240-360___________________ ___________ ________________