Multi-Member LLC Operating Agreement Template, Exercises of Law

Download Multi-Member LLC Operating Agreement Template and more Exercises Law in PDF only on Docsity! LIMITED LIABILITY COMPANY OPERATING AGREEMENT ____________________ (COMPANY NAME), LLC A Member-Managed Limited Liability Company LLC OPERATING AGREEMENT THIS OPERATING AGREEMENT is made and entered into effective ___________________ (Month Day, Year), by and among: ___________________ (Member Full Name), ___________________ (Member Full Name), and ___________________ (Member Full Name) (collectively referred to in this agreement as the "Members"). SECTION 1 THE LIMITED LIABILITY COMPANY 1.1 Formation. Effective ___________________ (Month Day, Year), the Members form a limited liability company under the name ___________________ (Company Name), L.L.C. ___________________ (the "Company") on the terms and conditions in this Operating Agreement (the "Agreement") and pursuant to _____________ (State Law) of the State of _____________ (the "Act"). The Members agree to file with the appropriate agency within the State of _____________ charged with processing and maintaining such records all documentation required for the formation of the Company. The rights and obligations of the parties are as provided in the Act except as otherwise expressly provided in this Agreement. 1.2 Name. The business of the Company will be conducted under the name ___________________ (Company Name), L.L.C., or such other name upon which the Members may unanimously may agree. 1.3 Purpose. The purpose of the Company is to engage in any lawful act or activity for which a Limited Liability Company may be formed within the State of _____________. 1.4 Office. The Company will maintain its principal business office within the State of _____________ at the following address: _________________________________________________________ (Address, City, State Zip). 1.5 Registered Agent. ___________________ (Full Name) is the Company's initial registered agent in the State of _____________, and the registered office is _________________________________________________________ (Address, City, State Zip). 1.6 Term. The term of the Company commences on ___________________ (Month Day, Year) and shall continue perpetually unless sooner terminated as provided in this Agreement. 1.7 Names and Addresses of Members. The Members' names and addresses are attached as Schedule 1 to this Agreement. 1.8 Admission of Additional Members. Except as otherwise expressly provided in this Agreement, no additional members may be admitted to the Company through issuance by the company of a new interest in the Company without the prior unanimous written consent of the Members. SECTION 2 CAPITAL CONTRIBUTIONS 2.1 Initial Contributions. The Members initially shall contribute to the Company capital as described in Schedule 2 attached to this Agreement. 2.2 Additional Contributions. No Member shall be obligated to make any additional contribution to the Company's capital without the prior unanimous written consent of the Members. 2.3 No Interest on Capital Contributions. Members are not entitled to interest or other compensation for or on account of their capital contributions to the Company except to the extent, if any, expressly provided in this Agreement. SECTION 3 ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS 3.1 Profits/Losses. For financial accounting and tax purposes, the Company's net profits or net losses shall be determined on an annual basis and shall be allocated to the Members in proportion to each Member's relative capital interest in the Company as set forth in Schedule 2 as amended from time to time in accordance with U.S. Department of the Treasury Regulation 1.704-1. 3.2 Distributions. The Members shall determine and distribute available funds annually or at more frequent intervals as they see fit. Available funds, as referred to herein, shall mean the net cash of the Company available after appropriate provision for expenses and liabilities, as determined by the Managers. Distributions in liquidation of the Company or in liquidation of a Member's interest shall be made in accordance with the positive capital account balances pursuant to U.S. Department of the Treasury Regulation 1.704.1(b)(2)(ii)(b)(2). To the extent a Member shall have a negative capital account balance, there shall be a qualified income offset, as set forth in U.S. Department of the Treasury Regulation 1.704.1(b)(2)(ii)(d). 3.3 No Right to Demand Return of Capital. No Member has any right to any return of capital or other distribution except as expressly provided in this Agreement. No Member has any drawing account in the Company. SECTION 4 INDEMNIFICATION The Company shall indemnify any person who was or is a party defendant or is threatened to be made a party defendant, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of the Company) by reason of the fact that he is or was a Member of remaining Members at that other price or other terms; provided, further, that if the sale to a third person is not closed within six months after the expiration of the 30-day period describe above, then the provisions of Section 8.2 will again apply to the Interest proposed to be sold or conveyed. 8.2.5 Notwithstanding the foregoing provisions of Section 8.2, should the sole remaining Member be entitled to and elect to acquire all the Interests of the other Members of the Company in accordance with the provisions of Section 8.2, the acquiring Member may assign the right to acquire the Interests to a spouse, lineal descendent, or an affiliated entity if the assignment is reasonably believed to be necessary to continue the existence of the Company as a limited liability company. 8.3 Substituted Parties. Any transfer in which the Transferee becomes a fully substituted Member is not permitted unless and until: 8.3.1 The transferor and assignee execute and deliver to the Company the documents and instruments of conveyance necessary or appropriate in the opinion of counsel to the Company to effect the transfer and to confirm the agreement of the permitted assignee to be bound by the provisions of this Agreement; and 8.3.2 The transferor furnishes to the Company an opinion of counsel, satisfactory to the Company, that the transfer will not cause the Company to terminate for federal income tax purposes or that any termination is not adverse to the Company or the other Members. 8.4 Death, Incompetency, or Bankruptcy of Member. On the death, adjudicated incompetence, or bankruptcy of a Member, unless the Company exercises its rights under Section 8.5, the successor in interest to the Member (whether an estate, bankruptcy trustee, or otherwise) will receive only the economic right to receive distributions whenever made by the Company and the Member's allocable share of taxable income, gain, loss, deduction, and credit (the "Economic Rights") unless and until a majority of the other Members determined on a per capita basis admit the transferee as a fully substituted Member in accordance with the provisions of Section 8.3. 8.4.1 Any transfer of Economic Rights pursuant to Section 8.4 will not include any right to participate in management of the Company, including any right to vote, consent to, and will not include any right to information on the Company or its operations or financial condition. Following any transfer of only the Economic Rights of a Member's Interest in the Company, the transferring Member's power and right to vote or consent to any matter submitted to the Members will be eliminated, and the Ownership Interests of the remaining Members, for purposes only of such votes, consents, and participation in management, will be proportionately increased until such time, if any, as the transferee of the Economic Rights becomes a fully substituted Member. 8.5 Death Buy Out. Notwithstanding the foregoing provision of Section 8, the Members covenant and agree that on the death of any Member, the Company, at its option, by providing written notice to the estate of the deceased Member within 180 days of the death of the Member, may purchase, acquire, and redeem the Interest of the deceased Member in the Company pursuant to the provision of Section 8.5. 8.5.1 The value of each Member's Interest in the Company will be determined on the date this Agreement is signed, and the value will be endorsed on Schedule 3 attached and made a part of this Agreement. The value of each Member's Interest will be redetermined unanimously by the Members annually, unless the Members unanimously decide to redetermine those values more frequently. The Members will use their best efforts to endorse those values on Schedule 3. The purchase price for a decedent Member's interest conclusively is the value last determined before the death of such Member; provided, however, that if the latest valuation is more than two years before the death of the deceased Member, the provisions of Section 8.5.2 will apply in determining the value of the Member's Interest in the Company. 8.5.2 If the Members have failed to value the deceased Member's Interest within the prior two-year period, the value of each Member's Interest in the Company on the date of death, in the first instance, will be determined by mutual agreement of the surviving Members and the personal representative of the estate of the deceased Member. If the parties cannot reach an agreement on the value within 30 days after the appointment of the personal representative of the deceased Member, then the surviving Members and the personal representative each must select a qualified appraiser within the next succeeding 30 days. The appraisers so selected must attempt to determine the value of the Company Interest owned by the decedent at the time of death based solely on their appraisal of the total value of the Company's assets and the amount the decedent would have received had the assets of the Company been sold at that time for an amount equal to their fair market value and the proceeds (after payment of all Company obligations) were distributed in the manner contemplated in Section 8. The appraisal may not consider and discount for the sale of a minority Interest in the Company. In the event the appraisers cannot agree on the value within 30 days after being selected, the two appraisers must, within 30 days, select a third appraiser. The value of the Interest of the decedent in the Company and the purchase price of it will be the average of the two appraisals nearest in amount to one another. That amount will be final and binding on all parties and their respective successors, assigns, and representatives. The costs and expenses of the third appraiser and any costs and expenses of the appraiser retained but not paid for by the estate of the deceased Member will be offset against the purchase price paid for the deceased Member's Interest in the Company. 8.5.3 Closing of the sale of the deceased Member's Interest in the Company will be held at the office of the Company on a date designated by the Company, not be later than 90 days after agreement with the personal representative of the deceased Member's estate on the fair market value of the deceased Member's Interest in the Company; provided, however, that if the purchase price are determined by appraisals as set forth in Section 8.5.2, the closing will be 30 days after the final appraisal and purchase price are determined. If no personal representative has been appointed within 60 days after the deceased Member's death, the surviving Members have the right to apply for and have a personal representative appointed. 8.5.4 At closing, the Company will pay the purchase price for the deceased Member's Interest in the Company. If the purchase price is less than $1,000.00, the purchase price will be paid in cash; if the purchase price is $1,000.00 or more, the purchase price will be paid as follows: (1) $1,000.00 in cash, bank cashier's check, or certified funds; (2) The balance of the purchase price by the Company executing and delivering its promissory note for the balance, with interest at the prime interest rate stated by primary banking institution utilized by the Company, its successors and assigns, at the time of the deceased Member's death. Interest will be payable monthly, with the principal sum being due and payable in three equal annual installments. The promissory note will be unsecured and will contain provisions that the principal sum may be paid in whole or in part at any time, without penalty. 8.5.5 At the closing, the deceased Member's estate or personal representative must assign to the Company all of the deceased Member's Interest in the Company free and clear of all liens, claims, and encumbrances, and, at the request of the Company, the estate or personal representative must execute all other instruments as may reasonably be necessary to vest in the Company all of the deceased Member's right, title, and interest in the Company and its assets. If either the Company or the deceased Member's estate or personal representative fails or refuses to execute any instrument required by this Agreement, the other party is hereby granted the irrevocable power of attorney which, it is agreed, is coupled with an interest, to execute and deliver on behalf of the failing or refusing party all instruments required to be executed and delivered by the failing or refusing party. 8.5.6 On completion of the purchase of the deceased Member's Interest in the Company, the Ownership Interests of the remaining Members will increase proportionately to their then existing Ownership Interests. SECTION 9 DISSOLUTION AND WINDING UP OF THE COMPANY 9.1 Dissolution. The Company will be dissolved on the happening of any of the following events: 9.1.1 Sale, transfer, or other disposition of all or substantially all of the property of the Company; 9.1.2 The agreement of all of the Members; 9.1.3 By operation of law; or 9.1.4 The death, incompetence, expulsion, or bankruptcy of a Member, or the occurrence of any event that terminates the continued membership of a Member in the Company, unless there are then remaining at least the minimum number of Listing of Members - Schedule 1 LIMITED LIABILITY COMPANY OPERATING AGREEMENT FOR _______________________ (COMPANY NAME), L.L.C. LISTING OF MEMBERS As of the ____ (Day) day of _______________, 20____ (Month, Year), the following is a list of Members of the Company: NAME ADDRESS Authorized by Member(s) to provide Member Listing as of this (Day) day of (Month, Year). Printed/Typed Name Signature Printed/Typed Name Signature Printed/Typed Name Signature Listing of Capital Contributions - Schedule 2 LIMITED LIABILITY COMPANY OPERATING AGREEMENT FOR _____________________ (COMPANY NAME), L.L.C. CAPITAL CONTRIBUTIONS Pursuant to ARTICLE 2, the Members' initial contribution to the Company capital is stated to be $100. The description and each individual portion of this initial contribution is as follows: NAME CONTRIBUTION % OWNERSHIP ___________________________ (Member) $_____________ ________% ___________________________ (Member) $_____________ ________% ___________________________ (Member) $_____________ ________% SIGNED AND AGREED this ____ (Day) day of ______________, 20____ (Month, Year). Printed/Typed Name Signature Printed/Typed Name Signature Printed/Typed Name Signature Listing of Valuation of Members Interest - Schedule 3 LIMITED LIABILITY COMPANY OPERATING AGREEMENT FOR ____________________ (COMPANY NAME), L.L.C. VALUATION OF MEMBERS INTEREST Pursuant to ARTICLE 8, the value of each Member's interest in the Company is endorsed as follows: NAME VALUATION ENDORSEMENT ___________________________ $________________ ___________________________ $________________ ___________________________ $________________ SIGNED AND AGREED this _____ (Day) day of ____________, 20____ (Month, Year). Printed/Typed Name Signature Printed/Typed Name Signature Printed/Typed Name Signature