Operating Agreement (Basic) Legal Forms and Contracts

The following free LLC operating agreement is a basic document outlining the internal operations of a Limited Liability Company. This agreement and contract is being provided as a sample and example for information and research purposes only, however it is a valid legal contract and agreement. Always consult an Attorney or Lawyer. This Agreement can apply in most states including California, New York, Florida, Nevada and others. Help improve this agreement by leaving a comment.

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

FOR

____________________, LLC

A Member-Managed Limited Liability Company
THIS LIMITED LIABILITY COMPANY AGREEMENT (the Agreement) is made and entered into this ____________________ by: ____________________, an Individual and ____________________, an individual and each individual or business entity later subsequently admitted to the Company. These individuals and/or business entities shall be known as and referred to as “Members” and individually as a “Member.”
As of this date the Members, through their agent, ____________________, ________________________________________ have formed ____________________, LIMITED LIABILITY COMPANY named above under the laws of the State of ____________________. Accordingly, in consideration of the conditions contained herein, they agree as follows:
ARTICLE I Company Formation and Registered Agent
1.1 FORMATION. The Members hereby form a Limited Liability Company (“Company”) subject to the provisions of the Limited Liability Company Act as currently in effect as of this date. A Certificate of Formation was filed with the ____________________ Corporations Commission on April 4, 2007.
1.2 NAME. The name of the Company shall be: ____________________, LLC.
1.3 REGISTERED OFFICE AND AGENT. The location of the registered office of the Company shall be: ________________________________________.
1.4 TERM. The Company shall continue perpetually, unless dissolved by:
(a) Members whose capital interest as defined in Article 2.2 exceeds fifty percent (50%) vote for dissolution; or (b) Any event which makes it unlawful for the business of the Company to be carried on by the Members; or
(b) The death, resignation, expulsion, bankruptcy, retirement of a Member or the occurrence of any other event that terminates the continued membership of a Member of the Company subject to Section 1.5 below; or
(c) Any other event causing a dissolution of a Limited Liability Company under the laws of the State of ____________________.
1.5 CONTINUANCE OF COMPANY. Notwithstanding the provisions of ARTICLE 1.4, in the event of an occurrence described in ARTICLE 1.4(b), if there is at least one (1) remaining Member, said remaining Member shall have the right to continue the business of the Company. Such right can be exercised within ninety (90) days after the occurrence of an event described in ARTICLE 1.4(b). If not so exercised, the right of the Member to continue the business of the Company shall expire.
1.6 BUSINESS PURPOSE. The purpose of the Company is to engage in any lawful act or activity for which a Limited Liability Company may be formed under the Limited Liability statutes of the State of ____________________.
1.7 PRINCIPAL PLACE OF BUSINESS. The location of the principal place of business of the Company shall be: ________________________________________, or at such other place as the Members from time to time select.
1.8 THE MEMBERS. The name and place of residence of each member are contained in Exhibit 2 attached to this Agreement.
1.9 ADMISSION OF ADDITIONAL MEMBERS. Except as otherwise expressly provided in the 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 Majority-In-Interest (Greater than 50%) written consent of the Members.
ARTICLE 2 Capital Contributions
2.1 INITIAL CONTRIBUTIONS. The Members initially shall contribute to the Company capital as described in Exhibit 3 attached to this Agreement. The agreed value of such property and cash is $200.
2.2 ADDITIONAL CONTRIBUTIONS. Except as provided in ARTICLE 6.2, no Member shall be obligated to make any additional contribution to the Company’s capital.
ARTICLE 3 Profits, Losses and 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 Exhibit 2 as amended from time to time in accordance with 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 Managing Member. 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 Treasury Regulation 1.704-l(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 Treasury Regulation 1.704-l(b)(2)(ii)(d).

ARTICLE 4 Management
4.1 MANAGEMENT OF THE BUSINESS. The name and place of residence of each Member is attached as Exhibit 1 of this Agreement. By a vote of the Members holding a majority of the capital interests in the Company, as set forth in Exhibit 2 as amended from time to time, shall elect a Chief Executive Manager.
4.2 MEMBERS. The liability of the Members shall be limited as provided under the laws of the ____________________ Limited Liability statutes.
4.3 POWERS OF MEMBERS. The Majority-In-Interest (Greater than 50%) vote of the Members are authorized on the Company’s behalf to make all decisions as to (a) the sale, development lease or other disposition of the Company’s assets; (b) the purchase or other acquisition of other assets of all kinds; (c) the management of all or any part of the Company’s assets; (d) the borrowing of money and the granting of security interests in the Company’s assets; (e) the pre-payment, refinancing or extension of any loan affecting the Company’s assets; (f ) the compromise or release of any of the Company’s claims or debts; and, (g) the employment of persons, firms or corporations for the operation and management of the company’s business. In the exercise of their management powers, the Members after approved by the Majority-In-Interest (Greater than 50%) are authorized to execute and deliver (a) all contracts, conveyances, assignments leases, sub-leases, franchise agreements, licensing agreements, management contracts and maintenance contracts covering or affecting the Company’s assets; (b) all checks, drafts and other orders for the payment of the Company’s funds; (c) all promissory notes, loans, security agreements and other similar documents; and, (d) all other instruments of any other kind relating to the Company’s affairs, whether like or unlike the foregoing.
4.4 CHIEF EXECUTIVE MEMBER. The Chief Executive Member shall have primary responsibility for managing the operations of the Company and for effectuating the decisions of the Members.
4.5 NOMINEE. Title to the Company’s assets shall be held in the Company’s name or in the name of any nominee that the Members may designate. The Members shall have power to enter into a nominee agreement with any such person, and such agreement may contain provisions indemnifying the nominee, except for his willful misconduct.
4.6 COMPANY INFORMATION. Upon request, the Members shall supply to any member information regarding the Company or its activities. Each Member or his authorized representative shall have access to and may inspect and copy all books, records and materials in the Managing Member’s possession regarding the Company or its activities. The exercise of the rights contained in this ARTICLE 4.6 shall be at the requesting Member’s expense.
4.7 EXCULPATION. Any act or omission of the Members, the effect of which may cause or result in loss or damage to the Company or the Members if done in good faith to promote the best interests of the Company, shall not subject the Members to any liability from the Company.
4.8 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 the Company, Manager, employee or agent of the Company, or is or was serving at the request of the Company, for instant expenses (including attorney’s fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred in connection with such 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 Company, and with respect to any criminal action proceeding, has no reasonable cause to believe his/her conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of “no lo Contendere” or its equivalent, shall not in itself create a 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 Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his/her conduct was lawful.
4.9 RECORDS. The Members shall cause the Company to keep at its principal place of business the following:
(a) a current list in alphabetical order of the full name and the last known street address of each Member;
(b) a copy of the Certificate of Formation and the Company Operating Agreement and all amendments;
(c) copies of the Company’s federal, state and local income tax returns and reports, if any, for the three most recent years;
(d) copies of any financial statements of the limited liability company for the three most recent years.
ARTICLE 5 Compensation
5.1 MANAGEMENT FEE. Any Manager or Member rendering services to the Company shall be entitled to compensation commensurate with the value of such services as determined by a Majority-In-Interest (Greater than 50%) of the Members.
5.2 REIMBURSEMENT. The Company shall reimburse the Managers or Members for all direct out-of-pocket expenses incurred by them in managing the Company upon prior written approval from a Majority-In-Interest (Greater than 50%) from the Members.
ARTICLE 6 Bookkeeping
6.1 BOOKS. The Members shall maintain complete and accurate books of account of the Company’s affairs at the Company’s principal place of business. Such books shall be kept on such method of accounting as the Members shall select. The company’s accounting period shall be the calendar year.
6.2 MEMBER’S ACCOUNTS. The Members shall maintain separate capital and distribution accounts for each member. Each Member’s capital account shall be determined and maintained in the manner set forth in Treasury Regulation 1.704-l(b)(2)(iv) and shall consist of his initial capital contribution increased by:
(a) any additional capital contribution made by him/her;
(b) credit balances transferred from his distribution account to his capital account;

and decreased by:
(a) distributions to him/her in reduction of Company capital;
(b) the Member’s share of Company losses if charged to his/her capital account.
6.3 REPORTS. The Members shall close the books of account after the close of each calendar year, and shall prepare and send to each member a statement of such Member’s distributive share of income and expense for income tax reporting purposes.
ARTICLE 7 Transfers
7.1 ASSIGNMENT. If at any time a Member proposes to sell, assign or otherwise dispose of all or any part of his interest in the Company, such Member shall first make a written offer to sell such interest to the other Members at a price determined by Majority-In-Interest (Greater than 50%) of the Members. If such other Members decline or fail to elect such interest within thirty (30) days, and if the sale or assignment is made and the Members fail to approve this sale or assignment unanimously then, pursuant to the ____________________ Limited Liability statutes, the purchaser or assignee shall have no right to participate in the management of the business and affairs of the Company. The purchaser or assignee shall only be entitled to receive the share of the profits or other compensation by way of income and the return of contributions to which that Member would otherwise be entitled.
ARTICLE 8
Aribitration of LLC Disputes

8.1 MANDATORY ARBITRATION OF CERTAIN DISPUTED MATERS. Any dispute between or among the parties relating to Arbitrable Matters (as defined in Article 8.2) shall be exclusively and finally resolved by arbitration by a single arbitrator (the "Arbitrator").

8.2 Definition of Arbitrable Matter. Arbitrable Matters shall include only the following types of matters:

a. How to construe and enforce the provisions of this Article 17 (including any issue concerning the scope of these provisions);

b. Whether the purchase price or the other terms of purchase of a member's LLC interest pursuant to the terms of this Agreement is fair to the LLC and to the members;

c. Any claim by a member in the member's capacity as a member against any other member in that other member's capacity as a member;

d. Whether any action by the LLC or by the members is (a) contrary to this Agreement or (b) seriously unfair to any member;

e. Whether the expulsion of a member under Article 6.9 is fair;

f. Whether a vote by majority members concerning the LLC's dissolution is fair to minority members; and

g. Any other matter that, in the Arbitrator's view, is appropriate for decision under Article 17.

8.3 EXCLUSIONS FROM DEFINITION. Arbitrable Matters shall not include:

a. Routine business matters of the LLC;

b. Matters requiring urgent judicial relief; and

c. Matters involving the enforcement of orders under this Article 17.

8.4 RULES GOVERNING ARBITRATION. Except as otherwise provided in this Article 17, any arbitration (an "Arbitration") under this article shall be governed by the Rules of Commercial Arbitration of the American Arbitration Association ("AAA").

8.5 NOTICE OF ARBITRATION. Any member may initiate an Arbitration of any Arbitrable Matter. The initiating member shall do so by providing written notice of the Arbitration to the other members. The notice shall bear a current date, shall state the name of the initiating member and shall briefly state the matter to be arbitrated.

8.6 SELECTION OF ARBITRATOR. If, within fifteen (15) business days after all the parties entitled to notice of an Arbitration have received that notice, the members have not agreed among themselves as to the identity of the Arbitrator or the site of the Arbitration, the LLC shall immediately refer these matters for resolution by the AAA office located in the city of Phoenix, ____________________. That office may resolve these matters without liability and in its sole discretion.

8.7 NO APPEAL, ETC. No member shall appeal to any court an order of an Arbitrator under this Article 17. The LLC or any member may enter any such order in any court of competent jurisdiction.

8.8 ALLOCATIONS OF COSTS, FEES, ETC. The Arbitrator may allocate among the members the costs, fees and other expenses relating to an Arbitration in any manner that the Arbitrator shall determine to be appropriate in his or her absolute discretion;

PROVIDED, that if the Arbitrator determines that a party has initiated an Arbitration without a reasonable basis for doing so, the Arbitrator shall assess against that party the costs of the other parties relating to the Arbitration, including the reasonable attorneys' fees of these parties.

8.9 AWARDING OF LITIGATION COSTS TO PREVAILING PARTY. If, in a suit in law or equity, any party seeks judicial review of any issue arising in an arbitration under this Article, an Arbitrator under this Article may allocate to the losing party in that suit all costs reasonably incurred by the prevailing party.

ARTICLE 9
General Provisions

9.1 ENTIRE AGREEMENT. This Agreement contains the entire agreement among the members concerning its subject matter, and it replaces all earlier agreements among them, whether written or oral, concerning its subject matter.

9.2 INCORPORATION OF EXHIBITS. All documents identified in this Agreement as exhibits to the Agreement are hereby incorporated in the Agreement and made an integral part of it.

9.3 GOVERNING LAW. This Agreement shall be governed exclusively by the laws of the State of ____________________ (exclusive of its laws governing conflicts of law).

9.4 FORUM FOR RESOLUTION OF DISPUTES. Except to the extent that a member or the LLC seeks (i) the enforcement of an Arbitrator's ruling under Article 8 or (ii) emergency judicial relief, all disputes among the members relating to the Agreement shall be exclusively and finally resolved by arbitration under Article 17.

9.5 NOTICES. All notices under this Agreement shall be in writing. They shall be sent by fax or by registered U.S. mail, return receipt requested, to the members at their respective addresses as stated on the first page of this Agreement. A member may change the member's address for purposes of this Article 9.5 at any time upon reasonable notice to the other members. Notices under this Article 9.5 shall be deemed to have been received when actually received.

9.6 CAPTIONS. Captions in this Agreement are for convenience only and shall be deemed irrelevant in construing the provisions of the Agreement.

9.7 FREEDOM AND ENFORCABILIY OF CONTRACT. The parties intend and desire that, in construing and enforcing the provisions of the Agreement, arbitrators and judges shall give maximum effect to the principles of contractual freedom and contractual enforceability.

9.8 SEVERABILITY. If any arbitrator or court finds any provision of this Agreement to be invalid or unenforceable:

a. The arbitrator or court shall enforce the provision to the maximum lawful extent; and

b. The arbitrator's or court's finding of invalidity or unenforceability shall not affect the validity or enforceability of any other provision of this Agreement.

9.9 WAIVERS. No express or implied waiver by any party of any right of the party under this Agreement in any specific circumstance shall be considered to waive any right of the party in any other circumstance.

9.10 DEFINITION OF “INCLUDING”, “PERSON”, ETC. The terms "including" and "includes" shall mean a partial definition. The term "person" shall mean a natural person and any kind of entity.

9.11 COUNTERPARTS. This Agreement may be signed in one or more counterparts, each of which shall be deemed to be an original copy of this Agreement and all of which shall be deemed to constitute one and the same agreement.

Signed and Agreed this ____________________.

____________________
Managing Member:___________________ ____________________
____________________

Managing Member:____________________ ____________________

LIMITED LIABILITY COMPANY OPERATING AGREEMENT FOR ____________________, LLC LISTING OF MEMBERS

By a majority vote of the Members the following Co-Managing Members were elected to operate the Company pursuant to ARTICLE 4 of the Agreement:

_____________________________
Managing Member

____________________

____________________ ____________________

_____________________________
Managing Member

____________________

____________________ ____________________
The above listed Managing Members will serve in their capacity until they are removed for any reason by a majority vote of the Members as defined by ARTICLE 4 or upon their voluntary resignation.
Signed and Agreed this ____________________.

_____________________________
____________________
_____________________________
____________________

LIMITED LIABILITY COMPANY OPERATING AGREEMENT FOR ____________________ , L.L.C. CAPITAL CONTRIBUTIONS

Pursuant to ARTICLE 2, the Members’ initial contribution to the Company capital is stated to be $____________________ . The description and each individual portion of this initial contribution is as follows:

____________________ $____________________

____________________ $____________________

SIGNED AND AGREED this ____________________
.
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