OPERATING AGREEMENT

of

 

A LIMITED LIABILITY COMPANY

These documents are intended as a resource for legal advisors and should not be used as forms in which names and amounts can be inserted without careful consideration and a full understanding of the purpose for or effect of each provision in these materials. Many of the provisions have variations and alternate or supplemental versions, which can be used to reflect the particular facts and circumstances of the parties and the arms’ length negotiations among them. Further, many of the provisions are intended simply to highlight issues and are not exhaustive of additional issues that might be addressed in the documents. Competent legal, accounting and financial advice should be obtained prior to implementing or adapting these documents for an actual transaction. Lastly, the laws governing limited liability companies are generally a function of state law and the laws in this regard can vary from state to state and are subject to amendment and modification by legislation and judicial decisions. Accordingly, there is no assurance that these documents fully reflect the laws or principles of equity of a given state, as those laws and principles might be constituted at a given point in time. Because of the numerous variations that might occur in a particular situation, these documents should not be considered as establishing a standard treatment of the issues that might arise. These documents are not intended as a substitute for appropriate legal advice and counsel in a specific transaction nor do these documents purport to ensure the reasonableness or appropriateness of their provisions in any situation.

 
Prepared by:
Victor S. Elgort, Esq.
Norris McLaughlin & Marcus, P. A.
721 US-202-206, P. O. Box 5933 Bridgewater, NJ 08807
Cat. No. 5159PDF

Established in 1887
©2016 Victor S. Elgort, Esq. Published by BlumbergExcelsior, Inc. NYC 11241
 
     
  LLC Prototype Operating Agreements—Feature List
Choose, complete and print the prototype appropriate for your LLC.
 
     
 
  A B C D E F
  Single Member Member Governed Single Member Manager Governed Basic Form One Class Percentages Member Governed Standard Form One Class Percentage Membership Interests
No Priority Return
Long Form One Class Percentage Interests Long Form
One Class
Two Members Percentages Priority Return of Capital Full Buy-Sell Provisions
MEMBERSHIP STRUCTURE            
Manager Governed   x   x x x
Member Governed x   x      
Membership Interest Measured in Units            
Membership Interest Measured in Percentages     x x x x
Classes of Units: Class A (Voting), Class B
(non-voting compensatory grants of Units)
           
Classes of Units: Class A (Voting), Class B
(non-voting non-compensatory Units
)
           
Capital Contribution in Proportion to Membership Interests     x x x  
Representations and Warranties: Authority, Title to Property and IP, and Securities Subscription Issues         x x
Representations and Warranties: Limited—Authority, Title to Property and IP       x    
Preemptive Rights       x x  
             
CAPITAL CALLS AND GUARANTEES            
Provisions for Contribution of Property
(other than cash)
    x x x x
Capital Calls       x x x
No Deficit Restoration Obligation, except for Capital Calls     x x x x
Tax Indemnity Obligations for Reimbursement of Taxes or Fees imposed on or Advanced by Company on Behalf of a Member     x x x x
             
TAX PROVISIONS AND ALLOCATIONS            
Profits and Losses Allocated in Proportion to Membership Interests     x x x x
Company Nonrecourse Liability and Deductions Provisions, Along with Minimum Gain Chargeback         x x
Minimum Distributions for Taxes     x x x x
Special Allocations for Nonrecourse Liabilities         x x
Other Special Allocation Rules and Elections Included       x x x
             
CASH FLOW PROVISIONS            
Distributions of Cash Flow in Proportion to Membership Interests (with no distinction between operating cash flow and proceeds of sales or refinancing proceeds and no priority return of or on capital) x x x x x  
Distributions of Cash Flow in Proportion to Membership Interests (with no distinction between operating cash flow and proceeds of sales or refinancing proceeds BUT with priority return of unrecovered capital contributions)           x
Distributions of Cash Flow in Proportion to Membership Interests BUT (with priority return on capital, and priority return of unrecovered capital contributions out of proceeds of sales or refinancing proceeds)            
In Exercising Discretion in Making Distributions of Cash Flow, Manager Retains Express Fiduciary Obligation to Members       x x x
Option for Use of Liquidating Trust     x x x x
On Liquidation, Distribution in Accordance with Capital Account     x x x x
             
MANAGEMENT AND VOTING            
Restrictions on Competition and Confidentiality         x x
Dispute Resolution Mechanism for Legal Claims       x x  
Dispute Resolution Mechanism for Business Matters       x x  
Exculpation and Indemnity     x x x x
Family Group Representative for Voting Units         x  
             
TRANSFER AND GIFT PROVISIONS            
Transfer of Membership Interest only upon Consent of Managers and Majority of Members       x x x
Transfer of Membership Interest only upon consent of Managers            
Transfer of Membership Interest only upon Consent of Majority of Members     x      
Permitted Transfers to Family without consent         x  
Restrictions on Direct and Indirect Transfers, other than Permitted Transfers       x x x
Consent of Spouse for Transfer Restrictions           x
limited Power of Withdrawal to Qualify for Annual Exclusion            
Joinder Agreement–Exhibit for Transferees       x x x
             
EXIT PLANS            
Dissolution by Members or Managers   x        
No Buy Sell Provisions x x x x    
Mandatory Purchase on Trigger Events–Death, Disability, Termination of Employment           x
Right of First Refusal         x x
Put/Call Process for Withdrawal on Deadlock           x
Option to Purchase on Default Events         x x
Extensive Buy-Sell Arrangements with Supporting Documents           x
             

  5159A - Model Act Limited Liability Company Operating Agreement, Single Member, Member Managed, 15 pp., 2016  
     
  5159B - Model Act Limited Liability Company Operating Agreement, Single Member, Manager Managed, 22 pp., 2016  
     
  5159C - Model Act Limited Liability Company Operating Agreement, Single Member, Basic Form One Class Percentages Member Governed, 31 pp., 2016  
     
  5159D - Model Act Limited Liability Company Operating Agreement, Standard Form, One Class Percentage Membership Interests No Priority Return, 58 pp., 2016  
     
  5159E - Model Act Limited Liability Company Operating Agreement, Long Form, One Class Percentage Interests, 75 pp., 2016  
     
  5159F - Model Act Limited Liability Company Operating Agreement, Long Form, One Class Two Members Percentages Priority Return of Capital Full Buy-Sell Provisions, 96 pp., 2016