LLC Operating Agreement - Template, Sample Form Online Pro · US-law
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PROFESSIONAL LIMITED LIABILITY COMPANY OPERATING AGREEMENT
State of ________
This Professional Limited Liability Company Operating Agreement (this “Agreement”) is made and entered into as of ________, by and among the persons executing this Agreement as members (collectively, the “Members” and each, a “Member”), for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.
ARTICLE 1 — FORMATION & COMPANY INFORMATION
§ 1.1 Name & State. The name of the limited liability company is ________ (the “Company”). The Company is a member-managed professional limited liability company organized under and pursuant to the applicable limited liability company act and professional entity statutes of the State of ________ (collectively, the “Act”). The Company was formed upon the filing of its Articles of Organization (the “Articles”) with the office of the Secretary of State of the State of ________ on ________, under file number ________.
§ 1.2 Address. The principal office and mailing address of the Company are as follows:
________
The principal office and mailing address of the Company may be changed from time to time as the Members may designate.
§ 1.3 Registered Agent. The name and address of the Company’s registered agent (or statutory agent, as applicable) for service of process are as follows:
Name: ________
Registered Office Address:
________
The Company may change its registered agent or registered office, as the Members may decide, by filing the appropriate statement with the Secretary of State of the State of ________.
§ 1.4 Professional Licensure. Each Member represents and warrants that, to the extent required by the Act and the regulatory authority governing the profession in which the Company engages, such Member is duly licensed, registered, or otherwise authorized to render the professional services described in Article 2. No person shall be admitted as a Member, and no membership interest shall be transferred, in contravention of any applicable professional licensing requirement.
ARTICLE 2 — PURPOSE
§ 2.1 Professional Services. The purpose of the Company is to render the following professional services, and such other lawful acts and activities as are incidental or related thereto and permitted under the Act:
________
The Company shall render professional services only through Members, officers, agents, and employees duly licensed or otherwise authorized to render such services.
ARTICLE 3 — DURATION
§ 3.1 The duration of the Company shall be perpetual.
§ 3.2 The Company may be dissolved upon any of the following events:
(a) the unanimous written consent or vote of the Members to dissolve the Company;
(b) the cessation of all membership interests with no remaining Members, subject to the continuation provisions of the Act;
(c) the continued existence of the Company becoming unlawful for any reason;
(d) the entry of a judicial decree of dissolution; or
(e) any other event causing dissolution under applicable state or federal law.
ARTICLE 4 — MEMBERS
§ 4.1 Member List & Capital Contributions.
________
________ in the amount of $________ (________)
Ownership percentage: ________%
________
________ in the amount of $________ (________)
Ownership percentage: ________%
§ 4.2 Management. The Company is member-managed. Management of the business and affairs of the Company is vested in its Members, who shall have all rights and powers granted to members under the Act, except as otherwise provided in this Agreement.
§ 4.3 Classes of Members. Membership shall be available in the following classes, with the rights, preferences, and duties described below:
________
§ 4.4 Meetings. Regular meetings shall be held approximately ________. Special meetings may be called upon the following notice: ________. All Members are expected to attend regular and special meetings and may participate in person, by means of remote communication, or by proxy. A quorum for the transaction of business shall consist of Members holding a majority of the ownership percentages, unless a greater number is required by this Agreement or the Act.
§ 4.5 Initial Contributions. The initial capital contributions of each Member are set forth in § 4.1. No Member shall be entitled to interest on any capital contribution. A Member may obtain the return of a capital contribution only as expressly provided in this Agreement or under the Act, and only upon the unanimous vote of the other Members. With respect to any Member that fails to make a required initial contribution when due, the other Members and the Company reserve all rights and remedies available at law or in equity.
§ 4.6 Profit/Loss Allocation. Profits and losses of the Company shall be allocated among the Members in proportion to their respective ownership percentages, in a manner consistent with the substantial economic effect requirements of Treasury Regulations under Section 704(b) of the Internal Revenue Code of 1986, as amended (the “Code”).
§ 4.7 Additional Contributions. Additional capital contributions may be required from time to time as approved by the Members. If fewer than all Members elect to make an approved additional contribution, the contributing Members may make such contribution in proportion to their respective ownership percentages, and the ownership percentages and corresponding profit and loss allocations shall be adjusted accordingly.
§ 4.8 Limitation of Liability. Except as required by the Act or by the rules of any applicable professional licensing authority, no Member shall be personally liable for any debt, obligation, or liability of the Company solely by reason of being a Member, including any liability arising from a judgment or order of any court or regulatory body. Nothing in this Agreement shall relieve any Member of personal liability for such Member’s own negligence, wrongful acts, or malpractice in the rendering of professional services. The capital contributions of the Members are subordinate to all other debts and liabilities of the Company.
§ 4.9 Member Loans to Company. Any payment of funds by a Member to the Company that is not expressly designated as a capital contribution shall be treated as a loan and a debt owed by the Company to such Member. Such loan shall not increase the lending Member’s ownership percentage and shall be repaid, with interest at a commercially reasonable rate not to exceed the maximum rate permitted by applicable usury law, in accordance with a schedule approved by a majority in interest of the Members.
§ 4.10 Authority to Bind. Each Member shall have authority to bind the Company in contract, provided that such act was authorized by the other Members or that such Member had express authority to do so.
§ 4.11 Agency. Each Member is an agent of the Company for the purpose of conducting its business. An obligation incurred by a Member shall bind the Company unless the Member lacked actual authority and the person with whom the Member dealt knew or had reason to know that the Member lacked authority.
§ 4.12 Valuation. For any valuation of a membership interest or of the Company required under this Agreement, the Members shall determine fair market value in accordance with generally accepted accounting principles (“GAAP”), and shall engage an independent qualified appraiser to perform such valuation.
§ 4.14 Death, Disqualification, or Incompetency. Upon the death, disqualification, professional disbarment, or adjudicated incompetency of a Member, the remaining Members may purchase, in equal parts, that Member’s interest, applying the procedures and time periods set forth in § 4.13. The interest shall be valued by a neutral third-party appraiser. If transfer is not completed as provided above, the affected Member or such Member’s estate or legal representatives may transfer the financial rights of the interest as permitted by the Act and applicable professional licensing law.
§ 4.15 Termination of a Member. Upon the involuntary termination of a Member as provided elsewhere in this Agreement or required by the Act, the remaining Members may purchase, in equal parts, that Member’s interest, applying the procedures and time periods set forth in § 4.13. The interest shall be valued by a neutral third-party appraiser. If transfer is not completed as provided above, the remaining Members may resolve the disposition by vote, consistent with the Act.
§ 4.16 New Members. A Member wishing to relinquish such Member’s interest must first offer it to the remaining Members. If no remaining Member elects to purchase, the interest, in whole or in part, may be transferred to a qualified non-Member who agrees in writing to be bound by the terms of this Agreement and any organizational document filed with the Secretary of State of the State of ________, and who satisfies the professional licensure requirements of § 1.4. Admission of a new Member requires the unanimous written consent of the existing Members.
ARTICLE 5 — VOTING
§ 5.1 Voting Rights. Members shall be entitled to votes as allocated through their respective membership classes described in § 4.3.
§ 5.2 Proxy Voting. A Member may vote by proxy, provided that an executed written proxy is delivered to the Company in advance of or at the time of the meeting at which the proxy is to be exercised.
ARTICLE 6 — DUTIES
The Members shall be responsible for ensuring the Company’s performance of the following:
(a) payment of wages and salaries to employees of the Company through the Company’s own financial accounts;
(b) maintenance of adequate minutes of all Company meetings, including material action items and resolutions; and
(c) compliance with all formal requirements imposed on limited liability companies and professional entities under applicable law.
§ 6.1 Duties of Loyalty and Care. To the extent permitted by the Act, the Members agree that any Member may engage in or possess interests in other business ventures of any nature, including ventures similar to or competitive with the business of the Company, and the Company and other Members shall have no rights in or to such independent ventures or the income or profits derived therefrom. This provision shall not relieve any Member of fiduciary or professional duties that may not be eliminated under the Act.
§ 6.2 Duty to Devote Time. Each Member shall devote such reasonable time and attention to the Company as is necessary to ensure the proper operation of its business.
§ 6.3 Duty to the Company. Each Member acknowledges and agrees that such Member’s duties of loyalty and care run to the Company and not to individual Members, except as otherwise required by the Act.
§ 6.4 Fiduciary Duties. The Members owe to the Company and to one another the duties of good faith and fair dealing, and a duty of disclosure, to the extent provided by the Act.
§ 6.5 Dispute Resolution. In the event of any dispute among the Members relating to the Company, the Members shall first attempt in good faith to resolve the dispute through direct negotiation. If such negotiation fails, the Members shall submit the dispute to non-binding mediation before commencing any litigation. The Members consent to the exclusive jurisdiction and venue of the state and federal courts located in ________ for the resolution of any dispute not so resolved.
§ 6.6 Assignment. A Member may assign such Member’s ownership interest solely to another Member. Assignment to a third party requires the unanimous consent of the other Members and compliance with § 1.4 and § 4.16.
§ 6.7 Records and Reports. The Company shall maintain at its principal office the following records and reports:
(a) evidence of the registration status of the Company with the State of ________;
(b) a copy of all documents filed with the State of ________, including the Articles of Organization and all amendments thereto;
(c) a copy of this Agreement and all amendments thereto;
(d) the financial records and statements of the Company;
(e) the names and addresses of all current Members; and
(f) the membership commencement dates for each Member.
Any Member may inspect and copy the foregoing records during ordinary business hours for a purpose reasonably related to such Member’s interest, at such Member’s own expense, as permitted by the Act.
ARTICLE 7 — FISCAL CONSIDERATIONS
§ 7.1 Fiscal Year. The fiscal year of the Company shall close in the month of ________. The Company shall pay all taxes required under applicable state and federal law.
§ 7.2 Duty to Maintain Books. The Members shall ensure that the Company maintains separate financial records, including bank accounts, checks, invoices, books, and financial statements. The assets of the Company shall not be commingled with the assets of any Member or other person. The books shall be maintained in accordance with GAAP. The Members shall determine by vote the financial institutions and accounts in which the Company’s liquid funds are held.
§ 7.3 No Guarantee of Member Debts. Neither the Company nor the Members on its behalf shall guarantee, or hold the Company out as able to guarantee, the personal debts of any Member.
§ 7.4 Member Compensation. The Members may, by vote, set compensation for individual Members, including reimbursement of expenses and salary. A Member may serve the Company in any additional capacity and receive reasonable compensation therefor.
§ 7.5 Distributions. Distributions may be made ________ or at the discretion of the Members, but are not required. No distribution shall be made that would render the Company insolvent or that is otherwise prohibited by the Act. Distributions shall be made to the Members in proportion to their respective ownership percentages.
§ 7.6 Tax Treatment. The Company has elected to be taxed as a corporation for federal income tax purposes pursuant to the Code and applicable Treasury Regulations, such that the Company shall be taxed on its income prior to any taxation of distributions to the Members. The Members may modify such election by unanimous written consent.
§ 7.7 Annual Report. At the close of each fiscal year, the Company shall provide each Member with an annual report to assist in the preparation of such Member’s tax filings, which shall include, at minimum, a copy of the Company’s federal tax returns for that fiscal year.
§ 7.8 Insurance. The Company may purchase and maintain such insurance as it deems necessary or desirable, including general liability coverage, professional liability (malpractice) coverage, business insurance, and coverage for the acts or omissions of any Member, officer, employee, or agent acting within the scope of authorized agency.
§ 7.9 Title to Property. Title to all Company property shall be held in the name of the Company and not in the name of any individual Member.
§ 7.10 Audit. Any Member may request an audit of the Company’s financial records. The Company shall bear the cost of such audit, provided that no more than one audit shall be required per calendar year.
ARTICLE 8 — OFFICERS
§ 8.1 President. The President shall oversee the general business of the Company, preside over Company meetings, and enact the business approved by the Members. The Members may elect to designate the President to serve additionally as Chief Operating Officer or may elect a Chairperson to serve in such capacity. If serving as Chief Operating Officer, the President may execute contracts on behalf of the Company unless another signature is expressly required by the contract or applicable law.
§ 8.2 Secretary. The Secretary shall maintain all records of the Company and complete all filings, other than financial filings, required by applicable law; provide notice of all regular and special meetings; record and maintain the minutes of all meetings; and prepare and file all reports of the Company other than financial reports.
§ 8.3 Treasurer. The Treasurer shall maintain all financial books and records of the Company, complete all financial filings required by applicable law, maintain the accounts of the Company in accordance with GAAP, disburse funds to the Company, Members, and officers as required, and, together with the President and Secretary, effect distributions approved by the Members. The Treasurer shall prepare any annual financial report required for filing with the State of ________.
§ 8.4 Additional Officers. The Members may elect additional officers, including a Chairperson, one or more Vice Presidents, and assistant officers, as the Members deem appropriate.
ARTICLE 9 — DISSOLUTION & WINDING UP
§ 9.1 Events of Dissolution. The Company may be dissolved upon the occurrence of any event listed in Article 3 or upon a ________ vote of the Members. Upon dissolution, the Members shall participate in the winding up of the Company.
§ 9.2 Winding Up. The winding up of the Company shall be the responsibility of the Members and may include satisfying creditors, liquidating assets, canceling outstanding contracts, and taking such other actions as the Members deem appropriate.
§ 9.3 Accounting. The Treasurer shall provide the Members with a final accounting of the assets and liabilities of the Company, including liquid funds, upon dissolution.
§ 9.4 Priority of Distributions. Upon dissolution, the assets and funds of the Company shall be distributed in the following order of priority, as required by the Act:
(a) to creditors who are not Members, in satisfaction of the liabilities of the Company;
(b) to Members who are creditors of the Company, in satisfaction of such liabilities;
(c) to the return of Members’ capital contributions; and
(d) the remainder, if any, to the Members in proportion to their respective ownership percentages.
§ 9.5 Distribution of Assets. Any assets remaining after satisfaction of creditors may, at the election of the Members, be distributed in kind or liquidated and distributed in cash. For any in-kind distribution, the Members shall first agree upon the fair market value of the assets (net of any associated liabilities). Failing agreement, an independent appraiser shall be engaged.
§ 9.6 Distributions Not Possible. If distributions are not possible after a final accounting, Members may be entitled to the return of their capital contributions only after all non-Member creditors have been satisfied.
§ 9.7 Completion of Dissolution. Dissolution shall be complete when all remaining assets and funds of the Company have been applied to satisfy creditors or distributed to the Members. Final termination requires the filing of articles of dissolution or termination with the Secretary of State of the State of ________.
ARTICLE 10 — INDEMNIFICATION
§ 10.1 Indemnification of Members and Officers. The Company shall indemnify and hold harmless each Member, officer, employee, and agent of the Company (each, an “Indemnified Person”) from and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys’ fees) incurred by reason of any act or omission performed or omitted on behalf of the Company, provided that such act or omission was taken in good faith and in a manner reasonably believed to be within the scope of authority conferred by this Agreement and in the best interests of the Company.
§ 10.2 Limitation on Indemnification. No Indemnified Person shall be entitled to indemnification for any loss, claim, damage, or liability arising out of such person’s fraud, gross negligence, willful misconduct, bad faith, knowing violation of law, or professional malpractice. Indemnification shall be satisfied solely out of the assets of the Company, and no Member shall be subject to personal liability by reason of these indemnification provisions.
§ 10.3 Advancement of Expenses. Expenses incurred by an Indemnified Person in defending any claim, demand, action, suit, or proceeding subject to indemnification under this Article may be advanced by the Company prior to final disposition, upon receipt of a written undertaking by or on behalf of the Indemnified Person to repay such amounts if it is ultimately determined that such person is not entitled to indemnification.
ARTICLE 11 — GENERAL PROVISIONS
§ 11.1 Right to Counsel. Each Member acknowledges that such Member has been advised of the right to seek independent legal counsel prior to executing this Agreement, and has either obtained such counsel or knowingly waived the right to do so, and enters into this Agreement freely and voluntarily.
§ 11.2 Language. All communications and notices under this Agreement shall be in the English language.
§ 11.3 Severability. If any provision of this Agreement is held invalid or unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect and shall be enforced to the maximum extent permitted by law.
§ 11.4 Entire Agreement. This Agreement constitutes the entire understanding among the Members and the Company with respect to the subject matter hereof and supersedes all prior or contemporaneous agreements or understandings, whether written or oral.
§ 11.5 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of ________, without giving effect to any choice or conflict of law provision or rule.
§ 11.6 Amendment. This Agreement may be amended only by a written instrument executed by each of the then-current Members.
§ 11.7 Computation of Days. For any reference to a number of days in this Agreement, all calendar days shall be counted, including weekends and holidays; provided that if the last day of any period falls on a weekend or legal holiday, the period shall extend to the next business day.
§ 11.8 Headings. Headings of articles and sections are for convenience and organization only and shall not affect the meaning or interpretation of any provision of this Agreement.
§ 11.9 Counterparts. This Agreement may be executed in counterparts, including by electronic signature, each of which shall be deemed an original and all of which together shall constitute one and the same instrument, effective as of the date first set forth above.
§ 11.10 Notices. All notices, requests, consents, claims, demands, waivers, and other communications hereunder (each, a “Notice”) shall be in writing and delivered by email, personal delivery, nationally recognized overnight courier (fees prepaid), or certified or registered mail (return receipt requested, postage prepaid), to the addresses designated by the Members. A Notice is effective only if (a) the receiving party has received it and (b) the party giving the Notice has complied with the requirements of this section.
EXECUTION
IN WITNESS WHEREOF, the undersigned Members have executed this Agreement as of the date first written above.
________
Signature: _______________________
Date: ________
________
Signature: _______________________
Date: ________
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