“COMPLEX MANAGER MANAGED”
OPERATING AGREEMENT
OF
____________________, LLC
THIS OPERATING AGREEMENT (the
"Agreement") of __________________, LLC (the "Company"), a
limited liability company organized pursuant to the _____________ (State)
Limited Liability Company Act (the "Act"), is executed effective as
of the ________ day of __________________________, by and among the Organizing
and Initial Members.
Article I: Formation of the Company
1.1 Formation:
The parties hereto hereby establish
___________________________, LLC to engage in any lawful business for which
limited liability companies may be organized under the North Carolina 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 Members' Interests:
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.
Article II:
Members
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.
2.2 Meetings
of Members:
The Members of the Company shall hold their
meetings, both regular and special, according to the following Bylaws:
2.2.1 Annual
Meetings of Members:
An annual meeting of the Members of the Company
shall be held at such time and date at the principal office of the Company or
at such other place as shall be designated by the Managers from time to time
and stated in the notice of the meeting.
The purposes of the annual meeting need not be enumerated in the notice
of such meeting.
2.2.2 Special
Meetings of Members:
Special meetings of the Members may be called by
any Manager or by holders of not less than fifty percent (50%) of all the
Membership Interests. Business
transacted at all special meetings shall be confined to the purposes stated in
the notice.
2.2.3 Notice
of Meetings of Members:
Written notice stating the place, day and hour
of the meeting and, additionally in the case of special meetings, stating the
purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than sixty (60) days before the date of the meeting, to each
Member of record entitled to vote at such meeting.
2.2.4 Quorum;
Actions by Members:
A Majority in Interest of the Members shall
constitute a quorum at all meetings of the Members. Once a quorum is present at a meeting of the Members, the
subsequent withdrawal from the meeting of any Member prior to adjournment or
the refusal of any Member to vote shall not affect the presence of a quorum at
the meeting. If, however, such quorum
shall not be present at the opening of any meeting of the Members, the Members
entitled to vote at such meeting shall have the power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
the holders of the requisite amount of Membership Interests shall be present or
represented. Except for a matter for
which the affirmative vote of the holders of a greater portion of the
Membership Interests entitled to vote is required by law, the Articles of
Organization or this Agreement, the act of Members shall be the affirmative
vote of a Majority in Interest of all the Members represented and voting at the
meeting.
2.2.5 Action
Without a Meeting:
All actions of the Members provided for herein
may be taken without a meeting by written consent signed by all Members
eligible to vote on such action.
2.3 Transferability
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.
2.3.1 Permitted
Transfers to Related Parties:
Each Member’s Membership Interest may be
transferred during the Member’s lifetime or by testamentary or intestate
transfer to any related party of the Member, provided, however, that no further
transfer of such Membership Interests shall be made by such transferee except
back to the Member who originally owned it or to a related party of such Member
who originally owned it, or except in accordance with the provisions made
herein below; and provided further that whenever the Company shall have an
option or a duty to repurchase the Membership Interest of any Member, such
option or duty shall include all Membership Interests transferred by any such
Member to a related party. A related
party shall mean a spouse, issue, spouse's issue, or ancestor of the Member,
except that any spouse living separate and apart from the other spouse, with
the intention by either to cease their matrimonial relationship, is not a
related party, and provided further, that a trust for the sole benefit of one
or more persons who is a related party shall be treated as a related party.
Upon the death or incapacity of a Member, the
legal representative of such Member shall have the right to become a Member
upon written notice to the Company within ninety (90) days after the
appointment of such Member’s legal representative, but not later than one
hundred eighty (180) days after the death or certified incapacity of such
Member, and upon such successor executing this Operating Agreement or an
amendment hereto and such other documents as the Managers may request. If such right is not exercised, the legal
representative of the deceased or incapacitated Member shall have the same
rights, subject to the same limitations, as such Member would have had to
assign or transfer his interest pursuant to this Exhibit C.
2.3.2 Voluntary
Transfers to Non-Related Parties:
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.
2.3.3 Involuntary
Transfers to Related and Non-Related Parties:
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
herein below.
2.3.4 Method
of Determining Purchase Value:
2.3.4.1 Purchase
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.
2.3.4.2 In
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 Member’s Membership Interest. The determination of the fair market value
of a Membership Interest by the accountant shall be binding on all parties.
12.3.4 Payment of Purchase Value:
2.3.5.1 Whenever
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.
2.3.5.2 Whenever
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.
2.3.6 Admission
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.
Article III: Management of the Company
3.1 Management:
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.
3.2 Restrictions
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.
3.3 Compensation:
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.
3.4 Meetings
of Managers:
The Managers of the Company shall hold their
meetings, both regular and special, according to the following bylaws:
3.4.1 Meetings
of Managers:
In the event the Company has more than one
manager, the Managers may hold meetings, both regular and special, for the
conduct of the Company’s business at the principal office of the Company or at
such other place as shall be designated in the notice of the meeting.
3.4.2 Notice
of Meetings:
The Managers may meet at such intervals and at
such times as they shall schedule. Any
scheduled meetings of Managers may be held without notice. Special meetings of the Managers may be
called at any time by no less than one-third of the then serving Managers for
any purpose or purposes. Notice of such
special meetings, unless waived by attendance, or by written consent to the
holding of the special meeting, shall be given at least five (5) days before
the date of such meeting to all Managers not calling the meeting, and shall
state the date, hour, and location of the special meeting, and its purpose or
purposes. Absent the written consent of
a majority of the Managers to take other action, the business transacted at
such special meeting shall be limited to such purpose or purposes as stated in
the notice.
3.4.3 Quorum;
Action by Managers:
A majority of the Managers shall be necessary to
constitute a quorum for the transaction of business. Every act or decision done or made by a Majority of the Managers
present at a meeting duly held at which a quorum is present shall be regarded
as the act of the Company, unless a greater number is required by law or by the
Articles of Organization. A majority of
the Managers present may adjourn any Managers' meeting to meet again at a
stated date and hour.
3.4.4 Action
Without a Meeting:
Any action which under any provision of the Act
or this Agreement is to be taken at a meeting of the Managers may be taken
without a meeting by written consent signed by all Managers who would be
entitled to vote upon such action at a meeting. Such written consent must be kept with the records of the
Company.
Article IV: Limitation of Liability and Indemnification
of Members and Managers
4.1 Limitation
of Liability:
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.
4.2 Indemnification:
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
indemnitee, and shall not be deemed to create any rights for the benefit of any
other person or entity.
Article V: Capital Accounts and Tax Matters
5.1 Capital
Contributions; Loans:
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.
5.2 Additional
Capital Contributions:
Members holding not less than fifty percent
(50%) of all the Membership Interests may request that the Members make
additional contributions to capital. If
a Majority in Interest of the Members approve such request, then each Member
shall be obligated to make such additional capital contribution to the Company
ratably in accordance with such Member's then existing Membership Interest,
within the time period approved by a Majority in Interest of the Members. If any Member (the "Defaulting Member")
fails to contribute additional capital when obligated to do so, the Members may
elect to allow the remaining Members (the "Lending Members") to
contribute to the Company, pro rata by Membership Interests, such additional
capital contribution. All amounts so contributed shall be considered a loan
from the Lending Members to the Defaulting Member, bearing interest at the
prime rate as published in the Wall Street Journal plus 3% simple interest,
until repaid. Until all such loans are
repaid, all distributions from the Company which would have been paid to the
Defaulting Member shall be paid to the Lending Members in proportion to the
then outstanding interest of such loans.
5.3 Capital
Accounts:
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.
5.4 Allocation
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:
5.4.1 Allocation
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 Taxable Income.
(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 Member’s 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 Managers.
(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.
5.4.2 Elections
and Modifications to Allocations:
The Managers shall prepare and execute any
amendments to this Agreement necessary for the Company to comply with the
provisions of Treasury Regulations Sections 1.704-1(b), 1.704-1(c) and 1.704-2
upon the happening of any of the following events: (i) incurring any liability which constitutes a "nonrecourse
liability" as defined in Treasury Regulation Section 1.704-2(b)(3) or a
"partnership nonrecourse debt" as defined in Treasury Regulations
Section 1.704-2(b)(4); (ii) a
constructive termination of the Company pursuant to Internal Revenue Code
Section 708(b)(1)(B); or (iii) the contribution or distribution of any
property, other than cash, to or by the Company.
The Managers, in their sole discretion, may
cause the Company to elect, pursuant to Section 754 of the Internal Revenue
Code, to adjust the basis of the Company assets as provided by Sections 743 or
734 of the Internal Revenue Code and the Treasury Regulations thereunder. The Company shall make such elections for
Federal income tax purposes as may be determined by the Managers, acting in
their sole and absolute discretion.
5.5 Compliance
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.
5.6 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.
5.7 Tax
Matters Member:
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.
5.8 Withdrawal
or Reduction of Contributions to Capital:
1No
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.
Article VI: Distributions
6.1 Distributions:
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 No
distribution shall be declared and paid
if payment of such distribution would cause the Company to violate any
limitation on distributions provided in the Act.
6.2 Annual
Distribution to Pay Members’ Taxes:
The Managers will use their best efforts to make
pro rata cash distributions from the Company each year to its Members
sufficient to pay the Federal and state income taxes of the Members resulting
from inclusion in the Members’ income of any item of profit or gain from the
Company, net of any tax benefits produced by losses, deductions and credits
that pass through to the Members. In
addition, the Managers will use their best efforts to make pro rata cash
distributions from the Company to its Members sufficient to pay any other tax
resulting from the ownership of a Membership Interest or the inclusion in any
Member’s assets of an interest in the Company
The foregoing distribution requirement is
subject, however, to the reasonably required needs of the Company as determined
by the Managers to maintain sufficient funds for working capital and business
needs so as not to impair the ability of the Company to continue its business
operations.
6.3 Records
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.
6.4 Bank
Accounts:
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.
6.5 Liability
of Members:
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, the Company.
Article VII: Dissolution and Termination
7.1 Withdrawal:
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.
7.2 Dissolution:
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
_________________ (State) 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
been distributed.
7.3 Distribution
of Assets Upon Dissolution:
In 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.
Article VIII: Miscellaneous Provisions
8.1 Competing
Business:
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.
8.2 Members’
Securities Law Representations:
Each Member
represents that he understands that the securities hereby subscribed
will be issued without registration under Federal or state securities laws
Delete portion of sentence after * unless there are securities laws issues and
Schedule A is to be attached. pursuant
to an exemption from such laws.
Notwithstanding anything contained in the
Operating Agreement to the contrary, each Member hereby represents and warrants
to the Company, the Managers and to each other that:
8.2.1 The
Membership Interest of the Member is acquired for investment purposes only, for
the Member's own account, and not with a view to or in connection with any
distribution, reoffer, resale or other disposition not in compliance with the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "1933 Act"), and applicable state securities laws;
8.2.2 The
Member, alone or together with the Member's representatives, possesses such
expertise, knowledge and sophistication in financial and business matters
generally, and in the type of transactions in which the Company proposes to
engage in particular, that the Member is capable of evaluating the merits and
economic risks of acquiring and holding the Membership Interest and the Member
is able to bear all such economic risks now and in the future;
8.2.3 The
Member has had access to all of the information with respect to the Membership
Interest acquired by the Member under this Agreement that the Member deems
necessary to make a complete evaluation thereof and has had the opportunity to
question the other Members and the Managers (if any) concerning such Membership
Interest;
8.2.4 The
Member's decision to acquire the Membership Interest for investment had been
based solely upon the evaluation made by the Member;
8.2.5 The
Member is aware that the Member must bear the economic risk of an investment in
the Company for an indefinite period of time because Membership Interests have
not been registered under the 1933 Act or under the securities laws of various
states and, therefore, cannot be sold unless such Membership Interests are
subsequently registered under the 1933 Act and any applicable state securities
laws or an exemption from registration is available;
8.2.6 The
Member is aware that only the Company can take action to register Membership
Interests and the Company is under no obligation and does not propose to
attempt to do so;
8.2.7 The
Member is aware that this Agreement provides restrictions on the ability of a
Member to sell, transfer, assign, mortgage, hypothecate or otherwise encumber
the Member's Membership Interest;
8.2.8 The
Member agrees that the Member will truthfully and completely answer all
questions, and make all covenants, that the Company or the Managers may,
contemporaneously or hereafter, ask or demand for the purpose of establishing
compliance with the 1933 Act and applicable state securities laws; and
8.2.9 If
the Member is an organization, that it is duly organized, validly existing, and
in good standing under the laws of its state of organization and that it has
full organizational power and authority to execute and agree to this Agreement
and to perform its obligations hereunder.
8.3 Notice:
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.
8.4 Governing
Law; Arbitration:
This Agreement
shall be interpreted, construed and enforced in accordance with the laws
of the State of _________________________.
Any dispute arising out of or in connection with this Agreement or the
breach thereof shall be decided by arbitration to be conducted in name of town
____________________, ___________________ (State)
in accordance with the then prevailing commercial arbitration rules of the
American Arbitration Association, and judgment thereof may be entered in any
court having jurisdiction thereof.
8.5 Waiver:
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 hereunder.
8.6 Benefits
of Agreement:
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.
8.7 Entire
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.
__________________________________ (SEAL)
Member
__________________________________ (SEAL)
Member
All of the Members.
Exhibit A
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 follows:
Name
Social Security Capital
Contribution % of Interest
___________________ ___________
________________
___________
___________________ ___________
________________
___________
___________________ ___________
________________
___________
___________________ ___________
________________
___________
___________________ ___________
________________
___________
