A partnership agreement is
used for partnerships whereas an
operating agreement is used for
Limited Liability Companies (LLC's).
A corporation has
minutes. These determinations are made under State law
and how the entity is treated for federal income tax purposes does not
matter.
Most multi-member LLC's are taxed as a
partnership. Therefore the two terms:
"LLC" and "partnership"
may occasionally be found to be used interchangeably.
A multi-member LLC has
members while a
partnership has partners, and the
two terms: "members" and "partners"
may occasionally be found to be used interchangeably.
Here is a collection of information regarding boilerplate partnership agreements and operating agreements:
unreimbursed expenses clause that may be
inserted in agreements
reimbursed expenses clause that may be
inserted in agreements
nominee account clause that may be
inserted in agreements
information on partnership agreements
boilerplate partnership agreement
boilerplate partnership agreement another
example
boilerplate LLC member-managed operating agreement
boilerplate LLC member-managed Connecticut operating
agreement
boilerplate LLC manager-managed Connecticut
operating agreement
end
The following paragraphs are provided "as is" to
give you ideas of what might be involved. A qualified attorney
should be retained to prepare appropriate documents for signature.
We are not attorneys, we do not practice law and we do not recommend
acting until you retain a qualified attorney on your own.
Business expenses paid out of pocket:
Business activities should be kept separate from
personal activities . It
is preferable to have the entity pay for all of its business expenses
form the entity's checking account and to have one credit card that is
used solely for business expenses (no personal expenses).
It is also common that from time-to-time the partners/members need to
pay for business expenses out of their own pocket. There should be
an agreement, an understanding, about just how to handle these payments.
One method is for an "expense report" with attached invoices to be
submitted to the entity for reimbursement payments made by the entity
back to the owner. Another method is for the entity to require the
owners to pay for business expenses without getting reimbursed.
Unreimbursed Business Expenses
paid by the owners of the business
The Partnership's Partnership Agreement
or the LLC's Operating Agreement might contain a clause saying that it
is agreed that each (general partner or active
member) is expected to incur and pay these types of expenses as a
condition of ownership in the venture. This
clause allows the expenses paid for by the owner to be fully deductible
without limitation on their personal form 1040, Schedule E, page #2,
part II, when appropriate. (Code §162)
Caution: According to the Tax Court,
unless an agreement between a partnership and a partner states
otherwise, a partner cannot deduct expenses on his or her personal tax
return if they were incurred on the partnership's behalf, because it is
not "necessary" that a partner pay for them with his own funds.
The logic being that Code §162 requires such deductions be "ordinary and
necessary." (this also holds true regarding LLC members of an LLC taxed as a partnership)
Michael T. Hines, TC Suture. Op. 2004-55
Thomas J. Spielbauer, T.C. Memo. 1998-80
Peter A. McLauchlan, TC Memo 2011-289
Note: When there is no such
clause regarding Code §162 "ordinary and necessary" "trade or business"
Unreimbursed Business Expenses allowing an "above the line" deduction of
Schedule E, part II, nonetheless, it may be possible to take these as
itemized deductions as Code §162 "ordinary and necessary"
or Code §212 "expenses for
production of income" investment related expenses on their personal form
1040, Schedule A, line 23, when appropriate. Similarly,
shareholders, employees. limited partners, and non-management owners may
also be allowed an itemized deduction for such expenses incurred.
Caution: Different rules for
S-Corporations. Unreimbursed expenses incurred by
non-employee S-corporation shareholders are generally not deductible (TC Memo
1989-207 and TC Memo 1997-446).
An S
corporation's expenses are deductible at the corporate level only, and
cannot be deducted by shareholders. In the case of Richard R. Russell,
the S corporation's shareholders personally paid for expenses they
incurred in conducting the corporation's business. The shareholders did
not seek reimbursement from the corporation, and deducted the expenses
as business expenses on Schedule C of their personal tax returns. The
IRS disallowed all of the deductions on the grounds that the taxpayers
did not individually operate a trade or business. The shareholders
argued that the S corporation's income or loss would pass through to
them anyway, so it did not matter whether the expenses were deducted on
their returns or were passed through by the corporation. The Tax Court
disagreed with the shareholders. None of the expenses were allowable,
even though they were legitimate and were incurred on behalf of the
corporation. The corporation and its shareholders are separate and
distinct entities, and one entity cannot take the deductions of another.
Thus, neither the corporation nor the shareholders could deduct the
expenditures. (The shareholders should, however, be entitled to increase
stock basis for the expenditures made on behalf of the business.)
If the corporation had simply reimbursed the shareholders for the
expenses, the corporation would be entitled to the deductions, and the
expenses would pass through to the shareholders. If the reimbursements
caused the corporation to be short of cash, the shareholders could lend
the funds to the corporation. As an alternative, the corporation could
pay the expenses directly, using funds borrowed from the shareholders.
Such loans should be carefully documented and bear a fair market
interest rate to avoid an IRS argument that they do not represent valid
indebtedness.
http://www.belkcollege.uncc.edu/haburton/S%20Corporations.pdf (page
96)
There are two exceptions: (1) performing artists with AGI under $16,001
and more than one employer (2) educators to the extent of $250 in
expenses annually from 2002 to 2007.
http://books.google.com/books?id=ADPtW6Mt7mgC&pg=PA523&lpg=PA523&dq=TC+Memo+1989-207)&source=web&ots=3tDqJYGtwz&sig=TYBPwEGerxMeO9R1ZdV5dQ92hw0&hl=en#PPA524,M1
http://books.google.com/books?id=xeawUKPJiggC&pg=RA1-PA397&lpg=RA1-PA397&dq=TC+Memo+1989-207&source=web&ots=nBc2fDckA_&sig=UGokioZr1cVbVAjC4CSPGB2S8wg&hl=en&sa=X&oi=book_result&resnum=2&ct=result
A work-around:
A shareholder is not entitled to a
business deduction for the payment of expenses of a corporation that he
or she controls. Rev. Rul. 71-36, 1971-1 C.B. 51 which says pretty
clearly: "...the sums advanced by him were expenses incurred in carrying
on the business of the corporation, the business to which these expenses
pertained was not the taxpayer's business, but that of the corporation.
Accordingly, the advances made by the taxpayer are not deductible in the
years paid as ordinary and necessary business expenses under section 26
USC 162 of the Code."
Instead, the amount of
the payment is treated as a loan by the shareholder to the corporation
if the parties intended the payment to be treated as a loan and there is
an obligation on the part of the corporation to make repayment. Edward Katzinger Co. v. Comr., 44 BTA 533, aff'd, 129 F.2d 74 (7th Cir. 1942).
Otherwise, the payment is treated as a capital contribution. In either
case, the shareholder has made the economic outlay required to increase
basis. See Rose v. Comr., No. 07-12245 (11th Cir. 4/24/08) (Remanded to
Tax Court on question whether shareholder's payment of S corporation's
debt had economic substance where shareholder satisfied corporation's
debt by forgiving debt owed him by creditor of S corporation).
The
Home Office Deduction for an active shareholder/employee of the s-corp
apparently must be limited to a Schedule A deduction. But if the s-corp happened to
own the shareholder's residence or a portion thereof, then the deduction
for home office can be deducted on the 1120S itself, which in turn
passes thru to the Schedule E. If the s-corp pays rent to
the shareholder, then basically the same effect of the deduction can be
had that way.
Likewise, another viewpoint is
that unreimbursed expenses incurred by
S-corporation employee-shareholders generally are deductible as itemized
deductions on Schedule A as long as the shareholder was paid a
reasonable salary.
http://books.google.com/books?id=xeawUKPJiggC&pg=RA1-PA398&lpg=RA1-PA398&dq=TC+Memo+1997-446&source=web&ots=nBb2gL9eBS&sig=bqZVQWVhxamCkmUx9upNBBSbjCM&hl=en#PRA1-PA414,M1
You can deduct unreimbursed ordinary and necessary expenses you paid on
behalf of the partnership if you were required to pay these expenses
under the partnership agreement. See the instructions for line 27 on
page E-6 for how to report these expenses.
http://www.irs.gov/instructions/i1040se/ar01.html
If a partner incurs out-of-pocket expenses in connection with providing
services to a partnership, those expenses may be deductible on the
partner’s individual tax return. To be deductible, the partnership
agreement must state in writing that the partner pay the expenses. A
partner’s out-of-pocket expenses are deducted on Schedule E (Form 1040),
Part II, column (i). These expenses also reduce self-employment income
on Schedule SE. The partnership may reimburse the partner for business
expenses. However, if the partner has the right to be reimbursed, but
fails to obtain reimbursement, the partner is not entitled to a
deduction.
http://www.1065accountant.com/unreimbursed-expenses.htm
If the partnership’s agreement or practice requires a partner to pay
certain partnership expenses from his own funds, with no right to
reimbursement from the partnership, the partner is entitled to deduct
these as trade or business expenses on his personal return. Because the
partner is not an "employee," the 2%-of-AGI limit of IRC Sec. 67(a) does
not apply.24 (The deduction is still subject to other applicable
limitations, such as the Section 274 limitation on the deductibility of
travel and entertainment expenses.) If the partnership would honor a
request for reimbursement, the expense is not deductible. While the
"requirement" that the partner incur the expense without right of
reimbursement need not be in writing, it is a question of fact, and may
be the subject of IRS dispute. As a consequence, the partners will
benefit by making this requirement explicit, either as a provision of
their partnership agreement or through a written policy of the
partnership.
(sample clause):
No Reimbursement For Partnership Expenses.
Each partner shall be required to incur those reasonable and necessary
expenses as determined appropriate for the effective operation of the
partnership, and such expenses will be made without reimbursement by the
Partnership.
(sample clause):
Capital Contribution.
Each partner who pays a liability of the partnership upon submission of
proof of such payment, will have made an indirect contribution to such
partner's capital account.
Note:
Any unreimbursed expense that is not deductible by the partner is
treated as a contribution to capital, pursuant to TAM 8442001.
In a private ruling that will affect CPAs in public practice as well as
their clients, the IRS
acknowledged a partner in a professional firm could deduct auto, travel
and meal expenses on form 1040 if the partnership policy requires the
expenses to be incurred personally without reimbursement
(technical advice memorandum
9316003).
The partner prevailed in this
ruling because partnership practice required each partner to
personally incur business expenses that could not be charged to
clients (such as travel to fulfill continuing professional education
requirements).
However, the partner was not
permitted to deduct expenses reimbursable under partnership policy
but for which he or she failed to seek reimbursement.
Observation: This ruling also
clarified that business expenses incurred by the partner are allowed as
schedule E deductions and are not subject to the 2% miscellaneous
itemized deduction threshold. This is consistent with both the 1040
schedule E instructions and previous IRS guidance allowing
above-the-line treatment of interest expense incurred by a partner to
acquire partnership ownership (see IRS notice 89-25).
The ruling may be of assistance
to partners in several IRS districts where audit programs have asserted
form 2106 employee treatment for partner expenses (thereby forcing the
deductions through the 2% miscellaneous itemized deduction
http://www.allbusiness.com/accounting-reporting/corporate-taxes-joint/382471-1.html
Reimbursements for Business Expenses
paid by the owners of the business (sample clause):
Reimbursement For Partnership Expenses.
Each partner shall be entitled to reimbursement for the reasonable and necessary
expenses incurred by the Partner on behalf of the Partnership. In order
to receive reimbursement, a Partner must submit a written itemized
report of all expenses for which reimbursement is sought, submit the
expense report to the other Partners, and enter the expense report with
the Partnership books and records.
Reimbursement For S-Corporation Expenses.
The stockholders hereby authorize the president to establish, implement
and modify a written accountable plan for payment or reimbursement of
actual and necessary business expenses that are incurred or paid by an
employee, officer, director or shareholder, subject to substantiation,
pursuant to Internal Revenue Code Section 62(a)(2)(A) and Reg. Section
1.62-2.
Safe Harbor Provisions: -
LLC Operating Agreement must satisfy basic requirements for economic effect (IRC Section 704(b) and Treasury Regulations Section 1.704-2(e)(1)) -
In year that nonrecourse deductions first arise, allocations must be reasonably consistent with valid allocations of other LLC items (Treasury Regulation 1.704-2(e)(2)) -
LLC Operating Agreement must contain "minimum charge back" provisions (Treasury Relations Sections 1.704-2(f)(c) and 1.704-2(e)(3)) -
All other material allocations and capital account adjustments must be valid (IRC Sections 704(b)(c); Treasury Regulations Section 1.704-2(e)(4)) -
Inclusion in Operating Agreement that: a) LLC will maintain capital accounts for its members in strict compliance with tax rules b) Partnership will make liquidating distributions in accordance with capital accounts c) Partners in liquidation who have deficits in their capital accounts will restore those deficits to the LLC d) LLC will make minimum charge backs with respect to their interest in LLC nonrecourse debt
http://www.irs.gov/businesses/partnerships/article/0,,id=134695,00.html
Nominee
accounts (sample clause):
The parties hereby agree that for
the sake of administrative convenience and cost savings, and because
[the entity name] has not yet secured its own accounts, [the entity]
shall conduct trading activities in the personal account of [name of
nominee] at [XYZ Brokerage account #123456].
[name of nominee] agrees to use said account 1) solely for the
purpose of conducting trading activities for the account of [the entity]
and 2) for charging certain expenses related to the business
activities of [the entity] and 3) for depositing and
withdrawing funds to or from [the entity]. Any such withdrawal of
[the nominee's] contributed funds shall not be considered a violation of
this agreement, even if said funds are used for the personal business of
[the nominee], whether or not transferred directly to third party
vendors. However, [the nominee] shall not be permitted to use
funds in said account to trade solely for his own account. Any
purchase or sale of assets, futures, commodities, contracts or
securities referenced above shall be for the account of [the entity],
and profits and losses from such activity shall be shared among the
parties hereto.
Liability / Asset Protection
clauses: - corporations and limited
liability companies offer different legal protections. For asset
protection, you need to look at the choice of entity's "inside
liability" and "outside liability." Inside liability
protects non-entity assets from liability that is directly and
solely related to the business and not at all due to the negligence,
mistake, oversight or the responsibility of the individual himself.
Outside liability protects entity assets from liability
that is directly and solely related to the individual and not at all due
to the negligence, mistake, oversight or the responsibility of the
business.
Examples of inside liability include: employee driving
company vehicle causes an accident; a product sold by the company
causes harm to the purchaser; lease-rental or bank loan signed by the
company with no personal guarantee made by the individual, corporate
bankruptcy.
Examples of outside liability include: a trip and fall
in the home; a lawsuit resulting from an automobile accident with the
family car while on personal errands; a judgment resulting from a
personal guarantee; personal bankruptcy.
A creditor of the individual can seek an order by the court to have
chares of stock in the corporation turned over to the creditor.
Once this is done the individual has lost his investment in the company.
But if the business was held in a limited liability company, then in
many cases in order to protect the interests of any innocent LLC members
with a new unwanted member (the creditor) the court will not order to
turn over the ownership of the LLC to the creditor, rather a
charging order is issued. The charging order assigns any
future profit distributions and any distributions that are a return of
capital. The creditor may even have to accept a K-1 from the LLC
and pay the income taxes on any annual earnings of the business - but
receive no cash from which to pay the income taxes with.
The LLC needs to have more than one owner-member,
otherwise the court may be more likely to side with the creditor since
there is no innocent LLC members to be protected. The LLC operating
agreement needs to be drafted or reviewed by an experienced asset
protection lawyer so it will contain language for:
- assignee/member definitions
- assignee limitations
- no right of members to demand
distributions
- prohibition of transfer of
member interests
- involuntary transfer poison
pill provisions
- no partition allowed
- accurate voting thresholds
- allocation of profits and losses
§761(c) PARTNERSHIP AGREEMENT.
- For purposes of this subchapter, a partnership agreement includes any
modifications of the partnership agreement made prior to, or at, the
time prescribed by law for the filing of the partnership return for the
taxable year (not including extensions) which are agreed to by all the
partners, or which are adopted in such other manner as may be provided
by the partnership agreement.
In other words long after-the-fact or retroactive provisions in a
partnership agreements are not allowable. All items must be in the
verbal or written partnership agreement or otherwise adopted no later
than the initial due date of the tax return. This is basically a
trap for the unwary. For example: upon being audited, if it was
found that the unreimbursed expenses clause or agreement was missing,
inconsistently applied or otherwise defective in some way, it is too
late to "fix it" once the IRS agent points if out to you. Once
caught in this type of trap, "your goose is cooked."
http://www.bcentral.com/articles/legal/110.asp
How a partnership agreement helps
your business
Legal
If you and your partners don't spell out your rights and
responsibilities in a written partnership agreement, you'll be
ill-equipped to settle conflicts when they arise, and minor
misunderstandings may erupt into full-blown disputes.
In addition, without a written agreement saying otherwise, your
state's law will control many aspects of your business.
A
partnership agreement allows you to structure your relationship with
your partners in a way that suits your business. You and your
partners can establish the shares of profits (or losses) each
partner will take, the responsibilities of each partner, what will
happen to the business if a partner leaves and other important
guidelines.
The Uniform Partnership Act
Each state (with the exception of Louisiana) has its own laws
governing partnerships, contained in what's usually called "The
Uniform Partnership Act" or "The Revised Uniform Partnership Act" —
or, sometimes, the "UPA" or the "Revised UPA." These statutes
establish the basic legal rules that apply to partnerships and will
control many aspects of your partnership's life unless you set out
different rules in a written partnership agreement.
Don't be
tempted to leave the terms of your partnership up to these state
laws. Because they were designed as one-size-fits-all fallback
rules, they may not be helpful in your particular situation. It's
much better to put your agreement into a document that specifically
sets out the points you and your partners have agreed on.
What to include in your partnership agreement
Here's a list of the major areas that most partnership agreements
cover. You and your partners-to-be should consider these issues
before you put the terms in writing:
- Name of the partnership. One of the first things you
must do is agree on a name for your partnership. You can use your
own last names, such as Smith & Wesson, or you can adopt and
register a fictitious business name, such as Westside Home
Repairs. If you choose a fictitious name, you must make sure that
the name isn't already in use
- Contributions to the partnership. It's critical that
you and your partners work out and record who's going to
contribute cash, property or services to the business before it
opens — and what ownership percentage each partner will have.
Disagreements over contributions have doomed many promising
businesses.
- Allocation of profits, losses and draws. Will profits
and losses be allocated in proportion to a partner's percentage
interest in the business? And will each partner be entitled to a
regular draw (a withdrawal of allocated profits from the business)
or will all profits be distributed at the end of each year? You
and your partners may have different ideas about how the money
should be divided up and distributed, and each of you will have
different financial needs, so this is an area to which you should
pay particular attention.
- Partners' authority. Without an agreement to the
contrary, any partner can bind the partnership without the consent
of the other partners. If you want one or all of the partners to
obtain the others' consent before binding the partnership, you
must make this clear in your partnership agreement.
- Partnership decision making. Although there's no magic
formula or language for divvying up decisions among partners,
you'll head off a lot of trouble if you try to work it out
beforehand. You may, for example, want to require a unanimous vote
of all the partners for every business decision. Or if that leaves
you feeling fettered, you can require a unanimous vote for major
decisions and allow individual partners to make minor decisions on
their own. In that case, your partnership agreement will have to
describe what constitutes a major or minor decision. You should
carefully think through issues like these when setting up the
decision-making process for your business.
- Management duties. You might not want to make ironclad
rules about every management detail, but you'd be wise to work out
some guidelines in advance. For example, who will keep the books?
Who will deal with customers? Supervise employees? Negotiate with
suppliers? Think through the management needs of your partnership
and be sure you've got everything covered.
- Admitting new partners. Eventually, you may want to
expand the business and bring in new partners. Agreeing on a
procedure for admitting new partners will make your lives a lot
easier when this issue comes up.
- Withdrawal or death of a partner. At least as important
as the rules for admitting new partners to the business are the
rules for handling the departure of an owner. You should set up a
reasonable buyout scheme in your partnership agreement.
- Resolving disputes. If you and your partners become
deadlocked on an issue, do you want to go straight to court? It
might benefit everyone involved if your partnership agreement
provides for alternative dispute resolution, such as mediation or
arbitration.
As you can see, there are many issues to consider before you and
your partners open for business — and you shouldn't wait for a
conflict to arise before hammering out some sound rules and
procedures. A good self-help book, such as "The Partnership Book" by
attorneys Denis Clifford and Ralph E. Warner (Nolo), can help you
think through the details and put them in writing.
Sample partnership agreements:
http://www.medlawplus.com/legalforms/instruct/sample-partnershipagreement.pdf
http://smallbusiness.findlaw.com/business-structures/business-structures-resources/form4-1.html
http://www.smallbusinessnotes.com/operating/legal/samplepartnership.html
Structuring Tax
Provisions in Partnership and LLC Operating Agreements (January 11,
2011) -
Winston & Strawn LLP
http://media.straffordpub.com/products/structuring-tax-provisions-in-partnership-and-llc-operating-agreements-2011-01-11/presentation.pdf
PARTNERSHIP AGREEMENT
This PARTNERSHIP AGREEMENT is made on ____________,
20__ between __________________________________________ and
__________________________________________ of _____________________.
1. NAME AND BUSINESS. The parties hereby form a
partnership under the name of __________________________________________
to conduct a __________________________________________. The principal
office of the business shall be in _______________________.
2. TERM. The partnership shall begin on
________________, 20____, and shall continue until terminated as herein
provided.
3. CAPITAL. The capital of the partnership shall be
contributed in cash by the partners as follows: A separate capital
account shall be maintained for each partner. Neither partner shall
withdraw any part of his capital account. Upon the demand of either
partner, the capital accounts of the partners shall be maintained at all
times in the proportions in which the partners share in the profits and
losses of the partnership.
4. PROFIT AND LOSS. The net profits of the
partnership shall be divided equally between the partners and the net
losses shall be borne equally by them. A separate income account shall
be maintained for each partner. Partnership profits and losses shall be
charged or credited to the separate income account of each partner. If a
partner has no credit balance in his income account, losses shall be
charged to his capital account.
5. SALARIES AND DRAWINGS. Neither partner shall
receive any salary for services rendered to the partnership. Each
partner may, from time to time, withdraw the credit balance in his
income account.
6. INTEREST. No interest shall be paid on the
initial contributions to the capital of the partnership or on any
subsequent contributions of capital.
7. MANAGEMENT DUTIES AND RESTRICTIONS. The partners
shall have equal rights in the management of the partnership business,
and each partner shall devote his entire time to the conduct of the
business. Without the consent of the other partner neither partner shall
on behalf of the partnership borrow or lend money, or make, deliver, or
accept any commercial paper, or execute any mortgage, security
agreement, bond, or lease, or purchase or contract to purchase, or sell
or contract to sell any property for or of the partnership other than
the type of property bought and sold in the regular course of its
business.
8. BANKING. All funds of the partnership shall be
deposited in its name in such checking account or accounts as shall be
designated by the partners. All withdrawals therefrom are to be made
upon checks signed by either partner.
9. BOOKS. The partnership books shall be maintained
at the principal office of the partnership, and each partner shall at
all times have access thereto. The books shall be kept on a fiscal year
basis, commencing _____________________ and ending
_____________________, and shall be closed and balanced at the end of
each fiscal year. An audit shall be made as of the closing date.
10. VOLUNTARY TERMINATION. The partnership may be
dissolved at any time by agreement of the partners, in which event the
partners shall proceed with reasonable promptness to liquidate the
business of the partnership. The partnership name shall be sold with the
other assets of the business. The assets of the partnership business
shall be used and distributed in the following order: (a) to pay or
provide for the payment of all partnership liabilities and liquidating
expenses and obligations; (b) to equalize the income accounts of the
partners; (c) to discharge the balance of the income accounts of the
partners; (d) to equalize the capital accounts of the partners; and (e)
to discharge the balance of the capital accounts of the partners.
11. DEATH. Upon the death of either partner, the
surviving partner shall have the right either to purchase the interest
of the decedent in the partnership or to terminate and liquidate the
partnership business. If the surviving partner elects to purchase the
decedent's interest, he shall serve notice in writing of such election,
within three months after the death of the decedent, upon the executor
or administrator of the decedent, or, if at the time of such election no
legal representative has been appointed, upon any one of the known legal
heirs of the decedent at the last-known address of such heir. (a) If the
surviving partner elects to purchase the interest of the decedent in the
partnership, the purchase price shall be equal to the decedent's capital
account as at the date of his death plus the decedent's income account
as at the end of the prior fiscal year, increased by his share of
partnership profits or decreased by his share of partnership losses for
the period from the beginning of the fiscal year in which his death
occurred until the end of the calendar month in which his death
occurred, and decreased by withdrawals charged to his income account
during such period. No allowance shall be made for goodwill, trade name,
patents, or other intangible assets, except as those assets have been
reflected on the partnership books immediately prior to the decedent's
death; but the survivor shall nevertheless be entitled to use the trade
name of the partnership. (b) Except as herein otherwise stated, the
procedure as to liquidation and distribution of the assets of the
partnership business shall be the same as stated in paragraph 10 with
reference to voluntary termination.
12. ARBITRATION. Any controversy or claim arising
out of or relating to this Agreement, or the breach hereof, shall be
settled by arbitration in accordance with the rules, then obtaining, of
the American Arbitration Association, and judgment upon the award
rendered may be entered in any court having jurisdiction thereof. In
witness whereof the parties have signed this Agreement.
Executed this ______________ day of _________________, 20_____ in
_____________________ [CITY], _____________________ [STATE].
PARTNERSHIP AGREEMENT
THIS PARTNERSHIP
AGREEMENT ("Agreement") made and effective this [Date], by and between
the following individuals, referred to in this Agreement as the
"Partners": [Partners' Names].
The Partners wish to
set forth, in a written agreement, the terms and conditions by which
they will associate themselves in the Partnership.
NOW, THEREFORE, in
consideration of the promises contained in this Agreement, the Partners
affirm in writing their association as a partnership in accordance with
the following provisions:
1.
Name and Place
of Business.
The name of the
partnership shall be called [Partnership Business Name] (the
"Partnership"). Its principal place of business shall be [City and
State of Principal Office], until changed by agreement of the Partners,
but the Partnership may own property and transact business in any and
all other places as may from time to time be agreed upon by the
Partners.
2.
Purpose.
The purpose of the
Partnership shall be to [Describe Partnership's Business]. The
Partnership may also engage in any and every other kind or type of
business, whether or not pertaining to the foregoing, upon which the
Partners may at any time or from time to time agree.
3.
Term.
The Partnership shall
commence as of the date of this Agreement and shall continue until
terminated as provided herein.
4.
Capital
Accounts.
A. The Partners shall
make an initial investment of capital, contemporaneously with the
execution of this Agreement, as follows:
Partners and Capital
[Partner Names and
Capital Amounts Invested]
In addition to each
Partner's share of the profits and losses of the Partnership, as set
forth in Section 5, each Partner is entitled to an interest in the
assets of the Partnership.
B. The amount credited
to the capital account of the Partners at any time shall be such amount
as set forth in this Section 4 above, plus the Partner's share of the
net profits of the Partnership and any additional capital contributions
made by the Partner and minus the Partner's share of the losses of the
Partnership and any distributions to or withdrawals made by the
Partner. For all purposes of this Agreement, the Partnership net
profits and each Partner's capital account shall be computed in
accordance with generally accepted accounting principles, consistently
applied, and each Partner's capital account, as reflected on the
Partnership federal income tax return as of the end of any year, shall
be deemed conclusively correct for all purposes, unless an objection in
writing is made by any Partner and delivered to the accountant or
accounting firm preparing the income tax return within one (1) year
after the same has been filed with the Internal Revenue Service. If an
objection is so filed, the validity of the objection shall be
conclusively determined by an independent certified public accountant or
accounting firm mutually acceptable to the Partners.
5.
Profits and
Losses.
Until modified by
mutual consent of all the Partners, the profits and losses of the
Partnership and all items of income, gain, loss, deduction, or credit
shall be shared by the Partners in the following proportions:
Partner and Shares
[Partner Names and
Percent or Fractional Share of Profits or Losses]
6.
Books and
Records of Account.
The Partnership books
and records shall be maintained at the principal office of the
Partnership and each Partner shall have access to the books and records
at all reasonable times.
7.
Future Projects.
The Partners recognize
that future projects for the Partnership depend upon many factors beyond
present control, but the Partners wish to set forth in writing and to
mutually acknowledge their joint understanding, intentions, and
expectations that the relationship among the Partners will continue to
flourish in future projects on similar terms and conditions as set forth
in this Agreement, but there shall be no legal obligations among the
Partners to so continue such relationship in connection with future
projects.
8.
Time and
Salary.
Until and unless
otherwise decided by unanimous agreement of the Partners, [Time
Commitment]. Each Partner shall nonetheless be expected to devote such
time and attention to Partnership affairs as shall from time to time be
determined by agreement of the Partners. No Partner shall be entitled
to any salary or to any compensation for services rendered to the
Partnership or to another Partner.
9.
Transfer of
Partnership Interests.
A. Restrictions on
Transfer. None of the Partners shall sell, assign, transfer, mortgage,
encumber, or otherwise dispose of the whole or part of that Partner's
interest in the Partnership, and no purchaser or other transferee shall
have any rights in the Partnership as an assignee or otherwise with
respect to all or any part of that Partnership interest attempted to be
sold, assigned, transferred, mortgaged, encumbered, or otherwise
disposed of, unless and to the extent that the remaining Partner(s) have
given consent to such sale, assignment, transfer, mortgage, or
encumbrance, but only if the transferee forthwith assumes and agrees to
be bound by the provisions of this Agreement and to become a Partner for
all purposes hereof, in which event, such transferee shall become a
substituted partner under this Agreement.
B. Transfer Does Not
Dissolve Partnership. No transfer of any interest in the Partnership,
whether or not permitted under this Agreement, shall dissolve the
Partnership. No transfer, except as permitted under Subsection 9.A.
above, shall entitle the transferee, during the continuance of the
Partnership, to participate in the management of the business or affairs
of the Partnership, to require any information or account of Partnership
transactions, or to inspect the books of account of the Partnership; but
it shall merely entitle the transferee to receive the profits to which
the assigning Partner would otherwise be entitled and, in case of
dissolution of the Partnership, to receive the interest of the assigning
Partner and to require an account from the date only of the last account
agreed to by the Partners.
10.
Death,
Incompetency, Withdrawal, or Bankruptcy.
Neither death,
incompetency, withdrawal, nor bankruptcy of any of the Partners or of
any successor in interest to any Partner shall operate to dissolve this
Partnership, but this Partnership shall continue as set forth in Section
3, subject, however, to the following terms and conditions:
A. Death or
Incompetency.
In the event any
Partner dies or is declared incompetent by a court of competent
jurisdiction, the successors in interest of that Partner shall succeed
to the partnership interest of that Partner and shall have the rights,
duties, privileges, disabilities, and obligations with respect to this
Partnership, the same as if the successors in interest were parties to
this Agreement, including, but not limited to, the right of the
successors to share in the profits or the burden to share in the losses
of this Partnership, in the same manner and to the same extent as the
deceased or incompetent Partner; the right of the successors in interest
to continue in this Partnership and all such further rights and duties
as are set forth in this Agreement with respect to the Partners, the
same as if the words "or his or her successors in interest" followed
each reference to a Partner; provided, however, that no successor in
interest shall be obligated to devote any service to this Partnership
and, provided further, that such successors in interest shall be treated
as holding a passive, rather than active, ownership investment.
B. Payments Upon
Retirement or Withdrawal of Partner.
(1) Amount of
Payments. Upon the retirement or withdrawal of a Partner, that Partner
or, in the case of death or incompetency, that Partner's legal
representative shall be entitled to receive the amount of the Partner's
capital account (as of the end of the fiscal year of the Partnership
next preceding the day on which the retirement or withdrawal occurs)
adjusted for the following:
(a) Any additional
capital contributions made by the Partner and any distributions to or
withdrawals made by the Partner during the period from the end of the
preceding fiscal year to the day on which the retirement or withdrawal
occurs;
(b) The Partner's
share of profits and losses of the Partnership from the end of the
preceding fiscal year of the Partnership to the day on which the
retirement or withdrawal occurs, determined in accordance with generally
accepted accounting principles, consistently applied; and
(c) The difference
between the Partner's share of the book value of all of the Partnership
assets and the fair market value of all Partnership assets, as
determined by a fair market value appraisal of all assets. Unless the
retiring or withdrawing Partner and the Partnership can agree on one
appraiser, three (3) appraisers shall be appointed--one by the
Partnership, one by the retiring or withdrawing Partner, and one by the
two appraisers thus appointed. All appraisers shall be appointed within
fifteen (15) days of the date of retirement or withdrawal. The average
of the three appraisals shall be binding on all Partners.
(2) Time of Payments.
Subject to a different agreement among the Partners or successors
thereto, the amount specified above shall be paid in cash, in full, but
without interest, no later than twelve (12) months following the date of
the retirement or withdrawal.
(3) Alternate
Procedure. In lieu of purchasing the interest of the retiring or
withdrawing Partner as provided in subparagraph (1) and (2) above, the
remaining Partners may elect to dissolve, liquidate and terminate the
Partnership. Such election shall be made, if at all, within thirty (30)
days following receipt of the appraisal referred to above.
11.
Procedure on
Dissolution of Partnership.
Except as provided in
Section 10.B.(3) above, this Partnership may be dissolved only by a
unanimous agreement of the Partners. Upon dissolution, the Partners
shall proceed with reasonable promptness to liquidate the Partnership
business and assets and wind-up its business by selling all of the
Partnership assets, paying all Partnership liabilities, and by
distributing the balance, if any, to the Partners in accordance with
their capital accounts, as computed after reflecting all losses or gains
from such liquidation in accordance with each Partner's share of the net
profits and losses as determined under Section 5.
12.
Title to
Partnership Property.
If for purposes of
confidentiality, title to Partnership property is taken in the name of a
nominee or of any individual Partner, the assets shall be considered to
be owned by the Partnership and all beneficial interests shall accrue to
the Partners in the percentages set forth in this Agreement.
13.
Leases.
All leases of
Partnership assets shall be in writing and on forms approved by all the
Partners.
14.
Controlling
Law.
This Agreement and the
rights of the Partners under this Agreement shall be governed by the
laws of the State of [State of Governing Law].
15.
Notices.
Any written notice
required by this Agreement shall be sufficient if sent to the Partner or
other party to be served by registered or certified mail, return receipt
requested, addressed to the Partner or other party at the last known
home or office address, in which event the date of the notice shall be
the date of deposit in the United States mails, postage prepaid.
16.
General.
This Agreement contains
the entire agreement of the Partners with respect to the Partnership and
may be amended only by the written agreement executed and delivered by
all of the Partners.
17.
Binding Upon
Heirs.
This Agreement shall
bind each of the Partners and shall inure to the benefit of (subject to
the Sections 9 and 10) and be binding upon their respective heirs,
executors, administrators, devisees, legatees, successors and assigns.
IN WITNESS WHEREOF, the
Partners have executed this Agreement the date first above written.
__________________________________________
Signature of Partner A
__________________________________________
Signature of Partner B
_______________________________________________________
OPERATING AGREEMENT
(Member Managed Limited Liability Company)
The following document is the operating agreement of :
hereafter referred to in this document as “The Company.”
The Company was formed on when articles of organization
were filed with the state of .
A copy of this document has been placed in The Company
record book. All members of The Company hereby agree with
its provisions. The Company will be managed by its
member(s).
GENERAL PROVISIONS
Ownership Percentage - A member’s ownership interest
in The Company shall be calculated as a percentage based on the member’s capital contribution. A member’s
“ownership percentage” shall the calculated as follows: the members capital contribution divided by total contributed
capital shown on the books of The Company. Transfer of a member’s ownership of The Company, or a change in a member’s
ownership percentage in The company may only take place upon approval of a majority of the members.
Voting - Each member shall be entitled to vote on
matters affecting The Company at a meeting held to discuss such matters. A member’s voting “power” shall be equal to the
member’s ownership percentage as calculated above. Any matter brought before the members to be voted on shall
pass when approved by more than 50% of the members as based on their ownership percentage.
Compensation - Members will not be paid for their
time in managing The Company. Members may, however, receive compensation in the form of salaries, bonuses, or any
other gratuity allowed by law for services rendered to The Company as an employee, officer, or independent contractor.
Also, members may be reimbursed for reasonable expenses incurred on behalf of The Company as evidenced by proper
receipts.
Other Business Interests - A member may not own or
be involved in any way with an activity or entity that competes with The Company, or otherwise might diminish the
earning potential of The Company without the prior written approval of all members.
Meetings - At this time, The Company does not have
scheduled meetings, but it may provide for such scheduled meetings upon the approval of a majority of members. A
special meeting may be requested by a member at any time either verbally or in writing. The member making this
call for a meeting shall provide a proposed date and time for the meeting. Agreement to have a meeting can be expressed by
the members either verbally or in witting. If any member cannot attend the meeting, then the member(s) unable to
attend shall propose an alternative date and time for the meeting.
If all the members cannot attend the proposed meeting,
then it shall be postponed until all members can attend. A requested meeting may not be postponed for more than six
months. A meeting of The Company may be held without all members in attendance if the member(s) unable to attend
provide in writing their approval of the meeting.
Minutes of all meetings shall be taken and a copy
provided to all members. A copy shall also be placed in The Company minute book.
Membership Certificates - The Company shall provide
membership certificates to each member, a sample of which shall be attached to this agreement. Each membership
certificate shall be sequentially numbered and reflect the member’s ownership percentage. It shall also bear the
name of The Company and the name of the member. It shall be signed and dated by The Company’s duly appointed
secretary as provided in this agreement.
FINANCIAL PROVISIONS
Tax Classification - The members intend for The
Company to be taxed as a partnership. Officers are hereby granted authority to do whatever necessary to retain
“partnership” tax status with State and Federal agencies.
Accounting - The Company shall have a tax year
beginning January 1 and ending December 31 of each year. Accordingly, The Company shall be known as a calendar
year taxpayer. The books of The Company shall be maintained on a cash basis with income being recognized when it is
received, and expenses recognized when they are paid.
Tax Matters Partner - The Company shall appoint a
representative to handle tax and accounting matters. This person shall be the Secretary of The Company, and if the
Secretary is unable to act in this position, then the President shall
act instead.
Banking - The President and Secretary of The Company
shall establish bank account(s) with a bank that meets the approval of all members. The President and Secretary
shall sign on the account and have the authority to draft funds from said accounts for payment of company obligations. No
officer of The Company shall have the authority to borrow money or obtain lines of credit without express written
approval of all members. This does not, however, apply to credit
accounts opened with suppliers. The officers may obtain credit
from suppliers in due course of operating the business. Bank statements shall be available to all members at any time
upon their request either verbally or in writing.
Property - Title to all property purchased or leased
for The Company shall be titled in the name of The Company. Officers are hereby granted authority lease equipment on
behalf of The Company in due course of business.
Capital Contributions - In consideration for their
percentage ownership in The Company, members shall contribute either cash, property, or services to The Company. Cash
received shall be deposited in The Company’s bank account and no interest shall be paid on the amount. Title to any
property given shall be transferred to The Company. Below is an accounting of consideration given by the members in
exchange for their ownership in The Company.
Name Consideration Given Value
Ownership
%
$
$
$
$
Members may decide occasionally that additional capital
must be contributed to The Company. This decision shall be made at a meeting of the members with all members in
attendance. Since any change in the capital accounts will result in a change in the ownership percentage, the decision must
be unanimous.
Capital Withdrawals - Members are not allowed to
withdraw their capital contributions without written approval of all members. Members will not be able to “Draw” against
their capital contributions without written approval of all members. Loans to members may be approved form time to time as
circumstances arise. Loans must be approved by all members.
Distributions - From time to time distributions may
be made from profits, sale of equipment, or other sources. Before payment, distributions shall be approved by all members
and shall be paid to each member in proportion to their ownership percentage. In the event that The Company
ceases operations, distributions of cash and property shall be made to the members after all creditors and suppliers
are paid. Such a distribution shall be made to the members in proportion to their ownership percentage.
OWNERSHIP
Changes In Ownership - A member can withdraw from
The Company at any time. The member wanting to withdraw must give written notice to the other members 60 days
prior to the date of withdrawal.
Transfer of Membership - A member may not transfer,
sell, assign, offer as collateral, or pledge his/her ownership in The Company without prior written approval of the other
members. This transfer restriction also applies to the members voting rights.
DISSOLUTION
The Company shall be dissolved upon any of the following
events:
• Death or other event that prevents a member from
participating in the operation of The company. In this event, the remaining members may vote not to dissolve The Company
within 90 days. If the remaining members agree unanimously, The Company shall continue and not
dissolve.
• Agreement of all members to dissolve The Company
OTHER PROVISIONS
Officers - Members may agree to appoint one or more
officers to be responsible for representing The Company in its due course of business. It is agreed to appoint at least
a President and a Secretary. Other offices and officers may be appointed as the need arises or at the pleasure of the
members. Officers may be compensated for services rendered in their respective positions. This compensation may be in
addition to any other compensation received from The Company.
The following members shall be officers of the company:
President
Secretary
Company Records - The Company Secretary must
maintain all records for The Company that are required by law. This may include but not be limited to a list of all
members including their addresses and ownership percentage, records of ownership transfers, minutes of all member meetings,
bank statements and accounting records. These records are to be kept at the principal office of The Company and may
be reviewed by any member by giving at least one day’s notice to The Company’s Secretary.
Authority - Officers of The Company and or any
member of The Company has authority to transact any business or enter into any transaction or carry out any act to
complete the formation of the Company or further its financial interest
in the due course of business with one exception: No member
has authority to obtain loans, lines of credit or commit The Company to any bank or lending institution without prior
written approval of all members.
Disputes - In the event of a dispute between the
members regarding this operating agreement or any matter regarding The Company, the dispute shall be settled by
arbitration according to the rules of the American Arbitration Association. The arbitration or mediation service
hearing the dispute shall be agreed upon by the members before proceeding. The cost of the arbitration/mediation shall
be borne by The company. If the dispute cannot be settled by arbitration, the
matter may go to before a court with jurisdiction in such matters. If the matter goes before a court, then the members
individually shall bear the cost of the proceedings. The prevailing
party may seek reimbursement of expenses related to the
proceedings.
Changes - This document is the only agreement
between the members of The Company and replaces any verbal or written agreement between members. It cannot be
replaced, amended or altered in any way without the approval of the members of The Company that adopted and approved the
agreement being replaced or amended. If any provision of this agreement is determined to be legally unenforceable,
then that provision only shall be stricken from the agreement, leaving the remainder of the agreement in force.
As evidenced by their signatures below, the members
hereby adopt this agreement in its entirety and agree to bound by its terms. The signatures need not be notarized.
Date
http://www.ilrg.com/forms/llc-opag-mem/us/ct
Boilerplate Connecticut Member Managed LLC
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
_______________________________, LLC
A Member‑Managed Limited Liability Company
OPERATING AGREEMENT
THIS OPERATING AGREEMENT is made and entered into
effective __________________, 20_____, by and among:
__________________________________________________________________________
__________________________________________________________________________
[list the full legal names of the LLC members] (collectively referred to
in this agreement as the "Members").
SECTION 1
THE LIMITED LIABILITY COMPANY
1.1 Formation. Effective __________________, 20_____,
the Members form a limited liability company under the name
_______________________________________, L.L.C. (the "Company") on the
terms and conditions in this Operating Agreement (the "Agreement") and
pursuant to the Limited Liability Company Act of the State of
Connecticut (the "Act"). The Members agree to file with the appropriate
agency within the State of Connecticut charged with processing and
maintaining such records all documentation required for the formation of
the Company. The rights and obligations of the parties are as provided
in the Act except as otherwise expressly provided in this Agreement.
1.2 Name. The business of the Company will be
conducted under the name _______________________________________, L.L.C.,
or such other name upon which the Members may unanimously may agree.
1.3 Purpose. The purpose of the Company is to engage
in any lawful act or activity for which a Limited Liability Company may
be formed within the State of Connecticut.
1.4 Office. The Company will maintain its principal
business office within the State of Connecticut at the following
address:
________________________________________________________________________.
1.5 Registered Agent.
____________________________________________ is the Company's initial
registered agent in the State of Connecticut, and the registered office
is
______________________________________________________________________________________.
1.6 Term. The term of the Company commences on
_____________________ [date] and shall continue perpetually unless
sooner terminated as provided in this Agreement.
1.7 Names and Addresses of Members. The Members' names
and addresses are attached as Schedule 1 to this Agreement.
1.8 Admission of Additional Members. Except as
otherwise expressly provided in this Agreement, no additional members
may be admitted to the Company through issuance by the company of a new
interest in the Company without the prior unanimous written consent of
the Members.
SECTION 2
CAPITAL CONTRIBUTIONS
2.1 Initial Contributions. The Members initially shall
contribute to the Company capital as described in Schedule 2 attached to
this Agreement.
2.2 Additional Contributions. No Member shall be
obligated to make any additional contribution to the Company’s capital
without the prior unanimous written consent of the Members.
2.3 No Interest on Capital Contributions. Members are
not entitled to interest or other compensation for or on account of
their capital contributions to the Company except to the extent, if any,
expressly provided in this Agreement.
SECTION 3
ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS
3.1 Profits/Losses. For financial accounting and tax
purposes, the Company's net profits or net losses shall be determined on
an annual basis and shall be allocated to the Members in proportion to
each Member’s relative capital interest in the Company as set forth in
Schedule 2 as amended from time to time in accordance with U.S.
Department of the Treasury Regulation 1.704-1.
3.2 Distributions. The Members shall determine and
distribute available funds annually or at more frequent intervals as
they see fit. Available funds, as referred to herein, shall mean the net
cash of the Company available after appropriate provision for expenses
and liabilities, as determined by the Managers. Distributions in
liquidation of the Company or in liquidation of a Member’s interest
shall be made in accordance with the positive capital account balances
pursuant to U.S. Department of the Treasury Regulation 1.704.1(b)(2)(ii)(b)(2).
To the extent a Member shall have a negative capital account balance,
there shall be a qualified income offset, as set forth in U.S.
Department of the Treasury Regulation 1.704.1(b)(2)(ii)(d).
3.3 No Right to Demand Return of Capital. No Member
has any right to any return of capital or other distribution except as
expressly provided in this Agreement. No Member has any drawing account
in the Company.
SECTION 4
INDEMNIFICATION
The Company shall indemnify any person who was or is a
party defendant or is threatened to be made a party defendant, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the
right of the Company) by reason of the fact that he is or was a Member
of the Company, Manager, employee or agent of the Company, or is or was
serving at the request of the Company, against 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
SECTION 5
POWERS AND DUTIES OF MANAGERS
5.1 Management of Company.
5.1.1 The Members, within the authority granted by the
Act and the terms of this Agreement shall have the complete power and
authority to manage and operate the Company and make all decisions
affecting its business and affairs.
5.1.2 Except as otherwise provided in this Agreement,
all decisions and documents relating to the management and operation of
the Company shall be made and executed by a Majority in Interest of the
Members.
5.1.3 Third parties dealing with the Company shall be
entitled to rely conclusively upon the power and authority of a Majority
in Interest of the Members to manage and operate the business and
affairs of the Company.
5.2 Decisions by Members. Whenever in this Agreement
reference is made to the decision, consent, approval, judgment, or
action of the Members, unless otherwise expressly provided in this
Agreement, such decision, consent, approval, judgment, or action shall
mean a Majority of the Members.
5.3 Withdrawal by a Member. A Member has no power to
withdraw from the Company, except as otherwise provided in Section 8.
SECTION 6
SALARIES, REIMBURSEMENT, AND PAYMENT OF EXPENSES
6.1 Organization Expenses. All expenses incurred in
connection with organization of the Company will be paid by the Company.
6.2 Salary. No salary will be paid to a Member for the
performance of his or her duties under this Agreement unless the salary
has been approved in writing by a Majority of the Members.
6.3 Legal and Accounting Services. The Company may
obtain legal and accounting services to the extent reasonably necessary
for the conduct of the Company's business.
SECTION 7
BOOKS OF ACCOUNT, ACCOUNTING REPORTS, TAX RETURNS,
FISCAL YEAR, BANKING
7.1 Method of Accounting. The Company will use the
method of accounting previously determined by the Members for financial
reporting and tax purposes.
7.2 Fiscal Year; Taxable Year. The fiscal year and the
taxable year of the Company is the calendar year.
7.3 Capital Accounts. The Company will maintain a
Capital Account for each Member on a cumulative basis in accordance with
federal income tax accounting principles.
7.4 Banking. All funds of the Company will be
deposited in a separate bank account or in an account or accounts of a
savings and loan association in the name of the Company as determined by
a Majority of the Members. Company funds will be invested or deposited
with an institution, the accounts or deposits of which are insured or
guaranteed by an agency of the United States government.
SECTION 8
TRANSFER OF MEMBERSHIP INTEREST
8.1 Sale or Encumbrance Prohibited. Except as
otherwise permitted in this Agreement, no Member may voluntarily or
involuntarily transfer, sell, convey, encumber, pledge, assign, or
otherwise dispose of (collectively, "Transfer") an interest in the
Company without the prior written consent of a majority of the other
nontransferring Members determined on a per capita basis.
8.2 Right of First Refusal. Notwithstanding Section
8.1, a Member may transfer all or any part of the Member's interest in
the Company (the "Interest") as follows:
8.2.1 The Member desiring to transfer his or her
Interest first must provide written notice (the "Notice") to the other
Members, specifying the price and terms on which the Member is prepared
to sell the Interest (the "Offer").
8.2.2 For a period of 30 days after receipt of the
Notice, the Members may acquire all, but not less than all, of the
Interest at the price and under the terms specified in the Offer. If the
other Members desiring to acquire the Interest cannot agree among
themselves on the allocation of the Interest among them, the allocation
will be proportional to the Ownership Interests of those Members
desiring to acquire the Interest.
8.2.3 Closing of the sale of the Interest will occur
as stated in the Offer; provided, however, that the closing will not be
less than 45 days after expiration of the 30‑day notice period.
8.2.4 If the other Members fail or refuse to notify
the transferring Member of their desire to acquire all of the Interest
proposed to be transferred within the 30‑day period following receipt of
the Notice, then the Members will be deemed to have waived their right
to acquire the Interest on the terms described in the Offer, and the
transferring Member may sell and convey the Interest consistent with the
Offer to any other person or entity; provided, however, that
notwithstanding anything in Section 8.2 to the contrary, should the sale
to a third person be at a price or on terms that are more favorable to
the purchaser than stated in the Offer, then the transferring Member
must reoffer the sale of the Interest to the remaining Members at that
other price or other terms; provided, further, that if the sale to a
third person is not closed within six months after the expiration of the
30‑day period describe above, then the provisions of Section 8.2 will
again apply to the Interest proposed to be sold or conveyed.
8.2.5 Notwithstanding the foregoing provisions of
Section 8.2, should the sole remaining Member be entitled to and elect
to acquire all the Interests of the other Members of the Company in
accordance with the provisions of Section 8.2, the acquiring Member may
assign the right to acquire the Interests to a spouse, lineal
descendent, or an affiliated entity if the assignment is reasonably
believed to be necessary to continue the existence of the Company as a
limited liability company.
8.3 Substituted Parties. Any transfer in which the
Transferee becomes a fully substituted Member is not permitted unless
and until:
(1) The transferor and assignee execute and deliver to
the Company the documents and instruments of conveyance necessary or
appropriate in the opinion of counsel to the Company to effect the
transfer and to confirm the agreement of the permitted assignee to be
bound by the provisions of this Agreement; and
(2) The transferor furnishes to the Company an opinion
of counsel, satisfactory to the Company, that the transfer will not
cause the Company to terminate for federal income tax purposes or that
any termination is not adverse to the Company or the other Members.
8.4 Death, Incompetency, or Bankruptcy of Member. On
the death, adjudicated incompetence, or bankruptcy of a Member, unless
the Company exercises its rights under Section 8.5, the successor in
interest to the Member (whether an estate, bankruptcy trustee, or
otherwise) will receive only the economic right to receive distributions
whenever made by the Company and the Member's allocable share of taxable
income, gain, loss, deduction, and credit (the "Economic Rights") unless
and until a majority of the other Members determined on a per capita
basis admit the transferee as a fully substituted Member in accordance
with the provisions of Section 8.3.
8.4.1 Any transfer of Economic Rights pursuant to
Section 8.4 will not include any right to participate in management of
the Company, including any right to vote, consent to, and will not
include any right to information on the Company or its operations or
financial condition. Following any transfer of only the Economic Rights
of a Member's Interest in the Company, the transferring Member's power
and right to vote or consent to any matter submitted to the Members will
be eliminated, and the Ownership Interests of the remaining Members, for
purposes only of such votes, consents, and participation in management,
will be proportionately increased until such time, if any, as the
transferee of the Economic Rights becomes a fully substituted Member.
8.5 Death Buy Out. Notwithstanding the foregoing
provision of Section 8, the Members covenant and agree that on the death
of any Member, the Company, at its option, by providing written notice
to the estate of the deceased Member within 180 days of the death of the
Member, may purchase, acquire, and redeem the Interest of the deceased
Member in the Company pursuant to the provision of Section 8.5.
8.5.1 The value of each Member's Interest in the
Company will be determined on the date this Agreement is signed, and the
value will be endorsed on Schedule 3 attached and made a part of this
Agreement. The value of each Member's Interest will be redetermined
unanimously by the Members annually, unless the Members unanimously
decide to redetermine those values more frequently. The Members will use
their best efforts to endorse those values on Schedule 3. The purchase
price for a decedent Member's interest conclusively is the value last
determined before the death of such Member; provided, however, that if
the latest valuation is more than two years before the death of the
deceased Member, the provisions of Section 8.5.2 will apply in
determining the value of the Member's Interest in the Company.
8.5.2 If the Members have failed to value the deceased
Member's Interest within the prior two‑year period, the value of each
Member's Interest in the Company on the date of death, in the first
instance, will be determined by mutual agreement of the surviving
Members and the personal representative of the estate of the deceased
Member. If the parties cannot reach an agreement on the value within 30
days after the appointment of the personal representative of the
deceased Member, then the surviving Members and the personal
representative each must select a qualified appraiser within the next
succeeding 30 days. The appraisers so selected must attempt to determine
the value of the Company Interest owned by the decedent at the time of
death based solely on their appraisal of the total value of the
Company's assets and the amount the decedent would have received had the
assets of the Company been sold at that time for an amount equal to
their fair market value and the proceeds (after payment of all Company
obligations) were distributed in the manner contemplated in Section 8.
The appraisal may not consider and discount for the sale of a minority
Interest in the Company. In the event the appraisers cannot agree on the
value within 30 days after being selected, the two appraisers must,
within 30 days, select a third appraiser. The value of the Interest of
the decedent in the Company and the purchase price of it will be the
average of the two appraisals nearest in amount to one another. That
amount will be final and binding on all parties and their respective
successors, assigns, and representatives. The costs and expenses of the
third appraiser and any costs and expenses of the appraiser retained but
not paid for by the estate of the deceased Member will be offset against
the purchase price paid for the deceased Member's Interest in the
Company.
8.5.3 Closing of the sale of the deceased Member's
Interest in the Company will be held at the office of the Company on a
date designated by the Company, not be later than 90 days after
agreement with the personal representative of the deceased Member's
estate on the fair market value of the deceased Member's Interest in the
Company; provided, however, that if the purchase price are determined by
appraisals as set forth in Section 8.5.2, the closing will be 30 days
after the final appraisal and purchase price are determined. If no
personal representative has been appointed within 60 days after the
deceased Member's death, the surviving Members have the right to apply
for and have a personal representative appointed.
8.5.4 At closing, the Company will pay the purchase
price for the deceased Member's Interest in the Company. If the purchase
price is less than $1,000.00, the purchase price will be paid in cash;
if the purchase price is $1,000.00 or more, the purchase price will be
paid as follows:
(1) $1,000.00 in cash, bank cashier's check, or
certified funds;
(2) The balance of the purchase price by the Company
executing and delivering its promissory note for the balance, with
interest at the prime interest rate stated by primary banking
institution utilized by the Company, its successors and assigns, at the
time of the deceased Member's death. Interest will be payable monthly,
with the principal sum being due and payable in three equal annual
installments. The promissory note will be unsecured and will contain
provisions that the principal sum may be paid in whole or in part at any
time, without penalty.
8.5.5 At the closing, the deceased Member's estate or
personal representative must assign to the Company all of the deceased
Member's Interest in the Company free and clear of all liens, claims,
and encumbrances, and, at the request of the Company, the estate or
personal representative must execute all other instruments as may
reasonably be necessary to vest in the Company all of the deceased
Member's right, title, and interest in the Company and its assets. If
either the Company or the deceased Member's estate or personal
representative fails or refuses to execute any instrument required by
this Agreement, the other party is hereby granted the irrevocable power
of attorney which, it is agreed, is coupled with an interest, to execute
and deliver on behalf of the failing or refusing party all instruments
required to be executed and delivered by the failing or refusing party.
8.5.6 On completion of the purchase of the deceased
Member's Interest in the Company, the Ownership Interests of the
remaining Members will increase proportionately to their then‑existing
Ownership Interests.
SECTION 9
DISSOLUTION AND WINDING UP OF THE COMPANY
9.1 Dissolution. The Company will be dissolved on the
happening of any of the following events:
9.1.1 Sale, transfer, or other disposition of all or
substantially all of the property of the Company;
9.1.2 The agreement of all of the Members;
9.1.3 By operation of law; or
9.1.4 The death, incompetence, expulsion, or
bankruptcy of a Member, or the occurrence of any event that terminates
the continued membership of a Member in the Company, unless there are
then remaining at least the minimum number of Members required by law
and all of the remaining Members, within 120 days after the date of the
event, elect to continue the business of the Company.
9.2 Winding Up. On the dissolution of the Company (if
the Company is not continued), the Members must take full account of the
Company's assets and liabilities, and the assets will be liquidated as
promptly as is consistent with obtaining their fair value, and the
proceeds, to the extent sufficient to pay the Company's obligations with
respect to the liquidation, will be applied and distributed, after any
gain or loss realized in connection with the liquidation has been
allocated in accordance with Section 3 of this Agreement, and the
Members' Capital Accounts have been adjusted to reflect the allocation
and all other transactions through the date of the distribution, in the
following order:
9.2.1 To payment and discharge of the expenses of
liquidation and of all the Company's debts and liabilities to persons or
organizations other than Members;
9.2.2 To the payment and discharge of any Company
debts and liabilities owed to Members; and
9.2.3 To Members in the amount of their respective
adjusted Capital Account balances on the date of distribution; provided,
however, that any then‑outstanding Default Advances (with interest and
costs of collection) first must be repaid from distributions otherwise
allocable to the Defaulting Member pursuant to Section 9.2.3.
SECTION 10
GENERAL PROVISIONS
10.1 Amendments. Amendments to this Agreement may be
proposed by any Member. A proposed amendment will be adopted and become
effective as an amendment only on the written approval of all of the
Members.
10.2 Governing Law. This Agreement and the rights and
obligations of the parties under it are governed by and interpreted in
accordance with the laws of the State of Connecticut (without regard to
principles of conflicts of law).
10.3 Entire Agreement; Modification. This Agreement
constitutes the entire understanding and agreement between the Members
with respect to the subject matter of this Agreement. No agreements,
understandings, restrictions, representations, or warranties exist
between or among the members other than those in this Agreement or
referred to or provided for in this Agreement. No modification or
amendment of any provision of this Agreement will be binding on any
Member unless in writing and signed by all the Members.
10.4 Attorney Fees. In the event of any suit or action
to enforce or interpret any provision of this Agreement (or that is
based on this Agreement), the prevailing party is entitled to recover,
in addition to other costs, reasonable attorney fees in connection with
the suit, action, or arbitration, and in any appeals. The determination
of who is the prevailing party and the amount of reasonable attorney
fees to be paid to the prevailing party will be decided by the court or
courts, including any appellate courts, in which the matter is tried,
heard, or decided.
10.5 Further Effect. The parties agree to execute
other documents reasonably necessary to further effect and evidence the
terms of this Agreement, as long as the terms and provisions of the
other documents are fully consistent with the terms of this Agreement.
10.6 Severability. If any term or provision of this
Agreement is held to be void or unenforceable, that term or provision
will be severed from this Agreement, the balance of the Agreement will
survive, and the balance of this Agreement will be reasonably construed
to carry out the intent of the parties as evidenced by the terms of this
Agreement.
10.7 Captions. The captions used in this Agreement are
for the convenience of the parties only and will not be interpreted to
enlarge, contract, or alter the terms and provisions of this Agreement.
10.8 Notices. All notices required to be given by this
Agreement will be in writing and will be effective when actually
delivered or, if mailed, when deposited as certified mail, postage
prepaid, directed to the addresses first shown above for each Member or
to such other address as a Member may specify by notice given in
conformance with these provisions to the other Members.
IN WITNESS WHEREOF, the parties to this Agreement
execute this Operating Agreement as of the date and year first above
written.
MEMBERS:
__________________________________
__________________________________
Printed/Typed Name Signature
__________________________________
__________________________________
Printed/Typed Name Signature
__________________________________
__________________________________
Printed/Typed Name Signature
__________________________________
__________________________________
Printed/Typed Name Signature
--------------------------------------------------------------------------------
Listing of Members – Schedule 1
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
FOR _______________________________, L.L.C.
LISTING OF MEMBERS
As of the _____ day of _________________, 20_____, the
following is a list of Members of the Company:
NAME: ADDRESS:
_______________________________
__________________________________
__________________________________
__________________________________
_______________________________
__________________________________
__________________________________
__________________________________
_______________________________
__________________________________
__________________________________
__________________________________
_______________________________
__________________________________
__________________________________
__________________________________
Authorized by Member(s) to provide Member Listing as
of this _____ day of _________________, 20_____.
__________________________________
__________________________________
Printed/Typed Name Signature
__________________________________
__________________________________
Printed/Typed Name Signature
__________________________________
__________________________________
Printed/Typed Name Signature
__________________________________
__________________________________
Printed/Typed Name Signature
--------------------------------------------------------------------------------
Listing of Capital Contributions – Schedule 2
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:
NAME: CONTRIBUTION: % OWNERSHIP:
___________________________ $______________
____________%
___________________________ $______________
____________%
___________________________ $______________
____________%
___________________________ $______________
____________%
___________________________ $______________
____________%
___________________________ $______________
____________%
___________________________ $______________
____________%
___________________________ $______________
____________%
___________________________ $______________
____________%
___________________________ $______________
____________%
___________________________ $______________
____________%
___________________________ $______________
____________%
SIGNED AND AGREED this_____ day of _________________,
20_____.
__________________________________
__________________________________
Printed/Typed Name Signature
__________________________________
__________________________________
Printed/Typed Name Signature
__________________________________
__________________________________
Printed/Typed Name Signature
__________________________________
__________________________________
Printed/Typed Name Signature
--------------------------------------------------------------------------------
Listing of Valuation of Members Interest – Schedule 3
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
FOR _______________________________, L.L.C.
VALUATION OF MEMBERS INTEREST
Pursuant to ARTICLE 8, the value of each Member’s
interest in the Company is endorsed as follows:
NAME: VALUATION ENDORSEMENT
___________________________ $______________
____________________
___________________________ $______________
____________________
___________________________ $______________
____________________
___________________________ $______________
____________________
___________________________ $______________
____________________
___________________________ $______________
____________________
___________________________ $______________
____________________
___________________________ $______________
____________________
___________________________ $______________
____________________
___________________________ $______________
____________________
___________________________ $______________
____________________
___________________________ $______________
____________________
SIGNED AND AGREED this _____ day of _________________,
20_____.
__________________________________
__________________________________
Printed/Typed Name Signature
__________________________________
__________________________________
Printed/Typed Name Signature
__________________________________
__________________________________
Printed/Typed Name Signature
__________________________________
__________________________________
Printed/Typed Name Signature
--------------------------------------------------------------------------------
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http://www.ilrg.com/forms/llc-opag-man/us/ct
Boilerplate Connecticut Manager Managed LLC
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
FOR
_______________________________________
[Insert Name of LLC]
A Manager-Managed Limited Liability Company
THIS LIMITED LIABILITY COMPANY AGREEMENT (the
Agreement) is made and entered into this _________________ day of
________________, 20___ by: [insert name(s) of Manager(s)]
_______________________________________________________________________
_______________________________________________________________________
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.”
[Insert Member names]
As of this date the Members, through their agent,
________________, ___________________ have formed the __________________
Limited Liability Company named above under the laws of the State of
Connecticut. 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 shall be filed with the Secretary of State.
1.2 NAME. The name of the Company shall be:
______________________________, L.L.C.
1.3 REGISTERED OFFICE AND AGENT. The location of the
registered office of the Company shall be:
1.4 TERM. The Company shall continue for a period
[insert term length] ________________ unless dissolved by:
____________________________________________________________.
(a) Members whose capital interest as defined in
Article 2.2 exceeds 50 percent 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
(c) 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; or
(d) Any other event causing a dissolution of a Limited
Liability Company under the laws of the State of Connecticut.
1.5 CONTINUANCE OF COMPANY. Notwithstanding the
provisions of ARTICLE 1.4, in the event of an occurrence described in
ARTICLE 1.4(c), if there are at least two remaining Members, said
remaining Members shall have the right to continue the business of the
Company. Such right can be exercised only by the unanimous vote of the
remaining Members within ninety (90) days after the occurrence of an
event described in ARTICLE 1.4(c). If not so exercised, the right of the
Members 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 Connecticut.
1.7 PRINCIPAL PLACE OF BUSINESS. The location of the
principal place of business of the Company shall be: [insert principal place of business address] or at such other place as the Managers 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 unanimous 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 $ [insert
amount] ___________.
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 Managers. Distributions in
liquidation of the Company or in liquidation of a Member’s interest
shall be made in accordance with the positive capital account balances
pursuant to 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 Manager 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 so many Managers as the Members determine, but no fewer than one,
with one Manager elected by the Members as Chief Executive Manager.
4.2 MEMBERS. The liability of the Members shall be
limited as provided under the laws of the Connecticut Limited Liability
statutes. Members that are not Managers shall take no part whatever in
the control, management, direction, or operation of the Company’s
affairs and shall have no power to bind the Company. The Managers may
from time to time seek advice from the Members, but they need not accept
such advice, and at all times the Managers shall have the exclusive
right to control and manage the Company. No Member shall be
an agent of any other Member of the Company solely by
reason of being a Member.
4.3 POWERS OF MANAGERS. The Managers 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 Managers 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 MANAGER. The Chief Executive
Manager shall have primary responsibility for managing the operations of
the Company and for effectuating the decisions of the Managers.
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
Managers may designate. The Managers 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 Managers
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 Manager’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 Managers,
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 Managers to any liability to the
Members.
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 Managers 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 rendering services to
the Company shall be entitled to compensation commensurate with the
value of such services.
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.
ARTICLE 6
Bookkeeping
6.1 BOOKS. The Managers 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 Managers shall select. The company’s accounting period
shall be the calendar year.
6.2 MEMBER’S ACCOUNTS. The Managers 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 Managers 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 mutual agreement.
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 Connecticut 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.
Signed and Agreed this ________ day of _______________
20____.
Member____________________
Member__________________________
--------------------------------------------------------------------------------
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
FOR ________________________________, L.L.C.
LISTING OF MANAGERS
By a majority vote of the Members the following
Managers were elected to operate the Company pursuant to ARTICLE 4 of
the Agreement:
_____________________________
Chief Executive Manager
_____________________________
Printed Name:
_____________________________
Address Line 1
_____________________________
Address Line 2
_____________________________
Title:
_____________________________
Printed Name:
_____________________________
Address Line 1
_____________________________
Address Line 2
_____________________________
Title:
_____________________________
Printed Name:
_____________________________
Address Line 1
_____________________________
Address Line 2
_____________________________
Title:
_____________________________
Printed Name:
_____________________________
Address Line 1
_____________________________
Address Line 2
_____________________________
Title:
_____________________________
Printed Name:
_____________________________
Address Line 1
_____________________________
Address Line 2
_____________________________
Title:
_____________________________
Printed Name:
_____________________________
Address Line 1
_____________________________
Address Line 2
The above listed Manager(s) will serve in their
capacities 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 ___________ day of
______________, 20__.
_____________________________
Member
_____________________________
Member
--------------------------------------------------------------------------------
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
FOR ________________________________, L.L.C.
LISTING OF MEMBERS
As of the ______ day of _____________, 20__ the
following is a list
of Members of the Company:
NAME: ADDRESS:
_______________________ ______________________________
______________________________
______________________________
_______________________ ______________________________
______________________________
______________________________
Authorized by Member(s) to provide Member Listing as
of this _____ day of _______________, 20__
_______________________________
Member
_______________________________
Member
--------------------------------------------------------------------------------
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 _____ day of ________________,
20____.
____________________________________
Member
____________________________________
Member
--------------------------------------------------------------------------------
Do you want this form for another state? Select one: AL,
AK,
AZ,
AR,
CA,
CO,
CT,
DE,
DC,
FL,
GA,
HI,
ID,
IL,
IN,
IA,
KS,
KY,
LA,
ME,
MD,
MA,
MI,
MN,
MS,
MO,
MT,
NE,
NV,
NH,
NJ,
NM,
NY,
NC,
ND,
OH,
OK,
OR,
PA,
RI,
SC,
SD,
TN,
TX,
UT,
VT,
VA,
WA,
WV,
WI,
WY
A Traders
Tax Responsibilities
Colin M. Cody, CPA, CMA
TraderStatus.com LLC
6004 Main Street
Trumbull, Connecticut 06611-2400
(203) 268-7000
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