LLC Operating Agreement - Manager-Managed

MANAGER-MANAGED LIMITED LIABILITY COMPANY

OPERATING AGREEMENT

OF [COMPANY NAME], LLC

(a [State] Limited Liability Company)

Effective Date: [EFFECTIVE DATE]

TABLE OF CONTENTS

1. Document Header and Recitals
2. Definitions
3. Formation; Name; Purpose; Term
4. Members; Capital Contributions
5. Allocations and Distributions
6. Management by Managers
7. Officers
8. Meetings
9. Tax Matters
10. Books, Records, and Reports
11. Transfers of Membership Interests
12. Additional Members; Withdrawal
13. Dissolution and Winding-Up
14. Indemnification; Limitation of Liability
15. Dispute Resolution
16. General Provisions
17. Execution Block
18. Exhibits

1. DOCUMENT HEADER AND RECITALS

1.1 Parties

This Manager-Managed Operating Agreement (this "Agreement") is made as of the Effective Date by and among:

MEMBERS:

(each a "Member" and collectively, the "Members")

INITIAL MANAGER(S):

(each a "Manager" and collectively, the "Managers" or "Board of Managers")

1.2 Recitals

A. The Members have formed [COMPANY NAME], LLC (the "Company"), a limited liability company organized under the laws of [STATE], by filing a Certificate of Formation with the [STATE] Secretary of State on [FORMATION DATE].

B. The Members desire to operate the Company as a manager-managed limited liability company with centralized management authority vested in the Managers.

C. This Agreement constitutes the "limited liability company agreement" or "operating agreement" of the Company as provided under the [STATE] Limited Liability Company Act.

D. The Company shall be treated as a partnership for U.S. federal income tax purposes.

[// GUIDANCE (Delaware): Under 6 Del. C. Section 18-402, unless otherwise provided in the operating agreement, management is vested in members. A manager-managed structure requires explicit designation in the operating agreement.]

[// GUIDANCE (ULLCA): Under ULLCA Section 407(c), a manager-managed LLC vests management authority exclusively in managers; members do not have authority to bind the company in ordinary course matters.]

NOW, THEREFORE, in consideration of the mutual covenants herein, the parties agree as follows:

2. DEFINITIONS

"Act" means the [STATE] Limited Liability Company Act, as amended. [For Delaware: 6 Del. C. Section 18-101 et seq.]

"Affiliate" means any Person that directly or indirectly controls, is controlled by, or is under common control with another Person.

"Agreement" means this Manager-Managed Operating Agreement, as amended.

"Board of Managers" means the Managers acting collectively.

"Capital Account" means the account maintained for each Member pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv).

"Capital Contribution" means the total value of cash, property, or services contributed to the Company by a Member.

"Code" means the Internal Revenue Code of 1986, as amended.

"Company" means [COMPANY NAME], LLC.

"Distributable Cash" means cash available for distribution as determined by the Board of Managers.

"Effective Date" means the date first written above.

"Majority in Interest" or "Majority Vote" means Members holding more than 50% of the Percentage Interests.

"Manager" means each Person designated as a manager of the Company pursuant to this Agreement.

"Member" means each Person named as a Member and any Person admitted as a Member in accordance with this Agreement.

"Membership Interest" means a Member's entire ownership interest, including rights to distributions, allocations, voting (as provided herein), and information.

"Officer" means any Person appointed as an officer pursuant to Section 7.

"Percentage Interest" means a Member's percentage ownership as set forth on Exhibit A.

"Person" means any individual, corporation, partnership, LLC, trust, or other entity.

"Supermajority" means Members holding at least [66.67 / 75]% of the Percentage Interests.

"Transfer" means any sale, assignment, gift, pledge, encumbrance, or other disposition.

"Treasury Regulations" means the regulations promulgated under the Code.

3. FORMATION; NAME; PURPOSE; TERM

3.1 Formation

The Company was formed as a manager-managed [STATE] limited liability company by filing a Certificate of Formation with the [STATE] Secretary of State on [FORMATION DATE].

3.2 Name

The name of the Company is [COMPANY NAME], LLC.

3.3 Registered Office and Agent

Registered Office: [REGISTERED AGENT ADDRESS]
Registered Agent: [REGISTERED AGENT NAME]

[// GUIDANCE (Delaware 2025 Amendment): Per 6 Del. C. Section 18-104, as amended effective August 1, 2025, a registered agent may not perform its duties solely through a virtual office or mail forwarding service.]

3.4 Principal Place of Business

[PRINCIPAL BUSINESS ADDRESS]

3.5 Purpose

The Company's purpose is to engage in any lawful business for which LLCs may be organized, including: [DESCRIBE PRIMARY BUSINESS PURPOSE].

3.6 Term

The Company shall continue until dissolved pursuant to Section 13.

3.7 Manager-Managed Designation

The Company is a "manager-managed" limited liability company. Management authority is vested exclusively in the Managers as set forth in Section 6.

4. MEMBERS; CAPITAL CONTRIBUTIONS

4.1 Initial Members and Contributions

The initial Members and their Capital Contributions are set forth on Exhibit A.

4.2 Capital Accounts

A Capital Account shall be maintained for each Member in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv).

4.3 Additional Contributions

No Member is required to make additional Capital Contributions without such Member's consent. If additional capital is needed, the Board of Managers may request contributions, and Members may contribute pro rata or in other proportions as agreed.

4.4 Loans by Members

Members may make loans to the Company with approval of the Board of Managers. Loans are not Capital Contributions and shall bear interest at [RATE]% per annum.

4.5 No Interest on Capital; No Right to Return

No interest shall be paid on Capital Contributions. No Member may demand return of capital except upon dissolution.

5. ALLOCATIONS AND DISTRIBUTIONS

5.1 Allocations of Profits and Losses

Profits and Losses shall be allocated to Members in proportion to their Percentage Interests, subject to special allocations required by Treasury Regulations (minimum gain chargeback, qualified income offset, etc.).

5.2 Distributions

a. Timing and Amount: Distributions shall be made at such times and in such amounts as the Board of Managers determines, subject to Section 5.3.

b. Pro Rata: All distributions shall be made to Members in proportion to their Percentage Interests.

c. Tax Distributions: The Company shall distribute to each Member, to the extent of available cash, an amount sufficient to cover such Member's estimated tax liability arising from Company allocations.

5.3 Limitation on Distributions

No distribution shall be made if, after giving effect thereto:
a. The Company would be unable to pay its debts as they become due; or
b. The Company's assets would be less than its liabilities.

[// GUIDANCE (Delaware): 6 Del. C. Section 18-607 restricts distributions. ULLCA Section 405 contains similar provisions.]

6. MANAGEMENT BY MANAGERS

6.1 Designation as Manager-Managed

The Company is manager-managed. The business and affairs of the Company shall be managed by or under the direction of the Managers. Members, in their capacity as Members, shall have no authority to bind the Company or participate in management except as specifically provided herein.

[// GUIDANCE (ULLCA): Under ULLCA Section 407(c), in a manager-managed LLC, each manager has equal rights in management, and any difference among managers is decided by majority vote.]

6.2 Number of Managers

The number of Managers shall be [NUMBER], which may be increased or decreased by Majority Vote of the Members (but not below one).

6.3 Initial Managers

The initial Manager(s) are:

6.4 Election and Term

a. Managers shall be elected by Majority Vote of the Members at the annual meeting or by written consent.

b. Each Manager shall serve until such Manager's successor is elected or until such Manager's earlier death, resignation, or removal.

c. Managers need not be Members.

6.5 Resignation

A Manager may resign at any time by delivering written notice to the Members. Resignation is effective upon receipt or at such later time specified in the notice.

6.6 Removal

A Manager may be removed, with or without cause, by:
☐ Majority Vote of the Members
☐ Supermajority Vote of the Members
☐ Unanimous Vote of the Members

6.7 Vacancies

Vacancies in the Board of Managers may be filled by Majority Vote of the Members.

6.8 Authority of Managers

a. General Authority: The Managers shall have full and exclusive authority to manage the Company's business and affairs, including the power to:

(i) Execute documents and agreements on behalf of the Company;
(ii) Open and maintain bank accounts;
(iii) Hire and terminate employees and consultants;
(iv) Enter into contracts, leases, and other agreements;
(v) Acquire, hold, and dispose of assets;
(vi) Borrow money and grant security interests;
(vii) Initiate or settle litigation;
(viii) Make all day-to-day operational decisions.

b. Binding Authority: Any Manager (or such Managers as the Board of Managers may designate) may bind the Company with respect to matters within the scope of the Managers' authority.

6.9 Actions Requiring Manager Approval Only

The Managers may take the following actions without Member approval:

a. Operating decisions in the ordinary course of business;
b. Hiring and compensation of employees (within approved budget);
c. Contracts involving amounts up to $[AMOUNT];
d. Capital expenditures within approved budget;
e. Borrowings up to $[AMOUNT];
f. Settlement of claims up to $[AMOUNT].

6.10 Actions Requiring Member Approval

Notwithstanding Section 6.8, the following actions require approval by [Majority / Supermajority / Unanimous] Vote of the Members:

a. Amendment of this Agreement or the Certificate of Formation;
b. Admission of new Members;
c. Issuance of additional Membership Interests;
d. Merger, consolidation, or conversion;
e. Sale of all or substantially all Company assets;
f. Dissolution of the Company;
g. Incurrence of debt exceeding $[AMOUNT];
h. Capital expenditures exceeding $[AMOUNT];
i. Transactions with Managers, Members, or their Affiliates;
j. Approval of annual budget;
k. Changes in the nature of the Company's business;
l. Filing for bankruptcy;
m. Election or removal of Managers.

6.11 Meetings of Managers

a. Regular Meetings: Regular meetings shall be held [monthly / quarterly / as determined by the Board of Managers].

b. Special Meetings: Special meetings may be called by any Manager upon [3] days' notice.

c. Notice: Notice may be given by email, telephone, or written notice. Notice may be waived.

d. Quorum: A majority of the Managers shall constitute a quorum.

e. Voting: Each Manager shall have one vote. Actions of the Board of Managers shall require the affirmative vote of a majority of Managers present at a meeting at which a quorum is present.

f. Telephonic Meetings: Managers may participate by telephone or video conference.

g. Action Without Meeting: Any action may be taken without a meeting if all Managers consent in writing.

6.12 Committees

The Board of Managers may designate one or more committees, each consisting of one or more Managers, to exercise such authority as the Board of Managers may delegate.

6.13 Compensation of Managers

Managers shall receive such compensation as approved by Majority Vote of the Members. Managers shall be reimbursed for reasonable expenses incurred in performing their duties.

6.14 Standard of Care; Fiduciary Duties

a. Each Manager shall discharge duties in good faith, with the care an ordinarily prudent person would exercise in like circumstances.

b. ☐ Full Fiduciary Duties: Managers owe fiduciary duties of loyalty and care to the Company and Members.

☐ Modified Duties: Fiduciary duties are modified as follows: [DESCRIBE].

☐ Eliminated Duties (Delaware): To the fullest extent permitted by 6 Del. C. Section 18-1101(c), all fiduciary duties are eliminated, except the implied contractual covenant of good faith and fair dealing.

[// GUIDANCE (Delaware): Delaware permits elimination of fiduciary duties. ULLCA permits modification but not elimination.]

6.15 Reliance

Managers may rely upon information, opinions, and reports provided by Officers, employees, attorneys, accountants, or committees they reasonably believe to be reliable.

6.16 No Personal Liability

No Manager shall be personally liable for the debts or obligations of the Company solely by reason of being a Manager.

7. OFFICERS

7.1 Designation of Officers

The Board of Managers may appoint Officers to carry out the day-to-day operations of the Company. Officers may include:

a. Chief Executive Officer (CEO) or President
b. Chief Financial Officer (CFO) or Treasurer
c. Secretary
d. Vice Presidents
e. Such other officers as the Board of Managers may determine

7.2 Appointment and Term

Officers shall be appointed by the Board of Managers and shall serve at the pleasure of the Board. Officers need not be Members or Managers.

7.3 Duties

Each Officer shall have the duties customarily associated with such office and such other duties as assigned by the Board of Managers.

7.4 Removal

Any Officer may be removed by the Board of Managers at any time, with or without cause.

7.5 Compensation

Officer compensation shall be determined by the Board of Managers.

7.6 Initial Officers

The initial Officers are:

8. MEETINGS OF MEMBERS

8.1 Annual Meeting

The Members shall hold an annual meeting within [120] days after the close of each fiscal year.

8.2 Special Meetings

Special meetings may be called by:
a. The Board of Managers;
b. Any Manager; or
c. Members holding at least [25]% of the Percentage Interests.

8.3 Notice

Written notice shall be given at least [10] days before any meeting, stating the time, place, and purpose. Notice may be waived.

8.4 Quorum

A quorum shall consist of Members holding at least [50]% of the Percentage Interests.

8.5 Voting

Each Member shall vote in proportion to such Member's Percentage Interest.

8.6 Telephonic/Electronic Meetings

Members may participate by telephone or video conference.

8.7 Action Without Meeting

Any action may be taken without a meeting by written consent of Members holding the required vote.

9. TAX MATTERS

9.1 Tax Classification

The Company shall be classified as a partnership for U.S. federal income tax purposes.

9.2 Partnership Representative

[NAME] shall serve as the Partnership Representative under Code Section 6223.

9.3 Tax Returns

The Partnership Representative (or the Board of Managers) shall cause timely preparation and filing of all tax returns. Schedule K-1s shall be provided within [90] days after fiscal year end.

9.4 Tax Elections

Tax elections shall be made by the Board of Managers, subject to Member approval for elections that materially affect Members' tax positions.

10. BOOKS, RECORDS, AND REPORTS

10.1 Books and Records

The Company shall maintain complete and accurate books at its principal place of business, including:
a. List of Members and Managers;
b. Certificate of Formation and amendments;
c. This Agreement and amendments;
d. Tax returns for the prior [3-5] years;
e. Financial statements;
f. Meeting minutes and consents.

10.2 Inspection Rights

Each Member may inspect Company books and records upon reasonable notice during normal business hours.

10.3 Financial Reports

The Company shall provide:
a. Quarterly unaudited financial statements within [45] days after quarter end;
b. Annual financial statements within [90] days after fiscal year end.

10.4 Accounting

Books shall be kept on the [cash / accrual] basis.

11. TRANSFERS OF MEMBERSHIP INTERESTS

11.1 Restrictions on Transfer

No Member may Transfer any Membership Interest except as provided in this Section 11.

11.2 Permitted Transfers

A Member may Transfer without consent to:
a. Affiliates;
b. Trusts for estate planning;
c. Immediate family members;
d. Other existing Members.

11.3 Right of First Refusal

Before any third-party Transfer:
a. The selling Member shall provide an Offer Notice to the Company and other Members;
b. The Company has [30] days to elect to purchase;
c. If the Company declines, non-selling Members have [30] additional days to purchase pro rata;
d. If not fully exercised, the Transfer may proceed on the stated terms within [90] days.

11.4 Tag-Along and Drag-Along Rights

a. Tag-Along: If a sale would result in a third party acquiring more than [50]% of the Percentage Interests, non-selling Members may participate pro rata.

b. Drag-Along: If Members holding at least [75]% approve a sale of all interests, they may require all Members to sell on the same terms.

11.5 Admission of Transferee

A transferee shall be admitted as a Member only upon:
a. Majority Vote of non-transferring Members;
b. Execution of a joinder agreement;
c. Payment of transfer expenses;
d. Compliance with securities laws.

11.6 Assignee Rights

A non-admitted transferee shall be an Assignee entitled only to distributions and allocations, without voting or management rights.

12. ADDITIONAL MEMBERS; WITHDRAWAL

12.1 Admission of Additional Members

Additional Members may be admitted upon [Supermajority / Unanimous] Vote and compliance with this Agreement.

12.2 Withdrawal

No Member may voluntarily withdraw without consent of all other Members. A withdrawing Member without consent remains liable and receives no distribution until dissolution.

12.3 Expulsion

A Member may be expelled for:
a. Material breach not cured within [30] days;
b. Bankruptcy or insolvency;
c. Conviction of a crime involving fraud;
d. Conduct causing loss of material licenses.

13. DISSOLUTION AND WINDING-UP

13.1 Events of Dissolution

The Company shall dissolve upon:
a. [Supermajority / Unanimous] Vote of Members;
b. Judicial decree;
c. Event making continuation unlawful;
d. Death, withdrawal, or bankruptcy of a Member (unless continued by remaining Members within [90] days);
e. Sale of all assets and distribution of proceeds.

13.2 Winding-Up

Upon dissolution, the Board of Managers (or a liquidating agent) shall:
a. Collect assets;
b. Pay creditors (including Member creditors);
c. Establish reserves for contingencies;
d. Distribute remaining assets to Members per Capital Accounts.

13.3 Certificate of Cancellation

Upon completion, file a Certificate of Cancellation with the Secretary of State.

14. INDEMNIFICATION; LIMITATION OF LIABILITY

14.1 Limited Liability

No Member or Manager shall be personally liable for Company obligations solely by reason of being a Member or Manager.

14.2 Indemnification

The Company shall indemnify each Manager, Officer, Member, and their Affiliates (each, an "Indemnified Party") from all claims, losses, and expenses arising from Company activities, except for:
a. Bad faith, fraud, or willful misconduct;
b. Knowing violations of law;
c. Improper personal benefit.

14.3 Advancement of Expenses

The Company shall advance expenses within [30] days of written request, subject to repayment undertaking.

14.4 Insurance

The Company may maintain D&O and other liability insurance.

14.5 Limitation on Damages

No Indemnified Party shall be liable for consequential, indirect, incidental, special, or punitive damages.

15. DISPUTE RESOLUTION

15.1 Governing Law

This Agreement shall be governed by the laws of:
☐ Delaware (without regard to conflicts of law)
☐ [OTHER STATE]
☐ State of Formation ([STATE])

15.2 Forum Selection

Actions shall be brought exclusively in courts located in [STATE/COUNTY].

15.3 Mediation

Disputes shall first be submitted to mediation administered by [PROVIDER] in [LOCATION].

15.4 Arbitration (Optional)

☐ Arbitration Elected: Disputes not resolved through mediation shall be settled by binding arbitration under [AAA / JAMS] rules in [LOCATION].

15.5 Jury Waiver (Optional)

☐ Jury Waiver Elected: ALL PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY.

15.6 Attorneys' Fees

The prevailing party shall recover reasonable attorneys' fees.

16. GENERAL PROVISIONS

16.1 Amendments

Amendments require [Supermajority / Unanimous] Vote; no amendment may disproportionately and adversely affect a Member without consent.

16.2 Waivers

Waivers must be in writing.

16.3 Severability

Invalid provisions shall be modified to minimum extent necessary; remaining provisions remain in effect.

16.4 Entire Agreement

This Agreement constitutes the entire agreement among the parties.

16.5 Notices

Notices shall be in writing, delivered by personal delivery, overnight courier, certified mail, or email with confirmation.

16.6 Counterparts; Electronic Signatures

This Agreement may be executed in counterparts; electronic signatures are valid.

16.7 Successors and Assigns

This Agreement binds and benefits successors and permitted assigns.

16.8 No Third-Party Beneficiaries

No third-party rights are created.

16.9 Construction

No presumption against the drafter.

17. EXECUTION BLOCK

IN WITNESS WHEREOF, the undersigned have executed this Manager-Managed Operating Agreement as of the Effective Date.

MEMBERS:

MANAGERS:

EXHIBIT A - MEMBERS, CONTRIBUTIONS, AND PERCENTAGE INTERESTS

EXHIBIT B - INITIAL MANAGERS

EXHIBIT C - FORM OF JOINDER AGREEMENT

The undersigned agrees to become a party to the Manager-Managed Operating Agreement of [COMPANY NAME], LLC, dated [DATE], and agrees to be bound by all terms thereof.

Signature: _________________________________
Printed Name: _________________________________
Address: _________________________________
Capital Contribution: $_________________________________
Percentage Interest: _________________________________%
Date: _________________________________

[END OF DOCUMENT]