Multi-Member LLC Operating Agreement — Alaska

Multi-Member LLC Operating Agreement (Alaska)

This Multi-Member Limited Liability Company Operating Agreement (this "Agreement") is entered into and made effective as of [__/__/____] (the "Effective Date") by and among the persons listed on Schedule A (each, a "Member" and collectively, the "Members") and [____], an Alaska limited liability company (the "Company").

Quick-Reference Summary

Article I — Formation

1.1 Formation. The Company was formed as an Alaska limited liability company on [__/__/____] by the filing of Articles of Organization with the Alaska Division of Corporations, Business and Professional Licensing, pursuant to AS 10.50.075. The Members adopt and ratify that filing.

1.2 Name. The name of the Company is "[____]," which complies with AS 10.50.020, including a required designation such as "Limited Liability Company," "LLC," or "L.L.C."

1.3 Principal Office. The principal office of the Company is located at [____].

1.4 Registered Agent and Registered Office. Pursuant to AS 10.50.055, the Company's registered agent is [____], whose registered office address is [____].

1.5 Duration. The Company has perpetual duration unless dissolved as provided in Article XIV or under AS 10.50.400–10.50.435.

1.6 Operating Agreement Authority. This Agreement is the "operating agreement" within the meaning of AS 10.50.095 and AS 10.50.990. To the maximum extent permitted by the Act, this Agreement governs the rights, duties, and relations among the Members, Managers, and the Company.

Article II — Purpose and Powers

2.1 Purpose. The Company is formed to engage in [____] and any other lawful business or activity for which a limited liability company may be organized under AS 10.50.010.

2.2 Powers. The Company has all powers granted to limited liability companies under the Act.

2.3 No Unlawful Activity. Nothing in this Agreement authorizes any business prohibited by Alaska or federal law. If an activity is subject to another provision of law, the Company shall also comply with that law (AS 10.50.015).

Article III — Members and Membership Interests

3.1 Initial Members; Percentage Interests. The names, addresses, capital contributions, and Percentage Interests of the initial Members are set forth on Schedule A.

3.2 Limited Liability Company Interest. Pursuant to AS 10.50.310, a Member's limited liability company interest is personal property; an assignment transfers only the right to receive distributions unless the assignee is admitted as a member.

3.3 Limited Liability. Pursuant to AS 10.50.135, no Member or Manager is personally liable for the Company's debts, obligations, or liabilities solely by reason of being a Member or Manager, except as expressly provided by Alaska law or a written guaranty.

3.4 Admission of Additional Members. A new Member may be admitted only with the consent of all existing Members and upon execution of a joinder.

Article IV — Capital Contributions and Capital Accounts

4.1 Initial Capital Contributions. Each Member shall contribute the cash, property, or services described on Schedule A on or before the Effective Date.

4.2 Capital Accounts. A separate capital account shall be maintained for each Member in accordance with Treas. Reg. § 1.704-1(b)(2)(iv).

4.3 No Interest. No Member is entitled to interest on capital contributions.

4.4 No Withdrawal of Capital. No Member may withdraw capital except as provided in this Agreement or by unanimous written consent.

4.5 Liability for Promised Contributions. A Member's promise to contribute is enforceable even if the Member is unable to perform, consistent with the Act.

Article V — Capital Calls

5.1 No Mandatory Capital Calls. No Member is obligated to make additional contributions except as provided in Section 4.5 or by separate unanimous written agreement.

5.2 Voluntary Capital Calls. Written notice shall specify the aggregate amount, each Member's pro-rata share by Percentage Interest, due date (not less than [____] days), and consequences of nonpayment.

5.3 Remedies for Failure to Fund. A Delinquent Member may be subjected to any one or more of:

(a) deemed demand loan at [____]% per annum;
(b) pro-rata dilution of Percentage Interest;
(c) forced sale at [____]% of fair market value; or
(d) any other remedy at law or equity.

Article VI — Allocations and Distributions

6.1 Allocations. All items of income, gain, loss, deduction, and credit shall be allocated among the Members in proportion to their Percentage Interests, subject to Treas. Reg. § 1.704-1(b) and § 1.704-2.

6.2 Distributions. Distributions of cash and other property shall be made to the Members in proportion to their Percentage Interests, at the times and amounts determined by the Governance Body, consistent with AS 10.50.265.

6.3 Tax Distributions. Unless waived by unanimous consent, the Company shall distribute, before each estimated-tax due date, an amount equal to each Member's allocated taxable income multiplied by [____]%.

6.4 Limitations on Distributions. No distribution shall be made if, after giving effect to it, (a) the Company would be unable to pay its debts as they become due, or (b) the Company's total assets would be less than its total liabilities.

6.5 Liquidating Distributions. Upon winding up under Article XIV, liquidating distributions shall be (a) first, to return positive capital-account balances, and (b) thereafter, in proportion to Percentage Interests.

6.6 Federal Tax Classification. Unless otherwise elected, the Company is classified as a partnership for federal income-tax purposes under Treas. Reg. § 301.7701-3.

Article VII — Management

7.1 Management Structure. The Company is (check one):

☐ Member-managed (default under AS 10.50.110). Decisions are made by a Majority by Percentage Interest (Section 8.1), except for actions reserved to Member supermajority or unanimous consent in Section 7.3.

☐ Manager-managed. The Articles of Organization designate the Company as manager-managed. The initial Manager(s) is/are [____]. Non-Manager Members have no agency authority by default.

7.2 Authority. Subject to Sections 7.3 and 8.2, the Governance Body may:

(a) execute contracts, deeds, leases, notes, and other instruments;
(b) open, maintain, and close financial accounts;
(c) hire, supervise, and terminate employees, contractors, and agents;
(d) acquire, hold, encumber, and dispose of property;
(e) borrow money and incur indebtedness; and
(f) institute, defend, settle, and compromise legal actions.

7.3 Major Decisions Requiring [Supermajority / Unanimous] Member Consent. The following actions require the written consent of Members holding at least [____]% of the Percentage Interests (or, where the Act requires, unanimous consent):

(a) amending the Articles of Organization or this Agreement;
(b) admitting a new Member;
(c) approving any merger, conversion, sale of all or substantially all of the Company's assets, or dissolution;
(d) authorizing an act outside the ordinary course of business;
(e) incurring indebtedness in excess of $[____];
(f) changing federal tax classification or making material tax elections; or
(g) appointing or removing a Manager.

7.4 Compensation. Reasonable compensation may be paid to Managers and Managing Members as approved by disinterested Members.

7.5 Removal. A Manager may be removed with or without cause by Members holding at least [____]% of the Percentage Interests.

Article VIII — Voting Rights and Member Meetings

8.1 Override to Percentage-Interest Voting. Notwithstanding the default rules of AS 10.50.155, the Members agree that all Member votes shall be cast in proportion to Percentage Interests. References to "Majority," "Supermajority," and similar thresholds refer to the specified percentage of the Percentage Interests.

8.2 Matters Requiring Unanimous Member Consent. The following matters require the unanimous consent of all Members:

(a) amending the Articles of Organization or this Agreement;
(b) admitting a new Member; and
(c) any other matter for which the Act requires unanimous consent.

8.3 Annual Meeting. An annual meeting of the Members shall be held on [____] of each year.

8.4 Special Meetings. A special meeting may be called by any Manager or Members holding at least [____]% of the Percentage Interests, on not less than [____] days' written notice.

8.5 Action Without Meeting. Any action may be taken by written or electronic consent signed by Members holding the percentage required to approve the action.

8.6 Quorum. Members holding at least [____]% of the Percentage Interests constitute a quorum.

8.7 Remote Participation. Permitted under the Alaska Uniform Electronic Transactions Act, AS 09.80.

Article IX — Fiduciary Duties and Standards of Conduct

9.1 Standards. Each Member of a member-managed Company and each Manager of a manager-managed Company shall discharge the Member's or Manager's duties in good faith, with the care of an ordinarily prudent person in a like position, and in a manner reasonably believed to be in the best interests of the Company.

9.2 Permitted Modifications. To the extent permitted under the Act, the Members agree to the following, none of which is intended to be unreasonable:

(a) Outside Activities. Each Member and Manager may engage in any business or investment, including those competing with the Company, except for opportunities arising directly from the use of Company resources.
(b) Self-Interested Transactions. A transaction between the Company and a Member, Manager, or Affiliate is not voidable solely by reason of the relationship if approved or ratified after disclosure by disinterested decisionmakers, or fair to the Company when entered into.
(c) Reliance. Each Member and Manager is entitled to rely in good faith on records and information presented by reliable and competent persons.

9.3 Standards Not Subject to Modification. Nothing in this Article eliminates the obligation of good faith and fair dealing or liability for intentional misconduct or knowing violation of law.

9.4 Indemnification. The Company shall indemnify each Member, Manager, and officer to the fullest extent permitted by the Act, except for conduct described in Section 9.3.

Article X — Transfer Restrictions, ROFR, Tag-Along, Drag-Along

10.1 General Transfer Restriction. No Member may sell, assign, pledge, encumber, or otherwise transfer all or any part of the Member's interest, except in accordance with this Article. An assignee acquires only the rights of an assignee under AS 10.50.310 and not the rights of a Member, unless admitted under Section 3.4.

10.2 Permitted Transfers. A Member may transfer all or part of the interest, without other Member consent, to (a) a revocable living trust of which the Member is settlor, (b) the Member's spouse, descendants, or a trust for the benefit of any of them, or (c) an entity wholly owned by the Member, subject in each case to a joinder.

10.3 Right of First Refusal (ROFR). A Selling Member who receives a bona fide third-party offer shall deliver a ROFR Notice to the Company and other Members. The Company has [____] days to elect to purchase; non-selling Members then have [____] additional days to elect pro rata.

10.4 Tag-Along. If Members holding more than 50% of the Percentage Interests propose to sell to a third party, the other Members may tag along pro rata within [____] days on the same terms.

10.5 Drag-Along. If Members holding at least [____]% of the Percentage Interests approve a sale of all membership interests or substantially all of the Company's assets to a bona fide third party, the remaining Members shall sell on the same terms.

10.6 Spousal Consent. Each married Member shall obtain spousal consent in the form attached as Schedule B.

Article XI — Buy-Sell Provisions

11.1 Triggering Events. A "Triggering Event" includes:

(a) death;
(b) Permanent Disability (Section 11.7);
(c) bankruptcy or assignment for the benefit of creditors;
(d) divorce affecting the membership interest;
(e) attempted transfer in violation of Article X;
(f) withdrawal or dissociation under AS 10.50.400; or
(g) voluntary withdrawal.

11.2 Company First Right; Other Members Second. Upon a Triggering Event, the Company has the option for [____] days to purchase the affected Member's interest; any unexercised portion is offered to the non-affected Members pro rata for [____] additional days.

11.3 Purchase Price. ☐ Fair market value (Section 11.5); ☐ book value; ☐ [____ × trailing-12-month EBITDA] less debt; or ☐ most-recent value agreed at the annual meeting.

11.4 Payment Terms. [____]% in cash at closing; balance by [____]-year promissory note at [____]% per annum.

11.5 Appraisal Procedure. Each side selects an appraiser; if values differ by 10% or less, the average controls; otherwise the two appraisers select a third whose appraisal controls.

11.6 Permanent Disability Defined. "Permanent Disability" means a Member's inability, by reason of physical or mental impairment, to perform customary services for [____] consecutive days or [____] days in any 12-month period, as determined by a physician selected by the Company.

Article XII — Charging Order (AS 10.50.380)

12.1 Exclusive Remedy; No Foreclosure. Pursuant to AS 10.50.380(c), the charging order is the EXCLUSIVE remedy by which a judgment creditor of a Member or a Member's assignee may satisfy a judgment out of the judgment debtor's interest in the Company. Other legal or equitable remedies, including FORECLOSURE on the Member's interest and court orders for directions, accounts, and inquiries, ARE NOT AVAILABLE and may not be ordered by a court.

12.2 Limited Effect of Charging Order. Under AS 10.50.380(a)–(b), a charging order charges the Member's interest with payment of the unsatisfied judgment, and the judgment creditor has only the rights of an assignee of the Member's interest.

12.3 Single-Member and Multi-Member. Under AS 10.50.380(e), this section applies to limited liability companies with only one member as well as to those with more than one member.

12.4 Exemptions Preserved. Under AS 10.50.380(d), this section does not deprive a Member of the benefit of any exemption applicable to the Member's membership interest.

12.5 No Information Rights; No Dissolution. A charging-order holder has no inspection or information rights and a charging order is not a dissolution event.

Article XIII — Deadlock and Dispute Resolution

13.1 Deadlock Defined. A "Deadlock" exists if (a) the Members or Managers fail to reach the required vote on a Major Decision for [____] consecutive days, or (b) any Member meeting fails to achieve a quorum twice in succession.

13.2 Mediation. Before pursuing remedies in Section 13.3 or 13.4, the Members shall participate in good-faith mediation administered by [☐ JAMS / ☐ AAA / ☐ a mediator in Alaska] for at least one session.

13.3 Buy-Sell Election (Optional). If Deadlock continues for [____] days after mediation, any Member may deliver an Offer Notice specifying a price per 1% Percentage Interest. The receiving Members must elect within [____] days to either sell to the Initiating Member or buy out the Initiating Member at the stated price.

13.4 Judicial Dissolution. A Member may petition the superior court for judicial dissolution under AS 10.50.405 on the grounds that it is not reasonably practicable to carry on the Company's business in conformity with the Articles of Organization and this Agreement.

13.5 Governing Law. This Agreement is governed by Alaska law without regard to conflict-of-laws principles.

13.6 Venue. Subject to Section 13.7, exclusive venue lies in the Superior Court for the State of Alaska, [____] Judicial District, or the United States District Court for the District of Alaska.

13.7 Arbitration (Optional). ☐ Any dispute (other than petitions for injunctive relief or judicial dissolution) shall be resolved by binding arbitration administered by [☐ JAMS / ☐ AAA] in [____], Alaska, before [☐ one / ☐ three] arbitrator(s), under the Federal Arbitration Act and the Alaska Uniform Arbitration Act, AS 09.43.300–09.43.595.

Article XIV — Dissolution and Winding Up

14.1 Events Causing Dissolution. The Company is dissolved on the first to occur of:

(a) an event specified in this Agreement;
(b) consent of Members holding at least [____]% of the Percentage Interests;
(c) entry of a decree of judicial dissolution under AS 10.50.405; or
(d) administrative dissolution by the Alaska Division of Corporations.

14.2 Winding Up. Upon dissolution, the Company shall wind up its affairs and apply proceeds in the order required by the Act:

(a) creditors (including Members who are creditors);
(b) reasonable reserves; and
(c) Members in accordance with Section 6.5.

14.3 Articles of Dissolution. Upon completion of winding up, the Company shall file Articles of Dissolution with the Alaska Division of Corporations.

Article XV — Alaska-Specific Provisions

15.1 Biennial Report. The Company shall file a biennial report with the Alaska Division of Corporations, Business and Professional Licensing, and shall maintain its business license as required.

15.2 No State Income Tax on Individuals. Alaska imposes no individual income tax; the Members acknowledge that pass-through income generally flows to Members for federal purposes, and any entity-level tax obligations shall be evaluated by the Governance Body.

15.3 Strong Charging-Order Protection. The Members acknowledge that Alaska affords charging-order-only protection with no foreclosure remedy under AS 10.50.380(c), applicable to both single- and multi-member LLCs.

15.4 Partnership Representative. The Company designates [____] as Partnership Representative under I.R.C. § 6223 for the Bipartisan Budget Act of 2015 centralized partnership audit regime.

Article XVI — General Provisions

16.1 Notices. All notices shall be in writing and delivered by hand, certified mail, overnight courier, or email (with confirmation) to the addresses on Schedule A.

16.2 Amendments. This Agreement may be amended only by a writing signed by all Members.

16.3 Entire Agreement. This Agreement, together with the Articles of Organization and the schedules and exhibits, constitutes the entire agreement among the Members and supersedes all prior agreements, written or oral.

16.4 Severability. If any provision is held invalid or unenforceable, it shall be limited or construed so as to be valid; remaining provisions remain in full force.

16.5 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, including by electronic signature under the Alaska Uniform Electronic Transactions Act, AS 09.80.

16.6 No Third-Party Beneficiaries. Except for indemnified persons under Section 9.4, this Agreement creates no rights in any person other than the Members and the Company.

16.7 Construction. Captions are for convenience only.

Signature Block

THE COMPANY

[____], an Alaska limited liability company

By: [____]
Name: [____]
Title: [☐ Managing Member / ☐ Manager]
Date: [__/__/____]

MEMBERS

Member 1: [____]
Signature: [____]
Date: [__/__/____]

Member 2: [____]
Signature: [____]
Date: [__/__/____]

Member 3: [____]
Signature: [____]
Date: [__/__/____]

SPOUSAL CONSENT (See Schedule B)

Pre-Execution Checklist

☐ Articles of Organization filed with Alaska Division of Corporations (AS 10.50.075)
☐ Alaska business license obtained
☐ EIN obtained from IRS
☐ Registered agent identified with Alaska street address
☐ Schedule A completed
☐ Schedule B (Spousal Consent) signed where applicable
☐ Buy-sell valuation method selected (Section 11.3)
☐ Major-Decision threshold completed (Section 7.3)
☐ Biennial report calendared
☐ Partnership Representative designated
☐ Operating Agreement reviewed by Alaska-licensed counsel
☐ Beneficial Ownership Information evaluated under the Corporate Transparency Act
☐ D&O / E&O / general liability insurance obtained

Sources and References

• Alaska Revised Limited Liability Company Act, AS 10.50: https://law.justia.com/codes/alaska/title-10/chapter-50/
• AS 10.50.380 (Rights of judgment creditors; charging order): https://law.justia.com/codes/alaska/title-10/chapter-50/article-10/section-10-50-380/
• AS 10.50.095 (Operating agreement): https://law.justia.com/codes/alaska/title-10/chapter-50/article-3/section-10-50-095/
• Alaska Division of Corporations, Business and Professional Licensing: https://www.commerce.alaska.gov/web/cbpl/Corporations.aspx