Multi-Member LLC Operating Agreement — Alabama

Multi-Member LLC Operating Agreement (Alabama)

This Limited Liability Company Agreement (the "Agreement") is made effective [DATE] by [COMPANY NAME], LLC, an Alabama limited liability company (the "Company"), and the Members signing below. The Company's certificate of formation became effective on [DATE]; Alabama Secretary of State entity number: [NUMBER]. The Members agree as follows.

1. Company and Members

1.1 Formation and name. The Company was formed when its certificate of formation became effective after delivery to the Alabama Secretary of State under Ala. Code § 10A-5A-2.01. Its name is [COMPANY NAME], LLC, using a designation allowed by § 10A-1-5.06. The principal office is [ADDRESS]. Its registered agent is [NAME] and its Alabama registered office is [STREET ADDRESS, COUNTY], subject to § 10A-1-5.31. The Company will conduct [BUSINESS PURPOSE] and other lawful activities permitted by § 10A-5A-1.04.

1.2 Members and interests. The initial Members, contribution commitments, and Percentage Interests are shown on signed Schedule A. Percentage Interests must total 100%. A person becomes an additional Member only with all existing Members' written consent and a signed joinder, except as this Agreement specifically provides for continuation after the last Member's dissociation. Ala. Code § 10A-5A-4.01 permits an agreement to set admission terms.

1.3 Limited liability. A Member is not personally liable for a Company debt solely because of membership under Ala. Code § 10A-5A-3.01. This clause does not release a separate guaranty or the Member's own obligation under this Agreement.

1.4 Term. The Company continues until dissolution under Section 10. An event that affects a Member does not alone dissolve the Company unless Section 10 says so.

2. Contributions and Capital

2.1 Initial contributions. Each Member shall provide the cash, described property, or services and meet the due date stated beside that Member's signature on Schedule A. The Members agree to those contributions under Ala. Code § 10A-5A-4.03. The Company will record contributed assets and the Members' Percentage Interests.

2.2 Later contributions. No Member must make an additional contribution without that Member's signed commitment. A proposed capital call must state the amount, each requested share, due date, and any agreed consequences. It becomes binding only on Members who sign it.

2.3 Optional default consequence. For a signed contribution commitment, the Members may attach a completed Schedule E selecting a demand loan, a stated dilution formula, or a purchase formula. Without that signed schedule, no automatic interest, dilution, forfeiture, or forced sale applies. Ala. Code § 10A-5A-1.08(b)(4)–(5) permits specified consequences in a written LLC agreement.

2.4 Accounts and return. The Company shall maintain a contribution and distribution ledger for each Member. Tax counsel shall set any federal tax capital-account method needed for the Company's actual tax classification. A Member may withdraw capital only as this Agreement expressly allows or all Members later agree in writing.

3. Distributions and Tax Decisions

3.1 Economic share. The Members choose Percentage Interests for allocations among themselves and for distributions before dissolution, overriding the equal-share default in Ala. Code § 10A-5A-4.05(a)(1). Subject to Section 3.2, the Governance Body may approve the amount and timing of a distribution; no Member has a right to compel an interim distribution simply because the Company earns income.

3.2 Statutory limit. The Company shall not make an interim distribution if, after giving effect to it, the liabilities counted under Ala. Code § 10A-5A-4.06(a)(1) exceed the fair value of Company assets counted under that subsection. A Member who knowingly receives a distribution contrary to that subsection or this Agreement is liable to the Company as § 10A-5A-4.06(a)(2) provides. The Governance Body shall document the calculation before a distribution.

3.3 Noncash property. A Member cannot demand a distribution in a form other than money. A noncash asset may be distributed only on terms consistent with § 10A-5A-4.05(a)(3), including proportionate shares of that asset for all Members unless a lawful different arrangement is agreed in writing.

3.4 Optional tax distribution. ☐ No tax distribution is required. ☐ If tax counsel confirms an appropriate pass-through treatment and the Members complete a rate of [PERCENT]%, the Governance Body shall consider a tax distribution by Percentage Interest, subject to Section 3.2. Any amount withheld under an applicable tax rule shall be recorded against the affected Member's distribution. This Agreement makes no federal tax election.

3.5 Tax coordination. The Governance Body shall obtain tax advice on required federal, Alabama, and local filings. It shall review Alabama Business Privilege Tax under Ala. Code §§ 40-14A-22 and -25, including the exemption when applicable and the initial-return deadline. If the Company is a qualifying pass-through entity with nonresident Members, it shall review the composite-return rule and exceptions in § 40-18-24.2. Any Alabama electing pass-through entity tax election or revocation under § 40-18-24.4 requires the statutory governing-body and greater-than-50%-voting-control consents and timely filing. Tax contact: [NAME].

4. Management and Voting

4.1 Structure; choose one. ☐ Member directed. The Members direct and oversee the Company's activities. ☐ Manager directed. The Managers named in Schedule D direct and oversee the Company's activities subject to this Agreement. Under Ala. Code § 10A-5A-4.07(a)–(b), members direct and oversee if this Agreement does not choose a different structure. "Governance Body" means the Members for the first choice and the Managers for the second.

4.2 Ordinary business. A Governance Body decision in the ordinary course requires approval by more than 50% of the Percentage Interests in a Member-directed Company or more than one-half of the named Managers in a Manager-directed Company. This Agreement's Percentage Interest voting choice replaces the per-member default in § 10A-5A-4.07(b)(2). An approved decision may authorize a named person to sign and deliver instruments for the Company; membership alone does not grant unlimited signing authority.

4.3 Member approvals. The written consent of all Members is required to amend the certificate of formation or this Agreement, admit another Member, petition for Company bankruptcy relief, approve an act outside the ordinary course, dissolve voluntarily, create or end a series, merge or convert the Company, or sell substantially all Company assets. A debt above $[AMOUNT] and a material tax election also require all Members' written approval. These are the "Major Decisions" for Section 9. At least [PERCENT]% of Percentage Interests constitutes a quorum for a Member meeting; a quorum alone does not lower the consent required here.

4.4 Managers and officers. Initial Managers, if any, and any delegated officers are listed on Schedule D. Members may appoint or remove a Manager by written consent of [PERCENT]% of Percentage Interests; fill this threshold before signing. The Governance Body may appoint an officer by written resolution stating authority and term. No Manager or officer may approve a reserved Major Decision alone.

4.5 Meetings and written consent. A Member may request a meeting on [NUMBER] days' written notice stating the proposed action. Participants may attend by an agreed method that permits contemporaneous communication. An action may be approved without a meeting by signed written consents meeting the required threshold. A Member may appoint a proxy or agent by signed writing under § 10A-5A-4.07(c). The records custodian shall keep meeting minutes and consents.

4.6 Compensation. Manager or Member service compensation must be approved in advance by disinterested Members and recorded separately from distributions. This Agreement creates no automatic remuneration right for Member services under § 10A-5A-4.07(d).

5. Conduct, Conflicts, and Protection

5.1 Duties. A person with authority to direct and oversee the Company's activities owes the duties described in Ala. Code § 10A-5A-4.08, including loyalty, care that refrains from grossly negligent or reckless conduct, intentional misconduct, or knowing violation of law, and the implied contractual covenant of good faith and fair dealing. A Member without that authority has the limited information-use duty described in § 10A-5A-4.08(g), as well as that covenant. This Agreement does not eliminate the covenant or authorize a bad-faith violation of it under § 10A-5A-1.08(b)–(c).

5.2 Conflicts and outside activities. A person directing the Company shall disclose a material personal interest in a proposed Company transaction to the other Members before approval. Any specific outside activity, Company opportunity, or transaction to be permitted despite a potential loyalty conflict must be identified and approved in a signed Member resolution; this Agreement gives no blanket permission to compete or appropriate an opportunity. The Company may record confidentiality restrictions on information provided under Section 8, consistent with § 10A-5A-4.09(g).

5.3 Indemnification and insurance. As an express contractual choice under Ala. Code § 10A-5A-4.10, the Company shall indemnify a Member, Manager, or officer for reasonable liabilities and expenses incurred in good-faith authorized Company service, except for that person's fraud, intentional misconduct, or bad-faith breach of the implied covenant. The Governance Body may advance defense expenses on a signed undertaking to repay amounts ultimately found outside this clause and may buy appropriate insurance. This clause does not imply that § 10A-5A-4.10 mandates indemnification.

6. Transfers and Exit

6.1 Transferable interest. A Member's transferable interest is personal property consisting of distribution rights under Ala. Code § 10A-5A-5.01. A transfer alone gives the transferee distribution rights, not membership, management, or inspection rights, under § 10A-5A-5.02. Admission as a Member requires Section 1.2 compliance.

6.2 Transfers. A Member may transfer an economic interest to a spouse, descendant, revocable trust, or wholly owned entity after written notice and a transferee acknowledgment of this Article. A proposed third-party transfer must first be offered in writing to the Company for [NUMBER] days and then to the other Members for [NUMBER] days on the same material terms. A transferee remains subject to the statutory rights and limits of § 10A-5A-5.02.

6.2A Optional tag-along and drag-along. ☐ No tag-along or drag-along right is created. ☐ If Members holding more than [PERCENT]% of Percentage Interests propose to sell their interests to a third party, other Members may join the sale pro rata on the same material terms by notice within [NUMBER] days. ☐ If Members holding at least [PERCENT]% of Percentage Interests approve a bona fide sale of all interests, remaining Members shall sell on the same per-interest terms, subject to completion of all selected thresholds and any required Member approval under Section 4.3.

6.3 Optional transfer at death. ☐ No transfer-at-death designation is made in this Agreement. ☐ The Member-specific designations in Schedule F govern a transfer of the named Member's transferable interest at death under Ala. Code § 10A-5A-5.02(g). A designation transfers only the economic interest unless the recipient is separately admitted as a Member, and it remains subject to outstanding charging orders and creditors' rights identified in that subsection. Each designating Member signs Schedule F.

6.4 Buy-sell option. On death, permanent incapacity as defined in Schedule G, a prohibited transfer, or dissociation under Ala. Code § 10A-5A-6.01, the Company may elect to purchase the affected transferable interest within [NUMBER] days after notice. If it declines, the other Members may elect pro rata within [NUMBER] more days. Price: ☐ fair market value by independent appraisal; ☐ formula attached as Schedule G: [FORMULA]. Payment: [PERCENT]% at closing and the balance on a signed note stating rate and maturity. Any option triggered by bankruptcy applies only to the extent enforceable under applicable law. Dissociation alone does not impose a statutory mandatory buyout under this Agreement.

6.5 Charging order. A judgment creditor's remedy against a Member's transferable interest is limited as stated in Ala. Code § 10A-5A-5.03: after service of a charging order the creditor can receive distributions otherwise due, and subsection (f) bars foreclosure of that interest and specified remedies against Company property. A charging order does not itself admit the creditor as a Member or dissolve the Company. The Company shall follow a served court order under § 10A-5A-5.03(b).

7. Series Election

7.1 Choose one. ☐ The Company will not establish series under this Agreement. ☐ The Company may establish the series identified in signed Schedule C under Ala. Code § 10A-5A-11.01. For any series, the liability separation in § 10A-5A-11.02(a) applies only when the series assets are separately accounted for, this Agreement states the limitation, and the filed certificate of formation contains the required series statement under § 10A-5A-11.02(b). The Members shall confirm all three conditions before relying on the separation.

7.2 Series limitation statement if elected. If the second box in Section 7.1 is checked and the statutory conditions are met, debts and obligations of a series are enforceable only against that series' assets, and debts and obligations of the Company generally or another series are not enforceable against that series' assets, as provided in § 10A-5A-11.02(a). Each series' manager, members, assets, and purpose shall be recorded in Schedule C and kept in separate asset records. This statement does not make an unformed or inadequately documented series protected.

8. Records and Information

8.1 Records. The Company shall keep the member list, filed certificate and amendments, effective Agreement, recent tax returns, and recent financial statements listed in Ala. Code § 10A-5A-4.09(a). Records custodian and delivery address: [NAME AND ADDRESS]. The Governance Body shall also retain contribution records, series asset records if applicable, resolutions, and signed schedules.

8.2 Member inspection. A Member may demand the § 10A-5A-4.09(a) records by written notice received by the Company at least 10 days before inspection. Other books and records require at least 30 days' received written notice and a proper purpose. Dissociated Members have the narrower 30-day right stated in § 10A-5A-4.09(c). The Company may apply only restrictions, redactions, and denials allowed by current § 10A-5A-4.09(g)–(i); the 2026 amendment makes litigation-related requests relevant to proper purpose. Nothing here gives a transferee an inspection right.

8.3 Confidentiality. A recipient shall use nonpublic Company information only for a permitted Company or Member purpose and safeguard information reasonably designated confidential under § 10A-5A-4.09(g). This clause does not restrict disclosure required by law or prevent a statutory inspection demand that the Company must honor.

9. Deadlock and Disputes

9.1 Deadlock. A "Deadlock" exists if a Major Decision fails to obtain the required consent at two properly noticed meetings at least [NUMBER] days apart. The Members shall first attempt one mediation session with an agreed Alabama mediator. A Member may seek urgent relief or apply for judicial dissolution without waiting where delay would impair a right that cannot be waived.

9.2 Purchase election. If Deadlock remains [NUMBER] days after mediation, a Member may deliver a written offer stating a price per 1% Percentage Interest. The recipients shall within [NUMBER] days elect to buy the offeror's interest or sell their interests at that same per-percent price, with closing terms stated in the offer. This option is contractual and is not a statutory court remedy.

9.3 Judicial dissolution. Ala. Code § 10A-5A-7.01(d) permits a Member's application for an order of dissolution where carrying on in conformity with the Agreement is not reasonably practicable. The statute identifies the designated court or, if none, the applicable county circuit court. This Agreement does not limit that court power.

10. Dissolution and Winding Up

10.1 Events. The Company dissolves on an event stated here, all Members' consent, the no-remaining-member event subject to the continuation routes in Ala. Code § 10A-5A-7.01(c), or a court order under § 10A-5A-7.01(d). Death or dissociation of one Member alone does not dissolve a Company with another Member. A voluntary dissolution decision under this Agreement requires all Members' written consent.

10.2 Winding up. The Governance Body or persons selected by all Members shall collect assets, provide for liabilities, and complete winding up under Ala. Code § 10A-5A-7.02. The Company may file a statement of dissolution with the Secretary of State during winding up under § 10A-5A-7.02(b)(1); that statement is optional under the cited subsection.

10.3 Asset order. On winding up, apply assets under Ala. Code § 10A-5A-7.06: first pay or adequately provide for creditors, including Members who are creditors; then return unreturned contributions to holders of transferable interests; then distribute any surplus in the proportions in which those interests shared distributions before dissolution. If assets are insufficient to return all unreturned contributions, allocate the remaining surplus in proportion to their values under § 10A-5A-7.06(c). Percentage Interests govern the final tier under Section 3.1.

11. General Terms

11.1 Notices. A notice under this Agreement must be in writing and sent to the address or confirmed email stated on Schedule A. A statutory records demand is effective only when received as Section 8.2 requires.

11.2 Amendments. All Members must sign a written amendment. This Agreement and its signed schedules are the parties' agreement on the matters they cover, subject to the filed certificate of formation and nonwaivable law.

11.3 Law and forum. Alabama law governs this Agreement. A party seeking judicial relief shall file in a court with jurisdiction and venue under applicable law; Section 9.3 controls the statutory dissolution forum.

11.4 Severability and counterparts. If a provision is unenforceable, the rest remains effective to the extent the parties' bargain can operate. The Members may sign counterparts. An electronic signature may be used only if the parties agree to transact electronically and the method satisfies Ala. Code §§ 8-1A-5 and 8-1A-7.

11.5 No third-party rights. This Agreement creates no rights in a nonparty except an expressly covered indemnitee under Section 5.3.

Signatures

Company: [COMPANY NAME], LLC

By: [SIGNATURE] Name and title: [NAME, TITLE] Date: [DATE]

Member 1: [NAME] Signature: [SIGNATURE] Date: [DATE]

Member 2: [NAME] Signature: [SIGNATURE] Date: [DATE]

Additional Members shall sign below or on an attached counterpart and sign Schedule A.

Schedule A — Members, Contributions, and Interests

The Members agree to the contributions below. Describe any property or service with enough detail to identify performance. Percentage Interests must total 100%.

Total Percentage Interests: [100]%.

Schedule B — Optional Classes

☐ One class of membership interests. ☐ Multiple classes, described below. If multiple classes are selected, state their voting, distribution, and transfer rights in a signed amendment; this Schedule alone does not override Sections 3 or 4.

Class terms or attachment reference: [DESCRIPTION / NONE].

Schedule C — Series, If Elected

Use only if Section 7.1 elects series. Attach the filed certificate statement and maintain separately identifiable asset records for each series.

Schedule D — Initial Managers and Officers

Use for a Manager-directed Company or a delegated officer. State each person's title and written signing limit.

Schedule E — Optional Contribution-Default Formula

☐ No additional consequence. ☐ Demand loan: [AMOUNT / RATE / TERM]. ☐ Dilution formula: [COMPLETE FORMULA]. ☐ Purchase formula: [COMPLETE FORMULA]. This Schedule has effect only when completed and signed by all Members.

All-Member signatures: [SIGNATURES AND DATES].

Schedule F — Optional Transfer at Death

Use only if Section 6.3 elects transfer at death. Each designation identifies the economic interest and the beneficiary; it does not by itself admit a Member.

Schedule G — Optional Buy-Sell Terms

Permanent incapacity means [COMPLETE OBJECTIVE DEFINITION]. Valuation formula, if selected in Section 6.4: [COMPLETE FORMULA]. Appraiser selection and cost allocation: [TERMS].

Schedule H — Optional Spousal Acknowledgment

Use only if counsel determines an acknowledgment is appropriate for a particular Member. This acknowledgment records receipt of the transfer provisions and does not make the spouse a Member or waive rights that this Agreement cannot waive.

Member: [NAME] Spouse: [NAME] Spouse signature: [SIGNATURE] Date: [DATE].

Before Signing

☐ Confirm the filed certificate, entity number, registered office, and agent.
☐ Select management, series, class, transfer-at-death, and tag/drag options; complete every selected schedule.
☐ Complete the Member approval threshold, debt limit, capital-call terms, and buy-sell terms.
☐ Have tax counsel review Alabama Business Privilege Tax, composite returns, and any electing pass-through entity tax choice.
☐ Have Alabama counsel review the signed agreement and any series asset records.