OPERATING AGREEMENT OF XYZ, L.L.C.
A. Pursuant to a Certificate of Formation filed with the Delaware Secretary of State on ____________, 20______, XYZ, L.L.C. (originally named JKL Shares, L.L.C.) was formed as a Delaware limited liability company (the “Company”) for the purpose of taking any and all action and engaging in any business or investment enterprise which is permitted under the Delaware Limited Liability Company Act (the “Act”), as the same shall be determined by the Managers. The Company may carry out the
foregoing purpose directly or indirectly as a general or limited partner, venturer, member, stockholder or other type of equity interest owner in one or more partnerships, joint ventures, corporations or limited liability companies, wheresoever organized or otherwise.
B. The Member and the Managers desire to enter into this Agreement to govern the business and affairs of the Company and set forth in full their rights and obligations with respect to the Company.
NOW, THEREFORE, in consideration of the foregoing premises, of the mutual covenants set forth in this Agreement, and of other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties to this Agreement, intending to be legally bound hereby, agree as follows:
foregoing purpose directly or indirectly as a general or limited partner, venturer, member, stockholder or other type of equity interest owner in one or more partnerships, joint ventures, corporations or limited liability companies, wheresoever organized or otherwise.
B. The Member and the Managers desire to enter into this Agreement to govern the business and affairs of the Company and set forth in full their rights and obligations with respect to the Company.
NOW, THEREFORE, in consideration of the foregoing premises, of the mutual covenants set forth in this Agreement, and of other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties to this Agreement, intending to be legally bound hereby, agree as follows:
I. MEMBER(S) AND MEMBERSHIP INTEREST
1.1 Member(s). The name, address and membership interest (“Membership Interest”) of the Member(s) are set forth on Exhibit A of this Agreement.
1.2 New Members. The Company may admit one or more new Members from time to time, but only if the Managers consent to the terms and conditions of such admission, which consent the Managers may grant or withhold in their sole and absolute discretion and without liability therefor. The Company shall not recognize any potential new Member unless and until such new Member executes, adopts and acknowledges this Agreement, or an amended and restated operating agreement, and provides such other information and documents as may be reasonably requested by the Managers.
1.3 Loss of Membership. A Member shall cease to be a Member upon his resignation, bankruptcy, dissolution, death or adjudication of incompetence.
1.4 Restrictions on Transfer by Members. No Member may sell, assign, transfer or otherwise dispose of or pledge, hypothecate or otherwise encumber his Membership Interest without the prior consent of the Managers, which consent the Managers may grant or withhold in their sole and absolute discretion and without liability therefor, and any such act in violation hereof shall be of no effect and shall not be binding on the Company. Anything contained herein to the contrary notwithstanding, no Member may sell, assign, transfer, encumber or otherwise dispose of his Membership Interest if such disposition would (i) violate the
provisions of any federal or state securities laws; or (ii) violate the terms of (or result in a default or acceleration under) any law, rule, regulation, agreement or commitment binding on the Company.
1.2 New Members. The Company may admit one or more new Members from time to time, but only if the Managers consent to the terms and conditions of such admission, which consent the Managers may grant or withhold in their sole and absolute discretion and without liability therefor. The Company shall not recognize any potential new Member unless and until such new Member executes, adopts and acknowledges this Agreement, or an amended and restated operating agreement, and provides such other information and documents as may be reasonably requested by the Managers.
1.3 Loss of Membership. A Member shall cease to be a Member upon his resignation, bankruptcy, dissolution, death or adjudication of incompetence.
1.4 Restrictions on Transfer by Members. No Member may sell, assign, transfer or otherwise dispose of or pledge, hypothecate or otherwise encumber his Membership Interest without the prior consent of the Managers, which consent the Managers may grant or withhold in their sole and absolute discretion and without liability therefor, and any such act in violation hereof shall be of no effect and shall not be binding on the Company. Anything contained herein to the contrary notwithstanding, no Member may sell, assign, transfer, encumber or otherwise dispose of his Membership Interest if such disposition would (i) violate the
provisions of any federal or state securities laws; or (ii) violate the terms of (or result in a default or acceleration under) any law, rule, regulation, agreement or commitment binding on the Company.
II. CAPITAL AND DISTRIBUTIONS
2.1 Capital Contributions. Simultaneously with the execution of this Agreement, the Member shall contribute One Hundred Dollars ($100.00) to the capital of the Company.
2.2 Distribution of Net Cash Flow. All cash derived from operating the Company, less expenses incurred in connection therewith and reserves as determined by the Managers in their discretion (“Net Cash Flow”), shall be distributed to the Member(s) at such intervals as the Managers shall determine. If there is more than one Member for and during the period as to which a distribution is made, such distribution shall be made among the Members proportionately in accordance with their respective interests as Members. The Managers may, from time to time, refrain from making distributions of Net Cash Flow entirely if the Managers determine that it is in the best interests of the Company. Notwithstanding the Managers’ power to make or withhold such distributions, the Managers have a fiduciary duty to the Member(s) and the Company.
2.2 Distribution of Net Cash Flow. All cash derived from operating the Company, less expenses incurred in connection therewith and reserves as determined by the Managers in their discretion (“Net Cash Flow”), shall be distributed to the Member(s) at such intervals as the Managers shall determine. If there is more than one Member for and during the period as to which a distribution is made, such distribution shall be made among the Members proportionately in accordance with their respective interests as Members. The Managers may, from time to time, refrain from making distributions of Net Cash Flow entirely if the Managers determine that it is in the best interests of the Company. Notwithstanding the Managers’ power to make or withhold such distributions, the Managers have a fiduciary duty to the Member(s) and the Company.
III. MANAGEMENT
3.1. Appointment of Managers. Mr. YOUR NAME and Mrs. YOUR NAME shall serve as Managers of the Company. The Member(s) (acting by a majority-in-interest of the Members if there are more than one Member) shall have the right to remove a Manager only for cause which, for purposes of this Agreement, shall mean the Manager’s actual fraud, gross negligence or willful misconduct with respect to the Company and the conduct of its affairs.
3.2 Successor Managers. In the event of the resignation, death, disability, removal, or legal incapacity of one of the Managers, the other Manager shall continue to serve as sole Manager.
3.2.1 In the event of the resignation, death, disability, removal, or legal incapacity of both Mr. YOUR Name and AND Mrs. YOUR NAME as Managers, the children of the Managers shall serve as Managers, provided, however, that a child shall not so serve
until she attains eighteen (18) years of age.
3.2.2 In the event of the resignation, death, disability, removal, or legal incapacity of all other than Mr. YOUR NAME and Mrs. YOUR NAME, such person or persons appointed by a majority of the Managers shall serve. In the event no Successor Manager has been so designated, the Members shall elect a successor Manager or Managers by a majority vote of the Members. Any successor Manager shall have all of the rights, powers and authority conferred upon the Managers pursuant to this
Agreement.
3.3 Authority of Managers. The Managers shall have full, exclusive and complete discretion to manage and control the business and affairs of the Company, to make all decisions affecting the business and affairs of the Company, and to take such actions as the Managers deem necessary or appropriate to accomplish the purposes of the Company. Any and all decisions made or actions taken by the Managers shall be sufficient for all purposes and shall be binding upon the Company and the Member. The decision of either Manager, acting alone and without the joinder of the other Manager, shall be effective and binding on the Company, and may be relied on by any third party. The Managers shall devote to the Company such time as may be necessary for the proper performance of their duties hereunder.
3.2 Successor Managers. In the event of the resignation, death, disability, removal, or legal incapacity of one of the Managers, the other Manager shall continue to serve as sole Manager.
3.2.1 In the event of the resignation, death, disability, removal, or legal incapacity of both Mr. YOUR Name and AND Mrs. YOUR NAME as Managers, the children of the Managers shall serve as Managers, provided, however, that a child shall not so serve
until she attains eighteen (18) years of age.
3.2.2 In the event of the resignation, death, disability, removal, or legal incapacity of all other than Mr. YOUR NAME and Mrs. YOUR NAME, such person or persons appointed by a majority of the Managers shall serve. In the event no Successor Manager has been so designated, the Members shall elect a successor Manager or Managers by a majority vote of the Members. Any successor Manager shall have all of the rights, powers and authority conferred upon the Managers pursuant to this
Agreement.
3.3 Authority of Managers. The Managers shall have full, exclusive and complete discretion to manage and control the business and affairs of the Company, to make all decisions affecting the business and affairs of the Company, and to take such actions as the Managers deem necessary or appropriate to accomplish the purposes of the Company. Any and all decisions made or actions taken by the Managers shall be sufficient for all purposes and shall be binding upon the Company and the Member. The decision of either Manager, acting alone and without the joinder of the other Manager, shall be effective and binding on the Company, and may be relied on by any third party. The Managers shall devote to the Company such time as may be necessary for the proper performance of their duties hereunder.
IV. LIMITATION ON LIABILITY OF MANAGERS; INDEMINIFICATION.
4.1 No Manager shall be liable, responsible or accountable in damages or otherwise to the Company or any of the Members for any act or omission performed or omitted in good faith on behalf of the Company and in a manner believed to be in the best interests of the Company, but shall be so liable, responsible or accountable for fraud, gross negligence, willful misconduct or a breach of fiduciary duty with respect to such acts or omissions.
4.2 The Company shall indemnify the Managers (to the extent of its available assets, but without the requirement that any Member make additional capital contributions for this purpose) against any loss or damage incurred by any Manager by reason of any act or omission performed or omitted by him or her (or his or her employees or agents) in good faith on behalf of the Company and in a manner believed by such Manager to be in the best interests of the Company (but not, in any event, any loss or
damage incurred by reason of fraud, gross negligence, willful misconduct or a breach of fiduciary duty with respect to such actor omission).
4.2 The Company shall indemnify the Managers (to the extent of its available assets, but without the requirement that any Member make additional capital contributions for this purpose) against any loss or damage incurred by any Manager by reason of any act or omission performed or omitted by him or her (or his or her employees or agents) in good faith on behalf of the Company and in a manner believed by such Manager to be in the best interests of the Company (but not, in any event, any loss or
damage incurred by reason of fraud, gross negligence, willful misconduct or a breach of fiduciary duty with respect to such actor omission).
V. DISSOLUTION AND LIQUIDATION
5.1 Term and Dissolution. The term of the Company commenced on __________________, 20_________ and shall continue until December 31, 20_________, or until dissolution occurs prior to that date for any one of the following reasons:
5.1.1 An election to dissolve the Company is made in writing by the Member (or by a majority-in-interest of the Members if there are more than one Member) and by all of the Managers; or
5.1.2 The sale, exchange or other disposition of all or substantially all of the Company’s assets; or
5.1.3 Any other event causing dissolution of the Company under the Act.
5.2 Liquidation of Company Assets.
5.2.1. In the event of dissolution and final termination of the Company, a full accounting of the assets and liabilities shall be taken, and the assets shall be liquidated, with the Net Cash Flow therefrom distributed in accordance with the
provisions of Section 2.2 of this Agreement by the later of (i) the last day of the fiscal year in which the termination occurs; or (ii) ninety (90) days after the date on which the termination occurs.
5.2.2 Upon the dissolution of the Company, the Managers shall cause to be prepared, and shall furnish to the Member(s), a statement setting forth the assets and liabilities of the Company. Promptly following the complete liquidation and distribution of the Company’s assets, the Managers shall furnish to the Member(s) a statement showing the manner in which the Company’s assets were liquidated and distributed.
5.1.1 An election to dissolve the Company is made in writing by the Member (or by a majority-in-interest of the Members if there are more than one Member) and by all of the Managers; or
5.1.2 The sale, exchange or other disposition of all or substantially all of the Company’s assets; or
5.1.3 Any other event causing dissolution of the Company under the Act.
5.2 Liquidation of Company Assets.
5.2.1. In the event of dissolution and final termination of the Company, a full accounting of the assets and liabilities shall be taken, and the assets shall be liquidated, with the Net Cash Flow therefrom distributed in accordance with the
provisions of Section 2.2 of this Agreement by the later of (i) the last day of the fiscal year in which the termination occurs; or (ii) ninety (90) days after the date on which the termination occurs.
5.2.2 Upon the dissolution of the Company, the Managers shall cause to be prepared, and shall furnish to the Member(s), a statement setting forth the assets and liabilities of the Company. Promptly following the complete liquidation and distribution of the Company’s assets, the Managers shall furnish to the Member(s) a statement showing the manner in which the Company’s assets were liquidated and distributed.
VI. COMPANY OFFICES
6.1 Place of Business. The principal office and primary place of business of the Company shall be ________________________________, _________________, _____, ___________ The principal office of the Company may be changed by the Managers in their sole discretion. The Company may have such other offices as the Managers may designate or as the business of the Company may from time to time require.
6.2 Registered Office and Agent. The registered office of the Company, as required by the Act to be maintained in the State of Delaware, shall be located a ______________Street, in the City of Wilmington, in the County of New Castle, in the State of Delaware, and the original registered agent at such address shall be the ____________ Trust Company. The registered office and registered agent may be changed from time to time by action of the Managers and by the filing of the prescribed forms with, and the payment of any prescribed fees to, the Delaware Secretary of State.
6.2 Registered Office and Agent. The registered office of the Company, as required by the Act to be maintained in the State of Delaware, shall be located a ______________Street, in the City of Wilmington, in the County of New Castle, in the State of Delaware, and the original registered agent at such address shall be the ____________ Trust Company. The registered office and registered agent may be changed from time to time by action of the Managers and by the filing of the prescribed forms with, and the payment of any prescribed fees to, the Delaware Secretary of State.
VII. MISCELLANEOUS
7.1 Amendments. This Agreement may be amended only by a writing executed or consented to by the Member (or by a majority-in-interest of the Members if there are more than one Member) and by all of the Managers.
7.2. Other Activities. The Member(s) and/or either or both of the Managers may possess an interest in other business ventures of every nature and description, independently or with others, whether or not such other enterprises shall be in competition with any activities of the Company, and neither the Company nor any other Member(s) or Manager shall have any right by virtue of this Agreement in and to such independent ventures or to the income or profits derived therefrom.
7.3 Business with Affiliates. The Managers, in their discretion, may cause the Company to transact business with any Member and/or Manager or any party related to a Member and/or Manager for goods or services reasonably required in the conduct of the Company’s business, provided that any such transaction shall be effected only on terms that are reasonable to the Company.
7.4 Books and Records. The Managers shall maintain at the office of the Company full and accurate books of the Company showing all receipts and expenditures, assets and liabilities, profits and losses, names and current addresses of Members,
and all other records necessary for recording the Company’s business and affairs. The Managers shall be required to prepare, or cause to be prepared, all tax returns required of the Company at the Company’s expense.
7.5 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law principles thereof.
7.6 Binding Agreement. This Agreement shall be binding upon the parties hereto and their respective heirs, executors, personal representatives, successors and assigns.
7.7 Entire Agreement. This Agreement contains the entire understanding between the Member(s) and the Managers with respect to the subject matter hereof and supersedes all prior written or oral agreements between them, unless otherwise provided herein. There are no representations, agreements, arrangements or understandings, oral or written, between the Member(s) and the Managers relating to the subject matter hereof which are not fully expressed herein.
7.8 Effectiveness. This Agreement may be executed in two or more counterparts, which shall be treated as originals for all purposes, and all so executed shall constitute one agreement, binding on all of the parties notwithstanding that all parties are not signatory to the original or same counterpart. The execution of this Agreement by facsimile signature shall be sufficient for all purposes and shall be binding on any party who so executes.
7.9 Rules of Construction. The following rules of construction shall apply to this Agreement:
7.9.1 All section headings in this Agreement are for convenience of reference only and are not intended to qualify the meaning of any section.
7.9.2 All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders, the singular shall include the plural, and vice versa, as the context may require.
7.9.3 Each provision of this Agreement shall be considered severable from the rest, and if any provision of this Agreement or its application to any person or circumstances shall be held invalid and contrary to any existing or future law or unenforceable to any extent, the remainder of this Agreement and the application of any other provision to any person or circumstances shall not be affected thereby and shall be interpreted and enforced to the greatest extent permitted by law so as to give effect to the original intent of the parties hereto. The Member(s) and the Managers agree that they shall use best efforts to agree on a substitute provision or provisions in lieu of such invalid, illegal or unenforceable portion of this Agreement to give effect to the original intent of the Member(s) and the Managers to the fullest extent permitted by law.
7.9.4 Unless otherwise specifically and expressly limited in the context, any reference herein to a decision, determination, act, action, exercise of a right, power or privilege, or other procedure by the Managers shall mean and refer to the decision, determination, act, action, exercise or other procedure by either or both of the Managers in his/her/their sole and absolute discretion.
7.2. Other Activities. The Member(s) and/or either or both of the Managers may possess an interest in other business ventures of every nature and description, independently or with others, whether or not such other enterprises shall be in competition with any activities of the Company, and neither the Company nor any other Member(s) or Manager shall have any right by virtue of this Agreement in and to such independent ventures or to the income or profits derived therefrom.
7.3 Business with Affiliates. The Managers, in their discretion, may cause the Company to transact business with any Member and/or Manager or any party related to a Member and/or Manager for goods or services reasonably required in the conduct of the Company’s business, provided that any such transaction shall be effected only on terms that are reasonable to the Company.
7.4 Books and Records. The Managers shall maintain at the office of the Company full and accurate books of the Company showing all receipts and expenditures, assets and liabilities, profits and losses, names and current addresses of Members,
and all other records necessary for recording the Company’s business and affairs. The Managers shall be required to prepare, or cause to be prepared, all tax returns required of the Company at the Company’s expense.
7.5 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law principles thereof.
7.6 Binding Agreement. This Agreement shall be binding upon the parties hereto and their respective heirs, executors, personal representatives, successors and assigns.
7.7 Entire Agreement. This Agreement contains the entire understanding between the Member(s) and the Managers with respect to the subject matter hereof and supersedes all prior written or oral agreements between them, unless otherwise provided herein. There are no representations, agreements, arrangements or understandings, oral or written, between the Member(s) and the Managers relating to the subject matter hereof which are not fully expressed herein.
7.8 Effectiveness. This Agreement may be executed in two or more counterparts, which shall be treated as originals for all purposes, and all so executed shall constitute one agreement, binding on all of the parties notwithstanding that all parties are not signatory to the original or same counterpart. The execution of this Agreement by facsimile signature shall be sufficient for all purposes and shall be binding on any party who so executes.
7.9 Rules of Construction. The following rules of construction shall apply to this Agreement:
7.9.1 All section headings in this Agreement are for convenience of reference only and are not intended to qualify the meaning of any section.
7.9.2 All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders, the singular shall include the plural, and vice versa, as the context may require.
7.9.3 Each provision of this Agreement shall be considered severable from the rest, and if any provision of this Agreement or its application to any person or circumstances shall be held invalid and contrary to any existing or future law or unenforceable to any extent, the remainder of this Agreement and the application of any other provision to any person or circumstances shall not be affected thereby and shall be interpreted and enforced to the greatest extent permitted by law so as to give effect to the original intent of the parties hereto. The Member(s) and the Managers agree that they shall use best efforts to agree on a substitute provision or provisions in lieu of such invalid, illegal or unenforceable portion of this Agreement to give effect to the original intent of the Member(s) and the Managers to the fullest extent permitted by law.
7.9.4 Unless otherwise specifically and expressly limited in the context, any reference herein to a decision, determination, act, action, exercise of a right, power or privilege, or other procedure by the Managers shall mean and refer to the decision, determination, act, action, exercise or other procedure by either or both of the Managers in his/her/their sole and absolute discretion.