Fillable Printable Llc Operating Agreement Template

Llc Operating Agreement Template

IL-00LLC-1

LLC SAMPLE OPERATING AGREEMENT

This agreement is a sample operating agreement and should be modified to meet your needs.

It provides for the LLC to be operated by one or more managers OR by the members. You

will have to decide how you want your LLC to operate.

Read carefully and make appropriate changes to suit your

individual needs and purposes.

OPERATING AGREEMENT

______________________________________

AN ILLINOIS LIMITED LIABILITY COMPANY

THIS OPERATING AGREEMENT ("Agreement") is entered into the _____ day of

__________, 20___, by and between the following persons:

1. _______________________________________________________________

2. _______________________________________________________________

3. _______________________________________________________________

4. _______________________________________________________________

hereinafter, ("Members" or “Parties”).

FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is

hereby acknowledged, the Parties covenant, contract and agree as follows:

ARTICLE I

FORMATION OF LIMITED LIABILITY COMPANY

1. Formation of LLC. The Parties have formed an Illinois limited liability

company named ___________________________________________________ ("LLC").

The operation of the LLC shall be governed by the terms of this Agreement and the

applicable laws of the State of Illinois relating to the formation, operation and taxation of a

LLC, including the Illinois Limited Liability Company Act (805 ILCS 180) hereinafter

referred to as the "Act". To the extent permitted by the Act, the terms and provisions of this

Agreement shall control if there is a conflict between such Act and this Agreement. The

Parties intend that the LLC shall be taxed as a partnership. Any provisions of this

Agreement, if any, that may cause the LLC not to be taxed as a partnership shall be

inoperative.

2. Articles or Organization

. The Members acting through one of its Members,

_____________________________________, filed Articles of Organization, ("Articles")

for record in the office of the Illinois Secretary of State on _________________________,

thereby creating the LLC.

3. Business

. The business of the LLC shall be:

(a) to invest in and develop real property located in _______________ County,

________________________ ("Property");

(b) in connection with the Property, to buy, take, lease, borrow, purchase or

otherwise acquire, and to own, use, hold, sell, convey, exchange, improve,

develop, lease, manage, dispose of, pledge or mortgage real or personal property,

or any interests therein or any services associated therewith;

other entities through which the LLC elects to carry on its business;

(d) to obtain financing and refinancing to accomplish the foregoing purposes; and

(e) to do any and all other things necessary, desirable or incidental to the foregoing

purposes. The LLC may sell or otherwise dispose of all or substantially all of its

assets, subject to any restrictions set out in this Agreement, and any such sale or

disposition shall be considered to be within the scope of the LLC's business.

(f) Other: _______________________________________________________

_____________________________________________________________

4. Registered Office and Registered Agent

. The registered office and place of

business of the LLC shall be ___________________________________________________

______________________________________ and the registered agent at such office shall

be __________________________________________________________________. The

Members may change the registered office and/or registered agent from time to time.

5. Duration

. The LLC will commence business as of the date the Members

contribute their capital investment in the LLC and will continue in perpetuity.

6. Fiscal Year

. The LLC's fiscal and tax year shall end December 31.

ARTICLE II

MEMBERS

7. Initial Members. The initial members of the LLC, their initial capital

contributions, and their percentage interest in the LLC are:

Initial Percentage Interest Capital

Members in LLC Contribution

________________________ _________________ ___________________

8. Additional Members. New members may be admitted only upon the consent

of a majority of the Members and upon compliance with the provisions of this agreement.

ARTICLE III

MANAGEMENT

9. Management. The Members have elected to manage the LLC as follows:

[ ] The management of the LLC shall be vested in the Members without an

appointed manager. The members shall elect officers who shall manage the company. The

President and Secretary may act for and on behalf of the LLC and shall have the power and

authority to bind the LLC in all transactions and business dealings of any kind except as

otherwise provided in this Agreement.

[ ] The Members hereby delegate the management of the LLC to Manager(s),

subject to the limitations set out in this agreement.

a) The Members shall elect and may remove the Manager(s) by majority

vote.

b) A Manager shall serve until a successor is elected by the Members.

c) The Manager(s) shall have the authority to take all necessary and proper

actions in order to conduct the business of the LLC.

d) Except for decisions concerning distributions, any Manager can take any

appropriate action on behalf of the LLC, including, but not limited to

signing checks, executing leases, and signing loan documents.

e) In determining the timing and total amount of distributions to the

Members, the action of the Manager shall be based on a majority vote of

the Managers, with or without a meeting.

f) The

compensation to the Manager(s) shall be in the discretion of the

majority of the Members of the LLC.

g) There shall be _________ initial Managers.

h) The initial Managers is/are:

_________________________________________________________.

10. Officers and Relating Provisions

. In the event the Members elect to manage

the LLC, rather than appointing a manager, the Members shall appoint officers for the LLC

and the following provisions shall apply:

(a) Officers

. The officers of the LLC shall consist of a president, a treasurer

and a secretary, or other officers or agents as may be elected and appointed by the Members.

Members may hold more than one office. The officers shall act in the name of the LLC and

shall supervise its operation under the direction and management of the Members, as further

described below.

(b) Election and Term of Office

. The officers of the LLC shall be elected

annually by the Members by a majority vote. Vacancies may be filled or new offices created

and filled at any meeting of the Members. Each officer shall hold office until his/her death,

until he/she shall resign, or until he/she is removed from office. Election or appointment of

an officer or agent shall not of itself create a contract right.

. Any officer or agent may be removed by a majority of the

Members whenever they decide that the best interests of the Company would be served

thereby. Such removal shall be without prejudice to the contract rights, if any, of the person

so removed.

(d) Vacancies

. A vacancy is any office because of death, resignation,

removal, disqualification or otherwise may be filled by the Members for the unexpired

portion of the term.

(e) President

. The President shall be the chief executive officer of the LLC

and shall preside at all meetings of the Members. The President shall have such other powers

and perform such duties as are specified in this Agreement and as may from time to time be

assigned by the Members of the LLC.

(f) The Treasurer

. The Treasurer shall be the chief financial officer of the

LLC. The Treasurer shall not be required to give a bond for the faithful discharge of his/her

duties. The Treasurer shall: (i) have charge and custody of and be responsible for all funds

and securities of the LLC; (ii) in the absence of the President, preside at meetings of the

Members; (iii) receive and give receipts for moneys due and payable to the LLC from any

source whatsoever, and deposit all such moneys in the name of the LLC in such banks, trust

companies or other depositaries as shall be selected by the Members of the LLC; and (iv) in

general perform all the duties incident to the office of treasurer and such other duties as from

time to time may be assigned by the President or by the Members of the LLC.

(g) Secretary

. The secretary shall: (i) keep the minutes of the Members

meetings in one or more books provided for that purpose; (ii) see that all notices are duly

given in accordance with the provisions of this Agreement or as required by law; (iii) be

custodian of LLC records; (iv) keep a register of the post office address of each Member; (v)

certify the Member’s resolutions; and other documents to the LLC as true and correct; (vi) in

the absence of the President and Treasurer, preside at meetings of the Members and (vii) in

general perform all duties incident to the office of secretary and such other duties as from

time as may be assigned by the President or the Members.

11. Member Only Powers

. Notwithstanding any other provision of this

Agreement, only a majority of the Members may: (a) sell or encumber (but not lease) any

real estate owned by the LLC, or (b) incur debt, expend funds, or otherwise obligate the LLC

if the debt, expenditure, or other obligation exceeds $_____________________.

ARTICLE IV

CONTRIBUTIONS, PROFITS, LOSSES, AND DISTRIBUTIONS

12. Interest of Members. Each Member shall own a percentage interest

(sometimes referred to as a share) in the LLC. The Member’s percentage interest shall be

based on the amount of cash or other property that the Member has contributed to the LLC

and that percentage interest shall control the Member’s share of the profits, losses, and

distributions of the LLC.

13. Contributions

. The initial contributions and initial percentage interest of the

Members are as set out in this Agreement.

14. Additional Contributions

. Only a majority of the Members of the LLC may

call on the Members to make additional cash contributions as may be necessary to carry on

the LLC's business. The amount of any additional cash contribution shall be based on the

Member's then existing percentage interest. To the extent a Member is unable to meet a cash

call, the other Members can contribute the unmet call on a pro rata basis based on the

Members' percentage interests at that time, and the percentage interest of each Member will

be adjusted accordingly.

15. Record of Contributions/Percentage Interests

. This Agreement, any

amendment(s) to this Agreement, and all Resolutions of the Members of the LLC shall

constitute the record of the Members of the LLC and of their respective interest therein.

16. Profits and Losses

. The profits and losses and all other tax attributes of the

LLC shall be allocated among the Members on the basis of the Members' percentage

interests in the LLC.

17. Distributions

. Distributions of cash or other assets of the LLC (other than in

dissolution of the LLC) shall be made in the total amounts and at the times as determined by

a majority of the Members. Any such distributions shall be allocated among the Members

on the basis of the Members' percentage interests in the LLC.

18. Change in Interests

. If during any year there is a change in a Member's

percentage interest, the Member's share of profits and losses and distributions in that year

shall be determined under a method which takes into account the varying interests during the

year.

ARTICLE V

VOTING; CONSENT TO ACTION

19. Voting by Members. Members shall be entitled to vote on all matters which

provide for a vote of the Members in accordance with each Member’s percentage interest.

20. Majority Required. Except as otherwise required, a majority of the

Members, based upon their percentage ownership, is required for any action.

21. Meetings - Written Consent

. Action of the Members may be accomplished

with or without a meeting. If a meeting is held, evidence of the action shall be by Minutes or

Resolution reflecting the action of the Meeting, signed by a majority of the Members.

Action without a meeting may be evidenced by a written consent signed by a majority of the

Members.

22. Meetings

. Meetings of the Members may be called by any Member owning

10% or more of the LLC, or, if Managers were selected, by any Manager of the LLC.

23. Majority Defined

. As used throughout this agreement the term “Majority” of

the Members shall mean a majority of the ownership interest of the LLC as determined by

the records of the LLC on the date of the action.

ARTICLE VI

DUTIES AND LIMITATION OF LIABILITY MEMBERS, OFFICERS AND

PERSONS SERVING ON ADVISORY COMMITTEES; INDEMNIFICATION

24. Duties of Members: Limitation of Liability. The Members, Managers and

officers shall perform their duties in good faith, in a manner they reasonably believe to be in

the best interests of the LLC, and with such care as an ordinarily prudent person in a like

position would use under similar circumstances. No Member or officer shall have any

liability to the LLC or any other Member by reason of being or having been a Member or

officer. No Member or officer shall be liable to the LLC or to any other Member or officer

for any loss or damage sustained by the LLC or any other Member or officer unless the loss

or damage shall have been the result of fraud, deceit, gross negligence, willful misconduct,

or a wrongful taking by that Member or officer.

25. Members Have No Exclusive Duty to LLC

. The Members shall not be

required to participate in the LLC as their sole and exclusive business. Members may have

other business interests and may participate in other investments or activities in addition to

those relating to the LLC. Neither the LLC nor any other Member shall have any right, by

virtue of this Agreement, to share or participate in another member’s business interests,

investments or activities or the income or proceeds derived therefrom. No Member shall

incur liability to the LLC or to any other Member by reason of participating in any such

other business, investment or activity.

26. Protection of Members and Officers

(a) As used herein, the term “Protected Party” refers to the Members and

officers of the Company.

(b) To the extent that, at law or in equity, a Protected Party has duties

(including fiduciary duties) and liabilities relating thereto to the LLC or

to any other Protected Party, a Protected Party acting under this

Agreement shall not be liable to the LLC or to any other Protected Party

for good faith reliance on:

(i) the provisions of this Agreement;

(ii) the records of the LLC; and/or

(iii) such information, opinions, reports or statements presented to the LLC

by any person as to matters the Protected Party reasonably believes

are within such other person’s professional or expert competence and

who has been selected with reasonable care by or on behalf of the

LLC, including information, opinions, reports or statements as to the

value and amount of the assets, liabilities, profits or losses of the LLC

or any other fact pertinent to the existence and amount of assets from

which distributions to Members might properly be paid.

c) The provisions of this Agreement, to the extent that they restrict the

duties and liabilities of a Protected Party to the LLC or to any other

Protected Party otherwise existing at law or in equity, are agreed by the

parties hereto to replace such other duties and liabilities of such

Protected Party.

d) Whenever this Agreement permits or requires a Protected Party to make

a decision in its “discretion” or under a grant of similar authority or

latitude, the Protected Party shall be entitled to consider only such

interests and factors as it desires, including its own interests, and shall

have no duty or obligation to give any consideration to any interest of or

factors affecting the LLC or any other Person.

e) Whenever this Agreement permits or requires a Protected Party to make

a decision using a “good faith” or under another express standard, the

Protected Party shall act under such express standard and shall not be

subject to any other or different standard imposed by this Agreement or

other applicable law.

27. Indemnification and Insurance

(a) Right to Indemnification

(i) Any person who is or was a member or officer of the LLC and who is or

may be a party to any civil action because of his/her participation in or

with the LLC, and who acted in good faith and in a manner which he/she

reasonably believed to be in, or not opposed to, the best interests of the

LLC, shall be indemnified and held harmless by the LLC.

(ii) Any person who is or was a member or officer of the LLC and who is or

may be a party to any criminal action because of his/her participation in or

with the LLC, and who acted in good faith and had reasonable cause to

believe that the act or omission was lawful, shall be indemnified and held

harmless by the LLC.

(b) Advancement of Expenses

. Expenses (including attorney’s fees) incurred by an

indemnified person in defending any proceeding shall be paid in advance of the

proceeding’s final disposition. Should the indemnified member or officer

ultimately be determined to not be entitled to indemnification, that member or

officer agrees to immediately repay to LLC all funds expended by the LLC on

behalf of the member or officer.

. The right to indemnification and the advancement of

expenses conferred in this section shall not be exclusive of any right which any

person may have or hereafter acquire under any statute, provision of this

Agreement, contract, agreement, vote of Members or otherwise. The Members

and officers are expressly authorized to adopt and enter into indemnification

agreements for Members, officers and advisory committee members.

(d) Insurance

. The Members may cause the LLC to purchase and maintain insurance

for the LLC, for its Members and officers, and/or on behalf of any third party or

parties whom the members might determine should be entitled to such insurance

coverage.

(e) Effect of Amendment

. No amendment, repeal or modification of this Article shall

adversely affect any rights hereunder with respect to any action or omission

occurring prior to the date when such amendment, repeal or modification became

effective.

28. Duties of Persons Serving on Advisory Committees; Limitation of Liability;

Indemnification. The Members shall have the right to form advisory committees. Persons

serving on an advisory committee, whether or not a Member or officer, shall perform their

duties in good faith, in a manner they reasonably believe to be in the best interests of the

LLC, and with such care as an ordinarily prudent person in a like position would use under

similar circumstances. A person serving on an advisory committee shall not have any

liability to the LLC or to any Member or officer for any loss or damage sustained by the

LLC or any Member or officer unless the loss or damage was the result of fraud, deceit,

gross negligence, willful misconduct, or a wrongful taking by such person.

ARTICLE VII

MEMBERS INTEREST TERMINATED

29. Termination of Membership. A Member’s interest in the LLC shall cease

upon the occurrence of one or more of the following events:

(a) A Member provided notice of withdrawal to the LLC thirty (30) days in

advance of the withdrawal date. Withdrawal by a Member is not a breach of this Agreement

(b) A Member assigns all of his/her interest to a third party.

(d) There is an entry of an order by a court of competent jurisdiction

adjudicating the Member incompetent to manage his/her person or his/her estate.

(e) In the case of an estate that is a Member, the distribution by the fiduciary

of the estate's entire interest in the LLC.

(f) A Member, without the consent of a majority of the Members: (1) makes

an assignment for the benefit of creditors; (2) files a voluntary petition in bankruptcy; (3) is

adjudicated a bankrupt or insolvent; (4) files a petition or answer seeking for himself any

reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar

relief under any statute, law or regulation; (5) files an answer or other pleading admitting or

failing to contest the material allegations of a petition filed against him in any proceeding of

the nature described in this paragraph; (6) seeks, consents to, or acquiesces in the

appointment of a trustee, receiver, or liquidator of the Member or of all or any substantial

part of his properties; or (7) if any creditor permitted by law to do so should commence

foreclosure or take any other action to seize or sell any Member's interest in the LLC.

(g) If within one hundred twenty (120) days after the commencement of any

action against a Member seeking reorganization, arrangement, composition, readjustment,

liquidation, dissolution, or similar relief under any statute, law, or regulation, the action has

not been dismissed and/or has not been consented to by a majority of the members.

(h) If within ninety (90) days after the appointment, without a member’s

consent or acquiescence, of a trustee, receiver, or liquidator of the Member or of all or any

substantial part of the member’s properties, said appointment is not vacated or within ninety

(90) days after the expiration of any stay, the appointment is not vacated and/or has not been

consented to by a majority of the members.

(i) Any of the events provided in applicable code provisions that are not

inconsistent with the dissociation events identified above.

30. Effect of Dissociation

. Any dissociated Member shall not be entitled to

receive the fair value of his LLC interest solely by virtue of his dissociation. A dissociated

Member that still owns an interest in the LLC shall be entitled to continue to receive such

profits and losses, to receive such distribution or distributions, and to receive such

allocations of income, gain, loss, deduction, credit or similar items to which he would have

been entitled if still a Member. For all other purposes, a dissociated Member shall no longer

be considered a Member and shall have no rights of a Member.

ARTICLE VIII

RESTRICTIONS ON TRANSFERABILITY OF LLC INTEREST;

SET PRICE FOR LLC INTEREST

31. LLC Interest. The LLC interest is personal property. A Member has no

interest in property owned by the LLC.

32. Encumbrance

. A Member can encumber his LLC interest by a security

interest or other form of collateral only with the consent of a majority of the other Members.

Such consent shall only be given if the proceeds of the encumbrance are contributed to the

LLC to respond to a cash call of the LLC.

33. Sale of Interest. A Member can sell his LLC interest only as follows:

(a) If a Member desires to sell his/her interest, in whole or in part, he/she

shall give written notice to the LLC of his desire to sell all or part of his/her interest and

must first offer the interest to the LLC. The LLC shall have the option to buy the offered

interest at the then existing Set Price as provided in this Agreement. The LLC shall have

thirty (30) days from the receipt of the assigning Member's notice to give the assigning

Member written notice of its intention to buy all, some, or none of the offered interest. The

decision to buy shall be made by a majority of the other Members. Closing on the sale shall

occur within sixty (60) days from the date that the LLC gives written notice of its intention

to buy. The purchase price shall be paid in cash at closing unless the total purchase price is

in excess of $_______________ in which event the purchase price shall be paid in twelve

(12) equal quarterly installments beginning with the date of closing. The installment

amounts shall be computed by applying the following interest factor to the principal amount:

interest compounded quarterly at the Quarterly Federal Short-Term Rate existing at closing

under the Applicable Federal Rates used for purposes of Internal Revenue Code § 1 274(d),

or any successor provision.

(b) To the extent the LLC does not buy the offered interest of the Member,

the other Members shall have the option to buy the offered interest at the Set Price on a pro

rata basis based on the Members' percentage interests at that time. If Member does not

desire to buy up to his/her proportional part, the other Members can buy the remaining

interest on the same pro rata basis. Members shall have fifteen (15) days from the date the

LLC gives its written notice to the selling Member to give the selling Member notice in

writing of their intention to buy all, some, or none of the offered interest. Closing on the

sales shall occur within sixty (60) days from the date that the Members give written notice of

their intention to buy. The purchase price from each purchasing Member shall be paid in

cash at closing.

selling Member can then assign the interest to a non-member. The selling Member must

close on the assignment within ninety (90) days of the date that he gave notice to the LLC.

If he does not close by that time, he must again give the notice and options to the LLC and

the LLC Members before he sells the interest.

(d) A non-member purchaser of a member’s interest cannot exercise any

rights of a Member unless a majority of the non-selling Members consent to him becoming a

Member. The non-member purchaser will be entitled, however, to share in such profits and

losses, to receive such distributions, and to receive such allocation of income, gain, loss,

deduction, credit or similar items to which the selling member would be entitled, to the

extent of the interest assigned, and will be subject to calls for contributions under the terms

of this Agreement. The purchaser, by purchasing the selling member’s interest, agrees to be

subject to all the terms of this Agreement as if he were a Member.