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LLC Operating Agreement template
LLC Operating Agreement sample


What is LLC Operating Agreement?

LLC Operating Agreement An LLC Operating Agreement defines the terms for managing and operating a limited liability company (LLC), specifying member responsibilities, capital contributions, and profit distribution.



Sample template:



OPERATING AGREEMENT OF CRESTVIEW HOLDINGS LLC


1. FORMATION

1.1. Name and Purpose


The name of the limited liability company is Crestview Holdings LLC (the "Company"). The Company has been formed for the purposes of conducting any lawful business as approved by its members.


1.2. Principal Place of Business


The principal place of business for the Company is at such location as the Members may designate from time to time.


1.3. Governing Law


This agreement, the organization of the Company, and the activities of the Members shall be governed by and interpreted under the laws of the United States of America.



2. MEMBERSHIP

2.1. Membership Interests


The ownership interests in the Company shall be divided into membership interests ("Membership Interests"), with each Member holding a percentage of ownership interest as listed in the Company's books and records. Each Membership Interest shall include all associated rights, privileges, and obligations as detailed in this Agreement.


2.2. Capital Contributions


Each Member has contributed an initial capital contribution (the "Initial Contribution") to the Company. The Initial Contributions are as follows:



  • Member A: $[CONTRIBUTION VALUE] in exchange for [PERCENTAGE]% of Membership Interests

  • Member B: $[CONTRIBUTION VALUE] in exchange for [PERCENTAGE]% of Membership Interests


Any additional capital contributions by Members shall be in proportion to their Membership Interests.


2.3. Admission of New Members


New members may be admitted to the Company only upon the unanimous written consent of the existing Members. The terms and conditions of such person's membership shall be set forth in a written agreement, signed by all existing Members and the prospective new member.



3. COMPANY MANAGEMENT

3.1. Management by Members


The Company shall be managed by its Members. Each Member may participate in the management of the Company in proportion to their Membership Interest. In the event of a deadlock in any matter requiring a decision of the Members, the Members shall attempt to resolve the deadlock through mediation or arbitration, as agreed upon by the Members.


3.2. Voting Rights


Each Member shall have voting rights in proportion to their Membership Interest. All decisions of the Members shall be made by a majority vote, unless otherwise specified in this Agreement or required by law.


3.3. Binding Authority


Any Member shall have the authority to bind the Company in the ordinary course of business, except that any contract, agreement, or transaction (a) in excess of $[LIMIT AMOUNT] or (b) outside the ordinary course of business shall require the prior written consent of a majority of the Membership Interests.



4. DISTRIBUTION OF PROFITS AND LOSSES

4.1. Allocation of Profits and Losses


All profits and losses of the Company shall be allocated to the Members in proportion to their Membership Interests.


4.2. Distribution of Profits


The Members shall determine when and if cash distributions will be made to the Members. Any such distribution shall be made to the Members in proportion to their Membership Interests.



5. TRANSFER OF MEMBERSHIP INTERESTS

5.1. Restrictions on Transfer


No Member shall transfer, assign, or otherwise encumber their Membership Interest without the prior written consent of all other Members. Any attempted transfer in violation of this provision shall be null and void.


5.2. Right of First Refusal


In the event a Member wishes to sell their Membership Interest and has received a bona fide written offer from a proposed transferee, the selling Member must first offer the Membership Interest to the other Members on the same terms and conditions. The other Members shall have the right to purchase the Membership Interest within thirty (30) days of receiving written notice from the selling Member.



6. DISSOLUTION AND WINDING UP

6.1. Events of Dissolution


The Company shall dissolve upon the occurrence of any of the following events:



  • Unanimous written consent of all Members

  • Expiration of the period specified in the Company's articles of organization

  • Any event specified in the articles of organization or this Agreement that results in the dissolution of the Company

  • Any other event required by law that results in the dissolution of the Company


6.2. Winding Up


Upon the dissolution of the Company, the Members shall promptly commence winding up the affairs of the Company. The assets of the Company shall be liquidated, and the proceeds shall be distributed in the following order:



  1. Payment of debts and obligations to creditors, including any Members who are creditors, in the order of priority established by law

  2. Distribution to the Members of their unpaid capital contributions, if any

  3. Distribution of any remaining assets to the Members in proportion to their Membership Interests


6.3. Termination


The Company will terminate when all debts, liabilities, and obligations have been paid and discharged or adequate provision has been made, and all remaining assets have been distributed to the Members in accordance with this Agreement.



7. MISCELLANEOUS PROVISIONS

7.1. Binding Effect


This Agreement shall be binding upon and inure to the benefit of the Members and their respective heirs, executors, administrators, legal representatives, successors, and assigns.


7.2. Amendments


This Agreement may be amended or restated only upon the unanimous written consent of all Members.


7.3. Counterparts


This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.



IN WITNESS WHEREOF, the Members have executed this Operating Agreement as of the date first above written.

_______________________________ _______________________________
MEMBER A (Print Name) MEMBER B (Print Name)

_______________________________ _______________________________
Signature Signature

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Sections of a LLC Operating Agreement


In this LLC Operating Agreement, you will see the following sections:

  1. Formation
  2. Membership
  3. Company Management
  4. Distribution of Profits and Losses
  5. Transfer of Membership Interests
  6. Dissolution and Winding Up
  7. Miscellaneous Provisions


Going indepth - Analysis of each section:

  1. Formation : This section outlines the basic information about the company, such as its name, purpose, principal place of business, and the governing law. Think of it as the company's birth certificate and the rules it must follow.

  2. Membership : This section explains the ownership structure of the company, including the percentage of ownership for each member, their initial capital contributions, and the process for admitting new members. It's like a pie chart showing who owns what part of the company and how much they invested.

  3. Company Management : This section describes how the company will be managed, the voting rights of members, and the authority of members to bind the company in contracts and agreements. It's like a playbook for how the team (members) will work together to run the company.

  4. Distribution of Profits and Losses : This section explains how the company's profits and losses will be allocated among the members and when cash distributions will be made. It's like a guide for dividing the company's financial gains and losses among the owners.

  5. Transfer of Membership Interests : This section sets out the rules for transferring ownership interests in the company, including restrictions on transfers and the right of first refusal for other members. It's like a set of rules for selling or trading your piece of the pie (ownership) to someone else.

  6. Dissolution and Winding Up : This section outlines the events that can lead to the dissolution of the company, the process for winding up its affairs, and the distribution of its assets upon dissolution. It's like an exit plan for the company, detailing how to close it down and distribute its remaining assets.

  7. Miscellaneous Provisions : This section includes various legal provisions, such as the binding effect of the agreement, the process for amending the agreement, and the use of counterparts for signing. These are like the fine print or additional rules that help ensure the agreement is legally sound and enforceable.

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