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Operating Agreement template
Operating Agreement sample


What is Operating Agreement?

Operating Agreement Governs the operation of limited liability companies (LLCs), specifying member rights and duties.



Sample template:



OPERATING AGREEMENT OF ACME CORPORATION INC.
1. FORMATION

This Operating Agreement (the "Agreement") is made and entered into effective as of [Insert Effective Date], by and among the members listed in Exhibit A attached hereto (each a "Member" and collectively the "Members") of ACME Corporation Inc., a limited liability company (the "Company"), organized under the laws of [Insert State of Formation] under the name ACME Corporation Inc.

2. NAME AND LOCATION

The name of the Company shall be ACME Corporation Inc. The principal place of business shall be at [Insert Address] or such other place as the Members may from time to time designate.

3. MEMBERS AND THEIR RIGHTS

3.1. Admission of Members

New Members may be admitted to the Company with the unanimous written consent of the existing Members, and upon such terms and conditions as they may agree.

3.2. Capital Contributions

Each Member shall contribute to the Company capital as described in Exhibit B attached hereto. The Members are not required to make additional capital contributions, except upon unanimous agreement of the Members.

3.3. Member's Interest

Each Member's interest in the Company (the "Membership Interest") shall be as set forth in Exhibit A. A Member's Membership Interest is personal property and may be transferred only in accordance with this Agreement.

3.4. Voting Rights

Each Member shall have voting rights in proportion to their respective Membership Interest percentages, except as otherwise provided herein or required by law.

3.5. Distributions

Distributions shall be made to the Members in accordance with their Membership Interests, as may be determined by the Members from time to time.

4. MANAGEMENT STRUCTURE

4.1. Management of the Company

Management of the Company shall be vested in a Manager or Managers who may be selected and removed by the Members holding a majority of the Membership Interests. The Manager, who may, but need not be, a Member, shall have the authority to bind the Company.

4.2. Officers

The Manager(s) may appoint officers as they deem necessary, including but not limited to a President, Vice President, Secretary, and Treasurer (each an "Officer"), who may be, but are not required to be, Members, to carry out the day-to-day operations of the Company.

4.3. Limitation of Authority

Except as otherwise provided in this Agreement, no Member, Manager, or Officer shall have the authority to bind the Company in any respect without the consent of the Members holding a majority of the Membership Interests.

5. DECISION-MAKING PROCEDURES

5.1. Ordinary Business Decisions

Ordinary business decisions requiring a vote shall be made by the affirmative vote of the Members holding more than fifty percent (50%) of the Membership Interests present at a meeting at which there is a quorum. Such decisions include, but are not limited to, decisions concerning the ordinary course of business operations of the Company.

5.2. Major Decisions

Major decisions, including but not limited to, the sale of all or substantially all of the Company's assets, mergers, company dissolution, or amendments to this Agreement, shall require the affirmative vote of Members holding at least seventy-five percent (75%) of the Membership Interests.

5.3. Meetings

Meetings of the Members shall be held at least annually or more frequently as may be necessary, at a date, time, and location determined by the Manager(s), or upon the call of any Member(s) holding at least twenty percent (20%) of the Membership Interests.

5.4. Notice

Written notice of any meeting shall be given to all Members not less than ten (10) days nor more than sixty (60) days prior to the meeting date, setting forth the time, date, and place of the meeting and the nature of the business to be transacted.

5.5. Quorum

At any meeting of the Members, the presence of Members holding at least fifty percent (50%) of the Membership Interests shall constitute a quorum for the transaction of business.

5.6. Action without Meeting

Any action which requires a vote may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing setting forth the action so taken shall be signed by Members holding the requisite percentage of Membership Interests necessary to authorize or take such action at a meeting.

6. LIMITATION OF LIABILITY AND INDEMNIFICATION

6.1. Liability

To the fullest extent permissible under [Insert State of Formation] law, no Member, Manager or Officer of the Company shall be liable to the Company or its Members for any loss, damage, or claim incurred by reason of any act or omission performed in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of the authority conferred hereby.

6.2. Indemnification

The Company shall indemnify any Member, Manager, or Officer who was or is a party to any proceeding by reason of the fact that they were a Member, Manager, or Officer of the Company to the fullest extent permissible under the laws of [Insert State of Formation].

7. TERM AND DISSOLUTION

7.1. Term

The term of the Company shall be perpetual unless it is dissolved in accordance with this Agreement or by operation of law.

7.2. Voluntary Dissolution

The Company may be dissolved by the affirmative vote of Members holding at least seventy-five percent (75%) of the Membership Interests.

7.3. Winding Up

Upon dissolution of the Company, the Members shall act to liquidate the Company's assets, discharge all liabilities, and distribute the remaining assets to the Members in accordance with their Membership Interests.

8. GENERAL PROVISIONS

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Common Sections of an Operating Agreement


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

  1. Formation
  2. Name and Location
  3. Members and Their Rights
  4. Management Structure
  5. Decision-Making Procedures
  6. Limitation of Liability and Indemnification
  7. Term and Dissolution
  8. General Provisions


Going indepth - Summary of each section:

  1. Formation : This section explains that the agreement is for ACME Corporation Inc., a limited liability company, and lists the members involved. It also mentions the effective date of the agreement.

  2. Name and Location : This part states the company's name and its principal place of business, which can be changed by the members if needed.

  3. Members and Their Rights : This section outlines the process for admitting new members, capital contributions, membership interests, voting rights, and distributions. It explains how members can join, their financial contributions, their ownership percentage, their voting power, and how profits are shared.

  4. Management Structure : This part describes how the company will be managed, including the appointment of managers and officers, and the limitations on their authority. It explains that managers can be selected and removed by majority vote and that they can appoint officers to help run the company.

  5. Decision-Making Procedures : This section details how decisions are made within the company, including ordinary business decisions, major decisions, meetings, notice requirements, quorum, and actions without meetings. It explains the voting percentages needed for different types of decisions and the process for holding meetings.

  6. Limitation of Liability and Indemnification : This part protects members, managers, and officers from personal liability for actions taken on behalf of the company, as long as they acted in good faith and within their authority. It also states that the company will indemnify (protect) them from legal claims related to their roles in the company.

  7. Term and Dissolution : This section explains that the company will exist indefinitely unless it is dissolved according to the agreement or by law. It outlines the process for voluntary dissolution, including the voting percentage needed, and the steps to be taken after dissolution, such as liquidating assets and distributing remaining assets to members.

  8. General Provisions : This part typically includes miscellaneous provisions, such as how the agreement can be amended, how notices should be given, and the governing law for the agreement.

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