OPERATING AGREEMENT
FOR SINGLE MEMBER, MEMBER MANAGED
DATE:
RECITAL:
The party to this agreement (the "Member") is signing this agreement for the purpose of
forming a limited liability company under the Limited Liability Company Act of the state of
Maryland (the “Act”).
AGREEMENTS:
1. FORMATION
1.1 Name. The name of this limited liability company (the "Company") is
.
1.2 Articles of Organization. Articles of organization for the Company were filed
with the Secretary of State for the state of Maryland on .
1.3 Duration. The Company will exist until dissolved as provided in this agreement.
1.4 Principal Office. The Company’s principal office will initially be at
, but may be relocated by the
Member at any time.
1.5 Designated Office and Agent for Service of Process. The Company’s initial
designated office will be at ____________________________, and the name of its initial
agent for service of process at that address will be _________________________________.
The Company’s designated office and its agent for service of process may only be changed by
filing notice of the change with the Secretary of State of the state in which the articles of
organization of the Company were filed.
1.6 Purposes and Powers. The Company is formed for the purpose of engaging in
any lawful business that a limited liability company may engage in under the Act. The Company
has the power to do all things necessary, incident, or in furtherance of that business.
1.7 Title to Assets. Title to all assets of the Company will be held in the name of the
Company. The Member does not have any right to the assets of the Company or any ownership
interest in those assets except indirectly as a result of the Member’s ownership of an interest in
the Company.
2. MEMBER
2.1 Name and Address. The name and address of the sole member of the Company
is: , and they shall also be referred to as “President”.
2.2 Termination of Member’s Interest. The Member will cease to be a member of
the Company upon the Member’s death, incompetency, or bankruptcy, or upon assignment of the
Member’s entire membership interest. Unless there are one or more other members of the
Company, the person who is the holder of the Member’s interest immediately after the Member
ceases to be a member will become a member. If there are one or more other members of the
Company at the time the Member ceases to be a member, the person who is the holder of the
Member’s interest immediately after the Member ceases to be a member will become a member
only with the consent of the other member or members.
2.3 Additional Members. Except for the holder of a member’s interest who becomes
a member under the provisions of the section of this agreement relating to termination of
member’s interest, additional members of the Company may be admitted only by written
agreement of the Member and the additional members.
3. CAPITAL
3.1 Initial Capital Contribution. The initial capital contribution of the Member will
be made by the Member’s transferring to the Company all of the assets of the business currently
being operated by the Member as a sole proprietorship under the name *, subject to all of the
liabilities of such business. The assets and liabilities of such business are described on the
balance sheet of the business attached to this agreement as Exhibit A. The transfer will be made
promptly following the signing of this agreement.
3.2 Additional Contributions. Except as otherwise provided in the Act, the Member
is not required to contribute additional capital to the Company. But the Member may make
additional capital contributions to the Company from time to time as the Member wishes.
3.3 No Interest on Capital Contributions. No interest will be paid on capital
contributions.
3.4 Capital Account. A capital account will be maintained for the Member. The
Member’s capital account will be credited with all capital contributions made by the Member and
with all income and gain (including any income exempt from federal income tax) of the
Company, and the Member’s capital account will be charged with the amount of all distributions
made to the Member and with all losses and deductions (including deductions attributable to tax-
exempt income) of the Company.
4. PROFITS AND LOSSES AND DISTRIBUTIONS
4.1 Profits and Losses. The entire net profit or net loss of the Company for each
fiscal year will be allocated to the Member and must be reported by the Member on all federal,
state, and local income and other tax returns required to be filed by the Member.
4.2 Distributions. Subject to the restrictions governing distributions under the Act,
distributions of cash or property may be made from time to time by the Company to the Member,
per the Member’s sole discretion. The Company may make distributions to the Members on a
non-pro rata basis
4.3 Charging Order. If there is a standing Charging Order issued by any Court or
similar jurisdictional authority against a Member or Manager of the Company, and their
assets or ownership of the Company, there shall be no distributions to any Member to which
a standing Charging Order has been issued and any allocations of income shall be reported to
the beneficiary or plaintiff benefitting from any such Charging Order
5. ADMINISTRATION OF COMPANY BUSINESS
5.1 Management. The Member has the sole right to manage and conduct the
Company’s business. Actions by the Member relating to the management of the Company may
be memorialized in written resolutions signed by the Member, but written resolutions are not
required to authorize action by the Member.
5.2 Authority of Member. The Member is the agent of the Company and has
authority to bind the Company on all matters. The authority of the Member includes, without
limitation, the authority to: (a) sell, lease, exchange, mortgage, pledge, or otherwise transfer or
dispose of all or substantially all of the property or assets of the Company; (b) merge the
Company with any other entity; (c) amend the articles of organization of the Company or this
agreement; (e) change the nature of the business of the Company; or (f) commence a voluntary
bankruptcy case for the Company. None of the Members shall sell, transfer or otherwise
dispose of its Membership Interest, including to a Permitted Transferee, without Member
Approval, which consent shall be granted or withheld in each Member’s sole discretion.
5.3 Compensation and Reimbursement. The Member is not entitled to the payment
of any salary or other compensation for services provided to the Company. The Member is,
however, entitled to reimbursement from the Company for reasonable expenses incurred on
behalf of the Company, including expenses incurred in the formation, dissolution, and
liquidation of the Company.
6. ACCOUNTING AND RECORDS
6.1 Books and Records. The Company may keep such books and records relating to
the operation of the Company as are appropriate and adequate for the Company’s business. The
books and records are to be available for inspection by the Member at the principal office of the
Company.
6.2 Separate Accounts. The funds, assets, properties, and accounts of the Company
must be maintained separately, and may not be commingled with those of the
Member or any other person.
6.3 Fiscal Year. The fiscal year of the Company will be the calendar year.
7. DISSOLUTION AND WINDING UP
7.1 Events of Dissolution. The Company will dissolve upon the earlier of
(a) approval of dissolution by the Member or (b) such time as the Company has no members.
Neither the death, incompetency, or bankruptcy of the Member nor the assignment of the
Member’s entire membership interest will dissolve the Company.
7.2 Winding Up and Liquidation. Upon the dissolution of the Company, the affairs
of the Company must be wound up by the Member. If the affairs of the Company are to be
wound up, a full account must be taken of the assets and liabilities of the Company, and the
assets of the Company must then be promptly liquidated. The proceeds must first be paid to
creditors of the Company in satisfaction of all liabilities and obligations of the Company,
including, to the extent permitted by law, liabilities and obligations owed to the Member as a
creditor. Any remaining proceeds may then be distributed to the Member. Property of the
Company may be distributed in kind in the process of winding up and liquidation.
7.3 Negative Capital Account. If the Member has a negative balance in the
Member’s capital account upon liquidation of the Company, the Member will have no obligation
to make any contribution to the capital of the Company to make up the deficit, and the deficit
will not be considered a debt owed to the Company or any other person for any purpose.
8. INDEMNIFICATION AND LIABILITY LIMITATION
8.1 Indemnification. The Company must indemnify the Member to the fullest extent
permissible under the law of the state in which the articles of organization of the Company have
been filed, as the same exists or may hereafter be amended, against all liability, loss, and costs
(including, without limitation, attorneys’ fees) incurred or suffered by the Member by reason of
or arising from the fact that the Member is or was a member of the Company, or is or was
serving at the request of the Company as a manager, member, director, officer, partner, trustee,
employee, or agent of another foreign or domestic limited liability company, corporation,
partnership, joint venture, trust, benefit plan, or other enterprise. The Company may, by action
of the Member, provide indemnification to employees and agents of the Company who are not
members. The indemnification provided in this section will not be exclusive of any other rights
to which any person may be entitled under any statute, agreement, resolution of the Member,
contract, or otherwise.
8.2 Limitation of Liability. The Member is not liable to the Company for monetary
damages resulting from the Member’s conduct except to the extent that the Act, as it now exists
or may be amended in the future, prohibits the elimination or limitation of liability of members of limited
liability companies. No repeal or amendment of this section or of the Act will adversely affect any right
or protection of the Member for actions or omissions prior to the repeal or amendment.
9. MISCELLANEOUS PROVISIONS
9.1 Amendment. The Member may amend or repeal all or part of this agreement by
written instrument.
9.2 Governing Law. This agreement will be governed by the law of the state in
which the articles of organization of the Company have been filed.
9.3 Severability. If any provision of this agreement is invalid or unenforceable, it
will not affect the remaining provisions.
Name of Member
EXHIBIT A
[Balance sheet of the business operated as a sole proprietorship that is to be contributed
to the capital of the Company as the Member’s initial capital contribution.]
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