OPERATING AGREEMENT
FOR
______________________________________(“THE COMPANY”)
THIS AGREEMENT is made on the …………..day of……….20……., entered into by the
persons listed in Exhibit A.
ARTICLE 1-THE COMPANY
Organization
The Company was formed on _________________________ [formation date], when
the Member(s) filed the Articles of Organization with the office of the Secretary of
State pursuant to the statutes governing limited liability companies in the State of
___________. (“Statutes”)
The name of the Company is ___________________ or such other name as the
Members may from time to time determine.
The principal business address of the Company shall be:
_____________________________________________________________________
_____________________________________________________________________
The Company’s initial agent (the “Agent”) for service of process is shall be:
_____________________________________________________________________
_____________________________________________________________________
The Company may change its principal business address or its registered agent to such
other place as members determine.
The Company’s nature of business is:
_____________________________________________________________________
This however shall not limit the Company from engaging in any other business
activity in compliance with the law and obtaining any necessary approvals.
This agreement shall be valid from the date of execution and shall be perpetual.
The Members shall execute, acknowledge, file, record or publish such certificates and
documents as may be required by this agreement or by law in connection with the
formation and operation of the Company.
Tax treatment
The Members agree that they shall execute and file documents to enable this Limited Liability
Company to maintain a S Election for tax purposes, and in accordance with Code Section
1361, further agree that the Company and the Members must meet the following criteria in
order to maintain the Company’s S Election which shall include but is not limited to:
(a) The Company shall not have more than one hundred (100) Members.
(b) All Members must be (i) individuals who are not nonresident aliens; (ii) trusts or estates
that meet the criteria set forth in Code Section 1361(c), (d) or (e); or (iii) an organization
described in Code Section 401(a) or 501(c)(3) which is exempt from tax under Code Section
501(a).
(c) The Company shall have only one (1) class of stock.
(d) The Company and the Members shall comply with all other applicable provisions
contained in Subchapter S of the Code, the Regulations thereunder and all other IRS rulings,
cases, etc. that govern the Company’s ability to retain its S election.
Members or potential Members meeting the criteria set forth in clauses (a) or (b) above are
collectively referred to as “Qualified S Corporation Members” or individually as a “Qualified
S Corporation Member.” In addition, certain states may provide criteria which are different
than those provided above, and it is the intent of the parties to this Agreement to also meet
these criteria for each state in which the Company does business, to the extent possible.
Management: Management authority is vested in the Manager. The Manager of the
Company shall be _______________________and upon their resignation or other inability to
carry out the Manager’s obligation and duties as set forth herein, a successor Manager may be
appointed by a vote of a Majority of the Units of the Members subject to all regulatory
approvals.
No Payments of Individual Obligations: The Manager and the Members shall use the
Company’s credit and assets solely for the benefit of the Company. No asset of the Company
shall be transferred or encumbered for or in payment of any individual obligation of a
Member.
Title to Property: All real and personal property owned by the Company shall be owned by
the Company as an entity and no Member shall have any ownership interest in such property
in the Member’s individual name or right, and each Member’s interest in the Company shall
be considered personal property for all purposes.
ARTICLE 2- MEMBERS AND CAPITAL CONTRIBUTIONS
2.1 Members; Initial Capital Contributions: The names, addresses and initial number of
Units for each of the Members are set forth in Exhibit A to this Agreement. The initial
Capital Contributions for those Units shall be made upon execution of Exhibit A.
2.2 Loans: Any Member may, upon approval of the Manager, lend or advance money to the
Company. If any Member makes a loan or loans to the Company, the amount of any such loan
shall not be treated as a Capital Contribution to the Company but shall be a debt due from the
Company. The amount of any such loan by a lending Member shall be repayable out of the
Company’s cash and shall bear interest at an agreed upon rate not to exceed ______% per
year. No Member shall be obligated to make any loan or advance to the Company.
2.3 Additional Capital Contribution; Default: The Manager shall promptly notify all
Members in writing of any additional Capital Contribution required by the Manager
(including, without limitation those relating to the Company’s own business, and those
necessary to fund capital calls made by entities in which the Company is an owner),
indicating the pro rata share (determined in accordance with such Members’ respective Unit
ownership) of such additional Capital Contribution that each Member is required to make.
Full payment of the required additional Capital Contribution, in cash or immediately available
funds, shall be due within ________ days of such notice.
Each Member agrees that the making when due of its pro rata share of additional Capital
Contribution, (as required herein pursuant to the provisions of this Agreement is of the
essence, that any Default of any Member would cause injury to the Company and to the other
Members and that the amount of damages caused by any such injury would be extremely
difficult to calculate. Therefore, the Members agree to the following provisions regarding
additional Capital Contributions.
If any Member fails to pay when due all or any portion of a Capital Contribution required
under this Section 2.3 (such Member being referred to as a “Defaulting Member,” and the
amount of such required additional Capital Contribution that such Member fails to pay being
referred to as the “Default Amount” of such Member), such failure shall constitute a
“Default” of such Member unless such failure shall have been waived by the Manager in his
sole and absolute discretion.
On the occurrence of a Default of a Member: (A) the Manager shall promptly give all
Members written notice of such Default; (B) the Default Amount of such Member shall
accrue interest (for the benefit of any non-defaulting Member(s) or other person(s) who fund
the Default Amount pursuant to this Section 2.3) commencing on the due date for the
additional Capital Contribution, at a rate not to exceed eighteen (18%) percent; and (C) the
Manager may exercise any or all of the rights and remedies set forth in this Section 2.3:
(1) To cause the Company to recover the Default Amount, plus accrued interest, from the
Defaulting Member, and/or to pursue whatever other rights and/or remedies are available to it
against the Defaulting Member under this Agreement, at law or in equity, and in any such
case the Defaulting Member shall be required to compensate the Company and the other
Members for all costs incurred and damages suffered by reason of such Default, including
reasonable attorneys’ fees and expenses. The Company may cause distributions that would
otherwise be made by the Company to such Defaulting Member to be applied against such
Defaulting Member’s Default Amount, and accrued interest.
(2) To obtain the agreement of one or more non-defaulting Members to increase their
respective additional Capital Contributions (pro rata in accordance with their respective Unit
ownership or as otherwise agreed among them), or to call additional capital from all non-
defaulting Members (pro rata in accordance with their respective Unit ownership) pursuant to
the provisions of this Section 2.3, in either case in an aggregate amount that does not exceed
the Default Amount. If the non-defaulting Members fund all or any portion of the Default
Amount in either of the foregoing manners, then the Defaulting Member shall forfeit a portion
of his or its Units equivalent to ____________times the ratio that the Default Amount bears to
the Defaulting Member’s total capital contribution obligation, as follows. Specifically, to
accomplish the foregoing, the Unit ownership of the Defaulting Member shall be reduced by
__________percent (_____%) of the excess of the Defaulting Member’s Unit ownership, over
the product of (x) the Defaulting Member’s Unit ownership, and (y) a fraction, the numerator
of which is the aggregate amount of the Capital Contributions made by the Defaulting
Member as of the date of the Default, and the denominator of which is the aggregate amount
of the Capital Contributions made by the Defaulting Member as of the date of the Default plus
the aggregate amount of the Default Amount funded by the non-defaulting Members. Any
portion of the Defaulting Member’s Units so forfeited by the Defaulting Member shall be
reallocated to the non-defaulting Members who fund the Default Amount, in proportion to the
manner in which they make such contribution(s).
(3) To cause a forced redemption of all of such Defaulting Member’s Units by the
Company, or a forced sale thereof to any other person(s) acceptable to the Manager
(including, if the Manager so determines, one or more non-defaulting Members) who have
agreed to acquire such Units. In either case, the Defaulting Member will be obligated to
convey his or its Units to the Company or the purchaser(s), as applicable. Any such sale or
redemption shall be at a price equal to such Defaulting Member’s aggregate Capital
Contributions, less one hundred twenty-five percent (125%) of the Default Amount (together
with accrued interest) of such Defaulting Member. In the case of a sale of the Defaulting
Member’s Units: (x) the purchaser(s) of such Units shall be obligated, pro rata, to fund any
Default Amount still outstanding; (y) each purchaser who is not already a Member will
execute a counterpart of the Operating Agreement and thereupon become a Member; and (z)
such Defaulting Member shall be treated as having withdrawn from the Company as a
Member and shall have no further interest, economic or otherwise, in the Company.
The rights and remedies referred to in this Section 2.3 may be exercised in any order or
combination chosen by the Manager, in his sole discretion. Failure to exercise any remedy
hereunder in any one instance shall not preclude its exercise in any different or subsequent
instance. A Default by a Member shall not relieve any other Member of its obligation to make
Capital Contributions under this Agreement. In addition, except to the extent of a sale or
redemption under (3), above, a Default by a Member shall not relieve such Member of its
obligation to make his or its pro rata share of additional Capital Contributions required
subsequent to such Default. The provisions of this Section 2.3 (and the Members’ obligations
to make additional Capital Contributions to the Company hereunder) shall not be for the
benefit of any third party.
2.4. Obligations to Other Members: In the event any Member is required to pay any
Company obligation by virtue of that Member’s personal guaranty of any of the Company’s
obligations, the other Members are obligated to reimburse the paying Member in proportion
to each Member’s relative number of Units and this reimbursement shall be paid within
_______days from written request.
2.5. Liability of Members: The liability of each Member shall be limited to the amount of
Capital Contributions which each Member is required to make in accordance with the
provisions of this Agreement. Except as provided herein, none of the Members shall have any
further personal liability to contribute money to or in respect of liabilities or obligations of the
Company, nor shall the Members be personally liable for any obligations of the Company.
2.6. No Interest on Contributions: No Member shall be entitled to receive interest on
contributions to the Company.
2.7. Withdrawal of Capital:
2.7.1. Except as otherwise provided in this Agreement, no Member shall demand or receive a
return of Capital Contributions or withdraw from the Company until:
2.7.1. (a) All liabilities of the Company, except liabilities to Members on account of their
Capital Contributions, have been paid or there remains property of the Company Sufficient to
pay them; and
2.7.1 (b) The vote of the Members as provided below in the section on voting.
2.7.2 No Member shall receive any interest, salary, or draw with respect to such Member’s
Capital Contributions or for services rendered on behalf of the Company or otherwise in such
Member’s capacity as Member, except as agreed in writing by the Members pursuant to a
Majority vote of the Members.
Article 3- ACCOUNTING AND RECORDS
3.1. Books and Records: The Company shall maintain books of account for the Company
which shall show a true and accurate record of all costs and expenses incurred, all charges
made, all credits made and received, and all income derived in connection with the operation
of the Company business in accordance with generally accepted accounting procedures
(GAAP). Each Member shall, at such Member’s sole expense, have the right, upon reasonable
notice to the Company, to examine, copy, and audit the Company’s books and records during
normal business hours as long as such review does not unreasonably disrupt the Company’s
business.
3.2. Reports: Within a reasonable time after the end of each fiscal year, the Company shall
provide each Member with a copy of the balance sheet of the Company as of the last day of
such year and a statement of income or loss for the Company for such year, including a
statement showing any item of income, deduction, credit, or loss allocable for federal income
tax purposes pursuant to the terms of this Agreement. Such statements shall be reviewed by
the Company’s accountants.
3.3. Tax Returns: Upon the written request of a Member, the Company shall furnish each
Member with a copy of each income tax return filed by the Company, together with any
schedules or other information which each Member may require in connection with such
Member’s own tax affairs.
3.4. Fiscal Year: The fiscal year of the Company shall be the calendar year, unless otherwise
approved by a Majority vote of the Members. As used in this Agreement, a fiscal year shall
include any partial fiscal year at the beginning and end of the Company term.
3.5. Banking: All funds of the Company shall be deposited in the Company’s name, in such
account or accounts with such bank, banks, or financial institutions as a Majority vote of the
Members shall determine, from time to time. Withdrawals of funds from the Company
accounts shall be made on such signature or signatures as determined by the Manager.
Article 4- MANAGEMENT, RIGHTS, AND DUTIES OF MEMBERS
4.1. In General: Except as otherwise provided in this Agreement, all determinations,
decisions, approvals, and actions affecting the Company and its business and affairs shall be
determined, made, approved, or authorized only by the Manager or vote of the Members
pursuant to this Agreement and subject to all applicable statutes and regulations.
4.2. Management Duties and Powers: Subject to the terms and conditions of this
Agreement, management of the Company shall be solely vested in the Manager, except as
otherwise provided herein.
4.3. Duties Regarding Bookkeeping and Records: In addition to the general duties of the
Manager, the Manager shall perform the following duties:
4.3.1. Maintain at the expense of the Company complete and accurate records of all rights and
interests acquired for or disposed of by the Company, all correspondence relating to the
Company business and records of all statements, bills and other instruments furnished the
Company in connection with its business, all of which shall be kept in the possession and
control of the Company for not less than ______years.
4.3.2. Maintain at the expense of the Company adequate records and accounts of all
operations and expenditures and furnish the Members with annual statements of account as of
the end of each calendar year, together with all necessary tax reporting information.
4.3.3. Employ at the expense of the Company such public accounting firm as the Manager
may deem desirable to maintain Company accounts and prepare statements of account
together with all tax reporting information.
4.3.4. Make any and all tax elections as the Manager deems necessary to further the business
of the Company, including the filing of any QSSS elections made under Code Section
1361(b)(2).
4.4. Waiver of Partition: No Member shall, either directly or indirectly, take any action to
require partition or appraisement of the Company or of any of its assets or properties or cause
the sale of any Company property, and notwithstanding any provisions of applicable law to
the contrary, each Member (and each such Member’s legal representatives, successors or
assigns) irrevocably waives any and all right to maintain any action for partition or to compel
any sale with respect to such Member’s Units, or with respect to any assets or properties of
the Company, unless expressly provided elsewhere in this Agreement.
4.5. Restrictive Covenants: The Manager and Member(s) shall be required to devote only
such time and attention to the business of the Company as is necessary to satisfy their
respective obligations as set forth herein. The Manager or Member(s), may, without
accountability to the Company or to any of the other Members, and without any disclosure or
consent whatsoever, engage in any other business or businesses, except that which is in direct
competition with the Company or such businesses or activities that would jeopardize said
Manager’s or Member’s gaming approval or license or such activity or business which is in
violation of any gaming statute or regulation.
Article 5-VOTING
In General: When a vote of the Members is required by this Agreement for any decision, it
shall be authorized by a vote of the Majority of the Members with each Member voting in
accordance with their respective Unit ownership. Any Member, by written delegation, may
delegate such Member’s authority or vote to any other Member, upon the terms and
conditions, and for the time provided in any such written delegation. Unless otherwise stated
herein, decisions of the Company are to be made by the Manager, except where a vote of the
Members is provided in this Agreement.
5.1. Method of Voting; Company Meetings.
5.1.1. General. Unless otherwise stated herein, whenever a vote of Members is required by
this Agreement for any decision, it shall be authorized by vote of a Majority of the Units of
the Members. A vote of more than fifty percent (50%) of the Units shall constitute a Majority.
5.1.2. Meetings. The Manager or any Member may call a meeting to consider approval of
an action or decision under any provision of this Agreement by delivering to the Manager and
to each other Member notice of the time and purpose of such meeting at least _____days
before the day of such meeting. A Member may waive the requirement of notice of a meeting
by executing a written waiver of notice before or after such meeting or by attending such
meeting unless such attendance is for the sole purpose of objecting to the holding of the
meeting without the required notice. Unless all of the Members consent in writing or by their
attendance, the time and place of any such meeting shall be held during the Company’s
normal business hours at its principal place of business.
5.1.3. Consent of Members. The Manager or a Member may propose that the Company
authorize an action or decision pursuant to any provision of this Agreement by the written
consent of a Majority of the Members in lieu of a meeting. A Member’s written consent may
be evidenced by such Member’s signature on a counterpart of the proposal or by a separate
writing (including a fax, telex, telecopy, telegram, etc.) that identifies the proposal with
reasonable specificity and states that such Member consents to such proposal.
5.1.4. Vote by Proxy. A Member may vote (or execute a written consent) by proxy given
to any other Member. Any such proxy must be in writing and must identify the specific
meeting or matter to which the proxy applies or state that it applies to all matters (subject to
specified reservations, if any) coming before the Company for approval under any provision
of this Agreement prior to a specified date (which shall not be later than the first anniversary
date of the date on which such proxy is given). Any such proxy shall be revocable at any time
and shall not be effective at any meeting at which the Member giving such proxy is in
attendance.
Records. The Company shall maintain permanent records of all actions taken by the Members
pursuant to any provision of this Agreement, including minutes of all Company meetings,
copies of all actions taken by consent of the Members, and copies of all proxies pursuant to
which one Member votes or executes a consent on behalf of another.
Article 6- ADDITIONAL MEMBERS
6.1. Admission. Upon a Majority vote of the then existing Members, the Company may, from
time to time, admit additional Members who will promote, contribute and benefit the
Company business undertaken pursuant to this Agreement. Generally, additional Members
shall be admitted as of the first day of any month.
6.2. Capital Contributions. Upon the admission of an additional Member, the number of
Units issued to the additional Member shall be an amount determined by the Manager. Such
new Members shall also make additional Capital Contributions from time to time on the same
basis as other Members.
6.3. Admission Mechanics. No Person shall be admitted as an additional Member unless
such Person executes, acknowledges, and delivers to the Company such instruments as the
Manager may deem necessary or advisable to effect the admission of such Person as an
additional Member, including, but without limitation, approval by the Nevada Gaming
Commission of the Person’s suitability to becoming a Member of the Company, the written
acceptance and adoption by such Person of the provisions of this Agreement as well as any
amendment to the Articles of Organization and attorneys fees and costs necessitated by the
admission of such additional Member. Exhibit A shall also be revised to reflect the admission
of the additional Member.
Article 7- DISTRIBUTIONS OTHER THAN AT DISSOLUTION
Subject to all applicable gaming statutes and regulations and except as otherwise provided
below, all distributions of cash may be paid to the Members at the discretion of the Manager
after the Manager reasonably determines amounts needed to meet the reasonable foreseeable
cash requirements and needs of the business and activities of the Company in addition to
establishing an adequate reserve for the payment of Company liabilities and contingencies.
Distributions to Members shall be made in accordance with the relative number of Units held
by the Members.
7.1. Distribution While Maintaining a S Election: The parties acknowledge that the
Company intends to be treated as a “S Corporation,” and pursuant thereto, all of its income
for federal tax purposes will be taxable to the Members, in accordance with their pro rata
share of the Units of the Company. Therefore, the Members agree as follows:
(a) If the dividend distributions to the Members hereunder shall exceed _____% percent of
the estimated pre-tax profit attributable to any one fiscal year, upon the Manager’s consent,
each Member shall reimburse at the request of the Chief Financial Officer of the Company,
the pro rata difference overpaid hereunder. In the alternative, the Company may deduct such
overpayments from any distributions due in the subsequent fiscal year.
(b) The requirement for distributions hereunder shall not include any distributions which
apply to distributions made for taxes from prior fiscal years or for other dividends declared
for prior years unrelated to distributions for tax purposes.
(c) The parties acknowledge that tax brackets of each Member may differ, and the Company
is not liable for any tax liability which is greater than the distribution amount.
(d) Any adjustment of this distribution shall be subject to the approval of the Manager or
vote of a Majority of the Units of the Members.
Article 8- BUY/SELL EVENT.
A Buy/Sell Event is defined herein as the occurrence of one of the following events:
Involuntary Termination of a Member or a Voluntary Termination of a Member. Voluntary
Termination of a Member shall include a Member’s voluntary election to withdraw from the
Company. Involuntary Termination of a Member shall include the death of a Member, the
loss of a Member’s gaming license, the divorce of a Member, the bankruptcy of a Member or
a Member’s default under this Agreement including the failure to make a capital contribution.
A Member who directly or indirectly causes a Buy/Sell Event shall be referred to herein as a
Terminating Member. The Company shall continue without dissolution; and the Terminating
Member or his personal representative shall cease to be a Member and shall have no further
right to participate in the Company’s business, profits, losses, or distributions, but shall have
only the rights provided below. Each Member hereby grants and gives the Company first and
the other Members second the right and option to purchase all of the Units of a Terminating
Member on the terms and conditions stated below. This right and option to purchase shall be
effective from the date the Manager becomes aware of the Buy/Sell Event for a period of
______ days at which time this right and option shall expire. This right and option may be
exercised by giving notice of exercise thereof within said ________day period of time.
8.1. Death of a Member. If a Member dies and the Units of the deceased Member is not
purchased as provided below, the personal representative, beneficiaries, heirs or other
successors shall take the Units and rights of the deceased Member subject to the terms of this
Agreement.
8.2. The Termination of Membership of a Member for any Reason. Upon a Voluntary
Termination or an Involuntary Termination, that Terminating Member hereby grants and
gives to the Company first and to the other Members second, the right to purchase all of the
Terminating Member’s Units in accordance with the terms and conditions of this Agreement.
8.3. Default. In addition to the remedy set forth in Section 2.3 for a default of a Capital
Contribution and in addition to any and all other rights and remedies of the Company and the
Members herein, the Company first and the other Members second shall have the right and
option, and each Member hereby grants to the Company the right and option, to take all of the
following actions in the event that any Member (hereinafter also referred to as the “Defaulting
Member,” with the other Non-defaulting Members being hereinafter referred to as the “Non-
Defaulting Members”) defaults under the provisions of this Agreement.
8.3.1. Right to Purchase Defaulting Member’s Units. The Company shall have, and the
Members hereby grant and give to the Company, the first right to purchase all of the
Defaulting Member’s Units in accordance with the Purchase Price and Payment Terms below.
8.3.2. Consequences of Breach. Notwithstanding anything to the contrary in the law, if a
Defaulting Member attempts to (i) Transfer a Unit, (ii) cause a partition, (iii) withdraw from
the Company or dissolve the Company, or (iv) otherwise breaches the provisions of this
Agreement, the Company shall continue and such Defaulting Member shall be subject to the
provisions of this Section 8.3. In such event the following shall occur.
8.3.2.(a) The Defaulting Member shall immediately cease to be a voting Member and shall
have no further power to act for or bind the Company but shall be treated as an assignee. The
Defaulting Member’s Units shall become nonvoting Units;
8.3.2.(b) The Defaulting Member shall be liable in damages, without requirement of a prior
accounting, to the Company for all costs and liabilities that the Company or any Member may
incur as a result of such breach;
8.3.2.(c) The Company may, by notice to the Defaulting Member, elect to purchase the
Defaulting Member’s Units in the Company;
8.3.2.(d) The Company shall treat the Defaulting Member as if he were an unadmitted
assignee of the Units of the Defaulting Member and shall make distributions to the Defaulting
Member only of those amounts otherwise payable with respect to such Units after offset of
any sums due the Company from the Defaulting Member;
8.3.2.(e) The Company may deduct from any distribution(s) otherwise payable with respect to
such Units to satisfy any claims it may have against the Defaulting Member; and
8.3.2.(f) The Defaulting Member shall have no right to inspect the Company’s books or
records or obtain other information concerning the Company’s operations.
8.4. No Bonding. Notwithstanding anything to the contrary in the law, if the Company treats
a Defaulting Member as an unadmitted assignee of Units in the Company, and elects to
purchase his Units, the Company shall not be obligated to secure the value of the Defaulting
Member’s Units by bond or otherwise; provided, however, that if a court of competent
jurisdiction determines that, in order to continue the business of the Company, such value
must be so secured, the Company may provide such security, but all Members hereby agree
that no such court-ordered bond shall exceed $__________. If the Company provides such
security, the Defaulting Member shall not have any right to participate in Company profits or
distributions during the term of the default and shall be liable to the Company in the amount
of the so provided security along with any costs incident thereto and shall be subject to
Section 8.3.2(b).
ARTICLE 9-PURCHASE PRICE AND PAYMENT TERMS
9.1. Purchase of Units. When a Buy/Sell Event occurs the Company may purchase, and the
Terminating Member shall sell, the total Units which the Terminating Member owns for the
price and upon the terms herein provided.
9.2. Purchase Price. Unless otherwise agreed by the remaining Members, the Purchase Price
of the Terminating Member’s Units shall be the following calculation as adjusted below:
9.2.1.(a) Purchase Price Calculation. The Purchase Price of the Terminating Member’s Units
shall be determined as follows: The Terminating Member and Company, or Non-Terminating
Members if the Company elects not to purchase that Terminating Member’s Units, shall agree
upon a Purchase Price within ______days of the Terminating Member’s notice of election to
sell pursuant to a Voluntary Termination or the Company or other Member’s election to
purchase upon the occurrence of an Involuntary Termination.
9.2.1.(b) If the Purchase Price and terms of payment are not agreed upon within the timeframe
set forth in Section 9.2.1.(a) above, then the Purchase Price for the selling Member’s Units
shall be the most recent valuation of Units previously determined by the Members, if and
only, if such valuation is no more than one (1) year from the date of the Buy/Sell Event.
9.2.1.(c) If the valuation referenced in Section 9.2.1(b) above has aged more than one (1) year
from the date of the Buy/Sell Event, then the Manager shall select a qualified appraiser to
conduct an appraisal of the Company to determine the market value of the Units. The
appraiser’s valuation shall be binding on all parties and the cost of such appraisal shall be
born by the Terminating Member.
9.3. Notice. In the event a Member should voluntarily elect to terminate its interest
(“Voluntary Termination”), the Terminating Member shall provide written notice of such
Member’s intention to withdraw from the Company at least ______days prior to the proposed
withdrawal date. In the event of an Involuntary Termination of the Member by the Company
or the other Members, the effective date of such termination shall be the date of notice. Each
Member shall obtain his or her spouses’ signature where indicated on Exhibit A within____
days of the Member executing this Agreement or marriage, whichever occurs later. In the
event of a divorce, the effective date shall be the date a divorce proceeding is filed with the
court or the date of a property settlement agreement, whichever occurs first.
9.4. Closing; Payment of Purchase Price, Etc.
9.4.1. Closing. Closing shall take place at the Company’s principal office or such other place
as the Company shall direct.
9.4.2. Closing Date. The Closing Date shall be a date not later than __________days after the
establishment of the Purchase Price.
9.4.3. Payment of Purchase Price. Unless otherwise agreed upon, the Purchase Price shall be
paid as follows: _______% of the Purchase Price shall be paid in cash to the Terminating
Member on or before the Closing Date. The balance of the Purchase Price shall be evidenced
by a promissory note providing (i)______yearly installments of principal and interest; (ii)
interest to accrue at a rate not to exceed ______% per year; (iii) with payments commencing
on the first annual anniversary date of the Closing and continuing on each of the next annual
anniversary dates of the Closing Date until fully paid; (iv) the privilege of prepayment at any
time, without penalty; (v) attorneys fees and costs if there is a default; and (vi) the
acceleration of all remaining installments of principal and interest in the event any installment
remains unpaid for ___________calendar days after the date upon which any installment
becomes due.
9.4.4. Delivery of Instruments. On the Closing Date, the Terminating Member or his personal
representative shall deliver to the Company appropriate duly-executed instruments of transfer
and assignment, assigning and transferring good and marketable title to the Units purchased,
free from any liens or encumbrances or rights of others therein. The Terminating Member or
his personal representative shall pay the cost (including the Company’s attorneys fees) of
such transfer, and shall execute and deliver such other instruments as may reasonably be
requested.
Article 10- TRANSFERS; WITHDRAWALS
10.1. Restrictions on Transfers. No Member shall Transfer all or any portion of a Unit or
any rights therein without the consent of the Manager and a vote of the Majority of the
Members as provided above subject to all applicable gaming statutes and regulations. Any
Transfer or attempted Transfer by any Member in violation of the preceding sentence shall be
null and void and of no effect whatever. Each Member acknowledges the reasonableness of
the restrictions on Transfer imposed by this Agreement in view of the Company purposes and
the relationship of the Members. Accordingly, the restrictions on Transfer contained in this
Agreement shall be specifically enforceable with a bond, if required, not to exceed the sum of
$_________. Each Member further agrees to hold the Company and each other Member (and
each other Member’s successors and assigns) wholly and completely harmless from any cost,
liability, or damage (including, without limitation, liabilities for income taxes and costs of
enforcing this indemnity) incurred by the Company or any of such indemnified Members as a
result of a Transfer or an attempted Transfer in violation of this Agreement. Notwithstanding
this restriction on Transfer, any Member may transfer his or her Units to a family trust or
other similar entity which, in the sole discretion of the Manager, is controlled by such
transferring Member and only if such transferring Member pays all costs and expenses,
including attorneys fees and reasonable compensation to the Manager, related to such transfer.
In addition, such trust must qualify as a Qualified S Corporation Member. During the time
that the S Elections for the Company are in effect, the Company and each Member shall
refrain from taking any action or omitting to take any action, which action or omission would
cause the termination of any S Election.
10.2. Termination of S Election. Upon election of the Manager, the Company may elect
to revoke the Company’s status as a S Corporation as defined in Code Section 1361 or any
successor provision. In such case, all language in this Agreement relating to such election
which shall include but is not limited to membership, transfer of Units, or Company
restrictions shall terminate and no longer be applicable. Notwithstanding the foregoing, all
other provisions of this Agreement shall remain in full force and effect, including Section
10.1, except for the last two sentences.
Article 11- DISSOLUTION AND WINDING UP
11.1. Liquidating Events. The Members agree that the Company shall not dissolve prior
to the occurrence of a Liquidating Event. If a court of competent jurisdiction determines that
agreement constitutes the entire agreement between the parties. It supersedes all prior oral or
written agreements or understandings between the parties concerning the subject matter of
this agreement. This agreement may not be altered, amended, or modified, except by a written
document signed by all parties. Failure by either party to enforce any of the terms or
conditions of this agreement shall not be a waiver of their right to enforce the terms and
conditions of this agreement. This agreement shall be governed in all respects by the laws of
____________without regard to its conflict of laws provisions. This Agreement may be
executed in counterparts, each of which shall be an original, all of which shall constitute the
same instrument. The Article and Section headings in this agreement are for convenience and
they form in no part of this agreement and shall not affect its interpretation. All pronouns and
any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular, or
plural, as the identity of the person or entity may require. As used in this Agreement: words of
the masculine gender shall mean and include corresponding neuter words or words of the
feminine gender, and words in the singular shall mean and include the plural and vice versa.
IN WITNESS WHEREOF, the Members have entered into this Operating Agreement as of
the Effective Date by executing Exhibit A or a copy thereof.
Exhibit A
Name Address Signature Initial Capital
Contribution
At Legal writing experts, we would be happy to assist in preparing any legal document you need. We are international lawyers and attorneys with significant experience in legal drafting, Commercial-Corporate practice and consulting. In the last few years, we have successfully undertaken similar assignments for clients from different jurisdictions. If given this opportunity, The LegalPen will be able to prepare the legal document within the shortest time possible. You can send us your quick enquiry ( here )