Fillable Mn Llc Operating Agreement (How to Start a Business)

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Mn Llc Operating Agreement (How to Start a Business)

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1
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
_______________________, LLC
FORMED IN THE STATE OF Minnesota
This Agreement, entered into on ______________, 20____, is a
(Check One)
☐ - SINGLE-MEMBER LLC OPERATING AGREEMENT, entered into by and between
_________________, LLC, a ___________________________ (State) LLC (the “Company”)
and ______________________________ of _________________________(Address),
hereinafter known as the “Member”
☐ - MULTI-MEMBER LLC OPERATING AGREEMENT, entered into by and between
_____________________________, of ____________________________ (Address),
_____________________________, of_____________________________ (Address),
_____________________________, of _____________________________(Address),
hereinafter known as the “Members”
WHEREAS the Member(s) desire to create a limited liability company under the laws of
the State of Minnesota and set forth the terms herein of the Company’s operation and the
relationship between Member(s).
NOW, THEREFORE, in consideration of the mutual covenants set forth herein and
other valuable consideration, the receipt and sufficiency of which hereby are acknowledged,
the Member(s) and the Company agree as follows:
1. Name and Principal Place of Business
The name of the Company shall be _________________________, LLC. The principal place
of business of the Company shall be at _______________________________________, City
of ____________________, in the State of Minnesota or at such other place of business as
the Member(s) shall determine.
2. Formation
The Company was formed on _______________________, 20_____, when the Member(s)
filed the Articles of Organization with the office of the Secretary of State of the State of
Maryland pursuant to the statutes governing limited liability companies in the State of
Minnesota. (the “Statutes”)
3. Purpose
2
The purpose of the Company is to engage in and conduct any and all lawful businesses,
activities or functions, and to carry on any other lawful activities in connection with or incidental
to the foregoing, as the Member(s) in their discretion shall determine.
4. Term
The term of the Company shall be perpetual, commencing on the filing of the Articles of
Organization of the Company, and continuing until terminated under the provisions set forth
herein.
5. Member Capital Contributions (Check One)
☐ - Single Member LLC: The Member may make such capital contributions (each a “Capital
Contribution”) in such amounts and at such times as the Member shall determine. The
Member shall not be obligated to make any Capital Contributions. The Member may take
distributions of the capital from time to time in accordance with the limitations imposed by the
Statutes.
☐ - Multi-Member LLC: Each Member has contributed the following capital amounts to the
Company as set forth below and are not obligated to make any additional capital contributions:
________________________________ $__________________________
________________________________ $__________________________
________________________________ $__________________________
Members shall have no right to withdraw or reduce their contributions to the capital of the
Company until the Company has been terminated unless otherwise set forth herein. Members
shall have no right to demand and receive any distribution from the Company in any form other
than cash and members shall not be entitled to interest on their capital contributions to the
Company.
The liability of any Member for the losses, debts, liabilities and obligations of the Company
shall be limited to the amount of the capital contribution of each Member plus any distributions
paid to such Member, such Member’s share of any undistributed assets of the Company; and
(only to the extent as might be required by applicable law) any amounts previously distributed
to such Member by the Company.
6. Distributions
For purposes of this Agreement “net profits” and “net losses” mean the profits or losses of the
Company resulting from the conduct of the Company’s business, after all expenses, including
depreciation allowance, incurred in connection with the conduct of its business for which such
expenses have been accounted.
The term “cash receipts” shall mean all cash receipts of the Company from whatever source
derived, including without limitation capital contributions made by the Member(s); the proceeds
of any sale, exchange, condemnation or other disposition of all or any part of the assets of the
3
Company; the proceeds of any loan to the Company; the proceeds of any mortgage or
refinancing of any mortgage on all or any part of the assets of the Company; the proceeds of
any insurance policy for fire or other casualty damage payable to the Company; and the
proceeds from the liquidation of assets of the Company following termination.
The term “capital transactions” shall mean any of the following: the sale of all or any part of the
assets of the Company; the refinancing of mortgages or other liabilities of the Company; the
receipt of insurance proceeds; and any other receipts or proceeds are attributable to capital.
(Check One)
☐ - SINGLE-MEMBER: A “Capital Account” for the Member shall be maintained by the
Company. The Member's Capital Account shall reflect the Member’s capital contributions and
increases for any net income or gain of the Company. The Member’s Capital Account shall
also reflect decreases for distributions made to the Member and the Member’s share of any
losses and deductions of the Company.
☐ - MULTI-MEMBER: The “Capital Account” for each Member shall mean the account
created and maintained for the Member in accordance with Section 704(b) of the Internal
Revenue Code and Treasury Regulation Section 1.704-1(b)(2)(iv).
The term “Members’ Percentage Interests” shall mean the percentages set forth opposite the
name of each Member Below:
Member Percentage Interest
_____________________________ _____________%
_____________________________ _____________%
_____________________________ _____________%
During each fiscal year, the net profits and net losses of the Company (other than from capital
transactions), and each item of income, gain, loss, deduction or credit entering into the
computation thereof, shall be credited or charged, as the case may be, to the capital accounts
of each Member in proportion to the Members’ Percentage Interests. The net profits of the
Company from capital transactions shall be allocated in the following order of priority: (a) to
offset any negative balance in the capital accounts of the Members in proportion to the
amounts of the negative balance in their respective capital accounts, until all negative
balances in the capital accounts have been eliminated; then (b) to the Members in proportion
to the Members’ Percentage Interests. The net losses of the Company from capital
transactions shall be allocated in the following order of priority: (a) to the extent that the
balance in the capital accounts of any Members are in excess of their original contributions, to
such Members in proportion to the excess balances until all such excess balances have been
reduced to zero; then (b) to the Members in proportion to the Members’ Percentage Interests.
The cash receipts of the Company shall be applied in the following order of priority: (a) to the
payment of interest or amortization on any mortgages on the assets of the Company, amounts
due on debts and liabilities of the Company other than those due to any Member, costs of the
construction of the improvements to the assets of the Company and operating expenses of the
Company; (b) to the payment of interest and establishment of cash reserves determined by the
4
Members to be necessary or appropriate, including without limitation, reserves for the
operation of the Company’s business, construction, repairs, replacements, taxes and
contingencies; and (d) to the repayment of any loans made to the Company by any Member.
Thereafter, the cash receipts of the Company shall be distributed among the Members as
hereafter provided.
Except as otherwise provided in this Agreement or otherwise required by law, distributions of
cash receipts of the Company, other than from capital transactions, shall be allocated among
the Members in proportion to the Members’ Percentage Interests.
Except as otherwise provided in this Agreement or otherwise required by law, distributions of
cash receipts from capital transactions shall be allocated in the following order or priority: (a) to
the Members in proportion to their respective capital accounts until each Member has received
cash distributions equal to any positive balance in their capital account; then (b) to the
Members in proportion to the Members’ Percentage Interests.
It is the intention of the Members that the allocations under this Agreement shall be deemed to
have “substantial economic effect” within the meaning of Section 704 of the Internal Revenue
Code and Treas. Reg. Section 1.704-1. Should the provisions of this Agreement be
inconsistent with or in conflict with Section 704 of the Code or the Regulations thereunder,
then Section 704 of the Code and the Regulations shall be deemed to override the contrary
provisions thereof. If Section 704 or the Regulations at any time require that limited liability
company operating agreements contain provisions which are not expressly set forth herein,
such provisions shall be incorporated into this Agreement by reference and shall be deemed a
part of this Agreement to the same extent as though they had been expressly set forth herein.
7. Books, Records and Tax Returns
(Check One)
☐ - SINGLE-MEMBER: The Company shall maintain complete and accurate books and
records of the Company's business and affairs as required by the Statutes and such books and
records shall be kept at the Company's Registered Office and shall in all respects be
independent of the books, records and transactions of the Member.
The Company's fiscal year shall be the calendar year with an ending month of December.
The Member intends that the Company, as a single member LLC, shall be taxed as a sole
proprietorship in accordance with the provisions of the Internal Revenue Code. Any
provisions herein that may cause may cause the Company not to be taxed as a sole
proprietorship shall be inoperative.
☐ - MULTI-MEMBER: The Members, or their designees, shall maintain complete and accurate
records and books of the Company’s transactions in accordance with generally accepted
accounting principles.
The Company shall furnish each Member, within seventy-five days after the end of each fiscal
year, an annual report of the Company including a balance sheet, a profit and loss statement a
5
capital account statement; and the amount of such Member’s share of the Company’s income,
gain, losses, deductions and other relevant items for federal income tax purposes.
The Company shall prepare all Federal, State and local income tax and information returns for
the Company, and shall cause such tax and information returns to be timely filed. Within
seventy-five days after the end of each fiscal year, the Company shall forward to each person
who was a Member during the preceding fiscal year a true copy of the Company’s information
return filed with the Internal Revenue Service for the preceding fiscal year.
All elections required or permitted to be made by the Company under the Internal Revenue
Code, and the designation of a tax matters partner pursuant to Section 6231(a)(7) of the
Internal Revenue Code for all purposes permitted or required by the Code, shall be made by
the Company by the affirmative vote or consent of Members holding a majority of the
Members’ Percentage Interests.
Upon request, the Company shall furnish to each Member, a current list of the names and
addresses of all of the Members of the Company, and any other persons or entities having any
financial interest in the Company.
8. Bank Accounts
All funds of the Company shall be deposited in the Company’s name in a bank account or
accounts as chosen by the Member(s). Withdrawals from any bank accounts shall be made
only in the regular course of business of the Company and shall be made upon such signature
or signatures as the Members from time to time may designate.
9. Management of the Company
The business and affairs of the Company shall be conducted and managed by the Member(s)
in accordance with this Agreement and the laws of the State of Minnesota.
(Check One)
☐ - SINGLE-MEMBER: __________________, as sole member of the Company, has sole
authority and power to act for or on behalf of the Company, to do any act that would be binding
on the Company, or incur any expenditures on behalf of the Company. The Member shall not
be liable for the debts, obligations or liabilities of the Company, including under a judgment,
decree or order of a court. The Company is organized as a “member-managed” limited liability
company. The Member is designated as the initial managing member.
☐ - MULTI-MEMBER: Except as expressly provided elsewhere in this Agreement, all
decisions respecting the management, operation and control of the business and affairs of the
Company and all determinations made in accordance with this Agreement shall be made by
the affirmative vote or consent of Members holding a majority of the Members’ Percentage
Interests.
Notwithstanding any other provision of this Agreement, the Members shall not, without the
prior written consent of the unanimous vote or consent of the Members, sell, exchange, lease,
6
assign or otherwise transfer all or substantially all of the assets of the Company; sell,
exchange, lease (other than space leases in the ordinary course of business), assign or
transfer the Company’s assets; mortgage, pledge or encumber the Company’s assets other
than is expressly authorized by this Agreement; prepay, refinance, modify, extend or
consolidate any existing mortgages or encumbrances; borrow money on behalf of the
Company in the excess of $___________________.00; lend any Company funds or other
assets to any person in an amount or with a value in excess of $___________________.00;
establish any reserves for working capital repairs, replacements, improvements or any other
purpose, in excess of an aggregate of $___________________.00; confess a judgment
against the Company; settle, compromise or release, discharge or pay any claim, demand or
debt in excess of $___________________.00, including claims for insurance; approve a
merger or consolidation of the Company with or into any other limited liability company,
corporation, partnership or other entity; or change the nature or character of the business of
the Company.
The members shall receive such sums for compensation as Members of the Company as may
be determined from time to time by the affirmative vote or consent of Members holding a
majority of the Members’ Percentage Interests.
(Check if Applicable)
☐ - MULTI-MEMBER: Meetings of Members
The annual meeting of the Members shall be held on _____________________________
(day/month) at the principal office of the Company or at such other time and place as the
Members determine, for the purpose of transacting such business as may lawfully come before
the meeting. If the day fixed for the annual meeting shall be a legal holiday, such meeting
shall be held on the next succeeding business day.
The Members may by resolution prescribe the time and place for the holding of regular
meetings and may provide that the adoption of such resolution shall constitute notice of such
regular meetings.
Special meetings of the Members, for any purpose or purposes, may be called by any ___
Members (or such other number of Members as the Members from time to time may specify).
Written or electronic notice stating the place, day and hour of the meeting and, in the case of a
special meeting, the purpose for which the meeting is called, shall be delivered not less than
three days before the date of the meeting, either personally or by mail, to each Member of
record entitled to vote at such meeting. When all the Members of the Company are present at
any meeting, or if those not present sign a written waiver of notice of such meeting, or
subsequently ratify all the proceedings thereof, the transactions of such meeting shall be valid
as if a meeting had been formally called and notice had been given.
At any meeting of the Members, the presence of Members holding a majority of the Members’
Percentage Interests, as determined from the books of the Company, represented in person or
by proxy, shall constitute a quorum for the conduct of the general business of the Company.
However, if any particular action by the Company shall require the vote or consent of some
other number or percentage of Members pursuant to this Agreement, a quorum for the
7
purpose of taking such action shall require such other number or percentage of Members. If a
quorum is not present, the meeting may be adjourned from time to time without further notice,
and if a quorum is present at the adjourned meeting any business may be transacted which
might have been transacted at the meeting as originally notified. The Members present at a
duly organized meeting may continue to transact business until adjournment, notwithstanding
the withdrawal of enough Members to leave less a quorum.
At all meetings of the Members, a Member may vote by proxy executed in writing by the
Member or by a duly authorized attorney-in-fact of the Member. Such proxy shall be filed with
the Company before or at the time of the meeting.
A Member of the Company who is present at a meeting of the Members at which action on any
matter is taken shall be presumed to have assented to the action taken, unless the dissent of
such Member shall be entered in the minutes of the meeting or unless such Member shall file a
written dissent to such action with the person acting as the secretary of the meeting before the
meeting’s adjournment. Such right to dissent shall not apply to a Member who voted in favor
of such action.
Unless otherwise provided by law, any action required to be taken at a meeting of the
Members, or any other action which may be taken at a meeting of the Members, may be taken
without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all
of the Members entitled to vote with respect to the subject.
Members of the Company may participate in any meeting of the Members by means of
conference telephone or similar communication if all persons participating in such meeting can
hear one another for the entire discussion of the matters to be vote upon. Participation in a
meeting pursuant to this paragraph shall constitute presence in person at such meeting.
(Check if Applicable)
☐ - MULTI-MEMBER: Assignment of Interests
Except as otherwise provided in this Agreement, no Member or other person holding any
interest in the Company may assign, pledge, hypothecate, transfer or otherwise dispose of all
or any part of their interest in the Company, including without limitation, the capital, profits or
distributions of the Company without the prior written consent of the other Members in each
instance.
The Members agree that no Member may voluntarily withdraw from the Company without the
unanimous vote or consent of the Members.
A Member may assign all or any part of such Member’s interest in the allocations and
distributions of the Company to any of the following (collectively the “permitted assignees”):
any person, corporation, partnership or other entity as to which the Company has given
consent to the assignment of such interest in the allocations and distributions of the Company
by the affirmative vote or consent of Members holding a majority of the Members’ Percentage
Interests. An assignment to a permitted assignee shall only entitle the permitted assignee to
the allocations and distributions to which the assigned interest is entitled, unless such
8
permitted assignee applies for admission to the Company and is admitted to the Company as
a Member in accordance with this Agreement.
An assignment, pledge, hypothecation, transfer or other disposition of all or any part of the
interest of a Member in the Company or other person holding any interest in the Company in
violation of the provisions hereof shall be null and void for all purposes.
No assignment, transfer or other disposition of all or any part of the interest of any Member
permitted under this Agreement shall be binding upon the Company unless and until a duly
executed and acknowledged counterpart of such assignment or instrument of transfer, in form
and substance satisfactory to the Company, has been delivered to the Company.
No assignment or other disposition of any interest of any Member may be made if such
assignment or disposition, alone or when combine with other transactions, would result in the
termination of the Company within the meaning of Section 708 of the Internal Revenue Code
or under any other relevant section of the Code or any successor statute. No assignment or
other disposition of any interest of any Member may be made without an opinion of counsel
satisfactory to the Company that such assignment or disposition is subject to an effective
registration under, or exempt from the registration requirements of, the applicable Federal and
State securities laws. No interest in the Company may be assigned or given to any person
below the age of 21 years or to a person who has been adjudged to be insane or incompetent.
Anything herein contained to the contrary, the Company shall be entitled to treat the record
holder of the interest of a Member as the absolute owner thereof, and shall incur no liability by
reason of distributions made in good faith to such record holder, unless and until there has
been delivered to the Company the assignment or other instrument of transfer and such other
evidence as may be reasonably required by the Company to establish to the satisfaction of the
Company that an interest has been assigned or transferred in accordance with this Agreement.
(Check One)
☐ - SINGLE-MEMBER: Ownership of Company Property.
The Company’s assets shall be deemed owned by the Company as an entity, and the Member
shall have no ownership interest in such assets or any portion thereof. Title to any or all such
Company assets may be held in the name of the Company, one or more nominees or in “street
name”, as the Member may determine.
Except as limited by the Statutes, the Member may engage in other business ventures of any
nature, including, without limitation by specification, the ownership of another business similar
to that operated by the Company. The Company shall not have any right or interest in any
such independent ventures or to the income and profits derived therefrom.
☐ - MULTI-MEMBER: Right of First Refusal
If a Member desires to sell, transfer or otherwise dispose of all or any part of their interest in
the Company, such Member (the “Selling Member”) shall first offer to sell and convey such
interest to the other Members before selling, transferring or otherwise disposing of such
interest to any other person, corporation or other entity. Such offer shall be in writing, shall be
9
given to every other Member, and shall set forth the interest to be sold, the purchase price to
be paid, the date on which the closing is to take place (which date shall be not less than thirty
nor more than sixty days after the delivery of the offer), the location at which the closing is to
take place, and all other material terms and conditions of the sale, transfer or other disposition.
Within fifteen days after the delivery of said offer the other Members shall deliver to the Selling
Member a written notice either accepting or rejecting the offer. Failure to deliver said notice
within said fifteen days conclusively shall be deemed a rejection of the offer. Any or all of the
other Members may elect to accept the offer, and if more than one of the other Members elects
to accept the offer, the interest being sold and the purchase price therefore shall be allocated
among the Members so accepting the offer in proportion to their Members’ Percentage
Interests, unless they otherwise agree in writing.
If any or all of the other Members elect to accept the offer, then the closing of title shall be held
in accordance with the offer and the Selling Member shall deliver to the other Members who
have accepted the offer an assignment of the interest being sold by the Selling Member, and
said other Members shall pay the purchase price prescribed in the offer.
If no other Member accepts the offer, or if the Members who have accepted such offer default
in their obligations to purchase the interest, then the Selling Member within 120 days after the
delivery of the offer may sell such interest to any other person or entity at a purchase price
which is not less than the purchase price prescribed in the offer and upon the terms and
conditions which are substantially the same as the terms and conditions set forth in the offer,
provided all other applicable requirements of this Agreement are complied with. An
assignment of such interest to a person or entity who is not a Member of the Company shall
only entitle such person or entity to the allocations and distributions to which the assigned
interest is entitled, unless such person or entity applies for admission to the Company and is
admitted to the Company as a Member in accordance with this Agreement.
If the Selling Member does not sell such interest within said 120 days, then the Selling Member
may not thereafter sell such interest without again offering such interest to the other Members
in accordance with this Agreement.
(Check if Applicable)
☐ - MULTI-MEMBER: Admission of New Members
The Company may admit new Members (or transferees of any interests of existing Members)
into the Company by the unanimous vote or consent of the Members.
As a condition to the admission of a new Member, such Member shall execute and
acknowledge such instruments, in form and substance satisfactory to the Company, as the
Company may deem necessary or desirable to effectuate such admission and to confirm the
agreement of such Member to be bound by all of the terms, covenants and conditions of this
Agreement, as the same may have been amended. Such new Member shall pay all
reasonable expenses in connection with such admission, including without limitation,
reasonable attorneys’ fees and the cost of the preparation, filing or publication of any
amendment to this Agreement or the Articles of Organization, which the Company may deem
necessary or desirable in connection with such admission.
10
No new Member shall be entitled to any retroactive allocation of income, losses, or expense
deductions of the Company. The Company may make pro rata allocations of income, losses
or expense deductions to a new Member for that portion of the tax year in which the Member
was admitted in accordance with Section 706(d) of the Internal Revenue Code and regulations
thereunder.
In no event shall a new Member be admitted to the Company if such admission would be in
violation of applicable Federal or State securities laws or would adversely affect the treatment
of the Company as a partnership for income tax purposes.
(Check if Applicable)
☐ - MULTI-MEMBER: Withdrawal Events
In the event of the death, retirement, withdrawal, expulsion, or dissolution of a Member, or an
event of bankruptcy or insolvency, as hereinafter defined, with respect to a Member, or the
occurrence of any other event which terminates the continued membership of a Member in the
Company pursuant to the Statutes (each of the foregoing being hereinafter referred to as a
“Withdrawal Event”), the Company shall terminate sixty days after notice to the Members of
such withdrawal Event unless the business of the Company is continued as hereinafter
provided.
Notwithstanding a Withdrawal Event with respect to a Member, the Company shall not
terminate, irrespective of applicable law, if within aforesaid sixty day period the remaining
Members, by the unanimous vote or consent of the Members (other than the Member who
caused the Withdrawal Event), shall elect to continue the business of the Company.
In the event of a Withdrawal Event with respect to an Member, any successor in interest to
such Member (including without limitation any executor, administrator, heir, committee,
guardian, or other representative or successor) shall not become entitled to any rights or
interests of such Member in the Company, other than the allocations and distributions to which
such Member is entitled, unless such successor in interest is admitted as a Member in
accordance with this Agreement.
An “event of bankruptcy or insolvency” with respect to a Member shall occur if such Member:
(1) applies for or consents to the appointment of a receiver, trustee or liquidator of all or a
substantial part of their assets; or (2) makes a general assignment for the benefit of creditors;
or (3) is adjudicated a bankrupt or an insolvent; or (4) files a voluntary petition in bankruptcy or
a petition or an answer seeking an arrangement with creditors or to take advantage of any
bankruptcy, insolvency, readjustment of debt or similar law or statute, or an answer admitting
the material allegations of a petition filed against them in any bankruptcy, insolvency,
readjustment of debt or similar proceedings; or (5) takes any action for the purpose of effecting
any of the foregoing; or (6) an order, judgment or decree shall be entered, with or without the
application, approval or consent of such Member, by any court of competent jurisdiction,
approving a petition for or appointing a receiver or trustee of all or a substantial part of the
assets of such Member, and such order, judgment or decree shall be entered, with or without
the application, approval or consent of such Member, by any court of competent jurisdiction,
approving a petition for or appointing a receiver or trustee of all or a substantial part of the
11
assets of such Member, and such order, judgment or decree shall continue unstayed and in
effect for thirty days.
10. Dissolution and Liquidation
(Check One)
☐ - SINGLE-MEMBER: The Company shall dissolve and its affairs shall be wound up on the
first to occur of (i) At a time, or upon the occurrence of an event specified in the Articles of
Organization or this Agreement. (ii) The determination by the Member that the Company shall
be dissolved.
Upon the death of the Member, the Company shall be dissolved. By separate written
documentation, the Member shall designate and appoint the individual who will wind down the
Company’s business and transfer or distribute the Member's Interests and Capital Account as
designated by the Member or as may otherwise be required by law.
Upon the disability of a Member, the Member may continue to act as Manager hereunder or
appoint a person to so serve until the Member's Interests and Capital Account of the Member
have been transferred or distributed.
☐ - MULTI-MEMBER: The Company shall terminate upon the occurrence of any of the
following : (i) the election by the Members to dissolve the Company made by the unanimous
vote or consent of the Members; (ii) the occurrence of a Withdrawal Event with respect to a
Member and the failure of the remaining Members to elect to continue the business of the
Company as provided for in this Agreement above; or (iii) any other event which pursuant to
this Agreement, as the same may hereafter be amended, shall cause a termination of the
Company.
The liquidation of the Company shall be conducted and supervised by a person designated for
such purposes by the affirmative vote or consent of Members holding a majority of the
Members’ Percentage Interests (the “Liquidating Agent”). The Liquidating Agent hereby is
authorized and empowered to execute any and all documents and to take any and all actions
necessary or desirable to effectuate the dissolution and liquidation of the Company in
accordance with this Agreement.
Promptly after the termination of the Company, the Liquidating Agent shall cause to be
prepared and furnished to the Members a statement setting forth the assets and liabilities of
the Company as of the date of termination. The Liquidating Agent, to the extent practicable,
shall liquidate the assets of the Company as promptly as possible, but in an orderly and
businesslike manner so as not to involve undue sacrifice.
The proceeds of sale and all other assets of the Company shall be applied and distributed in
the following order of priority: (1) to the payment of the expenses of liquidation and the debts
and liabilities of the Company, other than debts and liabilities to Members; (2) to the payment
of debts and liabilities to Members; (3) to the setting up of any reserves which the Liquidating
Agent may deem necessary or desirable for any contingent or unforeseen liabilities or
obligations of the Company, which reserves shall be paid over to licensed attorney to hold in
12
escrow for a period of two years for the purpose of payment of any liabilities and obligations, at
the expiration of which period the balance of such reserves shall be distributed as provided; (4)
to the Members in proportion to their respective capital accounts until each Member has
received cash distributions equal to any positive balance in their capital account, in accordance
with the rules and requirements of Treas. Reg. Section 1.704-1(b)(2)(ii)(b); and (5) to the
Members in proportion to the Members’ Percentage Interests.
The liquidation shall be complete within the period required by Treas. Reg. Section 1.704-
1(b)(2)(ii)(b).
Upon compliance with the distribution plan, the Members shall no longer be Members, and the
Company shall execute, acknowledge and cause to be filed any documents or instruments as
may be necessary or appropriate to evidence the dissolution and termination of the Company
pursuant to the Statutes.
11. Representations of Members
(Check if Applicable)
☐ - MULTI-MEMBER: Each of the Members represents, warrants and agrees that the Member
is acquiring the interest in the Company for the Member’s own account for investment
purposes only and not with a view to the sale or distribution thereof; the Member, if an
individual, is over the age of 21; if the Member is an organization, such organization is duly
organized, validly existing and in good standing under the laws of its State of organization and
that it has full power and authority to execute this Agreement and perform its obligations
hereunder; the execution and performance of this Agreement by the Member does not conflict
with, and will not result in any breach of, any law or any order, writ, injunction or decree of any
court or governmental authority against or which binds the Member, or of any agreement or
instrument to which the Member is a party; and the Member shall not dispose of such interest
or any part thereof in any manner which would constitute a violation of the Securities Act of
1933, the Rules and Regulations of the Securities and Exchange Commission, or any
applicable laws, rules or regulations of any State or other governmental authorities, as the
same may be amended.
12. Certificates Evidencing Membership
(Check if Applicable)
☐ - MULTI-MEMBER: Every membership interest in the Company shall be evidenced by a
Certificate of Membership issued by the Company. Each Certificate of Membership shall set
forth the name of the Member holding the membership interest and the Member’s Percentage
Interest held by the Member, and shall bear the following legend:
“The membership interest represented by this certificate is subject to, and may not be
transferred except in accordance with, the provisions of the Operating Agreement of
______________________, LLC, dated effective as of _________________________,
20______, as the same from time to time may be amended, a copy of which is on file at the
principal office of the Company.”
13
13. Notices
(Check if Applicable)
☐ - MULTI-MEMBER: All notices, demands, requests or other communications which any of
the parties to this Agreement may desire or be required to give hereunder shall be in writing
and shall be deemed to have been properly given if sent by courier or by registered or certified
mail, return receipt requested, with postage prepaid, addressed as follows: (a) if to the
Company, at the principal place of business of the Company designated by the Company; and
(b) if to any Member, to the address of said Member first above written, or to such other
address as may be designated by said Member by notice to the Company and the other
Members pursuant to this Article 13.
14. Arbitration
(Check if Applicable)
☐ - MULTI-MEMBER: Any dispute, controversy or claim arising out of or in connection with
this Agreement or any breach or alleged breach hereof shall, upon the request of any party
involved, be submitted to, and settled by, arbitration in the city in which the principal place of
business of the Company is then located, pursuant to the commercial arbitration rules then in
effect of the American Arbitration Association (or at any other time or place or under any other
form of arbitration mutually acceptable to the parties involved). Any award rendered shall be
final and conclusive upon the parties and a judgment thereon may be entered in a court of
competent jurisdiction. The expenses of the arbitration shall be borne equally by the parties to
the arbitration, provided that each party shall pay for and bear the cost of its own experts,
evidence and attorneys’ fees, except that in the discretion of the arbitrator any award may
include the attorney’s fees of a party if the arbitrator expressly determines that the party
against whom such award is entered has caused the dispute, controversy or claim to be
submitted to arbitration as a dilatory tactic or in bad faith.
15. Amendments
(Check if Applicable)
☐ - MULTI-MEMBER: This Agreement may not be altered, amended, changed,
supplemented, waived or modified in any respect or particular unless the same shall be in
writing and agreed to by the affirmative vote or consent of Members holding a majority of the
Members’ Percentage Interests. No amendment may be made to Articles that apply to the
financial interest of the Members, except by the vote or consent of all of the Members. No
amendment of any provision of this Agreement relating to the voting requirements of the
Members on any specific subject shall be made without the affirmative vote or consent of at
least the number or percentage of Members required to vote on such subject.
16. Indemnification
a) SINGLE-MEMBER: The Member (including, for purposes of this Section, any
estate, heir, personal representative, receiver, trustee, successor, assignee and/or
transferee of the Member) shall not be liable, responsible or accountable, in
14
damages or otherwise, to the Company or any other person for: (i) any act
performed, or the omission to perform any act, within the scope of the power and
authority conferred on the Member by this agreement and/or by the Statutes except
by reason of acts or omissions found by a court of competent jurisdiction upon entry
of a final judgment rendered and un-appealable or not timely appealed (“Judicially
Determined”) to constitute fraud, gross negligence, recklessness or intentional
misconduct; (ii) the termination of the Company and this Agreement pursuant to the
terms hereof; (iii) the performance by the Member of, or the omission by the Member
to perform, any act which the Member reasonably believed to be consistent with the
advice of attorneys, accountants or other professional advisers to the Company with
respect to matters relating to the Company, including actions or omissions
determined to constitute violations of law but which were not undertaken in bad faith;
or (iv) the conduct of any person selected or engaged by the Member.
The Company, its receivers, trustees, successors, assignees and/or transferees
shall indemnify, defend and hold the Member harmless from and against any and all
liabilities, damages, losses, costs and expenses of any nature whatsoever, known or
unknown, liquidated or unliquidated, that are incurred by the Member (including
amounts paid in satisfaction of judgments, in settlement of any action, suit, demand,
investigation, claim or proceeding (“Claim”), as fines or penalties) and from and
against all legal or other such costs as well as the expenses of investigating or
defending against any Claim or threatened or anticipated Claim arising out of,
connected with or relating to this Agreement, the Company or its business affairs in
any way; provided, that the conduct of the Member which gave rise to the action
against the Member is indemnifiable under the standards set forth herein.
Upon application, the Member shall be entitled to receive advances to cover the
costs of defending or settling any Claim or any threatened or anticipated Claim
against the Member that may be subject to indemnification hereunder upon receipt
by the Company of any undertaking by or on behalf of the Member to repay such
advances to the Company, without interest, if the Member is Judicially Determined
not to be entitled to indemnification as set forth herein.
All rights of the Member to indemnification under this Agreement shall (i) be
cumulative of, and in addition to, any right to which the Member may be entitled to
by contract or as a matter of law or equity, and (ii) survive the dissolution, liquidation
or termination of the Company as well as the death, removal, incompetency or
insolvency of the Member.
The termination of any Claim or threatened Claim against the Member by judgment,
order, settlement or upon a plea of nolo contendere or its equivalent shall not, of
itself, cause the Member not to be entitled to indemnification as provided herein
unless and until Judicially Determined to not be so entitled.
15
17. Miscellaneous
This Agreement and the rights and liabilities of the parties hereunder shall be governed by and
determined in accordance with the laws of the State of Minnesota. If any provision of this
Agreement shall be invalid or unenforceable, such invalidity or unenforceability shall not affect
the other provisions of this Agreement, which shall remain in full force and effect.
The captions in this Agreement are for convenience only and are not to be considered in
construing this Agreement. All pronouns shall be deemed to be the masculine, feminine,
neuter, singular or plural as the identity of the person or persons may require. References to a
person or persons shall include partnerships, corporations, limited liability companies,
unincorporated associations, trusts, estates and other types of entities.
This Agreement, and any amendments hereto may be executed in counterparts all of which
taken together shall constitute one agreement.
This Agreement sets forth the entire agreement of the parties hereto with respect to the subject
matter hereof. It is the intention of the Member(s) that this Agreement shall be the sole
agreement of the parties, and, except to the extent a provision of this Agreement provides for
the incorporation of federal income tax rules or is expressly prohibited or ineffective under the
Statutes, this Agreement shall govern even when inconsistent with, or different from, the
provisions of any applicable law or rule. To the extent any provision of this Agreement is
prohibited or otherwise ineffective under the Statutes, such provision shall be considered to be
ineffective to the smallest degree possible in order to make this Agreement effective under the
Statutes.
Subject to the limitations on transferability set forth above, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and to their respective heirs, executors,
administrators, successors and assigns.
No provision of this Agreement is intended to be for the benefit of or enforceable by any third
party.
IN WITNESS WHEREOF, the parties have executed this Agreement this _____ day of
______________________, 20_____.
________________________________, LLC
By:____________________________ ________________________________
Member Signature
________________________________
Member Signature
________________________________
Member Signature
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Mn Llc Operating Agreement (How to Start a Business)

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Completed 15 July 2020

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