Drafting Limited Liability Company
Operating Agreements
Published by Wolters Kluwer
Principal Author: John M. Cunningham
Co-author: Amanda L. Nelson
Materials for Use in Drafting Operating Agreements under General-Purpose Form 9.1 (with Drafting Guidelines and with Annotated Version of the Form)
FORM 9.1 IS A MODEL OPERATING AGREEMENT (GENERIC) FOR A MEMBER-MANAGED
MULTI-MEMBER LIMITED LIABILITY COMPANY: 
1.	WHICH HAS TWO MEMBERS; 
2.	WHICH IS MANAGED BY A MEMBER-MANAGER UNDER A SIMPLE LIMITED PARTNERSHIP MANAGEMENT STRUCTURE;
3.	WHICH IS SUBSTANTIALLY CONTROLLED BY ITS MANAGER; 
4.	WHOSE FEDERAL TAX CLASSIFICATION IS THAT OF AN ASSOCIATION; 
5.	WHICH IS TAXABLE AS AN S CORPORATION; AND
6.	WHOSE MEMBERS ARE TAXABLE AS S CORPORATION SHAREHOLDERS. 

DRAFTING GUIDELINES UNDER FORM 9.1
TABLE OF CONTENTS
PART I.	Form 9.1—Introduction
PART II.	Exhibits and Chapters in Drafting Limited Liability Company Operating Agreements Relevant in Drafting Operating Agreements Under Form 9.1
_____________________________________________________________________________________
TABLE OF EXHIBITS
EXHIBIT 1	Form 9.1 (annotated)
_____________________________________________________________________________________
PART I.	Form 9.1—Introduction
1.	Form 9.1—general description.
Form 9.1 is a model operating agreement (generic) for member-managed multi-member limited liability company: 
(a)	Which has two members; 
(b)	Which is managed by its manager under a simple limited partnership management structure;
(c)	Which is substantially controlled by its manager;
(d)	Whose federal tax classification is that of an association; 
(e)	Which is taxable as an S corporation; and
(f)	Whose members are taxable as S corporation shareholders.
2.	Annotated vs. unannotated versions of Form 9.1.
The last item in the present set of materials concerning Form 9.1 is an annotated version of Form 9.1.  An unannotated version of Form 9.1 is available on the online digital forms list.
3.	Form 9.1 is a “generic” form.
As indicated in the cover page of these materials, Form 9.1 is a “generic” form.  That is, you must adapt it for use under the governing LLC act.  However, the form is readily usable under any LLC act.
4.	Form 9.1 is a “general-purpose” form.
Form 9.1 is a “general-purpose” form.  That is, it can be used by an individual to conduct any type of single-owner business.
5.	The tables of contents, sections and subsections of Form 9.1.
All legal, tax and other issues likely to be important to individuals conducting their single-owner businesses as Form 9.1 LLCs are identified and addressed in the tables of contents, sections and subsections of the form.
6.	Plain English.
To make Form 9.1 readily intelligible to non-lawyer clients on a careful first reading, the form is drafted in plain English.
7.	Unavailability of similar forms.
To the authors’ knowledge, no form comparable to Form 9.1 in clarity, comprehensiveness or explanatory features is available from any other authors.

PART II.	Exhibits and Chapters in Drafting Limited Liability Company Operating Agreements That Are Relevant in Drafting Operating Agreements Under Form 9.1
The following exhibits and chapters in that book may be useful to you in drafting operating agreements for your clients under Form 9.1:
1.	LLC formation checklist.
An exhibit consisting of a comprehensive LLC formation checklist is set forth at the beginning of Part I.
2.	List of forms.
A list of the 28 general-purpose forms is set forth in an exhibit immediately following the above exhibit.
3.	Exhibit 15-4.
A model engagement letter is contained in Chapter 15 (“Initial Contacts with Clients”), Exhibit 15-4 (“Model Engagement Letter”).
4.	Chapter 1.
Chapter 1 identifies and discusses the 12 chief characteristics of LLCs, and Exhibit 1-1 briefly summarizes these characteristics.  You may want to give your client a copy of Exhibit 1-1.
5.	Chapter 2.
Chapter 2 (“Choosing the Right Model Operating Agreement”) provides clear guidelines for selecting the best form for your client from among the 28 general-purpose forms in the book.
6.	Chapter 3.
Chapter 3 (“General Drafting Guidelines”) contains general guidelines for drafting LLC operating agreements.
7.	Exhibit 5-1.
Exhibit 5-1 provides a comprehensive list of questions you should ask your clients about themselves and about their business before you begin drafting an operating agreement for their multi-member LLC.
8.	Chapter 9.
As its title indicates, Chapter 9 provides guidelines for evaluating and using model operating agreements.
9.	Chapters 16 and 17.
Chapters 16 and contain guidelines for complying with the rules of professional conduct applicable in drafting LLC operating agreements.
10.	Federal tax issues.
Chapters 39 through 45 address all of the principal federal and state tax issues potentially important to your client in conducting her business through a single-member LLC.
However, if you are not an expert on LLC tax, you should consult with an expert about the federal tax regimen to which the single-member LLC of your client should be subject before you use Form 9.1 as the basis for the operating agreement of the client’s LLC.

EXHIBIT 1
FORM 9.1 (ANNOTATED)

(ATTACHED)

OPERATING AGREEMENT, DATED ___________,
[OR “LIMITED LIABILITY COMPANY AGREEMENT” OR OTHER APPLICABLE STATUTORY TERM UNDER THE GOVERNING LIMITED LIABILITY COMPANY ACT] OF ______________, LLC
A Manager-Managed Two-Member 
[State] Limited Liability Company 
Taxable as an S Corporation

Dated as of _________, 20__

SUMMARY TABLE OF CONTENTS
Section 1	INTRODUCTORY PROVISIONS CONCERNING THE LLC
Section 2	INTRODUCTORY PROVISIONS CONCERNING THIS AGREEMENT AND THE ARTICLES
Section 3	THE LLC’S ELECTION TO BE TAXABLE AS AN S CORPORATION; THE LLC’S TAX ADVISER
Section 4	LLC SHARES; CONTRIBUTION BY THE MEMBERs IN EXCHANGE FOR SHARES, ETC.
Section 5	LLC’s ALLOCATIONS TO THE MEMBERS
Section 6	LLC DISTRIBUTIONS TO THE MEMBERS
Section 7	TRANSFERS, REDEMPTIONS AND GRANTS OF MEMBERSHIP RIGHTS—DEFINITIONS AND GENERAL RULES
Section 8	MEMBER DISSOCIATIONS AND SUSPENSIONS; CONSEQUENCES OF DISSOCIATIONS
Section 9	LLC GRANTS OF MEMBERSHIP RIGHTS AFTER THE LLC’s FORMATION
Section 10	MEMBERS’ SALES AND OTHER TRANSFERS OF THEIR MEMBERSHIP RIGHTS TO THIRD PARTIES; PLEDGES
Section 11	MEMBER MEETINGS
Section 12	MEMBER VOTING
Section 13	MEMBERS’ RIGHTS TO LLC RECORDS AND INFORMATION
Section 14	MANAGER’S QUALIFICATIONS AND SUBSEQUENT APPOINTMENTS, ETC.
Section 15	MANAGER’S TITLES AUTHORITY, FUNCTIONAL RESPONSIBILITIES AND COMPENSATION, ETC.
Section 16	MANAGER’S FIDUCIARY DUTY OF CARE
Section 17	MANAGER’S FIDUCIARY DUTY OF LOYALTY
Section 18	MANAGER’S FIDUCIARY DUTY OF CONFIDENTIALITY
Section 19	MANAGER’S FIDUCIARY DUTY OF DISCLOSURE
Section 20	MANAGER’S DUTY  TO COMPLY WITH THE IMPLIED CONTRACTUAL COVENANT OF GOOD FAITH AND FAIR DEALING
Section 21	MEMBERS’ REPRESENTATIONS
Section 22	LLC RECORD KEEPING
Section 23	LLC’s DISSOLUTION, WINDING-UP AND LIQUIDATION
Section 24	TERM AND TERMINATION OF THIS AGREEMENT
Section 25	CLAIMS BY THE MEMBERS, ETC.
Section 26	DISPUTE RESOLUTION—MANDATORY MEDIATION
Section 27	DISPUTE RESOLUTION—MANDATORY ARBITRATION
Section 28	GENERAL PROVISIONS

DETAILED TABLE OF CONTENTS
Section 1	INTRODUCTORY PROVISIONS CONCERNING THE LLC
1.1	LLC’s Name
1.2	Identification of Initial Members; Admission of Additional Members
1.3	Filing of Articles
1.4	Entity Status of LLC; Ownership of LLC Assets
1.5	LLC’s Principal Purpose
1.6	LLC’s Powers
1.7	LLC’s Duration
1.8	LLC’s Principal Place of Business
1.9	LLC’s Registered Agent and Registered Office
1.10	Management of LLC by a Member-manager; Appointment of Manager
1.11	MAnager’s Discretion
1.12	Limited Liability of Members and the Manager
1.13	Federal and State Taxation of LLC and Members
1.14	LLC Interest—Definition
1.15	LLC’s Annual Accounting Period
1.16	LLC’s Accounting Method
1.17	LLC’s Accounting Firm
1.18	LLC’s Principal Tax Adviser
1.19	LLC’s Principal Lawyer [or Law Firm]
Section 2	INTRODUCTORY PROVISIONS CONCERNING THIS AGREEMENT AND THE ARTICLES
2.1	Binding Effect of Agreement; Effective Date
2.2	Members’ Acceptance of Articles
2.3	Addition of LLC as Party to Agreement
Section 3	THE LLC’S ELECTION TO BE TAXABLE AS AN S CORPORATION; THE LLC’S TAX ADVISER
3.1	The LLC’s S Election
3.2	Members’ Acknowledgments Concerning Subchapter S
3.3	Appointment and Replacement of LLC’s Tax Adviser; Tax Adviser’s Qualifications
3.4	Members’ Duty to Consult with LLC’s Tax Adviser about Their Estate Plans Before the LLC Files its S Election
3.5	Members’ Duty to Consult with LLC’s Tax Adviser, Etc.
3.6	Revocation of LLC’s S Election
3.7	Inadvertent Termination of LLC’s S Election
3.8	Money Damages for Knowing or Negligent Termination of S Election
Section 4	LLC SHARES; CONTRIBUTION BY THE MEMBERs IN EXCHANGE FOR SHARES, ETC.
4.1	Shares—Definition, Etc.
4.2	Contribution—Definition
4.3	Membership Rights—Definition
4.4	Issuance of Shares and Other Membership Rights to the Members in Exchange for their Contributions
4.5	No Interest on Contributions or on Accrued Allocations
4.6	Valuation of Non-Cash Contributions
4.7	Requirement of Signed Writing as Condition for Enforceability of Promises to Make Contributions
4.8	Requirement of Consent by Other Member in Order to Amend Promise to Make Contributions
4.9	Members’ Duty to Make Promised Contributions Even if They Are Disabled, Etc.
4.10	Certain Duties of Members Contributing  Property to the LLC
4.11	Penalties for Failure to Make Promised Contributions
4.12	Contributions Include Only Contributions Actually Made, Etc.
Section 5	LLC’s ALLOCATIONS TO THE MEMBERS
5.1	Allocation—Definition
5.2	Formula for LLC Allocations
Section 6	LLC DISTRIBUTIONS TO THE MEMBERS
6.1	Distribution, Etc. —Definitions
6.2	Distributions—General Rules
6.3	Tax Distributions
6.4	Status of Members as Unsecured Creditors of LLC with Respect to Distributions
6.5	Restrictions on Distributions in Kind
6.6	Prohibition Against Unlawful Distributions
6.7	Liability of Manager and Members for Authorizing or Receiving Unlawful Distributions
6.8	Members’ Right to Reimbursement of Expenses
Section 7	TRANSFERS, REDEMPTIONS AND GRANTS OF MEMBERSHIP RIGHTS—DEFINITIONS AND GENERAL RULES
7.1	Transfer— Definition
7.2	Redemption—Definition
7.3	Cross-purchase—Definition
7.4	Grant—Definition
7.5	Obtaining of Advice from the LLC’s Principal Lawyer before Transfer, Redemption or Grant
7.6	Obtaining of Advice from the LLC’s Principal Lawyer before Transfer, Redemption or Grant
7.7	Signed Writing Required for Transfers, Cross-purchases, Redemptions and Grants
7.8	Requirement That Transferees and Grantees Sign This Agreement
7.9	Securities Law Compliance
Section 8	MEMBER DISSOCIATIONS AND SUSPENSIONS; CONSEQUENCES OF DISSOCIATIONS
8.1	Dissociation—Definition
8.2	Certain Effects of Dissociation upon the Rights of Dissociated Members
8.3	Events of Dissociation—In General
8.4	Redemptions and Cross-purchases—Purchase Price
8.5	Dissociation upon Resignation
8.6	Consequences of Dissociation upon Resignation
8.7	Dissociation upon Death
8.8	Consequences of Dissociation upon Death
8.9	Optional Dissociation of Entity Member upon Dissolution
8.10	Consequences of Dissociation upon Dissolution
8.11	Optional Dissociation upon Assignment of Entire LLC Interest
8.12	Consequences of Dissociation upon Assignment of Entire LLC Interest
8.13	Optional Dissociation upon Member Disability
8.14	Consequences upon Member Dissociation upon Disability
8.15	Optional Dissociation upon Member Bankruptcy
8.16	Consequences on Member Dissociation Because of Bankruptcy
8.17	Dissociation upon Expulsion
8.18	Consequences of Member Dissociation by Expulsion
8.19	Member’s Duty to Act on Options with Reasonable Promptness; Deadline for Agreement on Terms of Redemption, Etc.
8.20	Member Suspensions—Grounds
8.21	Requirement to Amend Agreement upon Change in Number of Members
8.22	Effect of Dissociations Resulting in the LLC’s Having No Members
Section 9	LLC GRANTS OF MEMBERSHIP RIGHTS AFTER THE LLC’s FORMATION
9.1	LLC Grants of Membership Rights to Third Parties
9.2	LLC Grants of Additional Membership Rights to Member
Section 10	MEMBERS’ SALES AND OTHER TRANSFERS OF THEIR MEMBERSHIP RIGHTS TO THIRD PARTIES; PLEDGES
10.1	Requirement of Consent by Manager for Transfers of Membership Rights to Third Parties
10.2	Requirement of Consent of the Manager for Pledges of Membership Rights
Section 11	MEMBER MEETINGS
Section 12	MEMBER VOTING
12.1	Definition of “Vote”
12.2	Reservation of Certain Matters to the Manager; Matters on Which the Members May Vote
12.3	Matters That the Non-Manager Member May Decide
Section 13	MEMBERS’ RIGHTS TO LLC RECORDS AND INFORMATION
13.1	Access to LLC Records, Etc.
13.2	Restrictions
Section 14	MANAGER’S QUALIFICATIONS AND SUBSEQUENT APPOINTMENTS, ETC.
14.1	Manager’s Qualifications
14.2	Duration of Manager’s Term of Office
14.3	Method of Appointing Manager After Appointment of Initial Manager
14.4	Manager’s Right to Resign upon Notice
Section 15	MANAGER’S TITLES AUTHORITY, FUNCTIONAL RESPONSIBILITIES AND COMPENSATION, ETC.
15.1	Manager’s Title
15.2	Agency Authority of Manager
15.3	Manager’s Rights with Respect to LLC Records and Information
15.4	Manager’s General Responsibility for Managing the LLC
15.5	Delegations of Management Authority
15.6	Manager’s Commitment of Time to LLC
15.7	Specific Functional Responsibilities of the Manager
15.8	Manager’s Compensation and Fringe Benefits
Section 16	MANAGER’S FIDUCIARY DUTY OF CARE
Section 17	MANAGER’S FIDUCIARY DUTY OF LOYALTY
Section 18	MANAGER’S FIDUCIARY DUTY OF CONFIDENTIALITY
Section 19	MANAGER’S FIDUCIARY DUTY OF DISCLOSURE
Section 20	MANAGER’S DUTY  TO COMPLY WITH THE IMPLIED CONTRACTUAL COVENANT OF GOOD FAITH AND FAIR DEALING
Section 21	MEMBERS’ REPRESENTATIONS
21.1	Representations by the Non-Member
21.2	Representations by the Managing Member
Section 22	LLC RECORD KEEPING
22.1	LLC’s Duty to Compile and Maintain Records and Information in Compliance with the LLC Act
22.2	LLC’s Duty to Compile and Maintain Books of Account and Other Records Required for the Sound Management of the LLC
22.3	LLC’s Duty to Compile and Maintain Certain Records Concerning Contributions
Section 23	LLC’s DISSOLUTION, WINDING-UP AND LIQUIDATION
23.1	LLC’s Dissolution, Winding-up and Liquidation— Definitions
23.2	Events Causing Dissolution
23.3	Effective Date of LLC’s Dissolution
23.4	Determination of Date for Delivery of Certificate of Cancellation [OR OTHER APPROPRIATE OFFICIAL FORM] and for Effective Date of Certificate
23.5	Cessation of LLC’s Legal Existence
23.6	LLC’s Winding-up
Section 24	TERM AND TERMINATION OF THIS AGREEMENT
24.1	Term and Termination of Agreement
24.2	Survival of Accrued Rights, Etc.
24.3	Parties’ Right after Termination of Agreement to Dispute Resolution in Certain Matters Relating to LLC’s Winding-up, Etc.
Section 25	CLAIMS BY THE MEMBERS, ETC.
25.1	Claims by the Manager and the Members
25.2	Claims by the Manager
25.3	Exculpation of Manager
25.4	Indemnification of the Manager
25.5	Advancement of Mediation, Arbitration and Litigation Expenses to Members or the Manager
25.6	LLC’s Duty to Provide Liability Insurance for the Manager
25.7	Burden of Proof; Standard of Proof
Section 26	DISPUTE RESOLUTION—MANDATORY MEDIATION
26.1	Mandatory Mediation
26.2	Procedural Rules
26.3	Notice of Mediation; Selection of Mediator, Etc.
26.4	Mediation Expenses
26.5	Confidentiality
26.6	Members’ Duty to Perform Their Obligations during Mediation
26.7	Arbitration
Section 27	DISPUTE RESOLUTION—MANDATORY ARBITRATION
Section 28	GENERAL PROVISIONS
28.1	Entire Agreement
28.2	Amendment of Agreement and Articles
28.3	Incorporation of Exhibits
28.4	Resolution of Conflicts  Agreement and Articles
28.5	Effect of LLC Act
28.6	Governing Law
28.7	Forum for Litigation; Acceptance of Personal Jurisdiction; Awarding of Litigation Expenses
28.8	Notices
28.9	Effect of Captions
28.10	Definition of “Day,” “Include,” Etc.
28.11	Meaning and Construction of Number and Gender
28.12	Delays and Omissions in Exercising Rights, Etc.; Waivers of Rights, Etc.
28.13	Severability of Provisions
28.14	Permissibility and Validity of Counterparts
28.15	Requirement of Certain Further Actions by the Parties
28.16	Parties’ Acknowledgement of Adequacy of Consideration
28.17	Validity of Facsimile Signatures
28.18	No Third Party Beneficiaries
28.19	Non-Manager Member’s Acknowledgements about Attorney [name of attorney]

TABLE OF EXHIBITS
Exhibit A	Articles of Organization [Or Other Appropriate Official Document]
Exhibit B	Member Contributions
Exhibit C	Specific Functions of the Manager
Exhibit D	Manager Compensation and Fringe Benefits

OPERATING AGREEMENT 
[OR LIMITED LIABILITY COMPANY AGREEMENT OR OTHER APPLICABLE STATUTORY TERM UNDER THE GOVERNING LIMITED LIABILITY COMPANY ACT] OF ________________, LLC
A Manager-Managed Two-Member
[State] Limited Liability Company
Taxable as an S Corporation
DATE OF AGREEMENT; PARTIES
This limited liability company operating agreement (the “Agreement”), dated as of ______, is among the following parties (the “members”):
1.	[NAME OF MEMBER], an individual, a resident of the State of [STATE], residing at _______________________; and
2.	[NAME OF MEMBER], an individual, a resident of the State of [STATE], residing at _______________________.
Promptly after the formation of _____________, LLC (the “LLC”), the LLC shall be automatically added as a party to the Agreement under Section 2.3.
STATEMENT OF BACKGROUND
1.	The members intend to form the LLC under the [STATE] Limited Liability Company Act (the “LLC Act”), [CITATION OF LLC STATUTE].
2.	The principal purpose of the LLC is to [STATE PURPOSE HERE].
3.	This Agreement sets forth the agreement among the parties about their respective rights and duties as parties to the Agreement and about the business, internal affairs and taxation of the LLC.
[YOU MAY WISH TO INCLUDE STATEMENTS IN A STATEMENT OF BACKGROUND THAT WILL SUPPORT YOUR CLIENTS’ INTERESTS, THAT WILL HELP TO GARNER INVESTOR SUPPORT OR THAT WILL ADVANCE OTHER PURPOSES NOT ADVANCED BY MERE STATEMENTS OF FACT.]
TERMS AND CONDITIONS
The parties, intending to be legally bound, agree as follows:
Section 1	INTRODUCTORY PROVISIONS CONCERNING THE LLC
1.1	LLC’s Name
The name of the LLC shall be ____________.
1.2	Identification of Initial Members; Admission of Additional Members
On the date of formation of the LLC, the members shall be the only members of the LLC.  Additional members shall be added to the LLC only in accordance with Sections 9 and 10 (concerning, respectively, grants and transfers of membership rights).
1.3	Filing of Articles
On or promptly after the effective date of this Agreement (as defined in Section 2.1), the members shall cause the Articles of Organization (the “Articles”) [OR OTHER OFFICIAL FORM] to be filed with the Secretary of State (the “Secretary of State”) [OR OTHER APPROPRIATE STATE OFFICIAL] of the State of [STATE].  The Articles as filed shall be substantially identical in form and content to the Articles set forth in Exhibit A.
1.4	Entity Status of LLC; Ownership of LLC Assets
Upon its formation, the LLC shall be a legal entity separate and distinct from its members.  The LLC shall own all of its assets in its own name and no member shall have any direct interest in those assets.
1.5	LLC’s Principal Purpose
The LLC’s principal purpose shall be as set forth above.  The LLC may also pursue any other purpose permitted by law and approved by mutual consent of the members.
1.6	LLC’s Powers
In pursuing its lawful purposes, the LLC shall have the power to do all things that LLCs are permitted to do under the LLC Act.
1.7	LLC’s Duration
The existence of the LLC as a legal entity shall begin on the date of filing of the Articles.  The duration of the LLC shall be indefinite and shall terminate only as set forth in Section 23 (concerning the LLC’s dissolution, winding-up and liquidation).
1.8	LLC’s Principal Place of Business
Upon the LLC’s formation, the address of the LLC’s principal place of business shall be _______________.  The manager may change this address from time to time.
1.9	LLC’s Registered Agent and Registered Office
The LLC’s registered agent and registered office shall be as set forth in the Articles.  The manager may change the LLC’s registered agent and office from time to time.  The manager shall amend the Articles [OR FOLLOW OTHER APPLICABLE STATE PROCEDURES] to reflect the change.
1.10	Management of LLC by a Member-manager; Appointment of Manager
(a)	Management Structure.
The LLC shall be managed by a member-manager (the “manager”) in accordance with the terms of this Agreement.
(b)	Appointment of Manager.
Under the terms and conditions of this Agreement:
(1)	The LLC hereby appoints [NAME OF MANAGER] as its initial manager; and
(2)	[NAME OF MANAGER] hereby accepts this appointment.
1.11	MAnager’s Discretion
In exercising the manager’s rights and responsibilities under this Agreement, the manager shall have absolute and unrestricted discretion, except that the manager shall take no action that materially impairs any express right of the non-manager member under this Agreement except with the non-manager member’s consent.
1.12	Limited Liability of Members and the Manager
Neither the members as members nor the manager as a manager shall be personally obligated to any third party for any debt, obligation or liability of the LLC solely because of being a member or manager.
1.13	Federal and State Taxation of LLC and Members
(a)	Federal Taxation under Subchapter S.
On and after the effective date of its S election under Section 3.1(a):
(1)	The LLC shall be subject to federal income taxation under Internal Revenue Code Subchapter S.
(2)	The members shall be subject to federal income taxation on the income, expenses, losses and other dollar items (collectively, “tax items”) of the LLC as the shareholders of an S corporation.
(b)	State Taxation.
The LLC and the members shall be taxable under the laws of [RELEVANT STATES] as provided by those laws and by the regulations thereunder.
1.14	LLC Interest—Definition
In this Agreement, a member’s “LLC interest” shall mean the member’s economic interest in the LLC.
1.15	LLC’s Annual Accounting Period
The LLC’s annual accounting period for financial and tax purposes shall be the calendar year [OR OTHER APPROPRIATE PERIOD].
1.16	LLC’s Accounting Method
(a)	Use of Federal Income Tax Definitions, Etc.
In computing its income, deductions and other tax and financial items, the LLC shall use federal income tax definitions and rules to the extent available under applicable federal tax authorities.
(b)	Cash [ACCRUAL, ETC.] Basis for Recognizing Income, Etc.
In determining when to recognize income, expenses and other tax items, the LLC shall use the cash [OR ACCRUAL OR OTHER] basis.
1.17	LLC’s Accounting Firm
The LLC’s accounting firm shall be [NAME OF ACCOUNTING FIRM].  The manager may terminate the LLC’s relation with this firm and may choose another firm as its accounting firm.
1.18	LLC’s Principal Tax Adviser
The LLC’s principal tax adviser shall be [NAME OF TAX ADVISER].  The manager may terminate the LLC’s relation with this principal tax adviser and may choose another principal tax adviser.
1.19	LLC’s Principal Lawyer [or Law Firm]
The LLC’s principal lawyer shall be [NAME OF LAWYER OR LAW FIRM].  The manager may terminate the LLC’s relation with this lawyer and may choose another lawyer.
Section 2	INTRODUCTORY PROVISIONS CONCERNING THIS AGREEMENT AND THE ARTICLES
2.1	Binding Effect of Agreement; Effective Date
This Agreement shall bind the members when each of them has signed it.  The effective date of the Agreement (the “Effective Date”) shall be the date on which the last of the members to sign and date it shall have done so.
2.2	Members’ Acceptance of Articles
Each member has reviewed and hereby approves and accepts the Articles.
2.3	Addition of LLC as Party to Agreement
Upon the formation of the LLC, the LLC shall automatically become a party to this Agreement.
Section 3	THE LLC’S ELECTION TO BE TAXABLE AS AN S CORPORATION; THE LLC’S TAX ADVISER
[SECTIONS 3 THROUGH 6 OF THIS FORM CONSIST OF PROVISIONS USEFUL OR NECESSARY IN OPERATING AGREEMENTS FOR LLCS TAXABLE AS S CORPORATIONS. THE MAIN PURPOSE OF THE SECTIONS IS TO ENSURE THAT THE MEMBERS PROPERLY MAKE AN S ELECTION AND THAT THE MEMBERS DON’T INADVERTENTLY OR NEGLIGENTLY TERMINATE THE ELECTION.]
3.1	The LLC’s S Election
On or promptly after the Effective Date:
(a)	The manager shall cause the LLC to make an election to be taxable as an S corporation (the “LLC’s S election”) by filing with the Internal Revenue Service (the “IRS”) a properly completed Form 2553 (“Election by a Small Business Corporation”);
(b)	The manager shall obtain from the IRS a letter evidencing the IRS’s acceptance of that election; and
(c)	The manager shall cause this letter to be filed in a safe place where it may be readily retrieved when needed.
3.2	Members’ Acknowledgments Concerning Subchapter S
The members acknowledge as follows:
(a)	The LLC’s S election can provide valuable tax benefits to the LLC and the member.
(b)	The rules affecting the LLC’s obtaining and retention of its S election are numerous and complex.
(c)	Any breach of these rules may have a serious adverse tax effect on the LLC and the members.
(d)	Compliance with these rules will sometime require the assistance of a tax professional with substantial Subchapter S expertise.
3.3	Appointment and Replacement of LLC’s Tax Adviser; Tax Adviser’s Qualifications
(a)	Appointment.
The manager hereby appoints [NAME OF TAX ADVISER] as the LLC’s tax adviser.  The manager is satisfied that the LLC’s tax adviser has substantial Subchapter S expertise.
(b)	Replacement.
If the individual or tax firm who is appointed as the LLC’s tax adviser ceases to hold that position because of death, resignation, dismissal or otherwise, the manager shall promptly replace the tax adviser with another having substantial Subchapter S expertise.
3.4	Members’ Duty to Consult with LLC’s Tax Adviser about Their Estate Plans Before the LLC Files its S Election
Before the LLC files its S election, each member shall consult with the LLC’s tax adviser in order to ensure that no element of the member’s estate planning arrangements, including any trust arrangement, or of the member’s other personal or business affairs, including security arrangements in connection with loans obtained or to be obtained by the member, significantly jeopardizes or will jeopardize the LLC’s S election.
3.5	Members’ Duty to Consult with LLC’s Tax Adviser, Etc.
(a)	Duty to Consult.
Before undertaking any of the following actions, the members shall consult with the LLC’s tax adviser about the effect of the action on the LLC’s S election:
(1)	Allocations and Distributions.
The members shall consult with the LLC’s tax adviser (i) before the LLC makes any allocation (as defined in Section 5.1(a)) or distribution (as defined in Section 6.1(a)) not  previously approved (whether in general or in a particular case) by the LLC’s tax adviser; and (ii) before it changes the timing of any distribution.
(2)	Member Compensation, Etc.
The members shall consult with the LLC’s tax adviser before the LLC makes any change in its compensation to a member for the member’s services to or for the LLC.
(3)	Issuance of Shares, Etc.
The members shall consult with the LLC’s tax adviser before the LLC issues any shares (as defined in Section 4.1(a)) or other membership rights (as defined in Section 4.3) to any person.
(4)	Sale of Shares, Etc.
The members shall consult with the LLC’s tax adviser before a member sells, gives or otherwise transfers or disposes of all or any part of the member’s shares or other membership rights to any person.
(5)	Redemptions.
The members shall consult with the LLC’s tax adviser before the LLC redeems all or any part of a member’s shares or other membership rights.
(6)	Loans.
The members shall consult with the LLC’s tax adviser before the members make any loan to the LLC and before the LLC makes any loan to either member.
(7)	Withholding of Taxes, Etc.
The members shall consult with the LLC’s tax adviser before the LLC withholds or pays taxes on behalf of a member to any state or other tax authority in a manner not already approved by the tax adviser.
(8)	Change in Estate Plan.
The members shall consult with the LLC’s tax adviser before a member makes any change in the member’s will or in any trusts or other estate planning documents or arrangements of the member.
(9)	Acquiring Ownership Interests in Another Entity.
The members shall consult with the LLC’s tax adviser before the LLC acquires an ownership interest in any other entity.
(10)	Change of LLC’s Purpose, Etc.
The members shall consult with the LLC’s tax adviser before making any change in the LLC’s purpose or lines of business.
(11)	Change of Accounting Method or Taxable Year.
The members shall consult with the LLC tax adviser before changing the LLC’s accounting method or taxable year.
(12)	Other Actions.
The members shall consult with the LLC’s tax adviser before either member or the LLC takes any other action relating to the LLC or its business or internal affairs outside the ordinary course of the LLC’s business.
(b)	Death of a Member.
Upon the death of either member, the other member shall use reasonable efforts to consult with the LLC’s tax adviser about possible Subchapter S issues that may arise because of the death.
(c)	Validity of Actions Taken without Consultation.
The failure of the members to consult with the LLC’s tax adviser about any of the above actions shall have no effect on the validity of the action.
3.6	Revocation of LLC’s S Election
The members may revoke the LLC’s S election under IRC Section 1362(d)(1)(A) by the affirmative vote of both members.
3.7	Inadvertent Termination of LLC’s S Election
(a)	Application for Waiver.
If the LLC’s S election is inadvertently terminated for any reason, the LLC shall, upon the affirmative vote of both members, apply under IRC Section 1362(f) for a waiver of the termination and shall make all adjustments necessary to obtain the waiver.
(b)	Costs of Application for Waiver.
If the LLC’s S election is inadvertently terminated because of the negligence of either member and if, under Section 3.7(a), the LLC applies for a waiver of the termination, the member whose negligence has caused the termination shall reimburse the LLC for its costs in seeking a waiver of the termination.
3.8	Money Damages for Knowing or Negligent Termination of S Election
If either member knowingly or negligently takes any action that results in the termination of the LLC’s S election and if this termination results in any federal or state tax to the other member for which the other member would not otherwise have been liable, the member whose action has caused the termination shall be liable to the other member for money damages for the amount of this tax and for all other resulting costs and damages to the other member, including reasonable accountants’ and attorneys’ fees.
Section 4	LLC SHARES; CONTRIBUTION BY THE MEMBERs IN EXCHANGE FOR SHARES, ETC.
4.1	Shares—Definition, Etc.
(a)	Share—Definition.
For purposes of this Agreement, the term “share” shall mean a unit of ownership of the right to receive (i) allocations of tax items (as defined in Section 1.12(a)(2)); and (ii) distributions of LLC cash and other assets.
(b)	Single Class of Shares.
The LLC shall be authorized to issue only a single class of shares, which shall be no-par common shares.
(c)	Uniformity of Shares.
Each share of the LLC shall confer on a member identical rights with respect to LLC distribution and liquidation proceeds.
(d)	Number of Authorized Shares.
The LLC shall be authorized to issue up to [NUMBER] no-par common shares.
4.2	Contribution—Definition
For purposes of this Agreement, a contribution shall mean any cash or property, or a promissory note or other obligation to contribute cash or property that a person transfers to the LLC in exchange for the person’s shares (as defined in Section 4.1(a)) and for the other membership rights (as defined in Section 4.3) provided to members under this Agreement.
4.3	Membership Rights—Definition
For purposes of this Agreement, the membership rights of a member shall mean the totality of the member’s rights as a member under the Agreement and the LLC Act, including both:
(a)	Economic rights; and
(b)	Non-economic rights (such as voting rights, agency rights, rights to receive notice of, to attend and to participate in meetings, rights with respect to LLC information, fiduciary rights and dispute resolution rights).
A member’s economic rights shall include, but shall not necessarily be limited to, the member’s rights as a holder of shares (as defined in Section 4.1).
4.4	Issuance of Shares and Other Membership Rights to the Members in Exchange for their Contributions
(a)	Initial Contributions.
In exchange for each member’s contributions of cash and property identified in the attached Exhibit B made in accordance with all terms of that exhibit, the LLC shall issue to the member [NUMBER] shares and the other membership rights provided to the members under this Agreement.
(b)	Documentation of Contribution.
Promptly after any member makes a contribution to the LLC, the LLC shall file in its records one or more documents, such as photocopies of cancelled checks, documentary evidence of bank transfers, or photocopies of executed bills of assignment, showing that the member has made the contribution.
(c)	Effective Date of Issuance.
The above issuances of shares and other membership rights shall be effective on the effective date of the LLC’s S election.
(d)	No Capital Calls.
Neither member shall be obligated to make a contribution to the LLC except as provided in Exhibit B.
(e)	Subsequent Member Contributions.
Members admitted to the LLC after its formation shall make contributions in exchange for their membership rights as set forth in amendments to Exhibit B.
4.5	No Interest on Contributions or on Accrued Allocations
The members shall earn no interest on their contributions under this Section 4 or on amounts allocated to them under Section 5.
4.6	Valuation of Non-Cash Contributions
Before either member makes a contribution to the LLC in a form other than cash, the members shall agree in writing as to the value of that contribution.
4.7	Requirement of Signed Writing as Condition for Enforceability of Promises to Make Contributions
No promise by a member to make a contribution to the LLC shall be enforceable unless it is set forth in this Agreement or in another writing and signed by the member.
4.8	Requirement of Consent by Other Member in Order to Amend Promise to Make Contributions
No term of any promise by a member to make a contribution to the LLC shall be amended except with the advance written consent of the other member.
4.9	Members’ Duty to Make Promised Contributions Even if They Are Disabled, Etc.
Each member and the member’s representative or successor shall be obligated to perform any promise by the member to make a contribution to the LLC even if the member is prevented from doing so because of disability, death, or otherwise.
4.10	Certain Duties of Members Contributing  Property to the LLC
(a)	No Conflict as to Contribution.
A member obligated to contribute property other than cash to the LLC under this Agreement shall, before making any such contribution, ensure:
(1)	That there is no conflict between this obligation and any obligation of the member to any other person, including an obligation under any other agreement or under any testamentary instrument of the member; and
(2)	That the contribution is consistent with any applicable laws concerning fraudulent transfers.
(b)	Warrant of No Conflict, Etc.
By signing this Agreement, the member shall warrant the absence of any conflict or inconsistency referred to in Section 4.10(a).
4.11	Penalties for Failure to Make Promised Contributions
(a)	Penalties.
If a member (the “defaulting member”) fails to make a contribution in accordance with Exhibit B, the non-defaulting member may impose upon the defaulting member any penalty that the non-defaulting member believes to be reasonable in the circumstances.  Penalties may include:
(1)	Reduction or elimination of the defaulting member’s membership rights;
(2)	Forfeiture of all or a portion of the defaulting member’s membership rights; or
(3)	Sale of all or a portion of the defaulting member’s membership rights.
(b)	Consultation with Principal Tax Adviser and Principal Lawyer.
In determining a penalty to apply under this Section 4.11, the non-defaulting member shall use reasonable efforts to consult in advance with the LLC’s principal tax adviser and principal lawyer.
4.12	Contributions Include Only Contributions Actually Made, Etc.
For purposes of this Agreement, the contributions of a member shall include only contributions that the LLC has actually received from the member and has not returned to the member.
Section 5	LLC’s ALLOCATIONS TO THE MEMBERS
5.1	Allocation—Definition
For purposes of this Agreement, an allocation by the LLC to a member of the LLC’s tax items (as defined in Section 1.12(a)(2)) shall mean an apportionment of these items in respect of the member’s shares on the books of the LLC.
5.2	Formula for LLC Allocations
The LLC shall allocate its tax items between the members in proportion to their respective holdings of shares.
Section 6	LLC DISTRIBUTIONS TO THE MEMBERS
6.1	Distribution, Etc. —Definitions
For purposes of this Agreement:
(a)	Distribution—Definition.
A distribution by the LLC to a member shall mean a transfer of the LLC’s cash or other assets to the member in respect of the member’s shares.
(b)	Interim Distribution—Definition.
An interim distribution to a member shall mean any distribution except a liquidating distribution (as defined in Sections 6.1(c)(1) and (2)).
(c)	Liquidating Distribution—Definition.
A liquidating distribution shall mean a distribution in connection with:
(1)	The LLC’s partial or complete redemption of a member’s membership rights; or
(2)	The LLC’s dissolution and liquidation.
6.2	Distributions—General Rules
(a)	Member Vote.
Whether the LLC shall make any distribution and the amount and timing of any such distribution shall, except as provided in Section 6.3, be determined by the affirmative vote of both members.
(b)	Distributions to Both Members.
The LLC shall make no distribution to either member unless it makes a distribution to both members.
(c)	Proportionality.
Amounts distributed to the members in any distribution shall be in proportion to the members’ respective holdings of shares.
6.3	Tax Distributions
(a)	Distributions for Members’ Tax Obligations.
To the extent that the LLC’s financial condition and other relevant factors permit, the LLC shall make interim distributions (“tax distributions”) to the members at such times and in such amounts as to enable them to pay federal, state and other taxes on their shares of LLC income on time and in full.
(b)	Contemporaneous and Proportional.
Any tax distribution shall be subject to the rules of Sections 6.2(b) and (c).
(c)	Highest Tax Rate on Member Assumed.
In computing the amount of each such distribution to each member, the LLC shall assume that the member is obligated to pay the highest combined federal and state marginal rate of tax on the member’s share of LLC income.
6.4	Status of Members as Unsecured Creditors of LLC with Respect to Distributions
Each member shall have the status of an unsecured creditor with respect to distributions to which the member is entitled under the Agreement.
6.5	Restrictions on Distributions in Kind
If this Agreement or applicable law requires the LLC to make a distribution to either member, then:
(a)	The member may not compel the LLC to make the distribution except in the form of cash; and
(b)	The LLC may not compel a member to accept the distribution except in the form of cash.
6.6	Prohibition Against Unlawful Distributions
(a)	No Unlawful Distributions.  
The LLC shall make no unlawful distribution of its assets (as defined in Sections 6.6(b)(1) and (2)) to either member.
(b)	Unlawful Distribution – Definition.
A distribution shall be an unlawful distribution within the meaning of Section 6.6(a) in either of the following circumstances:
(1)	Net Worth Test.
A distribution shall be an unlawful distribution if, immediately after the distribution, the sum of the LLC’s liabilities would exceed the aggregate fair market value of its assets.
(2)	Solvency Test.
A distribution shall be an unlawful distribution if, as a result of the distribution, the LLC would be unable to pay its reasonably foreseeable obligations as they become due.
6.7	Liability of Manager and Members for Authorizing or Receiving Unlawful Distributions
A manager who votes to authorize an unlawful distribution and members who receive such a distribution shall be liable for legal sanctions as provided in the LLC Act.
6.8	Members’ Right to Reimbursement of Expenses
If either member reasonably incurs an expense on behalf of the LLC and reasonably documents this expense to the LLC, the LLC shall reimburse the member for this expense as promptly as reasonably possible after receiving this documentation.
Section 7	TRANSFERS, REDEMPTIONS AND GRANTS OF MEMBERSHIP RIGHTS—DEFINITIONS AND GENERAL RULES
7.1	Transfer— Definition
(a)	Transfer—Definition.
For purposes of this Agreement, a transfer of membership rights by a member shall mean any voluntary or involuntary transfer or other disposition of all or any part of those rights to another person, with or without consideration, including:
(1)	A transfer by sale;
(2)	A transfer by exchange;
(3)	A transfer by gift;
(4)	A transfer by assignment;
(5)	A transfer (whether by will, trust or otherwise) taking effect on the death of the member; and
(6)	A transfer by operation of law, by execution of legal process, or pursuant to a divorce or bankruptcy decree (including a transfer in connection with a merger of a member that is an entity into another entity).
(b)	Exclusion of Redemptions and Pledges.
Transfers shall not include redemptions and pledges of membership rights.
7.2	Redemption—Definition
For purposes of this Agreement, a redemption of a member’s membership rights shall mean the extinguishment of those rights in exchange for cash or other consideration from the LLC to the member.
7.3	Cross-purchase—Definition
As used in this Agreement, the cross-purchase of all or any of a member’s membership rights shall mean the purchase of these rights the other member.
7.4	Grant—Definition
For purposes of this Agreement, the grant of membership rights means their issuance by the LLC to a member or other person.
7.5	Obtaining of Advice from the LLC’s Principal Lawyer before Transfer, Redemption or Grant
(a)	Reasonable Efforts, Etc.
Before any transfer, redemption or grant under this Agreement, the LLC shall use reasonable efforts to obtain the advice of its principal lawyer about the legal effects of the transfer, redemption or grant and to communicate this advice to the members.  However, the LLC’s failure to obtain this advice or to communicate it to either member shall not invalidate any such transfer, redemption or grant.
(b)	Loan Agreements, Etc.
In providing this advice, the LLC’s principal lawyer shall take into account the terms of this Agreement, all relevant loan agreements and all other agreements to which the LLC is a party, and all other relevant legal instruments and considerations.
7.6	Obtaining of Advice from the LLC’s Principal Lawyer before Transfer, Redemption or Grant
(a)	Reasonable Efforts, Etc.
Before any transfer, redemption or grant under this Agreement, the LLC shall use reasonable efforts to obtain the advice of its principal lawyer about the legal effects of the transfer, redemption or grant and to communicate this advice to the members.  However, the LLC’s failure to obtain this advice or to communicate it to either member shall not invalidate any such transfer, redemption or grant.
(b)	Loan Agreements, Etc.
In providing this advice, the LLC’s principal lawyer shall take into account the terms of this Agreement, all relevant loan agreements and all other agreements to which the LLC is a party, and all other relevant legal instruments and considerations.
7.7	Signed Writing Required for Transfers, Cross-purchases, Redemptions and Grants
No transfer, cross-purchase, redemption or grant of membership rights in the LLC (a “transaction”) shall be valid unless made pursuant to a writing that sets forth all material terms of the transaction and that is signed by all parties to the transaction.
7.8	Requirement That Transferees and Grantees Sign This Agreement
No transfer or grant of membership rights under this Agreement shall be valid unless the transferee or grantee (as the case may be) signs this Agreement (as appropriately amended to take account of the terms of the transfer or grant in question).
7.9	Securities Law Compliance
No transfer, redemption or grant of membership rights in the LLC (a “transaction”) shall be valid until:
(a)	The LLC has consulted with its principal lawyer about the compliance of the transaction with applicable securities laws; and
(b)	Both of the members are reasonably satisfied that the transaction complies with these laws.
Section 8	MEMBER DISSOCIATIONS AND SUSPENSIONS; CONSEQUENCES OF DISSOCIATIONS
8.1	Dissociation—Definition
Except as provided in Section 8.11 (concerning assignments of entire LLC interests), the dissociation of a member shall mean the termination of both of the member’s membership rights except:
(a)	The member’s LLC interest (as defined in Section 1.13);
(b)	The rights identified in Section 8.2(a); and
(c)	Any rights the member may have under this Section 8 as a consequence of the member’s dissociation.
8.2	Certain Effects of Dissociation upon the Rights of Dissociated Members
(a)	Certain Continuing Rights.
If, after dissociation, a former member retains all or any part of the former member’s LLC interest, the former member shall be, subject to any contrary order by an arbitrator under Section 27, entitled to the following rights:
(1)	Information Rights.
Subject to reasonable restrictions as determined from time to time by the manager, the former member shall be entitled to inspect and copy at the former member’s own expense all information reasonably relevant to allocations and distributions to the former member in respect of this LLC interest.
(2)	Dispute Resolution Rights.
The former member shall be entitled to invoke the dispute resolution provisions of Sections 26 and 27 with respect to the former member’s LLC interest.
(3)	The former member shall be entitled to any other rights provided to the member under this Section 8.
(b)	Termination of Duties.
Subject to any contrary provision in Section 17 (relating to the duty of loyalty) and Section 18 (relating to the duty of confidentiality), a person who has been dissociated from the LLC shall have no fiduciary or other duties to the LLC.
(c)	Liabilities.
A person who has been dissociated from the LLC shall have no liabilities to the LLC except liabilities that accrued to the member before the member’s dissociation.
8.3	Events of Dissociation—In General
A member shall be subject to dissociation from the LLC only upon the occurrence of an event identified in Sections 8.5 through 8.17.  The effective date of each such dissociation shall be as set forth in this Section 8.
8.4	Redemptions and Cross-purchases—Purchase Price
(a)	Except as otherwise provided in this Section 8, all redemptions and cross-purchases provided for in this section shall be:
(1)	For the fair market value of the membership rights, including management rights, held by the dissociated member immediately before the dissociated member’s dissociation; and
(2)	On non-price terms (including dsclosing terms, installment terms, and interest terms) that are reasonable in the circumstances.
(b)	The fair market value of any membership rights redeemed or cross-purchased under this Section 8 shall not take into account discounts for management right or marketing rights or other discounts.
8.5	Dissociation upon Resignation
(a)	Resignation—Definition.
For purposes of this Section 8, the resignation of a member shall mean the member’s voluntary renunciation of all of the member’s membership rights except the rights identified in Section 8.1.
(b)	Resignation—in General; Effective Date.
A member shall be dissociated upon resigning from the LLC in compliance with Section 8.5(c).  The effective date of the dissociation shall be the effective date of the resignation.
(c)	Notice; Effective Date.
A member may resign as a member of the LLC by giving written notice of resignation to the other member.  The resignation shall be effective ___ days after the other member has received the notice.  The resigning member shall incur no liability to the other member or to the LLC merely by reason of the resignation.
8.6	Consequences of Dissociation upon Resignation
(a)	If, in connection with a member’s resignation, the member agrees not to compete against the LLC, then, for a reasonable purchase price and on reasonable non-price terms:
(1)	The LLC may redeem and the other member may cross-purchase all (but not less than all) of the resigned member’s membership rights; and
(2)	The resigned member may require the above purchase.
(b)	If, in connection with the member’s resignation, the member does not agree not to  compete against the LLC, the above price and non-price terms shall be appropriately altered.
8.7	Dissociation upon Death
A member shall be dissociated upon the member’s death.  The effective date of the dissociation shall be the date of the member’s death.
8.8	Consequences of Dissociation upon Death
Upon a member’s death while a member, then, for a reasonable purchase price and on reasonable non-price terms:
(a)	The member’s successors may require the LLC to redeem or the other member to purchase all (but not less than all) the deceased member’s membership rights; and
(b)	The LLC or the other member may require the deceased member’s successors to make the above purchase.
8.9	Optional Dissociation of Entity Member upon Dissolution
Upon (a) the dissolution of a member that is an entity or (b) the occurrence of any condition or event terminating that member’s legal existence (a “dissolution”), the other member shall have the option to dissociate that member if they reasonably determine that the dissociation is in the LLC’s best interest.
8.10	Consequences of Dissociation upon Dissolution
Upon a member’s dissolution, then, for a reasonable purchase price and on reasonable non-price terms:
(a)	The member’s successors may require the LLC to redeem or the other member to purchase all (but not less than all) the dissolved member’s membership rights; and
(b)	The LLC or the other member may require the dissolved member’s successors to make the above purchase.
8.11	Optional Dissociation upon Assignment of Entire LLC Interest
If a member assigns the member’s entire LLC interest to a third party, the other member shall have the option to dissociate the assigning member.  Notwithstanding Section 8.1, the dissociated member shall no longer have any rights or liabilities as a member except for any rights or liabilities which accrued to the member prior to the dissociation.  The dissociation shall be effective on or after the effective date of the assignment as determined by the other member.
8.12	Consequences of Dissociation upon Assignment of Entire LLC Interest
If a member assigns the member’s entire LLC interest to a third party, the assigning member’s other membership rights shall terminate and the LLC and the other member shall have no duty to make any payment to the assigning member for these other rights.
8.13	Optional Dissociation upon Member Disability
(a)	Disability—Definition.
For purposes of this Section 8.13, a disability means any physical or mental impairment incurred by a member that substantially prevents the member from performing the member’s responsibilities to the LLC for a period of ____ consecutive days.
(b)	Option to Dissociate.
If a member incurs a disability (as defined in Section 8.13(a)), the other member shall have the option to dissociate that member if they reasonably determine that the dissociation is in the LLC’s best interest.
(c)	Right of Member to Appoint Proxy.
If, because of a disability or otherwise, a member is unable to exercise the member’s rights as a member under this Agreement, the member or the member’s legal representative may appoint a proxy to exercise these rights if the other member approves this appointment.
8.14	Consequences upon Member Dissociation upon Disability
If the other member dissociates a member because of a disability, then, for a reasonable purchase price and on reasonable non-price terms:
(a)	The disabled member or the disabled member’s proxy may require the LLC to redeem or the other member to purchase all (but not less than all) of the disabled member’s membership rights; and
(b)	The LLC or the other member may require the disabled member’s proxy to sell all (but not less than all) of the disabled member’s membership rights to the LLC or the other member.
8.15	Optional Dissociation upon Member Bankruptcy
The other member shall have the option to dissociate a member if:
(a)	The member files for bankruptcy or any similar relief; or
(b)	One or more creditors of a member file a petition to have the member declared bankrupt or any similar petition and this petition is not dismissed within 60 days after being filed; and
(c)	The non-bankrupt member reasonably determines that the dissociation is in the LLC’s best interest.
8.16	Consequences on Member Dissociation Because of Bankruptcy
If the other member dissociates a member for bankruptcy, then, for a reasonable purchase price and on reasonable non-price terms, the other member may require the bankrupt member to sell the bankrupt member’s membership rights to the LLC or to the other member.
8.17	Dissociation upon Expulsion
(a)	Expulsions—in General; Effective Date.
A member shall be dissociated upon being expelled from membership in the LLC in compliance with Sections 8.17(b) and (c).  The effective date of the expulsion shall be determined by the other member.
(b)	Expulsions—Substantive Grounds.
Subject to the provisions of Section 8.17(c), the other member shall have an option to expel a member from the LLC on any of the following grounds:
(1)	Breach of Agreement.
The other member shall have the option to expel a member if they reasonably determine that:
(A)	The member (“the breaching member”) has materially breached a duty of the member under this Agreement (including any duty to provide personal services to or for the LLC);
(B)	The non-breaching member has given the breaching member written notice of this breach; and
(C)	The breaching member has failed to cure the breach, if curable, within a reasonable period after receiving this notice.
(2)	Breach of Trust.
A breach of the Agreement by a member that has a material adverse effect on the other member’s trust of the breaching member shall be deemed to be a noncurable breach.
(3)	Misconduct Affecting the LLC’s Reputation.
The other member shall have the option to expel a member if they reasonably determine that the member has engaged in misconduct that has caused or is likely to cause a material adverse impact on the reputation of the LLC or on its business or internal affairs.
(4)	Serious Illegal or Immoral Conduct.
The other member shall have the option to expel a member if they reasonably determine that the member has engaged in serious illegal or immoral conduct.
(c)	Expulsions—Procedural Requirements.
Before expelling a member, the other member shall accord the member reasonable notice and a reasonable opportunity to be heard.
8.18	Consequences of Member Dissociation by Expulsion
Upon the dissociation of a member by expulsion, then, for a purchase price and on non-price terms that take into full account the conduct of the expelled member:
(a)	The LLC or the other member may require the expelled member to sell all or any part of the expelled membership rights to the LLC or to the other member; and
(b)	The expelled member may require the LLC or the other member or purchase all (but not less than all) of the expelled member’s membership rights.
8.19	Member’s Duty to Act on Options with Reasonable Promptness; Deadline for Agreement on Terms of Redemption, Etc.
(a)	General Rule.
The remaining member shall exercise all options available to the member under this Section 8, and shall take all other actions under this Section or relating to a dissociated member with reasonable promptness.
(b)	Determination of Buy-out Price; Closing of Buy-out.
Within __ days after the effective date of a member’s dissociation under this Section 8, the remaining member and the dissociated member (or that member’s heir or legal representative, as the case may be) shall do the following:
(1)	They shall determine the price and non-price terms of any redemption or cross-purchase permitted or required under this Section 8; and
(2)	They shall close any such redemption or cross-purchase.

[YOU MAY WANT TO REPLACE THE VERY FLEXIBLE MEMBER BUY-OUT TERMS OF SECTION 8.19 WITH A BUY-OUT FORMULA THAT CONTAINS TAILORED PRICE TERMS AND NON-PRICE TERMS.]
8.20	Member Suspensions—Grounds
(a)	Requirement of Reasonable Grounds for Suspension.
At the request of a member, an arbitrator may suspend another member under this Section 8.20 if the arbitrator determines that there is a substantial possibility that the other member can be validly expelled under Section 8.17.
(b)	Terms of Suspension.
No suspension under this Section 8.20 shall be valid unless its duration and its other terms are determined to be reasonable in mediation under Section 26 or arbitration under Section 27.  The terms of a member’s suspension may include, if reasonable, a complete or partial suspension of allocations, distributions and compensation to the suspended member.
8.21	Requirement to Amend Agreement upon Change in Number of Members
If, for any reason, the number of members changes after the Effective Date, the member or members (as the case may be) shall, with reasonable promptness, consult with the LLC’s principal lawyer and, if necessary, cause this Agreement to be amended so as to be suitable for the resulting number of members.
8.22	Effect of Dissociations Resulting in the LLC’s Having No Members
If, for any reason, both members are dissociated from the LLC at the same or approximately the same time, their successors as members or their legal representatives (as the case may be) shall be deemed to have succeeded to all of their respective membership rights for all purposes of this Agreement and the legal existence of the LLC shall continue.
Section 9	LLC GRANTS OF MEMBERSHIP RIGHTS AFTER THE LLC’s FORMATION
9.1	LLC Grants of Membership Rights to Third Parties
After the formation of the LLC, the manager shall determine whether the LLC shall grant membership rights to third parties and the terms of any such grant.  Notwithstanding any other provision of this Agreement, these terms may dilute the economic or other rights of the non-manager member under the Agreement.
9.2	LLC Grants of Additional Membership Rights to Member
After the formation of the LLC, the manager shall determine whether the LLC shall grant additional membership rights to a member and the terms of any such grant.
Section 10	MEMBERS’ SALES AND OTHER TRANSFERS OF THEIR MEMBERSHIP RIGHTS TO THIRD PARTIES; PLEDGES
10.1	Requirement of Consent by Manager for Transfers of Membership Rights to Third Parties
No member shall transfer all or any part of the member’s membership rights to any third party except with the consent of the manager.
10.2	Requirement of Consent of the Manager for Pledges of Membership Rights
(a)	Pledge—Definition.
For purposes of this Agreement, pledges shall include mortgages and all other arrangements under which a member provides another person with an interest in all or any portion of the member’s membership rights in order to secure an obligation of the member.
(b)	Requirement of Consent of Manager.
No member shall pledge all or any part of the member’s membership rights to any person except with the consent of the manager.
Section 11	MEMBER MEETINGS
The members shall meet from time to time as determined by the manager.
Section 12	MEMBER VOTING
12.1	Definition of “Vote”
For purposes of this Agreement, the term “vote” shall mean any expression of consent or dissent, whether by voice, by show of hand, or in writing by a member on a member matter (as defined in Section 12.2).
12.2	Reservation of Certain Matters to the Manager; Matters on Which the Members May Vote
Except as provided in Section 12.3, only the manager shall decide LLC matters.  For purposes of this Agreement, LLC matters mean arising under or relating to this Agreement and all matters relating to the LLC except the matters specifically identified in Section 12.3.
12.3	Matters That the Non-Manager Member May Decide
The only LLC matters that the non-manager member may decide are as follows:
(a)	Matters that, in the best interest of the LLC, must be decided but that the manager and any replacement manager do not decide with reasonable promptness; and
(b)	Such other matters as the manager may determine from time to time.
Section 13	MEMBERS’ RIGHTS TO LLC RECORDS AND INFORMATION
13.1	Access to LLC Records, Etc.
The manager shall determine whether and on what terms the non-manager member shall have the right to access, copy or use:
(a)	The records of the LLC and
(b)	Information concerning the LLC or in its  possession.
13.2	Restrictions
The rights of the non-manager member to access, obtain, copy and use LLC records and information under Section 13.1 shall be subject:
(a)	To the duty of confidentiality imposed by Section 18 of this Agreement;
(b)	To any applicable federal or state laws and regulations, including laws and regulations concerning the privacy of employee medical information; and
(c)	To restrictions imposed by the manager.
Section 14	MANAGER’S QUALIFICATIONS AND SUBSEQUENT APPOINTMENTS, ETC.
14.1	Manager’s Qualifications
Except as the manager may otherwise determine, the manager shall be a natural person and shall be a member of the LLC.  The manager may change these qualifications from time to time.
14.2	Duration of Manager’s Term of Office
The term of office of the manager shall be indefinite, but shall terminate upon the earliest of the date of the manager’s (a) death; (b) resignation as a manager; or (c) disability (as determined by the persons named as the successors to the manager as a member of the LLC.
14.3	Method of Appointing Manager After Appointment of Initial Manager
After the formation of the LLC, each new manager shall be appointed by the manager or, if the manager is no longer the manager, as determined by the manager in his capacity as a member or by successors to the manager as a member of the LLC.
14.4	Manager’s Right to Resign upon Notice
A manager may resign as a manager upon giving written notice of resignation to the other member.  A manager shall have no personal liability to the LLC or to the other member because of the manager’s resignation.  The resignation shall absolve the manager from any liabilities to the LLC or to the other member arising on or before the effective date of the resignation.
Section 15	MANAGER’S TITLES AUTHORITY, FUNCTIONAL RESPONSIBILITIES AND COMPENSATION, ETC.
15.1	Manager’s Title
In performing management functions for the LLC, the manager may use the title “manager” or any other title (including the title “president” or “chief executive officer”) that the manager may reasonably determine from time to time.
15.2	Agency Authority of Manager
Except to the extent of any delegation of the manager’s management authority under Section 15.5, the manager shall have the exclusive right, power and authority to sign contracts on behalf of the LLC and otherwise to bind the LLC with third parties.
15.3	Manager’s Rights with Respect to LLC Records and Information
The manager shall have an unrestricted right to access, copy and use the records of the LLC and information about or in the possession of the LLC.
15.4	Manager’s General Responsibility for Managing the LLC
The manager shall have general responsibility for managing the business and internal affairs of the LLC.
15.5	Delegations of Management Authority
The manager may delegate the manager’s management rights, power and authority from time to time to one or more officers or agents and may amend or terminate any such delegation.
15.6	Manager’s Commitment of Time to LLC
(a)	Devotion of Time to LLC.
The manager shall devote such time to the performance of the manager’s duties to the LLC as the manager  may determine to be appropriate from time to time.
(b)	Devotion of Time to Other Activities.
The manager may devote such time to professional, business, charitable and other activities besides LLC activities as the manager  may determine from time to time.
15.7	Specific Functional Responsibilities of the Manager
The specific functional responsibilities of the manager to the LLC shall be as determined by the manager from time to time.
15.8	Manager’s Compensation and Fringe Benefits
The compensation and fringe benefits to which the manager shall be entitled under this Agreement shall be as determined by the manager from time to time.
Section 16	MANAGER’S FIDUCIARY DUTY OF CARE
In performing the manager’s responsibilities under this Agreement, the manager’s only duty of care shall be:
(a)	To avoid gross negligence; and
(b)	To avoid willful misconduct that causes or may cause serious injury to the LLC.
Section 17	MANAGER’S FIDUCIARY DUTY OF LOYALTY
The manager’s duty of loyalty to the LLC and the non-manager member shall consist solely of a duty not to knowingly and deliberately act in such a manner as to materially lessen the economic rights provided by this Agreement to the non-manager member.
Section 18	MANAGER’S FIDUCIARY DUTY OF CONFIDENTIALITY
The manager shall have no duty of confidentiality under this Agreement or otherwise.
Section 19	MANAGER’S FIDUCIARY DUTY OF DISCLOSURE
In connection with the LLC’s formation and thereafter, the manager shall have no duty to disclose any information to the non-manager member whether or not that information is objectively material to the non-manager member in deciding whether to become a member or after the non-manager becomes a manager.
Section 20	MANAGER’S DUTY  TO COMPLY WITH THE IMPLIED CONTRACTUAL COVENANT OF GOOD FAITH AND FAIR DEALING
To the extent that the manager has any duty under the implied contractual covenant of good faith and fair dealing under the laws of this State, the manager may restrict those duties to the maximum extent permitted by those laws.
Section 21	MEMBERS’ REPRESENTATIONS
21.1	Representations by the Non-Member
The non-manager member represents as follows:
(a)	Good Faith.
In negotiating and entering into this Agreement, the non-manager member has acted in good faith.
(b)	Freedom to Enter into Agreement, Etc.
(1)	The member is legally free to enter into this Agreement and to perform the member’s obligations under it in accordance with its terms; and
(2)	The member is not prevented from doing so by order of any court or other governmental authority of compentent jurisdiction, by agreement with any person (including an employment agreement, noncompetition agreement or nondisclosure agreement) or by any other cause.
(c)	Access to Legal Advice, Etc.
Before accepting the terms of this Agreement, the member has had every reasonable opportunity to consider these terms and to review them with the member’s personal attorney.
(d)	Free Acceptance of Terms, Etc.
The member has accepted the terms of this Agreement knowingly and freely.
21.2	Representations by the Managing Member
The managing member in his capacity as a manager and as a member shall make no representation to the non-manager member that the managing member knows to be false.
Section 22	LLC RECORD KEEPING
22.1	LLC’s Duty to Compile and Maintain Records and Information in Compliance with the LLC Act
The LLC shall compile and maintain at its principal place of business all records and information that the LLC Act requires it to compile and maintain.
22.2	LLC’s Duty to Compile and Maintain Books of Account and Other Records Required for the Sound Management of the LLC
The LLC shall compile and maintain all books of account and other records that are necessary or appropriate for the sound management of the LLC’s business and internal affairs.
22.3	LLC’s Duty to Compile and Maintain Certain Records Concerning Contributions
The LLC shall compile and maintain records evidencing:
(a)	That its members have made to the LLC the contributions required of them under Section 3; and
(b)	The value of these contributions.
These records may take the form of cancelled checks, bills of assignment or any other appropriate form.
Section 23	LLC’s DISSOLUTION, WINDING-UP AND LIQUIDATION
23.1	LLC’s Dissolution, Winding-up and Liquidation— Definitions
For purposes of this Agreement, the following terms shall have the following meanings:
(a)	Dissolution.
The dissolution of the LLC shall mean the cessation of its normal business activities and the beginning of the process of its winding-up and liquidation.
(b)	Winding-up.
The winding-up of the LLC shall mean the process of concluding its existing business activities and preparing for its liquidation.
(c)	Liquidation.
The liquidation of the LLC shall mean the sale or other disposition of its assets and the distribution of its assets (or of the proceeds of the sale or other disposition of its assets) to its creditors and to the members.
23.2	Events Causing Dissolution
The LLC shall be dissolved on the earliest to occur of the following events:
(a)	Decision by the Manager.
The LLC shall be dissolved as decided by the manager and on the terms decided by the manager.
(b)	Government Order.
The LLC shall be dissolved by order of dissolution by a court of competent jurisdiction or by the Secretary of State.
(c)	Arbitrator’s Order.
An arbitrator under Section 27 may issue an order dissolving the LLC if the arbitrator determines that there is a compelling need for the dissolution.
23.3	Effective Date of LLC’s Dissolution
The effective date of any dissolution of the LLC shall be determined by the manager.
23.4	Determination of Date for Delivery of Certificate of Cancellation [OR OTHER APPROPRIATE OFFICIAL FORM] and for Effective Date of Certificate
The date on which the LLC shall deliver a certificate of cancellation of the LLC’s Articles [OR OTHER APPROPRIATE OFFICIAL FORM] to the Secretary of State for filing and the effective date of this certificate shall be as determined by the manager.
23.5	Cessation of LLC’s Legal Existence
Unless a court of competent jurisdiction or other governmental authority finally determines otherwise, the LLC shall cease to exist as a legal entity on the effective date of the certificate of cancellation.
23.6	LLC’s Winding-up
(a)	Manager Responsibility.
Only the manager may wind up the LLC.
(b)	Winding-up and Liquidation.
The manager shall wind up the LLC at such a time and in such a manner as he may determine from time to time.
Section 24	TERM AND TERMINATION OF THIS AGREEMENT
24.1	Term and Termination of Agreement
Subject to Sections 24.2 and 24.3, the term of this Agreement shall begin on the Effective Date (as defined in Section 2.1) and shall terminate as follows:
(a)	Termination by Member Vote—in General.
The Agreement shall terminate if both of the members vote to terminate it.  Unless the members vote otherwise, the date of any termination under this Section 24.1(a) shall be the date of the above vote.
(b)	Termination by Member Vote in Connection with Dissolution.
The Agreement shall terminate if the members vote to dissolve the LLC.  Unless the parties agree otherwise at the time of dissolution, the effective of termination of the Agreement under this Section 24.1(b) shall be the date of termination of the legal existence of the LLC.
(c)	Termination by Judicial Authority, Etc.
The Agreement shall terminate if the LLC is dissolved by decree of a duly authorized court or other governmental authority or by an arbitrator.  The date of a termination of the Agreement under this Section 24.1(c) shall be as determined by the authority in question.
24.2	Survival of Accrued Rights, Etc.
Any rights, responsibilities, duties and liabilities accrued by the parties under this Agreement before its termination shall continue in effect after its termination as reason and fairness may require.
24.3	Parties’ Right after Termination of Agreement to Dispute Resolution in Certain Matters Relating to LLC’s Winding-up, Etc.
Notwithstanding the termination of this Agreement, any party may, after that termination, invoke the dispute resolution provisions of Sections 26 and 27 to determine and enforce rights, responsibilities and duties of the party relating to:
(a)	LLC matters, if any, arising before and during the LLC’s winding-up but not resolved by the members before termination;
(b)	The LLC’s liquidation; and
(c)	LLC matters arising after the termination of the LLC’s legal existence.
Section 25	CLAIMS BY THE MEMBERS, ETC.
25.1	Claims by the Manager and the Members
(a)	All references to the manager in this Section 25 and in Sections 26 and 27 shall be to the manager in the manager’s capacity both as a manager and as a member.
(b)	The non-manager may make no claim against the manager except by mediation and arbitration in accordance with the provisions of this Agreement.
25.2	Claims by the Manager
(a)	The manager in his capacity as a manager or as a member may make claims against the non-manager member under or relating to the LLC by any means in any forum or location he or she deems appropriate.
(b)	The non-manager member shall make no claim against the except on the basis of rights expressly provided to the non-manager member under this Agreement.
25.3	Exculpation of Manager
The non-manager member shall make no damage claim against the manager except a claim for actual damages.
25.4	Indemnification of the Manager
The LLC shall fully indemnify the manager for any amount for which the manager becomes liable to any person on any ground.
25.5	Advancement of Mediation, Arbitration and Litigation Expenses to Members or the Manager
The LLC shall advance to the manager all expenses for which the manager determines that the manager may be liable in any claim against the manager.
25.6	LLC’s Duty to Provide Liability Insurance for the Manager
Whether the LLC shall maintain an insurance policy to cover liabilities incurred by the manager resulting result of claims against the manager shall be determined by the manager.
25.7	Burden of Proof; Standard of Proof
If the non-manager member makes any claim against the manager, the non-manager member shall bear the burden of proving the claim by clear and convincing evidence.
Section 26	DISPUTE RESOLUTION—MANDATORY MEDIATION
26.1	Mandatory Mediation
If any dispute arises the members under or relating to this Agreement or relating to the LLC’s business or internal affairs that the members cannot resolve voluntarily themselves, they shall seek to resolve the dispute by mediation.
26.2	Procedural Rules
Except as otherwise provided in this Section 26 or as decided otherwise by mutual consent of the members at the time, any mediation under this Section 26 shall be governed by the Commercial Mediation Procedures of the American Arbitration Association (the “AAA”) as in effect on the date of commencement of the mediation.
26.3	Notice of Mediation; Selection of Mediator, Etc.
(a)	Notice of Mediation.
Either member may initiate a mediation under this Agreement by giving the other member a written notice of mediation.  This notice shall bear a current date and shall briefly state the matter or matters to be mediated.
(b)	Voluntary Selection of Mediator, Etc.; Commencement of Mediation.
Unless the parties to a mediation under this Section 26 unanimously agree otherwise at the time, then,  within 10 business days after the other member has received a notice under Section 26.3(a), the members shall agree upon the identity of the mediator, the site of the mediation and the method of administering the mediation.  They shall commence mediation as promptly as reasonably possible after reaching agreement on these matters.
(c)	Referral of Mediation to AAA.
If, within the above 10 business days, the members cannot agree on any of the matters identified in Section 26.3(b), the LLC shall promptly give a written notice of the mediation to the AAA and the AAA shall administer the mediation.
26.4	Mediation Expenses
Each member in any mediation under this Section 26 shall bear the member’s mediation expenses, except that each member shall be liable for fees charged by the mediator to the LLC and any applicable AAA fees in proportion to the member’s respective percentage interest in the income of the LLC.
26.5	Confidentiality
(a)	Members’ Duty of Confidentiality.
The members shall maintain in confidence all information disclosed by each to the others and to the mediator in any mediation under this Section 26 and reasonably identified by the disclosing party as confidential.
(b)	Settlements, Etc.
No settlement offer by either member during any mediation under this Section 26 shall be discoverable or binding in any other proceeding.
(c)	Mediator’s Duty of Confidentiality.
Before the commencement of any mediation under this Section 26, the members may require the mediator to sign an appropriate non-disclosure agreement.
26.6	Members’ Duty to Perform Their Obligations during Mediation
Unless the members decide otherwise by mutual consent at the time, each member shall perform the member’s obligations under the Agreement during any mediation under this section.
26.7	Arbitration
Unless the members decide otherwise by mutual consent at the time, either member shall have the right to require the arbitration under Section 27 of any issue not resolved in mediation under this Section 26.
Section 27	DISPUTE RESOLUTION—MANDATORY ARBITRATION
[FOR SOME CLIENTS FOR WHOM YOU DRAFT OPERATING AGREEMENTS UNDER FORM 3.1, LITIGATION MAY BE BETTER THAN ARBITRATION AS A MEANS TO FINALLY RESOLVE DISPUTES AMONG THE MEMBERS.]
If the non-manager member makes a claim against the manager that cannot be resolved by mediation, the non-manager member may make the claim only in arbitration under the provision of this Section 27 under the Commercial Arbitration Rules of the American Arbitration Association and not in litigation.
Section 28	GENERAL PROVISIONS
28.1	Entire Agreement
This Agreement contains the entire agreement among the parties concerning its subject matter, and it replaces all prior agreements among them, whether written or oral, concerning this subject matter.
28.2	Amendment of Agreement and Articles
(a)	The manager may make any amendment of this Agreement that does not materially infringe on any right expressly provided to the non-member under the Agreement.
(b)	The manager shall notify the non-manager member with reasonable promptness about any amendment the manager makes under this Section 28.2 and shall provide the non-manager with the text of each such amendment.
(c)	The member may make any amendment of this Agreement to which the manager expressly consents in writing.
28.3	Incorporation of Exhibits
All exhibits identified in this Agreement as exhibits to the Agreement are hereby incorporated into the Agreement and made integral parts of it.
28.4	Resolution of Conflicts  Agreement and Articles
If there is any conflict this Agreement and the Articles, then, in any dispute the members, this Agreement shall prevail.
28.5	Effect of LLC Act
Except as otherwise provided in this Agreement, the business and internal affairs of the LLC shall be governed by the LLC Act as in effect on the Effective Date (as defined in Section 2.1) and as amended thereafter from time to time.
28.6	Governing Law
This Agreement shall be governed by and construed in compliance with the domestic laws of the State of [STATE] without giving effect to any choice-of-law or conflict-of-law provision or rule (whether of the State of [STATE] or of any other jurisdiction) that would cause the application of the laws of any jurisdiction except the State of [STATE].
28.7	Forum for Litigation; Acceptance of Personal Jurisdiction; Awarding of Litigation Expenses
(a)	Jurisdiction Where Suit Must Be Filed.
If any party to this Agreement sues another party to this Agreement in a suit permitted by this Agreement or by applicable law, the party bringing the suit shall do so in courts of competent jurisdiction only in the State of [STATE].  The parties hereby irrevocably submit to the personal jurisdiction of those courts in any such suit.
(b)	Litigation vs. Alternative Dispute Resolution.
This Section 28.7 shall not be construed to impair any restriction on litigation set forth in Sections 26 and 27 of this Agreement (relating to dispute resolution).
(c)	Suit—Definition.
For purposes of this Agreement, the term suit shall include an action at law or in equity.
28.8	Notices
(a)	Requirement of Writing; Address.
All notices required by this Agreement shall be in writing and shall be delivered to a party at the party’s address as stated on the first page of this Agreement.  A party may change this address upon reasonable notice to the other parties.
(b)	Method of Delivery.
Notices shall be (i) delivered by hand; or (ii) sent by reputable overnight courier service; or (iii) sent by electronic facsimile transmission or e-mail (with a copy sent by first class mail, postage prepaid); or (iv) mailed by first class certified or registered mail, return receipt requested, postage prepaid.
(c)	Proof of Delivery.
Notices provided in accordance with this Section 28.8 shall be deemed to have been delivered:
(1)	If delivered by hand, upon delivery;
(2)	If sent by electronic facsimile transmission or e-mail, upon the mailing of a copy of the notice by first-class mail;
(3)	If sent by overnight courier service, 24 hours after deposit with that service; or
(4)	If sent by certified or registered mail, return receipt requested, 48 hours after deposit in the mail.
28.9	Effect of Captions
All captions in this Agreement are for convenience only and shall be deemed irrelevant in construing any provision of the Agreement.
28.10	Definition of “Day,” “Include,” Etc.
As used in this Agreement:
(a)	Day.
“Day” shall mean a calendar day.
(b)	Include.
“Include” and similar terms shall denote partial definitions.
(c)	Person.
“Person” shall mean a natural person or an entity as the context shall require.
(d)	State.
Where the context permits or requires, “state” shall include the District of Columbia.
28.11	Meaning and Construction of Number and Gender
As the context shall require:
(a)	Singular and Plural.
The use of the singular in this Agreement shall denote the plural and vice versa.
(b)	Gender.
The use of any gender shall denote another gender.
28.12	Delays and Omissions in Exercising Rights, Etc.; Waivers of Rights, Etc.
(a)	Delays and Omissions.
No delay or omission by a party in the exercise of any right, power or remedy accruing to the party as a result of any breach or default by another party under this Agreement:
(1)	Shall impair any such right, power or remedy; or
(2)	Shall be construed as a waiver of or acquiescence by the party in (i) any such breach or default or (ii) any similar breach or default occurring later.
(b)	Waivers.
No waiver by a party of any single breach or default under this Agreement shall be construed as a waiver by the party of any other breach or default occurring before or after that waiver.
28.13	Severability of Provisions
Each provision of this Agreement (a “Provision”) shall be deemed severable.  If (i) any Provision or (ii) the application of any Provision to any person or circumstance shall be held invalid or unenforceable by a court of any jurisdiction:
(a)	Affected Jurisdiction.
The Provision shall be ineffective only in that jurisdiction.
(b)	Scope of Ineffectiveness.
The Provision shall be ineffective only to the extent that it has been expressly held to be invalid or unenforceable in that jurisdiction.
(c)	Effect on Other Provisions and on Applicability of Provision Itself.
The ineffectiveness of the Provision shall not invalidate any other provision of the Agreement or the application of the Provision itself to persons or circumstances other than those with respect to which it was held invalid or unenforceable in the jurisdiction in question.
28.14	Permissibility and Validity of Counterparts
This Agreement may be executed in any number of counterparts and by different parties to this Agreement in separate counterparts.  Each of these counterparts when so executed shall be deemed to be an original of the Agreement and all such counterparts taken together shall constitute one and the same Agreement.
28.15	Requirement of Certain Further Actions by the Parties
Each party, upon reasonable request by another party, shall do the following for the purpose of carrying out the intent of this Agreement:
(a)	The party shall furnish to the other party any information reasonably requested by the other party.
(b)	The party shall sign any documents and do any other things that the other party reasonably requests.
28.16	Parties’ Acknowledgement of Adequacy of Consideration
Each party acknowledges and agrees that upon the effectiveness of this Agreement, the party will be in receipt of valid and adequate consideration for its undertakings under this Agreement.
28.17	Validity of Facsimile Signatures
Facsimile copies of parties’ signatures shall be held valid for all purposes under this Agreement.
28.18	No Third Party Beneficiaries
The parties intend this Agreement to benefit only themselves and any persons that become their successors and assignees in accordance with the Agreement.  The Agreement is expressly not intended for the benefit of any creditor of the LLC or of any creditor of a member or for the benefit of any other person who is not a party to the Agreement.
28.19	Non-Manager Member’s Acknowledgements about Attorney [name of attorney]
The non-manager member hereby acknowledges as follows:
(a)	Except as the manager may otherwise advise in writing, in all matters relating to this Agreement and to the LLC, Attorney [NAME OF ATTORNEY] has represented and will continue to represent only the manager and not the non-manager member.
(b)	The non-managing member has had every reasonable opportunity to retain a attorney to protect the non-manager member’s interests in the above matters. ABOVE PROVISION.]
[THIS PAGE ENDS HERE.  THE PARTIES’ SIGNATURES ARE ON THE NEXT PAGE.]

THE PARTIES’ SIGNATURES
In witness of their acceptance of the terms and conditions of this LLC operating agreement, the parties, by themselves or by their duly authorized representatives, have duly signed and dated this Agreement as follows:

_________________________________________________________________
[NAME OF MANAGER] (in the capacity of a member and manager) 	(Date)

_________________________________________________________________
[NAME OF NON-MANAGER MEMBER]				(Date)

________________________, LLC

By:	__________________________________________________________
	[NAME OF MANAGER]					(Date)
	Manager
	
EXHIBIT A
ARTICLES OF ORGANIZATION [OR OTHER OFFICIAL DOCUMENT]
[ATTACHED]

EXHIBIT B
MEMBER CONTRIBUTIONS
[DRAFTERS SHOULD ADD TO THIS EXHIBIT DEADLINES AND OTHER CONTRIBUTION TERMS AS APPROPRIATE.]
(a)	Contributions.
In exchange for their respective membership rights in the LLC, each member shall make the following contributions of cash, property and services to the LLC in accordance with the following terms and conditions:
[TO BE COMPLETED]
(b)	Proof of Contributions.
Attached to this Exhibit B are documents proving that the members have made the above contributions.

EXHIBIT C
SPECIFIC FUNCTIONS OF THE MANAGER
The specific functional responsibilities of the manager to the LLC shall be as follows:
[TO BE COMPLETED]

EXHIBIT D
MANAGER’S COMPENSATION AND FRINGE BENEFITS

[TO BE COMPLETED]