Drafting Limited Liability Company
Operating Agreements
Published by Wolters Kluwer
Principal Author: John M. Cunningham
Co-author:  Amanda Nelson
Materials for Use in Drafting Operating Agreements under General-Purpose Form 2.2 (with Drafting Guidelines and with Annotated Version of the Form)
FORM 2.2 IS A MODEL OPERATING AGREEMENT (GENERIC) FOR A MANAGER-MANAGED
SINGLE-MEMBER LIMITED LIABILITY COMPANY:
1.	WHICH HAS ONE MEMBER, WHICH IS AN ENTITY;
2.	WHICH IS CLASSIFIED FOR FEDERAL TAX PURPOSES AS A DISREGARDED ENTITY;
3.	WHOSE FEDERAL TAX ITEMS ARE TAXABLE TO ITS MEMBER UNDER THE MEMBER’S FEDERAL TAX REGIMEN; AND
4.	WHICH IS MANAGED BY TWO OR MORE INDIVIDUALS, WHO ARE MANAGERS AND EMPLOYEES OF THE LLC.

DRAFTING GUIDELINES FOR USE IN DRAFTING OPERATING AGREEMENTS ON THE BASIS OF FORM 2.2
TABLE OF CONTENTS
PART I.	Form 2.2—Introduction
PART II.	Exhibits and Chapters in Drafting Limited Liability Company Operating Agreements Relevant in Drafting Operating Agreements Under Form 2.2
_____________________________________________________________________________________
TABLE OF EXHIBITS
Exhibit 1	Form 2.2 (annotated)
_____________________________________________________________________________________
PART I.	Form 2.2—Introduction
1.	Form 2.2—general description.
Form 2.2 is designed to enable you to draft operating agreements for a common type of single-member LLC used by entities to conduct their single-owner businesses.  As indicated in the cover page of these materials, a Form 2.2 LLC has four main characteristics:
a.	It has one member, which is an entity;
b.	It is classified for federal tax purposes as a disregarded entity;
c.	Its income, deductions and other federal tax items are taxable to its member under the member’s federal tax regimen; and
d.	It is managed by two or more individuals who are managers and employees of the relevant single-member LLC.
2.	Alternate management structures.
Form 2.1 provides for management by an individual who, under the operating agreement of Form 2.1 single-member LLCs, is an employee of the relevant single-member LLC.  Form 2.2 provides for management by two or more individuals who are managers of the LLC.  Form 2.3 provides for management by an internal board of directors.  Obviously, you must choose carefully among these three alternatives for the entity forming the LLC in question.
3.	Annotated vs. unannotated versions of Form 2.2.
The last item in the present set of materials concerning Form 2.2 is an annotated version of Form 2.2; i.e., in this version of the form, there are several bracketed comments, in capital letters and yellowed, concerning specific provisions of the form.  An unannotated version of Form 2.2 is available on the online digital forms list.
4.	Employment agreement
Single-member LLCs whose operating agreements are based on Form 2.2 are managed under their operating agreements by individuals, who are employees of these LLCs.  The digital list of forms contains a link for a form for an employment agreement that you may find useful as a basis for drafting an employment agreement for the manager of the LLC.
5.	Form 2.2 is a “generic” form.
As indicated in the cover page of these materials, Form 2.2 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.
6.	Form 2.2 is a “general-purpose” form.
Form 2.2 is a “general-purpose” form.  That is, it can be used by an entity to conduct any type of single-owner business.
7.	The tables of contents, sections and subsections of Form 2.2.
All legal, tax and other issues likely to be important to entities conducting their single-owner businesses as Form 2.2 LLCs are identified and addressed in the tables of contents, sections and subsections of the form.
8.	The taxation of Form 2.2
Form 2.2 is a form for a single-member LLC classified as a disregarded entity.  In theory, it would be possible for such an LLC to be taxable as a C corporation, but in practice, virtually no such single-member LLCs whose members are entities choose to be subject to Subchapter C.  Furthermore, the income, deductions and other tax items of operating agreements based on Form 2.2 are deemed to be those of the members of the relevant LLCs.  Thus, single-member LLCs whose operating agreements are based on Form 2.2 should not and may not file their own federal tax returns.
9.	Plain English.
To make Form 2.2 readily intelligible to non-lawyer clients on a careful first reading, the form is drafted in plain English.
10.	The uniqueness of Form 2.2
To the authors’ knowledge, no form comparable to Form 2.2 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 2.2
The following exhibits and chapters in this book may be useful to you in drafting operating agreements for your clients under Form 2.2:
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.	Chapter 5.
Chapter 5 (“Single-Member LLCs with Individual Members”) addresses in detail all significant legal and tax issues relevant to the drafting of an operating agreement for your client under Form 2.2.
8.	Exhibit 5-1.
Exhibit 5-1 provides a comprehensive list of questions you should ask your client about itself and about her business before you begin drafting an operating agreement for its single-member LLC.
9.	Chapter 9.
As its title indicates, Chapter 9 provides guidelines for evaluating and using model operating agreements.
10.	Chapters 16 and 17.
Chapters 16 and 17 contain guidelines for complying with the rules of professional conduct applicable in drafting LLC operating agreements.
11.	Federal tax issues.
Chapters 39 through 44 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 2.2 as the basis for the operating agreement of the client’s LLC.

OPERATING AGREEMENT 
[OR LIMITED LIABILITY COMPANY AGREEMENT OR 
OTHER APPROPRIATE TERMUNDER THE GOVERNING LIMITED LIABILITY COMPANY ACT] 
OF ______, LLC
A Manager-Managed Single-Member
 [State] Limited Liability Company 
Classified for federal tax classification purposes 
as a disregarded entity 

Dated as of _________, 20__

SUMMARY TABLE OF CONTENTS
Section 1	PRELIMINARY PROVISIONS
Section 2	MEMBER’S CONTRIBUTION TO THE LLC
Section 3	ALLOCATIONS AND DISTRIBUTIONS
Section 4	LLC MANAGEMENT
Section 5	TRANSFERS AND PLEDGES OF MEMBERSHIP RIGHTS
Section 6	DISSOCIATION OF THE MEMBER
Section 7	LLC RECORDS AND INFORMATION
Section 8	DISSOLUTION OF THE LLC, ETC.
Section 9	TERM AND TERMINATION OF THIS AGREEMENT
Section 10	REPRESENTATIONS BY THE MEMBER
Section 11	MISCELLANEOUS PROVISIONS

DETAILED TABLE OF CONTENTS

Section 1	PRELIMINARY PROVISIONS
1.1	Effective Date of Agreement
1.2	LLC’s Name, Etc.
1.3	Entity Status of LLC; Ownership of LLC Assets
1.4	LLC’s Principal Purpose
1.5	LLC’s Powers
1.6	LLC’s Duration
1.7	LLC’s Principal Place of Business
1.8	Management of LLC By Two or More Managers; Delegation, Etc.
1.9	Limited Liability of Member
1.10	Limited Liability of Managers
1.11	Federal and State Taxation of the LLC and the Member
1.12	LLC’s Annual Accounting Period
1.13	LLC’s Accounting Method
1.14	Effect of LLC Act
1.15	Relation of Agreement to Articles
1.16	Member’s and Managers’ Right to Reimbursement of Expenses
1.17	The LLC’s Accounting Firm
1.18	The LLC’s Principal Tax Adviser
1.19	The LLC’s Principal Lawyer [or Law Firm]
Section 2	MEMBER’S CONTRIBUTION TO THE LLC
2.1	Contribution—Definition
2.2	LLC Interest and Membership Rights—Definitions
2.3	The Member’s Contribution in Exchange for Membership Rights
2.4	No Duty to Make Additional Contributions, Etc.
Section 3	ALLOCATIONS AND DISTRIBUTIONS
3.1	Definitions
3.2	Member Has Sole Right to Allocations and Distributions
3.3	Distributions by the LLC
3.4	Tax Distributions
3.5	Wrongful Distributions
Section 4	LLC MANAGEMENT
4.1	Employment Status and Employment Agreement of Managers
4.2	Allocation of Decision-Making between the Member and the Managers
4.3	Management Responsibilities of the Managers—in General
4.4	Managers’ Responsibility to Obtain Tax Identification Numbers, Etc.
4.5	Signing of Contracts, Etc.
4.6	Member’s and Managers’ Fiduciary Duties
4.7	Defense and Indemnification of Member and Managers
Section 5	TRANSFERS AND PLEDGES OF MEMBERSHIP RIGHTS
5.1	Transfers of Membership Rights
5.2	Admission of Additional Members
5.3	Pledges
Section 6	DISSOCIATION OF THE MEMBER
Section 7	LLC RECORDS AND INFORMATION
Section 8	DISSOLUTION OF THE LLC, ETC.
8.1	LLC’s Dissolution, Winding-Up and Liquidation—Definitions
8.2	Dissolution, Etc., of LLC
Section 9	TERM AND TERMINATION OF THIS AGREEMENT
Section 10	REPRESENTATIONS BY THE MEMBER
Section 11	MISCELLANEOUS PROVISIONS
11.1	Entire Agreement
11.2	Amendments
11.3	Notices
11.4	Governing Law
11.5	Captions
11.6	Incorporation of Articles and Exhibits
11.7	“Discretion,” “Including,” and “Person” — Definitions

TABLE OF EXHIBITS
Exhibit A	Articles of Organization [OR OTHER APPROPRIATE OFFICIAL DOCUMENT]
Exhibit B	The Member’s Contribution to the LLC
Exhibit C	Employment Agreement Between the LLC’s Managers and the LLC

OPERATING AGREEMENT [OR OTHER APPROPRIATE TERM UNDER GOVERNING LIMITED LIABILITY COMPANY ACT] OF ______________, LLC
A Manager-Managed Single-Member [State] Limited Liability Company 
Taxable as a Disregarded Entity
DATE OF AGREEMENT; PARTIES
This limited liability company operating agreement (the “Agreement”), dated as of _________________, 20__, is between the following parties (the “parties”):
1.	[NAME OF MEMBER] (the “member”), a [TYPE OF ENTITY], formed and existing under the laws of the State of ___________, with its principal place of business at ___________________________; and
2.	_________, LLC (the “LLC”), a limited liability company formed and existing under the laws of the State of [STATE], with its principal place of business at ___________________________________.
BACKGROUND
1.	On [DATE] (the “Filing Date”), the member caused the LLC’s articles of organization (the “Articles”) [OR OTHER APPROPRIATE OFFICIAL DOCUMENT] to be filed with the Secretary of State (the “Secretary of State”) of the State of [STATE] [OR OTHER APPROPRIATE OFFICIAL], and on that date the LLC was formed as a limited liability company under the [STATE] LLC Act (the “LLC Act”), [CITATION OF ACT].  A copy of the Articles is attached as Exhibit A.
[IF THE OFFICIAL DOCUMENT FOR FORMING THE SINGLE-MEMBER LLC HAS A TITLE OTHER THAN ARTICLES OF ORGANIZATION, YOU SHOULD USE THIS ALTERNATIVE TITLE THROUGHOUT THIS AGREEMENT.]
2.	The principal purpose of the LLC is to [STATE PURPOSE].
3.	This Agreement sets forth the agreement of the parties about their respective rights and duties as parties to the Agreement and about the business, internal affairs and taxation of the LLC.
TERMS AND CONDITIONS
Intending to be legally bound, the parties agree as follows:
Section 1	PRELIMINARY PROVISIONS
1.1	Effective Date of Agreement
The effective date of this Agreement (the “Effective Date”) shall be the Filing Date.
1.2	LLC’s Name, Etc.
The LLC’s name, registered agent, registered office, and form of management shall be as set forth in the Articles.
1.3	Entity Status of LLC; Ownership of LLC Assets
The LLC is a legal entity separate and distinct from its member.  The LLC owns all of its assets in its own name, and the member has no direct interest in those assets.
1.4	LLC’s Principal Purpose
The principal purpose of the LLC shall be as set forth above.
1.5	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.
1.6	LLC’s Duration
The duration of the LLC shall be indefinite and shall terminate only as set forth in Section 8 (concerning the LLC’s dissolution, etc.).
1.7	LLC’s Principal Place of Business
The LLC’s principal place of business shall be as set forth above. The member’s board of directors [OR OTHER APPROPRIATE GOVERNING BODY OR MANAGERS OF THE MEMBER—REFERRED TO HEREAFTER IN THIS FORM AS THE “GOVERNING BODY”] may change the LLC’s principal place of business from time to time in the [GOVERNING BODY]’s discretion.
[THE GOVERNING BODY OF A SINGLE-MEMBER LLC WHOSE MEMBER IS AN INDIVIDUAL MAY BE THE MEMBERS OF THE BOARD OF DIRECTORS OF THE MEMBER OR ONE OR MORE OTHER INDIVIDUALS WHO HAVE AUTHORITY TO DECIDE ISSUES CONCERNING THE SINGLE-MEMBER LLC.]
1.8	Management of LLC By Two or More Managers; Delegation, Etc.
(a)	Management.
The LLC shall be managed by two more more individuals in accordance with the provisions of Section 4 of this Agreement.
(b)	Title of Managers.
The managers’ titles shall be “manager” [OR OTHER TITLES DETERMINED BY THE GOVERNING BODY].
(c)	Delegations
(1)	Delegations by the Managers.
With the advance written consent of the [GOVERNING BODY] each manager may, to the extent permitted by the LLC Act, delegate the manager’s management rights, power and authority from time to time to one or more agents and may amend or terminate any such delegation.
(2)	Written Confirmation of Delegation.
The manager shall confirm the fact and terms of each such delegation and of each such amendment and termination in a written record signed by the manager and filed in the LLC’s records and shall promptly provide a copy of each such record to the [GOVERNING BODY].
1.9	Limited Liability of Member
The member shall have no personal liability to any third party for any debt, obligation or liability of the LLC solely by reason of being the LLC’s member.
1.10	Limited Liability of Managers
The managers in their capacity as the LLC’s managers shall have no personal liability to any third party for any debt, obligation or liability of the LLC solely by reason of being the LLC’s managers.
1.11	Federal and State Taxation of the LLC and the Member
(a)	Federal Income Taxation.
For federal tax purposes, the LLC shall be a disregarded entity under the U.S. Treasury Entity Classification Regulations, Reg. § 301.7701-2(c)(2), and its income, losses and other tax items (collectively, “tax items”) shall be deemed for federal tax purposes to be those of the member.
(b)	State Taxation.
The LLC and the member shall be taxable under the laws of [RELEVANT STATES] as provided by those laws and by the regulations thereunder.
1.12	LLC’s Annual Accounting Period
The LLC’s annual accounting period for financial and tax purposes shall be the [TAXABLE YEAR OF THE MEMBER].
1.13	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 that these definitions and rules are 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 accrual [OR CASH OR OTHER] basis.
1.14	Effect of LLC Act
Except as otherwise provided in this Agreement or by applicable law, the business and internal affairs of the LLC shall be governed by the LLC Act as in effect from time to time.
1.15	Relation of Agreement to Articles
If there is any conflict between this Agreement and the Articles, this Agreement shall prevail.
1.16	Member’s and Managers’ Right to Reimbursement of Expenses
If the member or a manager reasonably incurs an expense on behalf of the LLC in connection with the LLC’s formation or otherwise and reasonably documents this expense to the LLC, the LLC shall reimburse the member or manager for this expense as promptly as reasonably possible after receiving this documentation.
1.17	The LLC’s Accounting Firm
The LLC’s accounting firm shall be [NAME OF ACCOUNTING FIRM].
1.18	The LLC’s Principal Tax Adviser
The LLC’s principal tax adviser shall be [NAME OF TAX ADVISER].
1.19	The LLC’s Principal Lawyer [or Law Firm]
The LLC’s principal lawyer shall be [NAME OF LAWYER OR LAW FIRM].
Section 2	MEMBER’S CONTRIBUTION TO THE LLC
2.1	Contribution—Definition
For purposes of this Agreement, a contribution shall mean any cash or property, or services rendered, or a promissory note or other obligation to contribute cash or property or to perform services that the member transfers or provides or promises to transfer or to provide to the LLC in exchange for the member’s LLC interest (as defined in Section 2.2(a)) and the person’s other membership rights (as defined in Section 2.2(b)).
2.2	LLC Interest and Membership Rights—Definitions
For purposes of this Agreement:
(c)	LLC Interest.
The “LLC interest” of the member shall mean the right of the member to receive allocations of LLC tax items (as defined in Section 1.11(a)) and to receive distributions of LLC profits and other LLC assets.
(d)	Membership Rights.
The term “membership rights” shall mean the totality of the member’s rights as a member.  These rights shall include:
(1)	The member’s economic rights, including the member’s LLC interest; and
(2)	The member’s management rights, including voting rights and information rights.
2.3	The Member’s Contribution in Exchange for Membership Rights
(a)	Contribution.
The member’s contribution to the LLC in exchange for the member’s membership rights shall be as set forth in the attached Exhibit B.
(b)	Record of Contribution.
Promptly after making the above contribution, the member shall file in the LLC’s records one or more documents, such as photocopies of cancelled checks, documentary evidence of bank transfers, or photocopies of executed bills of assignment, demonstrating that the member has made the contribution.
(c)	Warranty by Member.
The member hereby warrants that all cash and property contributed by the member to the LLC is free of any pledge, lien or other encumbrance.
2.4	No Duty to Make Additional Contributions, Etc.
The member shall have no duty to make any contribution to the LLC except as provided in Section 2.3 of this Agreement, and no cash or property of the member or of any other person and no services by any person shall be deemed to be a contribution to the LLC unless specifically recorded as such in the LLC’s records.
Section 3	ALLOCATIONS AND DISTRIBUTIONS
3.1	Definitions
As used in this Agreement:
(a)	Allocation.
An allocation to the member shall mean an accrual of a tax item of the LLC (as defined in Section 1.11(a)) to the member on the books of the LLC.
(b)	Distribution.
A distribution means a transfer of the LLC’s cash or other assets from the LLC to the member by check, bill of assignment or otherwise that is not:
(1)	Compensation to the member by the LLC for services rendered by the member to or for the LLC; or
(2)	A reimbursement by the LLC to the member of expenses incurred by the member for the LLC.
3.2	Member Has Sole Right to Allocations and Distributions
Only the member shall be entitled to receive allocations and distributions.
3.3	Distributions by the LLC
Subject to Sections 3.4 and 3.5, the LLC shall make distributions to the member at such times and in such amounts as the [GOVERNING BODY] may determine from time to time in the [GOVERNING BODY]’s discretion.
3.4	Tax Distributions
Subject to Section 3.5, the LLC shall make distributions (“tax distributions”) to the member at such times and in such amounts as to enable the member to pay the member’s federal, state and other taxes on the LLC’s taxable income on time and in full.
3.5	Wrongful Distributions
The LLC shall make no distribution to the member to the extent that, at the time the distribution is made, the distribution would be a wrongful or unlawful distribution under the LLC Act.
Section 4	LLC MANAGEMENT
4.1	Employment Status and Employment Agreement of Managers
(a)	The managers shall be employees of the LLC.
(b)	Each manager shall sign an employment agreement (the “Employment Agreement”), which shall be attached to this Agreement under Exhibit C.
(c)	Except as otherwise provided in this Agreement, the terms of the Employment Agreement  set forth in Exhibit C shall govern the employment relation between the LLC and a manager.
4.2	Allocation of Decision-Making between the Member and the Managers
The managers shall have the right to make all decisions relating to the day-to-day business and internal affairs of the LLC.  The decision of all other LLC matters shall be reserved to the [GOVERNING BODY].
4.3	Management Responsibilities of the Managers—in General
The managers shall have general responsibility for the management of the LLC’s business and internal affairs.
4.4	Managers’ Responsibility to Obtain Tax Identification Numbers, Etc.
Promptly after the LLC is formed, the managers shall do the following:
(a)	Bank Accounts.
They shall open any necessary bank accounts for the LLC.
(b)	Insurance.
They shall obtain on commercially reasonable terms insurance policies covering all reasonably foreseeable LLC insurable risks.
(c)	Miscellaneous.
They shall do all other things necessary or useful in connection with the commencement of the LLC’s business.
4.5	Signing of Contracts, Etc.
The managers 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.
4.6	Member’s and Managers’ Fiduciary Duties
(a)	The member and the managers shall have fiduciary duties of care and loyalty toward the LLC as these duties are defined in the law of [STATE].
(b)	The managers shall have a duty of care and loyalty toward the member.
4.7	Defense and Indemnification of Member and Managers
(a)	Advancements.
The LLC shall provide the member and the managers with advance coverage of all reasonable legal fees and other amounts relating to their defense of any claim against them by any third party that relates to their status as member and managers or to their actions and omissions in these capacities.
(b)	Indemnification.
The LLC shall indemnify the member and the managers for any amounts owed by them as a result of the claims identified in Section 4.7(a).
(c)	Reimbursements.
The member and the managers shall promptly reimburse the LLC for any amounts provided by the LLC under Sections 4.7(a) and (b) to the extent the member or a managers are determined by final order of a court of competent jurisdiction to have taken the above actions or to have made the above omissions in bad faith or with gross negligence.
Section 5	TRANSFERS AND PLEDGES OF MEMBERSHIP RIGHTS
5.1	Transfers of Membership Rights
(a)	Transfers by the Member—in General.
The member, in its discretion, may transfer (whether by sale, gift or otherwise) all or any part of the member’s membership rights, including economic and non-economic rights, to any person at any time under any terms.
(b)	Transfer upon the Member’s Dissolution.
However, upon the dissolution [OR OTHER SIMILAR EVENT, SUCH AS THE REVOCATION OF A TRUST AGREEMENT, CONSTITUTING OR LEADING TO THE TERMINATION OF THE MEMBER’S LEGAL EXISTENCE] of the member, its membership rights shall pass in accordance with the member’s plan of dissolution [OR OTHER APPLICABLE DOCUMENT] or, in the absence of such a plan, under other applicable law.
5.2	Admission of Additional Members
Whether additional persons shall be admitted as members of the LLC shall be determined by the [GOVERNING BODY] in its discretion.
5.3	Pledges
The [GOVERNING BODY] shall have discretion to pledge all or any part of the member’s membership rights to any person at any time as collateral for any debt of the member.  The member may make any such pledge under any terms and conditions that the [GOVERNING BODY] deems appropriate.
Section 6	DISSOCIATION OF THE MEMBER
The member shall cease to be a member of the LLC only upon the termination of the member’s existence as a legal entity, the transfer of all of its membership rights or the cessation of the LLC’s existence as a legal person, and the member shall not cease to be a member for any other reason, including:
(a)	Its bankruptcy; or
(b)	Its assignment of its entire LLC interest to another person.
Section 7	LLC RECORDS AND INFORMATION
(a)	Records and Information Required by LLC Act.
The LLC shall compile and shall maintain at its principal place of business all records and information that the LLC Act requires the LLC to compile and maintain.
(b)	Other Records.
The LLC shall maintain records and books of account concerning its business in accordance with financial and tax standards normally applicable to business organizations generally similar to the LLC in size and purpose.
Section 8	DISSOLUTION OF THE LLC, ETC.
8.1	LLC’s Dissolution, Winding-Up and Liquidation—Definitions
For purposes of this Agreement:
(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 internal affairs 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 member.
8.2	Dissolution, Etc., of LLC
(a)	Right of Member to Dissolve LLC, Etc.
Subject to any applicable provisions of the LLC Act, the member may dissolve, wind up and liquidate the LLC and terminate its legal existence at any time and upon any terms that the member may determine.
(b)	Termination of Legal Existence of LLC.
The legal existence of the LLC shall terminated on the effective date of the certificate of cancellation of the LLC’s Articles [OR OTHER APPLICABLE PROCEDURE UNDER THE LLC ACT AND STATE LAW] as filed with the Secretary of State [OR OTHER APPROPRIATE FORM AND STATE OFFICIAL].
(c)	Deemed Liquidating Dissolution.
Immediately upon the cessation of the legal existence of the LLC, the property of the LLC shall be deemed to be distributed to the member and to become the property of the member, subject to the rights of any existing creditors of the LLC.
Section 9	TERM AND TERMINATION OF THIS AGREEMENT
The term of this Agreement shall begin on the Effective Date (as defined in Section 1.1) and shall end upon the earlier of:
(a)	The date on which the LLC ceases to exist as a legal person under the LLC Act; and
(b)	The date which the member determines to be the date of termination of the Agreement.
Section 10	REPRESENTATIONS BY THE MEMBER
The member hereby represents as follows:
(a)	The member is a [TYPE OF ENTITY] duly formed and existing under the laws of the state of [STATE].
(b)	The member has full legal authority to enter into this Agreement and to perform its duties under it and is not prevented from doing so by judicial order, by agreement with a third party or by any other cause.
(c)	The member and [THE GOVERNING BODY] have adopted all resolutions and has done all other things necessary to authorize its execution and performance of this Agreement.
(d)	The member has full legal authority and all necessary authorization to make the contributions to the LLC provided for in Section 2.3 of this Agreement.
Section 11	MISCELLANEOUS PROVISIONS
11.1	Entire Agreement
This Agreement contains the entire agreement between the parties concerning its subject matter, and it replaces all other prior and current agreements between them concerning its subject matter.
11.2	Amendments
No amendment of this Agreement or of the Articles shall be valid unless the amendment is set forth in a writing signed by the parties.
11.3	Notices
(a)	All notices under this Agreement shall be in writing.
(b)	Each such notice shall be sent by electronic mail, fax or registered U.S. mail, return receipt requested, to the parties at their respective addresses as stated on the first page of this Agreement.
(c)	Either party may change the party’s address for purposes of this Section 11.3 at any time upon reasonable notice to the other party.  Notices shall be deemed to have been received when actually received.
11.4	Governing Law
This Agreement shall be governed exclusively by the laws of the State of [STATE] (exclusive of its laws relating to conflicts of law).
11.5	Captions
Captions in this Agreement are for convenience only and shall be deemed irrelevant in construing the provisions of the Agreement.
11.6	Incorporation of Articles and Exhibits
The Articles and all exhibits referred to in this Agreement are hereby incorporated into the Agreement and made integral parts of it.
11.7	“Discretion,” “Including,” and “Person” — Definitions
As used in this Agreement:
(a)	Discretion.
“Discretion” shall mean absolute discretion.
(b)	Including.
“Including” and similar terms shall denote partial definitions.
(c)	Person.
“Person” shall mean a natural person and any kind of entity.

[THIS PAGE ENDS HERE.  THE PARTIES’ SIGNATURES ARE ON THE NEXT PAGE.]

SIGNATURES AND DATES
In witness of their acceptance of the terms and conditions of this Agreement, the parties, by their duly authorized representatives, have signed and dated this Agreement as follows:

[NAME OF LLC], LLC

By:	_________________________________________________________________
[Name of Manager]							(Date)
Manager

[NAME OF MEMBER]

By:	________________________________________________________________
[Name of person with authority to bind member]				(Date)
[Title]

Exhibit A.	
EXHIBIT A
ARTICLES OF ORGANIZATION 
[OR OTHER APPROPRIATE OFFICIAL DOCUMENT]
(ATTACHED)

EXHIBIT B
MEMBER’S CONTRIBUTION TO THE LLC
In exchange for the member’s rights as a member of the LLC, the member shall promptly make the following contribution to the LLC in accordance with the following terms and conditions:

[TO BE COMPLETED]

EXHIBIT C
EMPLOYMENT AGREEMENT
(ATTACHED)