This is a basic operating agreement for a single-member limited liability company that's manager-managed. For information about what it means to be "manager-managed," I've written a short post to explain: https://bluemavenk.com/2018/03/11/which-flavor-... Most companies will want to delete the TOD designation language in section 7, and unless you're in Missouri, you'll also want to revise the second paragraph.
This operating agreement is adopted as of [_____] (the “Effective Date”), by [_____], an individual and the sole member (the “Member”) of [_____] (the “Company”).
As required under the Missouri Limited Liability Company Act (the “Act”), the Member hereby adopts this agreement as the operating agreement of the Company, which agreement sets forth the entire understanding of the Member regarding its subject matter and supersedes all prior understandings and agreements regarding its subject matter.
1. The business and affairs of the Company will be managed by the manager of the Company and any successor thereto appointed by the Member, which manager may also be referred to as the Company’s president (the “Manager”). The initial Manager will be [_____], who will serve until the Manager’s death, removal by the Member (for any reason or no reason), or resignation. The Manager will have the right and authority to manage the affairs of the Company and make decisions and take action with respect thereto without further approval or consent of any kind by the Member. Except as otherwise required by this agreement and in lieu of the limitations set forth in Section 347.079.3 of the Act, the Manager will be solely responsible for and is hereby authorized to manage and operate the business of the Company. The vote, action, decision, or consent of the Manager will constitute a valid decision of the Manager and the Company.
2. The decisions and actions of the Manager will be carried out by the officers, if any, granted authority to act on behalf of the Manager, pursuant to resolutions adopted by the Manager.
3. The duration of the Company will be perpetual.
4. The Member’s capital contribution(s) to the capital of the Company for the Member’s membership interest in the Company will be reflected on the books and records of the Company.
5. The following indemnification provisions will apply:
(1) The Member, the Manager, the officers, and the organizer of the Company and their respective affiliates, stockholders, members, managers, directors, officers, partners, employees, agents, trustees, and representatives (individually, an “Indemnitee”) will be indemnified by the Company against any and all losses, claims, damages, liabilities, expenses (including legal fees and expenses), judgments, fines, settlements, and other amounts arising from any and all claims, demands, actions, suits, or proceedings, civil, criminal, administrative, or investigative, in which the Indemnitee may be involved, or threatened to be involved, as a party or otherwise by reason of the Indemnitee’s status as any of the foregoing, which relates to or arises out of the Company or its assets, business, or affairs, if in each of the foregoing cases (A) the Indemnitee acted in good faith and in a manner the Indemnitee believed to be in, or not opposed to, the best interests of the Company, and, with respect to any criminal proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful, and (B) the Indemnitee’s conduct did not constitute gross negligence or willful or wanton misconduct. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere, or its equivalent, will not, of itself, create a presumption that the Indemnitee acted in a manner contrary to that specified in clause (A) or (B) above. Any indemnification under this section 5 will be made only out of the assets of the Company, and the Member will not have any personal liability on account thereof.
(2) Expenses (including reasonable legal fees) incurred by an Indemnitee in defending any claim, demand, action, suit, or proceeding described in the foregoing paragraph may, from time to time, be advanced by the Company before the final disposition of the claim, demand, action, suit, or proceeding, in the discretion of the Manager, upon receipt by the Company of an undertaking by or on behalf of the Indemnitee to repay the amount if it is determined that the Indemnitee is not entitled to be indemnified as authorized in this section 5.
(3) The indemnification and advancement of expenses set forth in this section 5 will not be exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any statute, the Company’s articles of organization, this agreement, any other agreement, a vote of the Manager, a policy of insurance, or otherwise and will not limit in any way any right that the Company may have to make additional indemnifications with respect to the same or different persons or classes of persons, as determined by the Manager. The indemnification and advancement of expenses set forth in this section 5 will continue as to a person or entity who has ceased to hold the position giving rise to the indemnification with respect to any claims, demands, actions, suits, or proceedings related to such Indemnitee’s former position and will inure to the benefit of the heirs, executors, administrators, successors, and assigns of such a person or entity.
(4) The Company may purchase and maintain insurance on behalf of any Indemnitee against any liability asserted against an Indemnitee and incurred by an Indemnitee in such capacity, or arising out of the Indemnitee’s status as aforesaid, whether or not the Company would have the power to indemnify the Indemnitee against the liability under this section 5.
(5) If an amendment to this Agreement reduces or eliminates any Indemnitee’s right to indemnification under this section 5, the amendment will not be effective with respect to any Indemnitee’s right to indemnification that accrued prior to the date of the amendment. For purposes of this section 5, a right to indemnification will accrue as of the date of the event underlying the claim that gives rise to the right to indemnification. All calculations of claims and the amount of indemnification to which any Indemnitee is entitled under this section 5 will be made (A) giving effect to the tax consequences of any such claim and (B) after deduction of all proceeds of insurance net of retroactive premiums and self-insurance retention recoverable by the Indemnitee with respect to the claims.
(6) The Member hereby ratifies all actions undertaken by the organizer of the Company pursuant to and for the purposes of causing the organization of the Company, and all other acts incidental thereto are hereby approved, confirmed, and ratified. The organizer will not be liable in any manner for any debts or obligations of the Company.
6. The Company will be disregarded for federal and state income tax purposes. The admission of one or more additional members, however, will cause the Company to be recognized for tax purposes, and to be taxed, as a partnership.
7. [_____] designates the following transfer-on-death beneficiaries to acquire, upon such member’s death, his/her entire Interest existing at the time of such member’s death: TOD1, if TOD1 survives such member by y hours [days], and if not, then to TOD2, provided TOD2 survives such member by z hours [days]. Such person shall be admitted as a member automatically upon the person accepting this agreement in writing, without any further action of the Manager. “Interest” means the ownership interest of a Member in the Company, including, without limitation, management rights, financial rights, and other benefits under this Operating Agreement and the Act. ]
8. Upon an “event of withdrawal” (as defined in the Act) of the Member or upon the occurrence of any other event which terminates the continued membership of the Member in the Company, the Company will not be dissolved, and the business of the Company will continue. The Member hereby specifically consents to such continuation of the business of the Company upon any event of withdrawal of the Member. The Member’s legal representative, assignee, or successor will automatically become an assignee of the Member’s interest and will automatically become a substitute Member in place of the withdrawn Member.
9. This agreement and the articles of organization of the Company may not be altered, modified, or changed, and no provision of this agreement may not be waived, except by an amendment or waiver, as applicable, approved by the Member.
10. The failure of the Company to observe any formalities or requirements relating to the exercise of its powers or management of its business or affairs under this agreement or the Act will not be grounds for imposing personal liability on the Member for liabilities of the Company.
The Member is signing this operating agreement as of the Effective Date.