DISCUSSION ITEMS FOR OPERATING AGREEMENT

MEMBERS OF A LIMITED LIABILITY COMPANY
  • The following is an outline of the topics for consideration and discussion between Members of a limited liability company considering entering into an operating agreement.
  • 6. EVENTS TRIGGERING BUY/SELL OF UNITS
  • 1) Embezzlement. 2) Causing the loss of a license required to carry on the business of the Company. 3) Violation of law (conviction or charge with a felony). 4) Civil theft or criminal theft. 5) Assets of Member become subject to receivership or are assigned for the benefit of creditors. 6) Other issues unique to the business of the Company.
  • a. Agreed Value
    b. Formula (value of tangible property + intangible property [goodwill])3
    c. Appraisals
    d. Book Value (need definition)
    e. Default/For Cause Value
    ** For the shotgun provision, this also provides a good guide for what to offer.
  • Examples: •Purchases over X amount of money
    •Loans for Business
    •Entering into Contracts
    •Sign Checks
  • Examples:
    •Sale of substantially all of the assets of the Company
    •Third party financing
    •Admission of new Members
    •Obligation to guaranty loans
    •Purchases over X amount of money
    •Affiliated transactions approved, i.e., leases to related entity
    •Loans for Business over X amount of money
    •Loans by Members to Company
    •Management fees
    •Loans by Company to Members
    •Employment agreements
    •Forgiveness of Debt
    •Third party contracts
    •Winding Up of Company
  • a. Non-Solicitation
    i. Time
    ii. Geographic Area
    iii. Scope

    b. Non-Competition
    i. Time
    ii. Geographic Area
    iii. Scope

    c. Confidentiality/Trade Secrets