Alberty Publishing Online: Item Detail

Price: $50.00
Revised: July 1, 2008 - 38 pages

Description:
Form 2.8 is an operating agreement for a manager-managed limited liability company providing for a preferred return to certain members. Preferred return provisions may be appropriate where one or more members are contributing substantial amounts of property or cash and other members are contributing services for all or part of their interests. The preferred return insures that the members contributing property or cash will receive a minimum rate of return on their capital from profits of the company before the members contributing services are entitled to share in the profits. Because the preferred return creates special allocations for federal income tax purposes, this form contains provisions supporting special allocations. This form is for a manager-managed limited liability company and is based upon a limited partnership model of management and operation.

Features:

Buy-sell provisions, dissociation - Operating agreement prohibits withdrawal by members and provides that the death, disability or dissociation of a member does not dissolve the LLC.
Distributions, allocation - Operating agreement provides that current distributions are to be made first to members with preferred return rights, and after those rights are satisfied to all members in proportion to their percentage interests.
Distributions, required - Operating agreement requires annual distribution of net cash flow.
Management - Operating agreement for manager managed LLC.
Managers, authority - Operating agreement appoints a manager who is responsible for the day-to-day management of the LLC and is to serve until his or her death, incapacity, removal, or resignation.
Members, classes - Operating agreement provides that the promoter member and the investor members have differing rights and responsibilities.
Preferred return - Operating agreement provides that certain members are entitled to a return at a given percentage rate on their unreturned capital contributions.
Profits and losses - Operating agreement provides that current distributions are to be made first to members with preferred rights, and after those rights are satisfied to all members in proportion to their percentage interests.
Securities laws - Operating agreement contemplates that members' interests are securities, subject to state and federal securities laws.
Special allocations, profits and losses - Operating agreement allocates profits and losses to members based on their rights to a preferred return (and not in a manner proportionate to their capital contributions) and specially allocates losses to enable members to use the greatest possible amount of losses for federal income tax purposes.
Special allocations, qualified income offset and minimum gain chargeback - Operating agreement contains both a qualified income offset and a minimum gain chargeback in order to insure that the LLC's special allocations are given effect for tax purposes.
Term - Operating agreement provides that the LLC will exist only for a specified term of years.

FORM 2.8 — Operating Agreement for Manager Managed LLC with Preferred Return