This
Operating Agreement, referred to herein as the Agreement, is made this
________
by and between ______, a resident of ___________, and his partner,
______,
a resident of ____________, who are referred to herein as either the Partners
or the Members, both terms having the same meaning.
The
Members have formed a Limited Liability Company, which is known as XYZ
Enterprises, LLC under the laws of the Commonwealth of Pennsylvania, and which
is referred to herein as the Company.
The two Members listed in the preceding paragraph are the only Members
of the Company. In consideration of the
mutual promises contained in this Agreement, and in order to establish
procedures for operating the Company, and intending to be legally bound by the
terms and conditions set forth herein, the Members hereby agree as follows.
A. The Company and its Business
1.
The
primary business to be conducted by the Company shall be the acquisition of
merchandise from various sources, and reselling it on the Internet website
known as _____. The Company shall also act as a Trading Assistant, whereby it
sells merchadise for others for a fee on _______. The Company may also engage
in any other lawful business that the Members may approve.
2.
The
name of the Company shall be registered as a trademark with the Office of the
Secretary of State of the Commonwealth of Pennsylvania.
3.
The
registered office of the Company, and its principal place of business shall be
located at __________, which is the home of ______, a Member of the
Company. This is a home-based business.
4.
Each
Member is employed by another company.
Each member shall work on the business of the Company part time as a
second job, and will devote time to the business, as it is available, primarily
on weekends. The business will not
maintain regular working hours, but each Member will work whatever hours that
are required to accomplish their respective responsibilities as set forth in
this Agreement.
B. Capital Contributions
5.
Each
Partner shall make equal contributions to the capital of the Company. Each
Partner shall provide their own
computer for use in the Company’s business, and shall contribute the amount of
Rs.1,000.00 in cash each for working capital.
Subsequent capital contributions shall be provided by each Partner as
may be required from time to time to operate the Company’s business adequately.
6.
Each
Partner shall own an equal 50% share of the Company and its business.
C. Accountability
7.
The
responsibilities for each Partner’s role in operating the Company’s business
are set forth in more detail later in this Agreement. ______ is responsible for acquiring suitable
merchandise for resale. ______ is
responsible for selling the merchandise acquired by her Partner. Each Partner shall be accountable to the
other Partner for the satisfactory performance of their responsibilities, and
shall devote whatever time and effort that may be required to accomplish the
goals that may be established by mutual agreement between the Partners from
time to time.
8.
The
Company is organized as a Limited Liability Company (LLC) pursuant to the
Business Corporation Law of the Commonwealth of Pennsylvania. Having two
Members, the Company shall be taxed by the Internal Revenue Service as a
Partnership.
D. Liability
9.
The
personal liability of each Member shall be limited to their respective
investment in the Company. The Members
shall not be subject to joint and several liability as would affect the general
partners in a general partnership.
10. The Company subscribes to
the highest personal standards of ethical conduct in any activity related to
the Company’s business. Any improper,
unethical or illegal activity undertaken by either Member shall be deemed to
have been disavowed by the Company, and shall not affect the liability of the
other Member. One Member shall not be
held liable for the illegal activity of the other Member, provided the innocent
Member had no knowledge or participation in such illegal activity.
11. Each Member shall be
personally responsible for 50% of any debt that is incurred legitimately by the
Company.
E. Authority
12. a. The Partners
shall meet at least once a week, at a time that is mutually agreeable, at the
office of the Company, to discuss the business of the Company. Each Partner shall have an equal vote in
making decisions affecting the conduct of the Company’s business. All decisions shall be made by consensus. In order to avoid a possible impasse or
deadlock, in the event that the Partners are unable to agree on a major
business decision, the matter shall be submitted for decision by the accountant
who is retained by the Company to keep its books. The decision of the accountant shall be
binding upon the Partners. If, for any
reason, the accountant is unable or unwilling to make such a decision, the
matter in controversy shall be referred to the lawyer who represents the
Company, whose decision shall be binding upon the Partners.
b.
Each
Partner is authorized to make decisions affecting his/her area of responsibility,
as set forth in Section F, below, in the normal course of business, without
consulting the other partner, provided the decision does not exceed the amount
of Rs.5,000.00. Any decision affecting
more than $5,000.00 must have the prior approval of the other Partner.
c.
The
Company shall be managed directly by its Members. The Company will not utilize a Manager unless
the Members decide to do so by unanimous decision.
13.Either
Partner may sign a check drawn on the Company’s bank account, provided the
amount of the transaction does not exceed $5,000.00. Both Partners must sign any check in an
amount more than $5,000.00.
• F. Responsibilities
14 a.
______ shall be responsible for acquiring merchandise to resell. In this capacity, he shall attend auctions,
flea markets and make purchases from other dealers. He shall acquire sufficient merchandise such
that its resale value is adequate to meet the sales goals established by the
Company. ______ shall also be the Chief Executive
Officer of the Company.
b. ______ shall be responsible to sell the merchandise on
eBay, or any other similar website.
Direct sales to private parties are allowed. ______ shall also keep the books of financial
accounts for the Company, and shall be its Chief Financial Officer.
15. Individual workloads will be established at
the weekly meetings of the Partners as set forth in Section 12 a., above. Each Partner is encouraged to exercise
individual initiative in order to achieve the goals of the Company, and provide
for its prosperity.
G.Personnel
16.The
selection of professional service providers, such as accountant, lawyer,
insurance agent and banker, shall be made by consensus between the Partners.
17. New Members shall be
admitted to the Company only by unanimous agreement among the existing Members. As a condition of membership in the Company,
new Members shall be required to execute a Joinder Agreement, whereby they
subscribe to all the terms and conditions of this Operating Agreement, or
whatever version hereof is in effect at the time.
18. Employees and/or
independent contractors shall be hired by the Partners as the needs of the
business may require.
19. Vendors and/or suppliers of
goods or services that may be required by the Company may be selected by either
Partner as needed.
20. Buyers of the Company’s
merchandise may be selected by either Partner.
H.
Insurance
21.The
need for general Liability insurance, Property insurance, Keyman Life and
Disability insurance, and any other insurance coverage related to the Company
and its business shall be determined by the Partners by mutual agreement.
22.Employee
benefits, such as life insurance, disability insurance, pensions and any other
similar benefits shall be provided as the Partners may decide by mutual
agreement.
23.Providing
Key man insurance is covered in section 21, above.
I.Ownership
and Compensation
24.Each
Member owns an equal 50% interest in the Company and its business. In the event that new Members are admitted,
pursuant to the provisions of Section 17, above, new Membership interests shall
be determined and allocated by the unanimous agreement of all existing Members.
25. Compensation and
distribution of profits shall be made to the Members in equal shares, unless
otherwise agreed by mutual consent.
26. Any losses incurred by the
Company shall be allocated among the Members in equal shares, unless otherwise
agreed my mutual consent.
27. The retention of profits
for reinvestment in the Company’s business from time to time shall be made as
the Members may agree unanimously.
28. Salaries for the Members
and any employees that may be hired shall be established and paid as the
Members may determine by unanimous agreement.
29. Company perquisites, such
as company-owned cars and similar benefits, shall be provided to Members and/or
employees as the Members may determine by unanimous decision.
30. Employee benefits such as
vacation, paid holidays, sick time, family time, mental health time and similar
benefits shall be provided, as the Members shall determine by unanimous
decision.
31. Conditions which affect a
Member’s ability to work productively, such as serious illness, disability or
other unexpected situation shall be dealt with as the Members may decide by
mutual agreement.
32. Any extended absence from
work of a Member, which adversely affects the performance of the Company and/or
its business, shall be dealt with as the need arises in such manner as the
Members may decide by mutual agreement.
The continuation of pay and benefits during any such period of extended
absence from work or disability shall be subject to unanimous agreement among
all Members.
33.Pursuant
to the provisions of Section 14 b., above, the books of account shall be kept
by ______. An accountant shall be
selected by the Members to prepare regular financial reports and tax returns
for the Company.
34. Both of the Members have
other jobs outside the Company, as stated in Section 4, above, and are expected
to spend most of their working time for their outside employment. Nevertheless, in the event a Member is unable
to devote sufficient time to his/her responsibilities as set forth in Section
F, above, to the extent that it adversely impacts the performance of the
Company and its business, that Member may be subject to having his/her
compensation adjusted, or other measures taken as the Members may mutually
agree, notwithstanding any provisions to the contrary contained in Section I,
pertaining to equal compensation of Members.
35. As stated in Section 10,
above, the Company adheres to the highest standards of personal integrity. Accordingly, all Members shall scrupulously
avoid at all times any activity that could be detrimental to the welfare of the
Company and its business. Any such
conflict of interest that may arise would be grounds for severe disciplinary
measures being taken against the offending Member, up to and including having
his/her Membership in the Company revoked or terminated.
J.Buy-Sell
Agreement
36. In the event of the death of a Member, the value of the
deceased Member’s interest in the Company, as determined according to the
provisions of Section
37,
below, shall be paid to the personal representative of the Member’s estate.
37.The
value of a Members interest in the Company shall be based on the Book Value of
such interest, as determined by the accountant who prepares regular financial
statements for the Company.
38. If a Member leaves the
Company, his/her employment with the company shall be terminated. The departed Member shall be paid the value
of his/her interest in the Company as provided in Section 37, above, except as
provided in Section 39, below.
39. If a Member leaves the
Company to work for any competitor of the Company, the value of his/her
interest in the Company, which shall be paid to the departing Member shall be
reduced as the remaining Members may mutually agree.
40. No Member shall sell
his/her interest in the Company to any person who is not a Member, unless the
interest is first offered for sale to the remaining Members, who have a right
of first refusal. Such offer must be in
writing. Only if the remaining Members
decline to purchase the Member’s interest within 30 days of the date of the
written offer of sale, may the Member’s interest be sold to an outsider who is
not already a Member. Any attempt to
sell a Member’s interest in violation of the terms of this section J.shall be
null and void, and will not be honored by the Company
.
41. Members shall not be
required to sign a Non-Competition agreement, but they shall also observe the
above-stated standards of personal integrity, and shall take no action that
would be detrimental to the Company.
42. Any Member who fails to
comply with all the provisions of this Agreement shall have his/her Membership
revoked by the other Members.
43.Any
offer to buy the Company or its business shall be referred to the Members for
evaluation. The Members must agree
unanimously in order to sell the Company or its business.
K. Company Dissolution
44. Upon dissolution of the
Company, its assets will be offered for sale at their Book
Value, first, to the Members in
proportion to their respective shares in the Company, and then to the
public. Shared assets shall be offered
for sale to the public.
45. Any intellectual property
owned by the Company, and proprietary information, such as customer lists, and
Company files and records shall be disposed of as the Partners may mutually
agree.
46. The continuing use of the
Company name and logo shall be determined by the mutual consent of the members.
47. In the event of a dispute
between the Members that cannot be reconciled, the members agree not to resort
to litigation in court, but in lieu thereof agree to submit the dispute to
binding arbitration under the rules of the American Arbitration Association.
48. This Agreement may be
amended only by the unanimous consent of the members.
WITNESS
the due execution of this Operating Agreement, consisting of 48 numbered
sections on six pages, as of the day and year first written above, by the
undersigned Members, being all the Members of XYZ Enterprises, LLC.
__________________________________ ______________________
________
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