Operating Agreement
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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
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.
The name of the Company shall be registered as a trademark with the Office of the Secretary of State of the Commonwealth of Pennsylvania.
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.
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
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.
Each Partner shall own an equal 50% share of the Company and its business.
C. Accountability
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.
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
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.
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.
Each Member shall be personally responsible for 50% of any debt that is incurred legitimately by the Company.
E. Authority
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.
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.
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.
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.
______ 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
The selection of professional service providers, such as accountant, lawyer, insurance agent and banker, shall be made by consensus between the Partners.
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.
Employees and/or independent contractors shall be hired by the Partners as the needs of the business may require.
Vendors and/or suppliers of goods or services that may be required by the Company may be selected by either Partner as needed.
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
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.
Compensation and distribution of profits shall be made to the Members in equal shares, unless otherwise agreed by mutual consent.
Any losses incurred by the Company shall be allocated among the Members in equal shares, unless otherwise agreed my mutual consent.
The retention of profits for reinvestment in the Company’s business from time to time shall be made as the Members may agree unanimously.
Salaries for the Members and any employees that may be hired shall be established and paid as the Members may determine by unanimous agreement.
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.
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.
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.
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.
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.
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.
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
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.
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.
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.
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.
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
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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.
Any Member who fails to comply with all the provisions of this Agreement shall have his/her Membership revoked by the other Members.
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
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.
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.
The continuing use of the Company name and logo shall be determined by the mutual consent of the members.
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.
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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