Xyz Limited Liability Company Operating Agreement Page 11
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284.6
Priority and Return of Capital. Except as may be expressly provided
herein, no Member shall have priority over any other Member, either as to the return of
Capital Contributions or as to Net Profits, Net Losses or distributions; provided that
this section shall not apply to loans which a Member has made to the Company.
4.7
Liability of a Member to the Company. A Member who receives a
distribution or the return in whole or in part of its contribution is liable to the Company
only to the extent provided by the Act.
[Provisions 4.8 and 4.9 will need to be considered together. The choice you make for either 4.8
or 4.9 will affect the choice you can make for the other. These provisions represent the choices of
“transferability” and “continuity of life.” They are two of the four elements that define a
corporation: limited liability, transferability, continuity of life, and centralized management. An
LLC should only have two of the four choices. You have undoubtedly chosen limited liability
(the corporate shield). If you have chosen centralized management by picking a manager
managed LLC, then you will have to pick the second paragraph options for both 4.8 and 4.9. If
you have not chosen the manager managed option, you can pick the first option of either 4.8 or
4.9.]
[Free Transferability Provision]
4.8
Member Sale, Assignment or Exchange. A Member or a Member's legal
representative has the power to sell, assign or exchange such Member's Membership
Interest.
[or]
4.8
Member Sale, Assignment or Exchange. A Member or a Member’s legal
representative has the power to sell, assign or exchange such Member’s Membership
Interest only with the majority approval of the other Members.
[This provision determines if you have free transferability of interest in your LLC. It is one of the
four corporate characteristics that you can pick from in an LLC. By choosing to form an LLC, we
expect you want the limited liability/corporate shield option. That means you can only choose
one of the remaining three options of free transferability, continuity of life, or centralized
management (manager managed). You can only have two of the four characteristics, so if you do
wish to pick the free transferability option by choosing the first paragraph in 4.8, you will not be
able to pick other options, i.e., manager managed or the continuity of life in 4.9. If you have
chosen to have your LLC be manager managed then you will have to pick the second option
above. If your LLC is member managed and you pick the first option of section 4.9 then pick the
second option above in this 4.8 provision. If your LLC is member managed and you want to have
the continuity of life option (the second choice in 4.9) then you should pick the first option above
in 4.8.]
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