LLC Operating Agreement (Multi-Member)
Comprehensive operating agreement for a multi-member LLC — ownership, capital, distributions, management, transfers, dissolution.
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OPERATING AGREEMENT
of
Riverstone Ventures LLC
a Delaware Limited Liability Company
This Operating Agreement (this "Agreement") is entered into and effective as of May 7, 2026 (the "Effective Date") by and among the Members of Riverstone Ventures LLC (the "Company"), a limited liability company organized under the laws of the State of Delaware.
ARTICLE I — FORMATION
1.1 Formation. The Company was formed by filing Articles of Organization (or Certificate of Formation) with the Delaware Secretary of State and is governed by this Agreement and the Delaware Limited Liability Company Act (the "Act").
1.2 Name. The name of the Company is Riverstone Ventures LLC.
1.3 Principal Office. The principal office is 1209 Orange Street, Wilmington, DE 19801, or such other location as the Members may designate.
1.4 Purpose. The Company is formed to engage in any lawful business activity for which a limited liability company may be organized under the laws of the state of formation, including without limitation [describe primary line of business].
1.5 Term. The Company shall continue in perpetuity unless dissolved as provided herein.
ARTICLE II — MEMBERS, CAPITAL, AND OWNERSHIP
2.1 Members and Initial Contributions. The initial Members and their Capital Contributions and Membership Interests are:
Member: Avery J. Chen
Initial Capital Contribution: $50,000.00
Membership Interest: 50%
Member: Jordan L. Patel
Initial Capital Contribution: $50,000.00
Membership Interest: 50%
2.2 Additional Capital. No Member shall be required to make additional capital contributions. The Members may make additional contributions only by unanimous written consent, in which case Membership Interests will be adjusted proportionally to reflect the new contributions, unless the Members agree otherwise in writing.
2.3 No Interest on Capital. No Member shall be entitled to interest on Capital Contributions or to a return of any portion of a Capital Contribution except as expressly provided herein.
2.4 Capital Accounts. The Company shall maintain a separate Capital Account for each Member in accordance with U.S. Treasury Regulation §1.704-1(b)(2)(iv).
ARTICLE III — ALLOCATIONS AND DISTRIBUTIONS
3.1 Allocations of Profit and Loss. Net profit and net loss shall be allocated among the Members in proportion to their Membership Interests, except as otherwise required by Section 704(b) of the Internal Revenue Code.
3.2 Distributions. Subject to retention of reasonable working capital and any debt-service obligations, the Company shall distribute available cash on a quarterly basis, in proportion to Membership Interests.
3.3 Tax Distributions. Within 30 days of each quarterly estimated-tax deadline, the Company shall make distributions to Members in amounts sufficient to pay each Member's federal and state income tax on the Member's allocable share of Company income, calculated at the highest marginal rate.
3.4 No Priority. Except as expressly stated, no Member has priority over any other Member as to allocations or distributions.
ARTICLE IV — MANAGEMENT
4.1 Member-Managed. The Company is member-managed. Each Member has equal authority to manage the day-to-day business of the Company, subject to the Major Decisions in Section 4.3.
4.2 Voting. Except where otherwise specified, decisions are made by Members holding a majority of Membership Interests, with each Member voting in proportion to such Member's Membership Interest.
4.3 Major Decisions. Unanimous written consent of all Members is required for: (a) sale of all or substantially all assets; (b) merger, conversion, or dissolution; (c) admission of a new Member; (d) borrowing in excess of $50,000; (e) amendment of this Agreement or the Articles; (f) any transaction with a Member or affiliate (related-party transactions); (g) tax elections that materially affect Members.
4.4 Officers. The Members may appoint officers (e.g., President, Treasurer, Secretary) with such duties as designated. Officer status alone does not create a Member interest.
ARTICLE V — TAX MATTERS
5.1 Tax Classification. The Company shall be treated as a partnership for federal income tax purposes.
5.2 Fiscal Year. The fiscal year of the Company ends December 31.
5.3 Partnership Representative. The Members shall appoint a Partnership Representative under IRC §6223 (Bipartisan Budget Act of 2015 partnership audit rules). Initial Partnership Representative: Avery J. Chen.
5.4 Books and Records. The Company shall keep accurate books of account at the principal office. Each Member has the right to inspect such books at reasonable times.
ARTICLE VI — TRANSFERS, BUYOUT, AND RIGHT OF FIRST REFUSAL
6.1 Transfer Restrictions. Members may not transfer, assign, pledge, or otherwise dispose of any membership interest without (a) the prior written consent of all other Members, and (b) compliance with the Right of First Refusal in Section 9. Any attempted transfer in violation is null and void.
6.2 Right of First Refusal. Before any permitted transfer to a third party, the selling Member must offer the interest to the Company first, then to the remaining Members on the same terms and price offered by the bona fide third-party purchaser. The Company / remaining Members have 30 days to accept.
6.3 Permitted Transfers. Transfers to a Member's revocable living trust, immediate family, or wholly-owned entity are permitted without consent, provided the transferee agrees in writing to be bound by this Agreement.
6.4 Buyout Triggers. Upon Death, permanent disability, bankruptcy, or court-ordered dissolution of a Member; unanimous written consent of Members; expiration of any term specified in the Articles; entry of a decree of judicial dissolution., the Company (or remaining Members) shall purchase the affected Member's Interest at fair market value as determined by an independent appraiser, payable in equal installments over 36 months.
ARTICLE VII — DISSOLUTION
7.1 Events of Dissolution. The Company shall dissolve upon: (a) unanimous written consent of all Members; (b) entry of a decree of judicial dissolution; (c) any other event causing dissolution under the Act that is not waived by the Members.
7.2 Winding Up. Upon dissolution, the Company's assets shall be applied first to creditors (including Members who are creditors), then to outstanding Capital Accounts in accordance with Treasury Regulation §1.704-1(b)(2)(ii)(b).
ARTICLE VIII — INDEMNIFICATION AND LIABILITY
8.1 Limited Liability. No Member or Manager shall be personally liable for the debts, obligations, or liabilities of the Company solely by reason of being a Member or Manager.
8.2 Indemnification. The Company shall indemnify each Member, Manager, and Officer to the fullest extent permitted by the Act for actions taken in good faith on behalf of the Company.
ARTICLE IX — MISCELLANEOUS
9.1 Governing Law. This Agreement is governed by the laws of the State of Delaware, without regard to conflicts-of-law principles.
9.2 Dispute Resolution. The Members shall first attempt to resolve any dispute through good-faith negotiation, then mediation, before any litigation.
9.3 Amendment. This Agreement may be amended only by written instrument signed by all Members.
9.4 Entire Agreement. This Agreement, together with the Articles of Organization, constitutes the entire agreement among the Members.
9.5 Counterparts. This Agreement may be executed in counterparts, each of which is deemed an original.
IN WITNESS WHEREOF, the Members have executed this Agreement as of the Effective Date.
_______________________________ _______________________________
Avery J. Chen Jordan L. Patel
Member Member
Date: ____________________ Date: ____________________
About this template
A multi-member LLC operating agreement is the single most important document a small-business LLC owns — far more important than the state-filed Articles of Organization. The Articles only create the entity; the operating agreement is what governs day-to-day decision-making, ownership, profit splits, and what happens if a member dies, divorces, goes bankrupt, or wants to leave. Even in the seven states that don't legally require one (most do require it for multi-member LLCs in some form, and Delaware, California, Maine, Missouri, and New York explicitly require it), every multi-member LLC should adopt one — without it, default state statutes apply, and those defaults rarely match what the members actually wanted. The most-fought clauses, in order of frequency: (1) Buyout triggers and valuation — what happens when a member dies, divorces, becomes disabled, or wants out? Without explicit valuation methodology (multiple-of-EBITDA, independent appraisal, or fixed buy-sell price reviewed annually), the surviving members and the leaving member often end up litigating; (2) Distributions vs. tax distributions — partnership tax pass-through means members owe tax on their share of income whether or not cash is distributed; the agreement must require the LLC to distribute at least enough to cover taxes (typically 35-40% of allocated income); (3) Major decision thresholds — what requires unanimous consent vs. majority vote? Sale of substantially all assets, debt above a threshold, admitting new members, related-party transactions, and tax elections should require unanimity; (4) Right of first refusal on transfers — without it, a 50% member can sell to a stranger and you are now in business with someone you didn't choose; (5) Tax classification — default partnership taxation works for most LLCs, but high-net active-income members may benefit from S-corp election (saves self-employment tax on distributions in excess of reasonable salary). Federal Bipartisan Budget Act of 2015 added the Partnership Representative role (replacing the Tax Matters Partner) — the agreement must designate one, with explicit limits on their authority to bind the LLC in IRS proceedings. State considerations: Delaware Chancery Court provides the most predictable LLC dispute resolution and is the default choice for any LLC with significant outside investors; California imposes the highest minimum franchise tax ($800) and has detailed statutory default rules; Wyoming, Nevada, and South Dakota have no state income tax but generally lack the case-law depth of Delaware. This template is for multi-member LLCs only; single-member LLCs should use the single-member-llc-operating-agreement template, which omits inter-member governance and adds disregarded-entity tax treatment.
When to use it
- Forming any new multi-member LLC (Delaware, California, New York, Maine, and Missouri legally require it).
- Adding a new member to an existing LLC formed without an operating agreement.
- Converting a general partnership or sole proprietorship into a multi-member LLC.
- Bringing in outside capital (angel/VC) — investors require a written operating agreement before funding.
- Memorializing an oral agreement among co-founders before disputes arise.
What to include
- Member identification, capital contributions, and ownership percentages.
- Profit/loss allocation and distribution mechanics (with mandatory tax distributions).
- Management structure (member-managed vs. manager-managed) and major-decision thresholds.
- Transfer restrictions and right of first refusal.
- Buyout triggers (death, disability, divorce, bankruptcy) with explicit valuation method.
- Tax classification and Partnership Representative designation (IRC §6223).
- Dissolution and winding-up procedures.