A Model Blog Operating Agreement?
A while back, I posted about the process of drafting an operating agreement for CoOp. (Larry criticized us, in part, for offering our members rights that they wouldn’t necessarily have had by default.) Ever since, I’ve gotten regular inquiries from bloggers seeking a copy of our operating agreement to use as a template. I’ve turned those folks down because our agreement contains some terms that I’d prefer remain private.
This has left a need for good practical tips on how to organize a blogging LLC, LLP, or Corporation. Into the breach steps David Johnson (NYLS), who is developing a “Virtual Company Project“. As he describes in this short paper, the Project aims to use a new Vermont statute, enabling online formation, to make the the Green Mountain state into “the Delaware of the Net”. While the project itself is still in development, David has already drafted a model operating agreement for a virtual company, that could easily transform into a model blog operating agreement (perhaps with the help of readers’ comments here). You should check it out after the jump.
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
A Member-Managed Limited Liability Company
entering and using this site, I am attaching my electronic signature to and
agreeing to the terms of this Agreement as a Member as follows:
Work Product. All Members hereby assign all right, title
and interest to any work product created in the course of Company projects to
the Company. In creating any work
product for the Company, Members shall be independent contractors of the Company.
Point Allocation. At the end of the first three months
following the creation of this Company (the “Initial Contribution Period” or
“ICP”), and at the end of each three-month period (“Period”) thereafter, each
Member will receive a total number of Point Allocation Votes (“PAVs”) equal to the number of Members then bound by this
Agreement, minus one. These PAVs may be used to distribute points (“Points”) to any
other Member(s) during the last seven days of such period. After the ICP, only Members who have received
points in the immediately preceding Period shall be deemed "Active
Members." Only Active Members shall
be eligible to exercise PAVs and to vote on Company
decisions, though Active Member status will not be a requirement to receive
Points Received. Points received by each Member will be
cumulative throughout the life of the Company; but if no Points are received by
a Member for three consecutive Periods, all Points previously accumulated by
such Member shall become invalid.
Distribution of Revenues. Revenues the Members decide to distribute
during any Period, including revenues arising out of the licensing or sale of
the assets of the Company outside of its ordinary course of business, shall be
distributed in proportion to the number of valid Points held by each Member as
a percentage of all valid Points outstanding.
No distributions may be made to the extent that they would cause the
Company to be unable to pay its debts as they become due in the ordinary course
Liability of Members. The debts, obligations and liabilities of the
Company are solely the debts, obligations and liabilities of the Company. A Member will not be personally liable for a
debt, obligation or liability of the Company solely by reason of being or
acting as a Member.
Decisions by Members. Except for amendment of this Agreement, all
decisions and any, consent, approval, or action of the Company may be taken by
means of a majority vote of Active Members entitled to vote and actually voting
within a one week period.
Service Provider. Members agree to designate __________________
as their service provider (the “Service Provider”) to maintain complete and
accurate books of account and records of the Company’s affairs and to assure
timely filing of any documents required by law.
Tax Election. The Company shall elect to be treated for
federal and state income tax purposes as a “Subchapter C corporation”. The Service Provider or an affiliate shall be
a Member of the Company and the sole shareholder (the “Shareholder”) of the
Company for federal and state income tax purposes absent a decision of the
Members to elect another person as the Shareholder(s).
Amendments. Any Member may propose an amendment of this
Agreement. An affirmative two-thirds
vote of the Active Members of the Company within 1 week of such proposal shall
be required to adopt such amendment.
Choice of Law. The law of the State of
Arbitration. The Members agree that any and all disputes
related to or arising from this Agreement will be resolved through online
arbitration under the rules of and as facilitated by ______________________.
Non-transferability. Any interest of a Member in the Company
created under this Agreement will be non-transferable and shall lapse upon the
death of the Member.
Dissolution. Upon dissolution of the Company and after
payment of all debts and liabilities, any remaining assets will escheat to the
Registered Agent. _______________ is the Company’s registered
agent in the State of
Designated Office. The location of the principal place of
business of the Company will be the office of the Company’s registered agent.
The Members. The Members of the Company will be the
parties bound by the terms of this Agreement.
Termination of Access and Active
Membership. The right of a member to
access the Company site, and a Member’s status as an Active Member, may be terminated
by vote of a majority of Active Members held within 1 week after such
termination is proposed by any Active Member.
Contracts With Third Parties. With the exception of agreements signed by
the founder(s) with the service providers identified above, no Member may sign
a contract on behalf of the Company unless expressly authorized by a decision
of the Members to do so, and any such contract will be invalid.
Integration. This contract
shall constitute the entire operating agreement among the parties.
ACKNOWLEDGMENT OF ARBITRATION. This Agreement contains an agreement to
arbitrate. After signing this document,
I understand that I will not be able to bring a lawsuit concerning any dispute
that may arise which is covered by the arbitration agreement, unless it
involves a question of constitutional or civil rights. Instead, I agree to submit any such dispute
to an impartial arbitrator as described above.