Revision as of 05:24, 17 February 2009

This is the Operating Agreement that Dreamwidth Studios, LLC operates under -- aka the legal document that governs the forming of the company. We post it here for reference only (with our personal information redacted), for the community to peruse. Dreamwidth Studios, LLC is a Maryland-registered limited liability company.

Due to limitations of MediaWiki markup, the clause numbers on the wiki version don't match the numbers on the real version. Generally speaking, each clause is numbered for its article, so any clause in Article is clause 5.#. Most, but not all, of the subclauses, are delineated with numbers, so 5.#(x), rather than 1.#.# as you see on the wiki.

The Microsoft Word document is a better copy of the actual contract, and is available for download: Media: Dreamwidth_Studios-_Operating_Agreement.doc

OPERATING AGREEMENT FOR
DREAMWIDTH STUDIOS, LLC
A MARYLAND LIMITED LIABILITY COMPANY

THIS LIMITED LIABILITY COMPANY AGREEMENT (the Agreement) of Dreamwidth Sudios, LLC, is made and entered into this 17th day of April, 2008 by Mark Smith, Jr and Denise Paolucci, and each individual or business entity later subsequently admitted to the Company. These individuals and/or business entities shall be known as and referred to as "Members" and individually as a "Member."    WHEREAS, of this date the Members, through their agent, Denise Paolucci, have formed the Limited Liability Company named below under the laws of the State of Maryland.

NOW, THEREFORE, intending that this Agreement constitute the “limited liability company agreement” of the Company, and in consideration of the respective covenants and agreements contained herein, Dreamwidth Studios, LLC, and its initial Members hereby agree as follows: 

DEFINITIONS

Section 1.1 Definitions. In this Agreement, the following terms shall, unless the context otherwise indicates, have the meaning set forth as follows:

“Affiliate” means, with respect to any Person, any other Person who controls is controlled by or is under common control with, such Person.

“Agreement” means this Limited Liability Company Agreement and By-laws among the Members of the Company, as amended from time to time.

“Board” means the Board of Directors of the Company, who shall constitute the “managers” of the Company.

“Bylaws and/or By-laws” means, with respect to any Entity, the bylaws or similar code of such Entity, and the interpretations, resolutions, policies, procedures, orders and directives of the Entity thereof or thereunder, as in effect from time to time, and if no other entity is specified, shall mean this Agreement.

“Capital Contribution” means any contribution (including but not limited to cash) contributed to the Company by or on behalf of a Member.

“Code” means The Internal Revenue Code of 1986, as in effect and hereafter amended, and, unless the context otherwise requires, applicable regulations thereunder. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law.

“Company” means Dreamwidth Studios, LLC.

“Company Assets” means all assets and property, whether tangible or intangible and whether real, personal, or mixed, at any time owned by or held for the benefit of the Company.

“Control” means the power to direct or cause the direction of the management or policies of a Person, whether through ownership of securities, by contract, or otherwise.

“Depreciation” means, for each Fiscal Year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to any asset for such Fiscal Year or other period.

“Encumbrance” means any security interest, pledge, mortgage, lien, charge, adverse claim of ownership or use, or other encumbrance of any kind.

“Entity” means any Person other than an individual.

“Member” means any Person admitted to membership in the Company as provided in the Rules of the Company.

“Percentage Interest” means, with respect to each Member, the percentage of issued and outstanding entity interest held by such Member.

“Person” means an individual, sole proprietorship, corporation, partnership, limited liability company, association, firm, trust, or other entity as the context may require.

“Rules” means, with respect to any Entity, the rules of such Entity and the interpretations, resolutions, orders, directives and procedures of the Entity thereunder, as in effect from time to time, and, if no other Entity is specified, means the Rules of the Company.

ARTICLE I
Company Formation and Registered Agent

1. 1. FORMATION. The Members hereby form a Limited Liability Company ("Company") subject to the provisions of the Limited Liability Company Act as currently in effect as of this date. A Certificate of Formation shall be filed with the Secretary of State.
   2.      NAME. The name of the Company shall  be "Dreamwidth Studios, L.L.C.", or such other name as the Members may determine. The Company may appropriate trade name and similar statements to be filed and published under the name as set forth in this Section, or such other names as the Company may have or use in any jurisdiction from time to time.
   3. REGISTERED OFFICE AND AGENT. The location of the registered office of the Company shall be:
      38 S. Paca St. Apt. 217
      Baltimore, MD 2120 
   4. TERM. The Company shall continue for an indefinite period unless dissolved by:
      1. The unanimous written resolution of Members; or
      2. Any event which makes it unlawful for the business of the Company to be carried on by the Members; or
      3. Any other event causing a dissolution of a Limited Liability Company under the laws of the State of Maryland.
   5. CONTINUANCE OF COMPANY. Notwithstanding the provisions of ARTICLE 1.4, in the event of an occurrence described in ARTICLE 1.4(c), if there are at least two remaining Members, said remaining Members shall have the right to continue the business of the Company. Such right can be exercised only by the unanimous vote of the remaining Members within ninety (90) days after the occurrence of an event described in ARTICLE 1.4(c). If not so exercised, the right of the Members to continue the business of the Company shall expire.
   6. BUSINESS PURPOSE. The purpose of the Company is to to engage in any lawful act or activity for which a limited liability company may be organized under the laws of the State of Maryland.
   7. PRINCIPAL PLACE OF BUSINESS. The location of the principal place of business of the Company shall be 38 S. Paca St, Apt 217, Baltimore, MD, 21201, or at such other place as the Managers from time to time select.
   8. THE MEMBERS. The name and place of residence of each member are contained in Exhibit 2 attached to this Agreement.
   9. ADMISSION OF ADDITIONAL MEMBERS.  Except as otherwise expressly provided in the Agreement, no additional members may be admitted to the Company through issuance by the company of a new interest in the Company without the prior unanimous written consent of the Members.
   10. COMMUNITY. The aggregate body of individuals using products and services developed by the Company shall be called the "Community". Members shall have sole discretion as to the qualifying criteria for inclusion in the Community, and shall maintain written agreement as to the working criteria being used. At any time, with written unanimous consent of Members, this writtten agreement may be changed. The Community will have no financial interest in the Company, but may be called upon to provide non-binding guidance to Members regarding management of the Company.
   11. Qualification in Other Jurisdictions. The Members shall cause the Company to be qualified to do business or properly registered to do business in accordance with any statutes or similar laws in any jurisdiction in which such qualification or registration is required or desirable, and shall execute, deliver, and file any certificates (and any addendums, amendments, or restatements thereof) necessary to effect such qualification or registration.
   12. Limitation of Liability. Except as required by law and as otherwise provided in this Agreement, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member of the Company.

ARTICLE 2
Capital Contributions

1. 1. INITIAL CONTRIBUTIONS. The Members initially shall contribute to the Company capital as described in Exhibit 3 attached to this Agreement. The agreed value of such property and cash is $2500.
   2. ADDITIONAL CONTRIBUTIONS. Except as provided in ARTICLE 6.2, no Member shall be obligated to make any additional contribution to the Company's capital.
   3. OPERATING CAPITAL. In the event that further capital contributions are required to support and sustain the Company's operations, Members shall have the right, but not the obligation, to make a loan to the Company at or below standard interest rates, upon the unanimous agreement of all Members to accept such a loan on behalf of the Company. These additional contributions will not alter or affect the loaning Member's percentage of interest in the Company.
   4. PREVIOUS EXPENSES. Each Member's initial capital contribution shall be offset by the value of expenses incurred on the behalf of the Company's purpose before the formalization of this Agreement, upon the unanimous agreement of all Members that the expenses pertain to the operations of the Company.

ARTICLE 3
Profits, Losses and Distributions

1. 1. PROFITS/LOSSES. For financial accounting and tax purposes the Company's net profits or net losses shall be determined on an annual basis and shall be allocated to the Members in proportion to each Member's relative capital interest in the Company as set forth in Exhibit 2 as amended from time to time in accordance with Treasury Regulation 1.704-1.
   2. DISTRIBUTIONS. The Members shall determine and distribute available funds annually, at more frequent intervals, or otherwise as they see fit. Available funds, as referred to herein, shall mean the net cash of the Company available after appropriate provision for expenses and liabilities, as determined by the Managers.
   3. TAX OFFSET. If Members choose to retain available funds in the Company's accounts to provide for further expansion of the Company, they must still provide a minimum annual distribution of available funds, calculated to provide for the payment of all applicable local, state, and federal taxes each Member will incur as a result of their interest in the Company.
   4. OPERATIONAL FUND. The Company will retain six months of projected operating expenses (including provisions for reasonable and projected infrastructure expansion). No profits will be distributed to Members until the Operational Fund reaches this projected amount.
   5. DISTRIBUTION OF FURTHER PROFIT. After the establishment of the Operational Fund, net profit will be divided as follows:
      1. Community Directed Development. One third of remaining net profit will be distributed as directed by the opinion of the Community. This distribution must advance the stated goals and ideals of the Company. Members will retain sole discretion over this distribution and must provide written unanimous consent to the proposed distribution plan.
      2. Member Directed Development. One third of remaining net profit will be distributed as directed by the opinion of the Members. This distribution must advance the stated goals and ideals of the Company. Members must provide written unanimous consent to the proposed distribution plan.
      3. Member Distribution. One third of remaining net profit will be distributed to Members according to the percentage of interest of each Member.
   6. DISSOLUTION OF COMPANY. If the Company is dissolved as set forth in Section 1.4 of this Agreement, the Operational Fund will be distributed to the Members according to the percentage of interest of each Member. Distributions in liquidation of the Company or in liquidation of a Member's interest shall be made in accordance with the positive capital account balances pursuant to Treasury Regulation 1.704-l(b)(2)(ii)(b)(2). To the extent a Member shall have a negative capital account balance, there shall be a qualified income offset, as set forth in Treasury Regulation 1.704-l(b)(2)(ii)(d).

ARTICLE 4
Management

1. 1. MANAGEMENT OF THE BUSINESS. The name and place of residence of each Manager is attached as Exhibit 1 of this Agreement. By a vote of the Members holding a majority of the capital interests in the Company, as set forth in Exhibit 2 as amended from time to time, shall elect so many Managers as the Members determine, but no fewer than one, with one Manager elected by the Members as Chief Executive Manager.
   2. MEMBERS. The liability of the Members shall be limited as provided under the laws of the Maryland Limited Liability statutes. Members that are not Managers shall take no part whatever in the control, management, direction, or operation of the Company's affairs and shall have no power to bind the Company. The Managers may from time to time seek advice from the Members, but they need not accept such advice, and at all times the Managers shall have the exclusive right to control and manage the Company. No Member shall be an agent of any other Member of the Company solely by reason of being a Member.
   3. POWERS OF MANAGERS. The Managers are authorized on the Company's behalf to make all decisions as to (a) the sale, development lease or other disposition of the Company's assets; (b) the purchase or other acquisition of other assets of all kinds; (c) the management of all or any part of the Company's assets; (d) the borrowing of money and the granting of security interests in the Company's assets; (e) the pre-payment,  refinancing or extension of any loan affecting the Company's assets; (f) the compromise or release of any of the Company's claims or debts; and, (g) the employment of persons, firms or corporations for the operation and management of the company's business. In the exercise of their management powers, the Managers are authorized to execute and deliver (a) all contracts, conveyances, assignments leases, sub-leases, franchise agreements, licensing agreements, management contracts and maintenance contracts covering or affecting the Company's assets; (b) all checks, drafts and other orders for the payment of the Company's funds; (c) all promissory notes, loans, security agreements and other similar documents; and, (d) all other instruments of any other kind relating to the Company's  affairs, whether like or unlike the foregoing.
   4. CHIEF EXECUTIVE MANAGER. The Chief Executive Manager shall have primary responsibility for managing the operations of the Company and for implementing the decisions of the Managers.
   5. NOMINEE. Title to the Company's assets shall be held in the Company's name or in the name of any nominee that the Managers may designate. The Managers shall have power to enter into a nominee agreement with any such person, and such agreement may contain provisions indemnifying the nominee, except for his willful misconduct.
   6. COMPANY INFORMATION. Upon request, the Managers shall supply to any member information regarding the Company or its activities. Each Member or his authorized representative shall have access to and may inspect and copy all books, records and materials in the Manager's possession regarding the  Company or its activities. The exercise of the rights contained in this ARTICLE 4.6 shall be at the requesting Member's expense.
   7. EXCULPATION/LITIGATION.
      1. Except in instances where there has been a finding of fraud or willful or wanton misconduct in which case the party found to have engaged in such conduct cannot avail itself of the protections in this section, neither the Company (including any affiliates of the Company), or its Members, nor any of their respective officers, directors, employees or agents shall be liable to any person, including but not limited to a customer, for any losses, damages, costs or expenses (including but not limited to loss of profits, loss of use, direct, indirect, incidental or consequential damages). The foregoing should apply regardless of whether a claim arises in contract, tort, negligence, strict liability or otherwise. The foregoing shall not limit the liability of any Member or any of their respective officers, directors, employees or agents for any act, incident or occurrence within their control.
      2. There are no express or implied warranties or representations provided by the Company relating to its products and/or services, including but not limited to warranties of merchantability and warranties of fitness for a particular purpose or use.
      3. Any actions, suits or proceedings against the Company, any affiliates of the Company or any of their respective officers, directors, or employees must be brought within two (2) years from the time that cause of action has accrued. Any party bringing such action, suit or proceeding consents to jurisdiction in the State of Maryland, and waives objection to venue therein. This provision shall in no way create a cause of action and shall not authorize an action that would otherwise be prohibited by this Agreement or the rules of the Company.
      4. Any member or employee who commences any action or proceeding whether in court, arbitration or any other forum, against the Company, or any officers, employees or agents of the Company, arising out of or in any way connected to any transactions effected on the Company or the conduct of the Company’s affairs, which or who fails to prevail in such action or proceeding shall reimburse on demand the Company for any and all reasonable expenses and disbursements (including without limitation attorneys’ fees and costs) incurred by it or any of them in the defense of such action or proceeding.
   8. INDEMNIFICATION.
      1. Actions, Suits or Proceedings Other Than by or in the Right of the Company. The Company shall indemnify any current or former director or officer of the Company, and may at the discretion of the Members, can indemnify any current or former employee or agent of the Company who was or is a party or is threatened to be made a party to any administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that such person is or was an employee or agent of the Company or is or was serving at the request of the Company as a director, officer employee or agent (including trustee) of another limited liability company, corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans) to the fullest extent permissible under Maryland law, as then in effect, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action suit or proceeding, if he or she acted in good fait and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was unlawful; except that any finds paid or required to be paid to any person as a result of the provisions of this Section shall be returned to the Company or reduced as the case may be, to the extent that such person receives funds pursuant to an indemnification from any such other limited liability company, corporation, partnership, joint venture, trust or enterprise. The termination of any action suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person seeking indemnification did not act in good faith. And in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was unlawful.
      2. Actions or Suits by or in the Right of the Company. The Company shall indemnify any current or former Director or officer of the Company, and may at the discretion of the Members, indemnify any current or former employee or agent of the Company who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit, by or in the right of the Company to procure a judgment in its favor by reason of the fact that such person is or was a Director, officer, employee or agent of the Company or is or was serving at the request of the Company as a director, officer, employee or agent (including trustee) of another limited liability company, corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans) to the fullest extent permitted under Maryland law, as then in effect, against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement from such action or suit, or he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company; except that (1) no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Company unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper; and (ii) any funds paid or required to be paid to any person as a result of the provisions of this Section shall be returned to the Company or reduced, as the case may be, to the extent that such person receives funds pursuant to an indemnification from any such other limited liability company, corporation, partnership, joint venture, trust or enterprise.
      3. Indemnification for Expenses of Successful Party. To the extent that a Director, officer, employee or agent of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraph (a) or (b) of this Section, or in defense of any claim, issue or matter therein, such person shall be indemnified by the Company against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith.
      4. Determination of Right to Indemnification. Any indemnification under paragraph (a) or (b) of this Section (unless ordered by a court) shall be made by the Company only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in paragraphs (a) and (b) of this Section. Such determination shall be made by independent legal counsel in a written opinion.
      5. Insurance. By action of the Members, the Company may purchase and maintain insurance, in such amounts as the Members deems appropriate, on behalf of any person who is or was a Director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent (including trustee) of another limited liability company, corporation, partnership, joint venture, trust or other enterprise (including employee benefit plans), against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Company shall have the power to indemnify such person against such liability under the provisions of this Section.
   9. RECORDS. The Managers shall cause the Company to keep at its principal place of business the following:
      1. a current list in alphabetical order of the full name and the last known street address of each Member;
      2. a copy of the Certificate of Formation and the Company Operating Agreement and all amendments;
      3. copies of the Company's federal, state and local income tax

 returns and reports, if any, for the three most recent years;

1. 1. 1. copies of any financial statements of the limited liability company for the three most recent years.

ARTICLE 5
Compensation

1. 1. MANAGEMENT FEE. Any Manager rendering services to the Company shall be entitled to compensation commensurate with the value of such services.
   2. REIMBURSEMENT. The Company shall reimburse the Managers or Members for all direct out-of-pocket expenses incurred by them in managing the Company.

ARTICLE 6
Bookkeeping

1. 1. BOOKS. The Managers shall maintain complete and accurate books of account of the Company's affairs at the Company's principal place of business. Such books shall be kept on such method of accounting as the Managers shall select. The company's accounting period shall be the calendar year.
   2. MEMBER'S ACCOUNTS. The Managers shall maintain separate capital and distribution accounts for each member. Each member's capital account shall be determined and maintained in the manner set forth in Treasury Regulation 1.704-l(b)(2)(iv) and shall consist of his initial capital contribution increased by:
      1. any additional capital contribution made by him/her;
      2. credit balances transferred from his distribution account to his capital account; and decreased by:
      • distributions to him/her in reduction of Company capital;
      • the Member's share of Company losses if charged to his/her capital account.
   3. REPORTS. The Managers shall close the books of account after the close of each calendar year, and shall prepare and send to each member a statement of such Member's distributive share of income and expense for income tax reporting purposes.

ARTICLE 7
Transfers

1. 1. ASSIGNMENT. If at any time a Member proposes to sell, assign or otherwise dispose of all or any part of his interest in the Company, such Member shall first make a written offer to sell such interest to the other Members at a price determined by mutual agreement. If such other Members decline or fail to elect such interest within thirty (30) days, and if the sale or assignment is made and the Members fail to approve this sale or assignment unanimously then, pursuant to the Maryland Limited Liability statutes, the purchaser or assignee shall have no right to participate in the management of the business and affairs of the Company. The purchaser or assignee shall only be entitled to receive the share of the profits or other compensation by way of income and the return of contributions to which that Member would otherwise be entitled.

ARTICLE 8
Miscellaneous Provisions

1. 1. Fiscal Year. The fiscal year of the Company for accounting and

tax purposes (the “Fiscal Year”) shall be from January 1 through December 31 of each calendar year except as otherwise fixed by the Members.

1. 1. Amendments of this Agreement. This Agreement may be

amended, in whole or in part, by majority vote of the Members.

1. 1. Governing Law, Severability. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THEREOF. In particular, it shall be construed to the maximum extent possible to comply with all of the terms and conditions of Maryland law. If, nevertheless, it shall be determined by a court of competent jurisdiction that any provision or wording of this Agreement shall be invalid or unenforceable under the applicable law, such invalidity or unenforceability shall not invalidate the entire agreement. In that case, this Agreement shall be construed so as to limit any term or provision so as to make it enforceable or valid within the requirements of any applicable law, and, in the event such term or provision cannot be so limited, this Agreement shall be construed to omit such invalid or unenforceable provisions. If it shall be determined by a court of competent jurisdiction that any provision relating to the distributions and allocations of the Company is invalid or unenforceable, this Agreement shall be construed or interpreted so as (i) to make it enforceable or valid or (ii) to make the distributions and allocations as closely equivalent to those set forth in this Agreement as is permissible under applicable law.
   2. Successors and Assigns. Subject to the restrictions on transfer set forth herein, this Agreement, and each and every provision hereof, shall be binding upon and shall inure to the benefit of the Members and their respective successors, successors-in-title, executors, administrators, representatives, heirs and assigns. Each and every successor-in-interest to any Member, whether such successor acquires such interest by way of gift, purchase, foreclosure or by any other method, shall hold such interest subject to all of the terms and provisions of this Agreement.
   3. Further Assurances. Each party hereto agrees to execute,

acknowledge, deliver, file, record and publish such further agreements, certificates, amendments of certificates, instruments or documents as may be required by law or may, in the opinion of the Members be necessary or desirable to carry out the provisions of this Agreement and the Rules.

1. 1. Remedies.
      1. No remedy conferred by any of the provisions of this Agreement and the

Rules is intended to be exclusive of any other remedy which is otherwise available at law, in equity, by statute or otherwise, and each and every other remedy shall be cumulative and shall be in addition to every remedy given hereunder or now or hereafter existing at law, in equity, by statute or otherwise. The election of any one or more of such remedies by any of the parties hereto shall not constitute a waiver by such party of the right to pursue any other available remedy.

1. 1. 1. Without prejudice to any other rights or remedies which any party may have, the parties acknowledge and agree that damages would not be an adequate remedy for any breach by any other party of the provisions of this Agreement and, to the fullest extent permitted by law, the parties shall be entitled to the remedies of injunction, specific performance and other equitable relief for any threatened or actual breach of any such provision by such other party or any other relevant Person and, to the fullest extent permitted by law, no proof of special damages shall be necessary for the enforcement by the parties of the rights under this Agreement and the Rules.
   2. Captions. Section titles or captions contained in this Agreement

are inserted only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof.

  Signed and Agreed this 17th day of April 2008.

_______________________ Denise Paolucci

_______________________ Mark Smith, Jr.