MEMBER OR MANAGER – LIMITATION OR ELIMINATION

OF LIABILITY – INDEMNIFICATION –

CREATION OF SERIES OR GROUPS

A. Subject to subsection B of this section, the articles of organization or operating agreement may:

1. Eliminate or limit the personal liability of a member or manager for monetary damages for breach of any duty provided for in Section 2016 of this title; and

2. Provide for indemnification of a member or manager for judgments, settlements, penalties, fines or expenses incurred in any proceeding because the person is or was a member or manager.

B. No provision permitted under subsection A of this section shall limit or eliminate the liability of a manager for:

1. Any breach of the manager’s duty of loyalty to the limited liability company or its members;

2. Acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; or

3. Any transaction from which the manager derived an improper personal benefit.

C. The articles of organization or operating agreement may define the scope of any duties owned by the members or managers to the limited liability company, if not manifestly unreasonable. A definition shall not eliminate the duty of loyalty or the obligation of good faith and fair dealing.

D. An operating agreement may provide for classes or groups of members or managers or both having such relative rights, powers and duties as the operating agreement may provide, and may provide for the creation in the manner provided in the operating agreement of additional classes or groups of members or managers or both having such relative rights, powers and duties as may from time to time be established, including rights, powers and duties senior to existing classes and groups of members or managers. An operating agreement may provide for the taking of an action, including the amendment of the operating agreement, without the vote or approval of any member or manager or class or group of members or managers, including an action to create under the operating agreement a class or group of membership interests that was not previously outstanding. An operating agreement may provide that any member or class or group of members shall have no voting rights.

Added by Laws 1992, c. 148, § 18, eff. Sept. 1, 1992. Amended by Laws 1993, c. 366, § 9, eff. Sept. 1, 1993; Laws 2001, c. 405, § 33, eff. Nov. 1, 2001; Laws 2004, c. 255, § 40, eff. Nov. 1, 2004.