SYNOPSIS NEW YORK LIMITED LIABILITY COMPANY LAW I. The Law II. Nature of LLC III. Formation IV. Operating Agreements V. Capital Contributions VI. Membership Rights and Obligations VII. Management VIII. Personal Liability of Members, Managers and Agents IX. Voting Rights X. Meetings XI. Tax Treatment and Annual Filing Fees XII. Records XIII. Distributions XIV. Mergers or Consolidations XV. Dissolution XVI. Foreign Limited Liability Companies XVII. Professional Service Limited Liability Companies I. The Law The Limited Liability Company Law (Ch. 34, C.L.) was enacted by Ch. 576, Laws 1994, and became effective October 24, 1994. Unless otherwise noted, all statutory citations are to the Limited Liability Company Law. II. Nature of LLC Limited liability companies are unincorporated organizations of one or more persons having limited liability for the contractual obligations and other liabilities of the business (Sec. 102). LLCs may be formed for any lawful business purpose or purposes except to do in New York any business for which another statute specifically requires some other business entity or natural person to be formed or used (Sec. 201). III. Formation Organizers One or more persons may act as an organizer or organizers by preparing, executing and filing articles of organization with the Department of State (Sec. 203). The LLC is formed at the time that the articles of organization are filed, or at a later date specified in the articles not exceeding 60 days from the date of filing. An organizer does not have to be a member of the LLC that he or she forms. LLC Name Required words: The LLC name must contain the words ``LLC'' or the abbreviation ``L.L.C.'' or ``LLC'' (Sec. 204). Unless the LLC complies with the provisions of Sec. 130, General Business Law, the name must be the name used by the LLC in the conduct of its business. Protection: The name must distinguish the LLC from the name of any domestic LLC, authorized foreign LLC, or fictitious name of an authorized foreign LLC. Prohibited names: The name must not contain certain words, phrases, or abbreviations or derivations thereof (Sec. 203(d), (e), (f), (g), (h)). Reservation: The LLC name may be reserved for 60 days (Sec. 205). The Secretary of State may extend the reservation for two additional periods not exceeding 60 days each. Articles of Organization Contents: Articles of organization must contain: (1) the name of the LLC; (2) the New York county within which the office of the LLC is to be located (if the LLC maintains more than one office, the county in which the principal office is to be located; (3) the LLC's date of dissolution, if applicable; (4) the designation of the secretary of state as agent upon whom process against the LLC may be served; (5) the post office address (within or without New York) to which copies served on the Secretary as agent of the LLC are to be mailed; (6) if the LLC is to have a registered agent, the agent's name and address within New York and a statement that the registered agent is to be the agent of the LLC upon whom process may be served; (7) whether the LLC is to be managed by one or more members or a class or classes of members or by one or more managers or a class or classes of managers; (8) if all or specified members are to be liable in their capacity as members for all or specifi! ed debts, obligations or liabilities of the LLC, a statement that all or specified members are so liable for such debts, obligations or liabilities; (8) any other provisions, not inconsistent with law, that the members elect to include in the articles of organization for the regulation of the internal affairs of the LLC (Sec. 206). Publication: Within 120 days after its effective date, a copy of the articles of organization, or a notice containing the substance thereof, must be published once per week for six successive weeks, in two newspapers of the county in which the office of the LLC is located (Sec. 206). One newspaper must be published in the city or town in which the office is intended to be located; if no newspaper is published therein, notice must be in the newspaper nearest to the city or town. Proof of publication must be filed with the Department of State. Failure to file such proof will prohibit the LLC from maintaining actions or special proceedings in New York until such proof of publication is filed, but will not impair the validity of any contract or act of the LLC or the right of any other party to the contract to maintain any action or special proceeding thereon, and will not prevent the LLC from defending any action or special proceeding in New York. Amendment to Articles of Organization An LLC may amend its articles of organization by preparing, executing and filing a certificate of amendment with the Department of State (Sec. 211). The certificate of amendment may set forth only such provisions as might be lawfully contained in the initial articles of organization filed at the time of making the amendment. Generally, certificates of amendment are effective as of the date of filing. Required amendments: An LLC must amend its articles of organization within 90 days after the occurrence of any of the following events: (1) a change in the LLC's name; (2) a change in the county in which the office of the LLC is to be located; (3) a change in the latest date, if any, on which the LLC is to dissolve; (4) the continuation of the LLC after an event of dissolution; (5) a change in the name or street address of its registered agent (if such change is made other than pursuant to Sec. 302); (6) a change in the post office address to which the Secretary of State must mail a copy of any process against the LLC served upon him or her (if such change is made other than pursuant to Sec. 301); (7) a change in whether the limited liability company is to be managed by one or more members of a class or classes of members or by one or more managers or a class or classes of managers; (8) the discovery of a materially false or inaccurate statement in the articles of organizati! on; or (9) the decision to change any other statement in the articles of organization. Vote required to amend articles of organization: Except as provided in the operating agreement, an amendment of the articles of organization must be authorized by at least a majority in interest of the members entitled to vote thereon (Sec. 213). If the LLC is managed by one or more managers, and unless the operating agreement provides otherwise, any of the following amendments may be authorized by a majority of the managers: (1) to change the name or street address of the registered agent, if any, of the LLC; (2) to change the post office address to which the Secretary of State must mail a copy of any process against the LLC served upon him or her; or (3) to correct any error in the articles of organization pursuant to Sec 212. IV. Operating Agreement Subject to any restrictions in the articles of organization, the members of a LLC must adopt a written operating agreement relating to: (1) the business of the LLC; (2) the conduct of its affairs; and (3) the rights, powers, preferences, limitations or responsibilities of its members, managers, employees or agents (Sec. 417). The operating agreement may contain provisions that eliminate or limit the personal liability of managers to the LLC or its members for damages for any breach of duty in such capacity; such provisions, however, may not eliminate or limit: (1) the liability of any manager if a judgment or other final adjudication adverse to him or her establishes that his or her acts or omissions were in bad faith or involved intentional misconduct or a knowing violation of law or that he or she personally gained in fact a financial profit or other advantage to which he or she was not legally entitled or that with respect to a distribution pursuant to Sec. 508(a) his or ! her acts were not performed in accordance with Sec. 409; or (2) the liability of any manager for any act or omission prior to the adoption of such a provision. V. Capital Contributions LLC members may make capital contributions in cash, property, services rendered, or by a promissory note or other obligation to contribute cash, property or to render services (Sec. 501). Liability for contributions: Except as provided in the operating agreement, LLC members are obligated to the LLC to perform any promise, to contribute cash or property or to perform services, even if the LLC member is unable to perform because of death, disability or any other reason (Sec. 502). Unless otherwise provided in the operating agreement, a member's obligation to contribute or to return money or other property paid or distributed may be compromised only by consent of all the members. VI. Membership Rights and Obligations Membership interests in LLCs are personal property (Sec. 601). Members have no interest in specific property of the LLC. Transactions with LLC: Except as provided in the operating agreement, a member may lend money to, borrow money from, act as a guarantor or surety for, provide collateral for the obligations of and transact other business with the LLC (Sec. 611). Membership Classes The articles of organization of a LLC may provide for classes or groups of members having such relative rights, powers, preferences and limitations as the operating agreement may provide (Sec. 418). The articles of organization may also provide for the future creation of additional classes of members, and may grant to, or withhold from, all or one or more classes the right to vote upon any matter on the basis of capital contributions, capital commitments or capital accounts or on a per capita, class or other basis. Admission of Members A person becomes a member of an LLC on the effective date of the initial articles of organization (Sec. 602). After the effective date of an LLC's initial articles of organization, a person may be admitted as a member: (1) in the case of a person acquiring a membership interest directly from the LLC, upon compliance with the operating agreement or, if the operating agreement does not so provide, upon the vote or written consent of a majority in interest of the members; and (2) in the case of an assignee of a membership interest of a member who has the power, as provided in the operating agreement, to grant the assignee the right to become a member, upon the exercise of that power and compliance with any conditions limiting the grant or exercise of the power. Withdrawal of Members A member may withdraw from an LLC as provided in the operating agreement with the vote or written consent of at least 2/3 in interest of the members (excluding the withdrawing member) (Sec. 606). If consent is not given, and if the operating agreement does not specify the time or the events upon the happening of which a member may withdraw, a member may (unless prohibited by the operating agreement) withdraw upon six months' prior written notice to the LLC. A member who withdraws from an LLC is entitled to receive any distribution to which he or she is entitled under the operating agreement and, if not otherwise provided in the operating agreement, is entitled to receive, within a reasonable time after withdrawal, the fair value of his or her membership interest in the LLC as of the date of withdrawal based upon his or her right to share in distributions from the LLC (Sec. 509). If a member's withdrawal violates the operating agreement, the LLC may recover damages for breach of the operating agreement and offset the damages against the amount otherwise distributable to him or her (Sec. 606). Transferability of Membership Interests Except as provided in the operating agreement, membership interests are assignable in whole or in part (Sec. 603). The assignment of a membership interest does not dissolve a LLC or entitle the assignee to participate in the LLC's management and affairs or to become or to exercise any rights or powers of a member. An assignment merely entitles the assignee to receive, to the extent assigned, the distributions and allocations of profits and losses to which the assignor would be entitled. Rights of assignees: Except as provided in the operating agreement, an assignee of a membership interest may not become a member without the vote or written consent of at least 50% in interest of the LLC members (excluding the assignor) (Sec. 604). VII. Management Management by Members Management rights are vested in an LLC's members unless the articles of organization provides for management by a manager or managers or a class or classes of managers (Sec. 401). If management is vested in its members, any member exercising management powers or responsibilities will be deemed to be a manager and is subject to all of a manager's duties and liabilities. The articles of organization or an operating agreement between the members may limit the management powers or responsibilities of one or more members or classes of members (Sec. 401). Management by Managers The articles of organization may provide for classes or groups of managers having such relative rights, powers, preferences and limitations as the operating agreement may provide (Sec. 419). Where managers are authorized, they are annually elected or designated by the members (Sec. 413). Each manager holds office until his or her successor has been elected and qualified or until his or her earlier resignation or removal. Unless otherwise provided in the operating agreement, a manager does not have to be a member of the LLC (Sec. 410). Fiduciary Duties of Managers A manager must perform his or her duties in good faith and with the degree of care that an ordinarily prudent person in a like position would use under similar circumstances (Sec. 409). A manager may rely on information prepared or presented by: (1) one or more agents or employees of the LLC; (2) counsel, public accountants or other persons as to matters that the manager believes to be within such person's professional or expert competence; or (3) a class of managers of which he or she is not a member, duly designated in accordance with the operating agreement of the LLC, as to matters within its designated authority, which class the manager believes to merit confidence, provided that, in so relying, he or she acts in good faith and with such degree of care. A manager will not be considered to be acting in good faith if he or she has knowledge concerning the matter in question that would cause his or her reliance to be unwarranted. A person who so performs his or her duties as a manager with the requisite degree of care noted above has no liability by reason of being or having been a manager of the LLC. Transactions Between LLC and Managers Generally, contracts or related transaction between LLCs and managers (or between LLCs and other business entities in which one or more of its managers are managers, directors, officers, or have a substantial financial interest) are not void or voidable if the material facts as to the manager's interest are disclosed in good faith or known to the other managers, class of managers or members and they approve the contract or transaction (Sec. 411). Removal of Managers Except as provided in the operating agreement, managers may be removed or replaced with or without cause by a vote of a majority in interest of the members entitled to vote (Sec. 414). Resignation of Managers Except as provided in the operating agreement, a manager may resign at any time by giving written notice to the LLC (Sec. 415). If the resignation violates the operating agreement or any contractual agreement between the manager and the LLC, the LLC may recover damages. Authority to Bind LLC Unless the articles of organization of a LLC vest management functions in a manager or managers, every member is an agent of the LLC for the purpose of its business (Sec. 412). The act of every member for apparently carrying on in the usual way the business of the LLC binds the LLC, unless (1) the member so acting has in fact no authority to act for the LLC in the particular matter and (2) the person with whom he or she is dealing has knowledge of the fact that the member has no such authority. Management vested in managers: If an LLC's articles of organization vest management functions in one or more manager, no member, solely by reason of being a member, will be considered as an agent of the LLC for the purpose of its business, except to the extent that authority has been delegated to him or her by the manager or managers or by the provisions of the operating agreement. Instead, every manager, subject to the restrictions listed in the preceding paragraph, will be an agent of the LLC for the purpose of its business. The act of a member or manager that is not apparently for the carrying on of the LLC's business in the usual way will not bind the LLC unless authorized in fact by the LLC in the particular matter. No act of a member, manager or other agent of a LLC in contravention of a restriction on authority will bind the LLC to persons having knowledge of the restriction. VIII. Personal Liability of Members, Managers and Agents LLC members, managers, and agents are not liable for any debts, obligations or liabilities of the LLC or each other, whether arising in tort, contract or otherwise, solely by reason of being such member, manager or agent or acting (or omitting to act) in such capacities or participating (as an employee, consultant, contractor or otherwise) in the conduct of the business of the LLC (Sec. 609). However, all or specified members of a LLC may be liable in their capacity as members for all or specified debts, obligations or liabilities of the LLC if: (1) a statement to that effect is specifically contained in the articles of organization and (2) a member so liable has (a) specifically consented in writing to the adoption of such provisions or to be bound by such provision or (b) specifically voted for the adoption of such provision. IX. Voting Rights Action by members: Except as provided in the operating agreement, each member, in managing the affairs of the LLC, votes in proportion to his or her share of the LLC's current (Sec. 402). Members may vote in person or by proxy. Generally, action to be taken by the members or a class of members must be authorized by a majority in interest of the members' votes cast at a meeting of members by members or such class of members entitled to vote thereon. Action by managers: Except as provided in any operating agreement, managers manage the LLC by the affirmative vote of a majority of the managers. Unless the operating agreement provides otherwise, any action required or permitted to be taken by a vote of managers or a class of managers may be taken without a vote if all of the managers (or all of the managers in the class) consent in writing. The writing must be filed with the records of the LLC. Required action by members: Regardless of whether a LLC is managed by members or by one or more managers, the vote of a majority in interest of the members entitled to vote is be required to: (1) admit a person as a member and issue such person a membership interest in the LLC; (2) approve incurring indebtedness by the LLC other than in the ordinary course of its business; or (3) adopt, amend, restate or revoke the articles of organization or operating agreement. The vote of at least 2/3 in interest of the members entitled to vote is required to: (1) approve the dissolution of the LLC; (2) approve the sale, exchange, lease, mortgage, pledge or other transfer of all or substantially all of the assets of the LLC; or (3) approve a merger or consolidation of the LLC with or into another LLC or foreign LLC. No provision that provides for the vote or consent of a percentage in interest of the members or class of members may be amended without the vote or consent of at least such percentage in interest of the members or such class of members. X. Meetings Except as provided in the operating agreement, a LLC must hold annual meetings of members. Meetings may be held either within or outside New York, as fixed by or in accordance with the operating agreement, or if not so fixed, at the office of the LLC. Generally, members (or, if the LLC is managed by managers, managers) may participate in meetings by means of conference telephone or similar communications equipment; such participation will constitute presence in person at the meeting. Notice of meeting: Except as provided in the operating agreement, whenever members are required or permitted to take any action by vote at a meeting, written notice must be given stating the place, date and hour of the meeting, indicating that it is being issued by or at the direction of the person or persons calling the meeting and, in the case of a special meeting, stating the purpose or purposes for which the meeting is called (Sec. 405). A copy of the notice of any meeting must be given, personally or by first class mail, not less than 10, nor more than 60, days before the date of the meeting; alternatively, a copy of the notice may be given by third class mail not less than 24 nor more than 60 days before the date of the meeting, to each member entitled to vote. Unless the operating agreement provides otherwise, it is not be necessary to give any notice of an adjourned meeting if the time and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken. Waiver of notice: Except as provided in the operating agreement, a member may waive notice of a meeting by submitting a signed waiver of notice (Sec. 406). The attendance of a member at a meeting, in person or by proxy, without protesting prior to the conclusion of the meeting the lack of notice of such meeting, constitutes a waiver of notice. Quorum: Generally, a majority in interest of the members entitled to vote constitute a quorum at a meeting of members for the transaction of any business (Sec. 404). If a specified item of business must be voted on by a class of members voting as a class, a majority in interest of the members of the class will constitute a quorum for the transaction of the specified item of business. An operating agreement may provide for a greater or lesser quorum, but a lesser quorum may not be less than 1/3 in interest of the members entitled to vote. Once a quorum is present, it is not broken by the subsequent withdrawal of any members. Action by Members Without Meeting Except as provided in the operating agreement, action may be taken without a meeting, without prior notice, and without a vote if consents in writing, setting forth the action taken, are signed by members holding voting interests having not less than the minimum number of votes that would be necessary to authorize or take such action, are delivered to the office of the LLC, its principal place of business or a manager, employee or agent of the LLC having custody of the LLC's records (Sec. 407). Delivery to the office of the LLC must be by hand or by certified or registered mail, return receipt requested. Prompt notice of the taking of the action without a meeting by less than unanimous written consent must be given to those members who have not consented in writing but who would have been entitled to vote thereon had such action been taken at a meeting. XII. Tax Treatment and Annual Filing Fees New York State Tax Law conforms with the federal tax treatment of LLCs. An LLC treated as a corporation for federal tax purposes is treated as a corporation for state tax purposes and is subject to tax under applicable corporation tax laws, rules and regulations. An LLC treated as a partnership for federal tax purposes is treated as a partnership for state tax purposes, and is subject to laws, rules and regulations under the personal income tax laws. Annual Filing Fees Foreign and domestic LLCs that are treated as partnerships and have income, gain, losses or deductions from New York sources are subject to annual filing fees. The amount of the fee is $50 multiplied by the total number of members as of the last day of the LLC's taxable year. The fee can not be less than $325, nor more than $10,000. LLCs that do not have income, gain, losses or deductions from New York sources, but are required to file New York State partnership returns solely because they have members who are state residents, are not subject to the annual fee. Domestic LLCs without New York source income are not subject to the fee solely because they were formed under the laws of New York. Dormant LLCs without items of income, gain, loss or deduction are also not subject to annual filing fees. Single-member LLCs: The Internal Revenue Service has not ruled on the federal tax treatment of single-member LLCs. New York has stated that, if the IRS elects to treat them as sole proprietorships, single-member LLCs will not be subject to annual filing fees (TSB-M-94(6)C, (6)I). XII. Records Domestic LLCs must maintain the following records (Sec. 1102): (1) if the LLC is managed by a manager or managers, a current list of the full name set forth in alphabetical order and last known mailing address of each manager; (2) a current list of the full name set forth in alphabetical order and last known mailing address of each member, together with the contribution and the share of profits and losses of each or information from which such share can be readily derived; (3) a copy of the articles of organization and all amendments thereto or restatements thereof, together with executed copies of any powers of attorney pursuant to which any certificate or amendment has been executed; (4) a copy of the operating agreement, any amendments thereto and any amended and restated operating agreement; and (5) a copy of the LLC's federal, state and local income tax or information returns and reports, if any, for the three most recent fiscal years. The above records may, but need not, be maintained in New York. Records may be maintain its records in other than a written form if they are capable of conversion into written form within a reasonable time. Inspection of Records by Members Any LLC member may, subject to reasonable standards as may be set forth in, or pursuant to, the operating agreement, inspect and copy at his or her own expense, for any purpose reasonably related to the member's interest as a member: (1) any records that the LLC is required to keep; (2) any financial statements maintained by the LLC for the three most recent fiscal years; and (3) other information regarding the affairs of the LLC as is just and reasonable. Confidential information: If provided in the operating agreement, members or managers may keep confidential any information that they reasonably believe to be in the nature of trade secrets or other information, the disclosure of which they in good faith believe is not in the best interest of the LLC or its business, or which the LLC is required by law or by agreement with a third party to keep confidential. XIII. Distributions LLC profits, losses and distributions of cash and other assets are allocated among the members and classes of members, if any, in the manner provided in the operating agreement (Secs. 503, 504). In the absence of an operating agreement provisions, allocations are made on the basis of the value (as stated in the LLC's records, if possible) of each member's contribution, excluding defaulted obligations to make contributions, to the extent received by, or promised to, the LLC and not returned to the member. Except as provided in the operating agreement, no member has the right to demand and receive any distribution from the LLC in any form other than cash. Distribution limitations: An LLC may not make a distribution to a member if, after such distribution, the LLC's liabilities (other than liabilities to members on account of their membership interests and liabilities for which recourse of creditors is limited to specified property of the LLC) would exceed the fair market value of the LLC's assets (Sec. 508). In computing whether liabilities exceed assets, the fair market value of property that is subject to a liability for which the recourse of creditors is limited must be included in the assets of the LLC only to the extent that the fair value of such property exceeds such liability. LLC members who receive wrongful distribution are liable to the LLC for the amount thereof if: (a) they knew at the time of distribution that the distribution was improper; and (b) the LLC seeks to recover the same within three years from the date of the distribution. XIV. Mergers or Consolidations Pursuant to an agreement of merger or consolidation, a domestic LLC may merge or consolidate with or into one or more domestic LLCs or other business entities (Sec. 1001). Procedure: The members of each domestic LLC or other business entity must adopt an agreement of merger or consolidation setting forth the terms and conditions of the conversion of the membership interests of the members of the domestic LLC into interests in the surviving or resulting entity or the cash or other consideration to be paid or delivered in exchange for their membership interests (Sec. 1002). The agreement must be submitted to the members of the domestic LLC who are entitled to vote at a meeting called on 20 days' notice (or a greater notice as provided in the operating agreement). Subject to any requirement in the operating agreement requiring approval by a greater or lesser percentage in interest of the members who are entitled to vote, the agreement must be approved on behalf of each domestic LLC by members representing at least 2/3 in interest of the members. Rights of Dissenting Members Any member that is a party to a proposed merger or consolidation and is entitled to vote may, prior to the meeting at which the merger or consolidation is to be voted on, file with the domestic LLC written notice of dissent (Sec. 1002). Upon the effective date of the merger or consolidation, a dissenting member will cease to be a member of or hold an interest in the surviving or resulting LLC or other business entity, but will be entitled to receive in cash from the surviving or resulting domestic LLC or other business entity the fair value of his or her membership interest in the domestic LLC as of the close of business of the day prior to the merger of consolidation's effective date. A notice of dissent may be withdrawn by the dissenting member at any time prior to the effective date of the merger or consolidation, and will be deemed to be withdrawn if the member casts a vote in favor of the proposed merger or consolidation. Payment of interest of dissenting members: The surviving or resulting domestic LLC or other business entity must, within 10 days after the adoption and filing of the agreement of merger or consolidation, send to each dissenting former member a written offer to pay in cash the fair value of his or her membership interest (Sec. 1005). Payment must be made to each member accepting such offer within 10 days after notice of acceptance is received by the surviving or resulting domestic LLC or other business entity. If a former member and the surviving entity fail to agree on the price to be paid for the membership interest within 90 days after the entity has made its offer to purchase, or if the surviving entity fails to make such an offer to purchase within the 10-day period, the procedure provided for in Secs. 623(h), (i), (j) and (k), Business Corporation Law (or any successor provisions or statute) will apply. Certificate of Merger or Consolidation After approval of the agreement of merger or consolidation by each domestic LLC or other business entity, a certificate of merger or consolidation must be executed and filed with the Department of State (Sec. 1003). The certificate must contain: (1) the name and jurisdiction of formation or organization of each LLC or other business entity that is to merge or consolidate; (2) for each domestic LLC that is to merge or consolidate, the date when its initial articles of organization were filed with the Department of State; (3) that an agreement of merger or consolidation has been approved and executed by each LLC or other business entity that is to merge or consolidate; (4) the name of the surviving or resulting domestic LLC or other business entity; (5) the future effective date or time of the merger or consolidation, if it is not to be effective upon the filing of the certificate of merger or consolidation; (6) if a domestic LLC is the surviving LLC, any changes in its articles of organization that are necessary by reason of the merger; (7) if a domestic LLC is the resulting LLC in a consolidation, any matters required to be set forth under Sec. 206; (8) if a constituent entity is a foreign LLC, the jurisdiction and date of filing of its initial articles of organization and the date when its application for authority was filed by the Department of State or, if no such application has been filed, a statement to that effect and (if the constituent foreign LLC is the surviving entity) that it is not to do business in New York until an application for authority has been filed; (9) if the surviving or resulting entity is not a domestic LLC, an agreement that the surviving or resulting other business entity may be served with process in New York in any action or special proceeding for the enforcement of any liability or obligation of any domestic LLC previously amenable to suit in New York that is to merge or consolidate, and for the enforcement of the right of members of any domestic LLC to receive payment for their interest against the surviving or consolidated other business entity; (10) a designation of the Secretary of State as its agent upon whom process against it may be served, and the post office address to which the Secretary of State must mail a copy of any process served upon him or her; (11) that the agreement of merger or consolidation is on file at a place of business of the surviving or resulting domestic LLC or other business entity; and (12) that a copy of the agreement of merger or consolidation will be furnished by the surviving or resulting domestic LLC or other business entity, on request and without cost, to any member of any domestic LLC or any person holding an interest in any other business entity that is to merge or consolidate. A certificate of merger or consolidation serves as articles of dissolution for a domestic LLC that is not the surviving or resulting entity (Sec. 1004). Effective Date A merger or consolidation is effective upon the filing of the certificate with the Department of State, or at a later date not more than 30 days after the date of filing. XV. Dissolution A LLC is dissolved and its affairs must be wound up upon the first to occur of the following: (a) the latest date on which the LLC is to dissolve, if any, provided in the articles of organization; (b) at the time or upon the happening of events specified in the operating agreement; (c) subject to any requirement in the operating agreement requiring approval by any greater or lesser percentage in interest of the members or class or classes or group or groups of members, the vote or written consent of at least two-thirds in interest of the members; (d) the bankruptcy, death, dissolution, expulsion, incapacity or withdrawal of any member or only the member, members or class or classes or group or groups of members specified in the operating agreement, or the occurrence of any other event that terminates the continued membership of any member, or only such member, members or class or classes or group or groups of members specified in the operating agreement, unless within 180 days after such event the LLC is continued either: (1) by the vote or written consent of the percentage in interest of the members or class or classes or group or groups of members stated in the operating agreement; or (2) if no such percentage is specified in the operating agreement, by the vote or written consent of a majority in interest of all of the remaining members; or (3) pursuant to a right to continue stated in the operating agreement (Sec. 701). Judicial dissolution: On application by or for a member, the supreme court in the judicial district in which the office of the LLC is located may decree dissolution of a LLC whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement. A certified copy of the order of dissolution must be filed by the applicant with the Department of State within 30 days of its issuance (Sec. 702). Winding Up Affairs Upon dissolution (other than a judicial dissolution), LLC members must wind up the LLC's affairs. Upon cause shown, the Supreme Court in the judicial district in which the office of the LLC is located may wind up the LLC's affairs upon application of any member, or his or her legal representative or assignee, and in connection therewith may appoint a receiver or liquidating trustee (Sec. 703). Distribution of Assets Upon the winding up of a LLC's affairs, assets must be distributed as follows: (1) to creditors, including members who are creditors, to the extent permitted by law, in satisfaction of liabilities of the LLC, whether by payment or by establishment of adequate reserves, other than liabilities for distributions to members under Secs. 507 or 509; (2) except as provided in the operating agreement, to members and former members in satisfaction of liabilities for distributions under Secs. 507 or 509; and (3) except as provided in the operating agreement, to members first for the return of their contributions, to the extent not previously returned, and second respecting their membership interests, in the proportions in which the members share in distributions in accordance with Sec. 504 (Sec. 704). Articles of Dissolution Within 90 days following the dissolution and the commencement of winding up of the LLC, or at any other time there are no members, articles of dissolution must be filed with the Department of State (Sec. 705). XVI. Foreign Limited Liability Companies Foreign LLCs must apply for permission to conduct business in New York. Although a foreign LLC's failure to apply for and receive a Certificate of Authority will not impair the validity of any contract or act or prevent the foreign LLC from defending action or proceeding in New York, it will be prohibited from maintaining actions, suits or special proceedings within the State (Sec. 808). Foreign LLCs that conduct business within New York without authority are deemed to have appointed the Secretary of State as its agent for service of process (Sec. 808). Application for Authority to do Business Foreign LLCs must apply to the Department of State for authority to do business within New York (Sec. 802). The foreign LLC must file (a) a copy of its certificate of existence (if no certificate is issued by the jurisdiction of formation, a certified copy of the LLC's articles of organization and all subsequent amendments thereto; if no articles of organization have been filed, a certified copy of the certificate filed as its organizational basis and all amendments thereto) and (b) an application for authority. Publication: Within 120 days after the filing of the application for authority, a copy of the application (or a notice containing the substance thereof) must be published once per week for six successive weeks, in two newspapers of the county in which the office of the foreign LLC is located. For details see discussion under LLCs. Proof of publication must be filed with the Department of State. Failure to file proof of publication: Failure to file proof within 120 days of the filing of the application for authority will prohibit the foreign LLC from maintaining any action or special proceeding in this New York until such proof of publication is filed. The failure of a foreign LLC to file proof of publication will not, however, impair the validity of any contract or act of the foreign LLC or the right of any other party to the contract to maintain any action or special proceeding thereon, nor prevent the foreign LLC from defending any action or special proceeding in New York. Issuance of Certificate of Authority A Certificate of Authority continues in effect so long as the foreign LLC retains its authority to do business in the jurisdiction of its formation and its authority to do business has not been surrendered, suspended or annulled (Sec. 805). Effect of Issuance of Certificate A foreign LLC that has received a Certificate of Authority has the power to conduct such business in New York as is permitted by the laws of the jurisdiction in which it was organized, provided that such powers are no greater than those applicable to domestic New York LLCs (Sec. 805). RLLPs: Foreign related limited liability partnerships (RLLPs) that receive certificates of authority to conduct business in New York have such powers as are permitted by the laws of the jurisdiction whose laws govern the agreement under which the foreign RLLP operates, but no greater than those of a partnership without limited partners operating under an agreement governed by the laws of New York. In addition, foreign RLLPs may not engage in any profession or professions and will be deemed to be foreign LLPs for purposes of Sec. 121-1502(l) and (m), Partnership Law. Surrender of Authority A foreign LLC may surrender its certificate of authority by filing a Certificate of Surrender with the Department of State (Sec. 806). The authority of the foreign LLC to do business in New York terminates upon the filing of the Certificate; such surrender does not, however, terminate the authority of the Secretary of State to accept service of process on the foreign LLC with respect to causes of action arising out of doing business in New York Contents of Certificate of Surrender: The Certificate of Surrender must include: (1) the name of the foreign LLC as it appears on the index of names of existing domestic and authorized foreign LLCs, and the fictitious name, if any, that the foreign LLC has agreed to use in New York: (2) the jurisdiction where it was organized; (3) the date on which its certificate of authority to do business was filed; (4) a statement that it (a) surrenders its authority to do business in New York, (b) revokes the authority of its registered agent, if any, and (c) consents that process against it in any action or special proceeding based upon any liability or obligation incurred by it within New York before the filing of the Certificate of Surrender may be served on the Secretary of State; (5) a post office address to which the Secretary of State must mail a copy of any process against it. Termination of Existence When a foreign LLC is dissolved, its authority to conduct its business or existence is otherwise terminated or canceled in its jurisdiction of formation, or is merged into or consolidated with another foreign LLC, either (a) an attesting certificate of the Secretary of State (or official performing equivalent functions in the LLC's originating jurisdiction) or (b) a certified copy of any applicable order or decree directing the LLC's dissolution, termination of existence or the surrender of authority must be delivered to the New York Department of State (Sec. 807). The filing of the certificate, order or decree has the same effect as the filing of a Certificate of Surrender. Action by Attorney General The attorney general may institute legal proceedings to restrain foreign LLCs without certificates of authority from doing business in New York, or to annul the authority of foreign LLCs that are conducting prohibited business in the State (Sec. 809). XVII. Professional Service Limited Liability Companies (PLLCs) One or more professionals, of which at least one of whom is authorized by law to render professional services within New York, may form a PLLC for the purpose of rendering the professional service or services that he or she is authorized to practice (Sec. 1203). Articles of Organization The articles of organization of a PLLC, in addition to complying with the requirements for LLCs, must include the following: (1) the profession or professions to be practiced by the PLLC; (2) the names and residence addresses of all individuals who are to be the original members and the original managers, if any; and (3) the names and residence addresses or, if none, the business address of all shareholders, directors, officers, members, managers and partners of all entities that are to be the original members or managers, if any, who are individuals of such LLC. A certificate or certificates issued by the licensing authority, certifying that each of the proposed members and managers, if any, who are individuals, is authorized by law to practice the profession for which the PLLC is being formed and, if applicable, that one or more of such individuals are authorized to practice within the state each profession that the LLC will be authorized to practice, must be filed with the Department of State. If a proposed member or manager, if any, is a professional service corporation, foreign professional service corporation, PLLC, foreign professional service LLC, registered limited liability partnership, foreign limited liability partnership or professional partnership, the certificate or certificates issued by the licensing authority must certify either: (1) that each proposed member or manager is authorized by law to practice the profession for which the PLLC is being formed and, if applicable, that each shareholder, member or partner of such proposed member or manager is authorized by law to render such professional services within the state; or (2) that one or more of such proposed members and one or more of such proposed managers, are authorized to practice within the state each profession that the PLLC will be authorized to practice and that one or more of the shareholders, members or partners of such proposed members or managers are authorized to practice within the state each profession that such PLLC will be authorized to practice A certified copy of the articles of organization must be filed with the licensing authority within 30 days after the filing with the Department of State. Publication: Within 120 days after the filing of the articles of organization, a copy (or a notice containing the substance thereof) must be published once in each week for six successive weeks in two newspapers of the county in which the office of the PLLC. For details, see discussion under LLCs. Proof of publication must be filed with the Secretary of State. Professions of PLLC PLLCs may only engage in the profession or professions set forth in their articles of organization and may only engage in a profession or professions as to which one or more of its members is authorized by law to render (Sec. 1206). Members Each PLLC member must be a professional, foreign professional service corporation, foreign PLLC or foreign limited liability partnership, authorized by law to practice in New York or in any foreign jurisdiction the profession that the PLLC is authorized to practice and who is, has been, or who will be engaged in the practice of such profession within 30 days from the date that the professional or entity becomes a PLLC member (Sec. 1207). Medical, dental, engineering, land surveying, architectural, and/or landscape architectural PLLC members must be licensed by the State of New York. Supervision of PLLCs PLLCs, other than those authorized to practice law, are under the supervision of the Regents of the University of the State of New York. PLLCs authorized to practice medicine are subject to pre-hearing procedures and hearing procedures provided with respect to individual physicians and their licenses in Title II-A, Article 2, Public Health Law. Legal PLLCs: PLLCs authorized to practice law are subject to the regulation and control of the New York Supreme Court, Appellate Division, and the New York Court of Appeals in the same manner and to the same extent applicable to individual attorneys and counselors-at-law. Such PLLCs need not qualify for any certification under Sec. 464, Judiciary Law, take an oath of office under Sec. 466, Judiciary Law, or register under Sec. 467, Judiciary Law. Liabilities Each shareholder, director, officer, employee, member, manager, partner and agent of a professional service corporation, foreign professional service corporation, PLLC, foreign PLLC, registered limited liability partnership, foreign limited liability partnership or professional partnership that is a member, manager, employee or agent of a PLLC is personally and fully liable and accountable for any negligent or wrongful act or misconduct committed by him, her or any person under his or her direct supervision and control while rendering professional services in his or her capacity as a member, manager, employee or agent of the PLLC (Sec. 1205). Liability for negligent acts: Each member, manager, employee or agent of a PLLC is personally and fully liable and accountable for any negligent or wrongful act or misconduct committed by him or her or by any person under his or her direct supervision and control while rendering professional services on behalf of the PLLC. Transfers of Membership Interests PLLC members may not sell or assign their membership interest except (1) to other professionals eligible to become PLLC members or (2) except in trust to other professionals who would be eligible to become members if employed by the PLLC (Sec. 1211). Notwithstanding same, membership interests in PLLCs may be assigned pursuant to operation of law or by judicial decree; such assignees will automatically become PLLC members if they are otherwise eligible to be members and a majority in interest of the PLLC fails to redeem the transferred membership within 60 days of receiving written notice of the transfer. Approval by PLLC: Sales or transfers (except by operation of law or court decree or except for a PLLC having only one member) require the approval or written consent of not less than a majority in interest of the PLLC members (exclusive of the interest of the member proposing to sell or transfer his, her or its membership interest). The voting interest of the transferring member may only be voted or counted if all of the members. Disqualification of Members, Managers and Employees A member, manager or employee of a PLLC who has been rendering professional service to the public and is legally disqualified to practice his, her or its profession within New York must immediately sever all employment with and financial interests (other than interests as a creditor or vested rights under a bona fide retirement program) in the PLLC (Sec. 1209). Legal disqualification to practice the profession of the PLLC within New York will be deemed to constitute an irrevocable offer by the disqualified member to sell his, her or its membership interest to the PLLC. A PLLC's failure to enforce compliance will constitute a ground for its dissolution. Redemption of Membership Interests A PLLC must purchase or redeem the membership interest of a deceased, disqualified or dissolved member within six months after the appointment of the executor, administrator or other legal representative of the decedent's estate, or within six months after such disqualification, at the book value of the membership interest as of the end of the month immediately preceding the member's death, disqualification or dissolution (Sec. 1210). The operating agreement may provide for a shorter period or an alternate method of determining the price to be paid for the membership interest, or both. A PLLC is not required to purchase or redeem the membership interest of a deceased, disqualified or dissolved member if the membership interest, within the six month period (or shorter period, if provided in the operating agreement) the interest is sold or transferred to another professional Orders of Suspension, Revocation or Annulment Order of suspension, revocation or annulment of a PLLC's articles of organization are effective upon filing with the Department of State.