Reference no: EM133545211

Question 1: Read the AAA Pool Services, LLC (APS) Limited Liability Company Agreement located at the end of this chapter and answer the following questions. Make sure you note any applicable LLC agreement and/or statutory provision that supports your answer.

1. Is APS member managed or manager managed?

Smith and Watson want to expand the business to include landscaping.

2. Gray is opposed to expansion. Can APS expand against Gray's wishes?

3. Gray and Watson no longer want Smith to be the APS Manager. Can they remove him?

4. Watson signs a contract on behalf of APS for the purchase of pool chemicals. Neither Smith, Gray, nor APS authorized him to sign it. Is APS bound to the contract?

Question 2: Refer again to the APS LLC agreement at the end of this chapter and answer the following questions. Make sure you note any applicable LLC agreement and/ or statutory provision that supports your answer.

1. What fiduciary duties do the members of APS owe each other?
2. What fiduciary duties does the manager of APS owe to APS?
3. What changes to the APS LLC agreement regarding fiduciary duties would you request if you represented Smith? What about if you represented Gray?

Question 3: Refer again to the APS LLC agreement at the end of this chapter and answer the following questions. Make sure you note any applicable LLC agreement and/ or statutory provision that supports your answer..

1. Watson wants to sell his APS units to Greenspan, an unrelated friend. Is this allowed under the LLC agreement? If so, what formalities are involved?

2. Would your answer to Question 1 change if Greenspan was Watson's brother by adoption?

3. Watson no longer wants to sell to Greenspan but instead wants to sell to Smith. Why might Gray care? Can Gray block the transfer?

4. If you represented Gray in connection with negotiating the APS LLC agree- ment, and he raised a transfer by Watson to Smith as a concern, what lan- guage would you have suggested be added to the agreement to address such concern?

Question 4:  Refer again to the APS LLC agreement at the end of this chapter and answer the following questions. Make sure you note any applicable LLC agreement and/ or statutory provision that supports your answer. Assume that Watson did not sell his units.

1. APS earned $200,000 for its latest fiscal year. How are these profits allo- cated among the members?

2. How much of this $200,000 is APS required to distribute to the members?

3. APS decides to distribute $100,000 to its members. How much of this amount does each member get?

4. How much does APS owe in federal income tax on the $200,000?