What is Operating Agreement?

Legal Definition
An operating agreement is an agreement among limited liability company ("LLC") members governing the LLC's business, and members' financial and managerial rights and duties. Many states in the United States require an LLC to have an operating agreement. LLCs operating without an operating agreement are governed by the state's default rules contained in the relevant statute and developed through state court decisions. An operating agreement is similar in function to corporate by-laws, or analogous to a partnership agreement in multi-member LLCs. In single-member LLCs, an operating agreement is a declaration of the structure that the member has chosen for the company and sometimes used to prove in court that the LLC structure is separate from that of the individual owner and thus necessary so that the owner has documentation to prove that he or she is indeed separate from the entity itself.

Limited liability companies are very flexible in nature and the operating agreement defines each member or manager's rights, powers, and entitlements. This includes capital accounts, membership interest, distributions of profit and allocated tax responsibility, etc. This internal document is an agreement set by the company members that contains provisions for critical items and rules that run the company. Operating agreements can be amended at any time by the company members or managers.
-- Wikipedia
Legal Definition
Governing contract adopted by members of a Limited Liability Company (LLC). It may be used to regulate nearly all aspects of the LLC's affairs, including how the business is managed, how assets are used and how revenues are shared. An operating agreement will override any default rules presented by a state LLC statute, which controls in the absence of an operating agreement.
See also
Legal Definition
Legal documentation that details the set up and operation of an investment program between a company and one of its investors.