Arkansas Corporate Business

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Arkansas LLC Operating Agreement - Free Editor

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

OF

[________________________________], LLC

AN ARKANSAS LIMITED LIABILITY COMPANY

EFFECTIVE DATE: [__/__/____]

THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT (this "Agreement") of [________________________________], LLC, an Arkansas limited liability company (the "Company"), is entered into and effective as of the date set forth above, by and among the Members identified in Exhibit A attached hereto.

RECITALS

WHEREAS, the Members desire to form a limited liability company under the laws of the State of Arkansas pursuant to the Arkansas Small Entity Flexibility Act, Ark. Code Ann. § 4-38-101 et seq. (the "Act"); and

WHEREAS, a Certificate of Organization was filed with the Arkansas Secretary of State on [__/__/____]; and

WHEREAS, the Members desire to enter into this Operating Agreement to set forth the terms and conditions governing the Company's business, operations, and the rights and obligations of the Members;

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Members agree as follows:

ARTICLE I - FORMATION AND ORGANIZATION

Section 1.1 Formation

The Company has been formed as an Arkansas limited liability company pursuant to the Arkansas Small Entity Flexibility Act, Ark. Code Ann. § 4-38-101 et seq., by the filing of a Certificate of Organization with the Arkansas Secretary of State.

Section 1.2 Name

The name of the Company is [________________________________], LLC. The Company may conduct business under such name or any assumed or fictitious name as the Members may determine, provided that appropriate filings are made with the Arkansas Secretary of State.

Section 1.3 Series LLC Designation

☐ This Company IS designated as a Series LLC pursuant to Ark. Code Ann. § 4-38-1101 et seq. The Certificate of Organization includes notice that the Company may establish one or more series with separate rights, powers, or duties.

☐ This Company is NOT a Series LLC.

ARKANSAS SERIES LLC NOTE: Arkansas permits Series LLCs under the Arkansas Small Entity Flexibility Act. Each series may have separate assets, liabilities, members, and managers. The debts and obligations of one series are enforceable only against the assets of that series if proper records are maintained and the Certificate of Organization includes the required series notice.

Section 1.4 Principal Place of Business

The principal place of business of the Company shall be:

Street Address: [________________________________]

City: [________________________________] State: Arkansas ZIP: [__________]

The Company may relocate its principal place of business or establish additional places of business upon the approval of the Members in accordance with Section 7.4 hereof.

Section 1.5 Registered Agent and Office

The Company's registered agent and registered office in Arkansas are:

Registered Agent: [________________________________]

Registered Office Address: [________________________________]

City: [________________________________] State: Arkansas ZIP: [__________]

The registered agent and registered office may be changed from time to time by filing the appropriate document with the Arkansas Secretary of State pursuant to Ark. Code Ann. § 4-38-113.

Section 1.6 Term

The Company shall have perpetual existence unless dissolved in accordance with Article XI of this Agreement or as otherwise provided by the Act.

Section 1.7 Purpose

The Company is formed for the following purposes:

[________________________________]

and to engage in any and all lawful business activities for which limited liability companies may be organized under the Act.

Section 1.8 Qualification in Other Jurisdictions

The Members may cause the Company to qualify to do business in any jurisdiction where the Company's activities require such qualification. The cost of such qualification shall be an expense of the Company.

ARTICLE II - DEFINITIONS

Section 2.1 Definitions

As used in this Agreement, the following terms shall have the meanings set forth below:

"Act" means the Arkansas Small Entity Flexibility Act, Ark. Code Ann. § 4-38-101 et seq., as amended from time to time.

"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person.

"Agreement" means this Limited Liability Company Operating Agreement, as amended, modified, or restated from time to time.

"Capital Account" means the capital account maintained for each Member in accordance with Section 4.4 hereof.

"Capital Contribution" means any contribution of cash, property, services, or promissory notes made by a Member to the Company as provided in Article IV.

"Certificate of Organization" means the Certificate of Organization of the Company filed with the Arkansas Secretary of State, as amended from time to time.

"Code" means the Internal Revenue Code of 1986, as amended from time to time.

"Company" means [________________________________], LLC, an Arkansas limited liability company.

"Distributable Cash" means cash funds of the Company available for distribution as determined by the Members or Managers, taking into account all Company debts, liabilities, and obligations then due and amounts necessary to establish reasonable reserves.

"Distribution" means any transfer of money or other property from the Company to a Member on account of that Member's Membership Interest.

"Economic Interest" means a Member's or Assignee's share of Profits, Losses, and Distributions.

"Fiscal Year" means the Company's fiscal year, which shall be the calendar year unless otherwise determined by the Members.

"Majority Interest" means Members holding more than fifty percent (50%) of the total Percentage Interests.

"Manager" means any Person designated as a manager of the Company pursuant to Article VII, if the Company is manager-managed.

"Member" means any Person who has been admitted to the Company as a member and who has not ceased to be a member.

"Membership Interest" means a Member's entire interest in the Company, including the Member's Economic Interest and all management and voting rights.

"Percentage Interest" means the percentage of a Member's ownership interest in the Company as set forth in Exhibit A, as adjusted from time to time.

"Person" means any individual, corporation, partnership, limited liability company, trust, estate, association, or other entity.

"Profits" and "Losses" mean the net income or net loss of the Company for any Fiscal Year as determined for federal income tax purposes.

"Series" means a designated series of Membership Interests established pursuant to Ark. Code Ann. § 4-38-1101 et seq. (if applicable).

"Supermajority Interest" means Members holding at least [____]% (e.g., 66-2/3%, 75%) of the total Percentage Interests.

"Transfer" means any sale, assignment, transfer, exchange, gift, pledge, hypothecation, or other disposition, whether voluntary, involuntary, or by operation of law.

"Treasury Regulations" means the regulations promulgated by the United States Treasury Department under the Code.

ARTICLE III - MEMBERS

Section 3.1 Initial Members

The initial Members of the Company, their addresses, Capital Contributions, and Percentage Interests are set forth in Exhibit A attached hereto and incorporated herein by reference.

Section 3.2 Representations and Warranties of Members

Each Member represents and warrants to the Company and the other Members that:

(a) Such Member has full power and authority to execute and deliver this Agreement and to perform such Member's obligations hereunder;

(b) This Agreement constitutes the legal, valid, and binding obligation of such Member enforceable against such Member in accordance with its terms;

(c) Such Member is acquiring the Membership Interest for such Member's own account for investment purposes only and not with a view to or for sale in connection with any distribution thereof;

(d) Such Member is an "accredited investor" as defined in Regulation D promulgated under the Securities Act of 1933, or has such knowledge and experience in financial and business matters that such Member is capable of evaluating the merits and risks of an investment in the Company; and

(e) Such Member's execution and performance of this Agreement does not conflict with any other agreement to which such Member is a party.

Section 3.3 Admission of Additional Members

Additional Members may be admitted to the Company only upon:

(a) The written consent of:

☐ All Members (unanimous consent required); or

☐ Members holding a Majority Interest; or

☐ Members holding a Supermajority Interest

(b) The new Member's execution of this Agreement or a counterpart hereof agreeing to be bound by all terms hereof;

(d) Compliance with all applicable securities laws.

Section 3.4 Liability of Members

(a) Pursuant to Ark. Code Ann. § 4-38-304, no Member shall be personally liable for any debt, obligation, or liability of the Company solely by reason of being or acting as a Member.

(b) A Member's liability shall be limited to the Member's Capital Contributions and any obligations expressly assumed by such Member under this Agreement.

(c) Except as otherwise required by the Act, no Member shall be required to lend any funds to the Company or to make any additional Capital Contributions.

Section 3.5 Access to Information

Each Member shall have the right, upon reasonable notice and during normal business hours, to inspect and copy at such Member's expense:

(a) A current list of the full name and last known mailing address of each Member;

(b) A copy of the Certificate of Organization and all amendments thereto;

(d) Copies of the Company's federal, state, and local income tax returns and reports for the three (3) most recent Fiscal Years;

(e) The Company's financial statements for the three (3) most recent Fiscal Years; and

(f) The Company's books and records as they relate to the internal affairs of the Company for at least the current and four (4) most recent Fiscal Years.

Section 3.6 No Right of Partition

No Member shall have the right to seek or obtain partition of any Company property, and each Member hereby irrevocably waives any such right.

ARTICLE IV - CAPITAL CONTRIBUTIONS

Section 4.1 Initial Capital Contributions

The initial Capital Contributions of the Members are set forth in Exhibit A. Each Member shall contribute such Member's initial Capital Contribution on or before [__/__/____], or as otherwise agreed by the Members.

Section 4.2 Additional Capital Contributions

(a) No Member shall be obligated to make any additional Capital Contributions beyond such Member's initial Capital Contribution except as unanimously agreed by the Members in writing.

(b) If the Members determine that additional Capital Contributions are necessary or desirable for the conduct of the Company's business, the Members shall have the opportunity to make such additional Capital Contributions in proportion to their respective Percentage Interests.

(c) If a Member elects not to make an additional Capital Contribution, the other Members may make such additional Capital Contribution, and the Percentage Interests shall be adjusted accordingly.

Section 4.3 Form of Capital Contributions

Capital Contributions may be made in the following forms:

☐ Cash

☐ Property (fair market value as determined by the Members)

☐ Services (valued at fair market value as determined by the Members)

☐ Promissory notes (subject to the approval of the Members)

The value of any non-cash Capital Contribution shall be determined by agreement of the Members or, if the Members cannot agree, by an independent appraiser selected by the Members.

Section 4.4 Capital Accounts

(a) A separate Capital Account shall be established and maintained for each Member in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv).

(b) Each Member's Capital Account shall be:

(i) Increased by (A) the amount of money contributed by such Member; (B) the fair market value of property contributed by such Member (net of liabilities assumed or taken subject to); and (C) allocations of Profits to such Member; and

(ii) Decreased by (A) the amount of money distributed to such Member; (B) the fair market value of property distributed to such Member (net of liabilities assumed or taken subject to); and (C) allocations of Losses to such Member.

(c) Upon the Transfer of a Membership Interest in accordance with this Agreement, the Capital Account of the transferring Member attributable to the transferred interest shall carry over to the transferee.

Section 4.5 No Interest on Capital Contributions

No Member shall be entitled to receive interest on such Member's Capital Contributions or Capital Account, except as otherwise provided in this Agreement.

Section 4.6 Return of Capital Contributions

Except as otherwise provided in this Agreement or required by the Act, no Member shall have the right to withdraw, demand, or receive a return of such Member's Capital Contributions.

Section 4.7 Loans by Members

(a) Any Member may, with the consent of Members holding a Majority Interest, make loans to the Company. Such loans shall not be considered Capital Contributions and shall not affect the lending Member's Membership Interest or Capital Account.

(b) Loans by Members shall bear interest at a rate agreed upon by the lending Member and the Company, which shall not exceed the maximum rate permitted by applicable law.

ARTICLE V - ALLOCATIONS OF PROFITS AND LOSSES

Section 5.1 Allocation of Profits

Subject to Sections 5.3 and 5.4, Profits for each Fiscal Year shall be allocated to the Members in proportion to their respective Percentage Interests.

Section 5.2 Allocation of Losses

Subject to Sections 5.3 and 5.4, Losses for each Fiscal Year shall be allocated to the Members in proportion to their respective Percentage Interests; provided, however, that no Losses shall be allocated to a Member to the extent such allocation would cause or increase a deficit balance in such Member's Capital Account.

Section 5.3 Special Allocations

(a) Qualified Income Offset. If any Member unexpectedly receives any adjustment, allocation, or distribution described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), items of income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate any deficit in such Member's Capital Account as quickly as possible.

(b) Minimum Gain Chargeback. If there is a net decrease in Company Minimum Gain during any Fiscal Year, each Member shall be specially allocated items of income and gain for such year in accordance with Treasury Regulations Section 1.704-2(f).

(c) Member Minimum Gain Chargeback. If there is a net decrease in Member Minimum Gain attributable to a Member Nonrecourse Debt during any Fiscal Year, each Member who has a share of such Member Minimum Gain shall be specially allocated items of income and gain for such year in accordance with Treasury Regulations Section 1.704-2(i)(4).

(d) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year shall be allocated to the Members in proportion to their respective Percentage Interests.

(e) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such deductions are attributable.

Section 5.4 Tax Allocations

(a) Except as otherwise provided in this Section 5.4, for income tax purposes, each item of income, gain, loss, deduction, and credit of the Company shall be allocated among the Members in the same manner as the corresponding items of Profits and Losses are allocated pursuant to Sections 5.1, 5.2, and 5.3.

(b) In accordance with Code Section 704(c) and the Treasury Regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its fair market value at the time of contribution.

(c) Allocations pursuant to this Section 5.4 are solely for purposes of federal, state, and local taxes and shall not affect, or in any way be taken into account in computing, any Member's Capital Account or share of Profits, Losses, or Distributions.

Section 5.5 Series Allocations

If this Company is a Series LLC:

(a) Profits, Losses, and Distributions attributable to the assets of a particular Series shall be allocated solely to the Members associated with that Series.

(b) Separate Capital Accounts shall be maintained for each Member with respect to each Series in which such Member participates.

(c) The Company shall maintain records sufficient to distinguish the assets, liabilities, income, and expenses of each Series from those of the Company generally and each other Series.

Section 5.6 Allocations in Year of Transfer

If a Membership Interest is Transferred during a Fiscal Year, Profits and Losses attributable to such interest shall be allocated between the transferor and the transferee:

☐ Based on the number of days each held the interest during the Fiscal Year (per diem method); or

☐ As if the Company's Fiscal Year consisted of two separate years, one ending on the date of Transfer and one beginning on the day after the date of Transfer (interim closing method)

ARTICLE VI - DISTRIBUTIONS

Section 6.1 Timing and Amount of Distributions

Distributions of Distributable Cash shall be made at such times and in such amounts as determined by:

☐ The Members holding a Majority Interest; or

☐ The Manager(s)

Section 6.2 Allocation of Distributions

Except as otherwise provided in this Agreement, Distributions shall be made to the Members in proportion to their respective Percentage Interests.

Section 6.3 Tax Distributions

(a) Notwithstanding Section 6.1, within ninety (90) days after the end of each Fiscal Year, and at such other times as may be necessary to enable Members to make timely estimated tax payments, the Company shall distribute to each Member an amount intended to enable such Member to satisfy such Member's federal and state income tax obligations attributable to such Member's share of Company income.

(b) Tax Distributions shall be calculated by multiplying:

(i) The Member's allocable share of Company taxable income for the relevant period; by

(ii) The highest combined marginal federal and state income tax rate applicable to individuals for such period.

(c) Arkansas Tax Note: Arkansas imposes a state income tax on individuals. The top marginal rate for individual income tax should be used when calculating Tax Distributions for Arkansas resident Members. Members who are residents of other states may be subject to different tax rates.

(d) All Tax Distributions shall be treated as advances against and shall reduce the amount of subsequent Distributions to which such Member would otherwise be entitled.

Section 6.4 Limitations on Distributions

(a) No Distribution shall be made if, after giving effect to the Distribution:

(i) The Company would not be able to pay its debts as they become due in the usual course of business; or

(ii) The Company's total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the Company were to be dissolved at the time of the Distribution, to satisfy the preferential rights upon dissolution of Members whose preferential rights are superior to the rights of the Member receiving the Distribution.

(b) A Member who receives a Distribution knowing at the time of the Distribution that it violated this Section 6.4 shall be liable to the Company for the amount of the Distribution pursuant to Ark. Code Ann. § 4-38-406.

Section 6.5 Distributions in Kind

(a) No Member shall have the right to demand or receive a Distribution in any form other than cash.

(b) The Members may, however, make Distributions in kind. If a Distribution is made in kind, the property distributed shall be valued at its fair market value as of the date of Distribution.

Section 6.6 Series Distributions

If this Company is a Series LLC:

(a) Distributions from a particular Series shall be made only from the assets associated with that Series.

(b) Members associated with a Series shall have no claim on the assets of another Series or the Company generally (except as specified in the operating agreement provisions for that Series).

ARTICLE VII - MANAGEMENT

Section 7.1 Management Structure

The Company shall be:

☐ MEMBER-MANAGED: The business and affairs of the Company shall be managed by all Members in accordance with Ark. Code Ann. § 4-38-407. Each Member shall have equal rights in the management and conduct of the Company's business, and any difference among Members on any matter connected with the Company's business shall be decided by Members holding a Majority Interest.

☐ MANAGER-MANAGED: The business and affairs of the Company shall be managed by the Manager(s) designated in Section 7.2 below.

Section 7.2 Designation of Manager(s)

If this is a manager-managed Company, the following Person(s) shall serve as the initial Manager(s):

Manager 1:

Name: [________________________________]

Address: [________________________________]

Manager 2:

Name: [________________________________]

Address: [________________________________]

Section 7.3 Powers of Managers

If this is a manager-managed Company, the Manager(s) shall have full and exclusive authority to manage the business and affairs of the Company, including the authority to:

(a) Conduct the day-to-day operations of the Company;

(b) Execute contracts, agreements, and other documents on behalf of the Company;

(d) Hire, supervise, and terminate employees and independent contractors;

(e) Purchase, lease, or otherwise acquire property and assets for the Company;

(f) Sell, lease, or otherwise dispose of Company property in the ordinary course of business;

(g) Borrow money and incur debt in the ordinary course of business in amounts not exceeding $[__________] without Member approval;

(h) Commence, defend, settle, or compromise litigation and claims;

(i) File tax returns and make tax elections on behalf of the Company;

(j) Retain attorneys, accountants, and other professionals; and

(k) Take all other actions necessary, appropriate, or advisable to carry out the Company's purposes.

Section 7.4 Actions Requiring Member Approval

Notwithstanding the foregoing, the following actions shall require the prior written consent of:

☐ All Members; or

☐ Members holding a Majority Interest; or

☐ Members holding a Supermajority Interest

(a) Amendment of the Certificate of Organization or this Agreement;

(b) Admission of a new Member;

(d) Sale of all or substantially all of the Company's assets;

(e) Dissolution of the Company;

(f) Incurring indebtedness in excess of $[__________];

(g) Making capital expenditures in excess of $[__________] in any Fiscal Year;

(h) Entering into any contract or commitment with a value in excess of $[__________];

(i) Acquisition of any business or entity;

(j) Commencement of any new line of business;

(k) Making any distribution other than in accordance with Article VI;

(l) Approving the Company's annual budget;

(m) Hiring or terminating any executive officer;

(n) Filing for bankruptcy or making an assignment for the benefit of creditors;

(o) Guaranteeing the obligations of any third party;

(p) Lending Company funds to any Person;

(q) Entering into any transaction with a Member, Manager, or their Affiliates;

(r) Changing the principal place of business;

(s) Changing the Company's tax classification;

(t) Establishing, modifying, or terminating any Series (if a Series LLC); and

(u) Any other action that would make it impossible to carry on the ordinary business of the Company.

Section 7.5 Standard of Care

(a) Pursuant to Ark. Code Ann. § 4-38-409, each Member (in a member-managed Company) and each Manager (in a manager-managed Company) owes to the Company and the other Members:

(i) Duty of Loyalty, which includes:

(A) To account to the Company and hold as trustee for it any property, profit, or benefit derived by the Member or Manager in the conduct of the Company's activities or from a use of Company property;

(B) To refrain from dealing with the Company as or on behalf of a party having an interest adverse to the Company; and

(ii) Duty of Care, which requires the Member or Manager to refrain from engaging in grossly negligent or reckless conduct, willful or intentional misconduct, or a knowing violation of law.

(b) A Member or Manager shall discharge such Member's or Manager's duties in good faith and in a manner reasonably believed to be in the best interests of the Company.

(c) A Member or Manager does not violate a duty under this Agreement merely because the Member's or Manager's conduct furthers the Member's or Manager's own interest.

Section 7.6 Resignation or Removal of Manager

(a) A Manager may resign at any time by delivering written notice to all Members. The resignation shall be effective upon receipt of the notice or at such later time as specified in the notice.

(b) A Manager may be removed:

☐ With or without cause by the consent of Members holding a Majority Interest; or

☐ Only for cause by the consent of Members holding a Majority Interest; or

☐ With or without cause by unanimous consent of the Members

(c) Upon the resignation or removal of a Manager, a successor Manager may be appointed by the consent of Members holding a Majority Interest.

Section 7.7 Compensation of Managers

Managers shall be entitled to receive compensation for services rendered to the Company as determined by Members holding a Majority Interest. Such compensation shall be a Company expense.

Section 7.8 Reimbursement of Expenses

Managers and Members shall be entitled to reimbursement for reasonable out-of-pocket expenses incurred on behalf of the Company in the conduct of the Company's business, provided such expenses are properly documented.

Section 7.9 No Agency Authority of Non-Managing Members

In a manager-managed Company, Members who are not Managers shall have no authority to bind the Company or transact any business in the Company's name.

ARTICLE VIII - MEETINGS AND VOTING

Section 8.1 Meetings of Members

(a) Annual Meeting. An annual meeting of the Members shall be held within [____] days after the end of each Fiscal Year at such time and place as determined by the Members or Manager(s).

(b) Special Meetings. Special meetings of the Members may be called by:

(i) Any Manager;

(ii) Any Member holding at least [____]% of the total Percentage Interests; or

(iii) Members holding a Majority Interest.

(c) Notice. Written notice of any meeting shall be given to all Members at least [____] days (but not more than sixty (60) days) before the meeting, stating the date, time, place, and purpose of the meeting.

(d) Waiver of Notice. A Member may waive notice of any meeting before, at, or after the meeting. Attendance at a meeting shall constitute a waiver of notice, except when a Member attends solely to object to the transaction of any business because the meeting was not properly called.

Section 8.2 Quorum

The presence, in person or by proxy, of Members holding a Majority Interest shall constitute a quorum for the transaction of business at any meeting of Members.

Section 8.3 Voting

(a) Each Member shall be entitled to vote in proportion to such Member's Percentage Interest.

(b) Except as otherwise provided in this Agreement or required by the Act, actions by Members shall require the approval of Members holding a Majority Interest.

(i) Amendment of this Agreement to modify the economic rights of any Member;

(ii) Admission of a new Member (unless otherwise specified in Section 3.3);

(iii) Any action that would result in the personal liability of any Member.

Section 8.4 Action Without Meeting

Any action required or permitted to be taken at a meeting of Members may be taken without a meeting if all Members entitled to vote on the action consent in writing to the action. Such consent shall be filed with the Company's records.

Section 8.5 Proxies

A Member may appoint a proxy to vote or otherwise act for the Member by signing an appointment form. The appointment shall be valid for eleven (11) months unless a longer period is expressly provided in the appointment form.

Section 8.6 Conduct of Meetings

(a) Meetings of Members shall be presided over by a chairperson designated by the Members.

(b) Minutes of each meeting shall be prepared and maintained with the Company's records.

ARTICLE IX - TRANSFER OF MEMBERSHIP INTERESTS

Section 9.1 Restrictions on Transfer

(a) No Member shall Transfer all or any portion of such Member's Membership Interest except in compliance with this Article IX.

(b) Any purported Transfer in violation of this Article IX shall be void and of no effect and shall not be recognized by the Company.

Section 9.2 Permitted Transfers

A Member may Transfer all or any portion of such Member's Membership Interest without the consent of the other Members to:

(a) A trust for the benefit of the transferring Member or such Member's spouse, children, or other lineal descendants;

(b) A family limited partnership or limited liability company in which the transferring Member or such Member's family members are the sole partners or members;

(d) An Affiliate of the transferring Member; or

(e) Another Member.

Section 9.3 Right of First Refusal

(a) Before any Member (the "Selling Member") may Transfer any Membership Interest to a third party (other than a Permitted Transfer), the Selling Member shall first offer such Membership Interest to the other Members (the "Non-Selling Members") on the following terms:

(b) The Selling Member shall deliver written notice (the "Offer Notice") to the Company and each Non-Selling Member, stating:

(i) The Selling Member's intention to Transfer the Membership Interest;

(ii) The identity of the proposed transferee;

(iii) The purchase price and other material terms of the proposed Transfer; and

(iv) A copy of the proposed purchase agreement or term sheet.

(c) Each Non-Selling Member shall have the right, but not the obligation, to purchase all or any portion of the offered Membership Interest pro rata based on their respective Percentage Interests (excluding the Selling Member's interest) at the same price and on the same terms set forth in the Offer Notice.

(d) Non-Selling Members shall exercise their right of first refusal by delivering written notice to the Selling Member within [____] days after receipt of the Offer Notice.

(e) If the Non-Selling Members do not collectively exercise their right to purchase all of the offered Membership Interest within such period, the Selling Member may Transfer the Membership Interest to the proposed transferee on terms no more favorable to the transferee than those set forth in the Offer Notice, provided such Transfer is completed within [____] days after the expiration of the right of first refusal period.

Section 9.4 Co-Sale Rights (Tag-Along)

(a) If any Member proposes to Transfer all or any portion of such Member's Membership Interest to a third party (other than a Permitted Transfer), each other Member shall have the right (but not the obligation) to participate in such Transfer on the same terms and conditions.

(b) The participating Members may sell up to their pro rata share (based on Percentage Interests) of the total Membership Interests being sold in the transaction.

Section 9.5 Drag-Along Rights

(a) If Members holding at least [____]% of the total Percentage Interests (the "Drag Majority") propose to Transfer their Membership Interests to a third party in a bona fide arm's length transaction, the Drag Majority may require all other Members to Transfer their Membership Interests on the same terms and conditions.

(b) Each Member shall be required to:

(i) Sell all of such Member's Membership Interest;

(ii) Execute all documents required to consummate the transaction;

(iii) Make representations and warranties regarding ownership and authority to sell; and

(iv) Participate pro rata in any escrow, holdback, or indemnification obligations.

Section 9.6 Effect of Transfer

(a) A transferee of a Membership Interest shall be an Assignee only and shall not become a Member unless:

(i) The transferee is admitted as a Member in accordance with Section 3.3; or

(ii) The Transfer is a Permitted Transfer under Section 9.2.

(b) An Assignee who has not been admitted as a Member shall be entitled to receive Distributions and allocations of Profits and Losses but shall have no right to vote, participate in management, or exercise any other rights of a Member.

Section 9.7 Charging Orders

Pursuant to Ark. Code Ann. § 4-38-503, a charging order is the exclusive remedy by which a judgment creditor of a Member may satisfy a judgment out of the judgment debtor's Membership Interest. The Company and the other Members shall not be required to make Distributions to a judgment creditor holding a charging order.

Section 9.8 Buy-Sell Provisions

Upon the occurrence of a Triggering Event (death, disability, withdrawal, or termination of employment) with respect to a Member:

☐ The Company shall have the right (but not the obligation) to purchase the Member's interest at fair market value; or

☐ The Company shall be obligated to purchase the Member's interest at fair market value; or

☐ The remaining Members shall have the right (but not the obligation) to purchase the Member's interest at fair market value pro rata

Fair Market Value Determination:

(a) The fair market value shall be determined by agreement of the parties within [____] days after the Triggering Event; or

(b) If the parties cannot agree, by an independent appraiser selected by the parties; or

(c) If the parties cannot agree on an appraiser, each party shall select an appraiser, and the two appraisers shall select a third appraiser, and the fair market value shall be the average of the three appraisals.

ARTICLE X - ACCOUNTING, RECORDS, AND TAX MATTERS

Section 10.1 Books and Records

The Company shall maintain complete and accurate books and records of the Company's business and affairs at its principal place of business, including:

(a) A current list of the full name and last known mailing address of each Member;

(b) Copies of the Certificate of Organization and all amendments;

(d) Copies of federal, state, and local income tax returns and reports for the three most recent Fiscal Years;

(e) Financial statements for the three most recent Fiscal Years;

(f) Records of all proceedings of Members for the six most recent Fiscal Years; and

(g) All other records required by the Act.

Section 10.2 Series Records

If this Company is a Series LLC, the Company shall maintain separate books and records for each Series, including:

(a) A list of the Members associated with each Series;

(b) A record of the assets and liabilities attributable to each Series;

(d) Financial statements for each Series.

Section 10.3 Fiscal Year

The Fiscal Year of the Company shall be the calendar year.

Section 10.4 Method of Accounting

The Company's books and records shall be maintained on the:

☐ Cash method of accounting; or

☐ Accrual method of accounting

Section 10.5 Financial Statements

The Company shall provide to each Member:

(a) Within [____] days after the end of each Fiscal Year, an unaudited balance sheet, income statement, and statement of cash flows for the Fiscal Year;

(b) Within [____] days after the end of each calendar quarter, quarterly financial statements (if requested by a Member); and

Section 10.6 Tax Classification

The Company intends to be classified for federal income tax purposes as:

☐ A partnership (if two or more Members); or

☐ A disregarded entity (if only one Member); or

☐ An S corporation (Form 2553 election); or

☐ A C corporation (Form 8832 election)

Section 10.7 Partnership Representative

(a) The following Member is designated as the Partnership Representative for purposes of the Code:

Name: [________________________________]

Address: [________________________________]

(b) The Partnership Representative shall have the authority to:

(i) Receive all notices and communications from the Internal Revenue Service;

(ii) Extend the statute of limitations for the assessment of taxes;

(iii) File administrative adjustment requests;

(iv) Bind the Company and all Members with respect to federal income tax matters;

(v) Make elections under Code Sections 6221 through 6241; and

(vi) Take all other actions necessary as Partnership Representative.

(d) The Company shall indemnify the Partnership Representative for all costs and expenses incurred in connection with such duties.

Section 10.8 Tax Elections

The Partnership Representative, with the consent of Members holding a Majority Interest, may make any tax elections available to the Company under the Code or applicable state law, including:

(a) Election under Code Section 754 to adjust the basis of Company property;

(b) Election to use the remedial allocation method under Treasury Regulations Section 1.704-3(d);

(d) Any election available under the partnership audit rules of Code Sections 6221 through 6241.

Section 10.9 Arkansas Tax Matters

(a) State Income Tax. Arkansas imposes a state income tax on individuals. Members who are Arkansas residents will owe Arkansas state income tax on their distributive share of Company income. The Company shall provide Members with information necessary to file their Arkansas income tax returns.

(b) Withholding. The Company may be required to withhold Arkansas income tax on distributions to nonresident Members. The Company shall comply with all Arkansas withholding requirements.

(c) Franchise Tax. Arkansas does not impose a franchise tax on LLCs. However, the Company is required to file an annual franchise tax report with the Arkansas Secretary of State.

ARTICLE XI - DISSOLUTION AND WINDING UP

Section 11.1 Events Causing Dissolution

The Company shall be dissolved upon the occurrence of any of the following:

(a) The consent of:

☐ All Members; or

☐ Members holding a Majority Interest; or

☐ Members holding a Supermajority Interest

(b) The occurrence of an event making it unlawful for all or substantially all of the Company's activities to be continued;

(d) Administrative dissolution pursuant to Ark. Code Ann. § 4-38-714;

(e) The passage of ninety (90) consecutive days during which the Company has no Members, unless before the end of that period an assignee of a Member's interest is admitted as a Member; or

(f) Any other event specified in the Certificate of Organization or this Agreement.

Section 11.2 No Dissolution on Dissociation

The dissociation of a Member, including by death, bankruptcy, or withdrawal, shall not cause the dissolution of the Company. The Company shall continue with the remaining Members.

Section 11.3 Winding Up

(a) Upon dissolution, the Company shall be wound up by the Members or a liquidating trustee appointed by Members holding a Majority Interest.

(b) The Person(s) winding up the Company shall:

(i) Collect all of the Company's assets;

(ii) Discharge or make provision for all of the Company's liabilities and obligations to creditors;

(iii) Distribute any remaining assets to the Members in accordance with Section 11.4; and

(iv) File Articles of Dissolution with the Arkansas Secretary of State.

Section 11.4 Distribution of Assets Upon Dissolution

Upon dissolution and after payment of all liabilities and obligations of the Company, the remaining assets shall be distributed to the Members in the following order of priority:

(a) First, to pay or provide for the payment of all debts and liabilities of the Company, including amounts owed to Members who are creditors of the Company;

(b) Second, to establish reasonable reserves for any contingent or unforeseen liabilities or obligations of the Company;

(d) Fourth, any remaining assets to the Members in proportion to their respective Percentage Interests.

Section 11.5 Series Dissolution

If this Company is a Series LLC:

(a) A Series may be dissolved without dissolving the Company or any other Series.

(b) Upon dissolution of a Series, the assets of that Series shall be distributed only to the Members associated with that Series.

Section 11.6 Articles of Dissolution

Upon completion of the winding up of the Company's affairs, Articles of Dissolution shall be filed with the Arkansas Secretary of State in accordance with Ark. Code Ann. § 4-38-703.

ARTICLE XII - INDEMNIFICATION AND LIMITATION OF LIABILITY

Section 12.1 Indemnification

(a) The Company shall indemnify, defend, and hold harmless each Member, Manager, officer, employee, and agent of the Company (each, an "Indemnified Person") from and against any and all claims, demands, losses, damages, liabilities, fines, penalties, costs, and expenses (including reasonable attorneys' fees and costs of litigation) arising out of or related to:

(i) Any action or omission by such Indemnified Person in connection with the Company's business or affairs; or

(ii) Such Indemnified Person's status as a Member, Manager, officer, employee, or agent of the Company;

provided that such Indemnified Person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal proceeding, had no reasonable cause to believe such conduct was unlawful.

(b) The Company shall not indemnify any Indemnified Person for:

(i) Any action or omission constituting willful misconduct, gross negligence, fraud, or a knowing violation of law;

(ii) Any action or omission for which such Indemnified Person received an improper personal benefit; or

(iii) Any breach of such Indemnified Person's duty of loyalty to the Company.

Section 12.2 Advancement of Expenses

The Company shall advance expenses (including attorneys' fees) incurred by an Indemnified Person in defending any proceeding prior to the final disposition of such proceeding, upon receipt of an undertaking by such Person to repay such amounts if it is ultimately determined that such Person is not entitled to indemnification.

Section 12.3 Insurance

The Company may purchase and maintain insurance on behalf of any Indemnified Person against any liability asserted against or incurred by such Person, whether or not the Company would have the power to indemnify such Person against such liability under this Article XII.

Section 12.4 Limitation of Liability

(a) Pursuant to Ark. Code Ann. § 4-38-304, no Member or Manager shall be personally liable for any debt, obligation, or liability of the Company solely by reason of being or acting as a Member or Manager.

(b) No Member or Manager shall be liable to the Company or to any other Member for any act or omission in connection with the Company's business unless such act or omission constitutes willful misconduct, gross negligence, fraud, or a knowing violation of law.

(c) To the fullest extent permitted by the Act, the liability of Members and Managers to the Company and to each other is hereby eliminated or limited.

Section 12.5 Reliance on Records and Reports

Any Member or Manager shall be fully protected in relying in good faith upon:

(a) The records of the Company;

(b) Information, opinions, reports, or statements presented by another Member, Manager, officer, employee, or agent of the Company;

(c) Information, opinions, reports, or statements presented by legal counsel, accountants, or other persons as to matters within their professional competence; or

(d) Any other information, opinion, report, or statement selected with reasonable care.

Section 12.6 Non-Exclusivity

The indemnification provided by this Article XII shall not be deemed exclusive of any other rights to which an Indemnified Person may be entitled under any agreement, insurance policy, vote of Members, or otherwise.

ARTICLE XIII - AMENDMENTS

Section 13.1 Amendment

This Agreement may be amended only by a written instrument executed by:

☐ All Members; or

☐ Members holding a Majority Interest; or

☐ Members holding a Supermajority Interest

Section 13.2 Amendments Requiring Unanimous Consent

Notwithstanding Section 13.1, the following amendments shall require the unanimous written consent of all Members:

(a) Any amendment that would modify the economic rights of any Member (including Percentage Interests, allocations, or distributions) in a manner that disproportionately and adversely affects such Member;

(b) Any amendment that would increase a Member's obligations or liabilities;

(d) Any amendment that would change the consent requirements for admission of new Members; or

(e) Any amendment that would modify the voting requirements in this Section 13.2.

Section 13.3 Amendment to Reflect Admission or Withdrawal

Exhibit A may be amended by the Members or Manager(s) without a formal amendment to this Agreement to reflect:

(a) The admission of additional Members;

(b) The withdrawal of a Member;

(d) Changes in Percentage Interests.

ARTICLE XIV - MISCELLANEOUS PROVISIONS

Section 14.1 Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of Arkansas, without regard to conflicts of law principles.

Section 14.2 Jurisdiction and Venue

Any action or proceeding arising out of or relating to this Agreement shall be brought exclusively in the state or federal courts located in [________________________________] County, Arkansas, and each party irrevocably submits to the jurisdiction of such courts.

Section 14.3 Entire Agreement

This Agreement, together with the Certificate of Organization and any exhibits, schedules, and amendments hereto, constitutes the entire agreement among the Members with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations, and discussions, whether oral or written.

Section 14.4 Severability

If any provision of this Agreement is held to be invalid, illegal, or unenforceable, such provision shall be modified to the minimum extent necessary to make it valid, legal, and enforceable, and the validity, legality, and enforceability of the remaining provisions shall not be affected or impaired.

Section 14.5 Binding Effect

This Agreement shall be binding upon and inure to the benefit of the Members, their heirs, executors, administrators, personal representatives, successors, and permitted assigns.

Section 14.6 Counterparts

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Electronic and facsimile signatures shall be deemed original signatures.

Section 14.7 Notices

All notices, requests, demands, and other communications under this Agreement shall be in writing and shall be deemed given:

(a) When delivered personally;

(b) One (1) business day after being sent by overnight courier;

(d) When sent by email with confirmation of receipt;

to the addresses set forth in Exhibit A or such other address as a party may designate by notice.

Section 14.8 Waiver

No waiver of any provision of this Agreement shall be effective unless in writing and signed by the party against whom the waiver is sought to be enforced. No failure or delay in exercising any right shall operate as a waiver thereof.

Section 14.9 Headings

The headings in this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

Section 14.10 Construction

This Agreement shall be construed without regard to any presumption against the party causing it to be drafted. The terms "include," "includes," and "including" shall be deemed to be followed by "without limitation."

Section 14.11 Attorneys' Fees

In any action or proceeding to enforce this Agreement, the prevailing party shall be entitled to recover reasonable attorneys' fees and costs from the non-prevailing party.

Section 14.12 Confidentiality

Each Member shall keep confidential all non-public information regarding the Company's business, financial affairs, and operations, except as required by law or with the prior written consent of the Members.

Section 14.13 No Third-Party Beneficiaries

This Agreement is for the sole benefit of the Members and the Company and shall not confer any rights or remedies upon any third party.

Section 14.14 Time of the Essence

Time is of the essence with respect to all provisions of this Agreement that specify a time for performance.

Section 14.15 Further Assurances

Each Member shall execute and deliver such additional documents and take such additional actions as may be necessary or appropriate to effectuate the purposes of this Agreement.

ARTICLE XV - EXECUTION

IN WITNESS WHEREOF, the undersigned Members have executed this Limited Liability Company Operating Agreement as of the Effective Date first written above.

MEMBERS:

Member 1:

Signature: [________________________________]

Printed Name: [________________________________]

Date: [__/__/____]

Member 2:

Signature: [________________________________]

Printed Name: [________________________________]

Date: [__/__/____]

Member 3:

Signature: [________________________________]

Printed Name: [________________________________]

Date: [__/__/____]

Member 4:

Signature: [________________________________]

Printed Name: [________________________________]

Date: [__/__/____]

EXHIBIT A - MEMBERS, CAPITAL CONTRIBUTIONS, AND PERCENTAGE INTERESTS

Member Name	Mailing Address	Initial Capital Contribution	Percentage Interest
[________________________________]	[________________________________]	$[__________]	[____]%
[________________________________]	[________________________________]	$[__________]	[____]%
[________________________________]	[________________________________]	$[__________]	[____]%
[________________________________]	[________________________________]	$[__________]	[____]%

TOTAL: | | $[__________] | 100% |

EXHIBIT B - DESCRIPTION OF INITIAL CAPITAL CONTRIBUTIONS

Member 1:

☐ Cash: $[__________]

☐ Property: [________________________________]
Fair Market Value: $[__________]

☐ Services: [________________________________]
Fair Market Value: $[__________]

☐ Promissory Note: $[__________]
Terms: [________________________________]

Member 2:

☐ Cash: $[__________]

☐ Property: [________________________________]
Fair Market Value: $[__________]

☐ Services: [________________________________]
Fair Market Value: $[__________]

☐ Promissory Note: $[__________]
Terms: [________________________________]

EXHIBIT C - SERIES PROVISIONS (IF APPLICABLE)

Series 1: [________________________________]

Members of Series 1:
| Member Name | Percentage Interest in Series |
|-------------|-------------------------------|
| [________________________________] | [____]% |
| [________________________________] | [____]% |

Assets Associated with Series 1:
[________________________________]

Purpose of Series 1:
[________________________________]

Series 2: [________________________________]

Members of Series 2:
| Member Name | Percentage Interest in Series |
|-------------|-------------------------------|
| [________________________________] | [____]% |
| [________________________________] | [____]% |

Assets Associated with Series 2:
[________________________________]

Purpose of Series 2:
[________________________________]

EXHIBIT D - BUY-SELL AGREEMENT TERMS

Triggering Events:

☐ Death of a Member

☐ Disability of a Member (inability to perform duties for [____] consecutive days)

☐ Voluntary withdrawal of a Member

☐ Termination of employment (if applicable)

☐ Bankruptcy or insolvency of a Member

☐ Divorce or legal separation of a Member

☐ Transfer to non-family member

Purchase Option Period: [____] days after Triggering Event

Valuation Method:

☐ Agreed Value: $[__________] (updated annually)

☐ Book Value

☐ Fair Market Value (determined by appraisal)

☐ Formula: [________________________________]

Payment Terms:

☐ Lump sum at closing

☐ Down payment of [____]% with balance paid over [____] months at [____]% interest

☐ Other: [________________________________]

Life Insurance Funding:

☐ Cross-purchase policies (each Member owns policy on other Members)

☐ Entity-purchase policies (Company owns policies on Members)

☐ No life insurance funding

This Operating Agreement is governed by the Arkansas Small Entity Flexibility Act, Ark. Code Ann. § 4-38-101 et seq. Arkansas permits Series LLCs under Ark. Code Ann. § 4-38-1101 et seq. Members should consult with tax and legal professionals regarding Arkansas state income tax obligations.

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