Multi-Member LLC Operating Agreement — Hawaii

Multi-Member LLC Operating Agreement (HAWAII)

Quick-Reference Summary

Article I — Formation

1.1 Formation. This Operating Agreement (the "Agreement") of [________________________________], LLC (the "Company"), a Hawaii limited liability company, is adopted and entered into effective as of [__/__/____] (the "Effective Date") by and among the persons identified as Members on the signature page (each a "Member" and collectively the "Members"). The Company was formed by filing Articles of Organization (Form LLC-1) with the Hawaii Department of Commerce and Consumer Affairs, Business Registration Division ("BREG"), pursuant to Haw. Rev. Stat. § 428-203 of the Hawaii Uniform Limited Liability Company Act (the "Act").

1.2 Name. The legal name of the Company is [________________________________], LLC. The name complies with Haw. Rev. Stat. § 428-105.

1.3 Principal Office. The Company's principal office is [________________________________].

1.4 Designated Office in Hawaii. The Company's designated office in Hawaii is [________________________________].

1.5 Registered Agent for Service of Process. The Company's agent for service of process in Hawaii is [________________________________], with a Hawaii street address at [________________________________], as required by Haw. Rev. Stat. § 428-108.

1.6 At-Will or Term Company. The Company is (check one):

• ☐ An at-will company — perpetual duration unless dissolved per Article XIV (default);
• ☐ A term company with a specified term ending on [__/__/____].

This election affects the buy-back rights of dissociated Members under Haw. Rev. Stat. § 428-701.

1.7 Statutory Override. To the maximum extent permitted by Haw. Rev. Stat. § 428-103, this Agreement governs the internal affairs of the Company and the relations among the Members, the Company, Managers, and any persons becoming members or transferees, except to the extent § 428-103(b) prohibits variation.

Article II — Purpose and Powers

2.1 Purpose. The Company is formed to engage in any lawful business, trade, investment, or activity for which a limited liability company may be organized under Haw. Rev. Stat. § 428-112, and specifically: [________________________________].

2.2 Powers. The Company has all powers granted under Haw. Rev. Stat. § 428-112, including the power to enter contracts; acquire, hold, lease, encumber, and dispose of real and personal property; borrow money and issue evidences of indebtedness; sue and be sued in its own name; and engage in any lawful activity not inconsistent with the Act.

Article III — Members and Membership Interests

3.1 Initial Members.

3.2 Limited Liability. Pursuant to Haw. Rev. Stat. § 428-303, no Member or Manager is personally liable for any debt, obligation, or liability of the Company solely by reason of being a Member or acting as a Manager.

3.3 No Agency by Member (Manager-Managed). Pursuant to Haw. Rev. Stat. § 428-301, a Member of a manager-managed Company is not an agent of the Company solely by reason of being a Member.

3.4 Admission of Additional Members. Pursuant to Haw. Rev. Stat. § 428-404(c)(7), unanimous consent of the Members is required to admit a new Member. Admission requires: (a) written consent of all existing Members; (b) execution of a counterpart of this Agreement; (c) payment of agreed capital contribution; and (d) compliance with applicable federal and state securities laws.

3.5 Classes of Interests. The Company may issue ☐ a single class ☐ multiple classes of Membership Interests with rights, preferences, and obligations set forth in Exhibit A.

Article IV — Capital Contributions and Capital Accounts

4.1 Initial Capital Contributions. Initial capital contributions are set forth in Section 3.1 and itemized in Exhibit A. Contributions may consist of cash, property, services, promissory notes, or other obligations to contribute, as permitted by Haw. Rev. Stat. § 428-401.

4.2 Additional Contributions. No Member is obligated to make additional contributions except as expressly required by this Agreement or a Capital Call adopted under Article V. Pursuant to Haw. Rev. Stat. § 428-402, an obligation to contribute is enforceable only if memorialized in writing and signed by the obligated Member.

4.3 Capital Accounts. A separate capital account shall be maintained for each Member in accordance with Treas. Reg. § 1.704-1(b)(2)(iv) and adjusted for contributions, allocations, and distributions.

4.4 No Interest on Contributions. No Member is entitled to interest on capital contribution or capital account balance.

4.5 Return of Contributions. A Member is entitled to a return of capital contributions only as permitted by Haw. Rev. Stat. § 428-406 (solvency test).

Article V — Capital Calls

5.1 Discretionary Capital Calls. Upon the approval of Members holding [____]% (default: Majority in Interest) of the Membership Interests, the Company may issue a written Capital Call to all Members, pro rata to Membership Interests.

5.2 Notice and Funding Deadline. A Capital Call notice shall state the aggregate amount, the per-Member share, the purpose, and a funding deadline of not less than [____] days (default: thirty (30)) after the notice date.

5.3 Remedies for Failure to Fund. If a Member fails to timely fund a Capital Call (a "Non-Funding Member"), the Company and non-defaulting Members may elect any one or more of the following remedies:

• ☐ Treat the unfunded portion as a loan bearing interest at the lesser of [____]% per annum or the maximum lawful rate;
• ☐ Allow non-defaulting Members to fund the shortfall pro rata, with proportionate dilution of the Non-Funding Member's Membership Interest;
• ☐ Suspend voting and distribution rights of the Non-Funding Member until cured;
• ☐ Trigger the Company's purchase right under Article XI (Buy-Sell).

Article VI — Allocations and Distributions

6.1 Allocations. Profits and losses shall be allocated to the Members in proportion to their Membership Interests, in compliance with Subchapter K of the Internal Revenue Code and Treas. Reg. § 1.704-1(b).

6.2 Distributions of Available Cash. Distributions of available cash shall be made to the Members in proportion to their Membership Interests, at such times as the Members (or Managers) determine, subject to the solvency limitations of Haw. Rev. Stat. § 428-406.

6.3 Default Statutory Rule Modified. Under Haw. Rev. Stat. § 428-405(a), the default distribution rule is equal shares per Member. This Agreement instead allocates distributions in proportion to Membership Interests as set forth in Section 6.2.

6.4 No Right to Demand Non-Cash Distributions. Pursuant to Haw. Rev. Stat. § 428-405(c), no Member is entitled to demand a distribution in any form other than cash.

6.5 Tax Distributions. The Company shall, to the extent of available cash and subject to Section 6.2, make a tax distribution to each Member equal to that Member's allocable share of Company taxable income multiplied by the assumed tax rate of [____]% (default: 40%, accounting for Hawaii state income tax up to 11% top bracket plus federal), pro rata to Membership Interests.

6.6 GET Reserve. The Company shall reserve from gross receipts an amount sufficient to pay Hawaii General Excise Tax under Chapter 237 (typically 4.0% to 4.5% depending on county) before making distributions to Members.

6.7 Liquidating Distributions. Liquidating distributions shall be made in accordance with positive capital account balances under Treas. Reg. § 1.704-1(b)(2)(ii)(b)(2), after payment of creditors as required by Haw. Rev. Stat. § 428-806.

6.8 Improper Distributions. Haw. Rev. Stat. § 428-407 imposes personal liability on members and managers who consent to distributions in violation of § 428-406.

Article VII — Management

7.1 Management Structure. The Company is ☐ member-managed ☐ manager-managed (check one) pursuant to Haw. Rev. Stat. § 428-203(a)(6) and § 428-404. Manager-managed status must be designated in the Articles of Organization.

7.2 Managers (if Manager-Managed). The initial Manager(s) is/are:

7.3 Authority of Managers / Managing Members. The Manager(s) or, if member-managed, the Members (acting by Majority in Interest) are authorized to:

• ☐ Execute contracts, leases, deeds, promissory notes, and other instruments;
• ☐ Open, maintain, and close Company bank, brokerage, and merchant accounts;
• ☐ Hire, supervise, and terminate employees and independent contractors;
• ☐ File tax returns and make tax elections, including the BBA partnership-representative designation under I.R.C. § 6223;
• ☐ Acquire, hold, lease, pledge, and dispose of Company property;
• ☐ Initiate, defend, settle, and compromise legal proceedings;
• ☐ Borrow funds and grant security interests in Company property;
• ☐ Apply for and renew Hawaii General Excise Tax licenses, county Transient Accommodations Tax licenses (if applicable), and other regulatory permits.

7.4 Major Decisions Requiring Unanimous Member Approval (§ 428-404(c)). The following matters require unanimous consent of all Members under Haw. Rev. Stat. § 428-404(c):

• ☐ Amendment of the Operating Agreement (§ 428-103);
• ☐ Authorization or ratification of duty-of-loyalty conflicts;
• ☐ Amendment of the Articles of Organization;
• ☐ Compromise of a Member's obligation to contribute (§ 428-402(b));
• ☐ Making of interim distributions, including redemption of an interest (§ 428-405(a));
• ☐ Admission of a new Member;
• ☐ Use of Company property to redeem an interest subject to a charging order;
• ☐ Consent to dissolve the Company (§ 428-801(2));
• ☐ Waiver of the right to wind up under § 428-802(b);
• ☐ Consent to merge with another entity;
• ☐ Sale, lease, exchange, or other disposal of all or substantially all Company property.

7.5 Additional Major Decisions Requiring Supermajority Approval. The following decisions require approval of Members holding [____]% (default: 75%) of the Membership Interests:

• ☐ Incurrence of Company indebtedness exceeding $[____________];
• ☐ Material change in the Company's business purpose;
• ☐ Acquisition or disposition of Hawaii real property.

7.6 Removal of Managers. A Manager may be removed, with or without cause, by Members holding [____]% (default: Majority in Interest) of the Membership Interests.

7.7 Indemnification. The Company shall indemnify each Member, Manager, and officer to the fullest extent permitted by Haw. Rev. Stat. § 428-403 against all judgments, settlements, penalties, fines, and reasonable expenses incurred in connection with any proceeding arising out of service to the Company.

Article VIII — Voting Rights and Member Meetings

8.1 Voting. Each Member is entitled to vote in proportion to that Member's Membership Interest. "Majority in Interest" means Members holding more than fifty percent (50%) of the outstanding Membership Interests; "Supermajority" means [____]% (default: 75%).

8.2 Default Statutory Rule Modified. Under Haw. Rev. Stat. § 428-404(a)(2), the default rule for member-managed companies is one vote per Member with majority of Members deciding ordinary matters. This Agreement instead allocates votes by Membership Interest as set forth in Section 8.1.

8.3 Annual Meeting. The Company shall hold an annual meeting of Members on [________________________________] each year.

8.4 Special Meetings. Special meetings may be called by any Member holding [____]% (default: 25%) or more of the Membership Interests on not less than [____] days' (default: ten (10)) written notice.

8.5 Quorum. Members holding a Majority in Interest constitute a quorum.

8.6 Action Without Meeting. Any action may be taken without a meeting under Haw. Rev. Stat. § 428-404(d).

8.7 Proxies. A Member may vote by written proxy under Haw. Rev. Stat. § 428-404(e), valid for not more than [____] months (default: 11 months) after its date.

Article IX — Fiduciary Duties and Standards of Conduct

9.1 Statutory Standards. Pursuant to Haw. Rev. Stat. § 428-409(a), the only fiduciary duties a Member of a member-managed Company owes to the Company and other Members are the duties of loyalty and care stated in subsections (b) and (c), and the obligation of good faith and fair dealing under subsection (d).

9.2 Duty of Loyalty (§ 428-409(b)). A Member's duty of loyalty is limited to:

• ☐ Accounting to the Company for any property, profit, or benefit derived from Company business or use of Company property;
• ☐ Refraining from dealing with the Company in the conduct or winding up of business as or on behalf of a person having an interest adverse to the Company;
• ☐ Refraining from competing with the Company in the conduct of its business before dissolution.

9.3 Permitted Modifications (§ 428-103(b)(2)). Under Haw. Rev. Stat. § 428-103(b)(2), the operating agreement may not unreasonably reduce the duty of loyalty, but may:

• ☐ Identify specific types or categories of activities that do not violate the duty of loyalty if not manifestly unreasonable; and
• ☐ Specify the number or percentage of Members or disinterested Managers that may authorize or ratify, after full disclosure of all material facts, a specific act or transaction that otherwise would violate the duty of loyalty.

The Members agree that the following activities do not violate the duty of loyalty, provided full disclosure is made:

• ☐ Outside business activities unrelated to the Company's business;
• ☐ Investment in entities that are not direct competitors of the Company;
• ☐ Reasonable compensation for services rendered separately to the Company;
• ☐ Specific transactions identified in Exhibit D and disclosed to all Members.

9.4 Duty of Care (§ 428-409(c)). A Member's duty of care is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law. Under § 428-103(b)(3), the operating agreement may not unreasonably reduce the duty of care.

9.5 Good Faith and Fair Dealing. Under § 428-409(d), a Member shall discharge duties consistently with the contractual obligation of good faith and fair dealing. This obligation may not be eliminated under § 428-103(b)(4) but may be subject to standards by which performance is measured if not manifestly unreasonable.

9.6 Conflict-of-Interest Transactions. Pursuant to § 428-409(e), a Member does not violate a duty merely because the Member's conduct furthers the Member's own interest.

9.7 Manager-Managed Application. In a manager-managed Company, § 428-409 applies to Managers, not to Members solely by virtue of membership.

Article X — Transfer Restrictions, ROFR, Tag-Along, Drag-Along

10.1 Nature of Distributional Interest. Pursuant to Haw. Rev. Stat. § 428-501, a Member's distributional interest is personal property.

10.2 General Restriction on Transfer. No Member may sell, assign, pledge, hypothecate, encumber, or otherwise transfer (each a "Transfer") all or any part of the Member's distributional interest except in compliance with this Article X, Haw. Rev. Stat. § 428-502, and applicable securities laws.

10.3 Permitted Transfers. A Member may Transfer the distributional interest, with notice but without consent, to: (a) a revocable living trust of which the Member is grantor; (b) a wholly-owned entity controlled by the Member; or (c) by testamentary disposition or intestate succession.

10.4 Right of First Refusal (ROFR). Before any other Transfer, the Selling Member shall give written notice to the Company and other Members stating the proposed transferee, price, and material terms. The Company shall have [____] days (default: thirty (30)) to elect to purchase, and if it declines, the other Members shall have an additional [____] days (default: thirty (30)) to elect to purchase pro rata.

10.5 Tag-Along Rights. If Members holding more than [____]% (default: 50%) of the Membership Interests propose to Transfer to a third party, each remaining Member shall have the right (but not the obligation) to participate pro rata in the Transfer on the same terms.

10.6 Drag-Along Rights. If Members holding more than [____]% (default: 75%) of the Membership Interests approve a sale to a bona fide third party, all remaining Members shall be required to participate in the sale on the same terms.

10.7 Effect of Transfer Without Consent. Under Haw. Rev. Stat. § 428-503, a transferee of a distributional interest is entitled only to receive distributions to which the transferor would have been entitled. The transferee is not a Member, has no right to participate in management, has no right to information, and has no right to inspect records.

Article XI — Buy-Sell Provisions

11.1 Statutory Mandatory Buy-Back (§ 428-701) — Override. Under Haw. Rev. Stat. § 428-701, when a Member dissociates from an at-will company, the Company is required by default to purchase the dissociated Member's distributional interest at fair value within thirty (30) days of dissociation. For a term company, the buy-back is at fair value as of the expiration of the specified term. The Members hereby override these statutory defaults as follows: the buy-sell provisions of this Article XI shall be the exclusive mechanism for purchasing a dissociating Member's interest, and the Company's obligation under § 428-701 shall be discharged by compliance with this Article XI.

11.2 Triggering Events. The Company (or, if the Company declines, the remaining Members pro rata) shall have the option (and, where required by § 428-701, the obligation) to purchase a Member's Membership Interest upon any of the following "Triggering Events":

• ☐ Death;
• ☐ Permanent disability or incapacity;
• ☐ Voluntary withdrawal / dissociation under § 428-601;
• ☐ Bankruptcy or insolvency;
• ☐ Divorce (to extinguish any spousal claim);
• ☐ Material breach of this Agreement;
• ☐ Entry of a charging order under Haw. Rev. Stat. § 428-504;
• ☐ Termination of employment with the Company (if applicable);
• ☐ Expulsion under § 428-601(5).

11.3 Permanent Disability. "Permanent Disability" means a Member's inability to perform essential functions for [____] consecutive months (default: six (6)) or [____] months out of any twelve (12) (default: nine (9)).

11.4 Purchase Price. The purchase price shall be (choose one):

• ☐ Fair value as determined under § 428-701 and an independent appraiser;
• ☐ Formula price equal to [____] times trailing 12-month EBITDA, minus indebtedness, multiplied by Membership Interest;
• ☐ Book value based on the most recent audited financial statements;
• ☐ Agreed value set forth in Exhibit B, updated annually.

11.5 Payment Terms. The purchase price shall be paid (choose one):

• ☐ Cash at closing;
• ☐ [____]% cash at closing, balance by promissory note over [____] years (default: 5) at [____]% annual interest;
• ☐ From life insurance proceeds (death only).

11.6 Life Insurance Funding (Optional). The Company may purchase and maintain life insurance on each Member to fund the buy-sell obligation upon death.

Article XII — Charging Order (Haw. Rev. Stat. § 428-504)

12.1 Statutory Provision. Pursuant to Haw. Rev. Stat. § 428-504(a), on application by a judgment creditor of a Member or transferee, a court having jurisdiction may order that the distributional interest of the judgment debtor be used to satisfy the judgment. The court may appoint a receiver to carry out the provisions of the charging order.

12.2 Exclusive Remedy. Section 428-504(e) provides that the charging order is the exclusive remedy by which a judgment creditor of a Member or transferee may satisfy a judgment out of the judgment debtor's distributional interest.

12.3 Effect of Charging Order. A charging order:

• ☐ Constitutes a lien on the Member's distributional interest only;
• ☐ Entitles the creditor only to distributions otherwise payable to the Member;
• ☐ Does not confer any voting, management, or information rights on the creditor;
• ☐ Does not cause dissociation of the Member or dissolution of the Company.

12.4 Foreclosure. The court may order a foreclosure of a lien on the distributional interest at any time (§ 428-504(b)). A purchaser at the foreclosure sale has only the rights of a transferee under § 428-503 — i.e., the right to distributions, but no membership, management, voting, or information rights.

12.5 Redemption. Before foreclosure, a charged distributional interest may be redeemed (§ 428-504(c)):

• ☐ By the judgment debtor;
• ☐ With property other than the Company's property, by one or more of the other Members;
• ☐ With the Company's property — only if permitted by the Operating Agreement — and the Members hereby grant such permission, subject to unanimous consent under § 428-404(c).

12.6 Exemption Preserved. Section 428-504(d) does not affect a Member's right under Hawaii or federal exemption laws with respect to the Member's distributional interest.

Article XIII — Deadlock and Dispute Resolution

13.1 Deadlock Defined. A "Deadlock" exists if the Members or Managers are unable to reach the required vote on a Major Decision (Section 7.4 or 7.5) for [____] consecutive days (default: 60).

13.2 Tiered Dispute Resolution. Members shall first attempt to resolve any Deadlock or dispute by:

• ☐ Good-faith negotiation among Member principals for [____] days (default: 30);
• ☐ Non-binding mediation under JAMS, AAA Commercial Mediation Rules, or Mediation Center of the Pacific;
• ☐ Binding arbitration in [____________], Hawaii, under AAA Commercial Arbitration Rules or DPR Rules; OR
• ☐ Litigation in the Circuit Court of the [First/Second/Third/Fifth] Circuit, State of Hawaii.

13.3 Buy-Sell Trigger on Deadlock. If Deadlock persists after the mediation period, any Member may invoke:

• ☐ Russian Roulette: Invoking Member offers price per percentage Membership Interest; non-invoking Member elects within [____] days to either sell or buy at that price.
• ☐ Texas Shoot-Out: Sealed bid auction; higher bidder buys the lower bidder out at the higher bid price.

13.4 Judicial Dissolution. A Member or dissociated Member may apply to the Circuit Court for judicial dissolution under Haw. Rev. Stat. § 428-801(4):

• (A) The economic purpose of the Company is likely to be unreasonably frustrated;
• (B) Another Member has engaged in conduct relating to the Company's business that makes it not reasonably practicable to carry on the Company's business with that Member;
• (C) It is not otherwise reasonably practicable to carry on the Company's business in conformity with the Articles of Organization and this Agreement;
• (D) The Company failed to purchase the petitioner's distributional interest as required by § 428-701; or
• (E) The Managers or Members in control have acted, are acting, or will act in a manner that is illegal, oppressive, fraudulent, or unfairly prejudicial to the petitioner.

These grounds are non-waivable under Haw. Rev. Stat. § 428-103(b)(7).

Article XIV — Dissolution and Winding Up

14.1 Events of Dissolution. Pursuant to Haw. Rev. Stat. § 428-801, the Company shall dissolve upon the first to occur of:

• ☐ An event specified in this Agreement;
• ☐ Consent of the number or percentage of Members specified in this Agreement;
• ☐ An event that makes it unlawful for all or substantially all of the Company's business to be continued (cure period of 90 days available);
• ☐ Entry of a decree of judicial dissolution (§ 428-801(4));
• ☐ Application by a transferee under § 428-801(5);
• ☐ Administrative dissolution by BREG.

14.2 Winding Up. Upon dissolution, the Members or Managers shall wind up the Company's affairs pursuant to Haw. Rev. Stat. § 428-803, including collecting receivables, liquidating assets, paying or providing for known and contingent liabilities, and giving notice to claimants under §§ 428-807 and 428-808.

14.3 Distribution of Assets. Pursuant to Haw. Rev. Stat. § 428-806, Company assets shall be distributed: (i) to creditors, including Members who are creditors; (ii) in satisfaction of distributions previously declared; (iii) to Members in proportion to positive capital account balances; then (iv) to Members in proportion to Membership Interests.

14.4 Articles of Termination. Upon completion of winding up, the Members shall file Articles of Termination with BREG under Haw. Rev. Stat. § 428-805.

Article XV — State-Specific Provisions

15.1 Annual Report (Haw. Rev. Stat. § 428-211). The Company shall file an Annual Report with the Hawaii DCCA, Business Registration Division, during the calendar quarter that includes the Company's anniversary date of formation. The filing fee is $15 ($25 expedited). The report shall include:

• ☐ Name of the Company and any registered trade name;
• ☐ Principal office address;
• ☐ Member and/or Manager names and addresses (Managers if manager-managed);
• ☐ Registered agent and Hawaii street address.

Failure to file results in administrative dissolution after notice.

15.2 General Excise Tax (GET) (Haw. Rev. Stat. Chapter 237) — DO NOT MISS. Hawaii does not have a sales tax; it has a General Excise Tax assessed on the gross income of the business (not on the customer). The Company must:

• ☐ Apply for a GET License (Form BB-1) with the Hawaii Department of Taxation; the one-time license fee is $20;
• ☐ Pay GET on gross receipts at applicable rates:

• ☐ The Company may visibly pass on GET to customers at the maximum pass-on rate of 4.7120% in counties with the 0.5% surcharge;
• ☐ File periodic returns (Form G-45) monthly, quarterly, or semi-annually (due 20th of following month);
• ☐ File annual return (Form G-49) by the 20th day of the fourth month following the close of the taxable year (April 20 for calendar-year filers).

15.3 No Series LLC. Hawaii does not authorize series LLCs. If the Members wish to segregate assets and liabilities, they must form separate Hawaii LLCs.

15.4 Foreign Qualification. If the Company transacts business outside Hawaii, it shall qualify as a foreign LLC. Likewise, foreign LLCs transacting business in Hawaii must obtain a certificate of authority under Haw. Rev. Stat. § 428-1002.

15.5 Hawaii Income Tax Filings. As a multi-member LLC, the Company is by default a partnership for federal tax purposes and shall file IRS Form 1065. For Hawaii purposes, the Company shall file Hawaii Form N-20 (Partnership Return of Income). Members shall report distributive shares on Form N-11/N-15.

15.6 Transient Accommodations Tax (TAT) (if applicable). If the Company furnishes transient accommodations (Haw. Rev. Stat. Chapter 237D), it must register for TAT, currently at the state rate of 10.25% plus county surcharges (3% in Honolulu, Maui, Kauai; 3% in Hawaii County). Confirm applicability with counsel before short-term rental activity.

15.7 Ceded Lands and Hawaiian Cultural Considerations. Where Company business involves ceded lands, kuleana lands, or operations on Hawaiian Home Lands, additional state and federal requirements may apply, including consultation with the Department of Hawaiian Home Lands (DHHL), the Office of Hawaiian Affairs (OHA), and the State Historic Preservation Division (SHPD).

15.8 Land Use and Zoning Compliance. Hawaii's land-use classifications (urban, rural, agricultural, conservation) under Chapter 205 may restrict permitted activities. Confirm zoning compliance with the appropriate County Planning Department before commencing operations.

Article XVI — General Provisions

16.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Hawaii, without regard to its conflict-of-laws principles. Internal affairs are governed by Haw. Rev. Stat. § 428-106.

16.2 Venue. Any dispute not subject to mandatory arbitration shall be resolved in the Circuit Court of the [First/Second/Third/Fifth] Circuit, State of Hawaii.

16.3 Amendment. Pursuant to Haw. Rev. Stat. § 428-404(c)(1), amendment of this Agreement requires unanimous consent of all Members unless this Agreement provides otherwise. The Members agree that amendment shall require Members holding [____]% (default: unanimous) of the Membership Interests.

16.4 Entire Agreement. This Agreement, together with the Articles of Organization and all exhibits, constitutes the entire agreement among the Members.

16.5 Severability. If any provision is held invalid or unenforceable, the remaining provisions shall continue in full force and effect.

16.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts and by electronic signature (E-SIGN Act, 15 U.S.C. § 7001 et seq.; Hawaii Uniform Electronic Transactions Act, Haw. Rev. Stat. § 489E-1 et seq.).

16.7 No Third-Party Beneficiaries. This Agreement is solely for the benefit of the Members, the Company, and their respective successors and permitted assigns.

16.8 Notices. All notices shall be in writing and delivered by hand, certified mail, overnight courier, or email with confirmation.

16.9 Confidentiality. Each Member shall hold in confidence all non-public Company information.

Signature Block

IN WITNESS WHEREOF, the undersigned Members execute this Operating Agreement effective as of the Effective Date.

Manager (if Manager-Managed):

State of Hawaii
County of [____________]

Acknowledged before me this [__/__/____] by [________________________________].

_________________________________
Notary Public
My commission expires: [__/__/____]

Pre-Execution Checklist

• ☐ Articles of Organization (Form LLC-1) filed with Hawaii DCCA Business Registration Division (§ 428-203).
• ☐ Registered agent and Hawaii street address confirmed (§ 428-108).
• ☐ Federal EIN obtained from the IRS (Form SS-4).
• ☐ BBA Partnership Representative designated under I.R.C. § 6223.
• ☐ General Excise Tax License obtained from Hawaii Dept. of Taxation (Form BB-1; $20 one-time fee).
• ☐ GET filing frequency (monthly / quarterly / semi-annual) determined based on projected gross income.
• ☐ Transient Accommodations Tax registration confirmed (if applicable).
• ☐ Initial capital contributions documented in Exhibit A.
• ☐ Spousal consents executed (if applicable).
• ☐ Buy-sell life insurance procured (if applicable).
• ☐ Business bank account opened in the Company's name (no commingling).
• ☐ Annual Report calendar reminder set for the calendar quarter of anniversary date (§ 428-211); $15 fee.
• ☐ At-will vs. term company election documented in Articles and Section 1.6.
• ☐ Beneficial ownership information considered under 31 U.S.C. § 5336 (Corporate Transparency Act).
• ☐ Industry-specific licensing reviewed (e.g., DCCA Professional and Vocational Licensing).
• ☐ County zoning and land-use compliance reviewed.
• ☐ DHHL / OHA / SHPD consultations completed if ceded or Hawaiian Home Lands are involved.
• ☐ Foreign qualification evaluated in other states where the Company transacts business.
• ☐ § 428-701 mandatory buy-back override confirmed in Article XI.
• ☐ Original signed Agreement maintained in Company records book.

Sources and References

• Hawaii Uniform Limited Liability Company Act, Haw. Rev. Stat. Chapter 428: https://law.justia.com/codes/hawaii/title-23a/chapter-428/
• Haw. Rev. Stat. § 428-103 (Operating agreement; nonwaivable): https://law.justia.com/codes/hawaii/title-23a/chapter-428/
• Haw. Rev. Stat. § 428-404 (Management): https://law.justia.com/codes/hawaii/title-23a/chapter-428/
• Haw. Rev. Stat. § 428-405 (Distributions): https://law.justia.com/codes/hawaii/title-23a/chapter-428/
• Haw. Rev. Stat. § 428-409 (Standards of conduct): https://law.justia.com/codes/hawaii/title-23a/chapter-428/
• Haw. Rev. Stat. § 428-504 (Charging order / Rights of creditors): https://law.justia.com/codes/hawaii/title-23a/chapter-428/section-428-504/
• Haw. Rev. Stat. § 428-701 (Mandatory buy-back on dissociation): https://codes.findlaw.com/hi/division-2-business/hi-rev-st-sect-428-701/
• Haw. Rev. Stat. § 428-801 (Dissolution): https://law.justia.com/codes/hawaii/title-23a/chapter-428/section-428-801/
• Hawaii DCCA Business Registration Division: https://cca.hawaii.gov/breg/
• Hawaii DCCA LLC Fee Schedule: https://cca.hawaii.gov/breg/registration/dllc/fees/
• Hawaii Department of Taxation, General Excise Tax: https://tax.hawaii.gov/geninfo/get/
• Hawaii County Surcharge: https://tax.hawaii.gov/geninfo/countysurcharge/
• Treas. Reg. § 1.704-1(b) (Capital accounts and allocations): https://www.ecfr.gov/current/title-26/section-1.704-1
• I.R.C. § 6223 (Partnership representative): https://www.law.cornell.edu/uscode/text/26/6223