Multi-Member LLC Operating Agreement — Oklahoma

Multi-Member LLC Operating Agreement (OKLAHOMA)

This Operating Agreement (the "Agreement") of [COMPANY NAME], LLC, an Oklahoma limited liability company (the "Company"), is entered into and effective as of [__/__/____] (the "Effective Date") by and among the persons executing this Agreement as members (each a "Member" and collectively the "Members"), pursuant to the Oklahoma Limited Liability Company Act, 18 O.S. §§ 2000 et seq. (the "Act").

Quick-Reference Summary

Article I — Formation

1.1 Formation. The Company was organized as an Oklahoma limited liability company on [__/__/____] upon the filing of Articles of Organization with the Oklahoma Secretary of State pursuant to 18 O.S. § 2004.

1.2 Name. The name of the Company is [COMPANY NAME], LLC.

1.3 Principal Office.
[________________________________]
[________________________________]

1.4 Registered Office and Agent.

• Registered Agent: [________________________________]
• Registered Office: [________________________________]

1.5 Term. Perpetual until dissolved under Article XIV or 18 O.S. § 2037.

1.6 Tax Classification. Unless and until the Members elect otherwise, the Company shall be classified as a partnership for federal income tax purposes.

1.7 Series Election. Check one:

☐ No Series. The Company is not establishing any protected or registered series.

☐ Protected Series (18 O.S. § 2054.4). The Articles of Organization include the statutorily required notice of limitation on liability of series. Series are established by amendment to this Agreement on the form attached as Schedule C, and the Company shall maintain separate books, records, and bank accounts for each series.

☐ Registered Series (18 O.S. § 2054.5). A registered series shall be formed by filing articles of registered series with the Oklahoma Secretary of State, and shall otherwise comply with 18 O.S. § 2054.5.

Article II — Purpose and Powers

2.1 Purpose. The Company is formed for the following purpose(s), and any other lawful business:
[________________________________]

2.2 Powers. All powers granted under the Act, including the power to own property, contract, sue and be sued, borrow, and engage in any lawful business.

2.3 Limitation on Liability. Consistent with 18 O.S. § 2022, no Member, manager, employee, or agent is personally liable for the Company's debts solely by reason of being a Member, manager, employee, or agent.

Article III — Members and Membership Interests

3.1 Initial Members; Percentage Interests.

3.2 Nature of Interest. Each Member's capital interest is personal property, and no Member has an interest in specific Company property (18 O.S. § 2032). A Member's rights consist of (a) a capital interest (economic rights) and (b) governance rights, and the assignability of those interests is governed by 18 O.S. § 2033.

3.3 Admission of Additional Members. A new Member may be admitted only upon (a) Approval of Members holding at least [____]% of the Percentage Interests, (b) execution of a counterpart or joinder, and (c) compliance with Article X.

3.4 No Personal Liability. Consistent with 18 O.S. § 2022, no Member is personally liable for any Company debt or obligation.

3.5 Records and Inspection. The Company shall maintain records under 18 O.S. § 2021 and make them available to Members for inspection upon reasonable request.

Article IV — Capital Contributions and Capital Accounts

4.1 Initial Contributions. As set forth in Section 3.1 and Schedule A.

4.2 Capital Accounts. Maintained in accordance with Treas. Reg. § 1.704-1(b)(2)(iv).

4.3 No Interest on Capital. No Member is entitled to interest on contributions.

4.4 Return of Capital. Except as expressly provided, no Member may demand return of capital.

Article V — Capital Calls

5.1 Mandatory Capital Calls. No additional contributions are required except as approved by Members holding at least [____]% of the Percentage Interests (a "Capital Call"). Each Member shall contribute its pro-rata share within [____] days after notice.

5.2 Failure to Fund. If a Member fails to fund (a "Non-Contributing Member"), the non-defaulting Members may, as their exclusive remedies (selected by Approval of non-defaulting Members):
(a) Treat the shortfall as a recourse loan at [____]% per annum repayable from distributions otherwise due the Non-Contributing Member;
(b) Dilute the Non-Contributing Member's Percentage Interest under a customary dilution formula; or
(c) Pursue any other remedy at law or in equity.

Article VI — Allocations and Distributions

6.1 Allocations. All items of income, gain, loss, deduction, and credit allocated in proportion to Percentage Interests, subject to regulatory allocations.

6.2 Distributions. Distributions of Available Cash made in proportion to Percentage Interests at such times as approved under Article VIII. Consistent with 18 O.S. § 2030, no distribution shall be made if, after giving effect to it, the Company could not pay its debts as they become due in the usual course of business or its total assets would be less than its total liabilities plus certain preferential amounts.

6.3 Tax Distributions. Prior to other distributions, the Company shall use commercially reasonable efforts to distribute to each Member, no later than [____] days before each federal estimated tax due date, an amount equal to taxable income allocable to the Member multiplied by the Assumed Tax Rate (highest combined federal and Oklahoma individual marginal rate, including self-employment tax where applicable).

6.4 No In-Kind Demand. No Member is entitled to demand a distribution other than in cash, except as the Members otherwise agree.

6.5 Oklahoma Tax Compliance. The Company shall timely file Oklahoma Form 514 (partnership) or applicable corporate form with the Oklahoma Tax Commission and pay any applicable taxes.

Article VII — Management

7.1 Management Structure. Check one:

☐ Member-Managed (default). The Members shall manage. Ordinary-course matters require Approval of Members holding a majority of Percentage Interests.

☐ Manager-Managed. Management is vested in one or more Managers identified on Schedule B. The Articles of Organization shall so designate. Each Manager serves until resignation, removal by Members holding a majority of Percentage Interests, or death/incapacity.

7.2 Authority. Subject to Section 8.4, the Members (or Managers) may exercise all powers permitted under the Act on behalf of the Company, including executing contracts, opening bank accounts, hiring personnel, borrowing, and engaging professionals.

7.3 Officers (Optional). Members may designate officers, who serve at the pleasure of the Members.

7.4 Compensation. No Member is entitled to compensation for Member services except as approved by majority Percentage Interest.

Article VIII — Voting Rights and Member Meetings

8.1 Voting by Percentage Interest. Each Member votes in proportion to its Percentage Interest. This modifies the statutory default in 18 O.S. § 2020 (members vote in proportion to their respective interests in the profits of the Company) only to the extent profit interest and Percentage Interest differ.

8.2 Quorum. Members holding more than [50]% of the Percentage Interests constitute a quorum.

8.3 Meetings. Annual meeting within [____] days of fiscal year-end; special meetings on request of Members holding at least [____]% of the Percentage Interests.

8.4 Supermajority Matters. The following require Approval of Members holding at least [75]% of the Percentage Interests (the "Supermajority"):
(a) Amendment of this Agreement or the Articles of Organization (default under 18 O.S. § 2012.2(E) is majority);
(b) Merger, conversion, or sale of all or substantially all Company assets;
(c) Voluntary dissolution;
(d) Admission of a new Member;
(e) Creation, dissolution, or material amendment of any series;
(f) Incurrence of indebtedness exceeding $[____________] in the aggregate;
(g) Any related-party transaction outside the ordinary course; and
(h) Any other action so specified in this Agreement.

8.5 Action Without Meeting; Proxies. Action may be taken by written consent signed by Members holding the percentage required for approval. Proxies are permitted.

8.6 Remote Participation. Meetings may be held in person or electronically.

Article IX — Fiduciary Duties and Standards of Conduct

9.1 Statutory Standard. Each Manager (and, in a member-managed Company, each Member acting as a manager under 18 O.S. § 2015) shall discharge his or her duties in good faith, with the care an ordinarily prudent person in a like position could exercise under similar circumstances, and in a manner reasonably believed to be in the best interests of the Company, and is not liable for action taken in compliance with the business judgment rule, all consistent with 18 O.S. § 2016.

9.2 Conflict-of-Interest Transactions. A transaction between the Company and a Member (or affiliate) is permitted if (a) material facts are disclosed and (b) approved by Members holding a majority of the disinterested Percentage Interests, or if the transaction is fair to the Company when authorized.

9.3 Outside Activities and Business Opportunities. To the maximum extent permitted by the Act (including the ability under 18 O.S. § 2017(C) to define the scope of duties owed to the Company, provided the definition is not manifestly unreasonable and does not eliminate the duty of loyalty or the obligation of good faith and fair dealing), each Member may engage in or possess interests in other business ventures, including ventures competitive with the Company, and is not required to offer business opportunities to the Company unless presented to the Member in its Company capacity and of a type the Company is then actively pursuing.

9.4 Good Faith and Fair Dealing. The implied covenant of good faith and fair dealing is not waived and may not be eliminated.

9.5 Indemnification. Consistent with 18 O.S. § 2017, the Company shall indemnify each Member, Manager, and officer to the fullest extent permitted by Oklahoma law, except that no indemnification or limitation of a manager's liability shall extend to (a) any breach of the duty of loyalty, (b) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or (c) any transaction from which an improper personal benefit was derived.

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

10.1 General Restriction. No Member may Transfer all or any part of its Membership Interest except as permitted in this Article. Purported Transfers in violation are void.

10.2 Permitted Transfers. A Member may Transfer to (a) a revocable trust of the Member, (b) a wholly-owned single-member LLC of the Member, or (c) the Member's spouse, descendants, or trusts for their benefit, subject to joinder.

10.3 Right of First Refusal (ROFR). Before any Transfer for value other than a Permitted Transfer, the selling Member shall give a Sale Notice. The Company has [30] days to elect to purchase; thereafter the other Members have [30] days to elect pro-rata, on the stated terms.

10.4 Tag-Along. If Members holding more than [50]% propose to Transfer to a third party, each other Member may elect to participate pro-rata on the same terms within [20] days.

10.5 Drag-Along. If Members holding at least [75]% approve a sale of the Company, all Members shall vote for and participate in the transaction on the same terms.

10.6 Effect of Transfer Without Admission. A transferee of a capital interest does not become a Member unless admitted under Section 3.3 and 18 O.S. § 2033 and § 2035. Until admitted, the transferee is an assignee entitled only to the economic rights assigned (distributions and allocations), with no right to participate in management.

Article XI — Buy-Sell Provisions

11.1 Triggering Events. A "Buy-Sell Event" includes:
(a) Death or adjudicated incapacity;
(b) Voluntary or involuntary bankruptcy;
(c) Divorce, to the extent an Interest would pass to a non-Member spouse;
(d) Material uncured breach of this Agreement;
(e) Conviction of a felony or crime materially injurious to the Company; or
(f) Withdrawal or attempted Transfer in violation of Article X.

11.2 Purchase Option. Company (first) and non-Affected Members (second, pro-rata) have options to purchase at the Purchase Price under Section 11.3 within [90] days after notice.

11.3 Purchase Price.
(a) Agreed value: Certificate of Value executed within [24] months controls.
(b) Appraisal: Otherwise, FMV by independent qualified appraiser(s).
(c) Discounts: Customary discounts may apply if Members so agreed at the outset.

11.4 Payment Terms. 25% cash at closing; balance by promissory note over [5] years at the applicable federal rate.

Article XII — Charging Order (18 O.S. § 2034)

12.1 Sole and Exclusive Remedy. Pursuant to 18 O.S. § 2034, a charging order is the sole and exclusive remedy by which a judgment creditor of a Member may satisfy a judgment from the Member's membership or capital interest. The judgment creditor has only the rights of an assignee of the capital interest.

12.2 No Foreclosure. 18 O.S. § 2034 expressly provides that a charging order "shall in no event be convertible into a membership interest through foreclosure or other action." Oklahoma's anti-foreclosure language is among the strongest in the United States and applies whether the Company has one or more than one Member.

12.3 No Management or Inspection Rights. The judgment creditor has no right to participate in management, no right to inspect records (beyond what an assignee may receive), and no right to cause dissolution.

12.4 No Cause of Dissolution. A charging order or assignment shall not constitute an event of withdrawal or cause dissolution.

12.5 Redemption. The Company or non-debtor Members may at any time pay the unsatisfied judgment and succeed to the creditor's rights.

12.6 Authority. This Article is intended to operate consistently with the exclusivity of the charging-order remedy expressed in 18 O.S. § 2034 and discussed in Arrington v. Kruger, No. 106,223 (Okla. Civ. App. Nov. 30, 2009).

Article XIII — Deadlock and Dispute Resolution

13.1 Good-Faith Negotiation. Upon dispute, Members shall meet within [15] days and negotiate in good faith for at least [30] days.

13.2 Mediation. If unresolved, mediation in [Oklahoma City/Tulsa], Oklahoma, before a mediator selected by the parties or appointed by JAMS or the AAA.

13.3 Deadlock Resolution Mechanisms. If, after mediation, the Members remain deadlocked on a Supermajority matter for more than [60] days, the Members may select one of the following exclusive remedies (other than judicial dissolution):
(a) Buy-Sell (Texas Shoot-Out);
(b) Auction; or
(c) Forced Sale at not less than appraised value.

13.4 Arbitration. Except for actions seeking injunctive relief or judicial dissolution, disputes shall be finally resolved by binding arbitration before [one/three] arbitrator(s) under the JAMS Comprehensive Rules, seated in [Oklahoma City/Tulsa], Oklahoma.

13.5 Judicial Dissolution. Nothing limits a Member's right to seek judicial dissolution under 18 O.S. § 2038 on the ground that it is not reasonably practicable to carry on the Company's business in conformity with its Articles or this Agreement.

Article XIV — Dissolution and Winding Up

14.1 Events of Dissolution. The Company shall be dissolved upon the first to occur of:
(a) Approval by Members holding the Supermajority under Section 8.4(c);
(b) Entry of a decree of judicial dissolution under 18 O.S. § 2038;
(c) Administrative cancellation by the Oklahoma Secretary of State; or
(d) Any other event causing dissolution under 18 O.S. § 2037.

14.2 Winding Up. Upon dissolution, the Members (or a person designated by Supermajority) shall wind up the Company's affairs:
(a) Collecting assets;
(b) Paying or making provision for liabilities, including taxes;
(c) Distributing remaining assets first to Members in respect of unpaid distributions, then in proportion to positive capital account balances, and otherwise in proportion to Percentage Interests; and
(d) Filing Articles of Dissolution with the Oklahoma Secretary of State.

14.3 Series Dissolution. Dissolution of an individual series does not cause dissolution of the Company. Series assets are distributed in accordance with the limitations on liability specified in 18 O.S. § 2054.4 or § 2054.5.

Article XV — State-Specific Provisions

15.1 Oklahoma Law Controls. This Agreement is governed by Oklahoma law, and the Act controls to the extent of any conflict not permitted to be modified.

15.2 Annual Certificate. Pursuant to 18 O.S. § 2055.2, the Company shall timely file its Annual Certificate with the Oklahoma Secretary of State by the anniversary date of formation and pay the $25 fee.

15.3 Oklahoma Tax Compliance. The Company shall file Form 514 (or successor) with the Oklahoma Tax Commission and pay applicable Oklahoma income tax.

15.4 Series LLC Compliance. If any series is established:
(a) The Articles of Organization include the statutory liability-segregation notice required by 18 O.S. § 2054.4 or § 2054.5;
(b) Each series maintains separate and distinct records and bank accounts;
(c) Each series's assets are held and accounted for separately from other series and from the general Company;
(d) Each registered series files articles of registered series and an annual certificate; and
(e) Contracts and instruments executed in the name of a series state the series name.

15.5 Statutory Override. The Members intend this Agreement to constitute the "operating agreement" within the meaning of 18 O.S. § 2012.2 and to override default rules of the Act to the maximum extent permitted (excluding rights, privileges, duties, and obligations imposed specifically by the Act).

15.6 Non-Waivable Provisions. Nothing in this Agreement waives the implied covenant of good faith and fair dealing, the rights of third-party creditors, or any other provision the Act makes non-waivable.

Article XVI — General Provisions

16.1 Entire Agreement. Supersedes any prior agreement on the same subject matter.

16.2 Amendment. Only as provided in Section 8.4(a).

16.3 Severability. Standard.

16.4 Successors and Assigns. Binds heirs, executors, administrators, successors, and permitted assigns.

16.5 Counterparts; Electronic Signatures. Permitted.

16.6 Notices. Effective on personal delivery, certified mail, or electronic mail to the address on the Company's books.

16.7 Headings. For convenience only.

16.8 No Third-Party Beneficiaries. Except as expressly provided, this Agreement is for the Members and the Company only.

Signature Block

IN WITNESS WHEREOF, the undersigned Members have executed this Operating Agreement as of the Effective Date.

ACKNOWLEDGMENT (Optional)

State of Oklahoma, County of [____________________]

On [__/__/____], before me, the undersigned notary public, personally appeared the Members named above, and acknowledged execution of this instrument.

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

Schedule A — Initial Capital Contributions

Schedule B — Managers (if Manager-Managed)

Schedule C — Series Designation (if Series LLC)

Pre-Execution Checklist

☐ Articles of Organization filed with Oklahoma Secretary of State (18 O.S. § 2004)
☐ Series liability-segregation notice included in Articles if series will be used
☐ EIN obtained from IRS
☐ Registered agent confirmed and consents in writing
☐ Initial capital contributions made and recorded on Schedule A
☐ Federal tax classification confirmed
☐ Capital accounts opened per Treas. Reg. § 1.704-1(b)(2)(iv)
☐ Annual Certificate calendar reminder set for formation anniversary (18 O.S. § 2055.2)
☐ Separate books, records, and bank accounts for each series (if applicable)
☐ Business bank account opened in Company name
☐ Required Oklahoma tax registrations (sales/use, withholding) and OTC accounts
☐ Local business licenses obtained
☐ Required insurance in place (with separate per-series policies if applicable)
☐ Initial Certificate of Value executed under Section 11.3(a)
☐ Spousal consents (if applicable)
☐ Legal review by Oklahoma-licensed attorney completed
☐ Operating Agreement signed and stored with company records

Sources and References

• Oklahoma Statutes, Title 18, Chapter 32 — Oklahoma LLC Act (Official Oklahoma Statutes, Westlaw table of contents): https://govt.westlaw.com/okjc/Browse/Home/Oklahoma/OfficialOklahomaStatutes?guid=NDF2C0020C37E11DB8F04FB3E68C8F4C5
• Oklahoma Statutes Title 18 (Corporations): https://oksenate.gov/sites/default/files/2019-12/os18.pdf
• 18 O.S. § 2012.2 (Operating agreement): https://law.justia.com/codes/oklahoma/title-18/section-18-2012-2/
• 18 O.S. § 2034 (Charging order; sole and exclusive remedy; no foreclosure): https://law.justia.com/codes/oklahoma/title-18/section-18-2034/
• 18 O.S. § 2054.5 (Registered series): https://law.justia.com/codes/oklahoma/title-18/section-18-2054-5/
• Oklahoma Secretary of State — Business Filing: https://www.sos.ok.gov/business/default.aspx
• Oklahoma Tax Commission: https://oklahoma.gov/tax.html
• Arrington v. Kruger analysis (McAfee & Taft): https://www.mcafeetaft.com/charging-order-protection-for-a-single-member-llc-may-still-be-illusory/
• Oklahoma Bar Journal — Recent Developments for LLCs (2024): https://www.okbar.org/barjournal/october-2024/recent-developments-for-corporations-and-llcs/