HomeMy WebLinkAbout25-22 RESOLUTION4 z1YEpr,
Cr aaS•'
113 West Mountain Street
Fayetteville, AR 72701
(479) 575-8323
Resolution: 25-22
File Number: 2022-0020
MRS ENTERPRISES, LLC:
A RESOLUTION TO APPROVE A FORTY (40) YEAR GROUND LEASE AGREEMENT
WITH MRS ENTERPRISES, LLC FOR AIRPORT PROPERTY LOCATED AT 4386 SOUTH
SCHOOL AVENUE FOR THE CONSTRUCTION OF A 110' X 100' HANGAR, WITH AN
OPTION TO EXTEND THE GROUND LEASE FOR AN ADDITIONAL FIVE (5) YEAR TERM
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE,
ARKANSAS:
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby authorizes Mayor Jordan
to sign a forty (40) year ground lease agreement, a copy of which is attached to this Resolution, with
MRS Enterprises, LLC for airport property located at 4386 South School Avenue for the construction
of a 110' x 100' hangar, along with an option to extend the ground lease for an additional five (5) year
term at a rental rate of $1,980.00 per year for the discount period and $3,850.00 for the remainder of
the term and any extension term.
PASSED and APPROVED on 2/l/2022
Attest: K Ty
FAYzTTi E��JLLE •�
Kara Paxton, City Clerk Treasurer:
Page 1 Printed on 2/2122
City of Fayetteville, Arkansas 113 West Mountain Street
Fayetteville, AR 72701
(479)575-8323
Text File
File Number: 2022-0020
Agenda Date: 2/1/2022 Version: 1 Status: Passed
In Control: City Council Meetinq File Type: Resolution
Agenda Number: A.3
MRS ENTERPRISES, LLC:
A RESOLUTION TO APPROVE A FORTY (40) YEAR GROUND LEASE AGREEMENT WITH MRS
ENTERPRISES, LLC FOR AIRPORT PROPERTY LOCATED AT 4386 SOUTH SCHOOL AVENUE
FOR THE CONSTRUCTION OF A 110' X 100' HANGAR, WITH AN OPTION TO EXTEND THE
GROUND LEASE FOR AN ADDITIONAL FIVE (5) YEAR TERM
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS:
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby authorizes Mayor Jordan to sign a
forty (40) year ground lease agreement, a copy of which is attached to this Resolution, with MRS Enterprises,
LLC for airport property located at 4386 South School Avenue for the construction of a 110' x 100' hangar,
along with an option to extend the ground lease for an additional five (5) year term at a rental rate of $1,980.00
per year for the discount period and $3,850.00 for the remainder of the term and any extension term.
City of Fayetteville, Arkansas Page 1 Printed on 21212022
Summer Fallen
Submitted By
City of Fayetteville Staff Review Form
2022-0020
Legistar File ID
2/1/2022
City Council Meeting Date - Agenda Item Only
N/A for Non -Agenda Item
1/10/2022 AIRPORT SERVICES (760)
Submitted Date Division / Department
Action Recommendation:
Staff recommends approval and signature of the Mayor on a ground lease with MRS ENTERPRISES LLC for land
located North of terminal at 4386 S. School Avenue to construct a 110' X 100' hangar.
Budget Impact:
Account Number
Fund
Project Number
Project Title
Budgeted Item? No
Current Budget
$ -
Funds Obligated
$ -
Current Balance
Does item have a cost? No
Item Cost
$ -
Budget Adjustment Attached? No
Budget Adjustment
$ -
Remaining Budget
Purchase Order Number:
Change Order Number:
Original Contract Number:
Comments:
V20210527
Previous Ordinance or Resolution #
Approval Date:
—� CITY OF
FAYETTEVILLE
ARKANSAS
MEETING OF FEBRUARY 1, 2022
TO: Mayor and City Council
THRU: Susan Norton, Chief of Staff
Terry Gulley, Assistant Public Works Director
FROM: Summer Fallen, Airport Director
DATE: Feb 1, 2022
SUBJECT: Ground Lease with MRS ENTERPRISES, LLC
CITY COUNCIL MEMO
RECOMMENDATION:
Staff recommends approval and signature of the Mayor on a ground lease with MRS
ENTERPRISES LLC for land located North of terminal at 4386 S. School Avenue to construct a
110' X 100' hangar.
BACKGROUND:
The area in question was improved via grant funds from the FAA and Arkansas Department of
Aeronautics in 2007 to prove infrastructure for 4 corporate style hangars.
DISCUSSION:
MRS ENTERPRISES, LLC will construct at 1 10'X 100' corporate hangar at Drake Field. This
hangar will have the ability to house multiple corporate sized aircraft.
BUDGET/STAFF IMPACT:
MRS ENTERPRISES, LLC will pay $1,980 per year during the 18-month discount period, and
$3,850 per year after the discount period is expired.
Attachments:
Staff Review Form
City Council Memo
Ground Lease
Exhibit A
Mailing Address:
113 W. Mountain Street www.fayetteville-ar.gov
Fayetteville, AR 72701
Lease Agreement
between The City of Fayetteville, Arkansas
And
Tenant
The purpose of this Lease Agreement is to establish an agreement between the City of
Fayetteville, Arkansas ("CITY") and MRS ENTERPRISES, LLC ("Lessees") for the use of
space for the construction of an aircraft hangar and associated aprons and taxilanes as described
below.
1. Leased Premises. For and in consideration of the rents, covenants and agreements
herein entered into and agreed upon by LESSEES as obligations to the CITY, the CITY lets, leases
and demises unto LESSEES, subject to the terms and conditions contained herein, the following
described property situated in Washington, County, Arkansas:
A certain tract of land located immediately north of the Drake Field Terminal building for
construction of a 110' x l 00' hangar.
2. Term. The initial erm is for forty (40) years beginning on FEBRUARY , 2022,
and shall end on FEBRUARY 2062 unless otherwise terminated, canceled or extended as set
forth hereinbelow:
a. LESSEES shall have eighteen (18) months from FEBRUARY , 2022 (the
"Discount Period") to begin construction of the hangar. The CITY or LESSEES
may terminate this lease at any time by giving the other party thirty (30) days
written notice of termination during the first eighteen (18) months following the
FEBRUARY 2022 date, or prior to the ground breaking for the new facility,
whichever occurs earlier. The Discount Period may be extended by up to an
additional eighteen (18) months upon written agreement of CITY and LESSEES.
Failure to begin construction before JULY I , 2023 (or the expiration of any
extended period agreed upon by the parties pursuant to this subsection) shall be an
automatic cancellation of this ground lease.
b. Option to Extend. LESSEES shall have the option to extend the lease term of this
lease for ONE (1) period of five (5) years if LESSEES have satisfied the following
conditions:
i. LESSEES have complied with and performed all conditions, covenants, and
terms of the Agreement without any defaults known to LESSEES, or any
defaults that are not otherwise in the process of being resolved in the manner
provided in this Agreement.
ii. Notice of LESSEES' request to renew has been made and presented in
writing to the City at least one hundred twenty (120) days prior to the
expiration of the initial tern.
iii. The amount of rental fees shall have been successfully negotiated and
agreed to by the parties for the extended lease term.
3. Rent. LESSEES agree to pay to CITY for the Discount Period set forth in
paragraph 2.A above a discounted annual ground rental fee of eighteen cents ($0.18) per square
foot of total leased ground space. Annual rental due for this Discount Period is NINETEEN
HUNDRED EIGHTY DOLLARS ($1,980). The discounted rate shall expire at the end of
Discount Period (including any extension agreed upon by the parties pursuant to paragraph 2.A
above) or upon the issuance of a Final Certificate of Occupancy, whichever shall occur first.
Upon the expiration of the Discount Period, LESSEES agree to pay to CITY an annual ground
rental rate of twenty-five cents ($0.35) per square foot of total leased ground space. Annual rental
due for this period of time is THREE THOUSAND EIGHT HUNDRED FIFTY DOLLARS
($3,850).
Rental payments during the iscount Period shall be paid in advance on the first day of each month
beginning FEBRUARY 1 2022. Rental payments after the Discount Period shall be paid in
advance in yearly installments on the first day following the issuance of a final certificate of
occupancy.
A delinquency charge shall be imposed on payments not received by the close of business on the
tenth (lot) day after the due date. Such delinquency charge shall be the maximum amount
allowable under Arkansas law. Payments shall be delivered or mailed to: City of Fayetteville,
113 W. Mountain St., Fayetteville, Arkansas 72701.
4. Use. LESSEES agree to use the leased premises only as an aircraft hangar and any
other related lawful purposes.
a. Flammable Material: LESSEES agree not to store any flammable material on the
leased premises other than a limited supply of oils and agents necessary for the
operation of an aircraft hangar.
b. Hazardous Substances. LESSEES shall not cause or permit any hazardous
substances to be used or stored on or in the leased premises without first obtaining
CITY's written consent. If hazardous substances are used, stored, generated, or
disposed of on or in the leased premises or if the leased premises or any other airport
property become contaminated in any manner for which LESSEES are responsible
or legally liable, LESSEES shall indemnify and hold harmless CITY from any and
all claims, damages, fines, judgments, penalties, costs, liabilities or losses
(including, without limitation, a decrease in value of the leased premises or
damages caused by loss or restriction of rentable or usable space as part of the
leased premises) arising during or after the term hereof and arising as a result of
that contamination by LESSEES, LESSEE'S agents, employees or invitees. This
indemnification includes, without limitation, any costs incurred because of any
investigation of the airport or any cleanup removal or restoration mandated by a
federal, state, or local agency or political subdivision.
c. LESSEES shall not start or operate aircraft engines within the facility to be
constructed on the leased premises and shall not allow such operations by any other
person.
5. Use of the Airport. LESSEES are granted the use, in common, without charge,
with others similarly authorized, of the airport, together with all facilities, equipment,
improvements, and services which have been or may hereafter be provided at or in connection
with the airport form time to time including, but not limited to, the landing field and any extensions
hereof or additions thereto, roadways, runways, ramps, aprons, taxiways, floodlights, landing
lights, beacons, control tower, signals, radio aids, and all other conveniences for flying, landings
and takeoffs.
LESSEES agree to observe and obey the CITY's ordinances and regulations with respect to use of
the leased premises and airport as well as all applicable county, state or federal regulations or laws.
LESSEES agree to abide by "The Minimum Standards for the Fayetteville Municipal Airport
Drake Field" a copy of which is attached hereto as Exhibit A and made a part hereof.
6. Repairs, Maintenance and Appearance. LESSEES shall at all times during the
term of this agreement, it their expense, keep and maintain in good repair and safe condition the
leased premises and the equipment and appurtenances, both inside and outside, structural and non-
structural, extraordinary and ordinary, whether or not due to wear, tear, obsolescence or defects,
latent or otherwise. When used herein, the term "repairs" shall include all necessary replacements,
renewals, alterations, additions and betterments. LESSEES acknowledge that they are responsible
for the repairs and maintenance necessary to maintain the structural integrity of the hangar.
LESSEES shall at all times maintain the leased premises in a clean, orderly, and attractive
condition and will not allow the accumulation of rubbish, trash, refuse or any other unsightly
condition or fire hazard on the leased premises. LESSEES shall be responsible for the mowing
and upkeep of the outside grounds of the leased premises. LESSEES shall be responsible for all
janitorial services and trash removal from the leased premises.
In the event LESSEES fail to repair or maintain the leased premises as required, CITY may enter
the leased premises for the purpose of making such repairs necessary to maintain the structural
integrity of the hangar or to perform any maintenance required to keep the leased premises in a
clean, orderly and attractive condition. LESSEES shall be liable for any costs incurred by the
CITY in the event CITY exercises its authority due to LESSEE'S Failure to make necessary repairs
or perform other required maintenance work.
7. Alterations and Improvements. Following issuance of a final certificate of
occupancy for the hangar and office space to be constructed on the leased premises, LESSEES
shall have prior written consent from the CITY, meeting all CITY requirements, to make any
alterations, additions and improvements LESSEES deem necessary and desirable to the interior of
the leased premises. LESSEES shall not be entitled to make any major or material alterations,
additions or changes to the exterior of the leased premises without the CITY's written consent.
LESSEES acknowledge and agree that all such alterations, additions, attachments and
improvements including, but not limited to, paneling, partitions, railings, floors, ceilings and the
like, shall become the property of the CITY upon the termination of this agreement.
8. Insurance. LESSEES shall obtain and maintain sufficient insurance coverage for
the repair or replacement of the leased premises and any adjacent improvements, with an insurance
company licensed to do business in the State of Arkansas, naming the CITY as an Additional
Insured on the policy. LESSEES shall provide the Airport Director with a valid certificate of
insurance at all times during the term of this agreement. LESSEES acknowledge that it is their
responsibility to maintain insurance on any personal property on the leased premises.
9. Sub -Leasing and Assignment. LESSEES shall not assign this lease or sublet the
Leased Premises without prior written consent of the CITY of Fayetteville. Consent for any
assignment or subletting shall only be considered at the same rates as established in Paragraph 3
above. Any such assignment or subletting shall in no way relieve LESSEES from liability for the
obligations imposed by this lease. LESSEES may only be released from liability by a specific
written release executed by the CITY.
10. Events of Default. The following shall be Events of Default under this agreement:
a. LESSEES shall fail to pay when due and owing any rent and such nonpayment
continues for twenty days after written notice by the CITY;
b. LESSEES voluntarily abandon, desert or vacate the leased premises;
c. LESSEES fail to comply with the insurance requirements set forth above;
d. LESSEES fail to observe or perform any other obligation under the terms of this
agreement and such failure is unremedied for twenty (20) days after the CITY has
provided written notice specifying such default. CITY may, but is not required to,
grant LESSEES such additional time as is reasonably required to correct any such
default if LESSEES have instituted corrective action and are diligently pursuing the
same; or
e. LESSES fail to provide and maintain any security assurances required under the
terms of this agreement.
11. Remedies Upon Default. Whenever an Event of Default shall occur, and at its
exclusive option, CITY may deliver to LESSEES written notice of termination specifying the date
upon which the agreement shall terminate. In the event of termination, LESSEES rights to
possession of the leased premises shall immediately cease. CITY may reenter and take possession
of the leased premises and LESSEES shall surrender possession. Upon termination, LESSEES
shall be liable to CITY for payment of:
a. All rents and sums accrued through the date of termination.
b. The reasonable costs incurred by CITY to re -let the leased premises, or any portion
thereof; and
c. The reasonable cost incurred by CITY to restore the leased premises or any portion
thereof to the condition in which they were originally leased, ordinary wear and
tear excepted; and
d. Reasonable attorney's fees and costs related to the termination of the lease
agreement including those incurred through the judicial process if LESSEES fail to
vacate.
All rental payments received by CITY from re -letting the leased premises after termination of this
agreement shall be credited against the LESSEES' Outstanding Rental Balance. The acceptance
by CITY of any rent payments by LESSEES after termination of this agreement shall not be
considered a reinstatement or waiver of any other remedies available to CITY.
CITY may also pursue any other available right or remedy available to it in the event of default.
12. Joint and Several Liability of Lessees. LESSEES acknowledge that they are
jointly and severally liable for the obligations imposed on them by this agreement
13. Expiration or Termination. LESSEES hereby agree that upon termination of this
lease by expiration or by earlier termination for any reason whatsoever, it will remove its property
from the leased premises immediately. All property installed, erected or placed by LESSEES in,
on, or about the leased premises shall be deemed to remain the property of CITY.
14. Closure of Airport. In the event that the Fayetteville Municipal Airport facility
and property are no longer used by the CITY for aviation purposes, LESSEES may remain in
possession of the premises until the end of the lease term with the right to use the premises for any
use allowable under Arkansas law.
15. Taxes. LESSEES shall pay all ad valorem taxes and assessments upon the leased
premises and upon all personal property located upon the leased premises which are assessed
during the lease term.
16. Indemnity. LESSEES agree to indemnify the CITY against any liability for
injuries to persons or damage to property caused by LESSEE'S gross negligent use or occupancy
of the leased premises; provided, however, that LESSEES shall not be liable for any personal
injury, damage or loss occasioned by the negligence of the CITY or its agents or employees, and
provided further that each party shall give prompt and timely notice of any claim made or suit
instituted which may in any way directly or indirectly affect either party. Each party shall have
the right to compromise and defend the same to the extent of its own interest. This clause shall
not be construed to waive that tort immunity granted to the CITY under Arkansas law.
17. Non -Waiver. It is agreed that the failure of CITY to invoke any of the available
remedies under this lease or under law in the event of one or more breaches or defaults by
LESSEES under the lease shall not be construed as a waiver of such provisions and conditions and
shall not prevent the CITY from invoking such remedies in the event of any future breach or
default.
18. Notices. Any notice or consent required by this agreement shall be sufficient if
sent by Certified Mail, return receipt requested, postage paid, to the following addresses:
LESSEES
MRS Enterprises, LLC
PO Box 397
Farmington, AR 72730
CITY
City of Fayetteville
ATTN: Airport Director
113 W. Mountain Street
Fayetteville, Arkansas 72701
19. Succession. This lease agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, successors and assigns.
20. Severability. Each paragraph of this lease agreement is severable from all other
paragraphs. In the event any court of competent jurisdiction determines that any paragraph or
subparagraph is invalid or unenforceable for any reason, all remaining paragraphs and
subparagraphs will remain in full force and effect.
21. Interpretation. This lease agreement shall be interpreted according to and
enforced under the laws of the State of Arkansas.
22. Entire Agreement. This lease agreement contains the entire agreement of both
parties hereto, and no other oral or written agreement shall be binding on the parties hereto. This
lease agreement supersedes all prior agreements, contracts and understandings of any kind between
the parties relating to the subject matter hereof. This agreement may be executed in all or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
CI
By:
TENANT
By: K<�*
Printed Name: ��
ATTEST: V Title:
By: k0erKARA PAXTON, ITY G • �� Y �` 9.0 �.
FAYETI / %
E JLLE
kj'Jj �o7 `±Get►►
OPERATING AGREEMENT
OF
MRS ENTERPRISES LLC
An Arkansas Limited Liability Company
PRLPAR[ D 13Y
RNIP LLP
All 0RNINS AT LAW
5519 I IACKLTT ROAD, S1'I1l" 300
SPRINGPAI F. AR 72764
P 0 BOX 1788
FA%'['_l fCVII.1_I:. AR 72702
1. DEFINITIONS.................................................... Page
2. ORGANIZATION................................................. Page 5
2.1 Name ................................................. Page
2.2 Pumoses.............................................. Page
2.3 Powers ................................................ Page 5
2.4 Term ................................................. Page 6
2.5 Registered Agent ....................................... Page 6
2.6 Registered Office . ...................................... Page 6
3. MEMBERS; MEETINGS ........................................... Page 6
3.1 Names and Addresses of Initial Members . ................... Page 6
3.2 Meetings .............................................. Page 6
3.3 Vote of Members ....................................... Page 6
4. MANAGEMENT..................................................... Page 6
4.1 Member Management ...................................... Page 6
4.1. I Business and Affairs ................................ Page 6
4.1.2 Individual Member Authority ......................... Page 6
4.1.3 Group Member Authority ............................ Page 7
4.1.4 Relief from Liability ............................... Page 7
4.1.5 Examples ........................................ Page 7
4.2 Reliance by Third Parties ................................... Page 8
4.2.1 Duty of Person -Dealing with Member .................. Page 8
4.2.2 No Affect on Liability to Other Members ............... Page 8
4.3 Nominees ............................................... Page 8
4.4 Other Member Matters ..................................... Page 9
4.4.1 Documents ....................................... Page 9
4.4.2 Experts .......................................... Page 9
4.4.3 Delegation ....................................... Page 9
4.4.4 Reimbursement ................................... Page 9
4.5 Reliance ................................................. Page 9
4.6 Limited Liability .......................................... Page 9
4.7 Withdrawal .............................................. Page 9
5. CONTRIBUTIONS AND DISTRIBUTIONS . ..........................
Page 9
5.1
Initial Capital Contributions ...............................
Page 9
5.2
Additional Capital Contributions . ..........................
Page 9
5.3
Interest and Return of Capital Contribution . ..................
Page 9
5.4
Capital Accounts .......................................
Page 10
5.4.1 Separate Accounts ................................
Page 10
5.4.2 Obligation of Member .............................
Page 10
5.4.3 Loans to the Company . ...........................
Page 10
5.4.4 Effect of Transfer . ...............................
Page 10
5.5
Distributions ..........................................
Page 11
5.5.1 Distributions ....................................
Page 11
5.5.2 Distributions in Kind .............................
Page 1
5.5.3 Tax Distributions ................................ Page 11
5.6 Allocations ........................................... Page 11
5.7 Allocation with Respect to Propertx ........................ Page 11
6. TRANSFER OF INTERESTS AND RESIGNATION . ..................
Page 12
6.1
Right of First Refusal ..................................
Page 12
6.1.1 Company Option ................................
Page 12
6.1.2 Member Option .................................
Page 12
6.1.3 Default Transfer Period ............................
Page 12
6.2
Refusal Right Not Applicable .............................
Page 12
6.3
Admission of Substitute Members ........................
Page 12
6.4
Purchase of Certain Membership Interests ...................
Page 13
6.4.1 Right of Company to Purchase ......................
Page 13
6.4.2 Notice and Option Period . .........................
Page 13
6.4.3 Determination of Purchase Price .....................
Page 13
6.4.4 Continuation of Company ..........................
Page 13
6.4.5 Closing of Purchase . .............................
Page 14
6.4.6 Prohibition on Exercise ............................
Page 14
6.5
Absolute Prohibition ....................................
Page 14
6.6
Members Acquiring Membership Interest from Company.......
Page 14
6.7
Resignation ...........................................
Page 14
6.8
Effect of Prohibited Action ..............................
Page 15
6.9
Consideration for Transfer . ..............................
Page 15
6.10
Transferor and Transferee Closine Responsibility . ............
Page 15
6.11
Rights of an Assignee ...................................
Page 15
7. DISSOLUTION AND TERMINATION . .............................
Page 15
7.1
Events of Dissolution . ..................................
Page 15
7.2
Liquidation . ..........................................
Page 16
7.3
Orderly Liquidation .....................................
Page 16
7.4
Distributions . .........................................
Page 16
7.5
Taxable Gain or Loss . ..................................
Page 17
7.6
No Recourse -Against Members . ..........................
Page 17
7.7
Continuation . .........................................
Page 17
7.8
Date of Dissolution .....................................
Page 17
S. ACCOUNTING; CERTAIN TAX MATTERS . ........................
Page 17
8.1
Financial Statements and Tax Returns .....................
Page 17
8.2
Fiscal Year ...........................................
Page 17
8.3
Method of Accountingg..................................
Page 17
8.4
Tax Classification .....................................
Page 17
8.5
Tax Elections .........................................
Page 18
8.6
Tax Matters Partner ....................................
Page 18
8.7
Company Representative ................................
Page 18
8.7.1 Appointment and Acceptance ......................
Page 18
8.7.2 Power and Duties ................................
Page 18
8.7.3 Elections .......................................
Page 18
8.7.4 Member Obligations .............................
Page 19
8.7.5 Expenses ...................................... Page 19
8.7.6 Liability of Company Representative ................ Page 19
8.7.7 Indemnification of Company Representative ........... Page 19
9. MISCELLANEOUS PROVISIONS . ................................. Page 19
9.1 Agent ................................................ Page 19
9.2 Amendments .......................................... Page 20
9.3 Application of Arkansas Law . ............................ Page 20
9.4 Mediation and Arbitration ............................... Page 20
9.5 Mediation ............................................ Page 20
9.6 Arbitration ........................................... Page 20
9.7 Attorneys'Fees........................................ Page 21
9.8 Banking .............................................. Page 21
9.9 Construction . ......................................... Page 21
9.10 Counterparts . ......................................... Page 21
9.11 Creditors . ............................................ Page 21
9.12 Headings ............................................. Page 21
9.13 Heirs. Successors and Assigns . ........................... Page 22
9.14 Information Release . ................................... Page 22
9.15 Insurance Purchase . .................................... Page 22
9.16 Location of and Access to Company Records . ............... Page 22
9.17 Notices . ............................................. Page 22
9.18 Power of Attorney ...................................... Page 23
9.18.1 Grant of Power .................................. Page 23
9.18.2 Power Irrevocable ................................ Page 23
9.18.3 Use of Power .................................... Page 23
9.19 Representations and Warranties . .......................... Page 24
9.19.1 Investment Representation . ........................ Page 24
9.19.2 Organization Representation ........................ Page 24
9.19.3 Survival ........................................ Page 24
9.20 Rights and Remedies Cumulative .......................... Page 24
9.21 Severability........................................... Page 24
9.22 Waiver of Right of Partition .............................. Page 24
9.23 Waivers .............................................. Page 25
9.24 Entire Agreement . ..................................... Page 25
SCHEDULE A --MEMBERS AND CAPITAL CONTRIBUTIONS .............. Page 27
OPERATING AGREEMENT
OF
MRS ENTERPRISES LLC
An Arkansas Limited Liability Company
THIS OPERATING AGREEMENT, dated as of February 12, 2019, by and among the
undersigned parties, who by their execution of this Operating Agreement affirm their status as the
current Members of MRS Enterprises LLC, an Arkansas limited liability company, provides as
follows:
RECITALS:
The Company was previously organized as a limited liability company under the laws of the
State of Arkansas effective as of July 24, 2018. The undersigned parties wish to enter into this
amended Operating Agreement to set forth the terms and conditions on which the management,
business and financial affairs of the Company shall be conducted. Except as specifically stated
herein and except as to the continuance of the capital account of the Member, this Operating
Agreement will replace all prior operating agreements of MRS Enterprises LLC.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises,
covenants and conditions herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties do hereby covenant and agree as follows:
1. DEFINITIONS. Capitalized terms used in this Operating Agreement shall have the
following meanings, or if not defined herein, in the Act:
"Act" shall mean the Arkansas Small Business Entity Tax Pass Through Act, Ark. Code Ann.
§ 4-32-101 et seq. (1993), as amended and in force from time to time.
"Articles" shall mean the articles of organization of the Company, as amended and in force
from time to time.
"Assiance" shall mean a transferee of a Membership Interest who is not otherwise admitted
to the Company as a Substitute Member pursuant to the terms of this Operating Agreement and who
has the rights described in paragraph 6.11 herein.
"BBA" means the Bipartisan Budget Act of 2015 as amended by the Protecting American
from Tax Hikes Act of 2015, Pub. L. No.114-113, div. Q (the "PATH Act'), § 411, whose
operational provisions are contained in §§ 6221 through 6241 of the Code.
"Capital Account" shall mean as of any given date the amount calculated and maintained by
the Company for each Member as provided in paragraph 5.4 hereof.
MRS Enterprises LLC
%Wk l mcrpii.«I I l tnanJcdOperalmgigrwncw upd Page 1 Operating A rcemcni dated February 12, 2019
"Capital Contribution" shall mean any contribution to the capital of the Company by a
Member in cash, property or services, or a binding obligation to contribute cash, property or services,
whenever made.
"Code" shall mean the Internal Revenue Code of 1986, as amended and includes the United
States Treasury Regulations promulgated under the authority of the Code.
"Company" shall mean MRS Enterprises LLC.
"Company Level Taxes" means any federal, state, or local taxes, additions to tax, penalties,
and interest payable by the Company as a result of any examination of the Company's affairs by any
federal, state, or local tax authorities, including resulting administrative and judicial proceedings
under the Partnership Tax Audit Rules.
"Company Representative" has the meaning assigned to the term "partnership representative"
in § 6223 of the Code and any Treasury Regulations or other administrative or judicial
pronouncements promulgated thereunder (and in any similar capacity under state or local Law), as
appointed in paragraph 8.7.
"Consideration" shall mean any interest in any real or personal property wherever situated
and whether tangible or intangible, direct or indirect, absolute or contingent, or future or present
which will be proposed to be exchanged or exchanged for all or any part of a Membership Interest.
"Covered Audit Adiustment" means an adjustment to any partnership -related item (within
the meaning of § 6241(2)(B) of the Code) to the extent such adjustment results in an "imputed
underpayment" as described in § 6225(b) of the Code or any analogous provision of state or local
Law.
"Dissolution" shall mean the conclusion of the procedure set forth in the Act for the
termination of the Company.
"Distribution" shall mean the payment of money to the Members other than payments for
services rendered, payments for the purchase and sale of Company Property or other real or personal
property, payments for reimbursement of expenses, and payments on loans.
"Entity" shall mean any general partnership, limited partnership, limited liability company,
corporation, joint venture, trust, business trust, cooperative or other association.
"Fair Market Value" shall mean the price at which an item of property would change hands
between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell
and both having reasonable knowledge of relevant facts as proposed in Reg. §§ 20.2031-1(b) and
25.2512-1 of the Code.
"Initial Capital Contribution's shall mean the initial contribution to the capital of the
Company made by a Member pursuant to paragraph 5.1 of this Operating Agreement.
MRS Cnterpriws LLC"
2017.0112 Page 2 Operating Agreement dated rebruary 12, 2019
"Law " means any federal, national, supranational, state, provincial, local or similar statute,
law, ordinance, regulation, rule, code, order, requirement or rule of law (including common law).
"Legally Separated" shall mean that Spouses shall have entered into a written separation
agreement.
"Loss" shall mean the losses and deductions of the Company for each fiscal year, plus any
expenditures of the Company not deductible in computing its taxable income and not properly
chargeable to the Capital Accounts of the Members.
"Management Authority" shall refer to the Members power to manage the Company, as
further described in 4.1.1
"Member" shall mean each Person that is identified as an Member on Schedule A or is
hereafter admitted as a Member (either as a transferee of a Membership Interest or as an additional
Member) as provided in this Operating Agreement. A Person shall cease to be a Member at such
time as he no longer owns any Membership Interest.
"Membership Interest" shall mean the ownership interest of a Member in the Company,
which may be expressed as a percentage equal to such Member's Capital Account divided by the
aggregate Capital Accounts of all Members. The Membership Interests may be recorded from time
to time on a schedule attached to this Operating Agreement. For purposes of Article 8 of the
Uniform Commercial Code, Ark. Code Ann. § 4-8-101 et seq., the Membership Interests of the
Company shall be a "security", but this shall not mean or imply that the Membership Interests are
otherwise a "security" under applicable Company Representative.
"Operating Agreement" shall mean this Operating Agreement, as originally executed and as
amended from time to time.
"Option Event" shall mean:
(A) the death of a Member;
(B) a default of a Member regarding the Member's Capital Contribution as
contemplated in subparagraph 5.4.2;
(C) the legal incapacity of a Member as established by a final non -appealable
judgment, decree or order of a court of competent jurisdiction;
(D) the Dissolution of the Member;
(E) the change of ownership;'voting control of the Member from the Person who
owned or had voting control of the Member on the execution date of this
Operating Agreement or otherwise, the date on which the Member was
admitted to the Company;
(F) the inability of a Member to pay his debts generally as they become due;
(G) any assignment by a Member for the benefit of his creditors:
(H) the filing by a Member of a voluntary petition in bankruptcy or similar
insolvency proceedings; or
MRS Enterprises LLC
2017-021IPage 3 Operating Agreement dated February 12. 2019
(1) the filing against a Member of an involuntary petition in bankruptcy or
similar insolvency proceeding that is not dismissed within ninety (90) days
thereafter.
"Option Member" shall mean any Member to which an Option Event has occurred. Option
Member shall include an Option Member's personal representative, trustee of a trust created by the
Option Member or trustee in bankruptcy, to the extent applicable.
"Partnership Tax Audit Rules" means §§ 6221 through 6241 of the Code, as amended,
together with any final or temporary Treasury Regulations, Revenue Rulings, and case Law
interpreting §§ 6221 through 6241 of the Code, as amended (and any analogous provision of state
or local tax Law).
"Permitted Transfer" shall mean:
(A) a Transfer to a Related Party of the Member;
(B) a Transfer (which is not the result of an Option Event) to a trust, each
beneficiary of which is a Related Party of the Member; and
(C) an encumbrance or pledge of up to ninety percent (90%) of a Member's
Membership Interest in order to secure loans from commercial financial
institutions; and
(D) a Transfer of a Membership Interest to a custodian to be held for a minor
Related Party of the transferor Member under the Laws of the State of
Arkansas or any other state and the Transferof this Membership Interest from
such custodian to such Related Party when he reaches the age of termination
of such custodianship under the applicable statute.
"Person" shall mean any natural person or Entity, and the heirs, executors, administrators,
legal representatives, successors, and assigns of such person where the context so admits.
"Profit" shall mean the income and gains of the Company for each fiscal year, plus any
income which is exempt from tax as described in § 705(a)(1)(B) of the Code.
"Property'' shall mean any and all interests of the Company in any asset, real or personal
property, wherever situated, whether tangible or intangible, direct or indirect, absolute orcontingent,
or future or present.
"Related Party'' shall mean in relation to a Member:
(A) any heir (determined by applying the Laws of descent and distribution of the
state where the Member resides) of the referenced Member, other than the
referenced Member's Spouse,
(B) a trust established providing a lifetime income interest for the Spouse of this
Member with principal distributions, in the event that the Spouse is the
trustee of such trust, as is necessary for this Spouse's health, maintenance and
support in such Spouse's accustomed manner of living, and
(C) a trust established providing a lifetime income interest only for a Spouse of
a descendant of the Member.
MRS Enterprises LLU
2019-0212.\IASEmvpnsot I ( VirealndbpoilinvAp"i mi „FKI Page 4 Operating Agreement dated February 12. 2019
"Spouse- means a person who is legally married to and not Legally Separated from the other
if the other is living; or was married to and not Legally Separated from the other at the time of the
other's death.
"Tax Matters Partner" has the meaning assigned to the term in § 6231(a)(7) of the Code prior
to amendment by the BBA.
"Transfer" means any transfer or other disposition by or with respect to a Member of all or
any part of his Membership interest, whether or not made to another party to this Operating
Agreement and whether voluntarily, involuntarily or by operation of Law, and includes any transfer
or other disposition (1) by sale, exchange, assignment, gift, will, intestacy Law or other act of
alienation, (2) by grant of security interest, pledge or other encumbrance, (3) by an executor,
administrator, custodian or trustee to a beneficiary, (4) by attachment, levy, judicial process or
similar proceedings (e.g., divorce, bankruptcy, enforcement of a security interest, entry of charging
order), or under an agreement prior or incident to such proceedings or (5) pursuant to applicable
community property, quasi -community property or similar state Law. In addition, a "Transfer" will
be deemed to have occurred if a Member that is an entity (1) is dissolved or (2) goes through a
change of ownership or voting control of the Member from the person who owned or had voting
control of the Member on the execution date of this Agreement or the date on which the Member
was admitted to the Company. For a Person to "Transfer" means a Transfer occurs by or with respect
to the Member. A Transfer made to the trustee of a trust that is wholly revocable by the transferor
will not be a Transfer for purposes of this Operating Agreement, but any subsequent Transfer by the
trustee of this trust will be deemed to have been made by the trust's grantor. Unless the context or
modifiers indicates otherwise, "Transfer" includes both voluntary and involuntary Transfers.
2. ORGANIZATION.
2.1 Name. The name of the Company shall be "MRS Enterprises LLC." Subject to
applicable Arkansas Law, the Company may adopt such trade or business names, whether fictitious,
assumed, in acronym form or otherwise, as the Members may deem appropriate.
2.2 Purposes. The nature of the business or purposes to be conducted or promoted by the
Company is to engage in any lawful act or activity for which limited liability companies may be
formed under the Act. The Company shall have the power and authority to take any and all actions
and engage in any and all activities necessary, appropriate, desirable, advisable, ancillary or
incidental to the accomplishment of the foregoing purpose.
2.3 Powers. The Company will have the power to hold, operate, encumber, lease, sell,
dispose of and otherwise deal with Company property (including businesses), to carry on any
activities and take any action related to its purposes and to execute and perfonn any contracts,
documents or instruments necessary to, in connection with or incidental to the accomplishment of
its purposes, so long as such activities may be lawfully carried on or performed by a limited liability
company under Arkansas Law (and if applicable, the foreign jurisdiction). The Company will have
the power to invest and reinvest any of the Company property, whether or not the original purpose
for the investment has been accomplished. In addition, the Company will have all powers and rights
related or incidental to its purposes and of limited liability company organized under the Act to the
extent such powers or rights are not limited or changed by its Articles. If the Company qualifies to
do business in a foreign jurisdiction, the Company will have such additional powers and rights (if
any) as provided a limited liability company with respect to its activity in that jurisdiction.
2.4 Term. The term of the Company shall commence upon filing duly executed Articles
of Organization in the office of the Secretary of State of Arkansas and shall continue until the
Company is liquidated and dissolved pursuant to the provisions of Section 7.
Page
Enterprises LLC
:017-0212 VRSFmrrVtie,1 l[ %nrndcd0peraung-%grccrMnt %tpd Cage 5 Opuattnr Agreement datal February 12, 2019
2.5 Registered Agent. The initial registered agent of the Company shall be the registered
agent named in the Articles of Organization. The registered agent may resign at anytime by sending
written notice to the Company. The Members may terminate the registered agent at any time and
appoint successor registered agents.
2.6 Registered Office. The Company's principal office and place of business will be P.O.
Box 397, Farmington, AR 72730. The registered office may be changed from time to time by the
Members.
3. MEMBERS; MEETINGS
3.1 Names and Addresses of Initial Members. The names and addresses of the initial
Members are set forth in Schedule A (which is incorporated by reference).
3.2 Meetings. Meetings of the Company may be called by a majority in interest of the
Members for any matters on which the Members may vote under this Operating Agreement or for
any other reason. Unless waived, ten (10) days written notice of a meeting will be required and
meetings will be held in the location designated by the Members. Any action required or permitted
to be taken at a meeting may be taken without a meeting by written action signed by the Members
with necessary Membership Interests required to take the same action at a meeting. The written
action is effective when signed by Members with the necessary Membership Interests, unless a
different effective time is provided in the written action.
3.3 Vote of Members. On all matters requiring a vote of the Members, each Member will
have a vote equal to his Membership Interest at the time of such vote. Members may vote informally
or by proxy at any Company meeting. A vote may be taken after written notice stating that a failure
to respond within not less than fifteen (15) days will be considered a vote in favor of the matter
which is the subject of the vote is sent to each Member entitled to vote pursuant to the terms of this
Operating Agreement. This paragraph shall not be interpreted as creating voting rights for a Member
that would not otherwise hold such voting power under another section, paragraph, subparagraph or
clause of this Operating Agreement.
4. MANAGEMENT.
4.1 Member Management.
4.1.1 Business and Affairs. The Member(s) will have the full and exclusive power
on behalf ofthe Company to manage, operate and control the businesses and affairs of the Company
and to do or cause to be done anything determined to be necessary or appropriate for the business
and affairs of the Company ("Management Authority").
4.1.2 Individual Member Authority. Each Member is authorized to exercise
Management Authority on behalf ofthe Company tirithow the need for any other Member to join in
the exercise of the Management Authority. The affect of the exercise of Management Authority by
one Member with respect to third parties will be the same as if the Management Authority was
exercised by the majority in interest vote of the Members, will constitute the act or non -act of the
Company and will bind the Company, the Member(s) and all respective successors, assigns, heirs
and personal representatives.
4.1.3 Group Member Authority. When multiple Members choose to exercise
Management Authority as a group, the Members will exercise Management Authority by majority
in interest vote unless otherwise required by this Agreement or the Act.
MRS Enterprises LLC
2019-0211 MRSEmcrprixcsLt [ lnrndcS0pera1ingagrccmcni npd Page 6 Operating Agreement dated February 12, 2019
4.1.4 Relief from Liability. If a Member disagrees with the exercise of Management
Authority by another Member acting alone or the vote of the Members acting as a group, within five
(5) days of actual knowledge of this exercise of Management Authority by the Member(s), the
dissenting Member may give written notice to the other Member(s) of the dissent and this notice will
relieve the dissenting Member of any liability to the Company, the other Member(s) or third parties
resulting from the exercise of the Management Authority. In this event, the dissenting Member will
be indemnified from all loss and expense by the Company and the other Member(s) who have
consented to the exercise of the Management Authority.
to:
4.1.5 Examples. Management Authority includes, but is not limited to, the authority
(1) execute and deliver on behalf of the Company, all contracts, instruments, documents,
and undertakings necessary that may be necessary, appropriate or advisable in
furtherance of the purposes of the Company;
(2) sell, exchange, assign, convey, lease and transfer legal and equitable title to Company
property on terms and conditions determined appropriate by the Members, including
the giving of any warranties or assurances determined appropriate;
(3) buy, lease or otherwise acquire, operate, improve and develop any type of Company
property;
(4) retain (without liability) any property in the form in which it is received without
regard to its productivity or the proportion that any one asset or class of assets may
bear to the whole of the Company property;
(5) take title to Company property in the name of the Company or as nominee (with or
without disclosing the identity of the principal) and allow registration of securities
in "street name" under a custodial arrangement with a securities brokerage firm, trust
department or other custodian;
(6) collect funds due to the Company;
(7) borrow money, finance, refinance or otherwise incur obligations for the account of
the Company and pledge, mortgage and grant security interests in Company property;
(8) assign any debts owing to the Company;
(9) carry out the Company purposes through other limited liability companies,
partnerships, corporations or other entities or business trusts and enter into any
agreement for the sharing of profits and any joint venture agreement with any person
or entity engaging in any business or venture in which this Company may engage;
(10) manage, administer, conserve, improve, develop, operate, lease, utilize and defend
Company property directly or through third parties;
(11) execute any type of agreement or instrument in connection with any other Company
power:
(12) hire employees, appoint agents and engage other persons to assist in the management
of the Company and delegate powers or duties of the Members to these persons
assisting in this management (even if they are related by blood, marriage or business
relationship to a Member) and pay these person reasonable compensation;
(13) incur any reasonable expense for travel, telephone, telegraph, insurance, taxes and
such other things in carrying on Company business or affairs;
(14) quitclaim, release, or abandon any Company property with or without consideration;
(15) loan funds on terms and conditions determined appropriate by the Members;
(16) open and maintain bank and investment accounts and arrangements, draw checks and
other orders for the payment of money and designate individuals with authority to
sign or give instructions with respect to those accounts and arrangements;
(17) invest and reinvest Company property to accomplish the Company purposes,
including but not limited to investing the Company property in accordance with
modern portfolio theory;
MRS Enterprises LLC
2019-0212.\IksrnrerpnsoLL[' lssrnnlnlUpersung %Vrrrnxm upd Page 7 Operating Agreement dated February 12. 2019
(18) prepare and file, or cause to be prepared and filed, all tax returns (if any) and
payments relating to income tax, employment taxes, and other taxes imposed upon
the Company;
(19) make elections available to the Company under the Code;
(20) execute and file certificates or instruments required or permitted by the Act and other
laws with respect to the Company.
4.2 Reliance by Third Parties.
4.2.1 Duty of Person Dealing with Member. Notwithstanding any other provision
of this Agreement, any act of Management Authority taken by a Member (even if there is more than
one Member) which states that it is on behalf of the Company will be binding as to any person (and
the heirs, successors and assigns of this person) who acts and relies in good faith on the authority of
the Member to take the action. A person who in good faith and for value deals with a Member (or
a person purporting to be a Member), or who in good faith assists a Member (or a person purporting
to be a Member), in the conduct of a transaction (e.g., a sale and purchase of Company property, a
transfer of Company property by a transfer agent, a distribution of dividends by dividend disbursing
agent, a loan to the Company by a bank or a distribution to a person by a brokerage firm holding
Company property) will not be required to:
(1) ascertain whether this person who purports to be a Member is in fact then
occupying the position of Member,
(2) ascertain whether this Member has the power to act alone or on behalf of the
other Members,
(3) ascertain whether this Member is properly exercising any Management
Authority,
(4) ascertain whether a person who purports to be acting for an entity Member
is in fact then authorized to act on behalf of the entity Member or
(5) assure the proper application of any property paid or delivered to the
Member,
even if the action appears to be prohibited by this Agreement.
4.2.2 No Affect on Liability to Other Members. This reliance accommodation for
third parties to act without the requirement to fully ascertain the authority of the Member by a
complete review of this Agreement and any applicable Member action resolution, memorandum or
minutes will in no way affect the liability of the acting Member to the Company or the other
Member(s) for any improper conduct.
4.3 Nominees. The Company and the Member(s) recognize that sometimes there are
practical difficulties in doing business as a limited liability company, occasioned by outsiders
seeking to satisfy themselves relative to the authority of the Member(s) to act for and on behalf of
the Company or for other reasons. The Members therefore specifically authorizes a Member to
acquire real and personal property, arrange financing, enter contracts and complete other
arrangements needed to effectuate the purposes of the Company in the individual name of the
Member or in the name of a nominee, without having to disclose the existence of the Company.
4.4 Other Member Matters.
4.4.1 Documents. A Member may rely, and will be protected in acting or refraining
from acting, oil any resolution, certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture or other paper or document believed by the Member to be genuine
and to have been signed or presented by the proper party(s).
MRS Enterprises LLC
IRSFmcrVTI si M %nxndcd0pnaunclgicrnrmupd Page 8 Operating Agreement dated February 12. 2019
4.4.2 Experts. A Member may consult with legal counsel, accountants, appraisers,
management consultants, investment managers, investment bankers and other consultants and
advisers selected by the Members, and any opinion of any such person as to matters that the Member
reasonably believes to be within the professional or expert competence of this person will be a full
and complete authorization and protection in respect of the action taken or omitted by the Member
in good faith and in accordance with that opinion.
4.4.3 Delegation. A Member will have the right, in respect of any of obligations of
the Member under this Agreement or the Act, to act through any of the duly authorized officer(s),
manager(s), member(s), general partner(s) or other applicable representative(s) of the Member and
will have the right, in respect of any of the powers or obligations of the Member under this
Agreement or the Act, to act through a duly appointed attorney -in -fact. Each such attorney -in -fact
will, to the extent provided by the Member in the power of attorney, have full power and authority
to do and perform every act and duty that is permitted or required to be done by the Member under
this Agreement or the Act.
4.4.4 Reimbursement. A Member will be entitled to receive reimbursement for
expenses incurred in the performance of duties under this Agreement if approved by the Member.
4.5 Reliance. Any person dealing with the Company in good faith may rely on the authority
of the Member(s) in taking any action or deciding not to act in the name of the Company.
4.6 Limited Liability. No Member(s) will have any personal obligation for any liabilities
of the Company solely by reason of being a Member(s) except as provided by applicable law.
4.7 Withdrawal. A Member will have no right to resign and withdraw from the Company
at any time prior to dissolution without the written consent of all other Members.
5. CONTRIBUTIONS AND DISTRIBUTIONS.
5.1 Initial Capital Contributions. Each Member has made an initial Capital Contribution
as shown on Schedule A attached hereto. The Initial Capital Contribution to be made by any Person
who hereafter is admitted as a Member and acquires his Membership Interest from the Company
shall be determined by the Members.
5.2 Additional Capital Contributions. No Member shall be required to make any Capital
Contribution in addition to his Initial Capital Contribution. Otherwise, the Members may make
additional Capital Contributions to the Company only if such additional Capital Contributions are
made pro rata by all the Members or all the Members consent in writing to any non -pro rata
contribution. The Fair Market Value of any property other than cash or widely traded securities to
be contributed as an additional Capital Contribution shall be (a) agreed upon by the contributing
Member and a majority in interest of the Members before contribution, or (b) determined by a
disinterested appraiser selected by the Members.
5.3 Interest and Return of Capital Contribution. No Member shall receive any interest
on his Capital Contribution. Except as otherwise specifically provided for herein, the Members shall
not be allowed to withdraw or have refunded any Capital Contribution. Further, no Members will
have priority over any other Members as to the return or withdrawal of Capital Contributions.
5.4 Capital Accounts.
5.4.1 Separate Accounts. A]I Capital Accounts shall be maintained pursuant to this
paragraph 5.4 and § 704(b) of the Code and Regulations promulgated thereunder. Separate Capital
MRS E;ntuprises LLB"
N19.6?1_'.NlMnt[rpnwil It %imidedUpcuungk..r"i mxpd Page 9 Operating Agreement dated rebruary 12, 2019
Accounts shall be maintained for each Member in accordance with the following provisions:
(A) To each Member's Capital Account there shall be credited the Fair Market
Value of such Member's Initial Capital Contribution and any additional
Capital Contributions, such Member's distributive share of Profits, and the
amount of any Company liabilities that are expressly assumed by such
Member.
(B) To each Member's Capital Account there shall be debited the amount of cash
and the Fair Market Value of any Property distributed to such Member
pursuant to any provision of this Operating Agreement, such Member's
distributive share of Losses, and the amount of any liabilities of such Member
that are assumed by the Company or that are secured by any Property
contributed by such Member to the Company.
(C) The Capital Account shall also include a pro rata share of the Fair Market
Value of any Property contributed by a Person who is not a Member, such
Fair Market Value to be the same value reported for federal gift tax purposes
if a gift tax return is filed, and if not, the Fair Market Value in the case of real
property shall be determined by an independent M.A.I. appraiser, selected by
the Members, actively engaged in appraisal work in the area where such real
property is located and otherwise by the certified public accountant or
accountants then serving the Company.
(D) If any Member makes a non -pro rata Capital Contribution to the Company or
the Company makes a non -pro rata Distribution to any Member, the Capital
Account of each Member shall be adjusted to reflect the then Fair Market
Value of the Property held by the Company immediately before the Capital
Contribution or Distribution.
5.4.2 Obligation of Member. Each Member is unconditionally obligated to make
its Capital Contribution to the Company. If after having received notice, as provided in this
Operating Agreement, a Member is in default of its Capital Contribution, the Company may offset
Distributions to that Member until the total offset Distributions for this Member equals the
Member's Capital Contribution obligation. In the alternative, the Company may charge the Member
interest, at a commercially reasonable rate and determined in the sole discretion of the Members, on
the amount of its Capital Contribution obligation.
5.4.3 Loans to the Company. If the Company has insufficient funds to meet its
obligations as they come due and to carry out its routine, day-to-day affairs, then, in lieu of obtaining
required funds from third parties or selling its assets to provide required funds, the Company may,
but shall not be required to, borrow necessary funds from one or more of the Members as designated
by the Members; provided that the terms of such borrowing shall be commercially reasonable and
the Company shall not pledge its Property to secure such borrowing.
5.4.4 Effect of Transfer. In the event of Transfer of a Membership Interest in the
Company, including a Permitted Transfer, the Capital Account of the transferor shall become the
Capital Account of the transferee in proportion to the percentage of the transferor's Membership
Interest Transferred.
5.5 Distributions.
55.1 Distributions. To the extent permitted by applicable Law and hereunder, and
MRS Enterprises LLC-
2019-0212.%1RSrntcrpnsnl It 11-. lk IOpetattngAgreerncnt 1�pd Page 10 Operating Agreement dated February 12, 2019
except as otherwise provided in paragraph 7.4, Distributions to Members may be declared by the
Members out of funds legally available therefor in such amounts and on such terms (including the
payment dates of such distributions) as the Members shall determine using such record date as the
Members may designate. Any such Distribution shall be made to the Members as of the close of
business on such record date on a pro,-ata basis, in accordance with the Membership Interest owned
by each Member as of the close of business on such record date; provided , however , that the
Managing Member shall have the obligation to make distributions as set forth in subparagraph 5.5.3
and clause 7.4(C); and provided, further, that, notwithstanding any other provision herein to the
contrary, no Distributions shall be made to any Member to the extent such Distribution would render
the Company insolvent or violate the Act. For purposes of the foregoing sentence, insolvency means
the inability of the Company to meet its payment obligations when due. Promptly following the
designation of record date and the declaration of a Distribution pursuant to this subparagraph 5.5.1,
the Members shall give notice to each Member of the record date, the amount and the terms of tile
Distribution and the payment date thereof.
5.5.2 Distributions in Kind. Distributions in kind of the Company Property, in
liquidation or otherwise, shall be made only with the consent of all Members and only at a value
established by mutual agreement of the Members. Prior to any such Distribution in kind, the
difference between such established value and the book value of the Property to be distributed shall
be credited or charged, as is appropriate, to the Members' Capital Accounts in proportion to their
Membership Interest. Upon the Distribution of such Property, such agreed upon value shall be
charged to the Capital Accounts of the Members receiving such Distribution. Members shall not be
able to demand or force a Distribution in kind of Company Property over the objection of non -
consenting Members.
5.5.3 Tax Distributions. The Company shall, subject to any restrictions contained
in any agreement to which the Company is bound, make Distributions out of legally available funds
to all Members on a pro rata basis in accordance with subparagraph 5.5.1, at such times and in such
amounts as the Members reasonably determine is necessary to enable the Members, in the aggregate,
to timely satisfy any and all U.S. federal, state and local and non-U.S. tax obligations (including any
Company Level Taxes, but excluding any obligations to remit any withholdings withheld from
payments to third parties) owed by the Members, in the aggregate.
5.6 Allocations. Except as otherwise provided in paragraphs 5.7 and 5.8 hereof, all items
of Profit, Loss, deduction and credit, whether resulting from the Company's operations or in
connection with its Dissolution, shall be allocated to the Members for federal, state and local income
tax purposes in proportion to their respective Membership Interests.
5.7 Allocation with Respect to Prop=. If, at anytime during the Company's existence,
any Member contributes to the Company Property with an adjusted basis to the contributing Member
which is more or less than the agreed Fair Market Value and such Property is accepted by the
Company at the time of its contribution, the taxable Profit, Loss, deductions and credits with respect
to such contributed Property for tax purposes only (but not for purposes of calculating the Members'
respective Capital Accounts) shall be shared among the Members so as to take account of the
variation between the basis of the Property to the Company and its agreed Fair Market Value at the
time of contribution, pursuant to § 704(c) of the Code.
5.8 Special Allocations. Items of income, gain, loss, expense or credit resulting from a
Covered Audit Adjustment shall be allocated to the Members in accordance with the applicable
provisions of the Partnership Tax Audit Rules.
6. TRANSFER OF INTERESTS AND RESIGNATION.
MR5 Enterprises LLC'
]617.0?I? %1RSEnirrprixrsL1.l \nendedop alin, % ccm nt „pd Page l l Operating Agreement dated February 12, 2019
6.1 Right of First Refusal.
6.1.1 Company Option. Unless the Transfer of his Membership Interest is a
Permitted Transfer, each Member hereby covenants and agrees that he will not Transfer all or any
part of his Membership Interest to any Person, firm, corporation, trust or other Entity without first
offering in writing to sell such Membership Interest to the Company on the same written terms and
conditions offered by such third party ("Purchase Terms"). The Company shall have the right to
accept the offer at any time during the 30 days following the date on which the written offer is
delivered to the Company ("Company Acceptance Period").
6.1.2 Member Option. If the Company shall fail to accept the offer within the
Company Acceptance Period or waive its right to acquire such Membership Interest, then within
fifteen (15) days, beginning on the earlier of (1) the end of the Company Acceptance Period or (2)
the date on which the Company waives its right to acquire such Membership Interest ("Member
Acceptance Period"), one or more of the Members may acquire such Membership Interest on the
same Purchase Terms. In this event, the Membership Interest will be divided pro-rata among the
acquiring Members.
6.1.3 Default Transfer Period. If both the Company and the Members fail to accept
the offer in the time provided herein, the Membership Interest may, during the sixty (60) day period
beginning on the earlier of (1) the end of the Member Acceptance Period or (2) the date on which
all Members waive their right to acquire such Membership Interest, be disposed of free of the
restrictions imposed by this Operating Agreement; provided, however, that the Membership Interest
is Transferred on the same Purchase Terms that were offered to the Company and Members (as
applicable). Any Membership Interest not so disposed of within this sixty (60) day period shall
thereafter remain subject to the terms of this Operating Agreement.
6.2 Refusal Right Not Applicable. Notwithstanding paragraph 6.1, any or all of a
Member's Membership Interest may be Transferred to a transferee without an offer being made to
the Company and Members as described therein, if the Transfer is a Permitted Transfer.
Notwithstanding the previous sentence, no Assignee of a Membership Interest by way of being the
transferee of a Transfer (including a Permitted Transfer) shall become a Member of the Company
except upon receiving the consent of a majority in interest of the non -Transferring Members and
upon complying with the requirements of paragraph 6.3.
6.3 Admission of Substitute Members. Notwithstanding paragraph 6.2, if the unanimous
consent contemplated in paragraph 6.2 is satisfied, a transferee (including a transferee of a Permitted
Transfer) shall be admitted as a Substitute Member only if -
(A) the Transferring Member (or his personal representative) and the transferee:
(1) execute, acknowledge, and deliver to the Members such instruments
of Transfer and assignment as are in form and substance satisfactory
to the Members; and
(2) furnish to the Members such assurances as the Members may request,
including, without limitation, an opinion of counsel to the Company
or counsel otherwise satisfactory to the Members that the Transferring
Members Membership Interest has been registered for sale under the
Securities Act of 1933, as amended, and under all applicable state
securities Laws or that such registration under the said Securities Act
of 1933 and under all applicable state securities Laws is not required
and that the Transfer shall not cause a termination of the Company
MRS Enterprkes LLC
Z019-0212MRSEwaprisoLlC %twi,1 011cutwgAgiceimm «p,l Page 12 Operating Agreement dated February 12, 1019
under § 708(b) or any other provision of the Code; and
(B) the transferee:
(1) pays all reasonable expenses connected with such substitution; and
(2) agrees to be bound by the terms and provisions of this Operating
Agreement by becoming a signatory hereto.
6.4 Purchase of Certain Membership Interests.
6.4.1 Right of Company to Purchase. If an Option Event occurs with respect to any
an Option Member, the Option Member shall cease to be a participating Member and shall have the
rights of an Assignee only. The Company shall have the option to purchase the Option Member's
Membership Interest upon the terms and conditions set forth in this paragraph 6.4.
6.4.2 Notice and Option Period. Upon any Option Event occurring to an Option
Member, the Option Member shall, within fifteen (15) days, deliver written notice of the occurrence
of such Option Event to the Company. The Company shall have the option, but not the obligation,
to purchase the Option Member's Membership Interest at any time during the sixty (60) day period
immediately following the date on which it receives notice of the occurrence of the Option Event.
Such option shall entitle the Company to purchase such Membership Interest for the purchase price
described in subparagraph 6.4.3. The consent of all the Members shall be required to authorize the
exercise of such option by the Company. Such option must be exercised by delivery of a written
notice from the Company to the Option Member during the aforementioned period. Upon delivery
of such notice the exercise of such option shall be final and binding on the Company and the Option
Member.
6.4.3 Determination of Purchase Price. The purchase price of Option Member's
Membership Interest shall be the Fair Market Value of such Membership Interest. The Fair Market
Value of the interest shall be the amount that the Option Member would receive in exchange for his
entire interest in the Company if the Company sold all of its assets, subject to their liabilities, at their
Fair Market Value as of the date on which the Option Event occurred and distributed the net
proceeds from such sale in complete liquidation of the Company. The Fair Market Value of the
Option Member's Membership Interest shall be determined as expeditiously as possible by a
disinterested appraiser selected by the Members, (exclusive of the Option Member's Membership
Interest). If the only Member is the Option Member, then the majority in interest of the Members
(exclusive of the Option Member's Membership Interest) shall select a disinterested appraiser who
shall determine the Fair Market Value of Company assets and purchase price of the Membership
Interest. The determination of the Fair Market Value of the Company Assets and purchase price of
the Membership Interest by the appraiser shall be conclusive and binding on all parties. All costs
of an appraiser shall be shared equally by the Option Member and the Company.
6.4.4 Continuation of Company. If the option described in this paragraph 6.4 is not
exercised, the business of the Company shall continue, and the Option Member shall retain his
Membership Interest as an Assignee, unless the Members (exclusive of the Option Member)
unanimously consent for the Option Member to be reinstated as a participating Member. The
unanimous consent of the Members described herein, may be conditioned on the Option Member
complying with the terms and conditions of paragraph 6.3.
6.4.5 Closing of Purchase. If the option to purchase the Option Member's
Membership Interest is exercised by the Company, then not later than thirty (30) days after the date
on which the appraisal described in subparagraph 6.4.3 is complete (the "Appraisal Date"), the
MRS Enterprises LLC
2019-0212MRSVn1erprisesW AnKidedopejiml;%peerermuTM1 Page 13 Operating Agreement dated February 12. 2019
Company shall make a Distribution of Property to the Option Member with a value equal in amount
to the purchase price of the Option Member's Membership Interest; provided, however, that at the
election of the Company, such Distribution to the Option Member may be made in five (5) equal
annual installments, the first of which shall be made on the thirtieth (30th) day after the Appraisal
Date and one of which shall be made on the same date in each of the four years thereafter, provided,
further, however, that notwithstanding an election by the Company to make the Distribution to the
Option Member in five equal annual installments, the Company may accelerate without penalty all
of such installments at any time or any part of such installment at any time. If the Company elects
to make Distributions to the Option Member in five equal annual installments as provided herein,
the Company, in addition to such annual installments, shall pay the Option Member additional
amounts computed as if the Option Member were entitled to interest on the undistributed amount
of the total Distribution to which the Option Member is entitled hereunder at an annual rate equal
to the annual Federal Mid -Term Rate in effect under § 1274(d) of the Code, as determined on the
thirtieth (30th) day after the Appraisal Date, which additional amounts, computed like interest, shall
be due and payable on the same dates as the annual installments of the Distribution payable to the
Option Member hereunder. Any unpaid Capital Contributions of the Option Member and any
damages occurring to the Company as a result of the Option Event shall be taken into account in
determining the net amount due the Option Member at the closing, and any excess of such unpaid
Capital Contributions or damages over the amount due at closing shall be netted against subsequent
installment payments as they become due.
6.4.6 Prohibition on Exercise. If at a time when the Company has an option to
purchase an Option Member's Membership Interest, it is prohibited from purchasing all or any
portion of such Membership Interest pursuant to the Act or any loan agreement or similar restrictive
agreement, the Option Member and the remaining Members shall, to the extent permitted by Law,
take appropriate action to adjust the value of the Company's Property from book value to a fair
valuation based on accounting practices and principles that are reasonable under the circumstances
in order to permit the Company to purchase such Membership Interest. If the Company becomes
obligated to purchase an Option Member's Membership Interest under this Section 6 and the above
action cannot be taken or does not create sufficient value to permit the Company to do so, the
Company shall be obligated to purchase the portion of the Membership Interest it is permitted to
purchase.
6.5 Absolute Prohibition. Notwithstanding any other provision in this Section 6, the
Membership Interest of a Member, in whole or in part, or any rights to Distributions therefrom, shall
not be Transferred, if, as a result thereof, the Company would be terminated for federal income tax
purposes in the opinion of counsel for the Company or such action would result in a violation of
federal or state securities Laws in the opinion of counsel for the Company.
6.6 Members Acquiring- Membership Interest from Company. No Person who acquires
a Membership Interest from the Company shall be admitted as a Member of the Company, except
upon receiving the unanimous consent of the Members and complying with the terms set forth in
clause 6.3(B).
6.7 Resignation. Any Member may elect to resign from the Company and to sell his
entire interest in the Company to the Company at any time by serving written notice of such election
upon the Company. Such notice shall set forth the date upon which such resignation shall become
effective, which shall be not less than sixty (60) days and not more than ninety (90) days from the
date of such notice. The purchase price for a Resigning Member's interest in the Company shall be
One Dollar ($1.00).
6.8 Effect of Prohibited Action. Any Transfer or other action in violation of this Section
6 shall be void ab initio and of no force or effect whatsoever.
MRS Enterprises LU-
2019-0212MHsemcmdscsi.ic Wi ndcdoperaong%pe n m „jHi Page 14 Operating Agreement dated February 12, 2019
6.9 Consideration for Transfer. The Consideration for a Transfer may be paid in a form
other than cash if the Members consent in writing to such non -cash Consideration. This non -cash
Consideration may be any type of property which the Members find acceptable. The Members will
set forth the terms of any promissory notes or other deferred payment obligations which are
Consideration for a Transfer. The value of any non -cash Consideration will be its Fair Market Value
on the date of Transfer. Fair Market Value will be determined by mutual agreement between the
Members and the transferee, unless they are unable or unqualified to mutually agree on the Fair
Market Value of such non -cash Consideration, in which case the Fair Market Value will be
determined by a disinterested professional, mutually selected by the Members and transferee, such
as a certified appraiser, who has the ability to provide an acceptable valuation. If the transferee and
the Members are unable to mutually select this disinterested professional, the part of the property
subject to the disagreement will be ineligible as Consideration.
6.10 Transferor and Transferee Closing Responsibility. Upon the closing of any Transfer,
the transferor will execute and deliver to the transferee any and all documents affecting conveyance
of the Membership Interest in a form reasonably acceptable to or requested by the transferee. The
transferee will execute and deliver to the Company a duplicate counterpart of this Operating
Agreement agreeing to be bound by all of the provisions of this Operating Agreement. The transferee
agrees that he will be subject to any claims or offsets attributable to the Transferred Membership
Interest. Further, the transferee will deliver the agreed Consideration to the Members. The Members
will first use this Consideration to pay any debts, liabilities, or obligations of the transferor to the
Company. Thereafter, the Members will pay the balance of the Consideration to the transferor.
6.11 Riahts of an Assianee. If an Assignee of a Membership Interest is not admitted as
a Member because of the failure to satisfy the requirements of paragraphs 6.1, 6.2, 6.3 or 6.5, such
Assignee shall nevertheless be entitled to receive such Distributions from the Company as the
Transferring Member would have been entitled to receive under paragraph 5.5 and clause 7.4(C) of
this Operating Agreement with respect to such Membership Interest had the Transferring Member
retained such Membership Interest. An Assignee will not acquire any legal, beneficial or equitable
interest in the Company; however, the Company may, but will not be required to make Distributions
to an Assignee until a court of competent jurisdiction will have issued a charge against a
Membership Interest as provided in the Act. Any further purported Transfer by an Assignee will be
subject to the terms of this Operating Agreement. The Assignee will not:
(A) have or exercise any rights of a Member;
(B) interfere in the management or administration of the business and affairs of
the Company;
(C) have access to information accounts of Company transactions; or
(D) be able to inspect or be reflected on the Company books and records.
7. DISSOLUTION AND TERMINATION.
7.1 Events of Dissolution. The Company shall be dissolved upon the first to occur of the
following ("Event of Dissolution"):
(A) any event that under the Act or the Articles requires Dissolution of the
Company, provided that the death, resignation, retirement, expulsion,
bankruptcy, or dissolution of a Member or occurrence of any other event that
terminates the continued membership of Member in the Company shall not
cause the Dissolution of the Company;
MRS Enterprises LLC
2019-0_'12.%1RSLnrcrpriscsL1 ( lnxndnl0per31ing lgrccmanr Td Page 15 Operating. Agreement dated February 12, 2019
(B) the unanimous written consent of the Members to the Dissolution of the
Company; and
(C) the entry of a decree of judicial dissolution of the Company as provided in the
Act.
7.2 Liquidation_ . Upon the Dissolution of the Company, it shall wind up its affairs and
distribute its Property in accordance with the Act and this Operating Agreement by either or a
combination of both of the following methods as the Members shall determine:
(A) selling the Company's Property and, after the payment of Company liabilities,
distributing the net proceeds therefrom to the Members in proportion to their
Membership Interests and in satisfaction thereof; and/or
(B) distributing the Company's Property to the Members in kind with each
Member accepting an undivided interest in the Company's Property, subject
to its liabilities, in satisfaction of his Membership Interest. The interest
conveyed to each Member in such Property shall constitute a percentage of
the entire interests in such Property equal to such Member's Membership
Interest.
7.3 Orderly Liquidation. A reasonable time as determined by the Members not to exceed
eighteen (18) months shall be allowed for the orderly liquidation of the assets of the Company and
the discharge of liabilities to the creditors so as to minimize any Losses attendant upon Dissolution.
7.4 Distributions. Upon liquidation, the Company Property (including any cash on hand)
shall be distributed in the following order and in accordance with the following priorities:
(A) first, to the payment of the debts and liabilities of the Company and the
expenses of liquidation, including a sales commission to the selling agent, if
any; then
(B) second, to the setting up of any reserves that the Members (or the Person or
Persons carrying out the liquidation) deem reasonably necessary for any
contingent or unforeseen liabilities or obligations of the Company. At the
expiration of such period as the Members (or the Person or Persons carrying
out the liquidation) shall deem advisable, but in no event to exceed eighteen
(18) months, the Company shall distribute the balance thereof in the manner
provided in the following clause; then
(C) third, to the Members in proportion to their respective Membership Interests.
(D) in the event of a Distribution in liquidation of the Company's Property in
kind, the Fair Market Value of such Property shall be determined by a
qualified and disinterested appraiser, selected bythe Members (orthe Person
or Persons carrying out the liquidation), and each Member shall receive an
undivided interest in such Property equal to the portion of the proceeds to
which lie would be entitled under the immediately preceding clause if such
Property were sold at such Fair Market Value.
7.5 Taxable Gain or Loss. Taxable Profit and Loss from the sale or Distribution of
Company Property incurred upon or during liquidation and termination of the Company shall be
allocated to the Members as provided in paragraph 5.6 above.
r iVIRS Enterprises LLC
?019-0?1'_,\IRSCmcrpriscsLL( inwndcJOpcisunE% .1 Page 16 Operating Agreement dated February 12, 2019
7.6 No Recourse Against Members. Except as provided by Law, upon Dissolution, each
Member shall look solely to the Property of the Company for the return of his Capital Contribution.
If the Company Property remaining after the payment or discharge of the debts and liabilities of the
Company is insufficient to return the Capital Contribution of each Member, such Member shall have
no recourse against any other Member.
7.7 Continuation. Within thirty(30) days after the occurrence ofan Event of Dissolution,
the Company may be continued if all Members consent in writing to such continuance. In such
event, the Company shall be deemed to have been reconstituted, reorganized, and continued as
though the Event of Dissolution never occurred.
7.8 Date of Dissolution. The Company shall terminate and dissolve when all of its assets
have been applied and distributed in accordance with the provisions of paragraph 7.4 above. The
establishment of any reserves in accordance with the provisions of clause 7.4(B) above shall not have
the effect of extending the term of the Company, but any such reserves shall be distributed in the
manner provided in paragraph 7.4 (exclusive of clause 7.4(B)) upon expiration of the period of such
reserve.
ACCOUNTING; CERTAIN TAX MATTERS.
8.1 Financial Statements and Tax Returns. Within seventy-five (75) days from the close
of each fiscal year of the Company, the Company Representative shall cause to be delivered to each
Member a statement setting forth such Member's allocable share of all tax items of the Company for
such year, and all such other information as may be required to enable each Member to prepare his
federal, state and local income tax returns in accordance with all then applicable Laws, rules and
regulations. The Company Representative will arrange for the preparation and timely filing of all
federal, state and local income tax, other tax and informational returns required of the Company for
each fiscal year at the sole cost and expense of the Company.
8.2 Fiscal Year. The fiscal and taxable year of the Company shall be on a calendar year.
8.3 Method of Accounting. The Company's books of account shall be maintained, and
its income, gains, Losses, and deductions shall be determined and accounted for in accordance with
such method of accounting as may be adopted for the Company for federal income tax purposes, and
for purposes of this Operating Agreement, the Company shall account for each and every item of its
income, gain, Loss and deduction in the same manner as it accounts for each such item for income
tax purposes.
8.4 Tax Classification. The Members intend that the Company shall be classified as a
partnership for federal, state and local tax purposes. Notwithstanding the foregoing, this
classification shall not be deemed to convert the Company to any classification other than an
Arkansas limited liability company for any other purpose whatsoever.
8.5 Tax Elections. The Company may make an election (or continue a previously made
election) pursuant to § 754 of the Code for the taxable year of the Company that includes the date
hereof and shall not thereafter revoke such election. In addition, the Company Representative may
make any election the Company Representative deems appropriate and in the best interests of the
Company so long as it is permitted under the Code and, or applicable Law.
8.6 Tax Matters Partner. To the extent the Company is required to have a Tax Matters
Partner, the Members elect and appoint Melissa Sims. The Tax Matters Partner shall take such
actions as necessary to cause to the extent possible each Member to become a "notice partner" within
the meaning of the Code. The Tax Matters Partner shall inform each Member of all significant
MRS Enterprises LLC
2017-0?I: MRSEmnpnscsti-( %wndcdOpernnnE lipmixnt �.pd Page 17 Oper�itin Agreement data! February I?, 20I
matters that may come to its attention in its capacity as Tax Matters Partner and shall forward to each
Member copies of all significant written communications it may receive in that capacity. The Tax
Matters Partner shall not take any action without authorization by the Company, other than an action
required by the Code, or other applicable state Law. All reasonable costs and expenses incurred by
the Tax Matters Partner in its capacity shall be paid by the Company.
8.7 Company Representative. For al l taxable years beginning on or after January 1, 2018,
this paragraph 8.7 shall apply.
8.7.1 Appointment and Acceptance. The Members unanimously elect and appoint
Melissa Sims to be the Company Representative pursuant to the Code at the sole cost and expense
of the Company. By signing below, the Company Representative accepts such appointment and
confirms to the Company that he or she satisfies the substantial presence requirement of Code §
6223(a) and the regulations thereunder, and agrees to forward any and all communications from the
IRS relating to the Company to the Members. The Company Representative will serve until his, her,
or its death, resignation, incapacity, bankruptcy, revocation/removal or a determination by the IRS
that the designation is not effective. If there is a vacancy in the position of Company Representative,
a successor Company Representative shall be designated by the Members.
8.7.2 Power and Duties. The Company Representative shall represent the Company
in connection with all examinations, disputes, controversies or proceedings by or against any federal,
state or local taxing authority. The Company Representative is authorized to exercise any and all
authority and take any and all actions granted to the Company Representative under applicable Law,
including without limitation, elections related to an audit; matters arising from the audit; the audit
proceedings, including receiving notices of the commencement of an audit and requests for
information; providing information to the IRS with regard to the audit; meeting with IRS personnel
to discuss and settle the audit; extending the statute of limitations for the Members and the
Company; binding the Company and the Members to a settlement with respect to the audit matters;
electing not to contest the notice of final adjustments to a Company tax return in court or to contest
all or any portion of the matter in court and to choose the court forum; filing an election out; making
decisions regarding the payment of the imputed underpayment; making a push -out election; entering
into a closing agreement with the IRS; requesting multiple imputed underpayments; filing an
administrative adjustment request; and deciding whether to settle with IRS appeals or to settle
litigation and whether to appeal an adverse court decision.
8.7.3 Elections. The Company Representative may, in his or her sole and absolute
discretion, file such election forms, statements and other information required bythe Partnership Tax
Audit Rules to make the election out of the Partnership Tax Audit Rules pursuant to Code § 6221(b)
(the "Opt -Out Election") if the Company is eligible for the Opt -Out Election. If the Company is not
eligible for the Opt -Out Election, the Company Representative may, in his or her sole and absolute
discretion, otherwise make the push -out election pursuant to Code § 6226(a) with respect to any tax
year of the Company.
8.7.4 Member Obligations. Each Member hereby covenants and agrees to promptly
provide the Company Representative with all information regarding the Member's tax returns and
tax liabilities as requested from time to time, including but not limited to proof that the Member has
filed an amended return and paid any resulting tax, the Member's address, taxpayer identification
number and current contact information, the Members status as a tax-exempt Member, the tax rate
applicable to the Member and the Member's status as an eligible Member. Each Member agrees that
any action taken by the Company Representative in connection with audits of the Company or any
other matters relating to taxes shall be binding upon such Members and each such Members further
agrees that such Members shall not treat any Company item inconsistently on such Member's income
tax return with the treatment of the item on the Company's return and that such Member shall not
MRS Enterprises LLC'
2019-0212 ]INSEmcMrisnLLC %inenJed0peraun % Page 18 Operating Agreement dated February 12. 2019
independently act with respect to tax audits or tax proceedings affecting the Company. In the event
that the Company becomes liable for any Company Level Taxes, (i) each Person that was a Member
of the Company for the taxable year to which such Company Level Taxes relate shall indemnify,
defend and hold harmless the Company for such Person's allocable share of the amount of such
Company Level Taxes, (ii) the Company may cause the Members (including any former Member)
to whom such Company Level Taxes relate to pay, and each such Member hereby agrees to pay, such
amount to the Company, and such amount shall not be treated as a Capital Contribution, and (iii)
without reduction to a Member's (or former Member's) obligations under this subparagraph 8.7.4,
any amount paid by the Company that is attributable to a Member and that is not paid by such
Member pursuant to clause (ii) above, shall be treated for purposes of this Agreement as a
Distribution to such Member and a reduction to such Member's Capital Account balance. The
obligations of each Member under this subparagraph 8.7.4 shall survive the Transfer by such
Member of its Membership Interest, the termination of this Agreement, and the dissolution of the
Company.
8.7.5 Expenses. The Company Representative may retain, at the Company's
expense, such outside counsel, accountants and other professional consultants as the Company
Representative reasonably deems necessary in the course of fulfilling his or her obligations as the
Company Representative.
8.7.6 Liability of Company Representative. The Company Representative shall act
in good faith and shall use commercially reasonable efforts to carry out the duties, authority and
responsibilities set forth in this Agreement and the Partnership Tax Audit Rules. Unless fraud,
deceit, gross negligence, willful misconduct or a wrongful taking shall be proved by a
non -appealable court order, judgment, decree or decision, the Company Representative shall not be
liable or obligated to the Company or to any of the Members for any breach of fiduciary duty, for any
mistake of fact or judgment, or for the doing of any act, or the failure to do any act, which may cause
or result in any loss or damage to the Company or to the Members. In addition, the Company
Representative may rely on the services and advice of attorneys, accountants and other professional
advisors or experts. The Company Representative shall not be liable to the Company or to any
Member for damages, losses, or costs, any loss of value or any liability arising from such reliance.
8.7.7 Indemnification of Company Representative. The Company shall reimburse
and indemnify the Company Representative for all claims, liabilities, losses and damages incurred
by the Company Representative in connection with any administrative or judicial proceeding with
respect to the federal income taxation of the Company or the Members, or both, including (without
limitation) his or her actions under the Partnership Tax Audit Rules.
9. MISCELLANEOUS PROVISIONS.
9.1 Assent. Status as a Member of the Company shall not cause a Member to be the agent
of the Company. Unless another agent is otherwise appointed by the Members, the Members shall
be the agent of the Company. The Members of the Company can designate one or more Members
to serve as the agent of the Company.
9.2 Amendments. No amendment or modification of this Operating Agreement shall be
effective except upon the unanimous written consent of the Members.
9.3 Application of Arkansas Law. This Operating Agreement, and the interpretation
hereof, shall be governed exclusively by its terms and by the Laws of the State of Arkansas, without
reference to its choice of law provisions, and specifically the Act.
9.4 Mediation and Arbitration. All disputes and controversies between the parties hereto
MRS Enterprises LLC
'019-0212.11NSEnlerpricA ( Page 19 Operating Agreement dated February 12. 2019
arising out of or in connection with this Operating Agreement shall be submitted to non -binding
mediation first and if this mediation does not produce a settlement agreeable to the parties, then such
disputes and controversies shall be submitted to arbitration.
9.5 Mediation. Mediation will be conducted pursuant to the following procedure:
(A) The opposing parties will attempt to select a mutually satisfactory mediator.
If they cannot agree on a mediator within fifteen (15) days after the
unresolved dispute arises, the opposing parties will submit a panel of seven
persons as proposed mediators. Names will be stricken from the list of the
panel alternatively by the opposing parties (with the order of striking
determined by lot) until only one name remains and that remaining person
will become the mediator.
(B) The mediator will render his decision within thirty (30) days after the close
of the hearing or thirty (30) days after the brief filing date, whichever is later.
(C) The mediator will have no power to add to or to subtract from or modify any
of the terms of this Operating Agreement or any agreement made
supplementary hereto.
(D) The mediator will decide only the issues presented by the dispute and will not
have the right to decide any other issues unless all parties involved in the
dispute and all the Members agree otherwise.
(E) Neither the opposing parties nor any other Member, nor the mediator, may
disclose the existence, content, or results of any mediation without the prior
written consent of the opposing parties and the Members.
(F) Each opposing party will bear his own costs and expenses and will pay one-
half of the mediator's fee and one-half of the administrative fees of mediation
unless there are more than two opposing parties in which event the mediator's
fee and the administrative fees of mediation will be shared equally by the
opposing parties.
9.6 Arbitration. Arbitration will be conducted pursuant to the following procedure:
(A) The opposing parties will attempt to select a mutually satisfactory arbitrator.
If they cannot agree on an arbitrator within fifteen (15) days after the
unresolved dispute arises, the American Arbitration Association will be
requested to submit a panel of seven persons, each qualified to serve as
arbitrator. Names will be stricken from the list of the panel alternatively by
the opposing parties (with the order of striking determined by lot) until only
one name remains and that remaining person will become the arbitrator.
(B) The arbitrator will render his decision within 30 days after the close of the
hearing or 30 days after the brief filing date, whichever is later. The decision
of the arbitrator will be final and binding and judgment on the award rendered
by the arbitrator may be entered in any court having jurisdiction.
(C) The arbitrator will have no power to add to or to subtract from or modify any
of the terms of this Operating Agreement or any agreement made
supplementary hereto.
MRS Enterprises LLC
NW-0212N1RSrmcrprncsLLC %nrndcd0per21in1!Apcae>rmep.l Page 20 Operating Agreement dated February 12. 2019
(U) The arbitrator will decide only the issues presented by the dispute and will
not have the right to decide any other issues unless all parties involved in the
dispute and all other Members agree otherwise.
(E) Neither the opposing parties nor any other Member, nor the arbitrator, may
disclose the existence, content, or results of any arbitration without the prior
written consent of the opposing parties and all other Members.
(F) Each opposing party will bear his own costs and expenses and will pay one-
half of the arbitrator's fee and one-half of the administrative fees of
arbitration unless there are more than two opposing parties in which event the
arbitrator's fee and the administrative fees of arbitration will be shared
equally by the opposing parties.
9.7 Attorneys' Fees. In the event any Member brings an action to enforce any provisions
of this Operating Agreement against the Company or any other Member, whether such action is at
law, in equity or otherwise, the prevailing party shall be entitled, in addition to any other rights or
remedies available to it, to collect from the non -prevailing party or parties the reasonable costs and
expenses incurred in the investigation preceding such action and the prosecution of such action,
including but not limited to reasonable attorney's fees and court costs.
9.8 Banking. The funds of the Company shall be kept in one or more separate bank
accounts in the name of the Company in such banks or other federally insured depositories as may
be designated by the Members, or shall otherwise be invested in the name of the Company in such
manner and upon such terms and conditions as may be designated by the Members. All withdrawals
from any such bank accounts or investments established by the Members hereunder shall be made
on such signature or signatures as may be authorized from time to time by the Members. Any
account opened by the Members for the Company shall not be commingled with other funds of the
Members or interested persons.
9.9 Construction. Whenever the singular number is used in this Operating Agreement
and when required by the context, the same shall include the plural, and the masculine gender shall
include the feminine and neuter genders, and vice versa.
9.10 Counterparts. This Operating Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the same instrument.
9.11 Creditors. None of the provisions of this Operating Agreement shall be for the benefit
of or enforceable by any creditor of the Company.
9.12 Headings. The headings in this Operating Agreement are inserted for convenience
only and are in no way intended to describe, interpret, define, or limit the scope, extent or intent of
this Operating Agreement or any provision hereof
9.13 Heirs. Successors and Assi ans. Each and all of the covenants, terms, provisions and
agreements herein contained shall be binding upon and inure to the benefit of the parties hereto and,
to the extent permitted by this Operating Agreement, their respective heirs, legal representatives,
successors and assigns.
9.14 Information Release. The Company and Members may release information
concerning Members and the business of the Company to governmental authorities as required by
the Act, or any other statute or regulation affecting the Company.
MRS Enterprise~ LLC-
_si119-0'_1_' %1R%EmerpriscsLLf %mcndcdOpeTaimp%Vtmixm r� np,l Page 21 Operating Agreement dated February 12, 2019
9.15 Insurance Purchase. In order to fund any obligations under this Operating Agreement,
the Company or the Members may maintain such life insurance policies on the lives of one or more
Members as the Members determine from time to time to be desirable.
9.16 Location of and Access to Company Records. The following records of the Company
shall be kept at its office designated by the Members where they shall be subject to inspection and
copying at the reasonable request and at the expense of any Member during ordinary business hours
only after providing the Company thirty (30) days written notice:
(A) a current list of the full name and last known business address of each current
and past Member (in alphabetical order);
(B) a copy of the Articles of Organization and all amendments thereto, together
with executed copies of any powers of attorney pursuant to which any
certificate has been executed;
(C) copies of the Company's federal, state and local income tax returns and
reports, if any, for the three most recent years;
(D) copies of any document evidencing an agreement by a Member to make
Capital Contributions or setting forth the value of Property or services
contributed;
(E) copies of any records required by the Act or other applicable Law to be kept
by the Company; and
(F) copies of this Operating Agreement, as amended, and of any financial
statements of the Company for the three most recent years.
9.17 Notices. Notices . Any notice or other communication hereunder must be given in
writing and (i) delivered in person, (i i) transmitted by facsimile, by telecommunications mechanism
or electronically or (iii) mailed by certified mail, postage prepaid, receipt requested as follows:
(A) if to the Company, addressed to it at:
MRS Enterprises LLC, P.O. Box 397, Farmington, AR 72730;
(B) if to the one of the Member, addressed to it at the address listed in Schedule
A
or to such other address or to such other Person as a party shall have last designated by such notice
to the other parties. Each such notice or other communication shall be effective (i) if given by
telecommunication or electronically, when transmitted to the applicable number or electronic mail
address so specified in (or pursuant to) this paragraph 9.17 and an appropriate answer is received or,
if transmitted after 4:00 p.m. local time on a Business Day in the jurisdiction to which such notice
is sent or at any time on a day that is not a Business Day in the jurisdiction to which such notice is
sent, then on the immediately following Business Day, (ii) if given by mail, on the first Business Day
in the jurisdiction to which such notice is sent following the date three (3) days after such
communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or
(iii) if given by any other means, on the Business Day when actually received at such address or, if
not received on a Business Day, on the Business Day immediately following such actual receipt.
A copy of each notice sent to or by a Member or the Company pursuant to the terms of this
LAIRS Enterprises LLC
2019-0212',IkSrntcrpnsuLLV %=ndcdDperaImgAgrrcncm „rd Page 22 Operating Agreement dated February 12, 2019
Operating Agreement will be forwarded to:(which shall not constitute notice) to:
RMP LLP
Attention: Kasper Huber
Facsimile: 1-479-443-2718
P.O. Box 1788
Fayetteville, Arkansas 72742
5519 Hackett Road
Springdale, Arkansas 72764
khuber@rmp.law
9.18 Power of Attornev.
9.18.1 Grant of Power. Each Member does hereby irrevocably constitute and appoint
the Other Members, as such Member's true and lawful attorney, in his name, place and stead, to
make, execute, consent to, swear to, acknowledge, record and file from time to time any and all of
the following:
(A) any certificate or other instrument that may be required to be filed by the
Company or the Members under the Laws of the State of Arkansas or under
the applicable Laws of any other jurisdiction in order to conduct business in
any such jurisdiction, to the extent the Managers deem any such filing to be
necessary or desirable;
(B) any amendment to the Articles adopted as provided in this Operating
Agreement; and
(C) any certificates or other instruments that may be required to effectuate the
Dissolution (including the winding up) of the Company pursuant to the
provisions of this Operating Agreement.
9.18.2 Power Irrevocable. It is expressly understood, intended and agreed by each
Member for himself, his successors and assigns that the grant of the power of attorney to the Other
Members pursuant to subparagraph 9.18.1 is coupled with an interest, is irrevocable, and shall
survive the death or legal incompetency of the Member or such assignment of his Membership
Interest.
9.18.3 Use of Power. One of the ways that the aforementioned power of attorney
may be exercised is by listing the names of the Members and having the signature of the other
Members, as attorney -in -fact, appear with the notation that the signatory is signing as attorney -in -fact
of the listed Members.
9.19 Representations and Warranties.
9.19.1 Investment Representation. All persons who become Members, by signing
this Operating Agreement, represent and warrant to the other Members and the Company (1) that
their purchase of Membership Interest in the Company is made as a principal for their sole account
for investment purposes only and not with the view toward distribution or resale of all or any portion
of the Membership Interest, (2) that under no circumstances will the Members Transfer any portion
of their Membership Interest except in compliance with this Operating Agreement and applicable
securities Laws and regulations, (3) that they are relying on their own professional tax, legal and
other business advisor in making their decision to enter into and execute this Operating Agreement,
(4) that they are aware of the restrictions on Transfer of their interest underthis Operating Agreement
MRS Enterprises LLC'
....'i'MRSFn[rMrisesLLC'.ktmtidcdOperaling,CgYvcwnimN1 Page 23 Operating Agreement dated February 12, 2019
and that the same will at no time be freely Transferable otherwise than to a Person accepting similar
restrictions on Transferability, (5) that they have been given the opportunity to review this Operating
Agreement and all other records or information requested by them before the date of execution, (6)
that they will bear the total risk of loss of their investment in the Company, (7) that their
Membership Interests have not been registered pursuant to Securities Act of 1933, 15 U.S.C. § 77a
et seq, as amended, the State of Arkansas Securities Act, A.C.A. § 23-42-101, or under any other
applicable state securities Laws and may be a "restricted security" underthese aforementioned Laws,
and (8) that they are an adult and are able to assess the economic risk associated with executing this
Operating Agreement.
9.19.2 Orizanization Renresentation. All Entities who become Members, by signing
this Operating Agreement represent and warrant to the other Members and the Company that the
Entity: (1) has all authority to own and operate its business; (2) has all authority (both implied and
apparent) to execute this Operating Agreement on behalf of the Entity; (3) has not or will not breach
any other contract, agreement or other obligation by executing this Operating Agreement; (4) is
solvent and has never been insolvent; (5) has never filed a voluntary petition in bankruptcy or
entered into similar insolvency proceedings and has never had an involuntary petition in bankruptcy
filed against it; (6) has continually been able to pay its debts generally as they become due; (7) has
always and will continue to comply with all Laws applicable to it; and (8) is not a party to any
litigation.
9.19.3 Survival. The Members agree that all representations and warranties provided
in this Operating Agreement will survive the execution of this Operating Agreement.
9.20 Rights and Remedies Cumulative. The rights and remedies provided by this Operating
Agreement are cumulative and the use of any one right or remedy by any Person shall not preclude
or waive the right to use any or all other remedies. Such rights and remedies are given in addition
to any other rights the Persons may have by Law, statute, ordinance or otherwise.
9.21 Severabilitv. Each provision of this Operating Agreement shall be considered
separable and (a) if for any reason any provision or provisions herein are determined to be invalid
and contrary to any existing or future Law, such invalidity shall not impair the operation of or affect
those portions of this Operating Agreement which are valid, or (b) if for any reason any provision
or provisions herein would cause the Members to be bound by the obligations of the Company under
the Laws of the State of Arkansas as the same may now or hereafter exist, such provision or
provisions shall be deemed void and of no effect.
9.22 Waiver of Right of Partition. Each of the Members does hereby agree to and does
hereby waive any right such Member may otherwise have to cause any asset of the Company to be
partitioned among the Members or to file any complaint or to institute any proceeding at law or in
equity seeking to have any such assets partitioned.
9.23 Waivers. The failure of any Person to seek redress for violation of or to insist upon
the strict performance of any covenant or condition of this Operating Agreement shall not prevent
a subsequent act, which would have originally constituted a violation, from having the effect of an
original violation.
9.24 Entire Agreement. This Operating Agreement represents the entire and complete
agreement of the Members with respect to the subject matter hereof, and supersedes all prior
understandings and agreements, both written and oral, as to the subject matter hereof by and among
any of the Members hereto. The Members represent and warrant that they have not been influenced
by any Member or other Person to enter into this Operating Agreement, nor relied on any
representation, warranty, or covenant of any Member or other Person except for those
MRS Enterprises L!_C
:014•011 LC %nrndal0perndnVAVrccnxm np,1 Page 24 Operating Agreement dated February 12, 2019
representations, warranties, and covenants of the Members in this Operating Agreement.
[Signature Page Follows]
C MRS Enterprises LLC
2619-0'12AIRSI_mcrpnxnLLl'.:1rsxnJrdOpcnung.lgrttnsrnt npd Page 75 Operating Agreement dated February 12, 2019
IN WITNESS WHEREOF, each of the parties hereto has caused this Operating Agreement
to be executed as of the day and year first above written.
ME IB
'ik'- /
Payton'S1rrtSs;-Trustee of the Payton Sims
Revocable Living Trust u/a/d July 29, 2015
Melissa Sims, rustee of the Sims Family
Trust u/a/d March 29, 2016
CON SENTATIVE:
1
Melissa Sims
MRS Enterprises LLC
loom):1: %I k5Ln[erprssesLL(- vwndedopenung\greearrst x14 Page 26 Operating Agreement dated February 12, 2019
OPERATING AGREEMENT OF MRS ENTERPRISES LLC
Dated: February 12, 2019
SCHEDULE A —MEMBERS AND CAPITAL CONTRIBUTIONS
Members - Name & Address
Capital
Account
Fair Market
Value
Percentage
Interest
Payton Sims, Trustee of the Payton
See Company
See Company
50,0
Sims Revocable Living Trust ula/d July
Records
Records
29, 2015
Melissa Sims, Trustee of the Sims
See Company
See Company
50° o
Family Trust u/a/d March 29, 2016
Records
Records
P.O. Box 397, Farmington, AR 72730
MRS Enterprises LLC
1019•021_s>1RSEntcrprixsLLC -%nrndnlUperaringAprmrrm uix{ Page 27 Operating Agreement dated February 12, 2019