Oregon LLC Operating Agreement

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

OF

[________________________________], LLC

AN OREGON LIMITED LIABILITY COMPANY

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THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT (this "Agreement") is entered into and made effective as of [__/__/____] (the "Effective Date"), by and among the Members identified in Exhibit A attached hereto.

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RECITALS

WHEREAS, the Members desire to form a limited liability company under the Oregon Limited Liability Company Act, ORS Chapter 63 (the "Act"); and

WHEREAS, Articles of Organization have been or will be filed with the Oregon Secretary of State to form [________________________________], LLC (the "Company"); and

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

WHEREAS, the Members intend this Agreement to constitute the "operating agreement" of the Company within the meaning of ORS 63.001;

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

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ARTICLE I

FORMATION AND ORGANIZATION

Section 1.1 Formation

The Members hereby form a limited liability company pursuant to the Oregon Limited Liability Company Act, ORS Chapter 63. The rights, duties, and liabilities of the Members shall be determined pursuant to the Act and this Agreement. To the extent that the rights, duties, and liabilities of any Member are different by reason of any provision of this Agreement than they would be under the Act in the absence of such provision, this Agreement shall, to the extent permitted by the Act, control.

Section 1.2 Name

The name of the Company is:

[________________________________], LLC

The Company may conduct business under this name or any assumed business name properly registered with the Oregon Secretary of State in accordance with applicable law. The name must contain the words "Limited Liability Company" or the abbreviation "L.L.C." or "LLC" as required by Oregon law.

Section 1.3 Articles of Organization

An authorized person has filed or shall file Articles of Organization with the Oregon Secretary of State in accordance with ORS 63.054. Upon the filing of the Articles of Organization, the existence of the Company shall commence. The Members shall execute, deliver, and file any amendments, restatements, corrections, or cancellations of the Articles of Organization as may be required or permitted by the Act.

Section 1.4 Principal Office

The principal office of the Company shall be located at:

[________________________________]
[________________________________]
[________________________________], Oregon [____]

The Company may maintain additional offices at such other places as the Members or Managers may from time to time designate. The principal office may be changed by the Members or Managers upon written notice to all Members.

Section 1.5 Registered Office and Registered Agent

The registered office of the Company in the State of Oregon shall be:

[________________________________]
[________________________________]
[________________________________], Oregon [____]

The registered agent of the Company at such address shall be:

[________________________________]

The registered office and registered agent may be changed from time to time by filing the appropriate documents with the Oregon Secretary of State in accordance with the Act.

Section 1.6 Term

The Company shall commence upon the filing of the Articles of Organization with the Oregon Secretary of State and shall continue perpetually unless dissolved in accordance with the provisions of this Agreement or the Act.

Section 1.7 Purpose

The Company is formed for the following purposes:

(a) To engage in [________________________________];

(b) To engage in any and all lawful business activities for which limited liability companies may be organized under the Act;

(c) To acquire, own, hold, improve, manage, operate, sell, lease, mortgage, pledge, hypothecate, exchange, or otherwise dispose of real and personal property of every kind and description;

(d) To borrow money and issue evidences of indebtedness and to secure the same by mortgage, pledge, or other lien;

(e) To enter into, perform, and carry out contracts of any kind necessary or incidental to the accomplishment of the purposes of the Company; and

(f) To do any and all things necessary, convenient, or incidental to the foregoing purposes.

Section 1.8 Title to Property

All property owned by the Company, whether real or personal, tangible or intangible, shall be owned by the Company as an entity, and no Member, Manager, or other person shall have any ownership interest in such property in the Member's individual name or right. Each Member's Membership Interest in the Company shall be personal property for all purposes.

Section 1.9 Annual Report

The Company shall file an annual report with the Oregon Secretary of State as required by ORS 63.787. The Managers (or Members if member-managed) shall ensure timely filing of all required reports and payment of all required fees to maintain the Company in good standing.

Section 1.10 Oregon Corporate Activity Tax (CAT)

The Company shall comply with Oregon Corporate Activity Tax requirements under ORS 317A. If the Company's Oregon commercial activity exceeds $1 million, the Company shall file a CAT return and pay the applicable tax. The current CAT rate is 0.57% on Oregon commercial activity over $1 million, with a subtraction for certain labor costs or cost inputs.

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ARTICLE II

DEFINITIONS

Section 2.1 Definitions

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

"Act" means the Oregon Limited Liability Company Act, ORS Chapter 63, as amended from time to time.

"Adjusted Capital Account" means, with respect to any Member, the balance in such Member's Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments:

(a) Credit to such Capital Account any amounts that such Member is obligated to restore or is deemed obligated to restore pursuant to Treasury Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentences of Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

(b) Debit to such Capital Account the items described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6).

"Affiliate" means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries Controls, is Controlled by, or is under common Control with such Person.

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

"Articles of Organization" means the Articles of Organization of the Company filed with the Oregon Secretary of State, as amended or restated from time to time.

"Assignee" means any Person who has acquired a Membership Interest or portion thereof through a Transfer but who has not been admitted as a Member.

"Available Cash" means, as of any date of determination, the excess, if any, of (a) all cash and cash equivalents of the Company on hand as of such date, over (b) the amount of cash reserves established by the Members or Managers for working capital, capital expenditures, debt service, and other Company obligations.

"Bankruptcy" means, with respect to any Person: (a) the filing of a voluntary petition under the federal bankruptcy law or any similar law; (b) the filing of an involuntary petition against such Person under the federal bankruptcy law or any similar law that is not dismissed within ninety (90) days; (c) the appointment of a receiver, liquidator, assignee, custodian, trustee, or similar official for such Person or a substantial part of such Person's property; (d) the general assignment of property for the benefit of creditors; or (e) the admission in writing of the inability to pay debts as they become due.

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

"Capital Contribution" means any contribution of cash, property, services, or other consideration made by a Member to the Company in exchange for a Membership Interest.

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

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

"Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

"Corporate Activity Tax" or "CAT" means the Oregon Corporate Activity Tax imposed under ORS 317A.

"Distributable Cash" has the meaning set forth in Section 5.3.

"Distribution" means any transfer of cash or property by the Company to a Member with respect to such Member's Membership Interest.

"Economic Interest" means a Member's share of the Company's Profits, Losses, and Distributions pursuant to this Agreement and the Act.

"Effective Date" means the date first written above.

"Fiscal Year" means the Company's fiscal year as determined in accordance with Section 10.1.

"Gross Asset Value" means, with respect to any asset, such asset's adjusted basis for federal income tax purposes, except as otherwise provided in Treasury Regulations Section 1.704-1(b)(2)(iv)(d).

"Majority Vote" or "Majority in Interest" means Members holding more than fifty percent (50%) of the aggregate Percentage Interests of all Members entitled to vote on the matter.

"Manager" means any Person designated as a manager of the Company in accordance with Article VI and the Act.

"Member" means any Person who has been admitted to the Company as a member and who holds a Membership Interest, as reflected on Exhibit A, as amended from time to time.

"Membership Interest" means a Member's entire interest in the Company, including such Member's Economic Interest, voting rights, and right to participate in the management of the Company.

"Net Profits" and "Net Losses" have the meanings set forth in Section 5.1.

"Operating Expenses" means all costs and expenses incurred by the Company in the ordinary course of business.

"Percentage Interest" means, with respect to any Member, the percentage set forth opposite such Member's name on Exhibit A, as may be adjusted from time to time in accordance with this Agreement.

"Person" means any individual, corporation, partnership, limited liability company, joint venture, trust, estate, unincorporated organization, governmental authority, or other entity.

"Profits" and "Losses" have the meanings set forth in Section 5.1.

"Supermajority Vote" means Members holding at least sixty-six and two-thirds percent (66-2/3%) of the aggregate Percentage Interests of all Members entitled to vote on the matter.

"Tax Matters Partner" or "Partnership Representative" means the Person designated pursuant to Section 10.4.

"Transfer" means, as a noun, any voluntary or involuntary transfer, sale, assignment, pledge, hypothecation, encumbrance, or other disposition, and as a verb, voluntarily or involuntarily to transfer, sell, assign, pledge, hypothecate, encumber, or otherwise dispose of.

"Treasury Regulations" means the income tax regulations promulgated under the Code, as amended from time to time.

"Unanimous Vote" means the affirmative vote or written consent of all Members.

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ARTICLE III

MEMBERS

Section 3.1 Initial Members

The names, addresses, initial Capital Contributions, and Percentage Interests of the Members as of the Effective Date are set forth on Exhibit A attached hereto and incorporated herein by reference.

Section 3.2 Representations and Warranties

Each Member, by executing this Agreement, represents and warrants to the Company and each other Member that:

(a) If such Member is an individual, such Member has the legal capacity to enter into this Agreement and to perform such Member's obligations hereunder;

(b) If such Member is an entity, such Member is duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization, has full power and authority to enter into this Agreement and to perform its obligations hereunder, and the execution and performance of this Agreement has been duly authorized by all necessary action;

(c) The execution, delivery, and performance of this Agreement by such Member does not and will not conflict with, violate, or result in a breach of any agreement, instrument, judgment, order, or decree to which such Member is a party or by which such Member is bound;

(d) Such Member is acquiring the Membership Interest for such Member's own account for investment and not with a view to or for sale in connection with any distribution thereof in violation of applicable securities laws;

(e) Such Member has such knowledge and experience in financial and business matters that such Member is capable of evaluating the merits and risks of an investment in the Company;

(f) Such Member understands that the Membership Interest has not been registered under federal or state securities laws and that such Membership Interest cannot be sold, transferred, or otherwise disposed of unless such Membership Interest is subsequently registered or an exemption from registration is available;

(g) Such Member has had an opportunity to ask questions and receive answers concerning the Company and the Membership Interest and to obtain any additional information necessary to verify the accuracy of information furnished;

(h) Such Member has been advised to consult with such Member's own attorney, accountant, and other advisors regarding the legal, tax, and financial consequences of an investment in the Company; and

(i) Such Member's principal residence or principal place of business is located at the address set forth on Exhibit A.

Section 3.3 Additional Members

Additional Members may be admitted to the Company only upon the satisfaction of all of the following conditions:

(a) The written consent of Members holding at least [________________] percent ([____]%) of the Percentage Interests;

(b) The execution by the additional Member of a counterpart of this Agreement or a written instrument agreeing to be bound by all terms and conditions of this Agreement;

(c) Payment of such Capital Contribution as the Members may require;

(d) Compliance with all applicable securities laws;

(e) Delivery to the Company of such documents and instruments as the Members may reasonably require; and

(f) Amendment of Exhibit A to reflect the admission of the additional Member.

Section 3.4 Liability of Members

(a) Except as otherwise required by the Act or other applicable law, no Member shall be personally liable for any debt, obligation, or liability of the Company, whether arising in contract, tort, or otherwise, solely by reason of being a Member, as provided in ORS 63.165.

(b) No Member shall be required to make any contribution to the Company except as expressly provided in this Agreement.

(c) No Member shall be required to lend any funds to the Company.

(d) No Member shall have any personal liability for the repayment of any Capital Contribution of any other Member.

Section 3.5 Withdrawal

(a) No Member may withdraw or resign from the Company prior to the dissolution and winding up of the Company, except with the written consent of Members holding at least [________________] percent ([____]%) of the Percentage Interests (excluding the Percentage Interest of the withdrawing Member).

(b) A Member who withdraws in violation of this Section 3.5 shall be liable to the Company and the remaining Members for any damages caused by such withdrawal.

(c) Upon a permitted withdrawal, the withdrawing Member shall be entitled to receive, within a reasonable time following the effective date of withdrawal, the fair market value of such Member's Membership Interest as of the effective date of withdrawal, determined by agreement of the parties or, failing agreement, by a qualified independent appraiser selected by the Company.

Section 3.6 Member Meetings

(a) Annual Meetings. An annual meeting of the Members may be held at such time and place as determined by the Members or Managers. The purpose of the annual meeting shall be to review the Company's operations and financial condition and to transact such other business as may properly come before the meeting.

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

☐ Any Manager (if manager-managed);
☐ Members holding at least twenty percent (20%) of the Percentage Interests;
☐ The President or Chief Executive Officer of the Company.

(c) Notice. Written notice of any meeting of Members shall be given to all Members not less than ten (10) nor more than sixty (60) days before the date of the meeting. The notice shall state the place, date, and time of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called.

(d) Quorum. Members holding a majority of the Percentage Interests, present in person or by proxy, shall constitute a quorum for the transaction of business at any meeting of Members.

(e) Voting. Except as otherwise provided in this Agreement or required by the Act, all matters submitted to a vote of Members shall be decided by a Majority Vote.

(f) Proxies. A Member may vote at any meeting by a proxy signed by the Member and delivered to the Company before or at the meeting. No proxy shall be valid after eleven (11) months from its date, unless otherwise provided in the proxy.

(g) Action Without Meeting. Any action required or permitted to be taken at a meeting of Members may be taken without a meeting if the action is evidenced by one or more written consents describing the action taken, signed by Members having not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting.

(h) Meetings by Communications Equipment. Members may participate in any meeting by means of telephone conference or other communications equipment by which all persons participating in the meeting can hear each other at the same time. Participation by such means shall constitute presence in person at a meeting.

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ARTICLE IV

CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS

Section 4.1 Initial Capital Contributions

Each Member shall make an initial Capital Contribution to the Company in the amount and form set forth opposite such Member's name on Exhibit A. The initial Capital Contributions shall be made on or before the Effective Date or at such other time as the Members may agree.

Section 4.2 Additional Capital Contributions

(a) No Member shall be required to make any additional Capital Contributions to the Company beyond the initial Capital Contribution set forth on Exhibit A.

(b) If the Members determine that additional capital is needed for the Company's operations, the Members may, but shall not be required to, make additional Capital Contributions in proportion to their respective Percentage Interests or in such other proportions as the Members may unanimously agree.

(c) If any Member fails to make an additional Capital Contribution when required by this Section 4.2, the non-contributing Member shall be deemed to be in default, and the contributing Members may elect, by written notice to the non-contributing Member, one or more of the following remedies:

☐ Treat the amount of the defaulted Capital Contribution as a loan to the non-contributing Member, bearing interest at the rate of [____] percent ([____]%) per annum;

☐ Reduce the non-contributing Member's Percentage Interest proportionately;

☐ Permit the contributing Members to make the defaulted Capital Contribution on behalf of the non-contributing Member, with appropriate adjustment to Percentage Interests; or

☐ Such other remedy as may be agreed upon by the contributing Members.

Section 4.3 Capital Contribution in Property

If any Member makes a Capital Contribution in property other than cash, the value of such property shall be determined by agreement of the Members or, failing agreement, by a qualified independent appraiser selected by the Company. The Member making such contribution shall provide all information necessary for the Company to comply with applicable tax reporting requirements.

Section 4.4 Capital Accounts

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

(b) Credits. Each Member's Capital Account shall be credited with:

(i) The amount of cash contributed by such Member to the capital of the Company;

(ii) The Gross Asset Value of property contributed by such Member to the capital of the Company (net of liabilities secured by such contributed property that the Company is considered to assume or take subject to);

(iii) Allocations to such Member of Profits and items of income and gain; and

(iv) The amount of any Company liabilities assumed by such Member or secured by property distributed to such Member.

(c) Debits. Each Member's Capital Account shall be debited with:

(i) The amount of cash distributed to such Member by the Company;

(ii) The Gross Asset Value of property distributed to such Member by the Company (net of liabilities secured by such distributed property that such Member is considered to assume or take subject to);

(iii) Allocations to such Member of Losses and items of deduction and loss; and

(iv) The amount of any liabilities of such Member assumed by the Company or secured by property contributed by such Member to the Company.

(d) Compliance with Treasury Regulations. The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such regulations.

Section 4.5 No Interest on Capital Contributions

Except as otherwise expressly provided in this Agreement, no interest shall be paid on Capital Contributions or on balances in Members' Capital Accounts.

Section 4.6 Return of Capital Contributions

Except as otherwise expressly provided in this Agreement, no Member shall have the right to demand or receive the return of all or any portion of such Member's Capital Contributions. Under circumstances requiring a return of any Capital Contribution, no Member shall have the right to receive property other than cash.

Section 4.7 Capital Account Adjustments Upon Transfer

Upon the Transfer of all or any part of a Membership Interest in accordance with this Agreement, the Capital Account of the transferor Member shall be transferred to the transferee in proportion to the Membership Interest transferred.

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ARTICLE V

ALLOCATIONS AND DISTRIBUTIONS

Section 5.1 Allocation of Profits and Losses

(a) Profits. Except as otherwise provided in this Article V, Profits for each Fiscal Year shall be allocated among the Members in proportion to their respective Percentage Interests.

(b) Losses. Except as otherwise provided in this Article V, Losses for each Fiscal Year shall be allocated among the Members in proportion to their respective Percentage Interests.

(c) Definition of Profits and Losses. "Profits" and "Losses" mean, for each Fiscal Year, an amount equal to the Company's taxable income or loss for such Fiscal Year, determined in accordance with Section 703(a) of the Code (including all items of income, gain, loss, or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code), with the following adjustments:

(i) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses shall be added to such taxable income or loss;

(ii) Any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as such pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses, shall be subtracted from such taxable income or loss;

(iii) Gain or loss resulting from any disposition of Company property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of;

(iv) In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year; and

(v) Notwithstanding any other provision of this definition, any items that are specially allocated pursuant to Section 5.2 shall not be taken into account in computing Profits or Losses.

Section 5.2 Special Allocations

(a) Minimum Gain Chargeback. If there is a net decrease in Company Minimum Gain during any Fiscal Year, each Member shall be specially allocated items of Company income and gain for such Fiscal Year in an amount equal to such Member's share of the net decrease in Company Minimum Gain.

(b) Member Nonrecourse Debt Minimum Gain Chargeback. If there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt during any Fiscal Year, each Member who has a share of the Member Nonrecourse Debt Minimum Gain shall be specially allocated items of Company income and gain.

(c) Qualified Income Offset. If any Member unexpectedly receives any adjustments, allocations, or Distributions described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), items of Company income and gain shall be specially allocated to such Member.

(d) Gross Income Allocation. If any Member has an Adjusted Capital Account Deficit at the end of any Fiscal Year, such Member shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible.

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

(f) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any Fiscal Year shall be allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt.

(g) Section 754 Adjustment. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Section 734(b) or Section 743(b) of the Code is required to be taken into account in determining Capital Accounts, the amount of such adjustment shall be treated as an item of gain or loss.

(h) Curative Allocations. The allocations set forth in Sections 5.2(a) through 5.2(g) are intended to comply with certain requirements of the Treasury Regulations.

Section 5.3 Distributions

(a) Timing and Amount. Distributions of Available Cash or other assets may be made to the Members at such times and in such amounts as determined by the Members or Managers, subject to the provisions of the Act regarding distributions.

(b) Allocation Among Members. Except as otherwise provided in this Agreement, all Distributions shall be made to the Members in proportion to their respective Percentage Interests.

(c) Limitations on Distributions. No Distribution shall be made if, after giving effect to the Distribution, as provided in ORS 63.175:

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

(ii) The Company's total assets would be less than the sum of its total liabilities.

(d) Return of Distributions. Except as otherwise provided by the Act, no Member shall be obligated to return any Distribution to the Company.

Section 5.4 Tax Distributions

(a) Estimated Tax Distributions. The Company shall make quarterly Distributions to the Members in amounts sufficient to enable each Member to pay such Member's estimated federal, state, and local income tax liability attributable to such Member's allocable share of the Company's income.

(b) Calculation. The Tax Distribution Amount for each Member shall be calculated by multiplying such Member's allocable share of the Company's estimated taxable income for the applicable period by the highest combined marginal federal and state income tax rate applicable to individuals residing in the State of Oregon.

(c) Offset. Any Distributions made pursuant to this Section 5.4 shall be treated as advances against, and shall reduce, Distributions otherwise payable to the Members pursuant to Section 5.3.

Section 5.5 Distributions in Kind

The Company may make Distributions in kind only with the consent of Members holding at least a Majority in Interest. Any property Distributed in kind shall be valued at its fair market value as of the date of Distribution.

Section 5.6 Withholding

(a) The Company is authorized to withhold from Distributions to the Members any amounts required to be withheld pursuant to the Code or any provisions of any other federal, state, local, or foreign law.

(b) Any amounts withheld pursuant to this Section 5.6 shall be treated as amounts Distributed to the Members.

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ARTICLE VI

MANAGEMENT

Section 6.1 Management Structure

The Company shall be:

☐ MEMBER-MANAGED: The business and affairs of the Company shall be managed by its Members in accordance with Section 6.2.

☐ MANAGER-MANAGED: The business and affairs of the Company shall be managed by one or more Managers in accordance with Section 6.3.

Section 6.2 Member-Managed Company

If the Company is member-managed:

(a) Management Authority. Each Member shall have the right to participate in the management and conduct of the Company's business and shall have the authority to bind the Company in the ordinary course of the Company's business, as provided in ORS 63.130.

(b) Voting. Except as otherwise provided in this Agreement, decisions regarding the ordinary business and affairs of the Company shall be made by a Majority Vote of the Members.

Actions Requiring Supermajority Vote (66-2/3%):

☐ Approval of operating budgets in excess of $[________________________________]
☐ Entering into contracts with terms exceeding [____] years
☐ Incurring indebtedness in excess of $[________________________________]
☐ Acquiring or disposing of assets with a value in excess of $[________________________________]
☐ Entering into any merger, consolidation, or similar transaction
☐ Changing the Company's principal business activity

Actions Requiring Unanimous Vote:

☐ Amendment of this Agreement (except as otherwise provided herein)
☐ Admission of new Members
☐ Dissolution of the Company (except as otherwise provided herein)
☐ Any act that would make it impossible to carry on the ordinary business of the Company
☐ Confession of a judgment against the Company
☐ Submission of a Company claim to arbitration

(c) Officers. The Members may appoint officers to manage the day-to-day operations of the Company. Officers shall have such titles, duties, authority, and terms as the Members may determine. The initial officers of the Company are:

President: [________________________________]
Secretary: [________________________________]
Treasurer: [________________________________]

Section 6.3 Manager-Managed Company

If the Company is manager-managed:

(a) Appointment of Managers. The initial Manager(s) of the Company shall be:

Name: [________________________________]
Address: [________________________________]
Term: [________________________________]

Name: [________________________________]
Address: [________________________________]
Term: [________________________________]

(b) Number of Managers. The number of Managers shall be [____], which number may be increased or decreased by a Majority Vote of the Members, provided that there shall be at least one (1) Manager at all times.

(c) Authority. Subject to the limitations set forth in this Agreement, the Manager(s) shall have full and exclusive authority to manage and control the business and affairs of the Company, as set forth in ORS 63.130.

(d) Powers of Managers. Without limiting the generality of the foregoing, the Manager(s) shall have the power and authority to:

(i) Open and maintain bank accounts and other accounts on behalf of the Company;
(ii) Enter into contracts and agreements on behalf of the Company;
(iii) Employ agents, employees, managers, accountants, attorneys, and consultants;
(iv) Purchase, lease, or otherwise acquire real or personal property;
(v) Sell, transfer, or dispose of Company property;
(vi) Borrow money and issue evidences of indebtedness;
(vii) Execute mortgages, security agreements, and other security instruments;
(viii) Prosecute, defend, settle, or compromise litigation;
(ix) Pay all debts and obligations of the Company;
(x) Make Distributions to the Members as provided in this Agreement;
(xi) Do all other acts necessary or appropriate to carry on the Company's business.

(e) Limitations on Manager Authority. Notwithstanding the foregoing, the Manager(s) shall not, without the prior written consent of Members holding at least [________________] percent ([____]%) of the Percentage Interests:

(i) Sell, exchange, lease, or otherwise dispose of all or substantially all of the Company's assets;
(ii) Merge or consolidate the Company with another entity;
(iii) Amend this Agreement or the Articles of Organization;
(iv) Admit new Members;
(v) Incur indebtedness in excess of $[________________________________] in any single transaction or series of related transactions;
(vi) Make capital expenditures in excess of $[________________________________] in any Fiscal Year;
(vii) Enter into any transaction with a Member, Manager, or Affiliate;
(viii) Dissolve the Company;
(ix) File a petition for bankruptcy or make an assignment for the benefit of creditors;
(x) Guarantee the obligations of any other Person;
(xi) Take any action that would cause the Company to be treated as an association taxable as a corporation for federal income tax purposes.

(f) Term. Each Manager shall serve until the earlier of resignation, removal, death, incapacity, or expiration of stated term.

(g) Removal. Any Manager may be removed at any time, with or without cause, by the vote or written consent of Members holding at least [________________] percent ([____]%) of the Percentage Interests.

(h) Resignation. Any Manager may resign at any time by giving written notice to the Members.

(i) Vacancies. Any vacancy occurring among the Managers shall be filled by the vote or written consent of Members holding at least a Majority in Interest.

(j) Compensation. Managers shall be entitled to receive compensation for services rendered to the Company in such amounts as may be approved by Members holding at least a Majority in Interest.

(k) Officers. The Manager(s) may appoint officers to assist in the management of the Company's business and affairs.

Section 6.4 Manager Meetings

(a) Regular Meetings. Regular meetings of the Managers may be held at such times and places as may be determined by the Managers.

(b) Special Meetings. Special meetings of the Managers may be called by any Manager upon at least [____] days' prior written notice.

(c) Quorum. A majority of the Managers then serving shall constitute a quorum for the transaction of business.

(d) Voting. Each Manager shall have one vote. Except as otherwise provided in this Agreement, acts of a majority of the Managers present at a meeting at which a quorum is present shall be acts of the Managers.

(e) Action Without Meeting. Any action required or permitted to be taken at a meeting of Managers may be taken without a meeting if the action is evidenced by one or more written consents describing the action taken, signed by all Managers.

(f) Meetings by Communications Equipment. Managers may participate in any meeting by means of telephone conference or other communications equipment.

Section 6.5 Standard of Care

(a) Duty of Care. Each Member and Manager shall discharge the duties of such Member's or Manager's position in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the Member or Manager reasonably believes to be in the best interests of the Company.

(b) Duty of Loyalty. Each Member and Manager shall act in accordance with the duty of loyalty owed to the Company and the other Members, which includes:

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

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

(iii) To refrain from competing with the Company in the conduct of the Company's business.

(c) Good Faith and Fair Dealing. Each Member and Manager shall discharge the duties under this Agreement consistent with the obligation of good faith and fair dealing.

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ARTICLE VII

VOTING

Section 7.1 Voting Rights

Each Member shall be entitled to vote on any matter submitted to a vote of the Members in proportion to such Member's Percentage Interest, unless otherwise provided in this Agreement or required by the Act.

Section 7.2 Voting Thresholds

(a) Majority Vote (More than 50%):

☐ Approval of annual operating budgets
☐ Selection and removal of officers
☐ Approval of routine business contracts
☐ Establishment of policies and procedures
☐ Appointment of accountants and attorneys
☐ Filling vacancies among Managers

(b) Supermajority Vote (66-2/3%):

☐ Major capital expenditures exceeding $[________________________________]
☐ Borrowing exceeding $[________________________________]
☐ Sale of substantial assets
☐ Entering into material contracts
☐ Removal of Managers

(c) Unanimous Vote (100%):

☐ Amendment of this Agreement
☐ Admission of new Members
☐ Dissolution of the Company
☐ Merger or conversion of the Company
☐ Any fundamental change to Company purpose

Section 7.3 Class Voting

☐ Not Applicable. All Members vote together as a single class.

☐ Class Voting Applies. The following matters require approval by each class of Members voting separately: [________________________________]

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ARTICLE VIII

TRANSFER OF MEMBERSHIP INTERESTS

Section 8.1 Restrictions on Transfer

(a) General Restriction. Except as otherwise expressly provided in this Article VIII, no Member shall Transfer all or any portion of such Member's Membership Interest without the prior written consent of Members holding at least [________________] percent ([____]%) of the Percentage Interests.

(b) Conditions to Transfer. No Transfer of a Membership Interest shall be effective unless and until:

(i) The transferring Member gives written notice to the Company and the other Members;
(ii) The transferee executes a counterpart of this Agreement;
(iii) The Transfer complies with all applicable federal and state securities laws;
(iv) The transferring Member pays or reimburses the Company for all reasonable costs;
(v) The Transfer would not result in the Company being treated as a publicly traded partnership; and
(vi) The Transfer would not cause the Company to be terminated under Section 708 of the Code.

(c) Void Transfers. Any attempted Transfer in violation of this Article VIII shall be null and void.

Section 8.2 Right of First Refusal

(a) Notice of Proposed Transfer. If any Member desires to Transfer all or any portion of such Member's Membership Interest to a third party, such Member shall first offer to sell such Membership Interest to the other Members by giving written notice.

(b) Exercise of Right of First Refusal. The Non-Selling Members shall have the right, but not the obligation, to purchase all of the Membership Interest proposed to be transferred within [____] days after receipt of the Transfer Notice.

(c) Allocation Among Non-Selling Members. If more than one Non-Selling Member elects to exercise the right of first refusal, the Membership Interest shall be allocated among the electing Non-Selling Members in proportion to their respective Percentage Interests.

(d) Closing. If the Non-Selling Members exercise the right of first refusal, the closing shall take place within [____] days.

(e) Failure to Exercise. If the Non-Selling Members do not exercise the right of first refusal, the Selling Member may proceed with the proposed Transfer.

Section 8.3 Permitted Transfers

A Member may Transfer all or any portion of such Member's Membership Interest without complying with Section 8.1(a) or Section 8.2 in the following circumstances:

(a) To an Affiliate of the Member;
(b) To a revocable or irrevocable trust for the benefit of the Member or the Member's family;
(c) To a family limited partnership or limited liability company;
(d) To the Member's spouse, children, or other lineal descendants;
(e) In the case of a Member that is an entity, to the owners of such entity;
(f) By bequest or inheritance upon the death of the Member; or
(g) To the Company or to other Members.

Section 8.4 Involuntary Transfer

Upon the occurrence of an Involuntary Transfer, the Company and the other Members shall have the option to purchase the Membership Interest subject to the Involuntary Transfer at fair market value.

Section 8.5 Effect of Death, Disability, or Dissolution of Member

(a) Death. Upon the death of a Member, the Membership Interest shall pass to such Member's estate and thereafter to such Member's heirs.

(b) Disability. If a Member becomes disabled, the Company and the other Members shall have the option to purchase such Member's Membership Interest.

(c) Dissolution. Upon the dissolution of a Member that is an entity, the Membership Interest may pass to the owners of such entity.

Section 8.6 Valuation of Membership Interest

(a) Agreement on Value. The fair market value shall be determined by agreement of the transferring Member and the Company.

(b) Appraisal. If the parties cannot agree, fair market value shall be determined by a qualified independent appraiser.

(c) Discounts. Appropriate discounts for lack of marketability and lack of control may be applied.

Section 8.7 Assignees

Unless and until an Assignee is admitted as a Member, the Assignee shall not be entitled to exercise any rights of a Member.

Section 8.8 Admission of Assignees as Members

An Assignee may be admitted as a Member only upon written consent of Members holding at least [________________] percent ([____]%) of the Percentage Interests.

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ARTICLE IX

DISSOLUTION AND WINDING UP

Section 9.1 Events Causing Dissolution

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

(a) The written consent of Members holding at least [________________] percent ([____]%) of the Percentage Interests;

(b) The entry of a decree of judicial dissolution pursuant to ORS 63.661;

(c) The occurrence of any event that makes it unlawful for the Company's business to be continued;

(d) The occurrence of any other event specified in the Articles of Organization as causing dissolution; or

(e) The occurrence of any other event causing dissolution under the Act.

Section 9.2 Effect of Dissolution

Upon dissolution, the Company shall cease to carry on its business, except as necessary to wind up its business and affairs, but the Company shall continue in existence until the winding up of its affairs is completed and Articles of Dissolution are filed with the Oregon Secretary of State.

Section 9.3 Winding Up

(a) Authority. Upon dissolution, the Members (or a liquidating trustee) shall wind up the affairs of the Company.

(b) Liquidation. In winding up the Company's affairs, the Members or liquidating trustee shall:

(i) Collect all assets of the Company;
(ii) Pay all debts, liabilities, and obligations of the Company;
(iii) Distribute any remaining assets to the Members in accordance with Section 9.4; and
(iv) File Articles of Dissolution with the Oregon Secretary of State.

Section 9.4 Distribution of Assets Upon Liquidation

Upon the winding up of the Company, the assets shall be distributed in the following order:

(a) First, to creditors of the Company;
(b) Second, to the establishment of reserves for contingent liabilities;
(c) Third, to Members in proportion to their respective Capital Account balances.

Section 9.5 No Recourse Against Other Members

If the assets of the Company are insufficient to return to any Member the amount of such Member's Capital Account balance, such Member shall have no recourse against the Company or any other Member.

Section 9.6 Articles of Dissolution

Upon the completion of winding up, the Members or liquidating trustee shall file Articles of Dissolution with the Oregon Secretary of State in accordance with ORS 63.654.

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ARTICLE X

TAX MATTERS

Section 10.1 Fiscal Year

The Fiscal Year of the Company shall be the calendar year unless otherwise required by the Code or determined by the Members.

Section 10.2 Tax Classification

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

☐ A partnership (if more than one Member)
☐ A disregarded entity (if a single Member)
☐ An S corporation (Form 2553 election)
☐ A C corporation (Form 8832 election)

Section 10.3 Tax Returns

The Company shall prepare and timely file all federal, state, and local tax returns required to be filed by the Company. Each Member shall be furnished with a copy of Schedule K-1 within [____] days after the end of each Fiscal Year.

Section 10.4 Partnership Representative

(a) Designation. [________________________________] is hereby designated as the Partnership Representative.

(b) Authority. The Partnership Representative shall have the authority to represent the Company in all tax audits and proceedings.

(c) Push-Out Election. If an adjustment is required as a result of an audit, the Partnership Representative shall elect the application of Section 6226 of the Code.

(d) Indemnification. Each Member agrees to indemnify the Company from any liability with respect to such Member's share of any imputed underpayment.

Section 10.5 Tax Elections

The Partnership Representative may make any tax election available to the Company, including:

(a) An election pursuant to Section 754 of the Code;
(b) An election to use any permissible method of accounting;
(c) An election to use any permissible method of depreciation or amortization; and
(d) An election under Section 6226 of the Code.

Section 10.6 Oregon Corporate Activity Tax (CAT)

The Company shall comply with all Oregon Corporate Activity Tax requirements under ORS 317A. If the Company's Oregon commercial activity exceeds $1 million, the Company shall:

(a) File an annual CAT return with the Oregon Department of Revenue;
(b) Pay estimated quarterly CAT payments as required;
(c) Maintain records necessary to calculate the CAT liability; and
(d) Claim any applicable subtractions for labor costs or cost inputs.

Section 10.7 Withholding

The Company may withhold from Distributions to any Member any amount required to be withheld under the Code or any applicable state or local tax law.

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ARTICLE XI

INDEMNIFICATION

Section 11.1 Indemnification

(a) General Indemnification. To the fullest extent permitted by the Act, including ORS 63.160, the Company shall indemnify and hold harmless each Member, Manager, officer, employee, and agent of the Company from and against any and all losses, claims, damages, liabilities, costs, and expenses arising out of or in connection with any claim, action, suit, proceeding, or investigation in which such Indemnified Person may be involved.

(b) Conditions. Indemnification shall be provided only if the Indemnified Person acted in good faith and in a manner such Person reasonably believed to be in or not opposed to the best interests of the Company.

(c) No Indemnification. No Indemnified Person shall be entitled to indemnification with respect to fraud, gross negligence, or willful misconduct.

Section 11.2 Advancement of Expenses

The Company shall advance to any Indemnified Person reasonable attorneys' fees and other expenses incurred in connection with the defense of any action, upon receipt of an undertaking to repay such amounts if it is ultimately determined that such Person is not entitled to indemnification.

Section 11.3 Insurance

The Company may purchase and maintain insurance on behalf of any Indemnified Person against any liability.

Section 11.4 Limitation of Liability

(a) No Personal Liability. To the fullest extent permitted by the Act and other applicable law, no Member or Manager shall be personally liable to the Company or any Member for monetary damages for breach of fiduciary duty.

(b) Exculpation. To the extent that a Member or Manager has duties and liabilities to the Company or to another Member, such Member or Manager acting in good faith shall not be liable for reliance on the provisions of this Agreement.

Section 11.5 Non-Exclusivity

The indemnification provided by this Article XI shall not be deemed exclusive of any other rights to which an Indemnified Person may be entitled.

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ARTICLE XII

RECORDS AND REPORTS

Section 12.1 Books and Records

The Company shall keep at its principal office the following:

(a) A current list of Members and Managers;
(b) A copy of the Articles of Organization and all amendments;
(c) Copies of tax returns for the three most recent years;
(d) Copies of this Agreement and all amendments;
(e) Copies of financial statements for the three most recent years; and
(f) Records of all proceedings of Members and Managers.

Section 12.2 Inspection Rights

Each Member shall have the right to inspect and copy during ordinary business hours the Company books and records.

Section 12.3 Financial Reports

The Company shall prepare and distribute to each Member:

(a) Annual Financial Statements. Within [____] days after the end of each Fiscal Year;
(b) Tax Information. Within [____] days after the end of each Fiscal Year; and
(c) Quarterly Reports. Within [____] days after the end of each fiscal quarter (if requested).

Section 12.4 Bank Accounts

The Company shall maintain one or more bank accounts in the name of the Company.

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ARTICLE XIII

AMENDMENTS

Section 13.1 Amendments

(a) General. This Agreement may be amended only by a written instrument executed by Members holding at least [________________] percent ([____]%) of the Percentage Interests.

(b) Unanimous Consent Required. The following amendments shall require unanimous consent:

(i) Any amendment that would increase a Member's obligation to make Capital Contributions;
(ii) Any amendment that would alter the allocation of Profits, Losses, or Distributions;
(iii) Any amendment that would alter the voting rights of any Member;
(iv) Any amendment that would alter the requirements for amending this Agreement; or
(v) Any amendment that would adversely and disproportionately affect a Member.

(c) Amendment of Exhibits. Exhibit A may be amended by the Members or Managers from time to time without compliance with the procedures set forth in this Section 13.1.

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ARTICLE XIV

MISCELLANEOUS PROVISIONS

Section 14.1 Governing Law

This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Oregon, without regard to its conflict of laws principles.

Section 14.2 Jurisdiction and Venue

Any action or proceeding arising out of or relating to this Agreement shall be brought exclusively in the state or federal courts located in [________________________________] County, Oregon.

Section 14.3 Dispute Resolution

☐ Mediation. Any dispute shall first be submitted to mediation.

☐ Arbitration. Any dispute that is not resolved through mediation shall be finally resolved by binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association.

☐ Litigation. Any dispute that is not resolved through mediation shall be resolved by litigation.

Section 14.4 Entire Agreement

This Agreement constitutes the entire agreement among the Members with respect to the subject matter hereof.

Section 14.5 Severability

If any provision of this Agreement is held to be invalid, illegal, or unenforceable, the remaining provisions shall not be affected.

Section 14.6 Binding Effect

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, and permitted assigns.

Section 14.7 Counterparts

This Agreement may be executed in one or more counterparts.

Section 14.8 Notices

All notices, requests, demands, and other communications shall be in writing and shall be deemed to have been duly given when delivered personally, sent by registered or certified mail, sent by overnight courier service, or sent by email.

Section 14.9 Waiver

No waiver of any provision of this Agreement shall be effective unless in writing and signed by the waiving party.

Section 14.10 Headings

The headings in this Agreement are for convenience of reference only.

Section 14.11 Construction

This Agreement shall be construed without regard to any presumption or rule requiring construction against the party drafting.

Section 14.12 Attorneys' Fees

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

Section 14.13 Confidentiality

Each Member agrees to maintain the confidentiality of all non-public information regarding the Company's business.

Section 14.14 No Third Party Beneficiaries

This Agreement is for the sole benefit of the parties hereto.

Section 14.15 Further Assurances

Each Member agrees to execute and deliver such further documents and instruments as may be reasonably necessary to effectuate the purposes of this Agreement.

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ARTICLE XV

SIGNATURES

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

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MEMBERS:

Member 1:

Signature: [________________________________]

Printed Name: [________________________________]

Date: [__/__/____]

Address:
[________________________________]
[________________________________]
[________________________________]

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Member 2:

Signature: [________________________________]

Printed Name: [________________________________]

Date: [__/__/____]

Address:
[________________________________]
[________________________________]
[________________________________]

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Member 3:

Signature: [________________________________]

Printed Name: [________________________________]

Date: [__/__/____]

Address:
[________________________________]
[________________________________]
[________________________________]

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[Additional signature blocks as needed]

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EXHIBIT A

MEMBERS, CAPITAL CONTRIBUTIONS, AND PERCENTAGE INTERESTS

As of [__/__/____]

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

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

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EXHIBIT B

ARTICLES OF ORGANIZATION CONFIRMATION

The undersigned confirms that Articles of Organization for [________________________________], LLC were filed with the Oregon Secretary of State on [__/__/____].

Registry Number: [________________________________]

Effective Date: [__/__/____]

Signed: [________________________________]

Date: [__/__/____]

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EXHIBIT C

CONSENT OF SPOUSE (If Applicable)

I, [________________________________], am the spouse of [________________________________], a Member of [________________________________], LLC. I have read and understand the foregoing Operating Agreement. I hereby consent to all of its terms and conditions and agree that my interest, if any, in the Membership Interest of my spouse shall be subject to the provisions of this Agreement.

Signature: [________________________________]

Printed Name: [________________________________]

Date: [__/__/____]

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This Operating Agreement is governed by the Oregon Limited Liability Company Act, ORS Chapter 63. Oregon imposes a Corporate Activity Tax (CAT) on businesses with Oregon commercial activity exceeding $1 million.