LIMITED LIABILITY COMPANY OPERATING AGREEMENT

[COMPANY NAME], LLC

A Vermont Limited Liability Company

TABLE OF CONTENTS

1. Formation and Organization
2. Definitions
3. Purpose and Powers
4. Members
5. Capital Contributions
6. Capital Accounts
7. Allocations of Profits and Losses
8. Distributions
9. Management
10. Meetings and Voting
11. Officers
12. Transfer of Membership Interests
13. Withdrawal and Dissociation
14. Dissolution and Winding Up
15. Indemnification and Limitation of Liability
16. Books, Records, and Reports
17. Tax Matters
18. Dispute Resolution
19. General Provisions
20. Execution

Exhibit A - Schedule of Members
Exhibit B - Initial Capital Contributions
Exhibit C - Officers (if applicable)

ARTICLE I - FORMATION AND ORGANIZATION

1.1 Formation

This Limited Liability Company Operating Agreement (this "Agreement") of [COMPANY NAME], LLC (the "Company") is entered into and effective as of [EFFECTIVE DATE] (the "Effective Date") by and among the Members identified on Exhibit A attached hereto.

The Company was formed as a Vermont limited liability company by filing Articles of Organization with the Vermont Secretary of State on [FILING DATE] pursuant to and governed by the Vermont Limited Liability Company Act, 11 V.S.A. Sections 4001-4203 (the "Act").

[// GUIDANCE: Vermont adopted the Revised Uniform Limited Liability Company Act (RULLCA) effective July 1, 2013. The Act provides significant flexibility for operating agreements to modify default rules.]

1.2 Name

The name of the Company is [COMPANY NAME], LLC. The Company may do business under such trade names or fictitious names as the Members may approve, subject to compliance with Vermont law regarding trade names.

1.3 Principal Office

The principal place of business of the Company shall be:

[STREET ADDRESS]
[CITY], Vermont [ZIP CODE]

The Company may establish additional offices at such other locations as the Members may determine.

1.4 Registered Agent and Office

The registered agent and registered office of the Company in Vermont is:

Registered Agent: [AGENT NAME]
Registered Office: [AGENT ADDRESS], [CITY], Vermont [ZIP CODE]

The registered agent may be changed by filing a statement of change with the Vermont Secretary of State pursuant to 11 V.S.A. Section 4014.

1.5 Term

The Company shall have a perpetual existence and shall continue until dissolved in accordance with Article XIV of this Agreement or as required by the Act.

1.6 Filing and Compliance

The Members shall cause the Company to file and maintain all reports, registrations, and filings required under Vermont law, including:

(a) Annual Reports: File annual reports with the Vermont Secretary of State as required by 11 V.S.A. Section 4016 by the anniversary date of formation

(b) Amendment of Articles: File amendments to the Articles of Organization as needed

(c) Trade Names: Register any trade names or d/b/a names as required

(d) Tax Registrations: Register with the Vermont Department of Taxes as required

ARTICLE II - DEFINITIONS

For purposes of this Agreement, the following capitalized terms have the meanings set forth below:

"Act" — The Vermont Limited Liability Company Act, 11 V.S.A. Sections 4001-4203, as amended from time to time.

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

"Agreement" — This Limited Liability Company Operating Agreement, including all exhibits and amendments.

"Assignee" — A Person who has acquired a Transferable Interest but who has not been admitted as a Member.

"Business Day" — Any day other than Saturday, Sunday, or a day on which banks in Vermont are authorized or required to be closed.

"Capital Account" — The capital account maintained for each Member in accordance with Article VI.

"Capital Contribution" — The total amount of cash and the fair market value of property contributed to the Company by a Member.

"Code" — The Internal Revenue Code of 1986, as amended.

"Company" — [COMPANY NAME], LLC, a Vermont limited liability company.

"Distributable Cash" — Cash available for distribution to Members after payment or provision for Company expenses, liabilities, and reasonable reserves.

"Distribution" — A transfer of money or property by the Company to a Member on account of a Transferable Interest.

"Effective Date" — The date first written above.

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

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

"Manager" — Each Person designated as a manager of the Company if the Company is manager-managed.

"Member" — Each Person who has been admitted to the Company as a member and who holds a Membership Interest, as reflected on Exhibit A.

"Membership Interest" — A Member's entire interest in the Company, including the Transferable Interest and all management and other rights.

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

"Percentage Interest" — The percentage of a Member's ownership interest in the Company as set forth on Exhibit A.

"Person" — An individual, corporation, partnership, limited liability company, trust, estate, association, or other legal entity.

"Profit" and "Loss" — For each Fiscal Year, the Company's taxable income or loss determined in accordance with Code Section 703(a), with adjustments as required by this Agreement.

"Supermajority Interest" — Members holding at least [sixty-six and two-thirds percent (66 2/3%) / seventy-five percent (75%) / eighty percent (80%)] of the total Percentage Interests.

"Transferable Interest" — A Member's right to receive distributions from the Company as provided in the Act and this Agreement.

"Treasury Regulations" — The regulations promulgated under the Code.

ARTICLE III - PURPOSE AND POWERS

3.1 Purpose

The Company is formed for the following purposes:

(a) [DESCRIBE PRIMARY BUSINESS PURPOSE]

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

(c) To exercise all powers necessary or convenient to accomplish the foregoing purposes

3.2 Powers

Subject to the limitations set forth in this Agreement, the Company shall have all powers available to a Vermont limited liability company under the Act, including without limitation the power to:

(a) Acquire, hold, own, operate, lease, encumber, and dispose of real and personal property

(b) Enter into contracts and agreements

(c) Borrow money, issue notes and other evidences of indebtedness, and secure obligations by mortgage, pledge, or other security interest

(d) Lend money and extend credit

(e) Invest Company funds

(f) Sue and be sued

(g) Hire employees and engage independent contractors

(h) Conduct business in other states and countries

(i) Take such other actions as may be necessary or desirable to carry out the Company's purposes

ARTICLE IV - MEMBERS

4.1 Initial Members

The initial Members of the Company, their addresses, Capital Contributions, and Percentage Interests are set forth on Exhibit A attached hereto.

4.2 Admission of Additional Members

(a) Additional Members may be admitted to the Company only upon:

(i) The approval of [a Majority Interest / a Supermajority Interest / all] of the existing Members; and

(ii) The execution by the new Member of a written agreement to be bound by this Agreement

(b) Upon admission, the new Member's information shall be added to Exhibit A

4.3 No Personal Liability

Except as otherwise provided by law or this Agreement, 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. This limitation on liability is consistent with 11 V.S.A. Section 4034.

4.4 Members as Agents

(a) If Member-Managed: Each Member is an agent of the Company for purposes of its activities and affairs, and the act of a Member, including the signing of a document in the Company's name, for apparently carrying on in the ordinary course the Company's activities and affairs or activities and affairs of the kind carried on by the Company binds the Company, unless the Member had no authority to act and the person with whom the Member was dealing knew or had notice that the Member lacked authority.

(b) If Manager-Managed: A Member is not an agent of the Company solely by reason of being a Member. A Manager is an agent of the Company.

4.5 No Right to Withdraw Capital

Except as specifically provided in this Agreement, no Member shall have the right to withdraw or receive a return of any portion of such Member's Capital Contributions.

ARTICLE V - CAPITAL CONTRIBUTIONS

5.1 Initial Capital Contributions

Each initial Member has contributed or agrees to contribute to the Company the Capital Contribution set forth opposite such Member's name on Exhibit B attached hereto.

5.2 Additional Capital Contributions

(a) No Member shall be required to make any additional Capital Contributions beyond the initial Capital Contribution without such Member's consent.

(b) If the Members determine that additional capital is needed, the Members may:

(i) Request voluntary additional Capital Contributions from existing Members

(ii) Admit new Members with approval pursuant to Section 4.2

(iii) Obtain third-party financing

(c) If additional Capital Contributions are approved:

(i) Each Member shall have the opportunity to contribute additional capital in proportion to such Member's Percentage Interest

(ii) If a Member declines or fails to contribute within [30] days of written request, the other Members may contribute the shortfall

(iii) Percentage Interests shall be adjusted to reflect additional contributions

5.3 Capital Contribution Defaults

If a Member fails to make a required Capital Contribution when due:

(a) The non-defaulting Members may, upon [10] days' written notice:

(i) Advance the defaulting Member's share as a loan to the Company bearing interest at [prime rate plus 5% / 12% per annum]

(ii) Treat the amount as an additional Capital Contribution by the advancing Member(s)

(b) The defaulting Member's Percentage Interest may be diluted proportionally

(c) The Company may pursue any other remedies available at law or equity

5.4 Form of Contributions

Capital Contributions may be made in the form of:

(a) Cash

(b) Property (valued at fair market value as determined by the Members)

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

(d) Promissory notes or other obligations to contribute cash or property

[// GUIDANCE: Under 11 V.S.A. Section 4042, contributions may consist of tangible or intangible property or services. The operating agreement should specify how non-cash contributions are valued.]

5.5 Return of Capital Contributions

Except as expressly provided in this Agreement, no Member shall be entitled to interest on Capital Contributions or to demand or receive the return of any Capital Contribution.

ARTICLE VI - CAPITAL ACCOUNTS

6.1 Establishment and Maintenance

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

6.2 Credits to Capital Accounts

Each Member's Capital Account shall be credited with:

(a) The amount of cash contributed by such Member

(b) The fair market value of property contributed by such Member (net of liabilities secured by such property)

(c) Allocations of Profit and other items of income or gain

6.3 Debits to Capital Accounts

Each Member's Capital Account shall be debited with:

(a) The amount of cash distributed to such Member

(b) The fair market value of property distributed to such Member (net of liabilities secured by such property)

(c) Allocations of Loss and other items of deduction or loss

6.4 Transfer of Capital Accounts

Upon the transfer of a Membership Interest in accordance with Article XII, the Capital Account of the transferor shall become the Capital Account of the transferee to the extent of the interest transferred.

6.5 Compliance with Treasury Regulations

The manner of maintaining Capital Accounts and the allocations to such accounts shall comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted consistently therewith.

ARTICLE VII - ALLOCATIONS OF PROFITS AND LOSSES

7.1 General Allocations

(a) Profits. After giving effect to the special allocations in Section 7.2, Profits for each Fiscal Year shall be allocated to the Members in proportion to their Percentage Interests.

(b) Losses. After giving effect to the special allocations in Section 7.2, Losses for each Fiscal Year shall be allocated to the Members in proportion to their Percentage Interests; provided, however, that Losses shall not be allocated to a Member to the extent such allocation would create or increase a deficit balance in such Member's Capital Account.

7.2 Special Allocations

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

(b) Minimum Gain Chargeback. If there is a net decrease in Company minimum gain during any Fiscal Year, each Member shall be allocated items of income and gain for such year (and, if necessary, subsequent years) as required by Treasury Regulations Section 1.704-2(f).

(c) Member Nonrecourse Debt Minimum Gain Chargeback. If there is a net decrease in Member nonrecourse debt minimum gain during any Fiscal Year, each Member shall be allocated items of income and gain as required by Treasury Regulations Section 1.704-2(i)(4).

(d) Nonrecourse Deductions. Nonrecourse deductions shall be allocated to the Members in proportion to their Percentage Interests.

(e) Member Nonrecourse Deductions. Member nonrecourse deductions shall be allocated to the Member who bears the economic risk of loss with respect to the related Member nonrecourse debt.

7.3 Tax Allocations

(a) For federal income tax purposes, each item of income, gain, loss, deduction, and credit shall be allocated among the Members in the same manner as the corresponding item of Profit or Loss.

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

7.4 Allocation Period

Allocations shall be made as of the last day of each Fiscal Year. Upon a change in Percentage Interests during a Fiscal Year, Profits and Losses shall be allocated using any permissible method under Code Section 706.

ARTICLE VIII - DISTRIBUTIONS

8.1 Distributions Generally

(a) Subject to Section 8.4, distributions of Distributable Cash shall be made at such times and in such amounts as determined by:

☐ A Majority Interest of the Members
☐ The Manager(s)

(b) Distributions shall be made to the Members in proportion to their Percentage Interests.

8.2 Timing of Distributions

(a) The Company shall make distributions at least [annually / quarterly / as determined by the Members].

(b) Notwithstanding the foregoing, the Company shall distribute to the Members, within [90] days after the end of each Fiscal Year, an amount equal to at least the estimated federal and state income tax liability of the Members attributable to their shares of Company income for such Fiscal Year ("Tax Distribution").

8.3 Distributions in Kind

(a) No Member shall be entitled to demand or receive a distribution in any form other than cash.

(b) The Members may, upon unanimous consent, make distributions in kind. Property distributed in kind shall be valued at fair market value and treated as if sold for such value, with the resulting gain or loss allocated among the Members before distribution.

8.4 Limitations on Distributions

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

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

(ii) The Company's total assets would be less than the sum of its total liabilities plus the amount that would be needed to satisfy any preferential rights of Members superior to those receiving the distribution

(b) This limitation is consistent with 11 V.S.A. Section 4049.

8.5 Distributions Upon Withdrawal or Dissociation

A Member who validly withdraws or dissociates pursuant to Article XIII shall receive distributions as provided in that Article.

ARTICLE IX - MANAGEMENT

9.1 Management Structure

The Company shall be:

☐ MEMBER-MANAGED: The business and affairs of the Company shall be managed by its Members. Each Member shall have the authority to act on behalf of the Company as provided in the Act and this Agreement.

☐ MANAGER-MANAGED: The business and affairs of the Company shall be managed by one or more Managers. The initial Manager(s) are:

[// GUIDANCE: Vermont law provides different default rules depending on whether the LLC is member-managed or manager-managed. See 11 V.S.A. Section 4054. Check one box and complete accordingly.]

9.2 Authority of Members (If Member-Managed)

(a) Ordinary Course Decisions. Any Member may take any action on behalf of the Company in the ordinary course of business, including:

(i) Executing contracts up to $[AMOUNT] in value
(ii) Opening and managing bank accounts
(iii) Hiring employees within approved budget
(iv) Conducting day-to-day operations

(b) Decisions Requiring Majority Approval. The following actions require approval of a Majority Interest:

(i) Entering into contracts exceeding $[AMOUNT] but less than $[HIGHER AMOUNT]
(ii) Borrowing up to $[AMOUNT]
(iii) Acquiring or disposing of assets up to $[AMOUNT]
(iv) Hiring or terminating key employees
(v) Approving annual budgets
(vi) Making distributions

(c) Decisions Requiring Supermajority or Unanimous Approval. The following actions require approval of a [Supermajority Interest / all Members]:

(i) Amending this Agreement
(ii) Admitting new Members
(iii) Approving a merger, conversion, or domestication
(iv) Selling substantially all Company assets
(v) Incurring debt exceeding $[AMOUNT]
(vi) Guaranteeing obligations of others
(vii) Making loans or extending credit to Members
(viii) Filing for bankruptcy
(ix) Dissolving the Company
(x) Changing the Company's purpose
(xi) Changing the Company's tax classification

9.3 Authority of Managers (If Manager-Managed)

(a) General Authority. Subject to Section 9.3(c), the Manager(s) shall have full authority to manage and conduct the business and affairs of the Company.

(b) Multiple Managers. If there is more than one Manager:

☐ Each Manager may act independently
☐ Managers must act by majority vote
☐ Managers must act unanimously

(c) Reserved Member Rights. Notwithstanding Manager authority, the following actions require approval of [a Majority Interest / a Supermajority Interest / all Members]:

(i) Amending this Agreement
(ii) Admitting new Members
(iii) Approving a merger, conversion, or domestication
(iv) Selling substantially all Company assets
(v) Dissolving the Company
(vi) Removing or replacing a Manager
(vii) Changing the Company's tax classification
(viii) [Add other reserved matters]

9.4 Manager Appointment and Removal

(a) Managers shall serve until resignation, removal, death, or incapacity.

(b) A Manager may be removed at any time, with or without cause, by the vote of [a Majority Interest / a Supermajority Interest] of the Members.

(c) A Manager may resign at any time by giving written notice to the Company. Resignation is effective upon receipt of notice or at any later time specified in the notice.

(d) Vacancies in the position of Manager shall be filled by the vote of [a Majority Interest] of the Members.

9.5 Manager Compensation

Managers shall be entitled to reasonable compensation for services rendered to the Company as determined by the Members. Managers shall also be entitled to reimbursement for reasonable expenses incurred in connection with Company business.

9.6 Standard of Care

(a) A Member or Manager shall discharge duties under this Agreement and the Act:

(i) In good faith
(ii) With the care an ordinarily prudent person in a like position would exercise under similar circumstances
(iii) In a manner the Member or Manager reasonably believes to be in the best interests of the Company

(b) A Member or Manager is entitled to rely on information, opinions, reports, or statements prepared or presented by:

(i) One or more other Members, Managers, employees, or agents whom the Member or Manager reasonably believes to be reliable and competent
(ii) Legal counsel, public accountants, or other professionals as to matters within their expertise

(c) A Member or Manager shall not be liable to the Company or to any Member for any action taken or omission made in good faith reliance on the provisions of this Agreement.

9.7 Duties

(a) Duty of Loyalty. Each Member (in a member-managed LLC) or Manager (in a manager-managed LLC) owes a duty of loyalty to the Company and the other Members, which includes:

(i) Accounting to the Company for any benefit derived from the conduct of Company activities or from use of Company property
(ii) Refraining from dealing with the Company on behalf of a party adverse to the Company
(iii) Refraining from competing with the Company in the conduct of its activities

(b) Duty of Care. Each Member or Manager shall refrain from engaging in grossly negligent or reckless conduct, willful or intentional misconduct, or a knowing violation of law.

(c) Modification of Duties. The duties set forth in this Section may be limited or eliminated by this Agreement to the extent permitted by 11 V.S.A. Section 4034, except that this Agreement may not eliminate:

(i) The duty to refrain from bad faith or willful or intentional misconduct
(ii) The duty to account for profits derived from transactions involving Company property

[// GUIDANCE: Vermont allows significant flexibility to modify fiduciary duties in the operating agreement. See 11 V.S.A. Section 4034(c).]

ARTICLE X - MEETINGS AND VOTING

10.1 Meetings of Members

(a) Annual Meeting. An annual meeting of the Members shall be held on [DATE OR DESCRIPTION] each year, or at such other time as the Members may determine.

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

(i) Any Manager (if manager-managed)
(ii) Any Member or Members holding at least [20%] of the Percentage Interests

(c) Notice. Written notice of any meeting shall be delivered to all Members at least [10] days but not more than [60] days before the meeting, stating the date, time, place, and purpose of the meeting.

(d) Place. Meetings may be held in person at the principal office or such other location as specified in the notice, or by telephone or video conference if all participating Members can hear one another.

10.2 Quorum

Members holding at least [a Majority Interest / Supermajority Interest] must be present in person or by proxy to constitute a quorum for the transaction of business.

10.3 Voting

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

(b) Unless otherwise required by this Agreement or the Act, decisions of the Members shall be made by a Majority Interest.

(c) Members may vote in person, by proxy, or by written consent without a meeting.

10.4 Action by Written Consent

Any action that may be taken at a meeting of Members may be taken without a meeting if a written consent setting forth the action so taken is signed by Members having at least the minimum number of votes that would be necessary to authorize the action at a meeting.

10.5 Proxies

A Member may appoint a proxy to vote or otherwise act for the Member by signing a written appointment form. A proxy appointment is valid for [11] months unless a longer period is expressly provided.

ARTICLE XI - OFFICERS

11.1 Designation of Officers

The [Members / Manager(s)] may appoint officers of the Company, which may include:

(a) President or Chief Executive Officer
(b) Vice President(s)
(c) Secretary
(d) Treasurer or Chief Financial Officer
(e) Such other officers as may be appointed

11.2 Officer Duties

Officers shall have the duties and authority customarily associated with their offices, as modified by the [Members / Manager(s)] or this Agreement. The initial officers, if any, are listed on Exhibit C.

11.3 Appointment, Removal, and Resignation

(a) Officers shall be appointed and may be removed at any time, with or without cause, by the [Members / Manager(s)].

(b) An officer may resign at any time by giving written notice to the Company.

(c) One person may hold more than one office.

11.4 Compensation

Officers shall be entitled to such compensation as determined by the [Members / Manager(s)].

ARTICLE XII - TRANSFER OF MEMBERSHIP INTERESTS

12.1 General Restrictions

(a) No Member may Transfer all or any portion of such Member's Membership Interest except in accordance with this Article XII.

(b) "Transfer" means any sale, assignment, gift, pledge, hypothecation, encumbrance, or other disposition, whether voluntary, involuntary, or by operation of law.

(c) Any purported Transfer in violation of this Agreement shall be void and of no effect.

12.2 Permitted Transfers

A Member may Transfer all or any portion of such Member's Membership Interest:

(a) To Permitted Transferees: Without consent, to:

(i) The Member's spouse, children, grandchildren, parents, or siblings
(ii) A trust for the benefit of the Member or the Member's family members
(iii) An entity controlled by the Member
(iv) Upon the Member's death, pursuant to the Member's will or the laws of intestacy

(b) With Consent: To any other Person with the prior written consent of [a Majority Interest / all] of the non-transferring Members

12.3 Right of First Refusal

(a) Before any Transfer requiring consent (other than Permitted Transfers), the transferring Member must first offer the interest to the Company and then to the other Members.

(b) Procedure:

(i) The transferring Member shall deliver a written notice ("Transfer Notice") to the Company and all Members stating the proposed transferee, price, and terms

(ii) The Company shall have [30] days to elect to purchase all (but not less than all) of the offered interest at the stated price and terms

(iii) If the Company does not elect to purchase, the other Members shall have [30] days to elect to purchase, pro rata based on their Percentage Interests

(iv) If the Company and other Members do not elect to purchase all of the offered interest, the transferring Member may complete the Transfer to the proposed transferee on terms no more favorable than stated in the Transfer Notice, provided the Transfer closes within [90] days

12.4 Admission as Member

(a) A transferee of a Membership Interest shall be admitted as a Member only upon:

(i) Compliance with this Article XII
(ii) Approval of [a Majority Interest / all] of the Members (if required)
(iii) Execution of a written agreement to be bound by this Agreement
(iv) Payment of any reasonable costs of the Transfer

(b) Until admitted as a Member, a transferee shall have only the rights of an Assignee under the Act.

12.5 Assignee Rights

An Assignee who has not been admitted as a Member shall have only the right to receive distributions and allocations of Profit and Loss as provided in this Agreement. An Assignee shall have no right to participate in management, vote, or receive information about the Company.

12.6 Effect of Death, Disability, or Incapacity

Upon the death, disability, or incapacity of a Member who is an individual:

(a) The personal representative, guardian, or trustee of such Member shall have the rights of an Assignee

(b) Such Person may be admitted as a Member with the consent of [a Majority Interest] of the remaining Members

(c) The Company or remaining Members shall have the option to purchase the deceased or incapacitated Member's interest at fair market value, payable over [3] years with interest at [prime rate]

12.7 Drag-Along Rights

If Members holding at least [75%] of the Percentage Interests approve a sale of all or substantially all of the Company's assets or Membership Interests to a third party, all other Members shall be required to participate in such transaction on the same terms and conditions.

12.8 Tag-Along Rights

If one or more Members propose to Transfer Membership Interests representing more than [50%] of the total Percentage Interests to a third party, each other Member shall have the right to participate in such Transfer on the same terms and conditions, pro rata based on Percentage Interests.

ARTICLE XIII - WITHDRAWAL AND DISSOCIATION

13.1 Voluntary Withdrawal

(a) A Member may withdraw from the Company only upon [90] days' prior written notice to the Company and the other Members.

(b) A withdrawing Member shall not be entitled to receive the fair value of such Member's interest upon withdrawal but shall remain entitled to distributions as an Assignee until the interest is purchased or the Company is dissolved.

[// GUIDANCE: Under 11 V.S.A. Section 4071, a person is dissociated as a member upon the occurrence of certain events. The operating agreement may modify the consequences of dissociation.]

13.2 Events of Dissociation

A Member is dissociated from the Company upon:

(a) The Company's receipt of the Member's notice of express will to withdraw

(b) An event specified in the operating agreement

(c) The Member's expulsion pursuant to Section 13.3

(d) The Member's bankruptcy or similar insolvency event

(e) The Member's death (for an individual) or dissolution/termination (for an entity)

(f) The appointment of a guardian or conservator

(g) A judicial order of dissociation under 11 V.S.A. Section 4072

13.3 Expulsion

A Member may be expelled upon the vote of [all / a Supermajority Interest of] the other Members for:

(a) Material breach of this Agreement that is not cured within [30] days after written notice

(b) Conviction of a felony or crime of moral turpitude

(c) Conduct that makes it not reasonably practicable to carry on the Company's business

(d) Willful or persistent breach of the duty of loyalty

13.4 Effect of Dissociation

Upon dissociation:

(a) The dissociated Member's right to participate in management terminates

(b) The dissociated Member's duties under this Agreement terminate except for obligations arising before dissociation

(c) The dissociated Member becomes an Assignee with only the right to receive distributions

(d) The Company and remaining Members shall have the option to purchase the dissociated Member's interest at fair market value

ARTICLE XIV - DISSOLUTION AND WINDING UP

14.1 Events Causing Dissolution

The Company shall be dissolved upon the first to occur of:

(a) The vote of [a Supermajority Interest / all] of the Members to dissolve

(b) The occurrence of an event specified in this Agreement requiring dissolution

(c) The entry of a judicial decree of dissolution under 11 V.S.A. Section 4091

(d) Administrative dissolution by the Vermont Secretary of State

14.2 Winding Up

Upon dissolution, the Company shall wind up its affairs by:

(a) Collecting its assets

(b) Disposing of properties not to be distributed in kind

(c) Discharging or making provision for liabilities

(d) Distributing remaining assets to Members

14.3 Order of Distributions Upon Dissolution

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

(a) First: To creditors, including Members who are creditors, to the extent permitted by law, in satisfaction of Company liabilities

(b) Second: To Members for unpaid distributions previously declared

(c) Third: To Members in accordance with their positive Capital Account balances

If the Company's assets are insufficient to satisfy creditors, the Members shall contribute to the Company in proportion to their share of losses (or in such other proportion as the Members may agree).

14.4 Certificate of Cancellation

Upon completion of winding up, the Company shall file a Certificate of Cancellation with the Vermont Secretary of State.

ARTICLE XV - INDEMNIFICATION AND LIMITATION OF LIABILITY

15.1 Indemnification

(a) The Company shall indemnify, defend, and hold harmless each Member, Manager, officer, employee, and agent of the Company (each an "Indemnified Person") against all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising from any claim, action, or proceeding to which such Indemnified Person may be made a party by reason of being or having been a Member, Manager, officer, employee, or agent of the Company, except to the extent such losses arise from:

(i) Bad faith, willful misconduct, or knowing violation of law
(ii) A transaction from which the Indemnified Person derived improper personal benefit
(iii) A breach of the duty of loyalty not authorized under this Agreement

(b) Indemnification shall be paid from Company assets only and no Member shall have personal liability for indemnification.

15.2 Advancement of Expenses

The Company shall advance to an Indemnified Person reasonable expenses incurred in defending any claim, action, or proceeding upon receipt of an undertaking to repay such amounts if it is ultimately determined that the Indemnified Person is not entitled to indemnification.

15.3 Limitation of Liability

(a) No Member shall be liable to the Company or to any other Member for any loss or damage unless caused by such Member's bad faith, willful misconduct, or knowing violation of law.

(b) No Manager shall be liable to the Company, any Member, or any other Person for any loss or damage arising from any act or omission performed or omitted by such Manager in good faith and in a manner such Manager reasonably believed to be in the best interests of the Company, unless such act or omission constitutes bad faith, willful misconduct, or knowing violation of law.

15.4 Insurance

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

ARTICLE XVI - BOOKS, RECORDS, AND REPORTS

16.1 Books and Records

The Company shall maintain at its principal office:

(a) A current list of the names and addresses of all Members

(b) A copy of the Articles of Organization and all amendments

(c) A copy of this Agreement and all amendments

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

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

(f) Minutes of Member and Manager meetings

(g) All other records required by the Act

16.2 Member Access to Records

Each Member has the right, upon reasonable request:

(a) To inspect and copy the books and records during ordinary business hours

(b) To obtain from the Company true and complete information regarding:

(i) The Company's activities, affairs, and financial condition
(ii) The names and addresses of all Members
(iii) Any other information reasonably related to the Member's interest

(c) The Company may impose a reasonable charge for copies

16.3 Reports

(a) Annual Reports. Within [90] days after the end of each Fiscal Year, the Company shall provide to each Member:

(i) Financial statements (balance sheet and income statement) for the Fiscal Year
(ii) A statement of each Member's Capital Account
(iii) Schedule K-1 or other tax information necessary for Members' tax returns

(b) Tax Returns. The Company shall prepare and timely file all required federal, state, and local tax returns.

ARTICLE XVII - TAX MATTERS

17.1 Tax Classification

The Company shall be classified for federal income tax purposes as:

☐ Partnership (if two or more Members)
☐ Disregarded Entity (if one Member)
☐ S Corporation (election to be filed)
☐ C Corporation (election to be filed)

17.2 Partnership Representative

(a) If the Company is classified as a partnership, the "Partnership Representative" (as defined in Code Section 6223) shall be:

[NAME] or such other Person as designated by [a Majority Interest] of the Members.

(b) The Partnership Representative shall have all powers and authority provided under Subchapter C of Chapter 63 of the Code (the centralized partnership audit rules).

(c) The Partnership Representative shall keep the Members informed of all administrative and judicial proceedings and shall not take any action that would have a material adverse effect on any Member without prior consultation with such Member.

17.3 Tax Elections

The Company shall make the following elections:

(a) Section 754 Election: ☐ Yes ☐ No ☐ At Partnership Representative's discretion

(b) Method of Accounting: ☐ Cash ☐ Accrual

(c) Depreciation Method: As determined by the Partnership Representative consistent with applicable law

17.4 Withholding

The Company is authorized to withhold from distributions to any Member, and to pay over to any governmental authority, any amounts required to be withheld under applicable law.

ARTICLE XVIII - DISPUTE RESOLUTION

18.1 Governing Law

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

18.2 Mediation

Any dispute arising out of or relating to this Agreement shall first be submitted to non-binding mediation before a mutually agreed-upon mediator. Mediation shall take place in [Burlington / Montpelier / other city], Vermont, and costs shall be shared equally.

18.3 Arbitration (Optional)

☐ ARBITRATION ELECTED: If this box is checked, any dispute not resolved through mediation shall be finally resolved by binding arbitration in accordance with the rules of the [American Arbitration Association / JAMS]. The arbitration shall take place in Vermont, and the arbitrator's decision shall be final and binding.

☐ LITIGATION ELECTED: If this box is checked (or neither box is checked), disputes not resolved through mediation shall be resolved by litigation in the state or federal courts located in Vermont.

18.4 Attorneys' Fees

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

ARTICLE XIX - GENERAL PROVISIONS

19.1 Amendments

This Agreement may be amended only by a written instrument signed by [a Supermajority Interest / all] of the Members.

19.2 Entire Agreement

This Agreement, including all exhibits, constitutes the entire agreement among the Members regarding its subject matter and supersedes all prior negotiations, agreements, and understandings.

19.3 Severability

If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall remain in full force and effect.

19.4 Notices

All notices required or permitted under this Agreement shall be in writing and delivered by personal delivery, nationally recognized overnight courier, or certified mail to the address of each Member set forth on Exhibit A (or such other address as provided in writing).

19.5 Waiver

No waiver of any provision shall be effective unless in writing signed by the waiving party. Failure to enforce any provision shall not constitute a waiver of future enforcement.

19.6 Binding Effect

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

19.7 Counterparts

This Agreement may be executed in counterparts, each of which shall be deemed an original.

19.8 Electronic Signatures

Signatures transmitted electronically shall be deemed original signatures and shall be valid and binding under Vermont law, including 9 V.S.A. Sections 270-289 (Vermont Uniform Electronic Transactions Act).

19.9 Headings

Headings are for convenience only and shall not affect interpretation.

19.10 Construction

This Agreement shall not be construed against any party by reason of such party's role in drafting.

ARTICLE XX - EXECUTION

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

MEMBERS:

[Add additional signature lines as needed]

EXHIBIT A - SCHEDULE OF MEMBERS

EXHIBIT B - INITIAL CAPITAL CONTRIBUTIONS

EXHIBIT C - OFFICERS

This Operating Agreement is governed by the Vermont Limited Liability Company Act, 11 V.S.A. Sections 4001-4203. Consult a licensed Vermont attorney for specific legal guidance.