Multi-Member LLC Operating Agreement — Oregon

Multi-Member LLC Operating Agreement (OREGON)

This Operating Agreement (the "Agreement") of [COMPANY NAME], LLC, an Oregon limited liability company (the "Company"), is entered into and effective as of [__/__/____] (the "Effective Date") by and among the persons executing this Agreement as members (each a "Member" and collectively the "Members"), pursuant to the Oregon Limited Liability Company Act, ORS Chapter 63 (the "Act").

Quick-Reference Summary

Article I — Formation

1.1 Formation. The Company was organized as an Oregon limited liability company on [__/__/____] upon the filing of Articles of Organization with the Oregon Secretary of State pursuant to ORS § 63.044 and § 63.047.

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

1.3 Principal Office.
[________________________________]
[________________________________]

1.4 Registered Office and Agent.

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

1.5 Term. Perpetual until dissolved under Article XIV or ORS § 63.621.

1.6 Tax Classification. Unless and until the Members elect otherwise on IRS Form 8832 or Form 2553, the Company shall be classified as a partnership for federal income tax purposes.

Article II — Purpose and Powers

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

2.2 Powers. The Company has all powers granted under ORS § 63.077, including the power to own property, enter contracts, sue and be sued, borrow, and engage in any lawful business.

2.3 Limitation on Liability. Consistent with ORS § 63.165, no Member, manager, employee, or agent is personally liable for the Company's debts, obligations, or liabilities solely by reason of being a Member, manager, employee, or agent.

Article III — Members and Membership Interests

3.1 Initial Members; Percentage Interests.

3.2 Nature of Interest. Consistent with ORS § 63.239, each Member's Membership Interest is personal property and consists of economic rights (allocations and distributions) and governance rights (voting and management).

3.3 Admission of Additional Members. A new Member may be admitted only upon (a) Approval of Members holding at least [____]% of the Percentage Interests, (b) execution of a counterpart or joinder, and (c) compliance with Article X. This Section modifies the statutory default in ORS § 63.130(4)(b).

3.4 No Personal Liability. Consistent with ORS § 63.165, no Member is personally liable for any Company debt or obligation.

3.5 Records and Inspection. The Company shall maintain the records required by ORS § 63.771 and make them available for inspection by Members under ORS § 63.777.

Article IV — Capital Contributions and Capital Accounts

4.1 Initial Contributions. Each Member shall contribute cash or property as set forth in Section 3.1 and on Schedule A. Consistent with ORS § 63.180, a promise to contribute is binding only if in a writing signed by the Member.

4.2 Capital Accounts. A capital account shall be maintained for each Member in accordance with Treas. Reg. § 1.704-1(b)(2)(iv).

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

4.4 Return of Capital. Except as expressly provided, no Member has the right to demand return of capital.

Article V — Capital Calls

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

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

Article VI — Allocations and Distributions

6.1 Allocations. Items of income, gain, loss, deduction, and credit shall be allocated in proportion to Percentage Interests, subject to qualified income offset, minimum gain chargeback, § 704(c), and other regulatory allocations.

6.2 Distributions. Distributions of Available Cash shall be made in proportion to Percentage Interests at such times as approved under Article VIII (interim distributions require majority consent under ORS § 63.130(4)(a)).

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

6.4 Limitations on Distributions. No distribution shall be made if it would render the Company insolvent or otherwise violate ORS § 63.229. Members receiving wrongful distributions are subject to ORS § 63.235.

6.5 Withdrawal. No Member may voluntarily withdraw except as expressly permitted under Section 10.2 or by Supermajority approval. This modifies ORS § 63.205 to the maximum extent the Act permits.

6.6 Tax Compliance. The Company shall timely file all required Oregon returns, including any minimum excise tax under ORS Chapter 317 (if applicable due to S/C-corp election) and Corporate Activity Tax (CAT) returns if commercial activity exceeds the statutory threshold.

Article VII — Management

7.1 Management Structure. Check one:

☐ Member-Managed (default under ORS § 63.130(1)). Members shall manage the Company. Ordinary-course matters require Approval of Members holding a majority of Percentage Interests; the matters listed in ORS § 63.130(4) and Section 8.4 of this Agreement require the votes specified.

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

7.2 Authority. Subject to Section 8.4, the Members (or Managers) may take any action permitted under ORS Chapter 63, including executing contracts, opening accounts, hiring personnel, borrowing, acquiring and disposing of property, and engaging professionals. Agency power is governed by ORS § 63.140.

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

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

Article VIII — Voting Rights and Member Meetings

8.1 Voting by Percentage Interest. Notwithstanding the per-capita default in ORS § 63.130(1)(b), each Member shall vote in proportion to its Percentage Interest.

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

8.3 Meetings. An annual meeting shall be held within [____] days of fiscal year-end. Special meetings may be called by Members holding at least [____]% of the Percentage Interests.

8.4 Supermajority Matters. The following actions require Approval of Members holding at least [75]% of the Percentage Interests (the "Supermajority"):
(a) Amendment of this Agreement or the Articles of Organization (ORS § 63.130(3)(a) default is unanimous; this Agreement reduces to [75]%);
(b) Merger or conversion of the Company (ORS § 63.130(4)(e)-(f));
(c) Sale, lease, exchange, mortgage, pledge, or other disposition of all or substantially all Company property (ORS § 63.130(4)(d));
(d) Voluntary dissolution (ORS § 63.130(3)(c) default is unanimous; this Agreement reduces to [75]%);
(e) Admission of a new Member (ORS § 63.130(4)(b));
(f) Use of Company property to redeem an interest subject to a charging order (ORS § 63.130(4)(c));
(g) Incurrence of indebtedness outside the ordinary course (ORS § 63.130(4)(g));
(h) Any related-party or conflict-of-interest transaction (ORS § 63.130(4)(h));
(i) Material change in the nature of the Company's business (ORS § 63.130(4)(i)); and
(j) Compromise of contribution or distribution obligations under ORS § 63.130(3)(b).

8.5 Action Without Meeting; Proxies. Action may be taken without a meeting under ORS § 63.130(5), and Members may act by proxy under ORS § 63.130(6).

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

Article IX — Fiduciary Duties and Standards of Conduct

9.1 Statutory Standard. Except as modified by this Article, each Member (and Manager, if any) owes the duties of loyalty and care set forth in ORS § 63.155.

9.2 Duty of Care. Conduct in the management of the Company is held to the gross-negligence/reckless-conduct standard described in ORS § 63.155. Simple negligence is not actionable.

9.3 Duty of Loyalty; Conflict Transactions. A Member's transaction with the Company is permitted if (a) material facts are disclosed and (b) approved by Members holding a majority of the disinterested Percentage Interests, or if the transaction is fair to the Company when authorized. This Article identifies specific conduct that is not a violation of the duty of loyalty, consistent with ORS § 63.155(3).

9.4 Outside Activities and Business Opportunities. To the maximum extent permitted by ORS § 63.155 and § 63.431, each Member may engage in or possess interests in other business ventures of any kind, including ventures in competition with the Company, and is not required to offer business opportunities to the Company except those (a) presented to the Member in its capacity as a Member or Manager and (b) of a type the Company is then actively pursuing. The Members agree this waiver is not manifestly unreasonable in light of the Members' independent business activities.

9.5 Good Faith and Fair Dealing. The implied contractual covenant of good faith and fair dealing is not waived and cannot be eliminated.

9.6 Indemnification. Consistent with ORS § 63.160, the Company shall indemnify each Member, Manager, and officer to the fullest extent permitted by Oregon law, except for conduct involving knowing violation of law, bad faith, intentional misconduct, or improper personal benefit.

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

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

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

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

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

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

10.6 Effect of Transfer Without Admission. A transferee of an economic interest does not become a Member unless admitted under Section 3.3 and ORS § 63.255. Until admitted, the transferee has only the rights of an assignee under ORS § 63.249.

Article XI — Buy-Sell Provisions

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

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

11.3 Purchase Price.
(a) Agreed value: A Certificate of Value executed within [24] months controls.
(b) Appraisal: Otherwise, fair market value as determined by an independent qualified appraiser jointly selected, or by three appraisers.
(c) Discounts: Customary discounts may be applied if the Members agree at the outset.

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

Article XII — Charging Order (ORS § 63.259)

12.1 Exclusive Remedy. Pursuant to ORS § 63.259, a charging order is the exclusive remedy by which a judgment creditor of a Member may satisfy a judgment from the Member's Membership Interest. The judgment creditor has only the rights of an assignee.

12.2 No Right to Participate or Inspect. The judgment creditor has no right to participate in management, no right to inspect records beyond what an assignee receives, and no right to cause dissolution.

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

12.4 Redemption. The Company or non-debtor Members may redeem the charged interest under Section 8.4(f) and ORS § 63.130(4)(c) by paying the unsatisfied judgment, and shall thereafter succeed to the creditor's rights.

Article XIII — Deadlock and Dispute Resolution

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

13.2 Mediation. If unresolved, the dispute shall be submitted to mediation in [Portland/Eugene], Oregon, before a mediator selected by the parties or appointed by JAMS or the AAA.

13.3 Deadlock Resolution Mechanisms. If, after mediation, the Members remain deadlocked on a Supermajority matter for more than [60] days, the Members may select one of the following exclusive remedies (other than judicial dissolution):
(a) Buy-Sell (Texas Shoot-Out): Any Member may offer a per-Interest price; the recipients must elect to buy or sell at that price within [30] days;
(b) Auction: Sealed-bid auction among Members; or
(c) Forced Sale: Sale of the Company at a price not less than appraised value.

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

13.5 Judicial Dissolution. Nothing in this Article limits a Member's right to seek judicial dissolution under ORS § 63.661 on the grounds that conduct is unlawful, fraudulent, oppressive, or it is not reasonably practicable to carry on the Company's business.

Article XIV — Dissolution and Winding Up

14.1 Events of Dissolution. The Company shall be dissolved upon the first to occur of:
(a) Approval of Members holding the Supermajority under Section 8.4(d);
(b) Entry of a decree of judicial dissolution under ORS § 63.661;
(c) Administrative dissolution by the Oregon Secretary of State under ORS § 63.647; or
(d) Any other event causing dissolution under ORS § 63.621.

14.2 Winding Up. Upon dissolution, the Members (or a person designated by Supermajority) shall wind up the Company's affairs under ORS § 63.637, including:
(a) Collecting Company assets;
(b) Paying or making provision for Company liabilities;
(c) Distributing remaining assets per ORS § 63.625 — first to creditors (including Members who are creditors), then to Members in respect of distributions previously declared but unpaid, then to Members for return of contributions and remaining balances in proportion to Percentage Interests; and
(d) Filing Articles of Dissolution with the Oregon Secretary of State under ORS § 63.631.

14.3 Notice to Creditors. The winding-up Members may give notice to creditors under ORS § 63.641 and § 63.644 to bar untimely claims.

Article XV — State-Specific Provisions

15.1 Oregon Law Controls. This Agreement is governed by Oregon law, and ORS Chapter 63 controls to the extent of any conflict not permitted to be modified.

15.2 Annual Report. Pursuant to ORS § 63.787, the Company shall timely file its annual report with the Oregon Secretary of State by the anniversary date of formation and pay the $100 fee.

15.3 Oregon Tax Compliance. The Company shall file Oregon Form OR-65 (partnership) or applicable corporate form, and pay any minimum excise tax under ORS Chapter 317 (if S/C-corp election made) and Corporate Activity Tax under ORS Chapter 317A if applicable.

15.4 No Series LLC. Oregon does not authorize series LLCs. Asset segregation shall be accomplished through subsidiary entities or contractual arrangements.

15.5 Statutory Override. The Members intend this Agreement to constitute the "operating agreement" within the meaning of ORS § 63.001 and § 63.057, and to override the default rules of the Act to the maximum extent permitted, including the per-capita voting default (ORS § 63.130(1)(b)) and the unanimous-consent requirements of ORS § 63.130(3).

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

Article XVI — General Provisions

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

16.2 Amendment. This Agreement may be amended only as provided in Section 8.4(a).

16.3 Severability. Invalid or unenforceable provisions do not affect the remainder.

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

16.5 Counterparts; Electronic Signatures. Execution in counterparts and by electronic signature is permitted.

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

16.7 Headings. For convenience only.

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

Signature Block

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

ACKNOWLEDGMENT (Optional)

State of Oregon, County of [____________________]

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

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

Schedule A — Initial Capital Contributions

Schedule B — Managers (if Manager-Managed)

Pre-Execution Checklist

☐ Articles of Organization filed with Oregon Secretary of State (ORS § 63.047)
☐ EIN obtained from IRS
☐ Registered agent confirmed and consents in writing
☐ Initial capital contributions made and recorded on Schedule A
☐ Federal tax classification confirmed
☐ Capital accounts opened per Treas. Reg. § 1.704-1(b)(2)(iv)
☐ Annual report calendar reminder set for formation anniversary (ORS § 63.787)
☐ CAT (ORS Chapter 317A) threshold tracking in place if commercial activity may exceed $1M
☐ City of Portland / Multnomah County / TriMet business tax registrations if applicable
☐ Business bank account opened in Company name
☐ Local licenses and permits obtained
☐ Required insurance (general liability, professional liability, workers' comp, key-person/buy-sell life) in place
☐ Initial Certificate of Value executed under Section 11.3(a)
☐ Spousal consents (if applicable)
☐ Legal review by Oregon-licensed attorney completed
☐ Operating Agreement signed and stored with company records

Sources and References

• Oregon Revised Statutes Chapter 63: https://www.oregonlegislature.gov/bills_laws/ors/ors063.html
• ORS § 63.130 (Rights of members and managers): https://oregon.public.law/statutes/ors_63.130
• ORS § 63.155 (Duties and standard of conduct): https://oregon.public.law/statutes/ors_63.155
• ORS § 63.259 (Rights of judgment creditor): https://oregon.public.law/statutes/ors_63.259
• ORS § 63.661 (Grounds for judicial dissolution): https://oregon.public.law/statutes/ors_63.661
• Oregon Secretary of State — Business Registry: https://sos.oregon.gov/business/Pages/register.aspx
• Oregon Department of Revenue — Corporation Excise: https://www.oregon.gov/dor/programs/businesses/pages/corp-requirements.aspx
• Oregon Corporate Activity Tax: https://www.oregon.gov/dor/programs/businesses/pages/corporate-activity-tax.aspx