Sample Operating Agreement for LLC

1.2 Organizer(s )

This operating agreement is made by _________ LLC, an Oregon limited liability company (Company), and ______________(Member A), ________________(Member B), and _____________(Member C), as Member(s).

The Company has been formed under the Oregon statute authorizing the formation of limited liability companies. The purpose of the Company is stated in the articles of organization.

The official registered agent shall be ___________________, Member.

3. Principal Place of Business

The Company will have one or more offices as places of business operation the Member(s) designates. The initial registered office of the Company is located at:

Address ___________________________________________

City__________________, Oregon ___________

and ________________________  Member is the resident agent.

The Member(s) have the right to manage the Companys business. The Member(s) may delegate to another person the authority to perform specified acts on behalf of the Company.

The Member A - will contribute $_____ in cash, and the following property to the Company in exchange for ___________ membership units:

________________,

________________,

The Member B - will contribute $_____ in cash, and the following property to the Company in exchange for ___________ membership units:

________________,

________________,

The Member C - will contribute $_____ in cash, and the following property to the Company in exchange for ___________ membership units:

________________,

________________,

This property is contributed in exchange for the Member(s) interest in the Company. The Member(s) will not be paid interest on this capital contribution.

An individual capital account shall be maintained for each member. Each members capital account shall (i) be credited with all capital contributions by such member and the members distributive share of all income and gain (including any exempt income for federal income tax), and (ii) shall be charged with the amount of all distributions to such member and the members distributive share of the losses and deductions. Capital accounts shall be maintained in accordance with federal income tax accounting principles as set fort in Treasury Regs I.704-1(b)(2)(iv) or any successor provision. Capital accounts shall be reduced for any liability for which the limited liability company accepts in connection with any asset contribution made by the member.

    A. For federal tax purposes, the Company will be a disregarded entity if single member or a partnership if more than one member is admitted, with profits and losses passing through to the Member(s) in proportion to units of ownership and will be made in accordance with Internal Revenue Regulations providing for actual economic effect. The members shall cause all required federal and state income tax returns for the LLC to be prepared and filed in a timely manner with the appropriate taxing authorities. Within 90 days after the end of each fiscal year, each member shall be furnished with a statement suitable for use in preparation of the members income tax return, showing the amounts of any distributions, contributions, gains, losses, profits, or credits allocated to the member during such fiscal year.

 B.  This LLC shall have to option to be treated as an S corporation for federal tax purposes if the member(s) desire to make such election with 75 days of organization or the beginning of any following tax year. If the S election is made, all distributions shall be made in accordance with Membership Interest ownership percentages. If the S election is made all income and expense shall be allocated under the rules of the Internal Revenue Code as it applies to S corporations. If the S election is made, the Member(s) shall take no action including addition of Member(s) , transfers of Membership Interest, or amendments to classes of Membership Interest that will cause the loss of S corporation status. Any such transaction shall be invalid and shall be remedied as soon as the action has been discovered.

The Member(s) will determine the financial institution that will hold Company funds and will determine the authorized signatures on Company accounts.

The Company may admit one or more additional members upon such terms as are determined by the Company and the Member. If new members are admitted, the articles of organization and the operating agreement will be appropriately amended.

The Member(s) will determine when and how cash and other assets of the Company will be distributed. Any distributions will be made in accordance with Internal Revenue Regulations providing for actual economic effect. 

 

An annual meeting of the members shall be held at _____ am/pm on the _______ Monday of _________ each year at the registered office of the company. At such meetings the members shall review the financial condition of the Company and perform such other acts as they deem appropriate.

 

The members shall keep books and records of the operation of the LLC which are appropriate and adequate for the LLCs business activities and the carrying out of this agreement. The LLCs books and records shall include a register showing the names, addresses, and ownership interests of the members and this Operating Agreement. Each member shall have access thereto at all reasonable times.

The fiscal year of the LLC shall be a calendar year.

 

Except as otherwise provided in this operating agreement, the LLC shall dissolve upon the earlier of: (a) the time, if any for dissolution specified in the articles of organization; (b) the death, incompetence, expulsion, bankruptcy, or dissolution of any member if within 120 days after such event all remaining members, other than the member to whom such event occurred, do not consent to continue the business affairs of the LLC; or (c) approval of dissolution by a vote of the members.

 

       a. Liability: Members of the LLC shall not be liable to the LLC or its members for monetary damages for their conduct except to the extent that the Oregon Limited Liability Company Act, as it now exists or may hereafter by amended, prohibits elimination or limitation of liability. No repeal or amendment of this section or of the Oregon Limited Liability Company Act shall adversely affect any right or protection of a member for actions or omissions prior to the repeal or amendment. 

      b. Indemnification: The LLC agrees to indemnify the members for all acts and omissions related to the normal operations of the LLC.   The Company shall indemnify any Manager and may indemnify any employee or agent of the Company who was or is a party or is threatened to be made a party to a threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative, and whether formal or informal, other than an action by or in the right of the Company, by reason of the fact that such person is or was a Manager, employee or agent of the Company against expenses, including attorneys fees, judgments, penalties, fines, and amounts paid in settlement actually and reasonably incurred by such person in connection with the action, suit or proceeding, if the person acted in good faith, with the care an ordinary prudent person in a like position would exercise under similar circumstances, and in a manner that such person reasonably believed to be in the best interests of the Company and with respect to a criminal action or proceeding, if such person had no reasonable cause to believe such persons conduct was unlawful. To the extent that a Member, employee, or agent of the Company has been successful on the merits or otherwise in defense of an action, suit, or proceeding or in the defense of any claim, issue, or other matter in the action, suit, or proceeding, such person shall be indemnified against actual and reasonable expenses, including attorneys fees, incurred by such person in connection with the action, suit, or proceeding and any action, suit or proceeding brought to enforce the mandatory indemnification provided herein. Any indemnification permitted under this Article, unless ordered by a court, shall be made by the Company only as authorized in the specific case upon a determination that the indemnification is proper under the circumstances because the person to be indemnified has met the applicable standard of conduct and upon an evaluation shall be made by a majority vote of the Member(s) who are not parties or threatened to be made parties to the action, suit, or proceeding. Notwithstanding the forgoing to the contrary, no indemnification shall be provided to any Manager, employee, agent of the Company for or in connection with the receipt of a financial benefit to which such person is not entitled, voting for or assenting to a distribution to Member(s) in violation of this Operating Agreement or the Act, or a knowing violation of law.

 

The invalidity of unenforceability of any provision of this operating agreement shall not affect the validity or enforceability of the remaining provisions.

15. Third-Party Beneficiaries

The provisions of this operating agreement are intended solely for the benefit of the members and shall create no rights or obligations enforceable by any third party, including creditors of the LLC, except as otherwise provided by applicable law.

 

Agreed to this _________ day of _____________, 20______

____________________________LLC,

An Oregon limited Liability Company

 

By:____________________________   Dated __________________________

Address (1) ______________________, City__________________, Oregon _______

 

By:____________________________   Dated __________________________

Address (1) ______________________, City__________________, Oregon _______

 

By:____________________________  Dated __________________________

Address (1) ______________________, City__________________, Oregon _______

 

I certify that:

______________________, ________________________, ______________________, 

Appeared before me on this ________ day of _________, 20___