Case 3:21-cv-00121-SI Document 1 Filed 01/26/21 Page 1 of 6

Stephen F. English, OSB No. 730843

[email protected]
Julia E. Markley, OSB No. 000791
[email protected]
Edward Choi, OSB No. 135673
[email protected]
PERKINS COIE LLP
1120 N.W. Couch Street, 10th Floor
Portland, OR 97209-4128
Telephone: 503.727.2000
Facsimile: 503.727.2222

Attorneys for Petitioner

Wilderness Training & Consulting, LLC

UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

PORTLAND DIVISION

WILDERNESS TRAINING &

CONSULTING, LLC, No. 3:21-cv-121
Petitioner, PETITION TO CONFIRM AN
ARBITRATION AWARD
v.
By Petitioner Wilderness Training &
KENNETH HUEY, Consulting, LLC
Respondent.

Pursuant to Arbitration Service of Portland Rules 36 and 41, ORS 36.700,

Section 31.11(h) of the Rocky Mountain Pathways LLC Operating Agreement, and 9 U.S.C. § 9,

Petitioner Wilderness Training & Consulting, LLC hereby petitions for confirmation of its

arbitration awards and entry of a judgment in the amount of $665,254, plus interest, costs, and

additional attorneys’ fees incurred to confirm the arbitration award, against Respondent

Dr. Kenneth Huey.

Perkins Coie LLP

1- PETITION TO CONFIRM AN ARBITRATION 1120 N.W. Couch Street, 10th Floor
AWARD Portland, OR 97209-4128
150588124.2 Phone: 503.727.2000
Fax: 503.727.2222
 Case 3:21-cv-00121-SI Document 1 Filed 01/26/21 Page 2 of 6

The Parties
1. Wilderness Training & Consulting, LLC (“WTC”), is an Oregon limited liability

company with is principal place of business in Salem, Oregon. The sole member of WTC is

WTCSL, LLC, a limited liability company with its principal place of business in Salem, Oregon.

No member of WTCSL, LLC (or its sub-members, for those members that are limited liability

companies) are citizens of Colorado.

2. Dr. Kenneth Huey was employed as the executive director of Kokua Recovery, a

residential treatment center for boys with substance use disorders in Greeley, Colorado, from

approximately May 2017 until July 2019. Kokua Recovery is a wholly owned subsidiary of

Rocky Mountain Pathways, LLC (“RMP”), of which WTC is the sole manager. Upon

information and belief, Dr. Huey is a resident of and citizen of Colorado.

3. Because none of the members of WTC or its non-corporate direct and indirect

owners are residents of Colorado, complete diversity between the parties exists. See Johnson v.

Columbia Properties Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (“[A]n LLC is a citizen

of every state of which its owners/members are citizens.”).

Jurisdiction and Venue

4. There is complete diversity of citizenship between the parties, and more than
$75,000, exclusive of interest and costs, is at stake in this controversy. Accordingly, this Court

has jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a)(1).

5. Petitioner files this petition under the Federal Arbitration Act, 9 U.S.C. § 9, and

Section 31.11(h) of the Rocky Mountain Pathways LLC Operating Agreement.

6. Pursuant to 9 U.S.C. § 9, venue is proper in this District and Division because the
parties agreed by contract that a proceeding to confirm an arbitration award shall be in courts

located in Multnomah County, Oregon, and the arbitration awards were entered in Portland,

Oregon.

Perkins Coie LLP

2- PETITION TO CONFIRM AN ARBITRATION 1120 N.W. Couch Street, 10th Floor
AWARD Portland, OR 97209-4128
150588124.2 Phone: 503.727.2000
Fax: 503.727.2222
 Case 3:21-cv-00121-SI Document 1 Filed 01/26/21 Page 3 of 6

Background
7. On or about May 8, 2017, Dr. Huey and WTC entered into an agreement entitled

“Operating Agreement of Rocky Mountain Pathways, LLC” (“Operating Agreement”) (attached

as Exhibit 1).

8. Both WTC and Dr. Huey ostensibly performed under the Operating Agreement,

creating and managing Kokua Recovery. Dr. Huey was Kokua’s executive director and the most

senior manager, responsible for obtaining and maintaining necessary permits, recruiting and

hiring staff, developing clinical programming, and supervising all staff and students. After more

than a year of preparations, Kokua began accepting students in October 2018.

9. In 2019, WTC became aware of several instances of troubling conduct from

Dr. Huey. On July 3, 2019, the Colorado Department of Human Services (“CDHS”) issued a

Report of Investigation (“ROI”) outlining eleven violations it had observed during its site visit to

Kokua.

10. On or about July 30, 2019, RMP terminated Dr. Huey’s employment at Kokua.

The Arbitration
11. Section 31.11 of the Operating Agreement provides that Dr. Huey and WTC will

settle any disputes arising with respect to the terms of the Operating Agreement, including any
claim alleging breach of the Operating Agreement, through mandatory arbitration provided by

the Arbitration Service of Portland (“ASP”) in Portland, Oregon.

12. On November 12, 2019, pursuant to ASP procedures and pursuant to the terms of

the Operating Agreement, WTC filed a Statement of Claim with ASP against Dr. Huey and RMP

seeking the judicial dissolution of RMP.

13. Pursuant to ASP Rule 6, the parties submitted to the ASP rankings from a

proposed list of arbitrators, and by letter dated December 17, 2019, ASP informed the parties that

Hon. Richard Baldwin (ret.), Susan Felstiner, and Frank Langfitt were appointed as arbitrators,

Perkins Coie LLP

3- PETITION TO CONFIRM AN ARBITRATION 1120 N.W. Couch Street, 10th Floor
AWARD Portland, OR 97209-4128
150588124.2 Phone: 503.727.2000
Fax: 503.727.2222
 Case 3:21-cv-00121-SI Document 1 Filed 01/26/21 Page 4 of 6

with Judge Baldwin designated as Chief Arbitrator. No party objected to this panel within the

time period specified in the ASP rules.

14. On January 14, 2020, WTC voluntarily dismissed its claims against Dr. Huey and

RMP.

15. On January 22, 2020, Dr. Huey filed his own Statement of Claim with ASP

against WTC, alleging breach of the Operating Agreement and breach of WTC’s fiduciary

duties. 1 Dr. Huey’s Statement of Claim did not plead a specific amount of damages, but at the

arbitration Dr. Huey sought $218,504 in lost wages, $2,413,000 in lost profits, and an additional

unspecified amount of punitive damages.

16. The parties engaged in discovery, including thousands of pages of document

production and several depositions. Although WTC attempted to limit the cost of discovery,

serving only 16 Requests for Production (“RFPs”), 10 Requests for Admission (“RFAs”), and

taking two depositions, Dr. Huey issued 78 RFPs, 16 RFAs, and served a corporate deposition

notice with 68 topics.

17. Through agreement of the parties, the arbitrators originally scheduled the

arbitration hearing to take place on May 18-19, 2020. The original hearing date was moved to

June 1-2, 2020, upon Dr. Huey’s request. That June setting was moved to August 11-13, 2020

due to WTC’s request. The August setting was moved to October 7-9, 2020 at Dr. Huey’s

request.

18. On October 7-9, 2020, the parties held an arbitration hearing by video conference

in Portland, Oregon. Both parties presented opening statements, witnesses (who were subject to

1
Although RMP was named as a Respondent by WTC’s original November 2019
Statement of Claim, WTC dismissed all claims against RMP on January 14, 2020. Dr. Huey did
not allege any claims against RMP in his separate Statement of Claim dated January 22, 2020.
Thus, although the arbitration case caption lists “Rocky Mountain Pathways, LLC, an Oregon
Limited Liability Company” as a Respondent, it was not a party to the arbitration proceeding that
resulted in the award at issue, nor is it a party to these proceedings.

Perkins Coie LLP

4- PETITION TO CONFIRM AN ARBITRATION 1120 N.W. Couch Street, 10th Floor
AWARD Portland, OR 97209-4128
150588124.2 Phone: 503.727.2000
Fax: 503.727.2222
 Case 3:21-cv-00121-SI Document 1 Filed 01/26/21 Page 5 of 6

cross-examination), and documentary evidence. Except for sustaining some of Dr. Huey’s

objections to certain of WTC’s exhibits, the Chief Arbitrator admitted all exhibits offered by the

parties. The parties stipulated to written closing statements, which they submitted on

October 16, 2020.

19. On November 5, 2020, after the close of the arbitration hearing, the arbitration

panel issued a Preliminary Award denying Dr. Huey’s claims in their entirety (attached to this

filing as Exhibit 2).

20. Having obtained complete relief in its favor, WTC petitioned the arbitration panel

for fees and costs pursuant to Section 31.12 of the Operating Agreement. Dr. Huey filed

objections to the fee petition.

21. The arbitration panel issued a Supplemental Award ruling on WTC’s petition for

attorneys fees and costs, awarding WTC $540,757 in attorneys’ fees and $124,497 in costs. The

Supplemental Award is attached to this filing as Exhibit 3. The arbitration panel also issued a

Money Award as a Final Award, awarding WTC a total amount of $665,254, with simple interest

at the rate of 9% per annum on the amount of the award from the date of award until paid. The

Money Award is attached to this filing as Exhibit 4. Both the Supplemental Award and Money

Award are dated January 12, 2021, and sent via email to the parties on January 14, 2021.

22. No party requested a correction of the Preliminary Award, Supplemental Award,

or Money Award. Pursuant to ASP Rule 36, the Money Award became final for purposes of

confirming the award in court on or about January 25, 2021.

23. The Money Award is in all respects proper, and there are no legitimate grounds

for Respondent to contest this Money Award. Accordingly, WTC is entitled to an order

confirming the Money Award and entry of judgment thereon.

24. WTC has incurred additional attorney fees to prepare this petition, in the

approximate amount to date of $8,500.

Perkins Coie LLP

5- PETITION TO CONFIRM AN ARBITRATION 1120 N.W. Couch Street, 10th Floor
AWARD Portland, OR 97209-4128
150588124.2 Phone: 503.727.2000
Fax: 503.727.2222
 Case 3:21-cv-00121-SI Document 1 Filed 01/26/21 Page 6 of 6

Prayer for Relief

WTC respectfully requests that this Court:

A. Enter an order confirming the Final Award in all respects, as authorized by Section 9

of the Federal Arbitration Act;

B. Enter a judgment against Dr. Huey and in favor of WTC that conforms to the Final

Award, including appropriate post-Money Award and pre-judgment interest, and

appropriate post-judgment interest;

C. Award WTC its costs, disbursements, and attorney fees incurred in this proceeding

pursuant to Section 31.12 of the Operating Agreement;

D. Grant such other relief as the Court deems just and proper.

DATED January 26, 2020 PERKINS COIE LLP

By: s/ Julia E. Markley

Stephen F. English, OSB No. 730843
[email protected]
Julia E. Markley, OSB No. 000791
[email protected]
Edward Choi, OSB No. 135673
[email protected]
1120 N.W. Couch Street, 10th Floor
Portland, OR 97209-4128
Telephone: 503.727.2000
Facsimile: 503.727.2222

Attorneys for Petitioner

Wilderness Training & Consulting, LLC

Perkins Coie LLP

6- PETITION TO CONFIRM AN ARBITRATION 1120 N.W. Couch Street, 10th Floor
AWARD Portland, OR 97209-4128
150588124.2 Phone: 503.727.2000
Fax: 503.727.2222
 Case 3:21-cv-00121-SI Document 1-1 Filed 01/26/21 Page 1 of 54

The Units represented by this Operating Agreement have not been registered under the Securities
Act of 1933 or any state securities laws. No offer, sale, transfer, pledge, or other disposition of the
Units represented by this Operating Agreement may be made unless pursuant to an effective
registration statement filed under the Securities Act of 1933 and applicable state securities laws, or
unless the Company receives an opinion of counsel, in form and from counsel acceptable to the
Company, that the offer, sale, transfer, pledge, or other disposition is exempt from the registration
requirements of the Securities Act of 1933 and applicable state securities laws.

OPERATING AGREEMENT
OF
ROCKY MOUNTAIN PATHWAYS, LLC

This Operating Agreement (“Agreement”) is dated effective May 8, 2017 among Rocky Mountain
Pathways, LLC, an Oregon limited liability company (the “Company”), and the interest holders of the
Company set forth on Schedule 2.1.

SECTION 1 DEFINITIONS

Unless defined elsewhere in this Agreement, capitalized terms used in this Agreement will have the
meanings ascribed to them in the attached Appendix A.

SECTION 2 COMPANY

2.1 Company Information. Schedule 2.1 sets forth the following Company information:

(a) the name of each Interest Holder, and whether the Interest Holder is a Member or an
Assignee;

(b) the number of Units owned by each Interest Holder, and each Interest Holder’s
corresponding Ownership Percentage;

(c) the Interest Holder’s Contribution Percentage;

(d) confirmation on whether an Interest Owner’s Units are Incentive Units;

(e) each Interest Holder’s contribution to the Company and Capital Account;

(f) the vesting schedule, if applicable, associated with any Incentive Units held by each
Interest Holder;

(g) the Key Individual of any Interest Holder, if applicable;

(h) the name of each Manager;

(i) the address of the Company, each Interest Holder, and each Manager;

(j) the name of the executive director of the Company, if any; and

1 –OPERATING AGREEMENT (Rocky Mountain Pathways, LLC) Exhibit 1

Page 1 of 54
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(k) the tax matters member of the Company.

2.2 Amendment. The Company will promptly amend and restate Schedule 2.1 to account for
any changes in the information set forth on Schedule 2.1 resulting from matters that occur in
accordance with the Act, the Articles of Organization, and this Agreement. Upon an
amendment, the Company will promptly deliver to each Member a copy of the amended and
restated Schedule 2.1.

SECTION 3 PURPOSES AND POWERS

3.1 Purposes. The Company may own, manage, and operate the facility identified on
Schedule 2.1, located at the address set forth on Schedule 2.1, and do all things incidental to
that purpose. The Company will not conduct or promote any other business.

3.2 General Powers. Subject to the Act, the Company may have and exercise all powers and do
every act not inconsistent with law which is necessary or convenient to promote and effect
any and all of the purposes for which the Company is organized.

SECTION 4 MANAGEMENT AND MANAGEMENT RIGHTS OF MANAGERS

4.1 Management. The Company is a manager-managed limited liability company.

4.2 Rights of Managers. Except as otherwise provided in this Agreement, any matter relating to
the business of the Company will be exclusively decided by a Majority of Managers,
including but not limited to the following matters:

(a) the amendment of Schedule 2.1 in accordance with Section 2.2 without the consent of
the Members;

(b) the making of interim Distributions under Section 11.2; and

(c) the redemption of Units, if the redemption is required by this Agreement.

4.3 Designation and Removal. A Manager must be designated, appointed, elected, removed, or
replaced by a vote, approval, or consent of a Majority of Units. A Manager holds office until
a successor has been elected and qualified, unless the Manager sooner resigns or is removed.

4.4 Compensation of Managers. The compensation of any Manager may be set from time to
time by a vote of a Super Majority of Units. The Company will reimburse a Manager for all
reasonable expenses properly incurred in connection with the performance of such Manager’s
duties.

4.5 Meeting of Managers. The Managers may hold regular or special meetings in or out of the
State of Oregon. The Managers may permit any or all Managers to participate in a regular or
special meeting by, or conduct the meeting through, use of any means of communication by
which all Managers participating may simultaneously hear each other during the meeting. A
Manager participating in a meeting by this means is deemed to be present in person at the
meeting.

4.6 Action by Managers Without a Meeting. Action required or permitted to be taken by the
Managers may be taken without a meeting if the action is taken by not less than the minimum

2 –OPERATING AGREEMENT (Rocky Mountain Pathways, LLC) Exhibit 1

Page 2 of 54
 Case 3:21-cv-00121-SI Document 1-1 Filed 01/26/21 Page 3 of 54

number of Managers that would be necessary to take such action at a meeting at which all
Managers entitled to vote on the action were present and voted. The action must be
evidenced by one or more written consents describing the action taken, signed by those
Managers taking action, and included in the minutes or filed with the Company records
reflecting the action taken. Action taken under this Section 4.6 is effective when the consent
bearing sufficient signatures is delivered to the Company, unless the consent specifies an
earlier or later effective date. A consent signed under this Section 4.6 has the effect of a
meeting vote and may be described as such in any document. If action is taken as provided in
this Section 4.6, the Company must give written notice of the action promptly after the action
is taken to Managers who did not consent in writing.

4.7 Notice of Managers’ Meeting.

(a) The Managers may by resolution provide for regular meetings. Regular meetings of
the Managers may be held without notice of the date, time, place or purpose of the
meeting, other than the resolution.

(b) Special meetings of the Managers may be called by or at the request of any Manager.
Special meetings of the Managers must be preceded by at least one days’ notice of the
date, time and place of the meeting, sent by any usual means of communication, which
may include e-mail. The notice need not describe the purpose of the special meeting.

4.8 Waiver of Notice of Managers’ Meeting. A Manager may at any time waive any notice
required by this Agreement. Except as otherwise provided in this Section 4.8, the waiver
must be in writing which may include e-mail, must specify the meeting for which notice is
waived and must be filed with the minutes or Company records. A Manager’s attendance at
or participation in a meeting waives any required notice to the Manager of the meeting unless
the Manager at the beginning of the meeting, or promptly upon the Manager’s arrival, objects
to holding the meeting or transacting business at the meeting and does not thereafter vote for
or assent to action taken at the meeting.

4.9 Agency Power. Each Manager is an agent of the Company for the purpose of its business.
Subject to certain matters requiring consent of the Members under Section 5.1 or Section 5.2,
any Manager may sign and deliver any instrument in the Company’s name, including but not
limited to any instrument transferring or affecting the Company’s interest in real property.

4.10 Duties and Standard of Conduct.

(a) The only fiduciary duties a Manager owes to the Company and the Members are the
duty of loyalty and the duty of care set forth in Section 4.10(b) and Section 4.10(d).

(b) A Manager’s duty of loyalty to the Company and the Members includes the following:

(1) to account to the Company and hold for it any property, profit or benefit derived
by the Manager in the conduct and winding up of the Company’s business or
derived from a use by the Manager of Company property; and

(2) except as provided in Section 4.10(g) and Section 4.10(h), to refrain from dealing
with the Company in a manner adverse to the Company and to refrain from
representing a person with an interest adverse to the Company, in the conduct or
winding up of the Company’s business.

3 –OPERATING AGREEMENT (Rocky Mountain Pathways, LLC) Exhibit 1

Page 3 of 54
 Case 3:21-cv-00121-SI Document 1-1 Filed 01/26/21 Page 4 of 54

(c) A Manager will not violate the Manager’s duty of loyalty to the Company and the
Members by:

(1) competing with the Company in the conduct of the business of the Company
before the dissolution of the Company; or

(2) entering into or engaging in, for the Manager’s own account, an investment,
business, transaction or activity that is similar to the investments, businesses,
transactions or activities of the Company without:

(A) first offering the Company or the Members an opportunity to participate in

the investment, business, transaction or activity; or

(B) having any obligation to account to the Company or the Members for the
investment, business, transaction or activity or the profits from the
investment, business, transaction or activity.

(d) A Manager’s duty of care to the Company and the Members in the conduct and
winding up of the business of the Company is limited to refraining from engaging in
grossly negligent or reckless conduct, intentional misconduct or a knowing violation of
law.

(e) A Manager will discharge the duties to the Company and the Members under the Act or
under this Agreement and exercise any rights consistent with the obligation of good
faith and fair dealing.

(f) A Manager does not violate a duty or obligation under the Act or under this Agreement
merely because the Manager’s conduct furthers the Manager’s own interest.

(g) A Manager may lend money to or transact other business with the Company, provided
that any loan or transaction between the Manager and the Company must be authorized
or ratified by a Super Majority of Units after full disclosure of all material facts.

(h) Loans and other transactions between the Company and a Manager are binding on the
parties in the same manner as transactions between the Company and persons who are
not Managers, subject to other applicable law.

(i) A Member who is not also a Manager owes no duties to the Company or the other
Members solely by reason of being a Member.

(j) A Super Majority of Units may authorize or ratify, after full disclosure of all material
facts, a specific act or transaction that otherwise would violate the duty of loyalty.

4.11 Indemnification and Limitation of Liability.

(a) Except as otherwise provided in Section 4.11(b), the Company will:

(1) indemnify any person for acts or omissions as a Manager; and

(2) eliminate the liability of a Manager to the Company or the Members for damages
from such acts or omissions.

4 –OPERATING AGREEMENT (Rocky Mountain Pathways, LLC) Exhibit 1

Page 4 of 54
 Case 3:21-cv-00121-SI Document 1-1 Filed 01/26/21 Page 5 of 54

(b) The Company may not indemnify a person for acts or omissions as a Manager or
eliminate the liability of a Manager for:

(1) any breach of the Manager’s duty of loyalty to the Company or the Members;

(2) acts or omissions not in good faith which involve intentional misconduct or a
knowing violation of law;

(3) any unlawful Distribution under ORS 63.235;

(4) any transaction from which the Manager derives an improper personal benefit; or

(5) as otherwise limited by the Act.

4.12 Liability of Managers. The debts, obligations, and liabilities of the Company, whether
arising in contract, tort, or otherwise, are solely the debts, obligations, and liabilities of the
Company. A Manager is not personally liable for a debt, obligation, or liability of the
Company solely by reason of being or acting as a Manager.

4.13 Executive Director.

(a) A Super Majority of Units may designate an executive director. If appointed, the
executive director will supervise, direct, and control the day-to-day business and affairs
of the Company. The executive director also will perform all duties commonly
incident to the position of executive director and other duties prescribed by the
Managers.

(b) An executive director has the authority and will perform the duties set forth in this
Agreement or, to the extent consistent with this Agreement, the duties prescribed by the
Managers. The designation of an executive director does not itself create contract
rights.

(c) An executive director may resign at any time by delivering notice to the Company. A
resignation is effective when the notice delivered unless the notice specifies a later
effective date. If a resignation is made effective at a later date and the Company
accepts the future effective date, the Managers may fill the pending vacancy before the
effective date if the Managers provide that the successor does not take office until the
effective date. Once delivered, a notice of resignation is irrevocable unless revocation
is permitted by the Managers.

(d) A Super Majority of Units may remove an executive director from such position;
provided, however, such removal does not terminate the executive director’s
employment relationship with the Company.

SECTION 5 MEMBERS

5.1 Matters Requiring Consent of a Super Majority of Units. The following matters of the
Company require the consent of a Super Majority of Units:

5 –OPERATING AGREEMENT (Rocky Mountain Pathways, LLC) Exhibit 1

Page 5 of 54
 Case 3:21-cv-00121-SI Document 1-1 Filed 01/26/21 Page 6 of 54

(a) the amendment of the Articles of Organization, except that the Company may file
articles of merger or articles of conversion to effectuate a merger or conversion of the
Company approved by the Members;

(b) the amendment of this Agreement, except that the Company may amend Schedule 2.1
in accordance with Section 2.2 without the consent of the Members;

(c) the redemption of Units, but only if the redemption is not required by this Agreement;

(d) the admission of an Assignee as a Member under Section 19.1;

(e) the compensation of a Manager under Section 4.4;

(f) the designation and removal of a Manager under Section 4.3;

(g) a capital expenditure in excess of $35,000;

(h) the incurring of indebtedness by the Company;

(i) the consent to dissolve the Company under Section 13.1(b);

(j) the sale, lease, exchange, mortgage, pledge, or transfer or disposition of all, or
substantially all, of the Company’s property, with or without goodwill;

(k) the merger of the Company with any other entity;

(l) the conversion of the Company into any other type of entity;

(m) subject to Section 4.10(g), a transaction involving an actual or a potential conflict of

interest between a Member or Manager and the Company;

(n) the election to opt out of the BBA Rules, at or after such time the BBA Rules become
mandatory; and

(o) the designation or replacement of a tax matters member or partnership representative,

as described in Section 10.6.

5.2 Matters Requiring Consent of a Majority of Units. Any other matter specified in the
Articles of Organization or this Agreement as requiring Member approval if no number or
percentage of Members is otherwise stated requires the consent of a Majority of Units.

5.3 Meeting of Members.

(a) The Company will hold a meeting of Members:

(1) on call of the Managers; or

(2) if the holders of at least 25% of all Units entitled to be cast on any issue proposed
for consideration at the proposed special meeting sign, date, and deliver to the
Company one or more written demands for the meeting describing the purpose or
purposes for which the meeting is to be held.

6 –OPERATING AGREEMENT (Rocky Mountain Pathways, LLC) Exhibit 1

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 Case 3:21-cv-00121-SI Document 1-1 Filed 01/26/21 Page 7 of 54

(b) Members’ meetings may be held in or out of the State of Oregon at the Company’s
principal office or at any other place fixed by the Managers.

5.4 Action by Members Without a Meeting. Action required or permitted to be taken by the
Members may be taken without a meeting if the action is taken by Members having not less
than the minimum number of Units that would be necessary to take such action at a meeting
at which all Members entitled to vote on the action were present and voted. The action taken
under this Section 5.4 must be evidenced by one or more written consents describing the
action taken, signed by those Members taking action, and delivered to the Company for
inclusion in the minutes or filing with the Company records. Action taken under this
Section 5.4 is effective when the consent or consents bearing sufficient signatures are
delivered to the Company, unless the consent or consents specify an earlier or later effective
date. A consent signed under this Section 5.4 has the effect of a meeting vote and may be
described as such in any document. If action is taken as provided in this Section 5.4, the
Company must give written notice of the action promptly after the action is taken to Members
who did not consent in writing.

5.5 Notice of Members’ Meeting. The Company must notify Members of the date, time and
place of each Members’ meeting not earlier than 60 days nor less than 10 days before the
meeting date, sent by any usual means of communication which may include e-mail. The
Company is required to give notice only to Members entitled to vote at the meeting. Notice
of a meeting need not include a description of the purpose or purposes for which the meeting
is called. If a Members’ meeting is adjourned to a different date, time or place, notice need
not be given of the new date, time or place if the new date, time or place is announced at the
meeting before adjournment.

5.6 Waiver of Notice of Members’ Meeting. A Member may at any time waive any notice
required by this Agreement. Except as otherwise provided in this Section 5.6, waiver must be
in writing, be signed by the Member entitled to the notice and be delivered to the Company
for inclusion in the minutes for filing with the Company records. A Member’s attendance at
a meeting waives objection to lack of notice or defective notice of the meeting, unless the
Member at the beginning of the meeting objects to holding the meeting or transacting
business at the meeting.

5.7 Adjournment of Members’ Meeting. A majority of Units represented at a meeting of

Members, whether or not a Majority of Units, may adjourn the meeting from time to time to a
different time and place without further notice to any Member of any adjournment, except as
such notice may be required by Section 5.5. At the adjourned meeting at which a Majority of
Units is present, any business may be transacted that might have been transacted at the
meeting originally held.

5.8 Participation at Meeting. All Members may participate in a meeting by, and all Members’
meetings may be conducted through, use of any means of communication by which all
Members participating may simultaneously hear each other. A Member participating in a
meeting by this means is deemed to be present in person at the meeting. The notice of each
meeting of Members will state that participation in the manner referred to in this Section 5.8
is permitted and will describe how any Member desiring to participate may notify the
Company of the Member’s desire to be included in the meeting.

5.9 Proxy. A Member may appoint a proxy to vote or otherwise act for the Member by signing
an appointment instrument, either personally or by the Member’s attorney-in-fact.

7 –OPERATING AGREEMENT (Rocky Mountain Pathways, LLC) Exhibit 1

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 Case 3:21-cv-00121-SI Document 1-1 Filed 01/26/21 Page 8 of 54

5.10 Liability of Members. The debts, obligations, and liabilities of the Company, whether
arising in contract, tort, or otherwise, are solely the debts, obligations, and liabilities of the
Company. A Member is not personally liable for a debt, obligation, or liability of the
Company solely by reason of being or acting as a Member.

SECTION 6 CONTRIBUTIONS

6.1 Contributions. The contributions of a Member to the Company may consist of cash,
property, services rendered, or a promissory note or other obligation to contribute cash or to
perform services.

6.2 Liability for Contributions. A promise by a Member to contribute to the Company is not
enforceable unless it is set out in writing and signed by the Member. The obligation of an
Interest Holder to make a contribution may be compromised only by consent of a Majority of
Units.

6.3 Initial Contributions. Each Member’s initial contribution to the Company is set forth on
Schedule 2.1. Each Member will deliver to the Company such deeds, bills of sale, certificates
of title, assignments, and other documents that the Company may reasonably request for the
contribution, in form and substance reasonably satisfactory to the Company.

6.4 Additional Contributions.

(a) No Interest Holder is required to make any additional contributions to the Company.
Any additional capital contributions (“Additional Capital Contribution”) will only be
made with the consent of a Majority of Managers and a Majority of Units. If a
Majority of Managers and a Majority of Units consents to an Additional Capital
Contribution, the Contribution Percentages and Ownership Percentages of the Interest
Holders will be adjusted in accordance with Section 6.4(b) or Section 6.4(c), as
applicable, and the Company will issue Units to the Interest Holders to reflect the
adjustment to their respective Ownership Percentages resulting from the Additional
Capital Contribution. Further, Schedule 2.1 will be revised following each Additional
Capital Contribution to reflect the changes resulting from such Additional Capital
Contribution.

(b) If a Majority of Managers and a Majority of Units consents to an Additional Capital

Contribution pursuant to Section 6.4(a), the Company will provide each Interest Holder
with the opportunity to fund such Interest Holder’s pro-rata share (determined by
Contribution Percentage) of the Additional Capital Contribution. If all Interest Holders
fund their respective pro-rata share of the Additional Capital Contribution in full and at
the time specified by the Company, there will be no adjustment to the Contribution
Percentages or the Ownership Percentages as a result of the Additional Capital
Contribution. However, if one or more of the Interest Holders do not fund their pro-
rata share of an Additional Capital Contribution in full and at the time specified by the
Company, the Contribution Percentages and Ownership Percentages of the Interest
Holders will be adjusted as provided in Section 6.4(c).

(c) If one or more of the Interest Holders do not fund their pro-rata share of an Additional
Capital Contribution in full and at the time specified by the Company, the Contribution
Percentages and the Ownership Percentage of the Interest Holders will be adjusted as
follows:

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(1) The Manager will calculate the value of the Company immediately prior to the
funding of the Additional Capital Contribution (“Pre-Adjustment Valuation”)
which will equal the greater of:

(A) (i) six times trailing twelve months EBITDA (6x TTM EBITDA) less any
indebtedness, multiplied by (ii) 0.85; or

(B) the Closing Value less any indebtedness, where “Closing Value” equals
$100,000.00 plus the aggregate amount of any previously funded
Additional Capital Contributions.

(2) Each Interest Holder’s Contribution Percentage following the Additional Capital
Contribution would equal:

(A) the sum of (i) the portion of the Additional Capital Contribution, if any,
funded by the Interest Holder, plus (ii) the Interest Holder’s pre-adjustment
Contribution Percentage multiplied by the Pre-Adjustment Valuation;

divided by

(B) the sum of (i) the Additional Capital Contribution plus (ii) the Pre-
Adjustment Valuation; and

(3) Each Interest Holder’s Ownership Percentage following the Additional Capital
Contribution would equal:

(A) in the case of Parent, Parent’s Contribution Percentage (as revised by

Section 6.4(c)(2)) multiplied by 0.85; and

(B) in the case of Ken Huey, the sum of (i) Ken Huey’s Contribution
Percentage (as revised by Section 6.4(c)(2) after giving effect to the
Additional Capital Contribution) multiplied by 0.85, plus (ii) 15%.

Example #1: Assume that the Company requires an Additional Capital Contribution of
$200,000.00 and the Pre-Adjustment Valuation equals $100,000.00. Assume further
that Parent funds $175,000.00 of the Additional Capital Contribution and Ken Huey
funds the remaining $25,000.00 of the Additional Capital Contribution. Assume
further that prior to the funding of this Additional Capital Contribution the Contribution
Percentage of the Interest Holders was (a) Parent – 70.6%, and (b) Ken Huey – 29.4%.
And finally assume that prior to the funding of this Additional Capital Contribution the
Ownership Percentage of the Interest Holders was (a) Parent – 60.0%, and (b) Ken
Huey – 40.0%. Using these facts, the Contribution Percentages and the Ownership
Percentages of the Interest Holders would be adjusted as follows as a result of the
Additional Capital Contribution:

• Parent’s Contribution Percentage would increase to 81.9%: ($175,000.00 +

70.6% of $100,000.00)/($200,000.00 + $100,000.00).

• Parent’s Ownership Percentage would increase to 69.6%: (81.9% * 0.85).

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• Ken Huey’s Contribution Percentage would decrease to 18.1%: ($25,000 +

29.4% of $100,000.00)/($200,000.00 + $100,000.00).

• Ken Huey’s Ownership Percentage would decrease to 30.4%: (18.1% * 0.85

+ 15.0%).

Example #2: Assume that Additional Capital Contribution, and associated adjustments
to Contribution Percentage and Ownership Percentage, described in Example #1 have
occurred and the Company now requires an the Company requires an Additional
Capital Contribution of $300,000.00. The Pre-Adjustment Valuation now equals
$500,000 (using 6x TTM EBITDA less any indebtedness, multiplied by 0.85 formula).
Assume further that Parent funds $300,000.00 of the Additional Capital Contribution.
Using these facts, the Contribution Percentages and the Ownership Percentages of the
Interest Holders would be adjusted as follows as a result of the Additional Capital
Contribution:

• Parent’s Contribution Percentage would increase to 88.7%: ($300,000.00 +

81.9% of $500,000.00)/($300,000.00 + $500,000.00).

• Parent’s Ownership Percentage would increase to 75.4%: (88.7% * 0.85).

• Ken Huey’s Contribution Percentage would decrease to 11.3%: ($0.00 +

18.1% of $500,000.00)/($300,000.00 + $500,000.00).

• Ken Huey’s Ownership Percentage would decrease to 24.6%: (11.3% *

0.85+ 15.0%).

6.5 No Interest on Contributions. Except as otherwise provided in this Agreement, no Interest

Holder will be paid any interest on any contribution.

6.6 Return of Contributions. Except as otherwise provided in this Agreement, no Interest

Holder will have the right to receive any return of any contribution.

SECTION 7 CAPITAL ACCOUNTS

7.1 Maintenance of Capital Accounts. The Capital Accounts of the Interest Holders will be
determined and maintained throughout the full term of the Company in accordance with the
capital accounting rules of Treas Reg § 1.704-1(b)(2)(iv).

7.2 Section 704(c) Considerations. In cases where IRC § 704(c) and Treas Reg § 1.704-3 apply
to Company property, the Interest Holders’ Capital Accounts will be adjusted in accordance
with Treas Reg § 1.704-1(b)(2)(iv)(g) for allocations to them of income, gain, loss, and
deduction – including depreciation, depletion, amortization, or other cost recovery – as
computed for book purposes, with respect to the property.

7.3 Revaluations of Property.

(a) Subject to Section 7.3(b), the Capital Accounts of the Interest Holders will be increased
or decreased to reflect a revaluation of Company property – including intangible assets
such as goodwill – on the Company’s books upon the occurrence of any of the
following events:

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(1) a contribution of money or other property – other than a de minimis amount – to

the Company by a new or existing Member as consideration for Units;

(2) a Distribution of Company property by the Company to an Interest Holder as

consideration for Units;

(3) the issuance of Incentive Units – other than a de minimis amount – by the
Company to a Service Provider; or

(4) the liquidation of the Company.

(b) Adjustments to Capital Accounts under this Section 7.3 may be made only if:

(1) the adjustments are based on the fair market value of Company property – taking
IRC § 7701(g) into account – on the date of adjustment;

(2) the adjustments reflect the manner in which the unrealized income, gain, loss, or
deduction inherent in such property – that has not been reflected in the Capital
Accounts previously – would be allocated among the Interest Holders if there
were a taxable disposition of such property for such fair market value on that
date;

(3) the Interest Holders’ Capital Accounts are adjusted in accordance with
Treas Reg § 1.704-1(b)(2)(iv)(g) for allocations to them of depreciation,
depletion, amortization, and gain or loss, as computed for book purposes, with
respect to such property; and

(4) the Interest Holders’ distributive shares of depreciation, depletion, amortization,

and gain or loss, as computed for tax purposes, with respect to such property will
be determined so as to take account of the variation between the adjusted tax
basis and book value of such property in the same manner as under IRC § 704(c)
and Treas Reg § 1.704-1(b)(4)(i).

7.4 Transfers of Units. Upon a sale, exchange, gift, or other transfer of Units by an Interest
Holder, the Capital Account of the Interest Holder that is attributable to the Units will carry
over to the transferee.

7.5 Section 754 Elections. Upon adjustment to the adjusted tax basis of Company property
under IRC § 732, IRC § 734, or IRC § 743, the Capital Accounts of the Interest Holders will
be adjusted as provided in Treas Reg § 1.704-1(b)(2)(iv)(m).

7.6 Negative Capital Account Balances. No Interest Holder will be obligated to restore a
negative Capital Account balance.

SECTION 8 UNITS, INCENTIVE UNITS, AND UNIT EQUIVALENTS

8.1 Units Generally. The ownership interests of the Interest Holders will be represented by
issued and outstanding Units. The Company is authorized to issue one class of Units.

8.2 Issuance of Units. The Company is authorized to issue to any person Units and Unit
Equivalents to a person after the date of this Agreement, and admit the person as a Member

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with respect to issued Units, upon the consent a Majority of Managers and a Majority of
Units, subject to Section 6.4 and Section 8.3.

8.3 Operating Agreement.

(a) Any issuance of Units (including Incentive Units) must be conditioned upon the person
that is issued Units being a party to this Agreement, or becoming a party to this
Agreement by signing a Joinder Agreement in the form attached as Exhibit A.

(b) With respect to Unit Equivalents, any issuance of Units upon the exercise of any Unit
Equivalent must be contingent upon the person that is issued Units becoming a party to
this Agreement by signing a Joinder Agreement in the form attached as Exhibit A.

(c) Each party to this Agreement consents to a person that is issued Units (including
Incentive Units) or that exercises any Unit Equivalents becoming a party to this
Agreement if the person signs a Joinder Agreement in the form attached as Exhibit A.

8.4 Incentive Units.

Alternative #1 – Assumes Ken does not purchased Units beyond his initial 1,500 Incentive Units
(i.e. 15% profit interest grant)

(a) The total number of Incentive Units (excluding any Incentive Units issued to Ken
Huey) may not exceed 10% of the total issued and outstanding Units of the Company.
If the Company issues Incentive Units to an Interest Holder(s) other than Ken Huey,
each such Incentive Unit issued will reduce the number of Units held by Parent by one
Unit. Such reductions will continue for each such additional Incentive Unit issued until
Parent’s total Ownership Percentage has been reduced by ten percentage points.

Example #1: For example, assume that the Company has 10,000 Units and 8,500 Units
are held by Parent and 1,500 Units are held by Ken Huey. If the Company issues 100
Incentive Units to a person other than Ken Huey, the Units held by Parent will be
reduced by 100 Units and its Ownership Percentage would decreased from 85% to
84%. Ken Huey would still own 1,500 Units and would have an Ownership Percentage
of 15%.

Alternative #2 – Assumes Ken has purchased additional Units beyond his initial 1,500 Incentive
Units (i.e. 15% profit interest grant) up to his maximum 40% (15% profit grant plus 25%
additional for cash contribution)

(b) The total number of Incentive Units (excluding any Incentive Units issued to Ken
Huey) may not exceed 10% of the total issued and outstanding Units of the Company.
If the Company issues Incentive Units to an Interest Holder(s) other than Ken Huey,
each such Incentive Unit issued will reduce the number of Units held by Ken Huey by
one Unit. Such reductions will continue for each such Incentive Unit issued until Ken
Huey’s Ownership Percentage has been reduced by one percentage point. If the
Company continues to issue Incentive Units to an Interest Holder(s) other than Ken
Huey after Ken Huey’s total Ownership Percentage has been reduced by one
percentage point, each such additional Incentive Unit issued will then reduce the
number of Units held by Parent by one Unit. Such reductions will continue for each

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such additional Incentive Unit issued until Parent’s total Ownership Percentage has
been reduced by nine percentage points.

Example #1: For example, assume that the Company has 10,000 Units and 6,000 Units
are held by Parent and 4,000 Units are held by Ken Huey. If the Company issues 100
Incentive Units to a person other than Ken Huey, the Units held by Ken Heuy will be
reduced by 100 Units and his Ownership Percentage would decreased from 40% to
39%. Parent would still own 6,000 Units and would still have an Ownership
Percentage of 60%.

Example #2: Assume that the issuance of Incentive Units described in Example #1 has
occurred and the Company then issues an additional 500 Incentive Units to a person
other than Ken Huey, the Units held by Parent would be reduced by 500 Units and
Parent’s Ownership Percentage would decreased from 60% to 55%. Ken Huey would
still own 3,900 Units and would have an Ownership Percentage of 14%.

(c) A Super Majority of Units may adopt a written plan pursuant to which all Incentive
Units will be granted in compliance with Rule 701 of the Securities Act or another
applicable exemption (such plan as in effect from time to time, the “Incentive Plan”).
If an Incentive Plan is adopted, the Company is authorized to issue Incentive Units to
Managers, officers, employees, consultants or other service providers of the Company
(collectively, “Service Providers”), and the Managers are authorized to negotiate and
enter into award agreements with each Service Provider to whom is granted Incentive
Units (such agreements, “Award Agreements”), in accordance with the Incentive Plan.

(d) The Company will establish such vesting criteria for any grant of Incentive Units and
will include such vesting criteria in the Incentive Plan and/or the applicable Award
Agreement for any grant of Incentive Units. As used in this Agreement:

(1) any Incentive Units that have not vested pursuant to the terms of the Incentive
Plan and any associated Award Agreement are referred to as “Restricted
Incentive Units”; and

(2) any Incentive Units that have vested pursuant to the terms of the Incentive Plan
and any associated Award Agreement are referred to as “Unrestricted Incentive
Units.”

(e) If any Restricted Incentive Units are forfeited, then immediately after such forfeiture
the Capital Account attributed for such forfeited Restricted Incentive Units will be
reallocated among the Interest Holders in proportion to their respective holdings of
Units.

(f) Immediately prior to each issuance of Incentive Units, the Managers will determine in
good faith the Incentive Liquidation Value. Pursuant to Section 7.3(a)(3), the Capital
Accounts of the existing Interest Holders, immediately prior to the issuance of the new
Incentive Units, will be adjusted so that the aggregate Capital Accounts of the existing
Interest Holders equals the Incentive Liquidation Value and the Capital Accounts
attributed to the new Incentive Units is zero.

(g) The Company and each Interest Holder acknowledge and agree that, with respect to
any Service Provider, such Service Provider's Incentive Units constitute a “profits

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interest” in the Company within the meaning of Rev. Proc. 93-27 (a “Profits
Interests”), and that any and all Incentive Units received by a Service Provider are
received in exchange for the provision of services by the Service Provider to or for the
benefit of the Company in a Service Provider capacity or in anticipation of becoming a
Service Provider. The Company and each Service Provider who receives Incentive
Units hereby agree to comply with the provisions of Rev. Proc. 2001-43, and neither
the Company nor any Service Provider who receives Incentive Units will perform any
act or take any position inconsistent with the application of Rev. Proc. 2001-43 or any
future Internal Revenue Service guidance or other governmental authority that
supplements or supersedes the foregoing Revenue Procedures.

(h) Incentive Units will receive the following tax treatment:

(1) The Company and each Service Provider who receives Incentive Units will treat
such Service Provider as the owner of such Incentive Units from the date of their
receipt, and the Service Provider receiving such Incentive Units will take into
account the Interest Holder’s Distributive share of income, gain, loss and
deduction associated with the Incentive Units in computing such Service
Provider’s income tax liability for the entire period during which such Service
Provider holds the Incentive Units.

(2) Each Service Provider that receives Incentive Units will make a timely and
effective election under IRC Section 83(b) with respect to such Incentive Units
and will promptly provide a copy to the Company. Except as otherwise
determined by the Managers, both the Company and all Members will:

(A) treat such Incentive Units as outstanding for tax purposes;

(B) treat such Service Provider as a partner for tax purposes with respect to
such Incentive Units; and

(C) file all tax returns and reports consistently with the foregoing. Neither the
Company nor any of its Interest Holders will deduct any amount (as wages,
compensation or otherwise) with respect to the receipt of such Incentive
Units for federal income tax purposes.

(3) In accordance with the finally promulgated successor rules to Proposed

Regulations Section 1.83-3(l) and IRS Notice 2005-43, each Interest Holder, by
executing this Agreement, authorizes and directs the Company to elect a safe
harbor under which the fair market value of any Incentive Units issued after the
effective date of such Proposed Regulations (or other guidance) will be treated as
equal to the liquidation value (within the meaning of the Proposed Regulations or
successor rules) of the Incentive Units as of the date of issuance of such Incentive
Units. If the Company makes a safe harbor election as described in the preceding
sentence, each Interest Holder agrees to comply with all safe harbor requirements
with respect to Transfers of Units while the safe harbor election remains
effective.

(i) For the avoidance of doubt:

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(1) all Incentive Units, including Unrestricted Incentive Units, will be subject to the
rights of the Company to exercise the option under Section 25.2; and

(2) no Restricted Incentive Units, will have any right to exercise the option under
Section 25.4, without the consent of a Super Majority of Units.

SECTION 9 ALLOCATION OF PROFITS AND LOSSES

9.1 Allocation of Profits and Losses. After giving effect to the allocation provisions set forth on
Schedule 9.1, Profits and Losses will be allocated among the Interest Holders in proportion to
their Units.

9.2 Transfer of Units. If an Interest Holder sells, exchanges, or liquidates some or all of the
Interest Holder’s Units, then to the extent permitted by IRC § 706, Profits and Losses will be
allocated between the former Interest Holder and the Interest Holder’s successor-in-interest as
follows:

(a) the Company taxable year with respect to the Units will close on the date of such sale,
exchange, or liquidation;

(b) the former Interest Holder will be allocated the amount of the Profits and Losses
attributable to the Units for the Company taxable year ending with the date of such
sale, exchange, or liquidation; and

(c) the Interest Holder’s successor-in-interest will be allocated the amount of the Profits
and Losses attributable to the Units after the date of such sale, exchange, or liquidation.

9.3 Distributions In Kind. The Profits or Losses attributable to any asset in kind that is
Distributed to one or more Interest Holders:

(a) will be determined as if the asset had been sold at its fair market value before the
dissolution and winding up of the Company; and

(b) will be allocated as provided in Section 9.1.

SECTION 10 ACCOUNTING, TAXES, AND BANKING

10.1 Books of Account. The Company will keep complete and accurate books of account and
records in a manner sufficient to effect and carry out this Agreement. The books of account
and records will be kept in accordance with sound accounting practices consistently applied.

10.2 Taxable Year. The Company will have a taxable year ending on December 31.

10.3 Bank Accounts. All Company funds will be deposited in one or more bank accounts in the
Company’s name. The Managers will determine the banks, the types of accounts, and the
individuals who have authority with respect to the accounts. Company funds will not be
commingled with the funds of any Member or Manager.

10.4 Tax Returns. The Company will cause to be prepared all federal, state, and local income tax
returns for the Company. No later than April 15 of each taxable year, the Company will
deliver to each Interest Holder: (a) any financial statements of the Company for the taxable

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year; (b) a statement showing the share of Company income, gain, loss, credit, and deduction
for income tax purposes allocated to each Interest Holder for the taxable year; and (c) any
other information concerning the Company that the Interest Holder may require to complete
the Interest Holder’s federal, state, and local income tax returns.

10.5 Reporting. Each Interest Holder will report the Interest Holder’s share of Company income,
gain, loss, credit, and deduction for income tax purposes in a manner consistent with this
Agreement.

10.6 Company Audit Rules.

(a) For all tax periods with respect to which the BBA Rules are not mandatory, the
Company will have a tax matters member who will have all of the powers and
obligations of a “tax matters partner” under IRC § 6231(a)(7). When the BBA Rules
are mandatory, the Company will have a partnership representative (the “Partnership
Representative”) who will have all of the powers and obligations of a “partnership
representative” under the BBA Rules. The tax matters member or partnership
representative must be a Member, and must be designated or replaced by a Majority of
Managers and a Super Majority of Units.

(b) The Company will not elect to be subject to the BBA Rules before the BBA Rules are
mandatory.

(c) With respect to any tax period for which the BBA Rules are mandatory and the
Company has not elected out of the BBA Rules:

(1) If any tax liability is to be imposed on or assessed against the Company under the
BBA Rules, the Partnership Representative will use reasonable efforts to
minimize the aggregate amount of such liability, and make on behalf of the
Company an election under IRC § 6226 and any Treasury Regulations
promulgated in accordance with IRC Section 6226.

(2) Each Interest Holder will take all actions that the Partnership Representative
informs each Interest Holder are reasonably necessary to effect a decision of the
Partnership Representative in its capacity as such, including without limitation
(A) providing any information reasonably requested in connection with any tax
audit or related proceeding (which information may be freely disclosed to the
Internal Revenue Service or other relevant taxing authorities), (B) paying all
liabilities attributable to such Interest Holder as the result of an election under
IRC § 6226, (C) filing any amended returns that the Partnership Representative
determines to be necessary or appropriate to reduce an imputed underpayment
under IRC § 6225(c), and/or (D) paying all liabilities associated with such an
amended return. The costs and expenses incurred by an Interest Holder in
connection with the preceding sentence (other than the Partnership
Representative in its capacity as such) will not be treated as Company expenses.

(3) If any tax audit results in the imposition of a tax liability on the Company itself,
the Managers will allocate the economic burden of that liability (including
interest and penalties) among the Interest Holders in a manner the Managers
determine to be fair and equitable. Each Interest Holder will pay to the Company
the amount allocated to it under the preceding sentence within ten business days.

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At the Managers’ discretion, such payment may be made by withholding

distributions that would otherwise be paid to an Interest Holder.

(4) Notwithstanding all other provisions of this Agreement, each Interest Holder
agrees that each Interest Holder’s obligations to comply with this Section 10.6
will survive any transfer of the Interest Holder’s ownership interest and the
dissolution of the Company. Accordingly, each Interest Holder that ceases to be
a Member or Assignee will, notwithstanding such cessation, reimburse and
indemnify the Company against any liability that would be allocated to such
Interest Holder under this Section 10.6 if the Interest Holder was an Interest
Holder at the time of determination.

10.7 Tax Elections. The Managers may make all of the Company’s tax elections permitted under
the IRC, including but not limited to elections under IRC § 754.

10.8 Corporate Costs Reimbursement. Within 10 days after the last day of each calendar
month, Parent will calculate the amount of Corporate Costs attributable to the Company for
the prior month and notify the Company such amount. The Corporate Costs attributable to
the Company will be an amount equal to: (a) Parent’s Corporate Cost for that month,
multiplied by; (b) the result of (i) the Company’s revenue for that month, divided by (ii) the
consolidated revenue of Parent and all of its subsidiaries (including the Company). The
Company will reimburse Parent for the amount of Corporate Costs attributable to the
Company for the prior month within 5 business days after delivery of the Parent’s calculation
to the Company.

SECTION 11 DISTRIBUTIONS

11.1 Allocation of Interim Distributions. Distributions of cash or other assets of the Company
before the dissolution and winding up of the Company will be allocated among the Interest
Holders in proportion to their Units.

11.2 Right to Interim Distributions. Subject to Section 11.4 and Section 11.5, an Interest Holder
is entitled to receive Distributions from the Company before the dissolution and winding up
of the Company as follows:

(a) The Distributable Cash of the Company will be distributed quarterly in arrears.
“Distributable Cash” means: (1) the Company’s EBITDA for the preceding financial
quarter; minus (2) the amount of any capital expenditure for the prior fiscal quarter that
will not be funded from any additional capital contributions; minus (3) all principal and
interest payments of the Company’s indebtedness (if any); minus (4) any increase in the
Company’s working capital during the previous financial quarter; plus (5) any decrease
in the Company’s working capital during the previous financial quarter; minus (6) the
amount of any reserve considered reasonable or necessary by the Manager to cover
anticipated future cash needs of the Company.

(b) An Interest Holder is entitled to receive Distributions from the Company to the extent
and at such other times as a Majority of Managers may determine.

11.3 Distribution In Kind. No Interest Holder, regardless of the nature of the Interest Holder’s
contribution, has any right to demand and receive any Distribution from the Company in any
form other than cash. No Interest Holder may be compelled to accept a Distribution of any

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asset in kind from the Company to the extent that the percentage of the asset Distributed to
the Interest Holder exceeds a percentage of that asset that is equal to the percentage in which
the Interest Holder shares in operating or liquidating Distributions, as the case may be, from
the Company. The value of any asset in kind that is Distributed will be the fair market value
of the asset as of the date of Distribution. If an asset in kind is Distributed to more than one
Interest Holder, the Interest Holders will own the asset as tenants in common.

11.4 Distributions Subject to Setoff. All Distributions to Interest Holders are subject to setoff by
the Company for any amount owed the Company by the Interest Holder or any assignor of
such Interest Holder.

11.5 Limitations on Distributions. No Distribution shall be declared and paid unless, after the
distribution is made, the assets of the Company are in excess of all liabilities of the Company,
and is otherwise not prohibited by the Act.

SECTION 12 WITHDRAWAL

12.1 Withdrawal. A Member has no power to withdraw voluntarily from the Company.

12.2 Expulsion. A Member may be expelled from the Company by a court, upon application of
any Member, if the court determines that: (a) the Member has been guilty of wrongful
conduct that adversely and materially affects the business or affairs of the Company; or (b)
the Member has willfully or persistently committed a material breach of the Articles of
Organization or this Agreement or otherwise breached a duty owed to the Company or the
other Members. The power of the Company to expel a Member does not limit or adversely
affect any right or power of the Company to recover any damages or to pursue any other
remedies provided for in the Articles of Organization or this Agreement or permitted under
applicable law or at equity. The Company, in addition to any of its other remedies, may
offset any such damages against any amounts otherwise Distributable or payable to the
expelled Member.

SECTION 13 DISSOLUTION

13.1 Dissolution. The Company will be dissolved and its affairs will be wound up upon the first
to occur of the following:

(a) upon reaching the time for dissolution, if any, specified in the Articles of Organization;

(b) by the consent of a Super Majority of Units;

(c) at such time as the Company has no Members;

(d) upon administrative dissolution by the Secretary of State under ORS 63.651, but only
after the five-year period for reinstatement in ORS 63.654(1) expires; and

(e) upon entry of a judgment of judicial dissolution under ORS 63.671.

13.2 Distribution of Assets Upon Dissolution. Upon the winding up of the Company, the assets
of the Company will be Distributed and applied in the following priority:

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(a) to the extent permitted by law, to creditors, including Interest Holders and former
Interest Holders who are creditors, in satisfaction of liabilities of the Company other
than liabilities for Distributions to Interest Holders under Section 11.2;

(b) to Interest Holders and former Interest Holders in satisfaction of the Company’s
obligations for Distributions due and owing under Section 11.2; and

(c) after giving effect to the allocation provisions under Section 9.1, to each Interest
Holder in an amount equal to the Interest Holder’s positive Capital Account balance.

13.3 Effect of Dissolution; Winding Up.

(a) Upon dissolution, the Company continues its existence, but may not carry on any
business except that which is appropriate to wind up and liquidate its business and
affairs, including:

(1) collecting the Company’s assets;

(2) disposing of the Company’s properties that will not be Distributed in kind to the
Interest Holders;

(3) discharging or making provision for discharging the Company’s liabilities;

(4) Distributing the Company’s remaining property among the Interest Holders in
accordance with Section 13.2;

(5) adopting a plan of merger; and

(6) doing other acts necessary to wind up and liquidate the Company’s business and
affairs.

(b) The Managers may wind up the Company’s affairs.

SECTION 14 RECORDS AND REPORTS

14.1 Company Records.

(a) The Company will keep at its principal office or registered office the following:

(1) a current list of the full name and last-known business, residence, or mailing
address of each Member and Manager, both past and present

(2) a copy of the Articles of Organization and all amendments to the Articles of
Organization, together with executed copies of any powers of attorney pursuant
to which any amendment has been executed;

(3) copies of the Company's federal, state and local income tax returns and reports, if
any, for the three most recent years; and

(4) a copy of this Agreement and all amendments to this Agreement, copies of any
writings permitted or required under the Act, and copies of any financial
statements of the Company for the three most recent years.

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(b) Any Company records are subject to inspection and copying at the reasonable request,
and at the expense, of any Member during ordinary business hours.

14.2 Scope of Inspection Right.

(a) A Member’s agent or attorney has the same inspection and copying rights as the
Member.

(b) The right to copy records includes, if reasonable, the right to receive copies made by
photographic, xerographic, or other means.

(c) The Company may impose a reasonable charge, covering the costs of labor and
material, for copies of any documents provided to the Member. The charge may not
exceed the estimated cost of production or reproduction of the records.

(d) The Company may comply with a Member’s demand to inspect the record of Members
by providing the Member with a list of Members that was compiled no earlier than the
date of the Member’s demand.

14.3 Certain Expense Reports to Members. If the Company indemnifies or advances expenses
to a Member or Manager in connection with a proceeding by or in the right of the Company,
the Company will report the indemnification or advance in writing to the Members.

SECTION 15 REPRESENTATIONS AND WARRANTIES OF INTEREST HOLDERS

Each Interest Holder represents and warrants to each other party as follows:

15.1 Status and Organization.

(a) If the Interest Holder is an individual, the Interest Holder is an individual at least 18
years of age, a bona fide resident and domiciliary of the State specified under the
Interest Holder’s name on Schedule 2.1, and has no present intention of becoming a
resident of any other State or jurisdiction.

(b) If the Interest Holder is an entity, the Interest Holder is duly organized and validly
existing under the laws of the State specified under the Interest Holder’s name on
Schedule 2.1.

15.2 Authority. The Interest Holder has full power and authority to sign and deliver this
Agreement and to perform all of the Interest Holder’s obligations under this Agreement.

15.3 Binding Obligation. This Agreement is the legal, valid, and binding obligation of the
Interest Holder, enforceable against the Interest Holder in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, or other similar laws of general
application or by general principles of equity.

15.4 No Conflicts. The signing and delivery of this Agreement by the Interest Holder and the
performance by the Interest Holder of all of the Interest Holder’s obligations under this
Agreement will not:

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(a) conflict with the Interest Holder’s articles of incorporation, bylaws, articles of
organization, operating agreement, certificate of limited partnership, partnership
agreement, trust agreement, or other similar organizational documents, if any;

(b) breach any agreement to which the Interest Holder is a party, or give any person the
right to accelerate any obligation of the Interest Holder;

(c) violate any law, judgment, or order to which the Interest Holder is subject; or

(d) require the consent, authorization, or approval of any person, including but not limited
to any governmental body.

SECTION 16 RESTRICTIONS ON TRANSFER

16.1 Restriction. No Transfer of Units may be made unless the Transfer is expressly permitted or
required by this Agreement.

16.2 Securities Laws. No offer or Transfer of Units may be made unless pursuant to an effective
registration statement filed under the Securities Act of 1933 and applicable state securities
laws, or unless the Company receives an opinion of counsel, in form and from counsel
satisfactory to the Company, that the offer or Transfer is exempt from the registration
requirements of the Securities Act of 1933 and applicable state securities laws.

16.3 Transferees.

(a) No Transfer of Units may be made unless the transferee is a party to this Agreement, or
becomes a party to this Agreement by signing a Joinder Agreement in the form
attached as Exhibit A.

(b) If a Transfer of Units expressly permitted or required by this Agreement is made to a

person other than the Company:

(1) the transferee will be an Assignee with respect to the Units if:

(A) both the transferee and the transferor were Assignees immediately before
the Transfer occurred; or

(B) the Transfer causes a cessation of membership under Section 18.1, and
Section 18.2(b) does not apply; and

(2) the transferee will be a Member with respect to the Units in all other cases.

16.4 Consent. Each party to this Agreement consents to a permitted transferee becoming a party
to this Agreement if the permitted transferee signs a Joinder Agreement in the form attached
as Exhibit A.

16.5 Prohibited Transfers. Any Transfer of Units that is not expressly permitted or required by
this Agreement will be null and void and have no force or effect unless the Company is
required by applicable law to recognize the Transfer or unless the Company and all of the
Members elect to recognize the Transfer.

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16.6 Indemnification. Each Interest Holder will defend and indemnify the Company and each
present and future member, assignee, manager, officer, and authorized representative of the
Company for, from, and against any and all claims, actions, proceedings, damages, liabilities,
and expenses of every kind, whether known or unknown, including but not limited to
reasonable attorney’s fees, resulting from or arising out of any Transfer of Units by the
Interest Holder that is not expressly permitted or required by this Agreement.

SECTION 17 PERMITTED TRANSFERS

An Interest Holder may Transfer Units as follows, subject to the terms and conditions set forth in
Section 16:

17.1 Prior Consent. An Interest Holder may Transfer Units with the prior written consent of a
Super Majority of Units, which the Members may withhold in their sole discretion. If the
Interest Holder is proposing to Transfer Units to an entity or trust, the Members may
condition their consent on obtaining a written agreement signed such Interest Holder and such
entity or trust, as applicable, confirming that following the Transfer the Interest Holder will
become a Key Individual with respect to the entity or trust receiving the Units.

17.2 Death. Subject to Section 20, an Interest Holder may Transfer Units by devise, intestate
succession, or operation of law upon the Interest Holder’s death.

17.3 Dissolution of Marriage. Subject to Section 20, an Interest Holder may Transfer Units
pursuant to a judgment for the annulment or dissolution of the Interest Holder’s marriage.

17.4 Foreclosure of Security Interest. An Interest Holder may Transfer Units in connection with
a foreclosure of a security interest by the former owner of the Units to whom the Interest
Holder granted the security interest.

SECTION 18 CESSATION OF MEMBERSHIP

18.1 Cessation of Membership. Except as provided in Section 18.3, a Member will cease to be a
Member in the Company only upon the occurrence of any of the following:

(a) if the Member is an individual other than Ken Huey:

(1) the death of the Member;

(2) the incompetency of the Member, if an entry of a judgment by a court of

competent jurisdiction adjudicates the Member incompetent to manage the
Member’s person or estate;

(3) the disability of the Member, if a Majority of Managers reasonably determines

that the Member – with or without reasonable accommodation – has been or will
be unable to perform the essential functions of the Member’s duties as a member,
manager, officer, employee, or independent contractor of the Company for a
period of 180 consecutive days;

(4) the Bankruptcy of the Member;

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(5) the Member terminates the Member’s employment relationship with the
Company for any reason;

(6) the Company terminates the Member’s employment relationship with the
Company for any reason;

(7) the Member materially breaches this Agreement and fails to cure the breach
within 30 days after the Company or any Interest Holder notifies the Member of
the breach;

(b) if the Member is an entity:

(1) the Dissolution of the Member, but only with respect to the Units that are not
Transferred to a Key Individual of the Member as a result of the Dissolution;

(2) a transfer of shares or other ownership interests of the Member that results in a
change in Control of the Member, regardless of whether the transfer occurs
voluntarily or involuntarily, by operation of law, or because of any act or
occurrence; or

(3) any of the events set forth in Section 18.1(a) occurs to a Key Individual of the
Member and such Key Individual is not Ken Huey;

(c) if the Member is a trust:

(1) the termination of the Member, but only with respect to the Units that are not
Transferred to a Key Individual of the Member as a result of the termination;

(2) the Key Individual of the Member ceases to Control the Member; or

(3) any of the events set forth in Section 18.1(a) occurs to a Key Individual of the
Member and such Key Individual is not Ken Huey;

(d) if the Member is Ken Huey or Ken Huey is a Key Individual of the Member:

(1) Ken Huey terminates his employment relationship with the Company for any
reason;

(2) the Company terminates the employment relationship of Ken Huey with the
Company For Cause;

(3) the death of Ken Huey;

(4) the Bankruptcy of the Member or a Key Individual of the Member; or

(5) the Member materially breaches this Agreement and fails to cure the breach
within 30 days after the Company or any Interest Holder notifies the Member of
the breach;

(e) the Member’s Transfer of Units, unless the Transfer is expressly permitted or required
by this Agreement;

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(f) the Member’s Transfer of Units pursuant to a judgment for the annulment or
dissolution of the Member’s marriage, but only with respect to the Units that are
Transferred pursuant to the judgment;

(g) the withdrawal of the Member; and

(h) the expulsion of the Member.

18.2 Effect of Cessation.

(a) Except as otherwise provided in Section 18.2(b), following the cessation of

membership:

(1) the holder of the former Member’s Units will be an Assignee with respect to the
Units;

(2) except as otherwise provided in ORS 63.229 and ORS 63.235, until the Assignee
becomes a Member, the Assignee has no liability, duty, or obligation as a
Member solely as a result of the cessation; and

(3) the former Member is not released from liability as a Member accruing or arising
prior to the cessation solely as a result of the cessation, and is not relieved of any
fiduciary duties the former Member otherwise may continue to owe the Company
or the other Members.

(b) If the Member who ceases to be a Member is the only Member of the Company, the
holder of the former Member’s Units will become a Member simultaneously with and
upon the cessation of membership.

18.3 Parent. The cessation of membership provisions set forth in this Section 18 will not apply
with respect to Parent.

SECTION 19 ASSIGNEES

19.1 Admission of Assignee as Member. An Assignee may become a Member upon the consent
of a Super Majority of Units.

19.2 Rights of Assignee Who Becomes Member. An Assignee who becomes a Member has the
rights and powers, and is subject to the restrictions and liabilities, of a Member under the Act,
the Articles of Organization, and this Agreement.

SECTION 20 CALL OPTION TRIGGERING EVENTS

20.1 Call Option Triggering Events. Except as provided in Section 20.7, each of the following
is a Call Option Triggering Event:

(a) if the Interest Holder is an individual other than Ken Huey:

(1) the death of the Interest Holder, subject to Section 20.8;

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(2) the incompetency of the Interest Holder, if an entry of a judgment by a court of

competent jurisdiction adjudicates the Interest Holder incompetent to manage the
Interest Holder’s person or estate;

(3) the disability of the Interest Holder, if a Majority of Managers reasonably

determines that the Interest Holder – with or without reasonable accommodation
– has been or will be unable to perform the essential functions of the Interest
Holder’s duties as a member, manager, officer, employee, or independent
contractor of the Company for a period of 180 consecutive days;

(4) the Bankruptcy of the Interest Holder;

(5) the Interest Holder terminates the Interest Holder’s employment relationship with
the Company for any reason;

(6) the Company terminates the Interest Holder’s employment relationship with the
Company for any reason;

(7) the Interest Holder materially breaches this Agreement and fails to cure the
breach within 30 days after the Company or any other Interest Holder notifies the
Interest Holder of the breach;

(b) if an Interest Holder is an entity:

(1) the Dissolution of the Interest Holder, unless all of the Units are Transferred to
the Key Individual of the Interest Holder as a result of the Dissolution;

(2) a transfer of shares or other ownership interests of the Interest Holder that results
in a change in Control of the Interest Holder, regardless of whether the transfer
occurs voluntarily or involuntarily, by operation of law, or because of any act or
occurrence; or

(3) any of the events set forth in Section 20.1(a) occurs to a Key Individual of the
Interest Holder and such Key Individual is not Ken Huey;

(c) if an Interest Holder is a trust:

(1) the termination of the Interest Holder, unless all of the Units are Transferred to
the Key Individual of the Interest Holder as a result of the termination;

(2) the Key Individual of the Interest Holder ceases to Control the Member; or

(3) any of the events set forth in Section 20.1(a) occurs to a Key Individual of the
Interest Holder and such Key Individual is not Ken Huey;

(d) if the Interest Holder is Ken Huey or Ken Huey is a Key Individual of the Interest
Holder:

(1) Ken Huey terminates his employment relationship with the Company for any
reason;

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(2) the Company terminates the employment relationship of Ken Huey with the
Company For Cause;

(3) the Bankruptcy of the Interest Holder or a Key Individual of the Interest Holder;
or

(4) the Interest Holder materially breaches this Agreement and fails to cure the
breach within 30 days after the Company or any Interest Holder notifies the
Interest Holder of the breach;

(e) if the Interest Holder is Ken Huey or Ken Huey is a Key Individual of the Interest
Holder, the death of Ken Huey, subject to Section 20.8

(f) an Interest Holder’s Transfer of Units, unless the Transfer is expressly permitted or
required by this Agreement;

(g) an Interest Holder’s Transfer of Units pursuant to a judgment for the annulment or
dissolution of the Interest Holder’s marriage;

(h) the withdrawal of a Member; and

(i) the expulsion of a Member.

20.2 Notice.

(a) If the Company obtains actual knowledge that a Call Option Triggering Event has
occurred with respect to an Interest Holder, the Company will promptly give each
Interest Holder a notice stating that the Call Option Triggering Event has occurred.

(b) If an Interest Holder obtains actual knowledge that a Call Option Triggering Event has
occurred with respect to any Interest Holder, and if the Interest Holder knows or should
know that the Company has not obtained such knowledge, the Interest Holder will
promptly give the Company a notice stating that the Call Option Triggering Event has
occurred.

20.3 Forfeiture of Restricted Incentive Units. Except as may be otherwise provided in the
applicable vesting schedule or as may be determined by a Majority of Managers, if a Call
Option Triggering Event occurs with respect to an Interest Holder holding Restricted
Incentive Units, then without further action on behalf of the Company or such Interest Holder
all of such Interest Holder’s Restricted Incentive Units will be forfeited.

20.4 Company’s Option to Buy.

(a) For 90 days after the delivery of the notice specified in Section 20.2(a), the Company
will have the option to buy all of the Call Option Units – but not less than all of the Call
Option Units – owned by the Interest Holder to whom the Call Option Triggering Event
occurred, at the price determined in accordance with Section 21 and on the terms and
conditions set forth in Section 22.

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(b) The Company may exercise the option by delivering to the Interest Holder a notice
stating that the option is exercised and specifying the number of Call Option Units for
which the option is exercised.

20.5 Sale to the Company. If the option under Section 20.4 is exercised with respect to all of the
Call Option Units owned by the Interest Holder:

(a) the Company will buy from the Interest Holder – and the Interest Holder will sell to the
Company – the Call Option Units, subject to the terms and conditions of this
Agreement; and

(b) the sale will occur in accordance with Section 23.

20.6 Continued Ownership. If the option under Section 20.4 is not exercised with respect to all
of the Call Option Units owned by the Interest Holder, no sale will occur and the Interest
Holder will continue to own all of the Interest Holder’s Call Option Units subject to the terms
and conditions of this Agreement.

20.7 Parent. The call option provisions set forth in Section 20 will not apply with respect to
Parent.

20.8 Life Insurance. If the event giving rise to the sale is the death of an Interest Holder or Key
Individual, and if the Company receives proceeds under a life insurance policy as a result of
the Interest Holder’s or Key Individual’s death, the Company must exercise the option under
Section 20.4.

SECTION 21 PRICE

If the price of any Units is to be determined in accordance with this Section 21, the price will be
determined as follows:

21.1 Agreed Value. If the seller and the Company agree on a price of the Units within 30 days
after the option under Section 20.4 is exercised, the price of the Units will be as agreed.

21.2 Price Per Unit. If the seller and the Company cannot agree on the price of the Units within
30 days after the option under Section 20.4 is exercised, then the price of the Units will be
determined as follows:

(a) if an individual Interest Holder terminates the Interest Holder’s employment

relationship with the Company for any reason under Section 20.1(a)(5) the price of the
Units will be based upon the Book Value of the Company determined in accordance
with Section 21.3;

(b) if the Company terminates an individual Interest Holder’s employment relationship

with the Company under Section 20.1(a)(6):

(1) if the termination is For Cause, the price of the Units will be based upon the
Book Value of the Company determined in accordance with Section 21.3; and

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(2) if termination is other than For Cause, the price of the Units will be based upon a
multiple of the Company’s EBITDA determined in accordance with
Section 21.4;

(c) if an Interest Holder is an entity or a trust, and the event giving rise to the sale is an
event set forth in Section 20.1(b) or Section 20.1(c) because a Key Individual of the
Interest Holder terminates the Key Individual’s employment relationship with the
Company for any reason and such Key Individual is not Ken Huey, the price of the
Units will be based upon the Book Value of the Company determined in accordance
with Section 21.3;

(d) if an Interest Holder an entity or a trust, and the event giving rise to the sale is an event
set forth in Section 20.1(b) or Section 20.1(c) because the Company terminates the
employment relationship of a Key Individual of the Interest Holder with the Company
and such Key Individual is not Ken Huey:

(1) if the termination is For Cause, the price of the Units will be based upon the
Book Value of the Company determined in accordance with Section 20.3; and

(2) if the termination is other than For Cause, the price of the Units will be based
upon a multiple of the Company’s EBITDA determined in accordance with
Section 21.4;

(e) if the event giving rise to the sale is an event set forth in Section 20.1(d), the price of
the Units will be determined as follows:

(1) for the first 1,500 Units, the price of the Units will be based upon the Book Value
of the Company determined in accordance with Section 21.3; and

(2) all additional Units, the price of the Units will be based upon a multiple of the
Company’s EBITDA determined in accordance with Section 21.4;

(f) if the event giving rise to the sale is an event set forth in Section 20.1(e), the price of
the Units will be based upon a multiple of the Company’s EBITDA determined in
accordance with Section 21.4;

(g) if the event giving rise to the sale is an event set forth in Section 20.1(f), the price of
the Units will be determined as follows:

(1) for all Incentive Units, the price of the Units will be based upon the Book Value
of the Company determined in accordance with Section 21.3; and

(2) for all Units other than Incentive Units, the price of the Units will be based upon
a multiple of the Company’s EBITDA determined in accordance with Section
21.4;

(h) if the event giving rise to the sale is a Call Option Triggering Event other than the
events described in this Section 21.2 above, the price of the Units will be based upon a
multiple of the Company’s EBITDA determined in accordance with Section 21.4.

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21.3 Book Value Price. If the price of any Units is to be determined in accordance with this
Section 21.3, then the price of the Units will be determined as follows:

(a) “Book Value” means an amount equal to:

(1) the book value of the Company’s assets as of the end of the fiscal year ending
immediately prior to the year in which the event giving rise to the sale occurred,
subject to Section 21.3(b);

less

(2) the Company’s liabilities as of the end of the fiscal year ending immediately
prior to the year in which the event giving rise to the sale occurred;

(b) the value of the assets of the Company under Section 21.3(a)(1) will include the cash
surrender value, if any, of each insurance policy on the life of an Interest Holder or on
the life of a Key Individual of an Interest Holder that is owned by the Company, but
will not include any death benefit that the Company has received or will receive;

(c) Book Value will be determined by the Company’s accountant, and the accountant’s
determination of Book Value will be binding on the seller and the Company; and

(d) the price of the Units will be the amount equal to:

(1) Book Value;

multiplied by

(2) the seller’s Ownership Percentage;

less

(3) any amounts owed by the seller to the Company as of the date of the sale.

21.4 Earnings Multiple Price. If the price of any Units is to be determined in accordance with
this Section 21.4, then the price of the Units will be determined as follows:

(a) the value of the assets of the Company, including goodwill, will be deemed to be an
amount equal to:

(1) the Company’s earned EBITDA for the trailing twelve months ending on the last
day of the calendar month in which the event giving rise to the sale occurred;

multiplied by

(2) six (6);

(b) the Company, after consulting with its accountant and legal counsel, will determine the
amount that the seller would have received if, on the last day of the calendar month in
which the event giving rise to the sale occurred:

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(1) the liabilities of the Company had been satisfied following the sale of the assets
of the Company for the value determined under Section 21.4(a);

(2) the Capital Accounts of the Interest Holders had been adjusted to reflect the
Profits or Losses that would have been allocated to the Interest Holders after
satisfying such liabilities and selling such assets; and

(3) the value of the net assets had been distributed to the Interest Holders in
accordance with Section 13.2(c); and

(c) the price of the Units will be the amount that the seller would have received under
Section 25.9(b)(3).

SECTION 22 PAYMENT TERMS

If the terms and conditions of a sale of any Units are to be determined in accordance with this Section
22, the terms and conditions will be determined as follows:

22.1 Agreed Terms. If the seller and the Company agree on the terms and conditions of the sale
of the Units within 30 days after the option under Section 20.4 is exercised, the terms and
conditions of the sale of the Units will be as agreed.

22.2 Payment Terms. If the seller and the Company cannot agree on the terms and conditions of
the sale of the Units within 30 days after the option under Section 20.4 is exercised, the terms
and conditions will be as follows, subject to Section 22.3:

(a) 25% of the price of the Units will be paid on the date that the sale occurs;

(b) the balance of the price of the Units, together with interest on the unpaid balance from
the date of the sale of the Units, will be paid in 120 equal monthly installments of
principal and interest;

(c) the first installment will be due on the first day of the first calendar month after the date
of the sale of the Units, and subsequent installments will be due on the same day of
each following month;

(d) the Company will pay interest on the unpaid balance at the “applicable Federal rate”
under IRC § 1274(d) as of the date of the sale of the Units; and

(e) the Company’s obligation to pay the balance of the price of the Units will be evidenced
by a nonnegotiable promissory note, in form and substance reasonably satisfactory to
the seller.

22.3 Life Insurance. If the event giving rise to the sale is the death of an Interest Holder or Key
Individual, and if the Company receives proceeds under a life insurance policy as a result of
the Interest Holder’s or Key Individual’s death, the proceeds will be paid to the seller as
follows:

(a) if the proceeds are received by the Company before the date that the sale of the Units
occurs, and if the proceeds exceed the amount that would otherwise be paid to the
seller under Section 22.2(a), the proceeds – to the extent that the proceeds do not

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exceed the price of the Units – will be paid to the seller on the date that the sale occurs
in lieu of the payment set forth in Section 22.2(a); and

(b) if the proceeds are received by the Company after the date that the sale of the Units
occurs, the proceeds – to the extent that the proceeds do not exceed the unpaid balance
of the price of the Units – will be promptly paid to the seller as a prepayment of the
unpaid balance of the price of the Units, which prepayment will not be credited as one
or more future scheduled payments.

SECTION 23 SALE OF UNITS

If the sale of any Units is to occur in accordance with this Section 23, the sale will occur as follows:

23.1 Sale.

(a) The sale will occur at a time and date fixed by the seller and the Company within 30
days after the final determination of the price of the Units, if the price of the Units is
determined in accordance with Section 21.

(b) The sale will take place at the Company’s principal office, or at a place fixed by the
seller and the Company.

23.2 Deliveries.

(a) The Company will sign and deliver to the seller:

(1) a certified check in the amount of the portion of the price of the Units that will be
paid on the date that the sale occurs;

(2) a redemption agreement that contains a representation and warranty by the

Company that the Company can lawfully buy the Units under the Act, and such
other terms and conditions that are customarily included in a redemption
agreement, in form and substance reasonably satisfactory to the Company and the
seller; and

(3) any promissory note required by Section 22.2(e).

(b) The seller will deliver to the Company assignments indorsed to the Company, in form
and substance reasonably satisfactory to the Company.

(c) The seller will sign and deliver to each Company:

(1) a redemption agreement that contains:

(A) representations and warranties by the seller that the seller is the sole owner
of the Units and that the Units are free from any encumbrance, including
but not limited to any security interest or lien;

(B) investment representations and warranties by the seller to ensure

compliance with all applicable securities laws, in form and substance
reasonably satisfactory to the Company; and

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(C) such other terms and conditions that are customarily included in a
redemption agreement, in form and substance reasonably satisfactory to the
Company and the seller.

(d) The seller and the Company will sign and deliver all other documents and take or cause
to be taken all other acts that they deem necessary or appropriate to effect and carry out
the sale of the Units.

SECTION 24 LIFE INSURANCE

24.1 Company.

(a) The Company may apply for and maintain one or more insurance policies on the life of
each Interest Holder and each Key Individual. The Company will be the sole owner of
each policy, with all powers and rights of ownership. The Company will pay all
premiums on each policy and will be the primary beneficiary of each policy.

(b) Each Interest Holder will take all actions reasonably necessary to cause an insurance
policy to be issued on the life of the Interest Holder or the life of each Key Individual
of the Interest Holder, as applicable.

24.2 Option to Buy Insurance Policies.

(a) An Interest Holder will have the option to buy any insurance policy on the life of the
Interest Holder or on the life of any Key Individual of the Interest Holder that is owned
by the Company if the Interest Holder ceases being a party to this Agreement, or upon
the termination of this Agreement.

(b) The price of the policy will be:

(1) the cash surrender value of the policy, if any, as of the date of the sale of the
policy;

plus

(2) the portion of any premiums on the policy paid before the date of the sale of the
policy that cover a period after the date of sale;

minus

(3) any existing indebtedness against the policy as of the date of the sale of the
policy.

(c) The Interest Holder may exercise the option by delivering to the Company a notice
stating that the option is exercised.

(d) If the option is exercised within 30 days after the date on which the event triggering the
option occurred:

(1) the sale of the policy will occur at a time and date fixed by the Company and the
buyer within 30 days after the delivery of the notice stating that the option is
exercised;

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(2) the buyer will sign and deliver to the Company a certified check in the amount of
the price of the policy on the date that the sale occurs;

(3) the Company will sign and deliver to the buyer all documents necessary or
appropriate to transfer ownership of the policy to the buyer on the date that the
sale occurs; and

(4) the Company and the buyer will sign and deliver all other documents and take or
cause to be taken all other acts that they deem necessary or appropriate to effect
and carry out the sale of the policy.

(e) If the option is not exercised within 30 days after the date on which the event triggering
the option occurred, the Company will continue to own the policy, free from any
restriction set forth in this Agreement.

SECTION 25 COMPANY TRANSACTION

25.1 Notice. If Company obtains actual knowledge that the Company or Parent agrees to enter
into a Company Transaction, the Company must give a notice to the Interest Holders.

25.2 Parent’s Option to Buy.

(a) For 10 days after the delivery of the notice specified in Section 25.1, Parent will have
the option to buy all of the Units – but not less than all of the Units – owned by the
Interest Holders, at the price determined in accordance with Section 25.9 and on the
terms and conditions set forth in Section 25.10.

(b) Parent may exercise the option by delivering to the Interest Holders a notice stating that
the option is exercised and specifying the number of Units for which the option is
exercised.

25.3 Interest Holders’ Obligation to Sell. If Parent exercises the option under Section 25.2
within the 10-day period after the delivery of the notice specified in Section 25.1 expires,
concurrent with or immediately prior to the Company Transaction:

(a) Parent will buy from the Interest Holder, and the Interest Holder will sell to Parent, all
of the Units – but not less than all of the Units – owned by the Interest Holders, subject
to the terms and conditions of this Agreement; and

(b) the sale will occur in accordance with Section 25.11.

25.4 Interest Holders’ Option to Sell.

(a) If the option under Section 25.2 is not exercised within the 10-day period after the
delivery of the notice specified in Section 25.1, then subject to Section 8.4(i)(2), each
Interest Holder will have the option to sell up to 70% of the Units – but no more than
70% of the Units – owned by the Interest Holder, at the price determined in accordance
with Section 25.9 and on the terms and conditions set forth in Section 25.10.

(b) The Member may exercise the option by delivering to the Company and the other
Interest Holders a notice stating that the option is exercised.

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25.5 Parent’s Obligation to Buy. If an Interest Holder exercises the option under Section 25.4,
within the 10-day period after date Parent’s option under Section 25.2 expires, concurrent
with or immediately prior to the Company Transaction:

(a) the Interest Holders will sell the number of Units for which the option was exercised by
the Interest Holders to Parent, subject to the terms and conditions of this Agreement;
and

(b) the sale will occur in accordance with Section 25.11.

25.6 Forfeiture of Restricted Incentive Units. Except as may be otherwise provided in the
applicable vesting schedule or as may be determined by a Majority of Managers, if the option
under Section 25.2 is exercised with respect to an Interest Holder holding Restrictive
Incentive Units, then without further action on behalf of the Company or such Interest Holder
all of such Interest Holder’s Restricted Incentive Units will be forfeited.

25.7 Expenses. Each Interest Holder will bear the Interest Holder’s own fees, costs, and expenses
incurred in connection with the Company Transaction.

25.8 Continued Ownership. If the option under Section 25.4 is not exercised by the Interest
Holders within the 10-day period after Parent’s option under Section 25.2 expires, no sale
will occur and the Interest Holder will continue to own and control all of the Interest Holders
Units subject to the terms and conditions of this Agreement.

25.9 Price. If the price of any Units is to be determined in accordance with this Section 25.9, the
price will be determined as follows:

(a) the value of the assets of the Company, including goodwill, will be deemed to be an
amount equal to:

(1) the Company’s earned EBITDA for the trailing twelve months from the date the
option under Section 25.2 or Section 25.4, as applicable, is exercised;

multiplied by

(2) the WTC Company Transaction Multiple;

(b) the Company, after consulting with its accountant and legal counsel, will determine the
amount that the seller would have received if, on the last day of the calendar month in
which the event giving rise to the sale occurred:

(1) the liabilities of the Company had been satisfied following the sale of the assets
of the Company for the value determined under Section 25.9(a);

(2) the Capital Accounts of the Interest Holders had been adjusted to reflect the
Profits or Losses that would have been allocated to the Interest Holders after
satisfying such liabilities and selling such assets; and

(3) the value of the net assets had been distributed to the Interest Holders in
accordance with Section 13.2(c); and

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(c) the price of the Units will be the amount that the seller would have received under
Section 25.9(b)(3).

25.10 Payment Terms. If the terms and conditions of a sale of any Units are to be determined in
accordance with this Section 25.10, the entire price of the Units will be paid on the date that
the sale occurs in immediately available funds.

25.11 Sale.

(a) If the sale of any Units is to occur in accordance with this Section 25.11, the sale will
occur contemporaneously or immediately prior to the closing of the Company
Transaction.

(b) The sale will take place at the Company’s principal office, or at a place fixed by the
seller and the buyers.

(c) Parent will sign and deliver to each seller:

(1) a certified check in the amount of the portion of the price of the Units that will be
paid on the date that the sale occurs; and

(2) a purchase agreement that contains a representation and warranty by Parent that
Parent can lawfully buy the Units under the Act, and such other terms and
conditions that are customarily included in a purchase agreement, in form and
substance reasonably satisfactory to Parent and the seller.

(d) Each seller will deliver to Parent assignments indorsed to Parent, in form and substance
reasonably satisfactory to Parent.

(e) Each seller will sign and deliver to Parent:

(1) a purchase agreement that contains:

(A) representations and warranties by the seller that the seller is the sole owner
of the Units and that the Units are free from any encumbrance, including
but not limited to any security interest or lien;

(B) investment representations and warranties by the seller to ensure

compliance with all applicable securities laws, in form and substance
reasonably satisfactory to Parent; and

(C) such other terms and conditions that are customarily included in a purchase
agreement, in form and substance reasonably satisfactory to Parent and the
seller.

(f) The sellers and Parent will sign and deliver all other documents and take or cause to be
taken all other acts that they deem necessary or appropriate to effect and carry out the
sale of the Units.

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SECTION 26 RESTRICTIVE COVENANTS

26.1 Noncompetition. During their respective Restricted Period, Restricted Party will not directly
or indirectly advise, invest in, own, manage, operate, control, be employed by, provide
services to, lend money to, guarantee any obligation of, lend his or her name to, or otherwise
assist any person engaged in or planning to be engaged in any business whose products,
services, or activities compete or will compete in whole or in part with the Company’s
products, services, or activities in the United States.

26.2 Employees. During a Restricted Party’s Restricted Period, the Restricted Party will not:

(a) for the Interest Holder or on behalf of any person, hire as an employee or engage as an
independent contractor any person who was an employee of the Company at any time
during the Restricted Party’s Restricted Period;

(b) solicit any employee of the Company, directly or indirectly, to become an employee or
independent contractor of the Restricted Party or any other person; or

(c) suggest to an employee of the Company, directly or indirectly, that the employee
should reduce or terminate the employee’s relationship with the Company.

26.3 Business Relationships. During a Restricted Party’s Restricted Period, the Restricted Party
will not:

(a) suggest to a customer or vendor of the Company, directly or indirectly, that the
customer or vendor should reduce or terminate the customer’s or vendor’s business or
relationship with the Company; or

(b) take any action, directly or indirectly, which interferes with, impedes or jeopardizes any
business relationships between the Company and any other business or entity with
whom the Company conducts or is actively planning to conduct business.

26.4 Reasonableness. Each Restricted Party acknowledges and agrees that each restriction in this
Section 26 is reasonable in scope and that such restrictions afford a fair protection to the
interests of the Company and the Interest Holders.

26.5 Enforceability. The parties intend that each restriction in this Section 26 be enforceable to
the fullest extent permitted by law. If any such restriction is determined to be unenforceable
to any extent, the restriction will automatically be amended to the extent necessary to make it
enforceable.

26.6 Breach. If a Restricted Party breaches a restriction in this Section 26, the Restricted Party’s
Restricted Period for all restrictions in this Section 26 will be extended by the duration of the
breach.

26.7 No Employment Relationship. The restrictions in Section 26.1 are made in the context of
an interest holder relationship and are not made in the context of an employment relationship
or contract.

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SECTION 27 NONDISCLOSURE

27.1 Use Restrictions and Nondisclosure Obligations. Each Interest Holder covenants to the
Company that:

(a) the Interest Holder will not use Confidential Information for any purpose without the
Company’s specific prior written authorization, except the Interest Holder may use
Confidential Information to promote and effect the purposes of the Company; and

(b) the Interest Holder will not disclose Confidential Information to any person without the
Company’s specific prior written authorization, except the Interest Holder may disclose
Confidential Information:

(1) if the Interest Holder is a Manager or employee, to the extent the Manager or
employee deems reasonably necessary to perform the Manager’s or employee’s
duties and obligations as a Manager or employee;

(2) on a need-to-know basis, to Representatives of the Company or the Interest

Holder who are informed by the Interest Holder of the confidential nature of the
Confidential Information and the obligations of the Interest Holder under this
Section 27; or

(3) in accordance with a judicial or other governmental order, but only if the Interest
Holder promptly notifies the Company of the order and complies with any
applicable protective or similar order.

27.2 Notification and Assistance Obligations. The Interest Holder will:

(a) promptly notify the Company of any unauthorized use or disclosure of Confidential
Information, or any other breach of this Section 27; and

(b) assist the Company to retrieve any Confidential Information that was used or disclosed
by the Interest Holder or the Interest Holder’s Representatives without the Company’s
specific prior written authorization and to mitigate the harm caused by the unauthorized
use or disclosure.

27.3 Exceptions. An Interest Holder will not breach Section 27.1 or Section 27.2 by using or
disclosing Confidential Information if the Interest Holder demonstrates that the information
used or disclosed:

(a) is generally available to the public other than as a result of a disclosure by the Interest
Holder or a Representative of the Interest Holder; or

(b) was received by the Interest Holder from another person without any limitations on use
or disclosure, but only if the Interest Holder had no reason to believe that the other
person was prohibited from using or disclosing the information by a contractual or
fiduciary obligation.

27.4 Return of Confidential Information. Upon the Company’s request, each Interest Holder
will promptly return to the Company all materials containing Confidential Information,

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together with all copies and summaries of Confidential Information in the possession or under
the control of the Interest Holder.

SECTION 28 SPOUSAL CONSENT

Contemporaneously with the signing and delivery of this Agreement, each party who has a spouse
who is not also a party to this Agreement will deliver to the Company a Spousal Consent in the form
attached as Exhibit B signed by the party’s spouse. If a party marries an individual who is not a party
to this Agreement after the date of this Agreement, the party will promptly deliver to the Company
the Spousal Consent signed by the party’s spouse.

SECTION 29 TERMINATION

29.1 Agreement. This Agreement will terminate with respect to all parties upon the earliest to
occur of the following:

(a) upon the written agreement of the parties;

(b) upon the merger of the Company with another business entity, if the Company is not
the surviving business entity; and

(c) upon the conversion of the Company into another business entity.

29.2 Interest Holder.

(a) This Agreement will terminate with respect to an Interest Holder if the Interest Holder
sells, exchanges, gifts, or otherwise liquidates all of the Interest Holder’s Units in
accordance with this Agreement, other than by operation of law as a result of the
Interest Holder’s death, incompetency, or Bankruptcy.

(b) Each Interest Holder will sign a Joinder Agreement in the form attached as Exhibit A if
the Interest Holder sells all of the Interest Holder’s Units in accordance with this
Agreement, is granted a security interest in some or all of such Units, and subsequently
forecloses the security interest and reacquires some or all of such Units.

29.3 Effect of Termination. The termination of this Agreement, regardless of how it occurs, will
not relieve a party of obligations that have accrued before the termination. All provisions of
this Agreement that would reasonably be expected to survive the termination of this
Agreement will do so.

SECTION 30 EQUITABLE RELIEF

The parties acknowledge that the remedies available at law for any breach of this Agreement may, by
their nature, be inadequate. Accordingly, and in addition to any other remedies available to the
parties at law or in equity, each party may obtain injunctive relief or other equitable relief to restrain a
breach or threatened breach of this Agreement or to specifically enforce this Agreement, without
proving that any monetary damages have been sustained.

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SECTION 31 GENERAL

31.1 No Assignment. No party may assign or delegate any of the party’s rights or obligations
under this Agreement to any person unless the assignment or delegation is expressly
permitted by this Agreement.

31.2 Binding Effect. This Agreement will be binding on the parties and their respective heirs,
personal representatives, successors, and permitted assigns, and will inure to their benefit.

31.3 Notices. All notices or other communications required or permitted by this Agreement must
be in writing, must be delivered to the parties at the addresses set forth on Schedule 2.1, or
any other address that a party may designate by notice to the other parties, and are considered
delivered: (a) upon actual receipt if delivered personally, by fax, or by a nationally
recognized overnight delivery service; or (b) at the end of the third business day after the date
of deposit, if deposited in the United States mail, postage pre-paid, certified, return receipt
requested.

31.4 Waiver. No waiver will be binding on a party unless it is in writing and signed by the party
making the waiver. A party’s waiver of a breach of a provision of this Agreement will not be
a waiver of any other provision or a waiver of a subsequent breach of the same provision.

31.5 Severability. If a provision of this Agreement is determined to be unenforceable in any

respect, the enforceability of the provision in any other respect and of the remaining
provisions of this Agreement will not be impaired.

31.6 Further Assurances. The parties will sign other documents and take other actions
reasonably necessary to further effect and evidence this Agreement.

31.7 No Third-Party Beneficiaries. Except for third parties entitled to indemnity under an
indemnification provision in this Agreement, the parties do not intend to confer any right or
remedy on any third party.

31.8 Attachments. Any exhibits, schedules, and other attachments referenced in this Agreement
are part of this Agreement.

31.9 Remedies. The parties will have all remedies available to them at law or in equity. All
available remedies are cumulative and may be exercised singularly or concurrently.

31.10 Governing Law. This Agreement is governed by the laws of the State of Oregon, without
giving effect to any conflict-of-law principle that would result in the laws of any other
jurisdiction governing this Agreement.

31.11 Arbitration.

(a) Except as otherwise provided in Section 31.11(h), any dispute, controversy, or claim
arising out of the subject matter of this Agreement will be settled by arbitration in
Portland, Oregon.

(b) Before a party can commence an arbirtration proceeding, such party must first offer to
participate in a mediation of the matter with the other party. If the parties are unable to
agree on a mediator or are otherwise unable to resolve the dispute with the 30-day

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period following the initial offer to participate in a mediation of the matter, then either
party may commence an arbitration proceeding under the terms and conditons set forth
in this Section 31.11. For the avoidance of doubt, nothing in this Section 31.11(b)
restricts or limits a party from seeking from a court an order to compel arbitration, or
any other interim relief or provisional remedies pending the resolution of any dispute,
controversy, or claim.

(c) If the amount of the dispute, controversy, or claim is $250,000 or less, and if neither
party is seeking injunctive or other equitable relief:

(1) the dispute, controversy, or claim will be settled before a single arbitrator;

(2) if the parties agree on an arbitrator, the arbitration will be held before the
arbitrator selected by the parties; and

(3) if the parties do not agree on an arbitrator, each party will designate an arbitrator
and the arbitration will be held before a third arbitrator selected by the designated
arbitrators.

(d) If the amount of the dispute, controversy, or claim exceeds $250,000, or if a party is
seeking injunctive or other equitable relief:

(1) the dispute, controversy, or claim will be settled before three arbitrators;

(2) if the parties agree on the arbitrators, the arbitration will be held before the
arbitrators selected by the parties; and

(3) if the parties do not agree on the arbitrators:

(A) each party will designate an arbitrator;

(B) the designated arbitrators will select a third arbitrator; and

(C) the arbitration will be held before the three arbitrators.

(e) Each arbitrator will be an attorney knowledgeable in the area of business law.

(f) The arbitration will be initiated by filing a claim with Arbitration Service of Portland,
and will be conducted in accordance with the then-current rules of Arbitration Service
of Portland.

(g) The resolution of any dispute, controversy, or claim as determined by a majority of the
arbitrators will be binding on the parties. Judgment on the award of the arbitrator may
be entered by any party in any court having jurisdiction.

(h) A party may seek from a court an order to compel arbitration, or any other interim
relief or provisional remedies pending the arbitrators’ resolution of any dispute,
controversy, or claim. Any such action, suit, or proceeding – or any action, suit, or
proceeding to confirm, vacate, modify, or correct the award of the arbitrators – will be
litigated in courts located in Multnomah County, Oregon.

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(i) For the purposes set forth in Section 31.11(h), each party consents and submits to the
jurisdiction of any local, state, or federal court located in Multnomah County, Oregon.

31.12 Attorney’s Fees. If any arbitration, action, suit, or proceeding is instituted to interpret,
enforce, or rescind this Agreement, or otherwise in connection with the subject matter of this
Agreement, including but not limited to any proceeding brought under the United States
Bankruptcy Code, the prevailing party on a claim will be entitled to recover with respect to
the claim, in addition to any other relief awarded, the prevailing party’s reasonable attorney's
fees and other fees, costs, and expenses of every kind, including but not limited to the costs
and disbursements specified in ORCP 68 A(2), incurred in connection with the arbitration,
action, suit, or proceeding, any appeal or petition for review, the collection of any award, or
the enforcement of any order, as determined by the arbitrator or court.

31.13 Entire Agreement. Except for the Articles of Organization, this Agreement contains the
entire understanding of the parties regarding the subject matter of this Agreement and
supersedes all prior and contemporaneous negotiations and agreements, whether written or
oral, between the parties with respect to the subject matter of this Agreement.

31.14 Signatures. This Agreement may be signed in counterparts. A fax or email transmission of
a signature page will be considered an original signature page. At the request of a party, each
other party will confirm a fax or email transmitted signature page by delivering an original
signature page to the requesting party.

[signature pages to follow]

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Dated effective as of the date set forth in the preamble.

Company:

Rocky Mountain Pathways, LLC

By: Wilderness Training & Consulting, LLC

Its: Manager

~~
By: Tim Dupell
Its: CEO

Interest Holders:

Wilderness Training & Consulting, LLC

By: Tim Dupell

Its: CEO

Ken Huey

42 -OPERA TING AGREEMENT (Rocky Mountain Pathways, LLC) Exhibit 1

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Dated effective as of the date set forth in the preamble.

Compa ny:

Rocky Mountain Pathways, LLC

By : Wilderness Training & Consu lting, LLC

Its: Manage r

By: Tim Dupell

Its: CEO

Interest Holders:

Wilderness Training & Consulting, LLC

By: Tim Dupell

Its: CEO

42 - OPERA TING AG R EE M ENT ( Rocky Mounta in Pathway

s , LLC)

Exhibit 1
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APPENDIX A

Definitions

“Act” means the Oregon Limited Liability Company Act, as amended from time to time.

“Affiliate” means, with respect to the Company or Parent, any other person directly or indirectly
controlling, controlled by or under direct or indirect common control with the entity. For purposes of
this definition, “controlling,” “is controlled by” or “is under common control with” will mean the
direct or indirect power to direct or cause the direction of the management and policies of the
Company or Parent, whether through the ownership of voting securities, by contract, or otherwise.

“Articles of Organization” means the Articles of Organization of the Company filed with the
Oregon Secretary of State on October 25, 2016, as amended or restated from time to time, and
including articles of conversion and articles of merger filed after the date of this Agreement.

“Assignee” means a person with an ownership interest in the Company who is not a Member and who
does not have any of the rights and obligations of a Member specified in the Act, the Articles of
Organization, or this Agreement, except the right to receive and retain Distributions, as and when
made, and allocations of Profits and Losses.

“Award Agreements” has the meaning set forth in Section 8.4(a).

“Bankruptcy” means, with respect to a person: (a) assignment by the person for the benefit of
creditors; (b) commencement of a voluntary bankruptcy case by the person; (c) adjudication of the
person as bankrupt or insolvent; (d) filing by the person of a petition or answer seeking for the person
any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief
under any statute, law, or rule; (e) filing by the person of an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the person in any proceeding of
this nature; (f) seeking, consenting to, or acquiescing in the appointment of a trustee, receiver, or
liquidator of the person or of all or any substantial part of the person’s properties; (g) commencement
of an involuntary bankruptcy case against the person that has not been dismissed on or before the
120th day after the commencement of the case; or (h) appointment, without the person’s consent, of a
trustee, receiver, or liquidator either of the person or of all or any substantial part of the person’s
properties that is not: (1) vacated or stayed on or before the 90th day after appointment; or (2) vacated
on or before the 90th day after expiration of a stay.

“BBA Rules” means the partnership audit rules contained in the Bipartisan Budget Act of 2015 and
enacted as Sections 6221 through 6241 of the IRC.

“Book Value” has the meaning set forth in Section 21.3(a).

“Call Option Triggering Event” means any event specified in Section 20.1.

“Call Option Units” means: (a) in the case of a Call Option Triggering Event under
Section 20.1(b)(1), the Units owned by the Interest Holder to whom the Call Option Triggering Event
occurred that are not Transferred to the Key Individual of the Interest Holder as a result of the
Dissolution of the Interest Holder; (b) in the case of a Call Option Triggering Event under
Section 20.1(c)(1), the Units owned by the Interest Holder to whom the Call Option Triggering Event
occurred that are not Transferred to the Key Individual of the Interest Holder as a result of the

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termination of the Interest Holder; (c) in the case of a Call Option Triggering Event under
Section 20.1(g), the Units owned by the Interest Holder to whom the Call Option Triggering Event
occurred that are Transferred pursuant to the judgment for the annulment or dissolution of the Interest
Holder’s marriage; and (d) in the case of any other Call Option Triggering Event, all of the Units
owned by the Interest Holder to whom the Call Option Triggering Event occurred.

“Capital Account” means a capital account of an Interest Holder determined and maintained in
accordance with Section 7.

“Company Transaction” means, with respect to the Company or Parent, a transaction involving: (a)
consummation of any merger or consolidation of the entity with or into any other company or other
entity that is not a Related Party Transaction; (b) consummation of any sale, lease exchange, or other
transfer in one transaction or a series of related transactions undertaken with a common purpose of
transferring all or substantially all of the entity’s assets that is not a Related Party Transaction; or (c) a
consummation of a sale in one or a series of related transactions with a common purpose of selling
50% or more of the entity’s outstanding voting securities that is not a Related Party Transaction.

“Confidential Information” means all information related to the Company that is received or
accessed by an Interest Holder, including but not limited to business models, customer and supplier
lists, marketing plans, financial information, books and records, trade secrets, know-how, ideas,
techniques, programs, systems, and processes.

“Contribution Percentage” means the Interest Holder’s Contribution Percentage set forth on
Schedule 2.1 as adjusted from time to time pursuant to Section 6.4.

“Control” means: (a) with respect to an entity, owning more than 50% of the shares or other
ownership interests of the entity; and (b) with respect to a trust, having the right to designate all of the
trustees of the trust.

“Corporate Costs” means any and all costs and expenses incurred by Parent in connection with
providing management services to Parent’s subsidiaries, including the Company, including but not
limited to accounting, insurance, travel, legal fees, and similar administrative costs and expenses.

“Dissolution” means, with respect to an entity: (a) the judicial dissolution of the entity; (b) the
administrative dissolution of the entity, but only after the applicable statutory period for
reinstatement, if any, expires; or (c) any other dissolution of the entity, but only after the applicable
statutory period for revocation of dissolution, if any, expires.

“Distributable Cash” has the meaning set forth in Section 11.2(a).

“Distribution” and all variations including “Distributable” and “Distributed” means: (a) for
purposes of Section 4.11(b)(3), Section 7, and Section 12.2, a direct or indirect transfer of money or
other property other than Units, or an incurrence of indebtedness by the Company, to or for the
benefit of the Interest Holders in respect of an Interest Holder’s Units, including but not limited to a
purchase, redemption, or other acquisition of Units; and (b) for all other purposes, a direct or indirect
transfer of money or other property other than Units, or an incurrence of indebtedness by the
Company, to or for the benefit of the Interest Holders in respect of an Interest Holder’s Units, but not
including a purchase, redemption, or other acquisition of Units.

“EBITDA” will mean the net income of the Company (excluding any extraordinary gains) plus, (a)
income taxes paid, (b) depreciation expense, (c) amortization expense, and (d) interest expense.

2 – APPENDIX A: DEFINITIONS Exhibit 1

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 Case 3:21-cv-00121-SI Document 1-1 Filed 01/26/21 Page 46 of 54

“For Cause” will have the meaning ascribed to such term in any then-current employment agreement
between the Company and the Interest Holder or Key Individual of the Interest Holder, or if no such
employment agreement exists will mean if any of the following has occurred: (a) the Interest Holder
or Key Individual of the Interest Holder engages in dishonesty, fraud, or theft; (b) the Interest Holder
or Key Individual of the Interest Holder willfully and repeatedly fails to carry out a reasonable
direction of the Managers of the Company; or (c) the Interest Holder or Key Individual of the Interest
Holder engages in conduct in clear violation of material policies of the Company, provided that the
Company has given the Interest Holder or Key Individual of the Interest Holder written notice
specifying the violation and the Interest Holder or Key Individual of the Interest Holder fails to cure
the violation within 30 days thereafter.

“Incentive Liquidation Value” means, as of the date of determination and with respect to the
relevant new Incentive Units to be issued, the aggregate amount that would be Distributed to the
Interest Holders pursuant to Section 13.2, if, immediately prior to the issuance of the relevant new
Incentive Units, the Company sold all of its assets for fair market value and immediately liquidated,
the Company’s debts and liabilities were satisfied and the proceeds of the liquidation were
Distributed pursuant to Section 13.2.

“Incentive Plan” has the meaning set forth in Section 8.4(a).

“Incentive Units” means the Units having the privileges, preference, duties, liabilities, obligations
and rights specified with respect to “Incentive Units” in this Agreement and includes both Restricted
Incentive Units and Unrestricted Incentive Units.

“Interest Holder” means a person who is a Member or an Assignee.

“IRC” means the Internal Revenue Code of 1986, as amended.

“Key Individual” means any individual identified as “Key Individual” under this Agreement as a
condition to a transfer pursuant to Section 17.1.

“Majority of Managers” means: (a) the Manager, if the Company has one Manager; or (b) a
majority of the Managers, if the Company has more than one Manager.

“Majority of Units” means Members whose Units exceed 50% of the Units of all Members.

“Manager” means a person, who need not be a Member, designated by the Members to manage the
Company’s business and affairs.

“Member” means a person with an ownership interest in the Company and all of the rights and
obligations of a member specified in the Act, the Articles of Organization, and this Agreement.

“Other Member” means, with respect to a particular Call Option Triggering Event, a Member other
than the Member to whom the Call Option Triggering Event occurred.

“Ownership Percentage” means each Interest Holder’s overall interest in the Company expressed as
a percentage based upon the sum of such Interest Holder’s Units divided by the aggregate number of
Units issued to all Interest Holders. At all times the collective Ownership Percentages of all Interest
Holders will equal one hundred percent (100%) and will be listed on Schedule 2.1 under the column
entitled “Ownership Percentage”.

3 – APPENDIX A: DEFINITIONS Exhibit 1

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 Case 3:21-cv-00121-SI Document 1-1 Filed 01/26/21 Page 47 of 54

“Parent” means Wilderness Training & Consulting, LLC, an Oregon limited liability company, or its
successors.

“Profit” and “Loss” means for each taxable year of the Company – or other period for which profits
and losses must be computed – the Company’s taxable income or loss determined in accordance with
IRC § 703(a), with the following adjustments: (a) all items of income, gain, loss, deduction, or credit
required to be stated separately under IRC § 703(a)(1) will be included; (b) any tax-exempt income of
the Company not otherwise taken into account in this definition will be included; (c) any expenditures
of the Company under IRC § 705(a)(2)(B) – or treated as such under Treas Reg § 1.704-1(b)(2)(iv)(i)
– not otherwise taken into account in this definition will be excluded; (d) gain or loss resulting from
any taxable disposition of property will be computed by reference to the adjusted book value of the
property disposed of, notwithstanding the fact that the adjusted book value of the property differs
from the adjusted basis of the property for federal income tax purposes; (e) in lieu of the depreciation,
amortization, or cost recovery deductions allowable in computing taxable income or loss, there will
be taken into account the depreciation or amortization computed for book purposes; and (f) any items
which are allocated under Schedule 9.1 will not be taken into account.

“Profits Interests” has the meaning set forth in Section 8.4(g).

“Related Party Transaction” means, with respect to the Company or Parent, a transaction involving:
(a) a merger or consolidation of the entity in which the holders of the outstanding voting securities of
the entity immediately prior to the merger or consolidation hold at least a majority of the outstanding
voting securities of the successor entity immediately after the merger or consolidation; (b) a sale,
lease, exchange or other transfer in one transaction or a series of related transactions undertaken with
a common purposes of transferring all or substantially all of the entity’s assets to an Affiliate; (c) a
sale in one or a series of related transactions with a common purpose of selling 50% or more of the
entity’s outstanding voting securities to an Affiliate; or (d) a transaction undertaken for the principal
purpose of restructuring the capital of the entity, including, but not limited to, reincorporating the
entity in a different jurisdiction, converting the entity to a different type of entity or creating a holding
company.

“Representatives” means directors, officers, managers, members, employees, independent

contractors, agents, consultants, advisors, and other representatives.

“Restricted Party” means Ken Huey, together with any future holder of Incentive Units.

“Restricted Period” means, with respect to a Restricted Party, the period beginning on the date of
this Agreement and ending upon the earliest to occur of the following: (a) two years after this
Agreement terminates with respect to the Restricted Party; (b) the dissolution of the Company; and
(c) the termination of this Agreement under Section 29.1.

“Restricted Incentive Units” has the meaning set forth in Section 8.4(d)(1).

“Service Providers” has the meaning set forth in Section 8.4(a).

“Super Majority of Units” means Members whose Units exceed 67% of the Units of all Members.

“Transfer” means any transfer, including but not limited to any sale, exchange, gift, encumbrance,
foreclosure of an encumbrance, or seizure to secure a judgment, regardless of whether the transfer
occurs voluntarily or involuntarily, by operation of law, or because of any act or occurrence.

4 – APPENDIX A: DEFINITIONS Exhibit 1

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 Case 3:21-cv-00121-SI Document 1-1 Filed 01/26/21 Page 48 of 54

“Units” means units that evidence an ownership interest in the Company.

“Unit Equivalents” means any security or obligation that is by its terms, directly or indirectly,
convertible into, exchangeable or exercisable for Units, and any option, warrant or other right to
subscribe for, purchase or acquire Units.

“Unrestricted Incentive Units” has the meaning set forth in Section 8.4(d)(2).

“WTC Company Transaction Multiple” means the multiple determined by:

(a) the enterprise value of Parent used in (or implied by) the Company Transaction;

divided by

(b) the sum of Parent’s EBITDA and Corporate Costs for the 12 months prior to the Company
Transaction.

5 – APPENDIX A: DEFINITIONS Exhibit 1

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 Case 3:21-cv-00121-SI Document 1-1 Filed 01/26/21 Page 49 of 54

SCHEDULE 2.1
Company Information as of August 1, 2017
Purposes and Powers:
The Company may own, manage, and operate an adolescent substance abuse facility and do all things incidental to that
purpose.

Interest Holders:
Incentive Key Ownership Contribution Initial Capital
Interest Holder Status Units Units Individual Percentage Percentage Contribution Account
Wilderness Member 6,000 N/A N/A 60.0% 100% $211,765 $211,765
Training &
Consulting, LLC
Ken Huey Member 1,500 Yes N/A 15.0% 0% $0.00 $0.00
2,500 No $88,235 $88,235
Addresses:
Company: Sole Manager:

Rocky Mountain Pathways, LLC Wilderness Training & Consulting, LLC

Attn: Tim Dupell 530 Center St NE, Suite 700
530 Center St NE, Suite 700 Salem, OR 97301
Salem, OR 97301 Attn: Tim Dupell

Interest Holders:

Wilderness Training & Consulting, LLC Dr. Ken Huey

Attn: Tim Dupell 1405 Clover Creek Dr
530 Center St NE, Suite 700 Longmont, CO 80503
Salem, OR 97301

Tax Matters Member: Wilderness Training & Consulting, LLC

1 – SCHEDULE 2.1: COMPANY INFORMATION Exhibit 1

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 Case 3:21-cv-00121-SI Document 1-1 Filed 01/26/21 Page 50 of 54

SCHEDULE 9.1

Allocation of Profits and Losses

SECTION 1 DEFINITIONS

“Adjusted Capital Account Deficit” means, with respect to an Interest Holder, the deficit balance, if
any, in the Interest Holder’s Capital Account as of the end of any taxable year, after giving effect to
the following adjustments: (a) the Capital Account will be credited with: (1) the amount which the
Interest Holder is obligated by this Agreement to restore to the Interest Holder’s Capital Account, if
any; and (2) the amount which the Interest Holder is deemed obligated to restore under Treas Reg
§ 1.704-2(g)(1) and Treas Reg § 1.704-2(i)(5); and (b) the Capital Account will be debited with the
amounts described in Treas Reg § 1.704-1(b)(2)(ii)(d)(4), Treas Reg § 1.704-1(b)(2)(ii)(d)(5), and
Treas Reg § 1.704-1(b)(2)(ii)(d)(6).

“Company Minimum Gain” has the meaning ascribed to “partnership minimum gain” in
Treas Reg § 1.704-2(b)(2).

“Excess Nonrecourse Liability” has the meaning ascribed to it in Treas Reg § 1.752-3(a)(3).

“Member Nonrecourse Debt Minimum Gain” has the meaning ascribed to “partner nonrecourse
debt minimum gain” in Treas Reg § 1.704-2(i)(2).

“Member Nonrecourse Deductions” has the meaning ascribed to “partner nonrecourse deductions”
in Treas Reg § 1.704-2(i)(1).

“Nonrecourse Deductions” has the meaning ascribed to it in Treas Reg § 1.704-2(b)(1).

“Nonrecourse Liability” has the meaning ascribed to it in Treas Reg § 1.704-2(b)(3).

SECTION 2 ALLOCATION OF PROFITS AND LOSSES

2.1 Limitation on Allocation of Losses.

(a) No Interest Holder will be allocated Losses if the allocation will cause the Interest
Holder to have an Adjusted Capital Account Deficit.

(b) Losses that are not allocated to an Interest Holder as a consequence of Section 2.1(a) of
this Schedule 9.1 will be allocated among the other Interest Holders in proportion to
their positive Capital Account balances, subject to Section 2.1(a) of this Schedule 9.1.

2.2 Allocation of Profits to Offset Unrecovered Losses.

(a) Before Profits are allocated among the Interests Holders under Section 9.1, Profits will
be allocated among those Interest Holders who have been allocated Losses under
Section 2.1(b) of this Schedule 9.1 that have not been fully offset by allocations of
Profits under this Section 2.2.

1 – SCHEDULE 9.1: ALLOCATION OF PROFITS AND LOSSES Exhibit 1

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 Case 3:21-cv-00121-SI Document 1-1 Filed 01/26/21 Page 51 of 54

(b) An Interest Holder will be allocated Profits under this Section 2.2 only to the extent
necessary to fully offset Losses that have been allocated to the Interest Holder under
Section 2.1(b) of this Schedule 9.1.

(c) Profits allocated under this Section 2.2 will be allocated among the appropriate Interest
Holders in proportion to their Losses that have not been fully offset by allocations of
Profits under this Section 2.2, subject to Section 2.2(b) of this Schedule 9.1.

SECTION 3 QUALIFIED INCOME OFFSET

An Interest Holder who unexpectedly receives an adjustment, allocation, or Distribution described in

Treas Reg § 1.704-1(b)(2)(ii)(d)(4), Treas Reg § 1.704-1(b)(2)(ii)(d)(5), or Treas Reg § 1.704-
1(b)(2)(ii)(d)(6) which causes or increases an Adjusted Capital Account Deficit for the Interest
Holder as of the end of the taxable year to which the allocation relates will be allocated items of
income and gain – consisting of a pro rata portion of each item of Company income, including gross
income, and gain for such year – in an amount and manner sufficient to eliminate the Adjusted
Capital Account Deficit as quickly as possible.

SECTION 4 ALLOCATIONS ATTRIBUTABLE TO NONRECOURSE LIABILITIES

4.1 Nonrecourse Deductions. Nonrecourse Deductions will be allocated among the Interest
Holders in proportion to their positive Capital Account balances.

4.2 Minimum Gain Chargeback Requirement. Except as otherwise provided in Treas

Reg § 1.704-2(f), if there is a net decrease in Company Minimum Gain for a Company
taxable year, each Interest Holder will be allocated items of Company income and gain for
that year equal to that Interest Holder’s share of the net decrease in Company Minimum Gain
– within the meaning of Treas Reg § 1.704-2(g)(2).

4.3 Member Nonrecourse Deductions. Member Nonrecourse Deductions will be allocated to

the Interest Holder that bears the economic risk of loss for the liability in accordance with
Treas Reg § 1.704-2(i).

4.4 Chargeback of Member Nonrecourse Debt Minimum Gain. Except as otherwise

provided in Treas Reg § 1.704-2(i)(4), if during a Company taxable year there is a net
decrease in Member Nonrecourse Debt Minimum Gain, any Interest Holder with a share of
that Member Nonrecourse Debt Minimum Gain – determined under Treas Reg § 1.704-
2(i)(5) – as of the beginning of the year will be allocated items of income and gain for the
year – and, if necessary, for succeeding years – equal to that Interest Holder’s share of the net
decrease in the Member Nonrecourse Debt Minimum Gain. An Interest Holder’s share of the
net decrease in Member Nonrecourse Debt Minimum Gain will be determined in a manner
consistent with the provisions of Treas Reg § 1.704-2(g).

4.5 Excess Nonrecourse Liabilities. For purposes of determining an Interest Holder’s share of
liabilities under IRC § 752, the Company will first allocate an Excess Nonrecourse Liability
to the Interest Holder up to the amount of built-in gain that is allocable to the Interest Holder
on IRC § 704(c) property or property for which reverse IRC § 704(c) allocations are
applicable where such property is subject to the Nonrecourse Liability to the extent that such
built-in gain exceeds the gain described in Treas Reg § 1.752-3(a)(2) with respect to such
property.

2 – SCHEDULE 9.1: ALLOCATION OF PROFITS AND LOSSES Exhibit 1

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 Case 3:21-cv-00121-SI Document 1-1 Filed 01/26/21 Page 52 of 54

SECTION 5 CONTRIBUTED PROPERTY

In accordance with IRC § 704(c), income, gain, loss, and deduction with respect to property
contributed to the Company by an Interest Holder will be allocated among the Interest Holders so as
to take account of the variation between the basis of the property to the Company and its fair market
value at the time of contribution. Such allocations will be made in accordance with the traditional
method under Treas Reg § 1.704-3(b). Allocations made under this Section 5 are solely for tax
purposes and will not affect any Interest Holder’s Capital Account, share of Profits and Losses, or the
right to receive Distributions of the Company’s assets.

SECTION 6 GUARANTEED PAYMENTS

To the extent that any compensation paid to an Interest Holder by the Company is determined by the
Internal Revenue Service not to be a guaranteed payment under IRC § 707(c) or not to be a
transaction between the Interest Holder and the Company under IRC § 707(a), the Interest Holder will
be allocated income in an amount equal to the compensation payment and the Interest Holder’s
Capital Account will be adjusted to treat the compensation payment as a Distribution.

SECTION 7 RECAPTURE

Upon a sale or other disposition of a Company asset, any ordinary income portion of any income or
gain resulting from the recapture of cost recovery or other deductions will be allocated among those
Interest Holders who were previously allocated – or whose predecessors-in-interest were previously
allocated – the cost recovery or other deductions resulting in the recapture items, in proportion to the
amount of the cost recovery or other deductions previously allocated to them.

SECTION 8 WITHHOLDING

All amounts required to be withheld under IRC § 1446 or any other provision of applicable federal,
state, or local tax law will be treated as amounts actually Distributed to the affected Interest Holders.

SECTION 9 OTHER ALLOCATIONS

If this Agreement does not provide for the allocation of any items of Company income, gain, loss,
credit, and deduction among the Interest Holders, the items will be allocated among the Interest
Holders in the same proportions as they share Profits and Losses.

3 – SCHEDULE 9.1: ALLOCATION OF PROFITS AND LOSSES Exhibit 1

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 Case 3:21-cv-00121-SI Document 1-1 Filed 01/26/21 Page 53 of 54

EXHIBIT A

Joinder Agreement

______________________________ (“New Party”) agrees to become a party to and be bound by

the provisions of the Operating Agreement of Rocky Mountain Pathways, LLC, an Oregon limited
liability company (the “Company”), dated ____________________ among the Company and the
Company’s interest holders. New Party makes the representations and warranties set forth in Section
15 of the Operating Agreement as of the date of this Joinder Agreement.

Dated effective: ____________________

[ Member: ] [ Assignee: ]

__________________________________

1 – EXHIBIT A: JOINDER AGREEMENT Exhibit 1

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 Case 3:21-cv-00121-SI Document 1-1 Filed 01/26/21 Page 54 of 54

EXHIBIT B

Spousal Consent

1. Spouse. I, the undersigned, certify to Rocky Mountain Pathways, LLC, an Oregon limited liability
company (the “Company”), and its interest holders that I am the spouse of
______________________________, an interest holder of the Company.

2. Operating Agreement. I have read and understood the Operating Agreement of the Company dated
____________________ among the Company and the Company’s interest holders (the
“Operating Agreement”).

3. Compliance. I agree to comply with the provisions of the Operating Agreement to the extent that I
have or subsequently acquire any interest in my spouse’s units, and agree that any interest that I
have or subsequently acquire in my spouse’s units is subject to the provisions of the Operating
Agreement.

4. Sale, Conversion, and Change of Rights. I understand that under the Operating Agreement: (a) my
spouse may have the option or obligation to sell some or all of my spouse’s units; (b) my
spouse’s units may be converted into units, shares, or other ownership interests of another
business entity, with or without my spouse’s consent; and (c) the rights of my spouse’s units may
be changed, with or without my spouse’s consent.

5. Consent and Waiver. I consent to any sale, conversion, or change of rights of my spouse’s units to
the extent that the sale, conversion, or change of rights is not inconsistent with the Operating
Agreement or applicable law. I waive any right that I may have to challenge any such sale,
conversion, or change of rights.

Dated effective: ____________________

__________________________________
______________________________

1 – EXHIBIT B: SPOUSAL CONSENT Exhibit 1

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 Case 3:21-cv-00121-SI Document 1-2 Filed 01/26/21 Page 1 of 8

ARBITRATION SERVICE OF PORTLAND, INC.

WILDERNESS TRAINING &

CONSULTING, LLC, an Oregon limited ASP Case No. 191112-2
liability company, as member of Rocky
Mountain Pathways, J,LC,
Claimant, PRELIMINARY AWARD

V.

K"ENNETH HUEY, an individual and

ROCKYMOUNTAINPATHWAYS,LLC,
an Oregon limited liability company,
Respondents.

An arbitration hearing in this matter was held on Oct. 7.9, 2020, and extensive evidence was taken.
The parties then submitted their closing arguments in writing to the panel on Oct. 16, 2020.
Pursuant to ASP Rule 31, and after careful consideration of the evidence and applicable law, the
undersigned panel unanimously issues this Preliminary Award in favor of claimant Wilderness
Training & Consulting, LLC (WTC). The panel has fully considered and has rejected all legal
arguments made by the parties that are not expressly addressed in this written decision.

BACKGROUND

This dispute arises out of a joint undertaking of the parties to create Kokua Recovery (Kokua), a
for-profit residential treatment program for adolescents with substance abuse and mental health
issues located in Greeley, Colorado. Following its business model, WTC partnered with
respondent Kenneth Huey (Huey) to be the salaried Executive Director for Kokua and as a 40%
minority member of Rocky Mountain Pathways, LLC (RMP). After he was hired,. Huey spent
approximately two years preparing the program to open. Kokua began admitting students in
October 2018. WTC terminated Huey as Executive Director on July 30, 2019. Several months
later. WTC created a new legal entity of their own called Red Mountain Colorado and essentially
continued the treatment program at the same location, utilizing the Kokua students and the Kokua
staff. From its inception as Kokua and to date as Red Mountain Colorado, the program has not
had a sufficient number of students to make a profit.

On Nov. 11, 2019, WTC initiated this proceeding by filing a Statement Of Claim seeking judicial
dissolution ofRMP pursuant to ORS 63.661, but it has dismissed that claim. This proceeding was
continued based on Huey's Statement Of Claim filed on Jan. 22, 2020, asserting claims for relief
for breach of conrract, breach of fiduciary duty and declaratory relief. Huey has subsequently
withdrawn his claim for declaratory relief. Prior to hearing, the panel allowed Huey's motion to
amend to add allegations supporting a request for punitive damages in connection with his claim
for breach of fiduciary duty.

Exhibit 2
Page 1 of 8
 Case 3:21-cv-00121-SI Document 1-2 Filed 01/26/21 Page 2 of 8

BREACH OF CONTRACT CLAIM

Huey alleges that Iris termination as Executive Director ofKokua was a breach of his contract of
employment with WTC and seeks an award of economic damages. Huey contends that his
employment was protected by a "for cause" requirement and that WTC has not demonstrated
"cause" for his termination. Although Huey does not rely on a provision in an employment
agreement providing such protection, he relies on

a the parties understandings, prior discussions, and conduct,

b. a statement in an employm.e nt job offer that says "Employment will be subject to the
terms outlined in the Operating Agreement, including but not limited to termination
without cause provisions standard for an executive level employee,"
c. Section 18 of the RMP Operating Agreement that provides for cessation of Huey's
membership interest ofRMP if his employment is terminated "For Cause," and
d. Section 20 of the RMP Operating Agreement that provides for a Call Option
Triggering Event if his employment is terminated "For Cause.

The RMP Operating Agreement defines "for cause" as:

"For Cause" will have the meaning ascribed to such term in any then-current
employment agreement between the Company and the Interest Holder or Key Individual
of the Interest Holder, or if no such employment agreement exists will mean if any of the
following has occurred: (a) the Interest Hol<ler or Key Individual of the Interest Holder
engages in dishonesty, fraud, or theft; (b) the Interest Holder or Key Individual of the
Interest Holder willfully and repeatedly fails to carry out a reasonable direction of the
Managers of the Company; or (c) the Interest Holder or Key Individual of the Interest
Holder engages in conduct in clear violation of material policies of the Company,
provided that the Company has given the Interest Holder or Key Individual of the Interest
Holder written notice specifying the violation and the Interest Holder or Key Individual
of the Interest Holder fails to cure the violation within 30 days thereafter.
(Ex. I 16, FHW-0067)

For its part, WTC contends that - although it had many good reasons to terminate Huey - he was
an at-wiJl employee and cause for termination was not required. WTC argues that the above "for
cause" provisions in the Operating Agreement are standard provisions for an equity holder such as
Huey, but the provisions do not apply to him as an employee of WTC.

We do not find it necessary to decide, as a matter of law, whether the "for cause" provisions of the
Operating Agreement apply to Huey as the Executive Director ofKokua. Instead, as we explain
below, we conclude that WTC has demonstrated cause for Huey's termination under the Operating
Agreement if cause is required. In other words. even if Huey is correct that he has "for cause"
protection under these provisions, WTC had sufficient cause to terminate him.

Exhibit 2
Page 2 of 8
 Case 3:21-cv-00121-SI Document 1-2 Filed 01/26/21 Page 3 of 8

Specifically, we conclude that WTC had a sufficient factual basis for terminating Huey for
"engag[ing] in dishonesty" within the meaning of the definition of "For Cause" in the Operating
Agreement. We begin by noting that "dishonesty" is simply defined in th.e Merriam-Webster
online dictionary as "1) lack of honesty or integrity: disposition to defraud or deceive'' and "2) a
dishonest act: fraud".

The panel's conclusions that WTC demonstrated it had a sufficient factual basis to terminate Huey
for engaging in dishonesty is hased on the credible testimony of Jenny Kudna, Briana Severine,
Steve Stradley and Josh White. The panel generally did not find Dr. Huey credible as a witness
regarding the termination issues.

Jenny Kudna's testimony: In February 2019, Ms. Kudna, Senior Vice President for WTC,
personally met with Briana Severine, a clinical director for Kokua, who had resigned from her
employment on Feb. 7, 2019. During the two-hour interview, Severine told Kudna that she had
resigned because of Huey's inappropriate conduct toward her and others at the workplace. Among
other things, this included Huey inquiring about her sexual orientation, using sexually vulgar
language in an interview with a female applicant, using sexually vulgar language in her presence
and threatening to ruin her reputation. Kudna reported this information to Steve Stradley, the CEO
ofWTC.

Briana Severine's testimony: In her videotaped perpetuation testimony, Severine corroborated

Kudna's testimony about the resignation meeting and the information she provided to Kudna.
Severine also testified that she told Kudna that she had complained to Huey about him allowing
men to reside on Kokua grounds after adolescents began residing at the treatment center. This
included Huey's brother, Dave Huey, who appeared to have a drug addiction and who behaved
erratically at times. Severine observed drug paraphernalia in Dave Huey's room some time after
Dave Huey was removed from the premises with police assistan.ce. Kudna did not recall Severine
telling her about the men living on the premises with the youth in residence.

Steven Strad1ey's testimony: On May I, 2019, Stradley received an email from Huey stating as
follows: "Steve - The state got a long complaint from Briana and perhaps Amanda.,They are on
site today investigating. Not much in the way of skeletons to create big problems but is annoying.
Just an FYI. - Ken". Stradley testified that he was "shocked" at how serious Kokua's violations
were compared to Huey's repres€t~tations after the complaint led to an inspection report by the
state. The Report of Inspection by the Colorado Department of Human Services dated July 3,
2019, found the following 11 violations of regulatory standards:

COMPLAINT VIOLATIONS OBSERVED:

1 Obser,od that the Trails/SIU check for staff Keith Troesser v,as not submitted within ~ 0 day:; of
rire.
This is in violation of7.701.32.C
Corrective Action: Corrected at time of visit as staff has been
terminated and is no longer and employee at the facility.

2. Observed that the Trails'SIU check for staff: A Gallegos, Kaylo ·, Rodriguez. Burgner

Exhibit 2
Page 3 of 8
 Case 3:21-cv-00121-SI Document 1-2 Filed 01/26/21 Page 4 of 8

P terson Quamberg, Hansen and K. Gail&gos. •:;ere not S' tbmr within 1 O days of hire.
This is in violation of?.701.32.C

()bserved documentation thal the Grim;i1a1 background checks/Fingerprint cards for the
:flowing employees we1 e not submitted v1ithir: 5 days of them beginning employment:
Kaylor ( date of hire 1/11/19- f- 'ng1,-' prints _. bmitt.
2/28/19) Rodriguez {date of hire 1/10/19 Fingerprints submitted 2/20/19). Peterson (date of
hire 3/7/19- Fingerprints not submitted as of this visit), Quarn::ierg (date of hire 1/10/19-
Fingerprints submitted 3/28/19).
This is in violation of 7.701 .33.D.3

4. Observed no documentation in the youth file to confirm that the youth was seen medically for
treatment of injuries related to self-harm with a steak knife. This is in violation of
7.714.932.C.7

5. Observed no Critical Incident Report that was submitted to the CDHS due to a youth being
seen/treated at the Urgent Care/ER for injuries as a result of self-harming behaviors, as well
as the youth being placed on an M1 hold. This is :n violation of 7.701.52.4.e; 7.701.52.4.f

6. Observed no documentation in the youth file to confirm that the youth was seen/treated at
the Urgent Care/ER for injuries as a result of self-harming behavior.s as well as the yo:.Jth
being placed on an M1 hold.
This is in violation of 7. ,·14.932.C .7

7 Observed documentation in the complaint allegations and through interviews with Mr.
Huey and 11/ir. Swenson that a male youth was able to obtain a steak knife from the facility
without staff knowledge, of which the youth was able to self-harm. The same youth was
also able to self-harm on a second occasion with pieces of a broken ruler, which resulted
in medical attention being sought.
This is in violation of7.714.31.A.4; 7.714.511.E; 7.714 .91.B

8. Two youth were unsupervised for approximately 30 minutes while on an adventure

then;;py outing at the Eldora Ski Resort. It was reported that the staff supervising the youth
wen~ into the woods to urinate ieaving the youth unattended. Mr. Huey confirmed that this
incident took place as described. Thh is in violation of7 .71~ .31A4.

9. Youth at the facility allege that a staff member was using alcohol and smoking cigarettes
on facility grounds. Mr. Huey and Mr. Swenson confirmed that this had taken place with staff
Troesser in his private residence at the facility. Staff Troesser was terminated as a result of
this taking place on more than one occasion. There were also concerns raised that staff
rr:ember Hanson was potentially using chewing tobacco on facility grounds which was
observed by the youth in placement. This was a violation of 7.701.33.F.3; 7.701.91

10. Observed no documentation that a Critica: Incident Report for the lack of supervision of youth
ir. placer.1ent was submitted to the CDHS involving several youth who obtained part of a cigar
and were able to smoke on the facility grounds. This is in violation of7.701.52.2.b; 7.701 .91

Exhibit 2
Page 4 of 8
 Case 3:21-cv-00121-SI Document 1-2 Filed 01/26/21 Page 5 of 8

1 ~. Observed none of the alleged incidents in this c::imp!aint were reported to the State Child
Abuse Hotline, documented in Critical Incident Reports. or reporter to the State Licensing or
Monitoring team despite all staff members at the facility being r.,andatory reporters, including
the former Clinical Director. former Assistant Clinical Director, and current staff at the facility.
r,is is in violation of7.701.53B (Ex. 1. i)p. 251-254)
Stradley terminated Huey as the Executive Director ofKokua a few weeks later on July 30, 2019.
The reason Stradley gave Huey for th~ termination when they met was that Huey was not
sufficiently '·collaborative". Huey's notes of the meeting state that "Steve related that the
complaint that was filed was alarming 'at a board level' and that FHW had never had such a report
against an FHW program:' (Ex. 143)

Josh White's testimony: Josh White was promptly hired by WTC as Executive Director to succeed
Huey at the treatment program. He testified that the state regulators were very unhappy about
Koktia based on the regulatory violations but that they appeared to be pleased with the prospect of
the development of a new program under new leadership. White and Kudna both testified that
they reasonably viewed Kokua·s license at risk as a result of the violations.

Thus, at the time Stradley terminated Huey, he knew there had been credible allegations about
Huey's inappropriate conduct at the workplace resulting in Severine's resignation and seriously
calling into question Huey's honesty and integrity as the leader ofKokua Recovery. Then, in close
proximity to the termination, Stradley found out, as a result of the Inspection Report. that Huey
had been dishonest with him about the seriousness of the violations at the treatment center that
would be discovered by the state. As stated, these violations included the failure of management
to timely conduct background checks of staff, violations relating to a youth self-harming himself
with a steak knife and multiple incidents of non-supervision of youth. Huey engaged in dishonesty
and deceit when he essentially told Stradley that the inspection would be "annoying" but would
not disclose substantive problems about the operations of the treatment program.

WTC also points to a number of other incidents of poor judgement by Huey during his tenure as
the Executive Director of Koktia. However, we have appropriately narrowed our assessment to
serious incidents regarding Huey's honesty and integrity known to WTC prior to his termination.
Based on the evidence, the incidents we have discussed were clearly known to WTC prior to
Huey's termination and we find them sufficient to support his termination for cause.

Huey argues that his termination was not for cause because Stradley did not state that his
termination was for cause at the time of the discharge and, instead, gave the reason that Huey was
"not collaborative". However, we are not aware of any legal requirement that art employer must
expressly use the term "for cause" to terminate an employee for cause. Further, Stradley credibly
testified that he routinely did not take a confrontive approach when he found it necessary to
terminate employees and that he chose a non-confrontative approach in this instance. Instead, he
took an approach he hoped would protect the reputational interests of WTC and Huey,
notwithstanding the fact that their partnership was ending.

Exhibit 2
Page 5 of 8
 Case 3:21-cv-00121-SI Document 1-2 Filed 01/26/21 Page 6 of 8

BREACH OF FIDUCIARY DUTY CLAIM

Huey alleges that WTC, as manager ofRMP. violated its duties of loyalty and care to RMP and
Huey. Section 4.1 O(b) the RMP Operating Agreement sets forth WTC' s duty of loyalty as:

(1) to account to the Company and hold for it any property, profit or benefit
derived by the Manger in the conduct and winding up of the Company's
business or derived from a use by the Manger of Company property; and

(2) except as provided in Section 4.1 0(g) and Section 4.1 O(h) [referring to loans
by the Manager to the Company], to refrain from dealing with the Company
in a manner adverse to the Company and to refrain from representing a person
with an interests adverse to the Company, in the conduct or winding up of the
Company's business. (Ex. 117 at 3)

The Operating Agreement provides that WTC does not violate its duty of loyalty by competing
with RMP. Nor does it do so by entering into or engaging in, for WTC's own account, a business
that is similar to RMP's business without first offering RMP or Huey an opportunity to participate
in the business or without having any obligation to account to RMP or Huey for the business or
the profits from the business. (Ex. 117 at 4.)

WTC had a duty of care to RMP and Huey not to engage in grossly negligent or reckless conduct,
or intentional misconduct, in the conduct and winding up of the business ofRMP. Id

WTC was required to discharge its duties and exercise any rights consistent with the obligation
of good faith and fair dealing. Id. WTC does not violate a duty or obligation merely because its
conduct furthers its own interest. Id. These provisions are not inconsistent with the Oregon LLC
Act (ORS 63.001 - 63.992).

Huey alleges that WTC was concerned about its continuing relationship with Huey and Kokua's
losses as early as February and considered "flushing its investment." Huey asserts that the May
31, 2019 capital call was wrongful or in bad faith because WTC did not warn Huey about these
developments. In the May capital call, Huey contributed and WTC contributed
.

Huey alleges that WTC" s decision to separate from Huey and have a new entity, Red Mountain
Colorado LLC, wholly owned by WTC, take over the lease, staff and students was a breach of its
fiduciary duties. Huey alleges that because of WTC's breach, he lost his investment
and his 40% ownership interest, which he valued at between $1,276,000 and $3,672,000 based on
projected revenue.

We conclude that WTC did not violate its fiduciary duties to the LLC and Huey. Regarding the
capital call, there was no evidence that the capital call was not a business necessity at the time
WTC made the capital call. Huey presented no evidence that WTC kept him in the dark about
RMP's financial information or that the RMP's financial results were not available to him. As a
member, WTC had every right to question the viability of its investment in RMP. As a

Exhibit 2
Page 6 of 8
 Case 3:21-cv-00121-SI Document 1-2 Filed 01/26/21 Page 7 of 8

manager, WTC had the right, and the responsibility, to consider Huey's performance. Tue fact
that there were concerns about RMP's financial performance and Huey's performance at the time
of the capital call does not make the cal] inappropriate or wrongful. WTC, as manager, did not
engage in grossly negligent or reckless conduct, intentional misconduct or knowing violation of
the law in making the capital call without notifying Huey that his employment was an issue. In
sum, WTC's May capital call did not breach its duty to Huey because the evidence supports
making the capital call.

R~garding WTC's termination of Huey. the testimony ofKudna, Severine, Stradley, White and
even Huey, as well as the CDIIS violations, showed that Huey was running Kokua in a way that
put the RMP in jeopardy. Given Huey's cavalier attitude toward policies and responding to the
CDHS violations, unprofessional treatment of staff and unprofessional actions in front of
students, and his imminent plan to admit girls to live on the second floor, Huey appeared prone
to future actions that could have resulted in additional liabiliti~s for the RMP. WTC exercised its
duty of care to RMP by ending Huey's employment when it did.

The Kokua program assets and liabilities must be considered as part of the :fiduciary duty
analysis. The Kolata program could not continue after Huey's termination. The lease would be
in default if WTC did not unilaterally pay additional rent, which it had no obligation to do. The
Red Mountain Colorado lease was a new lease, which permitted the RMP to avoid further,
significant losses. The alternative was to default on the lease, which would be a liability to
RMP, WTC and Huey of around $2 million. Considering the lease liability, WTC would have
violated its duty to the RMP and Huey had it not tried to find someone to take over the lease.
Negotiating a lease termination was reasonable and prudent and not a breach ofWTC's duty.

WTC leased Kokua's assets to Red Mountain Colorado for a value that was not challenged. By
leasing the assets to Red Mountain Colorado, WTC derived value for assets that otherwise would
have been sold at a fire sale or placed in storage. WTC had obtained an appraisal of the vehicles,
equipment and furniture and offered to sell them to Huey. Thus, WTC did not violate its duty of
loyalty in accounting to and holding the property for RMP in winding up Kokua.

The student contracts were a liability, not an asset. The contracts for the 5 to 6 students did not
create any value because the July 2019 financials show that the gross income of from
the students was far less than the in expenses necessary to provide them services. (Ex.
32). WTC could have tenninated staff and sent the students home in July 2019. However, both
WTC and Huey would have suffered reputational damages as a result. Thus, WTC did not act in
a manner adverse to Huey by having Red Mountain Colorado take over the staff and student
contracts.

Further, Kokua's license had no value since it was facility specific. WTC's evidence was that the
license for Red Mountain Colorado was processed per the direction of the Colorado regulators,
and there was no contrary evidence.

Kokua' s financial performance informs the breach of :fiduciary duty analysis. At the time of
Huey's termination, Kokua was insolvent and remained insolvent through November 2019 when
Rc:d Mountain Colorado took over the lease, the student contracts and hired the staff. Kokua lost

Exhibit 2
Page 7 of 8
 Case 3:21-cv-00121-SI Document 1-2 Filed 01/26/21 Page 8 of 8

significant amounts of money and had debts that exceeded its assets. It never made a profit. At
the time WTC terminated Huey, the lease: was in default or going into default, and had no value.
The hard assets appear to have been of low quality, and if sold at any reasonable market value,
the proceeds would have gone to pay the RIY!P' s debts. Iltere was no evidence that the RMP had
any goodwill of any value, and \VTC's evidence suggests that the Kokua name had no value, but
was a detriment. In sum, the Kokua progra.in bad no value. Given the financial status of the
Kokua program, RMP did not appear to have any prospects for a sale or to attract investors.

Even if WTC breached its duty ofloyalty to RMP and Huey by forming Red Mountain Colorado
and having it take over the liabilities of the lease, staff and enrolled students, WTC's actions did
not result in lost profits for Huey because RMP was insolvent. The reliance of Huey's expert on
projections to create an artificial EBITDA is not persuasive because he. used budget numbers that
were aspirational and had no real world validity. WTC's expert testimony was credible because
he based his analysis on actual financial performance. The fact that WTC had to put in $375,000
pl)St temlination of Huey to keep the R1v.1P afloat and satisfy creditors supports his testimony of
im;olvency, as does the fact that Red :Mountain Colorado still has not made a profit. Since an
insolvent entity has no value, Huey's 40% .interest in the insolvent RMP had no "al.ue.

In :j\Jffi, while wrc may have had mixed motives of its own economic and reputational interests,
WTC did not breach its fiduciary duty by having Red Mountain Colorado take over RMP's
Hab:ilities because all other options were less desirable. WTC. s actions resulted in fewer losses,
both reputational and financiai. The evidence shows that WTC has not violated its duties to Huey
in ~iinding up Kokua and even if WTC breached its fiduciary duty, any breach did not cause
damages because ofR1\1P's insolvency.

SUPPLE:t-11ENTAL AWARD

In its Answer to Huey's Statement Of Claim, WTC requested an award. of "reasonable costs,
d1slmrsements, and attorney fees" incurred by WTC "as provided for and allowed by Section 31.12
of the Operating Agreement". ~VTC may now proceed to seek a supplemental award as provided
for in ASP Rule 34A. Any objections by Huey will be governed by ASP Rule 34B.

;;z::t:fi.~.:-
Rl,chard C. Baldwin
Nov. 3, 2020
(date)
CZJ'ef
:trator ___ _
. · · ' <)ll
~ ~·· -----~'1~:::idf1' ~
Susan T. Felstiner
Arbitrator

~~
l'rank Langfitt
Arbitrator

Exhibit 2
Page 8 of 8
 Case 3:21-cv-00121-SI Document 1-3 Filed 01/26/21 Page 1 of 4

ARBITRATION SERVICE OF PORTLAND, INC.

WILDERNESS TRAINING &

CONSULTING, LLC, an Oregon limited ASP No. 191112-2
liability company, as member of Rocky
Mountain Pathways, LLC,
Claimant, SUPPLEMENTAL AWARD

V.

KENNETH HUEY, an individual and

ROCKY MOUNTAIN PATHWAYS, LLC,
an Oregon limited liability company,
Respondents.

By Preliminary Award dated Nov. 3, 2020, this panel found in favor of Claimant Wilderness
Training & Consulting, LLC (WTC) on all claims asserted by Respondent Kenneth Huey (Huey)
in his Statement of Claim for breach of contract and breach of fiduciary duty. WTC had initiated
this proceeding by filing a Statement of Claim seeking judicial dissolution of Rocky Mountain
Pathways, LLC (RMP), but dismissed that claim. WTC has timely filed an APPLICATION
FOR ATTORNEYS' FEES AND COSTS and Huey has timely filed an OPPOSITION TO
CLAIMANT'S APPLICATION. WTC seeks $811,136.12 in reasonable attorney fees incurred
and $124,496.86 in litigation costs for a total award of $935,532.98. (The panel has adjusted
WTC's cost request by an additional $10,500., based on the panel's final fee deposit assessment).
For the reasons we explain below, the panel awards WTC $540,757. in reasonable attorney fees
(a one-third reduction from the requested amount) and $124,497. in costs for a total award of
$665,254.

HUEY' S "MATERIAL BREACH" ARGUMENT

In his opposition to WTC's Application for Attorney Fees and Costs, Huey first argues that WTC
should not be awarded any fees or eosts under Section 31.12 of the parties1.. Operating
Agreement. "given that WTC materially breached the Operating Agreement." Opp., p.l. We
disagree. First, the panel has already concluded that WTC did not violate its fiduciary duties t9
RMP and Huey under the circumstances presented. Preliminary Award, p.6. Second, to the
extent that WTC breached the Operating Agreement, as alleged by Huey, WTC's breaches were
a consequence of Huey's breach of his duties as Executive Director ofKokua. The purpose of
RMP was to own, operate and manage a treatment facility. Operating Agreement, section 3 .1.
RMP hired Huey as the Executive Director to operate and manage Kokua. The Operating
Agreement contemplated that Huey would operate the facility professionally as Executive
Director, and he had a fiduciary duty to do so. His failure to act in a professional manner gave
rise to his termination and contributed to the insolvency of Kokua, whose ownership, operation
and management was the sole purpose ofRMP. Huey's breach of fiduciary duty defeated the
object, or purpose ofRMP. WTC's alleged breaches came after Huey's breach of fiduciary duty

Exhibit 3
Page 1 of 4
 Case 3:21-cv-00121-SI Document 1-3 Filed 01/26/21 Page 2 of 4

to the LLC, and in some respects were a consequence of Huey's breach. Huey's breach of duty
was material because it defeated the sole purpose of RMP and that breach discharged WTC from
its duty to perform the obligations to Huey that WTC allegedly breached. See Craig v Siegal,
151 Or App 567, 572-73 (1997) ("a breach is material ifit goes to the very substance of the
contract and defeats the object of the parties in entering the contract").

"REASONABLENESS" OF WTC'S ATTORNEY FEE REQUEST

As stated, WTC seeks "reasonable attorney fees" under Section 31.12 of the parties' Operating
Agreement as the "prevailing party" on the claims prosecuted by Huey. In this proceeding, our
determination of the amount of attorney fees is also guided by ASP Rule 34C which provides
that the panel "may consider such factors as: whether and when a settlement offer was made and
the value of the settlement offer compared to the award granted; whether and the extent to which
the party succeeded in a claim or a defense, and the time reasonably expended thereon; the
reasonableness of the time expended in relation to the dollar amount of the claim or defense;
whether the factual or legal disputes represented close questions; whether the attorney refused to
concede matters that ought to have been conceded, resisted matters that should not have been
resisted, refused to stipulate to matters that should have and are customarily stipulated to, if such
conduct affected the expenditure of attorney time." Thus, the Operating Agreement and ASP
Rule 34C provide the legal framework for our determination of a 'reasonable attorney fee award
to WTC as the prevailing party in this case. Under this framework, the panel may also consider
additional pertinent factors, as appropriate, to determine a reasonable fee award.

As WTC points out in its request, it achieved complete success in defending against Huey's
claims. WTC had significant exposure to liability for an award of substantial damages if Huey
had prevailed on his claims. This factor militates in favor ofWTC' s request for an award of
reasonable attorney fees.

WTC also contends that Huey unreasonably turned down WTC's offer of$650,000 to settle this
matter, did not engage in mediation with WTC in good faith and unreasonably continued to
prosecute his claims after WTC dismissed its claim for a judicial dissolution ofRMP. However,
we conclude that the record does not support WTC's contention. Although the record does
support the contention that WTC .offered Huey $150,000 to settle his claims, it does not support
the vague contention that he was offered "a commission worth up to $500,000". App., p.3. Nor
does the record support WTC's contention that Huey did not engage in mediation in good faith
or that it was unreasonable for him to prosecute his claims. At the time mediation was attempted
and at the time Huey filed his claims, he had invested over $400,000 in RMP. He had a
reasonable expectation for a settlement at that time notwithstanding the fact that he was unable to
demonstrate that his investment had value at the time of the parties' arbitration hearing nearly a
year later. Thus, it was not unreasonable for him to expect a larger settlement than offered or to
proceed to the prosecution of his claims.

Supplemental Award, p.2

ASP No. 191112-2

Exhibit 3
Page 2 of 4
 Case 3:21-cv-00121-SI Document 1-3 Filed 01/26/21 Page 3 of 4

Following Huey's recent representation that he is unable to pay the panels' final fee deposit
request, WTC has requested an enhancement of its attorney fee award, citing to ORS 20.075.
Assuming, arguendo, that ORS 20.075 is authority for WTC's request, we do not think that
Huey's current financial circumstances are a factor the panel should appropriately consider in
determining whether a fee enhancement should be allowed.

We now turn to Huey's objections to the reasonableness ofWTC's request for attorney fees.
Huey's primary objection is to the amount of time expended by WTC lawyers in defending
Huey's claims and to the number ofWTC attorneys expending time on the case (staffing). He
contends that the amount of overall attorney time expended by WTC attorneys is "grossly
unreasonable". Opp., p.3. While Huey makes passing reference to "impermissible block-
billing" and "above-market rates charged by WTC's lawyers", he does not develop those
arguments.

WTC's time records show a total of 1,575 in hours worked for the fees WTC now seeks to
recover. WTC Ex. 2, p.3. This includes fees for time expended by four partners and three
associates of Perkins Coie in addition to other time expended by additional attorneys and
paralegals. This also includes the participation of numerous WTC attorneys at the arbitration
hearing held on Oct. 7-9, 2020. Although we recognize that this matter was hotly contested by
both sides, we conclude that the amount oftime expended by WTC to defend Huey's claims was
excessive. This is due, in part, to the number of attorneys assigrn~d to the defense of Huey's
claims, including the number of Perkins Coie attorneys participating in the arbitration hearing.
Accordingly, we conclude that a substantial reduction in the fees requested by WTC is
warranted.

Based on Huey's additional objections to WTC's fee request, we also conclude that a significant
reduction in fees is appropriate with respect to the following work activity: 1) fees for work
performed on WTC's Statement of Claim since that claim was voluntarily dismissed by WTC
(i.e., WTC was not a "prevailing party" on that claim); 2) fees for work relating to WTC's
motions for bond and injunctive relief; at the time the motions were filed, WTC did not have a
sufficient factual basis to assert those motions and; 3) fees for work relating to the testimony of
Paul Collins, an attorney and regulatory expert whose testimony was excluded because his law
firm represented WTC in this matter.
,'
The panel rejects without discuss1oh Huey's additional arguments based on his assertion that the
panel did not correctly decide his claims on the merits. Those arguments disregard how the p~ el
determined the facts and law in this case and are inconsistent with those findings and
conclusions.

After full consideration of all relevant factors in this case and aggregating the substantial
reductions in fees discussed above, we conclude that an overall reduction in WTC 's fee request
by one-third is necessary to arrive at a reasonable fee award to WTC. A one-third reduction in
the requested fees reduces the fee award to $540,757.

Supplemental Award, p. 3
ASP No. 191112-2

Exhibit 3
Page 3 of 4
 Case 3:21-cv-00121-SI Document 1-3 Filed 01/26/21 Page 4 of 4

COSTS

WTC has requested a cost award of $124,497. as the prevailing party under the parties'
Operating Agreement. Huey has only objected to costs attributable to Paul Collins, the expert
witness excluded from testifying by the panel. Huey has not cited to the record for any costs paid
to Mr. Collins and we have not found a request by WTC for recovery of such a cost. We
therefore award WTC the full amount of costs they have requested. This includes WTC's final
fee deposit of $10,500 (one-half of that deposit was advanced for Huey by WTC pursuant to
ASP Rule l 5F).

IT IS SO ORDERED. January 12, 2021

/4& Ltk .~
Richard C. Baldwin
Chief Arbitrator

Susan T. Felstiner
Arbitrator

b _? /;u
Frank Langfitt
Arbitrator

Supplement al Award, p. 4
ASP No. 191112-2

Exhibit 3
Page 4 of 4
 Case 3:21-cv-00121-SI Document 1-4 Filed 01/26/21 Page 1 of 2

WILDERNESS TRAINING &

CONSULTING, LLC, an Oregon limited ASP No. 191112-2
liability company, as member of Rocky
Mountain Pathways, LLC,
Claimant,

V. MONEY AWARD

KENNETH HUEY, an individual and

ROCKY MOUNTAIN PATHWAYS, LLC,
an Oregon limited liability company,

By Preliminary Award dated Nov. 3, 2020, claimant was the prevailing party on all claims asserted
by respondent in his Statement Of Claim. Based on the Supplemental Award issued this date, the
undersigned panel now issues the following Money Award as a Final Award:

Award Creditor: Wilderness Training & Consulting, LLC

Attorney for Award Creditor: Julia E.Markley

Perkins Coie LLP
1120 N.W. Couch Street, 10th Floor
Portland, OR 97209

Person or Public Body Other

than Judgment Creditor
Entitled to Any Portion of
Judgement: None

Award Debtor: I ::0

Kenneth Huey •
• •'I

Attorney for Award Debtor: Jeffrey M. Edelson

Markowitz Herbold PC
1455 SW Broadway Ste 1900
Portland OR 97201

Costs and Disbursements: $124,497.

Attorneys' Fees: $540,757.

Exhibit 4
Page 1 of 2
 Case 3:21-cv-00121-SI Document 1-4 Filed 01/26/21 Page 2 of 2

Total Supplemental Award: $665,254.

(Fees and Costs above)

Post Award Interest: Simple interest at the rate of 9% per annum on the
amount of the award from the date of award until paid.

Date: January 12, 2021

Richard C. Baldwin
Chief Arbitrator

Susan T. Felstiner
Arbitrator

~--~
Frank Langfitt .
Arbitrator

....~-
( •

Money Award, ASP No. 191112-2, p.2

Exhibit 4
Page 2 of 2
JS 44 (Rev. 10/20) Case 3:21-cv-00121-SI Document
CIVIL COVER 1-5SHEET
Filed 01/26/21 Page 1 of 2
The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as
provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the
purpose of initiating the civil docket sheet. (SEE INSTRUCTIONS ON NEXT PAGE OF THIS FORM.)
I. (a) PLAINTIFFS DEFENDANTS
Wilderness Training & Consulting, LLC Kenneth Huey
(b) County of Residence of First Listed Plaintiff Marion County, OR County of Residence of First Listed Defendant Larimer County, CO
(EXCEPT IN U.S. PLAINTIFF CASES) (IN U.S. PLAINTIFF CASES ONLY)
NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF
THE TRACT OF LAND INVOLVED.

(c) Attorneys (Firm Name, Address, and Telephone Number) Attorneys (If Known)

Stephen F. English, Julia M. Markley, Perkins Coie LLP Jeffrey M. Edelson, Kathryn P. Roberts, Markowtiz Herbold
1120 NW Couch Street, 10th Floor, Portland, OR 97209 PC, 1455 SW Broadway St., Ste. 1900, Portland, OR 97201
II. BASIS OF JURISDICTION (Place an “X” in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES (Place an “X” in One Box for Plaintiff
(For Diversity Cases Only) and One Box for Defendant)
1 U.S. Government 3 Federal Question PTF DEF PTF DEF
Plaintiff (U.S. Government Not a Party) Citizen of This State ✖ 1 1 Incorporated or Principal Place 4 4
of Business In This State

2 U.S. Government ✖ 4 Diversity Citizen of Another State 2 ✖ 2 Incorporated and Principal Place 5 5
Defendant (Indicate Citizenship of Parties in Item III) of Business In Another State

Citizen or Subject of a 3 3 Foreign Nation 6 6

Foreign Country
IV. NATURE OF SUIT (Place an “X” in One Box Only) Click here for: Nature of Suit Code Descriptions.
CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY OTHER STATUTES
110 Insurance PERSONAL INJURY PERSONAL INJURY 625 Drug Related Seizure 422 Appeal 28 USC 158 375 False Claims Act
120 Marine 310 Airplane 365 Personal Injury - of Property 21 USC 881 423 Withdrawal 376 Qui Tam (31 USC
130 Miller Act 315 Airplane Product Product Liability 690 Other 28 USC 157 3729(a))
140 Negotiable Instrument Liability 367 Health Care/ 400 State Reapportionment
150 Recovery of Overpayment 320 Assault, Libel & Pharmaceutical PROPERTY RIGHTS 410 Antitrust
& Enforcement of Judgment Slander Personal Injury 820 Copyrights 430 Banks and Banking
151 Medicare Act 330 Federal Employers’ Product Liability 830 Patent 450 Commerce
152 Recovery of Defaulted Liability 368 Asbestos Personal 835 Patent - Abbreviated 460 Deportation
Student Loans 340 Marine Injury Product New Drug Application 470 Racketeer Influenced and
(Excludes Veterans) 345 Marine Product Liability 840 Trademark Corrupt Organizations
153 Recovery of Overpayment Liability PERSONAL PROPERTY LABOR 880 Defend Trade Secrets 480 Consumer Credit
of Veteran’s Benefits 350 Motor Vehicle 370 Other Fraud 710 Fair Labor Standards Act of 2016 (15 USC 1681 or 1692)
160 Stockholders’ Suits 355 Motor Vehicle 371 Truth in Lending Act 485 Telephone Consumer
190 Other Contract Product Liability 380 Other Personal 720 Labor/Management SOCIAL SECURITY Protection Act
195 Contract Product Liability 360 Other Personal Property Damage Relations 861 HIA (1395ff) 490 Cable/Sat TV
196 Franchise Injury 385 Property Damage 740 Railway Labor Act 862 Black Lung (923) 850 Securities/Commodities/
362 Personal Injury - Product Liability 751 Family and Medical 863 DIWC/DIWW (405(g)) Exchange
Medical Malpractice Leave Act 864 SSID Title XVI 890 Other Statutory Actions
REAL PROPERTY CIVIL RIGHTS PRISONER PETITIONS 790 Other Labor Litigation 865 RSI (405(g)) 891 Agricultural Acts
210 Land Condemnation 440 Other Civil Rights Habeas Corpus: 791 Employee Retirement 893 Environmental Matters
220 Foreclosure 441 Voting 463 Alien Detainee Income Security Act FEDERAL TAX SUITS 895 Freedom of Information
230 Rent Lease & Ejectment 442 Employment 510 Motions to Vacate 870 Taxes (U.S. Plaintiff Act
240 Torts to Land 443 Housing/ Sentence or Defendant) ✖ 896 Arbitration
245 Tort Product Liability Accommodations 530 General 871 IRS—Third Party 899 Administrative Procedure
290 All Other Real Property 445 Amer. w/Disabilities - 535 Death Penalty IMMIGRATION 26 USC 7609 Act/Review or Appeal of
Employment Other: 462 Naturalization Application Agency Decision
446 Amer. w/Disabilities - 540 Mandamus & Other 465 Other Immigration 950 Constitutionality of
Other 550 Civil Rights Actions State Statutes
448 Education 555 Prison Condition
560 Civil Detainee -
Conditions of
Confinement
V. ORIGIN (Place an “X” in One Box Only)
✖ 1 Original 2 Removed from 3 Remanded from 4 Reinstated or 5 Transferred from 6 Multidistrict 8 Multidistrict
Proceeding State Court Appellate Court Reopened Another District Litigation - Litigation -
(specify) Transfer Direct File
Cite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity):
9 U.S.C. 9
VI. CAUSE OF ACTION Brief description of cause:
Confirmation of arbitration award
VII. REQUESTED IN CHECK IF THIS IS A CLASS ACTION DEMAND $ CHECK YES only if demanded in complaint:
COMPLAINT: UNDER RULE 23, F.R.Cv.P. $665,254 JURY DEMAND: Yes No
VIII. RELATED CASE(S)
(See instructions):
IF ANY JUDGE DOCKET NUMBER
DATE SIGNATURE OF ATTORNEY OF RECORD
01/26/2021 s/ Julia E. Markley
FOR OFFICE USE ONLY

RECEIPT # AMOUNT APPLYING IFP JUDGE MAG. JUDGE

JS 44 Reverse (Rev. 10/20) Case 3:21-cv-00121-SI Document 1-5 Filed 01/26/21 Page 2 of 2
INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS 44
Authority For Civil Cover Sheet

The JS 44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers as
required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is
required for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk of
Court for each civil complaint filed. The attorney filing a case should complete the form as follows:

I.(a) Plaintiffs-Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiff or defendant is a government agency, use
only the full name or standard abbreviations. If the plaintiff or defendant is an official within a government agency, identify first the agency and then
the official, giving both name and title.
(b) County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides at the
time of filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of filing. (NOTE: In land
condemnation cases, the county of residence of the "defendant" is the location of the tract of land involved.)
(c) Attorneys. Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment, noting
in this section "(see attachment)".

II. Jurisdiction. The basis of jurisdiction is set forth under Rule 8(a), F.R.Cv.P., which requires that jurisdictions be shown in pleadings. Place an "X"
in one of the boxes. If there is more than one basis of jurisdiction, precedence is given in the order shown below.
United States plaintiff. (1) Jurisdiction based on 28 U.S.C. 1345 and 1348. Suits by agencies and officers of the United States are included here.
United States defendant. (2) When the plaintiff is suing the United States, its officers or agencies, place an "X" in this box.
Federal question. (3) This refers to suits under 28 U.S.C. 1331, where jurisdiction arises under the Constitution of the United States, an amendment
to the Constitution, an act of Congress or a treaty of the United States. In cases where the U.S. is a party, the U.S. plaintiff or defendant code takes
precedence, and box 1 or 2 should be marked.
Diversity of citizenship. (4) This refers to suits under 28 U.S.C. 1332, where parties are citizens of different states. When Box 4 is checked, the
citizenship of the different parties must be checked. (See Section III below; NOTE: federal question actions take precedence over diversity
cases.)

III. Residence (citizenship) of Principal Parties. This section of the JS 44 is to be completed if diversity of citizenship was indicated above. Mark this
section for each principal party.

IV. Nature of Suit. Place an "X" in the appropriate box. If there are multiple nature of suit codes associated with the case, pick the nature of suit code
that is most applicable. Click here for: Nature of Suit Code Descriptions.

V. Origin. Place an "X" in one of the seven boxes.

Original Proceedings. (1) Cases which originate in the United States district courts.
Removed from State Court. (2) Proceedings initiated in state courts may be removed to the district courts under Title 28 U.S.C., Section 1441.
Remanded from Appellate Court. (3) Check this box for cases remanded to the district court for further action. Use the date of remand as the filing
date.
Reinstated or Reopened. (4) Check this box for cases reinstated or reopened in the district court. Use the reopening date as the filing date.
Transferred from Another District. (5) For cases transferred under Title 28 U.S.C. Section 1404(a). Do not use this for within district transfers or
multidistrict litigation transfers.
Multidistrict Litigation – Transfer. (6) Check this box when a multidistrict case is transferred into the district under authority of Title 28 U.S.C.
Section 1407.
Multidistrict Litigation – Direct File. (8) Check this box when a multidistrict case is filed in the same district as the Master MDL docket.
PLEASE NOTE THAT THERE IS NOT AN ORIGIN CODE 7. Origin Code 7 was used for historical records and is no longer relevant due to
changes in statue.

VI. Cause of Action. Report the civil statute directly related to the cause of action and give a brief description of the cause. Do not cite jurisdictional
statutes unless diversity. Example: U.S. Civil Statute: 47 USC 553 Brief Description: Unauthorized reception of cable service.

VII. Requested in Complaint. Class Action. Place an "X" in this box if you are filing a class action under Rule 23, F.R.Cv.P.
Demand. In this space enter the actual dollar amount being demanded or indicate other demand, such as a preliminary injunction.
Jury Demand. Check the appropriate box to indicate whether or not a jury is being demanded.

VIII. Related Cases. This section of the JS 44 is used to reference related pending cases, if any. If there are related pending cases, insert the docket
numbers and the corresponding judge names for such cases.

Date and Attorney Signature. Date and sign the civil cover sheet.
 Case 3:21-cv-00121-SI Document 1-6 Filed 01/26/21 Page 1 of 2

AO 440 (Rev. 06/12) Summons in a Civil Action

UNITED STATES DISTRICT COURT

for the
District
__________ of Oregon
District of __________

WILDERNESS TRAINING & CONSULTING, LLC )

)
)
)
Plaintiff(s) )
)
v. Civil Action No. 3:21-cv-121
)
KENNETH HUEY )
)
)
)
Defendant(s) )

SUMMONS IN A CIVIL ACTION

To: (Defendant’s name and address)

Kenneth Huey
2736 Saltbrush Drive
Loveland, CO 80538

A lawsuit has been filed against you.

Within 21 days after service of this summons on you (not counting the day you received it) — or 60 days if you
are the United States or a United States agency, or an officer or employee of the United States described in Fed. R. Civ.
P. 12 (a)(2) or (3) — you must serve on the plaintiff an answer to the attached complaint or a motion under Rule 12 of
the Federal Rules of Civil Procedure. The answer or motion must be served on the plaintiff or plaintiff’s attorney,
whose name and address are: Julia E. Markley
Perkins Coie, LLP
1120 NW Couch St, 10th Floor
Portland, OR 97209

If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint.
You also must file your answer or motion with the court.

CLERK OF COURT

Date:
Signature of Clerk or Deputy Clerk
 Case 3:21-cv-00121-SI Document 1-6 Filed 01/26/21 Page 2 of 2

AO 440 (Rev. 06/12) Summons in a Civil Action (Page 2)

Civil Action No.

PROOF OF SERVICE
(This section should not be filed with the court unless required by Fed. R. Civ. P. 4 (l))

This summons for (name of individual and title, if any)

was received by me on (date) .

u I personally served the summons on the individual at (place)

on (date) ; or

u I left the summons at the individual’s residence or usual place of abode with (name)
, a person of suitable age and discretion who resides there,
on (date) , and mailed a copy to the individual’s last known address; or

u I served the summons on (name of individual) , who is

designated by law to accept service of process on behalf of (name of organization)
on (date) ; or

u I returned the summons unexecuted because ; or

u Other (specify):
.

My fees are $ for travel and $ for services, for a total of $ 0.00 .

I declare under penalty of perjury that this information is true.

Date:
Server’s signature

Printed name and title

Server’s address

Additional information regarding attempted service, etc:

 Case 3:21-cv-00121-SI Document 1-7 Filed 01/26/21 Page 1 of 2

AO 440 (Rev. 06/12) Summons in a Civil Action

UNITED STATES DISTRICT COURT

for the
District
__________ of Oregon
District of __________

WILDERNESS TRAINING & CONSULTING, LLC )

)
)
)
Plaintiff(s) )
)
v. Civil Action No. 3:21-cv-121
)
KENNETH HUEY )
)
)
)
Defendant(s) )

SUMMONS IN A CIVIL ACTION

To: (Defendant’s name and address)

Kenneth Huey
Havenwood Academy
246 E Fiddlers Canyon Rd
Cedar City, UT 84721

A lawsuit has been filed against you.

Within 21 days after service of this summons on you (not counting the day you received it) — or 60 days if you
are the United States or a United States agency, or an officer or employee of the United States described in Fed. R. Civ.
P. 12 (a)(2) or (3) — you must serve on the plaintiff an answer to the attached complaint or a motion under Rule 12 of
the Federal Rules of Civil Procedure. The answer or motion must be served on the plaintiff or plaintiff’s attorney,
whose name and address are: Julia E. Markley
Perkins Coie, LLP
1120 NW Couch St, 10th Floor
Portland, OR 97209

If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint.
You also must file your answer or motion with the court.

CLERK OF COURT

Date:
Signature of Clerk or Deputy Clerk
 Case 3:21-cv-00121-SI Document 1-7 Filed 01/26/21 Page 2 of 2

AO 440 (Rev. 06/12) Summons in a Civil Action (Page 2)

Civil Action No.

PROOF OF SERVICE
(This section should not be filed with the court unless required by Fed. R. Civ. P. 4 (l))

This summons for (name of individual and title, if any)

was received by me on (date) .

u I personally served the summons on the individual at (place)

on (date) ; or

u I left the summons at the individual’s residence or usual place of abode with (name)
, a person of suitable age and discretion who resides there,
on (date) , and mailed a copy to the individual’s last known address; or

u I served the summons on (name of individual) , who is

designated by law to accept service of process on behalf of (name of organization)
on (date) ; or

u I returned the summons unexecuted because ; or

u Other (specify):
.

My fees are $ for travel and $ for services, for a total of $ 0.00 .

I declare under penalty of perjury that this information is true.

Date:
Server’s signature

Printed name and title

Server’s address

Additional information regarding attempted service, etc: