LLC Operating Agreement

LIMITED LIABILITY COMPANY OPERATING AGREEMENT

[COMPANY NAME], LLC

A California Limited Liability Company

Effective Date: [DATE]

ARTICLE I - FORMATION

1.1 Formation

The Members form a limited liability company pursuant to the California Revised Uniform Limited Liability Company Act, Cal. Corp. Code §§ 17701.01 et seq. (the "Act") by filing Articles of Organization with the California Secretary of State.

1.2 Name

[COMPANY NAME], LLC

1.3 Principal Executive Office

[ADDRESS]
[CITY], California [ZIP]

1.4 Agent for Service of Process

Agent: [NAME]
Address: [ADDRESS], California [ZIP]

1.5 Term

The Company shall have perpetual existence unless dissolved in accordance with this Agreement or the Act.

1.6 Status of This Agreement

This Agreement constitutes the written operating agreement of the Company within the meaning of Cal. Corp. Code § 17701.02(s), is binding on and enforceable by the Company under Cal. Corp. Code § 17701.11(a), and supersedes any prior oral or implied operating agreement among the Members. A person who becomes a Member is deemed to assent to this Agreement under Cal. Corp. Code § 17701.11(b).

1.7 No Series LLC

The Company is a single limited liability company and is not, and may not be organized as, a "series" limited liability company under California law. California does not permit the domestic formation of series LLCs; each protected series or cell structure available in other states has no equivalent under the Act.

ARTICLE II - PURPOSE AND POWERS

2.1 Purpose

The Company is formed for the purpose of:
[DESCRIBE BUSINESS PURPOSE]
and any other lawful business for which a limited liability company may be organized under the Act.

2.2 Powers

The Company has all powers permitted by the Act.

ARTICLE III - MEMBERS AND INTERESTS

3.1 Initial Members

See Exhibit A for Members, Capital Contributions, and Percentage Interests.

3.2 Community Property

(a) Each married Member represents that such Member's Membership Interest is [separate property / community property].
(b) If community property, the Member's spouse must execute a Spousal Consent (Exhibit B).
(c) Transfers of community property interests require spousal consent.

3.3 Admission of Additional Members

Additional Members may be admitted only with the consent of Members holding a majority of the Percentage Interests.

ARTICLE IV - CAPITAL CONTRIBUTIONS

4.1 Initial Contributions

Each Member has contributed the Capital Contribution set forth in Exhibit A.

4.2 Additional Contributions

No Member is required to make additional contributions without such Member's consent.

4.3 Capital Accounts

A separate Capital Account shall be maintained for each Member per IRC § 704(b) and Treasury Regulations.

4.4 No Interest; No Withdrawal

No interest on contributions. No right to withdraw capital except as provided herein.

ARTICLE V - ALLOCATIONS AND DISTRIBUTIONS

5.1 Allocations

Profits and Losses shall be allocated to Members in proportion to their Percentage Interests.

5.2 Distributions

(a) Distributions of Distributable Cash shall be made at times and amounts determined by [Members / Manager(s)].
(b) Distributions shall be made pro rata to Percentage Interests.

5.3 Tax Distributions

The Company shall distribute to each Member an amount sufficient to cover such Member's California and federal income tax liability arising from Company allocations, at the highest applicable marginal rates.

5.4 California Withholding

The Company shall withhold amounts as required by California law on distributions to nonresident Members.

ARTICLE VI - MANAGEMENT

6.1 Management Structure

☐ MEMBER-MANAGED
The Company is member-managed. Each Member has equal rights in management.

☐ MANAGER-MANAGED
The Company is manager-managed. The Manager(s) are:
[MANAGER NAME(S)]

6.2 Voting

• Ordinary Matters: Majority of Percentage Interests
• Extraordinary Matters: [Two-thirds / Unanimous] of Percentage Interests

6.3 Actions Requiring Member Approval

The following require the consent of all Members, as the default rule under Cal. Corp. Code §§ 17701.10(a)(4) and 17704.07(b)(5)/(r)(2) unless this Agreement specifies a different threshold:
(a) Amendment of this Operating Agreement;
(b) Amendment of the Articles of Organization (subject to the majority floor in Cal. Corp. Code § 17704.07(s));
(c) Admission of new Members (see Section 3.3).

If the Company is manager-managed, the consent of all Members is additionally required, under Cal. Corp. Code § 17704.07(c)(4), for:
(d) Sale, lease, exchange, or other disposition of all, or substantially all, of the Company's property outside the ordinary course of business;
(e) Any other act of the Manager(s) outside the ordinary course of the Company's activities.

Other actions requiring approval of [specify threshold]:
(f) Merger, conversion, or dissolution;
(g) Incurrence of debt exceeding $[AMOUNT].

6.4 Standard of Care

Under Cal. Corp. Code § 17704.09, the Member(s) of a member-managed Company (or the Manager(s) of a manager-managed Company) owe the Company and the other Members a duty of loyalty and a duty of care. The statutory duty of care is limited to refraining from grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law; it is not a general "ordinarily prudent person" negligence standard. Each Member and Manager shall also discharge duties and exercise rights consistent with the contractual obligation of good faith and fair dealing under Cal. Corp. Code § 17704.09(d). This Agreement does not eliminate the duty of loyalty or unreasonably reduce the duty of care, as prohibited by Cal. Corp. Code § 17701.10(c)(4), (14)-(15).

ARTICLE VII - TRANSFER RESTRICTIONS

7.1 General Restriction

No Member may Transfer any Membership Interest without prior written consent of Members holding a majority of Percentage Interests.

7.2 Right of First Refusal

Before any Transfer to a third party, the selling Member shall first offer to sell to the Company, then to other Members, at the same terms.

7.3 Permitted Transfers

Notwithstanding Section 7.1, a Member may Transfer to:
(a) A revocable living trust for estate planning;
(b) An Affiliate;
(c) A family member (spouse, children, grandchildren).

7.4 Assignee Rights

A Transferee not admitted as a Substitute Member has only the right to receive distributions per Cal. Corp. Code § 17705.02.

7.5 Charging Order Protection

A judgment creditor of a Member has no right to seize Company assets or to become a Member. Under Cal. Corp. Code § 17705.03, a charging order against a Member's transferable interest is the exclusive remedy by which a judgment creditor may satisfy a judgment out of the judgment debtor's interest in the Company, subject to the court's power to appoint a receiver of distributions or, if distributions will not satisfy the judgment within a reasonable time, to order foreclosure and sale of the transferable interest.

ARTICLE VIII - DISSOLUTION AND WINDING UP

8.1 Dissolution Events

The Company dissolves upon:
(a) Consent of Members holding a majority of Percentage Interests;
(b) Judicial dissolution under Cal. Corp. Code § 17707.03;
(c) Any event of dissolution under the Act.

8.2 Winding Up

Upon dissolution, the Members or a designated person shall wind up affairs per Cal. Corp. Code § 17707.05.

8.3 Certificate of Cancellation

File Certificate of Cancellation with California Secretary of State upon completion.

ARTICLE IX - INDEMNIFICATION AND LIABILITY

9.1 Limitation of Liability

To the fullest extent permitted by Cal. Corp. Code § 17703.04, no Member or Manager is personally liable for Company obligations.

9.2 Indemnification

The Company shall reimburse and indemnify a Member (in a member-managed Company) or Manager (in a manager-managed Company) for any payment made or debt, obligation, or other liability incurred in the course of that person's activities on behalf of the Company, to the extent required by Cal. Corp. Code § 17704.08(a), provided the person complied with the duties stated in Cal. Corp. Code § 17704.09. The Company may additionally indemnify officers, employees, and agents as permitted by Cal. Corp. Code § 17704.08(b) and (d).

9.3 Advancement of Expenses

The Company may advance expenses for defending covered claims, as permitted by Cal. Corp. Code § 17704.08.

ARTICLE X - TAX MATTERS

10.1 Tax Classification

☐ Partnership (multi-member) / Disregarded entity (single-member)
☐ S corporation (upon election)
☐ C corporation (upon election)

10.2 Partnership Representative

[MEMBER NAME] is designated as Partnership Representative under IRC § 6223.

10.3 California Franchise Tax and Fees

The Company shall pay the annual minimum franchise tax of $800 required by Cal. Rev. & Tax. Code § 17941, due on or before the 15th day of the fourth month of the Company's taxable year, for each taxable year (or part thereof) until a Certificate of Cancellation is filed with the California Secretary of State. If the Company's total California gross income exceeds $250,000 in any taxable year, the Company shall also pay the additional LLC fee required by Cal. Rev. & Tax. Code § 17942.

10.4 Statement of Information

The Company shall file a Statement of Information (Form LLC-12) with the California Secretary of State within 90 days after the filing of its Articles of Organization, and biennially thereafter during the applicable filing period, as required by Cal. Corp. Code § 17702.09.

ARTICLE XI - BOOKS AND RECORDS

11.1 Records

The Company shall maintain at its principal office:
(a) Current list of Members;
(b) Tax returns for past 4 years;
(c) Operating Agreement and amendments;
(d) Financial statements for past 4 years.

11.2 Inspection Rights

Each Member may inspect records per Cal. Corp. Code § 17704.10.

ARTICLE XII - MISCELLANEOUS

12.1 Governing Law

This Agreement is governed by the laws of the State of California, without regard to conflict-of-laws principles.

12.2 Forum and Venue

Any action or proceeding arising out of or relating to this Agreement shall be brought exclusively in the Superior Court of the State of California for the county in which the Company's designated office under Section 1.4 is located, or, if applicable, in that court's complex civil litigation program. Each Member and Manager consents to the personal jurisdiction of that court.

12.3 Amendments

This Agreement may be amended only by written instrument signed by Members holding [a majority / all] Percentage Interests, consistent with Section 6.3 and Cal. Corp. Code § 17701.10(a)(4).

12.4 Entire Agreement

This Agreement supersedes all prior agreements.

12.5 Counterparts; Electronic Signatures

This Agreement may be executed in counterparts, each of which is deemed an original. The Members agree to conduct this transaction by electronic means, and an electronic signature on this Agreement is valid and enforceable to the same extent as a handwritten signature, as provided by the California Uniform Electronic Transactions Act, Cal. Civ. Code §§ 1633.1 et seq.

12.6 Notices

Notices to addresses in Exhibit A.

EXECUTION

The undersigned execute this Operating Agreement as of the Effective Date.

MEMBERS:

______________________________
[MEMBER 1 NAME]
Date: ______________

______________________________
[MEMBER 2 NAME]
Date: ______________

EXHIBIT A - MEMBERS, CONTRIBUTIONS, AND INTERESTS

EXHIBIT B - SPOUSAL CONSENT

I, [SPOUSE NAME], am the spouse of [MEMBER NAME], a Member of [COMPANY NAME], LLC. I acknowledge that I have read and understand the Operating Agreement. I consent to the provisions thereof and agree that my community property interest, if any, in the Membership Interest is subject to this Agreement.

______________________________
[SPOUSE NAME]
Date: ______________

This Operating Agreement is governed by the California Revised Uniform Limited Liability Company Act, Cal. Corp. Code §§ 17701.01 et seq. California imposes annual franchise taxes and fees. Consult a California attorney before use.