LIMITED LIABILITY COMPANY OPERATING AGREEMENT

[COMPANY NAME], LLC

A California Limited Liability Company

Effective Date: [DATE]

[// GUIDANCE: Governed by the California Revised Uniform Limited Liability Company Act, Cal. Corp. Code §§ 17701.01 et seq. IMPORTANT: California imposes an annual minimum franchise tax of $800 on all LLCs, plus an additional fee for LLCs with gross receipts over $250,000. California is a community property state. California does NOT permit Series LLCs.]

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.

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

[// GUIDANCE: California is a community property state. The following provisions address spousal interests.]

(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

[// GUIDANCE: California requires withholding on distributions to nonresident members. See Cal. Rev. & Tax. Code § 18662.]

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

ARTICLE VI - MANAGEMENT

[// GUIDANCE: Cal. Corp. Code § 17704.07 provides default rules for member-managed LLCs. Manager-managed LLCs must so state in the Articles of Organization.]

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

Under Cal. Corp. Code § 17704.07(c), the following require consent of all Members:
(a) Amendment of the Operating Agreement;
(b) Amendment of the Articles of Organization;
(c) Admission of new Members;
(d) Certain extraordinary actions.

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

6.4 Standard of Care

Members and Managers shall discharge duties in good faith and with the care of an ordinarily prudent person, per Cal. Corp. Code § 17704.09.

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.

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 indemnify Members and Managers to the fullest extent permitted by Cal. Corp. Code § 17703.04.

9.3 Advancement of Expenses

The Company may advance expenses for defending covered claims.

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

[// GUIDANCE: All California LLCs must pay an annual minimum franchise tax of $800, due by the 15th day of the 4th month after formation and annually thereafter. Additional LLC fees apply based on gross receipts.]

The Company shall pay all required California franchise taxes and fees.

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.

12.2 Amendments

This Agreement may be amended only by written instrument signed by Members holding [a majority / all] Percentage Interests.

12.3 Entire Agreement

This Agreement supersedes all prior agreements.

12.4 Counterparts

May be executed in counterparts.

12.5 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.