This Operating Agreement (as the same may be amended, restated, or otherwise modified from time to time, this “Agreement”), effective (Date), is entered into by [Member1.FirstName] [Member1.LastName] , [Member2.FirstName] [Member2.LastName] (Insert Names Of All Parties) (the “Members”), as the Members of Company Name LLC (the “Company”), according to the Act (as such term is defined below) on the following terms and conditions:
All members’ names need to appear on the agreement and in Exhibit A, which also outlines their address and membership interest. Any new members can be added as an addendum to this agreement and the articles of organization.
On (Date Of Formation), the articles of organization of the Company (“Articles of Organization”) were filed in the office of the Secretary of State of California in accordance with and under the Act.
The Company's name shall be (Company Name LLC), and its principal place of business shall be (Address). The Members may change such name, consistent with the requirements of the Act, change such place of business, or establish additional places of business of the Company as the Members may determine to be necessary or desirable.
The purpose of the Company is the following:
(State the entire purpose of the company as set out in the articles of organization)
The term of this Agreement shall be until the Company is dissolved as provided in this Agreement.
The Members shall execute, acknowledge, file, record, and/or publish such certificates and documents as may be required by this Agreement or by law in connection with the formation and operation of the Company.
The Company’s initial registered office and initial California registered agent shall be as provided in the Articles of Organization. The registered office and registered agent may be changed from time to time by the Members by filing the address of the new registered office and/or the name of the new registered agent in accordance with the Act.
All LLCs in California are required to have a registered agent. You need to include the information of your registered agent in this agreement. You must update the information in an addendum if you change registered agents.
The following capitalized terms are intended to have the meaning set forth below:
“Act” shall mean the California Limited Liability Company Law, which may be amended occasionally.
“Affiliate” shall mean:
Any person directly or indirectly controlling, controlled by, or under common control with another person.
A person owning or controlling 10% or more of the outstanding voting securities of such other person.
Any officer, director, or partner of such other person.If such a person is an officer, director, or partner, any company for which such person acts in any capacity.
The term “person” shall include any natural person, corporation, partnership, trust, unincorporated association, or other legal entity.
“Code” shall mean the Internal Revenue Code of 1986, as amended occasionally, and the regulations promulgated and the rulings issued thereunder.
“Membership Interest” shall mean the Member’s ownership interest in the Company.
Membership interest is usually indicated as a percentage based on each member’s capital contributions. It’s important to allocate a membership interest to all members as this dictates their voting power and profit distributions.
Members shall make an initial capital contribution of $(Dollar Amount). Members may make additional capital contributions but shall have no obligation to.
Capital contributions don’t only need to be in the form of money. They can also be assets such as property. You need to specify what members are required to contribute to this agreement. Otherwise, they’re not legally required to make any contributions.
For each fiscal year, the net income and net loss of the Company shall be allocated to the Members in proportion to each Member’s Membership Interest, as described in Exhibit A.
Distributions shall be made to the Members at the times and in the aggregate amounts determined by the Members.
California has no default rules related to the distribution of profits or losses. As such, you must be very clear about how these processes will work in your operating agreement.
The Company shall pay directly, or reimburse the Members, as the case may be, for all the costs and expenses of the Company’s operations.
The Members shall manage the business and affairs of the Company. The Members shall have full and complete authority, power, and discretion to manage and control the Company’s business, affairs, and properties, to make all decisions regarding those matters, and to perform any and all other acts or activities customary or incident to the management of the Company’s business. The Members may act by written consent.
Under RULLCA, all LLCs formed within California are automatically member-managed. As such, you need to clarify all the members’ roles and responsibilities in this agreement.
The Members shall have all authority, rights, and powers conferred by law and those required or appropriate to the management of the Company’s business, which, by way of illustration but not by way of limitation, shall include the right, authority, and power to cause the Company to:
7.2.1 Acquire, hold, develop, lease, rent, operate, sell, exchange, subdivide, and otherwise dispose of the Company’s property;
7.2.2 Borrow money on such terms and in such amounts as the Members deems to be in the best interest of the Company;
7.2.3 To pledge or mortgage or subject the Company’s property to any security device, to obtain replacements of any mortgage or other security device, and to prepay, in whole or in part, refinance, increase, modify, consolidate, or extend any mortgage or other security device, all on such terms as the Members deems to be in the best interest of the Company;
7.2.4 Enter into such contracts and agreements as the Members determines to be reasonably necessary or appropriate in connection with the Company’s business and purpose (including contracts with Affiliates of the Members) and any contract of insurance that the Members deems necessary or appropriate for the protection of the Company and the Members, including errors and omissions insurance, for the conservation of Company assets, or for any purpose convenient or beneficial to the Company;
7.2.5 Employ persons, who may be Affiliates of the Members, in the operation and management of the business of the Company;
7.2.6 Prepare or cause to be prepared reports, statements, and other relevant information for distribution to the Members;
7.2.7 Open accounts and deposits and maintain funds in the name of the Company in banks, savings and loan associations, “money market” mutual funds, and other instruments as the Members may deem in its discretion to be necessary or desirable;
7.2.8 Make or revoke any of the elections referred to in the Code;
You’ll need to outline your company’s voting process and rules within this agreement. If you don’t, then California’s default provisions will take effect. This means that under RULLCA, voting power is calculated according to membership interests. Also, any changes to the articles of organization or this agreement need a unanimous vote to be accepted.
7.2.9 Select as its accounting year a calendar or fiscal year as may be approved by the Internal Revenue Service;
7.2.10 Determine the appropriate accounting method or methods to be used by the Company;