California Member-Managed LLC Operating Agreement

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This Limited Liability Company (LLC) Operating Agreement outlines the operating procedures and policies of an LLC with multiple members. An LLC is a flexible business entity that combines the benefits of corporations and partnerships, and the operating agreement defines the members' rights, powers and entitlements. The agreement contains information regarding the members' capital contributions, the registered agent, and the LLC's purpose. This operating agreement contains many of the standard provisions commonly included in LLC operating agreements, and it may be customized to fit the specific needs of the members forming the LLC. This document should be used when forming an LLC with multiple members.

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                             This Limited Liability Company (LLC) Operating Agreement outlines the operating
                             procedures and policies of an LLC with multiple members. An LLC is a flexible business
                             entity that combines the benefits of corporations and partnerships, and the operating
                             agreement defines the members' rights, powers and entitlements. The agreement contains
                             information regarding the members' capital contributions, the registered agent, and the
                             LLC's purpose. This operating agreement contains many of the standard provisions
                             commonly included in LLC operating agreements, and it may be customized to fit the
                             specific needs of the members forming the LLC. This document should be used when
                             forming an LLC with multiple members.
             ®




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                     OPERATING AGREEMENT OF
                     _____________________________

This OPERATING AGREEMENT, dated ___________________ (the “Agreement”), is
between the [Insert each Members name]___________________, (collectively referred to
as the “Members” and individually as a "Member").

The Members hereby forms this limited liability company pursuant to and in accordance
with the California Beverly-Killea Limited Liability Company Act, as amended from
time to time (“the Act”) and hereby agree as follows:

                                       ARTICLE I

                          THE LIMITED LIABILITY COMPANY

1.1. Filing. In connection with the execution of this Agreement, the Members
___________________ [have caused or will cause] Articles of Organization (the
“Articles”) that comply with the Act to be properly filed with the California Secretary of
State, and will execute such further documents (including amendments to the Articles)
and take such further action as is appropriate to comply with the requirements of law for
the formation and operation of a limited liability company in all places where the
Company may conduct its business.

1.2. Name. The name of the Company is _____________________, [Instruction: The
name of the Company shall include either, LLC, L.L.C. or Limited Liability Company].
The Company will transact business under that name.

1.3. Company Purpose. The purpose of the Company is to engage in
__________________ [Instruction: If the business of the Company is not clearly
defined, it is permissible to insert “The business of the Company may be conducted and
promoted by the Company, and may engage in any lawful activity for which limited
liability companies may be formed under the Act and engaging in any and all activities
necessary or incidental to the foregoing” ].

1.4. Operative Date of Agreement. The provisions of this Agreement shall take effect
on _______ [date].

1.5. Registered Office. The Company shall maintain an office in California as required
by the Act at which it shall maintain the records required to be maintained there by the
Act. The Company may have such other offices as the Members may determine, within
or without the State of California and any such office may be the Company's principal
place of business, as determined by the Members.

1.6. Agent. The Company's initial agent for service of process required by the Act is as
set forth in the Articles and may be changed if and as determined by the


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Members.[Instruction: It is permissible to insert the name and address of the initial agent
for service of process].

1.7. Definitions. As used in this Agreement, the following terms have the following
meanings:

"Act": as defined in the Preamble.

"Code" means the Internal Revenue Code of 1986, as it may be amended or superseded
from time to time.

"Economic Interest" has the meaning set forth in Section 17001(n) of the Act.

"Membership Interest," as to each Member, means each Member's percentage interest in
the Company as set forth in ___________________ [Schedule A].

"Profits" and "Losses" mean respectively, for each fiscal year or other period, an amount
equal to the Company's taxable income or loss for such year or period, determined in
accordance with Code Section 703(a).

                                       ARTICLE II

                                        MEMBERS

2.1. Names, Addresses, Contributions, Membership Interests, and Capital Accounts of
Members.

The name, full business or residence street address, initial capital contribution, and
Membership Interest of each Member are as set forth in Schedule A attached and
incorporated by reference to this Agreement.

Each Member shall make the Initial Capital Contribution and have the Membership
Interest set forth above.

If a person becomes a Member by admission as such pursuant to action of the Members
or as a Member's assignee as provided in Article VIII, that person becomes a party to this
Agreement by executing and delivering to the Members a supplement to this Agreement
in such form as determined by the Members. The supplement shall show: (a) the full
name and address of the new Member; (b) the Capital Contribution, if any, to be made by
the new Member; (c) the Membership Interest of the new Member; and (d) any
adjustments in the Membership Interests of other Members resulting from the admission
of the new Member. By executing and delivering the supplement, the new Member
becomes a party to this Agreement without further action.

2.2. Additional Contributions. No Member will be obligated to make any additional
contribution to the Company. No Member may make an additional contribution to the



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Company without the prior written consent of ___________________ [all other Members
or other Members whose Membership Interests equal more than ____________________
percent of the Membership Interests of all Members].

2.3. Capital Accounts. A Capital Account shall be maintained for each Member. The
Capital Account of each Member will be credited initially with the amount of capital
contributed to the Company by that Member. Thereafter, each Member's Capital
Account will be credited with that Member's share of Profits and the amount of any
additional capital contributed to the Company by that Member, and will be debited with
that Member's share of Losses and the amount of any cash distributed to that Member.

                                     ARTICLE III

                     PROFITS, LOSSES AND DISTRIBUTIONS

3.1. Profits and Losses. The Profits and Losses of the Company shall be allocated
among the Members in accordance with their Membership Interests.

3.2. Distributions. The Members shall distribute available funds to the Members, in
proportion to their Membership Interests, as determined by the Members. "Available
funds" for this purpose means the Company's gross cash receipts (other than cash funds
obtained as contributions to the Company by its Members and cash funds, if any,
obtained from loans to the Company), less the Company's operating expenses including
provisions for payment of outstanding and unpaid current obligations of the Company as
of such time, and less the amount that, in the Members' reasonable judgment, the
Company should retain in order to fulfill its business purposes.

                                     ARTICLE IV

                                   MANAGEMENT

4.1. Members. The liability of the Members shall be limited as provided in the Act,
which generally provides that no Member is personally liable for the debts, obligations,
or liabilities of the Company.

4.2. Authority of Members. Except as otherwise provided in this Paragraph or
Paragraph 4.4, the Members have equal rights to manage the operations and affairs of the
Company and to make all decisions regarding the Company and the business of the
Company. Subject to Paragraph 4.4, any action approved by a majority measured by
Membership Interests of the Members will constitute the act of and will bind the
Company. The signature of any Member authorized to do so by such approval is
sufficient to bind the Company with respect to the matter or matters so approved. No
member acting alone without such approval may bind the Company to any agreement
with or obligation to any third party or represent or claim to have the ability to do so.
The Members will not be required to hold meetings to make management decisions but
may do so if desired, according to Paragraph 4.5.



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4.3. Other Activities; Affiliates.

[Choose]

 (a) Members are not required to manage the Company as their sole and exclusive
function and each Member may have other business interests and may engage in other
activities, in addition to those relating to the Company, including the making or
management of other investments. Each Member recognizes that each other Member
may have an interest in investing in, operating, and otherwise using various kinds of
property for profit, and engaging in any and all activities related or incidental thereto and
that each Member will make other investments consistent with such interests. Neither the
Company nor any Member by virtue of this Agreement will have any right in or to any
other ventures or activities in which any other Member is involved or to the income or
proceeds derived from such other ventures or activities. The pursuit of other ventures
and activities by each Member, even if competitive with the business of the Company, is
hereby consented to by each Member and will not be deemed wrongful or improper.
Except as otherwise provided in this Agreement, neither any Member nor any Affiliate of
a Member will be obligated to present any particular investment opportunity to the
Company, even if such opportunity is of a character that, if presented to the Company,
could be taken by the Company, and each Member and each Affiliate of a Member will
have the right to take for its own account, or to recommend to others, any such particular
investment opportunity.

(b) "Affiliate(s) of a Member" means (1) any partners in that Member; (2) any person that
directly or indirectly (including through any related entity) or in a fiduciary capacity
controls, is controlled by, or is under common control with that Member or any general
partner in that Member; or (3) any other person of which 5 percent or more of the equity
interest is held beneficially or of record by that Member or any general partner in that
Member. "Affiliate" also includes any officer or director of that Member, a spouse,
ancestor, or descendant of such officer or director or a trust for the benefit of any of the
foregoing. For purposes of this definition, the term "control" means the possession,
directly or indirectly, of the power to cause the direction of the management and policies
of a person, whether through the ownership of voting securities, by contract, family
relationships, or otherwise.

[OR]

(a) Each Member agrees that he/she shall devote 100% of his/her business efforts in the
management of the Company, however, notwithstanding the foregoing (1) may engage in
incidental other business activities that do not compete with the Company or interfere
with the Member's services to the Company, and (2) may engage in personal investment
activities in enterprises not directly competitive with the Company.

4.4. Certain Decisions. Except as may be agreed upon by the Members, decisions of the
Members shall be made by a majority measured by_________ the Membership Interests



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of all Members. Notwithstanding the foregoing, however, to the fullest extent permitted
by law, the following matters require the mutual agreement of all of the Members:

       A. A change in the purposes or the nature of the business of the Company;

       B. The admission or withdrawal of Members or a change in their Membership
       Interests in any manner other than as provided in this Agreement;

       C. The dissolution of the Company other than as provided in this Agreement;

       D. Any amendment to this Agreement;

       E. The incurrence or prepayment of any debt for borrowed money by the
       Company in excess of $____________________;

       F. Any purchase of capital assets or other properties for the Company in excess of
       $____________________

       G. Changes in tax elections and accounting policies of the Company.

       H. ___________________ [Include any other as required].

4.5. Meetings and Consents of Members. Actions of Members may be taken at
meetings, by written consent of all Members, or otherwise as agreed among the
Members. If action is taken at a meeting, an appropriate record of the action taken shall
be retained in the Company's records. Meetings of Members may be called by
___________________ [any____________________ (number) Members or not less than
____________________ percent measured by Membership]. Reasonable notice shall be
given to each Member of any meeting of Members, and such notices shall be deemed
reasonable if it briefly specifies the nature of the matters to be presented at the meeting,
and is sent or delivered in a manner that in the ordinary course of business would be
received by each Member not less than ___________________ [specify number of days]
before the day of the meeting.

4.6. Information Relating to Company. Any Member is entitled to receive any
information regarding the Company or its activities. Each Member or authorized
representative shall be given access to and may inspect and copy all books and records
regarding the Company or its activities. The requesting Member shall be responsible for
all such expenses related to the rights contained in this Paragraph.

4.7. Exculpation. No act or omission of the Members, the effect of which may cause or
result in loss or damage to the Company or the Members, if done in good faith to promote
the best interests of the Company, shall subject the Members acting or failing to act to
any liability to the Members.




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4.8. Records at Principal Place of Business. The Company shall keep at its principal
place of business the following:

        A. A current list the full name and address of each Member and each holder of an
Economic Interest in the Company, together with the contribution and share in profits and
losses of each Member and holder of Economic Interest;

       B. A copy of the Articles and all amendments thereto;

       C. Copies of the Company's federal, state, and local income tax returns and
       reports, if any, for the six most recent years;

       D. A copy of this Agreement;

       E. Copies of financial statements of the Company for the six most recent years;
       and

       F. The books and records of the Company as they relate to internal affairs for at
       least the current and past four fiscal years.

                                      ARTICLE V

                                  COMPENSATION

5.1. Compensation. Unless otherwise agreed among the Members, no Member shall
receive any payment or compensation for performing the obligations under this
Agreement or for providing management services to the Company.

5.2. Reimbursement of Expenses. The Company shall reimburse Members for all
reasonable, direct out-of-pocket expenses incurred by such Member in managing the
Company.

                                      ARTICLE VI

                                      ACCOUNTS

6.1. Books. Complete and accurate accounting books for the Company shall be
maintained at the Company's principal place of business. These books are to be kept on
an accounting method acceptable for tax or other applicable regulatory purposes as the
Members may select. The Company's accounting period is the calendar year.

6.2. Reports. The books of account are to be closed after the close of each calendar year.
Each Member shall promptly be sent a statement of the Member's distributive share of
income and expense for federal income tax reporting purposes.




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                                     ARTICLE VII

                           TRANSFERS; NEW MEMBERS

7.1. Assignment. A Member's interest in the Company may be assigned only with the
consent of ___________________ [all or ____________________ percent measured by
Membership Interests] of the other Members.

7.2. Substitution of Transferee as Member. Notwithstanding anything to the contrary in
this Agreement, no transferee, assignee, purchaser, designee, or legal representative of a
Member may become a Member without the consent of ___________________ [all or a
majority measured by Membership Interests] of the other Members. If consent is not
granted, the transferee, assignee, purchaser, designee, or legal representative of a
Member, except as otherwise required by law, shall have no right to participate in the
management of the business and affairs of the Company and shall be entitled only to
receive the Economic Interest to which that Member would otherwise be entitled and
which was assigned.

As further conditions to admission as a Member any transferee, assignee, purchaser,
designee, or legal representative of a Member shall (a) execute and deliver such
instruments, in form and substance satisfactory to the Members, as the Members deem
necessary or desirable to cause the transferee to become a Member, including but not
limited to the supplement to this Agreement referred to in Paragraph 2.1, and (b) pay all
reasonable expenses in connection with admission as a Member, including but not limited
to the cost of preparation and filing of any supplement to this Agreement referred to
above and any other amendment of this Agreement or the Articles or of taking any other
action necessary in connection therewith.

7.3. Admission of New Members. Additional persons may be admitted as Members of
the Company upon the affirmative vote of ___________________ [all Members or
Members whose Membership Interests equal more than ____________________ percent
of all Membership Interests]. Concurrently with admission of a person as a Member, that
new Member shall execute and deliver the supplement described in Paragraph 2.1.

7.4 Resignation. A Member may only resign from the Company with the consent of all
of the other Members.


7.5 Indemnification. The Company shall indemnify, to the fullest extent now or
hereafter permitted by law, each Member of the Company who was or is made a party to
or a witness in or is threatened to be made a party to or a witness in any threatened,
pending or completed action or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such Member is or was an authorized
representative of the Company, against all expenses (including attorneys' fees and
disbursements), judgments, fines (including excise taxes and penalties) and amounts paid
in settlement actually and reasonably incurred by such person in connection with such



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action or proceeding. Indemnification under this paragraph shall not be made by the
Company in any case where a court determines that the alleged act or failure to act giving
rise to the claim for indemnification (i) is expressly prohibited by the Act or any
successor statute in effect at the time of such alleged action or failure to take action, (ii)
constitutes willful misconduct, bad faith, gross negligence or reckless disregard of a
Member's duties or (iii) is outside the scope of such Member's duties performed in his or
her official capacity or in another capacity at the Company's request.

7.6 Personal Indemnification. No Member shall have any obligation to indemnify any
other Member, Manager, officer, employee, agent or other authorized representative of
the Company under any circumstances.

7.7 Insurance. The Company may purchase and maintain insurance on behalf of any
Member, or is or was an authorized representative of the Company, against any liability
asserted against or incurred by such Member in any such capacity, or arising out of the
status of such Member as such, whether or not the Company would have the power to
indemnify such Member against such liability under the provisions of this Agreement.

                                      ARTICLE VIII

                        DISSOLUTION AND TERMINATION

8.1. Duration; Events of Dissolution. The Company shall be dissolved on the date set
forth in the Articles, if any, unless sooner dissolved by:

       A.       The happening of events specified in this Agreement;

       B. The affirmative vote of ___________________ [all Members or Members
       whose Membership Interest equals more than ____________________ percent];
       or

       C. Any event that makes it unlawful for the business of the Company to be carried
       on by the Members.

8.2. Final Accounting. In case of the Company's dissolution, an accounting shall be
made from the date of the last previous accounting to the date of dissolution.

8.3. Liquidation. On the Company's dissolution, the then remaining Members or a
person selected by a majority measured by Membership Interests of the Members shall
act as liquidator to wind up the Company. The person acting as liquidator shall act in
accordance with Chapter 8 of the Act. The liquidator shall have full power and authority
to sell, assign, and encumber any or all of the Company's assets and to wind up and
liquidate the Company's affairs in an orderly and prudent manner. The liquidator shall
distribute all proceeds from liquidation to the Members, after payment or provision for all
obligations of the Company, in accordance with their Membership Interests.




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8.4. Distribution in Kind. If the Members, or the liquidator, with the consent of a
majority measured by Membership Interests of all Members, determine that a portion of
the Company's assets should be distributed in kind to the Members, the liquidator shall
distribute the same to the Members in undivided interests as tenants in common in
proportion to their Membership Interests.

8.5. Certificates of Dissolution and Cancellation. Upon dissolution of the Company, if
and as required by the Act, the members shall cause a certificate of dissolution to be filed
pursuant to Section 17356 of the Act. On completion of the Company's winding up and
distribution of its assets, the Company shall be terminated, and a majority measured by
Membership Interests of all Members shall cause a certificate of dissolution and a
certificate of cancellation of articles to be filed as required by Chapter 8 of the Act and
take such other actions as may be necessary to terminate the Company.

                                      ARTICLE IX

                                        NOTICES

9.1. Method for Notices. Except as otherwise expressly provided in this Agreement, all
notices hereunder shall be sent by first class mail, postage prepaid, and addressed to a
Member at the current address of the Member as set forth in the records of the Company
(except that any Member may change the address for such purpose by providing written
notice to the Company), and are effective on the date of receipt or on the fifth day after
mailing, whichever is earlier.

9.2. Computation of Time. In computing any period of time under this Operating
Agreement, the day of the act, event, or default from which the designated period of time
begins to run shall not be included. The last day of the period so computed is included,
unless it is a Saturday, Sunday, or legal holiday, in which event the period will run until
the end of the next day that is not a Saturday, Sunday, or legal holiday.

                                       ARTICLE X

                          MISCELLANEOUS PROVISIONS

10.1. Entire Agreement. This Operating Agreement (a) contains the entire agreement
among the parties, (b) except as otherwise expressly provided in this Agreement, may not
be amended and no rights hereunder be waived except by an instrument in writing signed
by the party sought to be charged with such amendment or waiver, (c) will be construed
in accordance with, and governed by, the laws of California, and (d) is binding on and
inures to the benefit of the parties and their respective personal representatives,
successors, and assigns, except as above set forth. No document that purports to amend,
supplement, or replace this Agreement will be effective to do so unless it specifically
refers to this Agreement, specifically states its effect on this Agreement, and is signed by
all Members of the Company.




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10.2. Construction Principles. Words in any gender are deemed to include the other
genders. The singular is deemed to include the plural and vice versa. The headings and
underlined paragraph titles are for guidance only and have no significance in the
interpretation of this Operating Agreement.

IN WITNESS WHEREOF, the Members have signed this Operating Agreement as of the
date first above written.

___________________ [signature]
___________________ [print name]

___________________ [signature]
___________________ [print name]

___________________ [signature]
___________________ [print name]




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                                     Schedule A


               Name        Address   Initial    Membership
                                    Capital       Interest
                                  Contribution
                                  $_________
            __________ __________ __________ ________________
             _________ _________                ____ percent

                                  $_________
            __________ __________ __________ ________________
             _________ _________                ____ percent

                                  $_________
            __________ __________ __________ ________________
             _________ _________                ____ percent




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