Legal Question in Business Law in California

Well, there is a range of possibilities, each with a variable and unknowable set of costs and benefits, risks and rewards. Without interviewing you in depth about the facts and the personality of the person, I cannot make a recommendation, but I can lay out some of the possibilities:

(1) Tell him he breached the oral contract by failing to carry out his part of the deal;

(2) Agree to add him as a minority member, but use your majority ownership position to continue to run the show, including paying yourself a big salary if and when the LLC has positive cash flow.

(3) Cash him out, if you can.

(4) Agree to add him as a full member if and when he provides the expected services.

(5) Terminate the LLC and conduct the business through a new organization, perhaps an S-corporation -- if it has sufficient promise to warrant continuing.

(6) Terminate the LLC and discontinue the business, which doesn't sound like a winner.

(7) Etc., etc.

Note that these decisions may have tax implications. I assume that as a single member LLC you have filed tax returns as a disregarded entity. We would need to see the tax returns to tell. If you do provide a membership interest, no matter how small, you are no longer a disregarded entity for tax purposes. This means a presumed dissolution and recontribution of assets. Discuss you issues with your CPA or attorney and consider the implications. You will also need to determine what tax consequence the tranfer of interests will have for you, for the LLC and for the new member. It this compensation, and taxable as such?

As indicated by Bryan's comments, these are not simple issues