Entity Formation — Multi-Member LLC (Eight-Step)

Section 1 of 8

Company & Jurisdiction

Establish the entity structure, formation state, company name, principal office, registered agent, and effective date.

Single-entity structure. This tool produces a single-entity Multi-Member LLC. HoldCo·OpCo structures with bankruptcy-remote sub-entities are addressed in the RESERVE 12-step tool; please use that tool if the deal requires a HoldCo·OpCo split.

Jurisdiction of Formation *

Company Name *

Tool appends “, LLC” in the document; verify name availability with the relevant Secretary of State before filing.

Effective Date *

Effective date of the Operating Agreement.

Principal Office Address *

Registered Agent *

Primary Business Purpose

Determines the purpose clause in Article II of the generated Operating Agreement.

Section 2 of 8

Members & Contributions

Define each Member of the Company. Members may be individuals, trusts, or entities. Capital contributions are all-cash; Percentage Interests must total 100%.

All-cash contributions only. This tool assumes that all Capital Contributions are made in cash. If any Member intends to contribute property (real estate, securities, IP, services), the engagement requires § 704(c) allocation analysis and routes to the RESERVE 12-step tool. The generated Operating Agreement contains a recital confirming the all-cash structure.

Soft cap. This tool is sized for the ten-member soft cap. If the deal contemplates more than ten Members or accredited-investor counts beyond this scope, consult the firm to determine whether the RESERVE 12-step tool with full PPM is more appropriate.

Section 3 of 8

Management & Governance

Designate the management structure, identify the Manager (if Manager-Managed), and specify Major Decisions requiring Member-level consent over and above Manager authority.

Management Structure

Manager-Managed is standard where one Member (or an affiliate) will run day-to-day operations and the other Members are largely passive. Member-Managed is appropriate for small joint ventures where every Member has a hands-on role. Board-Managed (multi-Manager governance) is reserved for the RESERVE 12-step tool.

Manager Name *

If a Member, the Manager-Member retains a Member capital position separately from its Manager role.

Fiduciary Duty Treatment

Delaware permits broad elimination of fiduciary duties under § 18-1101(c). Other states are more restrictive; the firm will calibrate this provision to the formation state.

Major Decisions Requiring Member-Level Consent

Decisions requiring Member approval beyond Manager-level authority.

Sale of all or substantially all of the Company’s assets Merger, consolidation, or conversion of the Company Dissolution or winding up of the Company Incurrence of indebtedness above a stated threshold Amendment of this Operating Agreement Admission of new Members (except permitted transferees) Material tax elections (other than annual elections) Affiliate transactions other than at arm’s length on disclosed terms Change in the Company’s principal business purpose

Major-Decision Threshold

Manager Removal

Section 4 of 8

Distributions

Configure how distributions of Available Cash will be made. The default is pro-rata in proportion to Percentage Interests, with an optional single-tier Preferred Return ahead of the pro-rata split. Multi-tier IRR promote waterfalls with catch-up and clawback are reserved for the RESERVE 12-step tool.

Single-class, traditional allocations. This tool produces a single class of Membership Interests with optional Preferred Return. Allocations follow Percentage Interests on a traditional basis; the tool does not generate § 704(b) safe-harbor allocations (PIPCA, QIO, minimum-gain chargebacks). If the deal economics require special allocations, route to the RESERVE 12-step tool.

Include a Preferred Return on Capital Contributions

If enabled, Members receive their accrued Preferred Return first, then return of Unreturned Capital Contributions, then pro-rata residual. If disabled, all distributions are pro-rata to Percentage Interests.

Distribution Timing

Liquidating Distributions

Additional Capital Contributions

Additional Capital Mode

For mandatory capital calls, default remedies include Member-loan-with-priority-return at 25% per annum. Full institutional capital-call default machinery (punitive dilution, forced sale, forfeiture of profits interests) is reserved for the RESERVE 12-step tool.

Section 5 of 8

Tax Elections & Provisions

Configure federal tax classification, § 754 election, § 752 debt-allocation method, BBA Partnership Representative, tax year, and tax distributions. The tool defaults to partnership classification (Subchapter K), which is appropriate for nearly all multi-member real estate LLCs.

Federal Tax Classification

Multi-member LLCs default to partnership treatment. S-corp election is rarely appropriate for real estate (single-class-of-stock restriction; ineligible shareholders). C-corp election typically reflects a specific strategic objective.

§ 754 Inside Basis Adjustment

§ 754 Election

A § 754 election permits the Company to adjust the inside basis of its assets upon a transfer of an interest or distribution to a Member. Once made, it binds the Company for that year and all subsequent years.

§ 752 Liability Allocation

Nonrecourse Liabilities — Third Tier

Qualified Nonrecourse Financing (§ 465)

BBA Partnership Representative

Partnership Representative

Designated Individual (if PR is an entity)

Push-Out Election under § 6226

Push-out shifts audit-year tax liability to the reviewed-year Members. Without it, current-year Members bear the imputed underpayment regardless of who held interests in the reviewed year.

Tax Year, Accounting Method & Tax Distributions

Tax Year

Accounting Method

Tax Distributions

Assumed Tax Rate

Tax Distribution Treatment

Section 6 of 8

Transfers & Exit Mechanics

Configure restrictions on Membership Interest transfers, permitted-transferee categories, and exit mechanics (ROFO, ROFR, drag-along, tag-along).

General Transfer Restriction

Permitted Transferees

Transfers to these categories are permitted without Member consent (subject to securities and tax compliance).

Estate planning transfers to revocable trust, irrevocable trust for spouse/descendants, GRAT, IDGT, family limited partnership Wholly-owned entity of the transferring Member (single-member LLC, S-Corp) Affiliates of the transferring Member (controlled / under common control) Transfer by will / intestacy upon death of an individual Member Charitable organizations (501(c)(3) and DAFs) Employee benefit trusts of the transferring Member or its Affiliates

Right of First Offer (ROFO)

Transferring Member must first offer to non-transferring Members at the proposed transfer price and terms.

Right of First Refusal (ROFR)

Drag-Along Right

Drag-Along Trigger Threshold

Tag-Along Right

Tag-Along Trigger

Special Provisions

SPE Covenants

Required by most commercial real estate lenders for entities holding financed property.

Charging Order Protection

Manager / Member Indemnification

Confidentiality

Restrictive Covenants

Dispute Resolution

Section 7 of 8

Securities Compliance

Select the securities compliance posture appropriate for the deal. This tool supports two postures: Level 0 (joint venture — no securities offering) and Level 1 (Reg D 506(b) friends-and-family offering with Risk Disclosure Letter). Higher-complexity offerings (Level 2 full PPM, Level 3 506(c) with general solicitation) are reserved for the RESERVE 12-step tool.

Securities Compliance Level *

Level 0: Operating-member joint venture; companion document is the JV Securities Analysis Memo addressing the Williamson v. Tucker factors. Level 1: Reg D 506(b) friends-and-family private placement; companion document is the Risk Disclosure Letter (in lieu of full PPM).

Section 8 of 8

Review & Generate

Review the configuration and generate the draft document set. All documents are DRAFTS subject to attorney review and final issuance by Donovan Legal PLLC under a written engagement letter.

Important. All documents generated by this tool are drafts intended for attorney review and final issuance by Donovan Legal PLLC. Drafts are not legally effective until reviewed, finalized, and signed in accordance with the firm’s written engagement letter. PLATINUM and RESERVE members should forward the generated documents to the firm for review against the specific deal facts before execution or reliance. Tax, distribution, and securities-compliance provisions involve fact-specific determinations that the firm verifies against the underlying economic deal, lender requirements, and Members’ tax profiles before issuance. Reading or using this tool does not create an attorney-client relationship; an attorney-client relationship is created only by a signed engagement letter.