¶ C01
Introduction and Use
Purpose. This appendix sets out three complete model operating agreements, two riders that are added to a base agreement for particular purposes, a set of provisions for a Wyoming DAO LLC, and the schedules and conforming documents that accompany any of them. The models apply the analysis of the preceding chapters. Each is preceded by drafting notes that state the choices the model makes, the default rules it displaces and the paragraphs of the treatise where the point is developed. The models are original to the treatise and are written to illustrate the drafting points in the text. Each must be adapted to the facts, the parties and the law of the state of formation before use.
Governing law. Models A, B and C are written for a limited liability company formed under the Delaware Limited Liability Company Act, Del. Code Ann. tit. 6, ch. 18. Delaware was chosen because its act gives the widest effect to the operating agreement, Del. Code Ann. tit. 6, § 18-1101(b), and because most reported decisions construing LLC agreements apply it. The considerations that bear on choosing Delaware, including the matters bearing on the Court of Chancery as a forum, are examined in ¶ 540. A drafter using a model for a company formed in a state that has adopted the revised uniform act must conform each provision to the nonwaivable rules of that act, Rev. Unif. Ltd. Liab. Co. Act § 105(c) (2013), which are compared with Delaware's in Appendix B and in ¶ 2210. Rider D includes a variant for a company formed under the Nevis Limited Liability Company Ordinance, and Model F is written for a Wyoming DAO LLC.
Conventions. Bracketed words are choices or blanks to be completed: "[name]", "[number]", "[date]", "[Delaware]". Where alternatives are offered, they appear as "[Alternative 1: ...] [Alternative 2: ...]" and the drafting notes explain the choice. Capitalized terms are defined in the definitions article of each model. Section numbers within each model are internal to that model, and cross-references in the models are to sections of the same model unless stated otherwise. "Code" means the Internal Revenue Code of 1986, as amended, and "Act" means the LLC statute of the state of formation.
How the models are built. Each model follows the order of the clause-by-clause guide in Chapter 56. The articles proceed from formation and purpose, through membership and capital, economics and tax, management and duties, to transfer, exit, dissolution and dispute resolution, and end with general provisions. A drafter who uses Model B as a base for a different transaction can locate the corresponding discussion of each article in Chapter 56 by its heading.
The models.
Table C-1. The models in this appendix
| Model | Use | Base or rider | Principal chapters |
|---|---|---|---|
| A | Single-member LLC, member-managed, with an optional special-purpose rider | Base | 9, 11, 49 |
| B | Multi-member, manager-managed LLC for a closely held business | Base | 13 to 24, 29 to 33, 37, 44 |
| C | Family LLC for estate and succession planning | Base | 50, 29, 31 |
| D | Creditor-protection provisions, with a Nevis variant | Rider to A, B or C | 27, 54, 55 |
| E | S corporation conformity | Rider to B or C | 43 |
| F | Wyoming DAO LLC provisions | Base provisions | 53 |
What the models do not address. The models do not contain the securities-law representations and legends that a company issuing interests to investors requires (¶ 4790), the provisions of a private fund agreement (Chapter 52), or the loan-document covenants that a lender will require of a real estate borrower beyond the special-purpose provisions of Model A (Chapter 51). They also do not contain the waterfall of a sponsor-investor joint venture, which is examined with examples in ¶ 1630. Where a model is used for such a transaction, those provisions must be added.