Supplemental Provisions for Certificate of Formation
“Blank-Check” Authorization (More Than One Class of Stock with Board Authorization to Create Series)
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The Texas Business Organizations Code permits the certificate of formation to authorize more than one class of stock and to authorize the corporation’s board of directors to create and issue series of stock from time to time. See Tex. Bus. Orgs. Code §§ 3.007(b), 21.155, 21.156. |
1
The corporation is authorized to issue two classes of capital stock to be designated “Common Stock” and “Preferred Stock” respectively. The total number of shares of all classes of capital stock that the corporation has authority to issue is [number] shares, consisting of [number] shares of Preferred Stock, $[amount] par value per share, and [number] shares of Common Stock, $[amount] par value per share.
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And/Or |
2
The board of directors of the corporation is granted authority to, from time to time, (1) establish by resolution one or more series of unissued shares of the class of Preferred Stock by specifying the designations, preferences, limitations, and relative rights, including voting rights, of the series to be established and (2) issue shares of the series of Preferred Stock so established.
Change in Required Shareholder Vote
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The Texas Business Organizations Code (TBOC) requires the affirmative vote of holders of at least two-thirds of the outstanding shares and, if applicable, the affirmative vote of at least two-thirds of the outstanding shares of a class or series entitled to vote to approve a “fundamental action” and a “fundamental business transaction.” See Tex. Bus. Orgs. Code §§ 21.364, 21.457. The TBOC, however, permits the required vote to be increased or decreased by a provision in the certificate of formation. If decreased, the required vote must be at least a majority of the outstanding shares and (if applicable) a majority of the outstanding shares of a class or series entitled to vote. Tex. Bus. Orgs. Code § 21.365. |
3
The affirmative vote of the holders of [a majority/[percent] percent] of the outstanding shares or, if applicable, [a majority/[percent] percent] of the outstanding shares of a class or series entitled to vote on or approve any matter or action as to which the Code requires a vote of two-thirds or any other specified portion of the shares will be sufficient to effect the matter or action subject to that vote, notwithstanding the vote required by the Code.
Limitation of Liability of Directors
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The Texas Business Organizations Code (TBOC) permits the corporation’s certificate of formation to eliminate or limit the liability of its directors (who are the “governing authorities” or “governing persons” of a corporation under sections 1.002(35) and 1.002(37) of the TBOC) for monetary damages for an act or omission in the capacity of director, subject to specified exceptions. See Tex. Bus. Orgs. Code § 7.001. |
4
No director of the corporation will be liable to the corporation or its shareholders for monetary damages for an act or omission in the director’s capacity as a director, except as provided by the Code.