Form 12-3

The clause in this form may be substituted for article 6 in the company agreement for a series LLC, form 12-2 in this chapter.

Alternative Clause for Series LLC Company Agreements

For Use with Company Agreement for Series LLC

Clause 12-3-1

Article 6

Series

6.1      Establishment and Designation of Series.      For purposes of this Agree­ment, any series created pursuant to this Article 6 and in accordance with the Texas Business Organizations Code shall be referred to as a “Series,” any interest in a Series shall be referred to as a “Series Interest,” and any division of a Series into a class shall be referred to as a “Class.” A Series may be cre­ated at any time (a) by a Required Interest, (b) by management, or (c) automat­ically by direct acquisition of an asset into a particular Series that is named in the deed, bill of sale, or other transfer document, and may be so created with­out necessity for a meeting or resolution of Members or Managers, a supple­mental filing with the secretary of state, or any notice to the public.

a.Series Created by Management or Direct Acquisition of Asset.      Any Series created or established by management or automati­cally created by direct acquisition of an asset into a particular Series that is named in the deed, bill of sale, or other transfer document will have the same members, classes of membership interest, rights, managers, officers, allocations of profits and losses, and distributions as the Com­pany and will be governed by the same terms and provisions of the Company. Each manager for that Series will be known as a “Series Manager” for that Series, and management for that Series will be same as for the Company. Each member for that Series will be known as a “Series Member” for that Series, and Required Interest for that Series will be the same as for the Company.

b.Series Created by Required Interest.      If a separate Series is to be established with members, classes of membership interest, rights, man­agers, officers, allocations of profits and losses, and distributions that are different from that of the Company or will be governed differently than or have different terms and provisions than the Company, then the creation of the separate Series must be created by a written agreement of a Required Interest. The written agreement creating the separate Series having provisions and ownership different than the Company must iden­tify each Series’ members, managers, property, tax elections, allocations of profits and losses, and distributions for that separate Series. If a Series is created by Required Interest, the managers will be those designated in the written agreement creating the Series, each manager to be known as a “Series Manager” for that Series, and the management for that Series will be that designated in the written agreement; or if the written agree­ment creating the Series does not designate particular managers, the managers for that Series will be the same as for the Company, each to be known as a “Series Manager” for that Series, and management for that Series will be the same as for the Company. If a Series is created by Required Interest, the members will be those designated in the written agreement creating the Series, each member to be known as a “Series Member” for that Series, and “Required Interest” for that Series will be that designated in the written agreement, or if the written agreement cre­ating the Series does not designate particular members, the members for that Series will be the same as for the Company, each to be known as a “Series Member” for that Series, and Required Interest for that Series will be the same as for the Company.

c.Designation of Series.      Each separate Series created under this Agreement will be consecutively numbered and will be identified by putting the designation of the Series behind the Company name, for example, “[name of LLC]-Series 200, a separate series of a Texas series limited liability company.”

6.2      Assets and Liabilities Associated with Series.      Management shall cause the Company to maintain separate and distinct records for each Series and shall cause the assets, debts, liabilities, obligations, expenses, and profits and losses associated with each Series to be held and accounted for separately from the other assets, debts, liabilities, obligations, expenses, and profits and losses of the Company or any other Series. Management may delegate these duties for each Series to the Series Manager(s) of that Series. The Company or a desig­nated Series may handle or administer all recordkeeping required by and in accordance with the Texas Business Organizations Code, including all adver­tising, leasing, collections, repairs, evictions, accounting, recordkeeping, and other administrative functions on behalf of itself and all other Series created by management or Required Interest, as specified elsewhere in this Agreement. A designated Series may have a management contract with the Company or another Series.

a.Consideration; Receipts; Revenue.      All consideration received by a particular Series for the issue or sale of Series Interest or Series mem­bership interests of a particular Series together with all the assets of a particular Series in which that consideration is invested or reinvested, and all revenue, income, earnings, profits, and proceeds thereof, includ­ing any capital proceeds received by a particular Series from a capital transaction with respect to those assets, shall irrevocably belong to that particular Series for all purposes, subject to the rights of creditors of only that particular Series and except as may be required by applicable tax laws. If any funds or payments are not readily identifiable as belong­ing to any particular Series, management shall allocate them among any one or more Series in such a manner and on such a basis as management, in management’s sole discretion, deems fair and equitable. Each such allocation by management shall be conclusive and binding on the Series Members and Series Interests of all Series and Classes for all purposes.

b.Liabilities; Debts; Expenses.      All liabilities, expenses, costs, charges, and reserves of the Company that are readily associated with a particular Series shall be charged against the assets associated with that Series. If any liabilities, expenses, costs, charges, and reserves of the Company are not readily associated with a particular Series, they shall be allocated and charged by management to, between, or among any one or more of the Series in such a manner and on such a basis as manage­ment, in management’s sole discretion, deems fair and equitable. Each such allocation by management shall be conclusive and binding on the Series Members and Series Interests of all Series and Classes for all pur­poses.

6.3      Limitations on Enforceability of Obligations and Expenses of Series against Assets.      Notwithstanding any other provision of this Agreement or of law—

a.the debts, liabilities, obligations, and expenses incurred by, con­tracted for, or otherwise existing with respect to a particular Series shall be enforceable against the assets of that Series only, and shall not be enforceable against the assets of the Company generally or any other Series, and

b.none of the debts, liabilities, obligations, and expenses incurred by, contracted for, or otherwise existing with respect to the Company gener­ally or any other Series shall be enforceable against the assets of a par­ticular Series. All persons who extend credit to or for a particular Series, or who contract with or for a particular Series, or have a claim against a particular Series may look only to the assets associated with that particu­lar Series for repayment of the credit or to enforce or satisfy the contract or claim.

6.4      Rights, Powers, and Privileges of Series

a.Purpose.      Unless otherwise specified in this Agreement, the pur­pose of any Series created by a written agreement by a Required Interest will have the purpose specified in the written agreement for that Series, but if no such purpose is specified in a written agreement or a particular series is not created by a written agreement, then the purpose of that par­ticular Series shall be that set forth for the Company.

b.Rights of Members.      If the Series is created by management, the rights, powers, privileges, limitations, restrictions, and voting rights of Series Members shall be as set forth for the Company in this Agreement. If the Series is created by a Required Interest, the rights, powers, privi­leges, limitations, restrictions, and voting rights of Series Members shall be as set forth in a written agreement for that Series or Class.