LIMITED LIABILITY COMPANY OPERATING AGREEMENT

OF

[________________________________], LLC

A Texas Limited Liability Company

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OPERATING AGREEMENT

This Limited Liability Company Operating Agreement (this "Agreement") of [________________________________], LLC, a Texas limited liability company (the "Company"), is entered into and shall be effective as of [__/__/____] (the "Effective Date"), by and among the Company and the Members identified in Exhibit A attached hereto.

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RECITALS

WHEREAS, the Members desire to form a limited liability company pursuant to the Texas Business Organizations Code, Chapters 1 and 101 (as amended from time to time, the "Code");

WHEREAS, a Certificate of Formation has been or will be filed with the Texas Secretary of State in accordance with BOC 101.001;

WHEREAS, the Members desire to enter into this Agreement to set forth their respective rights, duties, and obligations with respect to the Company and its affairs;

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

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ARTICLE I

DEFINITIONS

Section 1.1 Definitions

As used in this Agreement, the following terms shall have the meanings set forth below:

(a) "Act" or "Code" means the Texas Business Organizations Code, Chapters 1 and 101, as amended from time to time.

(b) "Affiliate" means, with respect to any Person, any other Person that directly or indirectly Controls, is Controlled by, or is under common Control with such Person.

(c) "Agreement" means this Limited Liability Company Operating Agreement, including all exhibits and schedules attached hereto, as the same may be amended, modified, supplemented, or restated from time to time.

(d) "Bankrupt" or "Bankruptcy" means, with respect to any Person: (i) the filing of a voluntary petition in bankruptcy under Title 11 of the United States Code; (ii) the filing of an involuntary petition against such Person under Title 11 of the United States Code that is not dismissed within ninety (90) days; (iii) the appointment of a receiver, custodian, or trustee for all or substantially all of such Person's property; (iv) a general assignment for the benefit of creditors; or (v) the entry of an order for relief in any bankruptcy or insolvency proceeding.

(e) "Capital Account" means the capital account maintained for each Member in accordance with Section 4.4 of this Agreement.

(f) "Capital Contribution" means any cash, property, services rendered, or promissory note or other binding obligation to contribute cash or property or to perform services contributed or agreed to be contributed by a Member to the Company pursuant to this Agreement.

(g) "Certificate" or "Certificate of Formation" means the Certificate of Formation filed with the Texas Secretary of State pursuant to BOC 101.001, as amended or restated from time to time.

(h) "Community Property" means property acquired during marriage that is subject to division as community property under the Texas Family Code.

(i) "Company" means [________________________________], LLC, a Texas limited liability company.

(j) "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract, or otherwise.

(k) "Dissolution Event" has the meaning set forth in Section 11.1.

(l) "Distributable Cash" means all cash, revenues, and funds received by the Company from Company operations, less the sum of the following (to the extent paid or set aside by the Company): (i) all principal and interest payments on indebtedness of the Company and all other sums paid to lenders; (ii) all cash expenditures incurred in the normal operation of the Company's business; and (iii) Reserves.

(m) "Distribution" means a transfer of money or other property from the Company to a Member on account of a Membership Interest.

(n) "Economic Interest" means a Member's share of Profits, Losses, and Distributions of the Company.

(o) "Fiscal Year" means the taxable year of the Company, which shall be the calendar year unless otherwise required by the Internal Revenue Code or selected by the Members.

(p) "Franchise Tax" means the Texas Franchise Tax (Margin Tax) imposed under Chapter 171 of the Texas Tax Code.

(q) "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute.

(r) "Involuntary Transfer" has the meaning set forth in Section 9.6.

(s) "Majority Interest" or "Majority in Interest" means one or more Members holding in the aggregate more than fifty percent (50%) of the total Percentage Interests of all Members.

(t) "Manager" means each Person designated as a Manager of the Company in accordance with Article VI, if the Company is Manager-Managed.

(u) "Member" means each Person who has been admitted to the Company as a member and who has not ceased to be a member, as reflected on Exhibit A as amended from time to time.

(v) "Membership Interest" means a Member's entire interest in the Company, including the Member's Economic Interest, right to vote, right to information, and all other rights and obligations under this Agreement and the Code.

(w) "Percentage Interest" means, with respect to each Member, the percentage set forth opposite such Member's name on Exhibit A, as adjusted from time to time in accordance with this Agreement.

(x) "Person" means any individual, corporation, partnership, limited liability company, trust, estate, association, or other entity.

(y) "Profits" and "Losses" mean, for each Fiscal Year or other period, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Internal Revenue Code Section 703(a), with the adjustments specified in Section 5.1.

(z) "Protected Series" means a series established pursuant to BOC 101.601 with liability protection for that series.

(aa) "Registered Series" means a series that has filed a certificate of registered series with the Texas Secretary of State pursuant to BOC 101.602.

(bb) "Reserves" means funds set aside or amounts allocated to reserves that shall be maintained in amounts deemed sufficient by the Members or Managers for working capital, to pay taxes, insurance, debt service, and other costs or expenses incident to the ownership or operation of the Company's business.

(cc) "Supermajority Interest" means one or more Members holding in the aggregate at least sixty-six and two-thirds percent (66-2/3%) of the total Percentage Interests of all Members.

(dd) "Transfer" means any sale, assignment, transfer, exchange, mortgage, pledge, grant of security interest, encumbrance, or other disposition, whether voluntary or involuntary, by operation of law or otherwise.

(ee) "Treasury Regulations" means the income tax regulations, including temporary regulations, promulgated under the Internal Revenue Code.

Section 1.2 Interpretation

Unless the context otherwise requires: (a) words in the singular include the plural and vice versa; (b) words importing any gender include all genders; (c) references to "including" or "include" shall mean "including without limitation"; (d) references to Articles, Sections, and Exhibits are to Articles and Sections of, and Exhibits to, this Agreement; and (e) headings are for convenience only and shall not affect the interpretation of this Agreement.

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ARTICLE II

FORMATION AND ORGANIZATION

Section 2.1 Formation

The Company has been or shall be formed as a Texas limited liability company pursuant to the Code by the filing of a Certificate of Formation with the Texas Secretary of State in accordance with BOC 101.001. The rights and obligations of the Members shall be determined pursuant to the Code and this Agreement. To the extent that the rights or obligations of any Member are different by reason of any provision of this Agreement than they would be under the Code in the absence of such provision, this Agreement shall, to the extent permitted by the Code, control.

Section 2.2 Name

The name of the Company is [________________________________], LLC. The Company may conduct business under that name or any other name approved by the Members or Managers, provided that the name contains the words "Limited Liability Company," "Limited Company," or the abbreviation "LLC," "L.L.C.," "LC," or "L.C." as required by BOC 5.053.

Section 2.3 Principal Office

The principal office of the Company shall be located at:

[________________________________]
[________________________________]
[________________________________], Texas [____]

The Company may change its principal office or have additional offices at such other places as the Members or Managers may from time to time determine.

Section 2.4 Registered Agent

The Company's registered agent for service of process in Texas shall be:

Name: [________________________________]

Address: [________________________________]
[________________________________], Texas [____]

The registered agent may be changed from time to time by filing a statement with the Texas Secretary of State in accordance with BOC 5.202.

Section 2.5 Term

The Company shall continue in existence perpetually unless dissolved and its affairs wound up in accordance with the Code and Article XI of this Agreement.

Section 2.6 Purposes

The Company is formed for the following purposes:

(a) To engage in [________________________________] and any and all activities related or incidental thereto;

(b) To engage in any other lawful business, purpose, or activity for which limited liability companies may be organized under the Code; and

(c) To do all things necessary or incidental to the foregoing purposes.

Section 2.7 Powers

Subject to the limitations set forth in this Agreement, the Company shall have all powers necessary, suitable, or convenient for the accomplishment of its purposes, including all powers granted to limited liability companies under BOC 2.101 and 101.251, and the power to:

(a) Acquire, own, manage, improve, and dispose of any real or personal property;

(b) Enter into, perform, and carry out contracts of any kind;

(c) Borrow money and issue evidences of indebtedness and secure the same by mortgage, pledge, or other lien;

(d) Lend money;

(e) Sue and be sued, complain, and defend in the Company's name;

(f) Appoint employees and agents of the Company and define their duties and fix their compensation;

(g) Indemnify any Person pursuant to BOC 101.401;

(h) Make and alter operating agreements not inconsistent with the Certificate or with the laws of the State of Texas;

(i) Conduct business in any state, territory, or foreign country;

(j) Merge or consolidate with, or convert into, any other entity pursuant to BOC Chapter 10;

(k) Form or acquire subsidiaries; and

(l) Exercise all other powers that are necessary or convenient for the conduct, promotion, or attainment of the business, purposes, or activities of the Company.

Section 2.8 Title to Property

All real and personal property owned by the Company shall be owned by the Company as an entity, and no Member shall have any ownership interest in such property in the Member's individual name. Each Member's Membership Interest shall be personal property for all purposes pursuant to BOC 101.106.

Section 2.9 Series LLC Designation

☐ This Company IS designated as a Series LLC under BOC 101.601 et seq.

If the above box is checked, the Certificate of Formation includes a notice that the Company may establish one or more series, and the Company may establish one or more Protected Series or Registered Series. Each Series may have:

(a) Separate rights, powers, or duties with respect to specified property or obligations of the Company or profits and losses associated with specified property or obligations;

(b) A separate business purpose or investment objective;

(c) Separate members or managers;

(d) Separate liability for the debts, liabilities, and obligations of the Series, enforceable only against the assets of that Series and not against the assets of the Company generally or any other Series pursuant to BOC 101.602; and

(e) Any other separate or different provisions as set forth in this Agreement or a separate Series designation.

Registered Series. If a series is designated as a Registered Series by filing a certificate of registered series with the Texas Secretary of State, such series shall have a separate legal existence from the Company and any other series.

The establishment, terms, and conditions of each Series shall be set forth in a separate exhibit or supplement to this Agreement.

☐ This Company is NOT a Series LLC.

Section 2.10 Community Property Notice

IMPORTANT: Texas is a community property state. Membership interests acquired during marriage may be community property subject to the Texas Family Code. Members should consider the following:

(a) Each married Member should disclose whether such Member's Membership Interest is separate property or community property;

(b) If a Membership Interest is community property, the non-member spouse may have rights that affect the Transfer and management of the interest;

(c) Spousal consent may be required for certain Transfers of community property interests; and

(d) Members are encouraged to execute Spousal Consents attached as Exhibit C.

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ARTICLE III

MEMBERS

Section 3.1 Initial Members

The names, addresses, and initial Capital Contributions of the Members are set forth on Exhibit A attached hereto. Each Person identified on Exhibit A as of the Effective Date is hereby admitted as a Member of the Company.

Section 3.2 Representations and Warranties

Each Member represents and warrants to the Company and each other Member that:

(a) Authorization. Such Member has full power and authority to enter into this Agreement and to perform such Member's obligations hereunder, and the execution, delivery, and performance of this Agreement has been duly authorized by all necessary action.

(b) Binding Obligation. This Agreement constitutes the legal, valid, and binding obligation of such Member, enforceable against such Member in accordance with its terms.

(c) No Conflicts. The execution, delivery, and performance of this Agreement by such Member will not: (i) conflict with or violate any law, rule, regulation, order, judgment, or decree applicable to such Member; or (ii) conflict with or result in a breach of or default under any agreement or instrument to which such Member is a party.

(d) Investment Intent. Such Member is acquiring such Member's Membership Interest for investment for such Member's own account and not with a view to resale or distribution, and such Member understands that such Membership Interest has not been registered under the Securities Act of 1933 or applicable state securities laws.

(e) Sophistication. Such Member is a sophisticated investor with knowledge and experience in business and financial matters sufficient to enable such Member to evaluate the merits and risks of an investment in the Company.

(f) No Public Market. Such Member understands that there is no public market for the Membership Interests and none is expected to develop.

(g) Community Property Status. If such Member is married and a Texas resident, such Member represents that such Member's Membership Interest is:

☐ Separate property of such Member
☐ Community property of such Member and such Member's spouse

Section 3.3 Admission of Additional Members

(a) Additional Members may be admitted to the Company only with the prior written consent of:

☐ All Members (unanimous consent)
☐ A Majority Interest
☐ A Supermajority Interest
☐ The Managers (if Manager-Managed)

(b) As a condition to admission, each additional Member shall:

(i) Execute a counterpart of this Agreement or an instrument agreeing to be bound by all terms and conditions of this Agreement;

(ii) Provide such information as the Company may reasonably require;

(iii) Make any required Capital Contribution; and

(iv) Pay any reasonable expenses in connection with such Member's admission.

(c) Upon admission, Exhibit A shall be amended to reflect the addition of such Member and any adjustment to Percentage Interests.

Section 3.4 No Liability of Members

Except as otherwise required by the Code or as expressly set forth in this Agreement, no Member shall be personally liable for any debt, obligation, or liability of the Company, whether arising in contract, tort, or otherwise, solely by reason of being a Member pursuant to BOC 101.114. This limitation applies regardless of the dissolution of the Company.

Section 3.5 No Withdrawal

No Member may withdraw or resign from the Company prior to dissolution and winding up of the Company, except with the prior written consent of a Supermajority Interest.

Section 3.6 Death, Disability, or Bankruptcy of a Member

(a) Natural Person Members. Upon the death or adjudication of incompetency of a Member who is a natural person:

(i) The deceased or incompetent Member's legal representative shall have all the rights of the Member for the purpose of settling or managing the Member's estate;

(ii) The deceased or incompetent Member's Membership Interest shall pass to such Member's heirs, beneficiaries, or estate in accordance with applicable law, subject to the Transfer restrictions in Article IX;

(iii) Such heirs, beneficiaries, or estate shall become assignees holding Economic Interests only, unless admitted as Members pursuant to Section 3.3.

(b) Entity Members. Upon the dissolution, termination, or Bankruptcy of a Member that is an entity:

(i) The rights of such Member shall pass to its successor, liquidator, or trustee in bankruptcy, subject to the Transfer restrictions in Article IX;

(ii) Such successor, liquidator, or trustee shall become an assignee holding Economic Interests only, unless admitted as a Member pursuant to Section 3.3.

Section 3.7 Information Rights

Each Member shall have the right to obtain from the Company, upon reasonable demand pursuant to BOC 101.501:

(a) True and complete copies of the Certificate and this Agreement;

(b) The Company's federal, state, and local income tax returns for the three (3) most recent Fiscal Years;

(c) A current list of the names and last known addresses of all Members and Managers;

(d) A copy of any written consents or actions;

(e) Financial statements for the three (3) most recent Fiscal Years; and

(f) Such other information regarding the Company's business and affairs as is just and reasonable.

Section 3.8 Confidentiality

Each Member shall maintain the confidentiality of all non-public information concerning the Company and shall not disclose such information to any third party without the prior written consent of the Company, except: (a) to such Member's attorneys, accountants, financial advisors, and other professional advisors who need to know such information; (b) as required by law; or (c) in connection with any legal proceeding involving the Company.

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ARTICLE IV

CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS

Section 4.1 Initial Capital Contributions

Each Member shall make the initial Capital Contribution set forth opposite such Member's name on Exhibit A. Initial Capital Contributions shall be made on or before [__/__/____] or such other date as the Members may agree.

Section 4.2 Additional Capital Contributions

(a) Voluntary Contributions. With the consent of a Majority Interest, Members may make additional Capital Contributions to the Company. Such additional contributions shall be made pro rata in accordance with each Member's Percentage Interest unless otherwise agreed by all Members.

(b) Mandatory Contributions. No Member shall be required to make any additional Capital Contribution to the Company without such Member's written consent.

(c) Failure to Contribute. If a Member (the "Non-Contributing Member") fails to make a required additional Capital Contribution within thirty (30) days after written notice, the other Members (the "Contributing Members") may:

(i) Make such contribution on behalf of the Non-Contributing Member as a loan bearing interest at the prime rate plus five percent (5%) per annum; or

(ii) Dilute the Non-Contributing Member's Percentage Interest to reflect the failure to contribute, calculated as follows: the Non-Contributing Member's new Percentage Interest shall equal (x) the Non-Contributing Member's Capital Account immediately prior to the call for additional contributions divided by (y) the sum of all Members' Capital Accounts after all contributions have been made.

Section 4.3 Form of Contribution

Capital Contributions may be made in cash, property, services, or a promissory note or other binding obligation to contribute cash, property, or services pursuant to BOC 101.151. The value of any non-cash Capital Contribution shall be determined by agreement of the Contributing Member and a Majority Interest.

Section 4.4 Capital Accounts

(a) Establishment. A separate Capital Account shall be established and maintained for each Member.

(b) Credits. Each Member's Capital Account shall be credited with:

(i) The amount of cash contributed by such Member to the Company;

(ii) The fair market value of property contributed by such Member to the Company (net of liabilities secured by such property that the Company is considered to assume or take subject to);

(iii) Allocations of Profits to such Member; and

(iv) The amount of any Company liabilities assumed by such Member or secured by any property distributed to such Member.

(c) Debits. Each Member's Capital Account shall be debited with:

(i) The amount of cash distributed to such Member by the Company;

(ii) The fair market value of property distributed to such Member by the Company (net of liabilities secured by such property that such Member is considered to assume or take subject to);

(iii) Allocations of Losses to such Member; and

(iv) The amount of any liabilities of such Member assumed by the Company or secured by any property contributed by such Member to the Company.

(d) Maintenance. Capital Accounts shall be maintained in accordance with the rules of Treasury Regulations Section 1.704-1(b)(2)(iv).

(e) Transfer Adjustments. Upon the Transfer of all or part of a Membership Interest, the Capital Account of the transferor shall become the Capital Account of the transferee to the extent it relates to the transferred interest.

Section 4.5 No Interest on Capital Contributions

No Member shall be entitled to receive interest on such Member's Capital Contributions or Capital Account.

Section 4.6 Return of Capital Contributions

(a) Except as otherwise provided in this Agreement, no Member shall have the right to withdraw or receive a return of any Capital Contribution.

(b) No Member shall have priority over any other Member for the return of Capital Contributions, except as otherwise provided in this Agreement.

(c) The return of a Member's Capital Contribution shall be made solely from Company assets and no Member shall be personally liable for the return of any other Member's Capital Contribution.

Section 4.7 Loans by Members

(a) Any Member may, with the consent of a Majority Interest, make a loan to the Company. Such loan shall not be treated as a Capital Contribution and shall not increase the lending Member's Capital Account.

(b) Any such loan shall bear interest at the rate agreed upon by the lending Member and a Majority Interest, and shall be repayable on such terms and conditions as may be agreed upon.

(c) No Member shall be obligated to make a loan to the Company.

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ARTICLE V

ALLOCATIONS OF PROFITS AND LOSSES

Section 5.1 Determination of Profits and Losses

(a) "Profits" and "Losses" mean, for each Fiscal Year or other period, an amount equal to the Company's taxable income or loss for such Fiscal Year or period, determined in accordance with Internal Revenue Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Internal Revenue Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:

(i) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits and Losses shall be added to such taxable income or loss;

(ii) Any expenditures of the Company described in Internal Revenue Code Section 705(a)(2)(B) or treated as Internal Revenue Code Section 705(a)(2)(B) expenditures pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits and Losses, shall be subtracted from such taxable income or loss;

(iii) Gain or loss resulting from any disposition of Company property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the book value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its book value;

(iv) In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account depreciation computed based on the book value of the property; and

(v) To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Internal Revenue Code Section 734(b) is required pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member's Membership Interest, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) from the disposition of the asset and shall be taken into account for purposes of computing Profits and Losses.

Section 5.2 General Allocations

(a) Profits. Except as otherwise provided in this Agreement, Profits for each Fiscal Year shall be allocated to the Members in proportion to their respective Percentage Interests pursuant to BOC 101.201.

(b) Losses. Except as otherwise provided in this Agreement, Losses for each Fiscal Year shall be allocated to the Members in proportion to their respective Percentage Interests; provided, however, that Losses shall not be allocated to a Member to the extent that such allocation would cause or increase a deficit balance in such Member's Capital Account.

Section 5.3 Special Allocations

(a) Minimum Gain Chargeback. Notwithstanding any other provision of this Article V, if there is a net decrease in Company Minimum Gain during any Fiscal Year, each Member shall be specially allocated items of Company income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal to such Member's share of the net decrease in Company Minimum Gain, determined in accordance with Treasury Regulations Section 1.704-2(g).

(b) Member Nonrecourse Debt Minimum Gain Chargeback. Notwithstanding any other provision of this Article V except Section 5.3(a), if there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt during any Fiscal Year, each Member who has a share of the Member Nonrecourse Debt Minimum Gain shall be specially allocated items of Company income and gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal to such Member's share of the net decrease in Member Nonrecourse Debt Minimum Gain.

(c) Qualified Income Offset. If any Member unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Adjusted Capital Account Deficit of such Member as quickly as possible.

(d) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year shall be allocated to the Members in proportion to their respective Percentage Interests.

(e) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any Fiscal Year shall be specially allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable.

(f) Section 754 Adjustments. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Internal Revenue Code Section 734(b) or Internal Revenue Code Section 743(b) is required to be taken into account in determining Capital Accounts, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset).

Section 5.4 Curative Allocations

The allocations set forth in Section 5.3 (the "Regulatory Allocations") are intended to comply with certain requirements of Treasury Regulations Sections 1.704-1(b) and 1.704-2. The Regulatory Allocations may not be consistent with the manner in which the Members intend to divide Company income, gain, loss, and deduction. Accordingly, the Members or Managers are hereby authorized to divide other allocations of income, gain, loss, and deduction among the Members so as to prevent the Regulatory Allocations from distorting the manner in which Company income, gain, loss, and deduction would be divided among the Members, to the extent permitted by the Treasury Regulations.

Section 5.5 Tax Allocations

(a) General. For federal, state, and local income tax purposes, except as otherwise provided in this Section 5.5, each item of income, gain, loss, and deduction shall be allocated among the Members in the same manner as its correlative item of Profits or Losses is allocated pursuant to this Article V.

(b) Section 704(c) Allocations. In accordance with Internal Revenue Code Section 704(c) and the Treasury Regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its initial book value. The Members or Managers shall have the authority to select any method permitted under the Treasury Regulations for making allocations under this Section 5.5(b).

Section 5.6 Allocations Upon Transfer

If a Membership Interest is Transferred during a Fiscal Year, the Profits, Losses, and other items attributable to such interest for such Fiscal Year shall be allocated between the transferor and transferee based on the portion of such Fiscal Year during which each was the holder of such interest, using any method permitted under Internal Revenue Code Section 706 and the Treasury Regulations thereunder that is selected by the Members or Managers.

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ARTICLE VI

MANAGEMENT

Section 6.1 Management Structure

The Company shall be managed as follows (check one):

☐ MEMBER-MANAGED: The Company shall be managed by its Members pursuant to BOC 101.251. Each Member shall have the right to participate in the management of the Company and to bind the Company in the ordinary course of business.

☐ MANAGER-MANAGED: The Company shall be managed by one or more Managers pursuant to BOC 101.251. The Members shall not have the right to manage the Company or bind the Company except as expressly provided in this Agreement or the Code.

Section 6.2 Powers and Duties of Managers (If Manager-Managed)

(a) General Powers. The Managers shall have full, exclusive, and complete authority, power, and discretion to manage and control the business, affairs, and properties of the Company, to make all decisions regarding those matters, and to perform any and all other acts or activities customary or incident to the management of the Company's business.

(b) Specific Powers. Without limiting the generality of Section 6.2(a), the Managers shall have the power and authority to:

(i) Enter into, execute, and deliver any and all contracts, agreements, and instruments in the name of and on behalf of the Company;

(ii) Open, maintain, and close bank accounts and draw checks or other orders for the payment of money;

(iii) Employ, engage, and dismiss employees, agents, attorneys, accountants, consultants, and other persons necessary or appropriate for the conduct of the Company's business;

(iv) Bring, prosecute, defend, and settle legal actions and proceedings;

(v) Incur indebtedness on behalf of the Company;

(vi) Acquire, hold, manage, and dispose of real and personal property;

(vii) Make elections under the Internal Revenue Code and take positions on the Company's tax returns;

(viii) Establish Reserves; and

(ix) Do and perform all other acts necessary or appropriate for the management of the Company's business.

(c) Number and Designation. The initial Manager(s) shall be:

Manager: [________________________________]
Address: [________________________________]

Additional Managers may be designated by the Members.

(d) Term. Each Manager shall serve until the earlier of: (i) such Manager's resignation; (ii) such Manager's removal; (iii) such Manager's death or incapacity; or (iv) the dissolution and winding up of the Company.

(e) Resignation. A Manager may resign at any time by giving written notice to the Members. Such resignation shall be effective upon receipt of such notice or at such later time as may be specified therein.

(f) Removal. A Manager may be removed, with or without cause, by:

☐ A Majority Interest
☐ A Supermajority Interest
☐ Unanimous consent of the Members

(g) Vacancy. Any vacancy occurring in the position of Manager shall be filled by the Members holding a Majority Interest.

(h) Compensation. The Managers shall be entitled to receive compensation for services rendered to the Company in such amounts as determined by a Majority Interest. Managers shall be entitled to reimbursement for reasonable out-of-pocket expenses incurred in connection with the performance of their duties.

Section 6.3 Powers and Duties of Members (If Member-Managed)

(a) General Powers. If the Company is Member-Managed, the Members shall have full authority, power, and discretion to manage and control the business, affairs, and properties of the Company.

(b) Participation. Each Member shall have the right to participate in the management and conduct of the Company's business.

(c) Agency. Each Member shall be an agent of the Company for the purpose of its business, and the act of every Member, including the execution in the Company's name of any instrument, for apparently carrying on in the ordinary course the Company's business, shall bind the Company, unless the Member so acting has, in fact, no authority to act for the Company in the particular matter.

Section 6.4 Actions Requiring Member Approval

Notwithstanding any other provision of this Agreement, the following actions shall require the prior written consent of the Members specified below pursuant to BOC 101.356:

(a) Majority Interest Approval:

(i) Approval of the annual budget;
(ii) Incurrence of indebtedness in excess of $[________] in the aggregate;
(iii) Capital expenditures in excess of $[________];
(iv) Entry into any contract involving payments in excess of $[________];
(v) Hiring or termination of key employees;
(vi) Establishment of employee benefit plans; and
(vii) Making or revoking tax elections (other than elections requiring Supermajority Interest approval).

(b) Supermajority Interest Approval:

(i) Sale, exchange, lease, or other disposition of all or substantially all of the Company's assets;
(ii) Merger, consolidation, or conversion of the Company pursuant to BOC Chapter 10;
(iii) Amendment of the Certificate or this Agreement;
(iv) Admission of additional Members;
(v) Issuance of additional Membership Interests;
(vi) Dissolution of the Company;
(vii) Commencement of bankruptcy proceedings;
(viii) Entry into transactions with Affiliates of Members or Managers;
(ix) Making an Internal Revenue Code Section 754 election; and
(x) Changing the Company's principal business.

Section 6.5 Standard of Care

(a) Each Manager and Member (when participating in management) shall discharge such Person's duties in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the Person reasonably believes to be in the best interests of the Company pursuant to BOC 101.401.

(b) A Manager or Member shall be entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, prepared or presented by:

(i) Officers or employees of the Company whom the Manager or Member reasonably believes to be reliable and competent in the matters presented;

(ii) Legal counsel, public accountants, or other persons as to matters the Manager or Member reasonably believes are within the person's professional or expert competence; or

(iii) A committee of the Company if the Manager or Member reasonably believes the committee merits confidence.

Section 6.6 Limitation of Liability

To the fullest extent permitted by the Code, no Manager or Member shall be personally liable to the Company or any Member for monetary damages for any action taken or failure to act pursuant to BOC 101.401 and 101.402 unless such action or failure to act involves: (a) a breach of the duty of loyalty to the Company or its Members; (b) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; or (c) a transaction from which the Manager or Member received an improper personal benefit.

Section 6.7 Officers

(a) Designation. The Members or Managers may designate one or more officers of the Company, including a President, Vice President, Secretary, Treasurer, and such other officers as may be deemed necessary or appropriate pursuant to BOC 101.251(c).

(b) Authority. Each officer shall have such authority and perform such duties as may be specified in this Agreement or by the Members or Managers.

(c) Term. Each officer shall hold office until such officer's successor is duly designated or until such officer's earlier resignation, removal, death, or incapacity.

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ARTICLE VII

MEETINGS AND VOTING

Section 7.1 Meetings of Members

(a) Annual Meetings. Annual meetings of the Members may be held at such time and place as determined by the Members or Managers.

(b) Special Meetings. Special meetings of the Members may be called at any time by:

(i) Any Manager (if Manager-Managed);
(ii) Members holding at least twenty percent (20%) of the Percentage Interests; or
(iii) Any other Person designated in this Agreement.

(c) Place of Meetings. Meetings of the Members may be held at the Company's principal office or at such other place (within or outside the State of Texas) as determined by the Person calling the meeting.

(d) Participation by Remote Communication. Members may participate in any meeting by telephone, video conference, or other means of remote communication that allows all participants to hear and communicate with each other simultaneously. Participation by such means shall constitute presence in person at the meeting.

Section 7.2 Notice of Meetings

(a) Notice Requirements. Written notice of each meeting of Members shall be given to each Member entitled to vote at least ten (10) days before the meeting. Such notice shall state the place, date, and time of the meeting and the purpose or purposes for which the meeting is called.

(b) Waiver of Notice. A Member may waive notice of any meeting before, at, or after the meeting. Attendance at a meeting shall constitute waiver of notice unless the Member objects at the beginning of the meeting.

Section 7.3 Quorum

A quorum for a meeting of Members shall consist of Members holding at least a Majority Interest. If a quorum is not present, the meeting may be adjourned from time to time without further notice until a quorum is present.

Section 7.4 Voting

(a) Voting Rights. Each Member shall be entitled to vote in proportion to such Member's Percentage Interest.

(b) Approval Requirements. Except as otherwise provided in this Agreement or required by the Code:

(i) Ordinary matters shall require the affirmative vote of a Majority Interest;
(ii) Extraordinary matters identified in Section 6.4(b) shall require the affirmative vote of a Supermajority Interest.

(c) Manner of Voting. Members may vote in person, by proxy, or by written consent.

Section 7.5 Action Without a Meeting

Any action required or permitted to be taken at a meeting of Members may be taken without a meeting if a written consent setting forth the action so taken is signed by Members having not less than the minimum Percentage Interest that would be necessary to authorize or take such action at a meeting pursuant to BOC 101.358. Such consent shall have the same force and effect as a vote of the Members and shall be filed with the records of the Company.

Section 7.6 Proxies

A Member may appoint a proxy to vote or otherwise act for the Member by signing a written appointment form either personally or by the Member's attorney-in-fact. A proxy shall be valid for eleven (11) months from the date of its execution unless otherwise provided in the proxy.

Section 7.7 Meetings of Managers

(a) If the Company is Manager-Managed and there is more than one Manager, the Managers may hold regular and special meetings at such times and places as they may determine.

(b) Notice of Manager meetings shall be given at least five (5) days prior to the meeting, unless waived.

(c) A majority of the Managers shall constitute a quorum for the transaction of business.

(d) Actions of the Managers shall require the affirmative vote of a majority of the Managers present at a meeting at which a quorum is present, unless otherwise specified.

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ARTICLE VIII

DISTRIBUTIONS

Section 8.1 Distributions Generally

Distributions of Distributable Cash shall be made at such times and in such amounts as determined by:

☐ A Majority Interest
☐ The Managers (if Manager-Managed)

Section 8.2 Distribution Amounts

(a) Pro Rata Distributions. Except as otherwise provided in this Agreement, all Distributions shall be made to the Members in proportion to their respective Percentage Interests pursuant to BOC 101.201.

(b) No Guaranteed Return. No Member shall have the right to receive any guaranteed return on such Member's Capital Contribution or Membership Interest.

Section 8.3 Tax Distributions

(a) Timing. Notwithstanding any other provision of this Agreement, the Company shall distribute to each Member, on or before each due date for estimated income tax payments (or, if later, within thirty (30) days after the end of each Fiscal Year), an amount equal to such Member's Tax Distribution Amount.

(b) Tax Distribution Amount. A Member's "Tax Distribution Amount" means the product of: (i) the net taxable income allocated to such Member for the applicable period; multiplied by (ii) the maximum combined federal and state income tax rate applicable to individuals resident in Texas (noting that Texas has no state personal income tax).

(c) Offset. Tax Distributions shall be treated as advances against, and shall be offset against, any Distributions otherwise payable to the Member.

Section 8.4 Limitations on Distributions

(a) Legal Restrictions. No Distribution shall be made if, after giving effect to the Distribution pursuant to BOC 101.206:

(i) The Company would not be able to pay its debts as they become due in the ordinary course of business; or

(ii) The Company's total assets would be less than the sum of its total liabilities plus, unless this Agreement provides otherwise, the amount that would be needed, if the Company were to be dissolved at the time of the Distribution, to satisfy the preferential rights upon dissolution of Members whose preferential rights are superior to the rights of Members receiving the Distribution.

(b) Determination. The determination of whether a Distribution is permitted shall be made by the Members or Managers based on financial statements prepared in accordance with accounting practices and principles that are reasonable under the circumstances or a fair valuation or other method that is reasonable under the circumstances.

Section 8.5 Distributions in Kind

(a) Distributions may be made in kind with the consent of a Majority Interest.

(b) Any property distributed in kind shall be valued at its fair market value as of the date of Distribution. The difference between the fair market value and the book value of such property shall be treated as Profit or Loss and allocated among the Members in accordance with Article V immediately prior to the Distribution.

Section 8.6 Withholding

The Company shall be entitled to withhold from any Distribution any amounts required to be withheld under federal, state, or local tax law. Any amounts so withheld shall be treated as having been distributed to the Member on whose behalf such withholding was made.

Section 8.7 Distributions Upon Liquidation

Distributions upon liquidation of the Company shall be made in accordance with Section 11.4.

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ARTICLE IX

TRANSFER OF MEMBERSHIP INTERESTS

Section 9.1 Restrictions on Transfer

(a) General Restriction. Except as otherwise provided in this Article IX, no Member may Transfer all or any portion of such Member's Membership Interest without the prior written consent of:

☐ All Members (unanimous consent)
☐ A Supermajority Interest
☐ A Majority Interest

(b) Void Transfers. Any attempted Transfer in violation of this Article IX shall be null and void and of no force or effect, and the Company shall not recognize or give effect to such Transfer.

Section 9.2 Permitted Transfers

Notwithstanding Section 9.1, a Member may Transfer all or any portion of such Member's Membership Interest without the consent of any other Member to:

(a) Any other Member;

(b) Any Affiliate of the Member;

(c) Any trust for the benefit of the Member or the Member's spouse, children, or other lineal descendants;

(d) The Member's spouse or lineal descendants;

(e) A former spouse pursuant to a divorce decree or settlement agreement (subject to community property considerations); or

(f) Any other Person approved in advance in writing by a Majority Interest.

Section 9.3 Right of First Refusal

(a) Notice of Proposed Transfer. Before any Member (the "Selling Member") may Transfer all or any portion of such Member's Membership Interest to any Person other than a Permitted Transferee (a "Proposed Transfer"), the Selling Member shall first give written notice (the "Transfer Notice") to the Company and each other Member (the "Non-Selling Members"), which notice shall include:

(i) The name and address of the proposed transferee;
(ii) The Percentage Interest proposed to be Transferred;
(iii) The proposed purchase price and other material terms of the Transfer; and
(iv) An offer to sell such interest to the Non-Selling Members on the same terms and conditions.

(b) Exercise of Right. Within thirty (30) days after receipt of the Transfer Notice (the "ROFR Period"), each Non-Selling Member may elect, by written notice to the Selling Member, to purchase all or any portion of such Non-Selling Member's pro rata share (based on Percentage Interests) of the interest offered for sale.

(c) Company's Right. If the Non-Selling Members do not elect to purchase all of the interest offered for sale, the Company may elect, within fifteen (15) days after expiration of the ROFR Period, to purchase any remaining interest.

(d) Completion of Transfer. If the Non-Selling Members and the Company do not elect to purchase all of the interest offered for sale, the Selling Member may, within ninety (90) days after expiration of the ROFR Period, Transfer such interest to the proposed transferee on terms no more favorable to the transferee than those specified in the Transfer Notice.

Section 9.4 Tag-Along Rights

(a) If one or more Members holding in the aggregate more than fifty percent (50%) of the total Percentage Interests (the "Majority Sellers") propose to Transfer their Membership Interests to a third party (a "Tag-Along Sale"), the Majority Sellers shall give written notice to each other Member (the "Tag-Along Members") at least thirty (30) days prior to the proposed closing date.

(b) Each Tag-Along Member shall have the right to participate in the Tag-Along Sale by selling a pro rata portion of such Tag-Along Member's Membership Interest on the same terms and conditions as the Majority Sellers.

(c) Tag-Along Members must exercise this right by written notice to the Majority Sellers within fifteen (15) days after receipt of the Tag-Along notice.

Section 9.5 Drag-Along Rights

(a) If Members holding at least seventy-five percent (75%) of the total Percentage Interests (the "Dragging Members") approve a sale of all of the Membership Interests or substantially all of the Company's assets to a bona fide third party purchaser (a "Drag-Along Sale"), the Dragging Members may require all other Members (the "Dragged Members") to participate in such sale.

(b) The Dragging Members shall give written notice to the Dragged Members at least thirty (30) days prior to the proposed closing date, and the Dragged Members shall be obligated to sell their Membership Interests on the same terms and conditions as the Dragging Members.

Section 9.6 Involuntary Transfers

(a) Definition. An "Involuntary Transfer" means any Transfer of a Membership Interest by operation of law, court order, foreclosure of a security interest, Bankruptcy, or any other Transfer not made voluntarily by a Member.

(b) Option to Purchase. Upon an Involuntary Transfer, the Company and the Non-Selling Members shall have an option to purchase the Transferred interest for its fair market value, determined in accordance with Section 9.8.

Section 9.7 Conditions to Transfer

As a condition to any Transfer of a Membership Interest:

(a) The transferee shall execute a written agreement agreeing to be bound by all terms and conditions of this Agreement;

(b) The Transfer shall comply with all applicable securities laws;

(c) The transferee shall provide such information as reasonably requested by the Company;

(d) The transferor and transferee shall pay or reimburse the Company for all reasonable costs and expenses incurred in connection with the Transfer;

(e) The transferor shall provide an opinion of counsel satisfactory to the Company that the Transfer complies with applicable securities laws, if requested by the Company; and

(f) If the Membership Interest is community property, the transferor shall provide spousal consent to the Transfer.

Section 9.8 Valuation

(a) If the parties cannot agree on the fair market value of a Membership Interest, such value shall be determined by an independent appraiser selected by agreement of the parties or, if the parties cannot agree, by an appraiser selected by the American Arbitration Association.

(b) The fair market value shall be determined assuming the sale of the entire Company as a going concern, with appropriate discounts for lack of marketability and minority interest if applicable.

(c) The cost of any appraisal shall be borne equally by the parties to the valuation dispute.

Section 9.9 Effect of Transfer

(a) Economic Interest Only. Unless admitted as a Member pursuant to Section 3.3, a transferee of a Membership Interest shall only be entitled to receive the Distributions and allocations of Profits and Losses to which the transferor would have been entitled pursuant to BOC 101.109, and shall not be entitled to participate in the management or affairs of the Company or to access Company records.

(b) Liability of Transferor. A transferring Member shall not be released from any liability to the Company arising prior to the effective date of the Transfer, except with the consent of a Majority Interest.

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ARTICLE X

INDEMNIFICATION AND INSURANCE

Section 10.1 Indemnification

(a) Covered Persons. The Company shall indemnify and hold harmless, to the fullest extent permitted by the Code (including BOC 101.401 and 101.402), each Member, Manager, officer, employee, and agent of the Company and each member, manager, shareholder, partner, director, officer, employee, and agent of each Member (collectively, "Covered Persons") from and against any and all losses, claims, damages, liabilities, expenses (including reasonable attorneys' fees and costs), judgments, fines, settlements, and other amounts (collectively, "Losses") arising from any claim, demand, action, suit, or proceeding (whether civil, criminal, administrative, or investigative) in which such Covered Person may be involved, or threatened to be involved, as a party or otherwise, by reason of such Covered Person's status as a Member, Manager, officer, employee, or agent of the Company or a member, manager, shareholder, partner, director, officer, employee, or agent of any Member.

(b) Conditions. The indemnification provided in this Section 10.1 shall apply only if the Covered Person:

(i) Acted in good faith and in a manner such Covered Person reasonably believed to be in or not opposed to the best interests of the Company; and

(ii) With respect to any criminal proceeding, had no reasonable cause to believe such Covered Person's conduct was unlawful.

(c) Exclusions. Notwithstanding the foregoing, no Covered Person shall be entitled to indemnification with respect to:

(i) Any matter for which such Covered Person has been adjudicated liable for gross negligence, willful misconduct, or a knowing violation of law;

(ii) Any matter for which such Covered Person received an improper personal benefit; or

(iii) Any breach of such Covered Person's duty of loyalty to the Company or its Members.

(d) Expenses. Reasonable expenses (including attorneys' fees) incurred by a Covered Person in defending any proceeding may be advanced by the Company prior to the final disposition of such proceeding upon receipt of an undertaking by or on behalf of such Covered Person to repay such amount if it shall ultimately be determined that such Covered Person is not entitled to be indemnified.

Section 10.2 Insurance

The Company may purchase and maintain insurance on behalf of any Covered Person against any liability asserted against or incurred by such Covered Person in any capacity, whether or not the Company would have the power to indemnify such Covered Person against such liability under this Article X.

Section 10.3 Non-Exclusivity

The indemnification provided by this Article X shall not be deemed exclusive of any other rights to which a Covered Person may be entitled under any agreement, vote of the Members, insurance policy, or otherwise.

Section 10.4 Survival

The indemnification and advancement of expenses provided by this Article X shall continue as to a Covered Person who has ceased to serve in such capacity and shall inure to the benefit of the heirs, executors, and administrators of such Covered Person.

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ARTICLE XI

DISSOLUTION AND WINDING UP

Section 11.1 Dissolution Events

The Company shall be dissolved upon the occurrence of any of the following events (each, a "Dissolution Event") pursuant to BOC 101.552:

(a) The written consent of a Supermajority Interest to dissolve the Company;

(b) The sale, exchange, or other disposition of all or substantially all of the Company's assets;

(c) The entry of a decree of judicial dissolution pursuant to BOC 11.314;

(d) Administrative dissolution by the Texas Secretary of State;

(e) Any event that makes it unlawful for the business of the Company to be carried on; or

(f) Any other event specified in the Certificate or this Agreement as causing dissolution.

Section 11.2 Effect of Dissolution

Upon dissolution, the Company shall cease to carry on its business except as necessary for the winding up of its affairs, but the Company's separate existence shall continue until the winding up is completed and a Certificate of Termination is filed with the Texas Secretary of State pursuant to BOC 11.101.

Section 11.3 Winding Up

(a) Persons Responsible. The winding up of the Company's affairs shall be conducted by the Managers (or, if there are no Managers, by the Members holding a Majority Interest), or by such other Person as may be designated by a Majority Interest (the "Liquidator") pursuant to BOC 11.051 et seq.

(b) Liquidation. The Liquidator shall:

(i) Collect all accounts receivable and other amounts owing to the Company;

(ii) Sell or otherwise dispose of all Company property as promptly as practicable (except to the extent the Liquidator may determine to distribute any property in kind to the Members);

(iii) Pay, satisfy, or discharge all debts, liabilities, and obligations of the Company (or make adequate provision therefor);

(iv) Establish Reserves reasonably necessary for any contingent or unforeseen liabilities; and

(v) Distribute the remaining assets to the Members in accordance with Section 11.4.

Section 11.4 Distribution of Proceeds

(a) Order of Distributions. Upon completion of the liquidation, the proceeds shall be distributed in the following order of priority pursuant to BOC 11.053:

(i) First, to the payment of debts and liabilities of the Company (including debts and liabilities owed to Members who are creditors), in the order of priority established by law;

(ii) Second, to the establishment of Reserves for any contingent or unforeseen liabilities;

(iii) Third, to the Members in proportion to their positive Capital Account balances, after giving effect to all allocations under Article V.

(b) Negative Capital Accounts. No Member shall be required to restore any deficit in such Member's Capital Account.

(c) Distributions in Kind. Any property distributed in kind shall be valued at its fair market value. The difference between the fair market value and the book value of such property shall be allocated to the Members' Capital Accounts in accordance with Article V immediately prior to distribution.

Section 11.5 Certificate of Termination

Upon completion of the winding up and distribution of the Company's assets, the Liquidator shall file a Certificate of Termination with the Texas Secretary of State in accordance with BOC 11.101.

Section 11.6 Continuation of Company

Notwithstanding Section 11.1, the Company shall not be dissolved but shall continue if, within ninety (90) days after the occurrence of a Dissolution Event (other than one requiring mandatory dissolution under the Code), Members holding a Majority Interest elect in writing to continue the Company.

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ARTICLE XII

TAX MATTERS

Section 12.1 Tax Classification

The Company shall be classified for federal income tax purposes as follows (check one):

☐ Partnership (if there are two or more Members)
☐ Disregarded Entity (if there is only one Member)
☐ S Corporation (requires IRS Form 2553 election)
☐ C Corporation (requires IRS Form 8832 election)

The Company shall make any elections and file any documents necessary to achieve the selected tax classification.

Section 12.2 Partnership Representative

(a) Designation. If the Company is treated as a partnership for federal income tax purposes, the following Person is designated as the Partnership Representative for purposes of the Bipartisan Budget Act of 2015 (Internal Revenue Code Sections 6221-6241):

Partnership Representative: [________________________________]

(b) Authority. The Partnership Representative shall have all the powers and authority of a "partnership representative" under the Internal Revenue Code and shall be authorized to make all elections and take all actions on behalf of the Company in any tax audit, administrative proceeding, or litigation.

(c) Push-Out Election. In the event of any adjustment resulting in an imputed underpayment, the Partnership Representative shall, unless otherwise directed by a Majority Interest, elect the alternative procedure under Internal Revenue Code Section 6226 to "push out" the adjustment to the Members.

(d) Successor. If the Partnership Representative is unable or unwilling to serve, a successor shall be designated by a Majority Interest.

Section 12.3 Tax Elections

(a) The Company may make the following elections (subject to approval by a Supermajority Interest where indicated):

(i) Election under Internal Revenue Code Section 754 to adjust the basis of Company property (requires Supermajority Interest approval);

(ii) Election to use any permissible method of depreciation;

(iii) Election to capitalize or expense start-up costs;

(iv) Any other election the Partnership Representative deems appropriate.

(b) The cost of any tax election shall be borne by the Company.

Section 12.4 Tax Returns

(a) The Partnership Representative shall cause all required federal, state, and local income tax returns to be prepared and filed on behalf of the Company.

(b) The Company shall provide each Member with a Schedule K-1 or other required tax information within ninety (90) days after the end of each Fiscal Year (or such earlier time as required for Members to timely file their own returns).

Section 12.5 Tax Controversies

(a) The Partnership Representative shall have the authority to handle all tax examinations, audits, administrative proceedings, and judicial proceedings involving the Company.

(b) The Partnership Representative shall keep all Members reasonably informed of the status of any tax controversy and shall consult with Members holding a Majority Interest before settling any material tax dispute.

(c) Each Member agrees to cooperate with the Partnership Representative and to take any actions reasonably requested by the Partnership Representative in connection with any tax controversy.

Section 12.6 Texas Franchise Tax (Margin Tax)

(a) The Company shall comply with all requirements of the Texas Franchise Tax (Margin Tax) under Chapter 171 of the Texas Tax Code.

(b) The Company shall file all required franchise tax reports with the Texas Comptroller of Public Accounts and pay all franchise taxes due.

(c) For the purposes of calculating the Texas Franchise Tax:

(i) The Company shall elect to compute the tax using the method most advantageous to the Company (E-Z Computation, cost of goods sold method, compensation method, or 70% of total revenue method);

(ii) The no-tax-due threshold (currently $2.47 million in total revenue as of 2024) shall be monitored and the appropriate filings shall be made.

(d) The Company shall file all required Public Information Reports with the Texas Secretary of State.

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ARTICLE XIII

RECORDS AND ACCOUNTING

Section 13.1 Books and Records

The Company shall keep at its principal office or at such other place as determined by the Managers pursuant to BOC 101.501:

(a) A current list of the full name and last known address of each Member and Manager;

(b) A copy of the Certificate and all amendments thereto;

(c) Copies of the Company's federal, state, and local income tax returns for the three (3) most recent Fiscal Years;

(d) Copies of this Agreement and all amendments thereto;

(e) Copies of all financial statements for the three (3) most recent Fiscal Years;

(f) The books and records of the Company; and

(g) Minutes of all meetings and records of all actions taken without a meeting.

Section 13.2 Accounting Method

The Company's books and records shall be kept on the accrual method of accounting (or such other method as required by the Internal Revenue Code or selected by the Members) and in accordance with generally accepted accounting principles consistently applied.

Section 13.3 Financial Statements

The Company shall prepare and deliver to each Member within ninety (90) days after the end of each Fiscal Year:

(a) A balance sheet as of the end of such Fiscal Year;

(b) A statement of income and expenses for such Fiscal Year;

(c) A statement of cash flows for such Fiscal Year;

(d) A statement of changes in each Member's Capital Account; and

(e) Such other information as the Members may reasonably request.

Section 13.4 Bank Accounts

The Company shall maintain bank accounts at such financial institutions as the Managers or Members deem appropriate. Withdrawals from such accounts shall be made only by Persons authorized by the Managers or Members.

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ARTICLE XIV

AMENDMENTS

Section 14.1 Amendments Generally

This Agreement may be amended or modified only by a written instrument signed by Members holding at least a Supermajority Interest; provided, however, that:

(a) Any amendment that would adversely affect a Member's Economic Interest in a manner different from other Members shall require the written consent of such affected Member;

(b) Any amendment that would increase a Member's obligation to make Capital Contributions shall require the written consent of such Member; and

(c) Any amendment that would change the voting requirements of this Agreement shall require the written consent of Members meeting the higher of the existing or proposed voting requirement.

Section 14.2 Amendments to Exhibit A

Exhibit A may be amended by the Members or Managers to reflect:

(a) Admission of new Members;

(b) Transfers of Membership Interests;

(c) Additional Capital Contributions;

(d) Adjustments to Percentage Interests; and

(e) Withdrawal, death, or removal of Members.

Such amendments shall not require the consent of all Members but shall require written notice to all Members.

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ARTICLE XV

MISCELLANEOUS PROVISIONS

Section 15.1 Governing Law

This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without giving effect to any choice of law or conflict of law rules or provisions.

Section 15.2 Jurisdiction and Venue

(a) The parties hereby consent to the exclusive jurisdiction and venue of the state and federal courts located in the State of Texas for any action, suit, or proceeding arising out of or relating to this Agreement.

(b) Each party hereby waives any objection to such jurisdiction and venue, including any objection based on inconvenient forum.

Section 15.3 Dispute Resolution

☐ Mediation. Prior to commencing any litigation, the parties shall attempt to resolve any dispute through mediation administered by [________________________________].

☐ Arbitration. Any dispute arising out of or relating to this Agreement shall be finally resolved by binding arbitration administered by [________________________________] in accordance with its Commercial Arbitration Rules. The arbitrator's decision shall be final and binding, and judgment on the award may be entered in any court having jurisdiction.

☐ Litigation. Disputes shall be resolved through litigation in the courts of the State of Texas.

Section 15.4 Waiver of Jury Trial

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

Section 15.5 Entire Agreement

This Agreement (including all Exhibits) constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations, and discussions, whether oral or written.

Section 15.6 Severability

If any provision of this Agreement is held to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not be affected thereby, and such invalid, illegal, or unenforceable provision shall be modified to the minimum extent necessary to make it valid, legal, and enforceable.

Section 15.7 Binding Effect

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, and permitted assigns.

Section 15.8 No Third-Party Beneficiaries

Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person (other than the parties hereto and their respective successors and permitted assigns) any right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement.

Section 15.9 Notices

All notices, requests, demands, and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given:

(a) When delivered personally;

(b) Upon receipt of confirmation if sent by facsimile or email (with confirmation of transmission);

(c) One (1) business day after deposit with a nationally recognized overnight courier; or

(d) Five (5) days after mailing by certified mail, return receipt requested.

Notices shall be addressed to the parties at their addresses set forth on Exhibit A or to such other address as a party may designate in writing.

Section 15.10 Further Assurances

Each party shall execute and deliver such additional documents and instruments and take such additional actions as may be reasonably necessary or appropriate to effectuate the provisions of this Agreement.

Section 15.11 Counterparts

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Execution and delivery of this Agreement by exchange of facsimile or electronic copies bearing the signature of a party shall constitute a valid and binding execution and delivery.

Section 15.12 Waiver

No waiver of any provision of this Agreement shall be effective unless in writing and signed by the waiving party. No failure or delay in exercising any right, power, or remedy shall operate as a waiver thereof.

Section 15.13 Construction

This Agreement shall not be construed more strictly against one party than another merely by virtue of the fact that it may have been prepared by counsel for one of the parties.

Section 15.14 Attorneys' Fees

In any action or proceeding to enforce this Agreement, the prevailing party shall be entitled to recover reasonable attorneys' fees and costs from the non-prevailing party.

Section 15.15 Time is of the Essence

Time is of the essence with respect to all matters set forth in this Agreement.

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ARTICLE XVI

EXECUTION

IN WITNESS WHEREOF, the undersigned have executed this Limited Liability Company Operating Agreement as of the Effective Date first written above.

COMPANY:

[________________________________], LLC

By: [________________________________]
Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

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MEMBERS:

Member 1:

Signature: [________________________________]
Printed Name: [________________________________]
Address: [________________________________]
[________________________________]
Date: [__/__/____]

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Member 2:

Signature: [________________________________]
Printed Name: [________________________________]
Address: [________________________________]
[________________________________]
Date: [__/__/____]

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Member 3:

Signature: [________________________________]
Printed Name: [________________________________]
Address: [________________________________]
[________________________________]
Date: [__/__/____]

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(Add additional signature blocks as necessary)

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EXHIBIT A

MEMBERS, CAPITAL CONTRIBUTIONS, AND PERCENTAGE INTERESTS

Member Name	Address	Initial Capital Contribution	Percentage Interest	Community Property Status
[________________________________]	[________________________________]	$[________________]	[____]%	☐ Separate ☐ Community
[________________________________]	[________________________________]	$[________________]	[____]%	☐ Separate ☐ Community
[________________________________]	[________________________________]	$[________________]	[____]%	☐ Separate ☐ Community
[________________________________]	[________________________________]	$[________________]	[____]%	☐ Separate ☐ Community

TOTAL: | | $[________________] | 100% | |

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EXHIBIT B

INITIAL MANAGERS (If Manager-Managed)

Manager Name	Address	Term
[________________________________]	[________________________________]	Indefinite
[________________________________]	[________________________________]	Indefinite

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EXHIBIT C

SPOUSAL CONSENT (Community Property State)

The undersigned spouse of a Member acknowledges that:

1. I have read and understand the Operating Agreement of [________________________________], LLC.

2. I consent to the provisions of the Operating Agreement, including all restrictions on Transfer of Membership Interests.

3. I acknowledge that my spouse's Membership Interest in the Company may be community property under Texas law.

4. I agree that my community property interest, if any, in the Membership Interest held by my spouse shall be bound by and subject to all terms and conditions of the Operating Agreement.

5. I agree that my spouse may take any actions permitted by the Operating Agreement without my further consent.

6. I waive any right to partition or division of the Membership Interest during the term of the Company except as provided in the Operating Agreement.

SPOUSE:

Signature: [________________________________]
Printed Name: [________________________________]
Spouse of: [________________________________]
Date: [__/__/____]

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This Operating Agreement is governed by the Texas Business Organizations Code, Chapters 1 and 101. Texas is a community property state with no state personal income tax but imposes a Franchise Tax (Margin Tax) on LLCs. Texas permits Series LLCs.