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HomeMy WebLinkAboutPartner Agreementcopy COPPERPOINTE PARTNERSHIP rAR T NERSHIP AGR r:EMI";1V'1' This Partnership Agreement ("Agreement") is entered into effective 1 — l 2007, by and between 344 East Horton Limited Partnership, a Texas limited partnership, and Joseph Gorzycki (collectively, "Partners"). RECITAL For and in consideration of the mutual covenants herein contained, the Partners hereby form and create a general partnership (the "Partnership"), under and pursuant to the Texas Business Organizations Code, as amended from time to time (the "Code"), for the purposes and upon the terms, provisions, and conditions set forth herein, L NAM& PRINCIPAL OFFICE TERM. 1.01. Name. The activities and business of the Partnership will be conducted under the name of CopperPointe Partnership, or such other name as the Partners may select from time to time. As necessary, the Partners may execute, file, record and/or publish with the proper authorities an assumed name certificate. 1.02. Place of Business. The principal place of business of the Partnership will be 304 E. Blue Bell Rd., Brenham, Washington County, Texas 77833, but additional places of business may be located elsewhere. 1.03 Term. The Partnership will commence upon full execution ofthis Agreement, and will continue to exist into perpetuity unless it is wound up and terminated prior to that date as provided in Article 10 of this Agreement. 2. DEFINITIONS. Whenever used in this Agreement, the terms set forth below have the following definitions: 2.1 "Additional Capital Contribution" means that amount of money or other property, if any, that the Partners may contribute to the Partnership for additional capital, if any, to be used for operating capital. 2.2 "Affiliate" means, with respect to a Partner, any Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or under common control with the Partner. The term "control," as used in this definition means, with respect to a Person that is a.corporation, the right to exercise, directly or indirectly, more than ten percent (10%) of the voting rights attributable to the shares of the controlled corporation, and with respect to a Person that is not a corporation, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of the controlled Person. 2.3 "Transferee" means a Person who has acquired all or a portion of an interest in the Partnership by assignment or Transfer as of the date the assignment or Transfer of such interest becomes effective. A Transferee has only the rights granted under sections 152.401-152.405 of the Code. A Transferee does not have the right to become a Partner, except as provided in this Agreement. For a proper purpose, a Transferee may require reasonable information or an account of Partnership transactions and make reasonable inspection of the Partnership books. In addition, no Transferee of an interest in the Partnership has the right to assign any transferred interest except as otherwise provided in this Agreement. CopperPointe Partnership Agreement Page 1 2.4 "Capital Contribution" means the total contribution to the capital of the Partnership which a Partner is legally bound and obligated to make, which amount is designated as a Capital Contribution for that Partner, pursuant to Article 4 of this Agreement. 2.5 "Default Rate of Interest" means the rate per annum equal to the lesser of (a) the Wail Street Journal prime rate as quoted in the money rates section of the Wall Street Journal which is also. the base rate on corporate loans at large United States money center commercial banks as its prime commercial or similar reference interest rate, with adjustments to be made on the same date as any change in the rate, and (b) the maximum rate permitted by applicable law. 2.6 "Distributable Cash" means, at the time of determination for any period (on the cash receipts and disbursements method of accounting), all Partnership cash derived from the conduct of the Partnership's business, including distributions from entities owned by the Partnership, cash from operations or investments, and cash from the sale or other disposition of Partnership property; other than (a) Capital Contributions with interest earned pending its utilization; (b) financing or other loan proceeds; (c) reserves for working capital; and (d) other amounts that the Partners reasonably determine should be retained by the Partnership in accordance with the Partners' discretion under section 6.1 hereof. 2.7 "Majority -in -interest" means as to all of or a specified group of Partners, Partners owning more than 50 percent of the current interest in the profits of the Partnership owned by all of the Partners or by the Partners in the specified group, as appropriate. 2.8 "Partner" or "Partners" means all Persons designated as a Partner on Exhibit "A" and any successor Partners pursuant to the terms of this Agreement. 2.9 "Initial Capital Contribution" means that amount of money or property initially contributed by the Partners as set forth in Exhibit "A" hereto. 2.10 "Partnership Property" means that property, real, personal, or mixed, tangible or intangible, or an interest in that property, which is contributed to or acquired by the Partnership. 2.11 "Person" shall mean any individual, corporation, business trust, estate, trust, custodian, trustee, executor, administrator, nominee, partnership (including a registered limited Iiability partnership and a limited partnership), association, limited liability company, government, governmental subdivision, governmental agency, governmental instrumentality, and any other legal or commercial entity, in its own or representative capacity 2.12 "Profits" or "Losses" means, for each fiscal year or other period, profits and losses as determined by cash basis. 2.13 "Transfer" when used as a noun means any voluntary or involuntary transfer, sale, pledge, hypothecation, assignment or other disposition, and as a verb means voluntarily or involuntarily to transfer, sell, pledge, hypothecate, assign or otherwise dispose. 2.14 "Wholly Owned Affiliate" of any Person means an Affiliate of the Person, 100% of the voting stock or beneficial ownership of which is owned by such Person, directly or indirectly, through one or more Wholly Owned Affiliates, or by any Person who, directly or indirectly, owns 100% of the voting stock or beneficial ownership of such Person, and an Affiliate of such Person who, directly or indirectly, owns 100% of the voting stock or beneficial ownership of such Person. CopperPointe Partnership Agreement Page 2 3. PURPOSE AND POWERS. 3.1 Purposes. The purposes of the Partnership will be to own, hold, manage, develop, lease, buy and sell property, both real and personal, including options, rights, intangibles, and undivided interests in property. In addition, the Partnership may undertake any other activities that will not violate the Code or any other applicable law, subject to the unanimous consent of the Partners. There is no jurisdictional restriction upon the location of an investment property or activity. The Partnership may lease property which it owns or may sublease property which it acquires under another lease. It may borrow and lend money. It will not enter into a. business or investment activity which requires the Partnership or a Partner to have a license to sell securities or a license to broker the sale of real estate, or other required license, unless and until the applicable license has been actually obtained. Unless otherwise prohibited by this Agreement or applicable law, a Partner may lend money to and transact other business with the Partnership. 3.2 Powers. The Partners may make, enter into, deliver and perform all contracts, agreements or undertakings, pay all costs and expenses and perform all acts deemed appropriate by the Partners to carry out the Partnership purposes, subject to the limitations of this Agreement and the Code. 3.3 Other Transactions of Partners. (a) The Partners may in the future, from time to time, obtain additional opportunities to acquire property for investment, development or otherwise. Each Partner will be free to acquire such interests in other property as the Partner may, in the Partner's sole discretion, deem desirable without having to offer interests in that property to the other Partner(s) or this Partnership, and such action on the part of any Partner will not be deemed a breach of any fiduciary relationship owed by that Partner to the other Partners or the Partnership. Participation in the Partnership will not in any way act as a restraint on the other present or future business activities or investments of a Partner (or any Affiliate of a Partner), or any employee, officer, director, member, manager, or shareholder of a Partner, except to the extent those activities are competitive with the business of the Partnership. As a result of this Agreement, no Partner (or Affiliate of any Partner), is obligated or bound to offer the Partnership or any of the other Partners any business opportunity presented to or offered to them or the Partnership as a prerequisite to the acquisition of or investment in the business opportunity by that Partner (or any Affiliate of a Partner), or any employee, officer, director; member, manager, or shareholder of the Partner. Each Partner and the Partnership hereby waives any right or claim the Partner or the Partnership may have against a Partner (or any Affiliate of a Partner), or any employee, officer, director, member, manager, or shareholder of a Partner with respect to such business or activity or the income or profits thereof, unless that business activity is one in competition with the Partnership. (b) With the consent of all of the Partners, the Partnership may contract with any of the Partners or their Affiliates for the purchase of goods and services for the benefit of the Partnership at any time, provided that the compensation paid to the Person is commensurate with rates prevailing for those services at the time they are performed, and any charges so incurred are deemed expenses of the Partnership. 4. CAPITAL CONTRIBUTIONS AND SHARES OF PROFITS AND LOSSES, 4.1 Ownership Percentages. The percentage interest of each Partner will be determined by dividing the balance of that Partner's capital account by the total of al I of the capital accounts CopperPointe Partnership Agreement Page 3 of all Partners. A Partner's percentage interest will be determinative of. (a) a Partner's ownership interest in the Partnership as an entity; (b) a Partner's interest in the distribution of Distributable Cash; (c) a Partner's allocable share of the items of Profits and Losses; and (d) a Partner's distributive share of cash and other property upon dissolution of the Partnership. 4.2 Initial CapitalContributions. Receipt is hereby acknowledged for each Partner's Initial Capital Contribution. 4.3 Additional Capital Contributions. The Partners will make Additional Capital Contributions on a pro rata basis, as deemed necessary by the Partners to fulfill the purposes of the Partnership. 4.4 Capital Accounts. A Partnership capital account will be established and maintained for each Partner at all times throughout the existence of the Partnership. The amount in a Partner's capital account will initially be the amount ofthe Partner's Initial Capital Contribution, which will be the fair market value of the assets the Partner contributed. A Partner's capital account will be credited with its Additional Capital Contribution, and any other voluntary Capital Contribution made by the Partner, and the Partner's share of Partnership Profits. A Partner's capital account will be decreased by the amount of money and the fair market value of property distributed to the Partner and by the amount of Partnership losses charged to such Partner. Additional Capital Contributions will be recorded at the fair market value of the assets contributed by the Partner and the distributions to a Partner will also be recorded at the fair market value of the assets distributed. 4.5 Return of Capital. No Partner has the right to withdraw, demand a return or reduce his, her or its Capital Contribution to the Partnership. In the event a return of or reduction in the capital account of a Partner is made, any amounts paid to the Partner will be reduced by all costs, fees and other expenses incurred by the Partnership in facilitating the return of or reduction in capital. 4.6 Additional Operating Capital. (a) Each Partner may from time to time be required to make an Additional Capital Contribution pursuant to this section. Any such contribution must be made within ten (1.0) days from the date of written notice by the Managing Partner. If the cash receipts are insufficient to pay the obligations ofthe Partnership, the Partners are hereby expressly authorized to borrow, on behalf of the Partnership, any sums of money sufficient to offset negative cash flow. To secure any such loan, the Partners or record title holder are hereby authorized and empowered to pledge, mortgage or otherwise encumber or hypothecate the Partnership Property. Should the Partners not be able to borrow on behalf of the Partnership funds necessary to timely discharge Partnership obligations, then the Partners may assess each Partner, based upon the Partner's pro rata ownership interest in the Partnership, such sum or sums as are necessary to timely discharge Partnership obligations. All sums raised by the Partners pursuant to this section must be used solely for Partnership purposes. (b) If a Partner fails to make a required Additional Capital Contribution pursuant to this Section 4.6, the Partnership may exercise, on notice to that Partner (the "Delinquent Partner"), one or more of the following remedies: (1) Taking such action, at the cost and expense of the Delinquent Partner, to obtain payment by the Delinquent Partner, of the portion of the Delinquent Partner's Additional Capital Contribution that is in default, together with interest CopperPointe Partnership Agreement Page 4 on that amount at the Default Rate of Interest from the date that the Additional Capital Contribution was due until the date that it is made; (2) Permitting the Partners in proportion to their ownership interests in the Partnership, or in such other percentages as they may agree (the "Lending Partner", whether one or more), to advance the portion of the Delinquent Partner's Additional Capital Contribution that is in default, with the following results: (i) The sum advanced constitutes a loan from the Lending Partner to the Delinquent Partner and an Additional Capital Contribution of that sum to the Partnership by the Delinquent Partner; (ii) The principal balance of the loan and all accrued unpaid interest is due and payable on the tenth day after written demand by the Lending Partner to the Delinquent Partner; (iii) The amount lent bears interest at the Default Rate of Interest from the date that the advance is deemed made until the date that.the loan, together with all interest accrued, is repaid to the Lending Partner; (iv) All distributions from the Partnership that would be made to the Delinquent Partner will be paid to the Lending Partner until the loan and all interest accrued have been paid in full; (v) The payment of the loan and interest accrued to the Lending Partner is secured by a security interest in the Delinquent Partner's ownership interest in the Partnership; (vi) The Lending Partner has the right, in addition to the other rights and remedies granted to the Lending Partner under this Agreement or at law or in equity, to take any action, at the cost and expense of the Delinquent Partner, that the Lending Partner may deem appropriate to obtain payment by the Delinquent Partner of the loan and all accrued and unpaid interest; (3) Exercising the rights of a secured party under the Uniform Commercial Code of the, State of Texas; or (4) Exercising any other rights available at law or in equity. Each Partner grants to the Partnership, and to the Lending Partner with respect to any loans made by the Lending Partner to a Delinquent Partner, as security, equally and ratably far the payment of all Additional Capital Contributions that the Partner has agreed to make and the payment of all loans and interest accrued made by the Lending Partner to that Partner, a security interest in that Partner's ownership interest in the Partnership under the Uniform Commercial Code of the State of Texas. On any default in the payment of a required Additional Capital Contribution or in the payment of a loan or interest accrued, the Partnership or the Lending Partner, as applicable, is entitled to all the rights and remedies of a secured party under the Uniform Commercial Code of the State of Texas with respect to the security interest granted. CopperPointe Partnership Agreement Page 5 4.7 Use of Contributions. The cash and property contributed by the Partners, initially being the aggregate amounts reflected on Exhibit "A," will be utilized by the Partnership for the purposes of the Partnership set forth in Article 3. 4.8 Nature of Interests. All property owned by the Partnership, whether real or personal, tangible or intangible, is deemed to be owned by the Partnership as an entity. No Partner has any direct ownership of any Partnership property. S. ACCOUNTING. 5.1 Profits and Losses. Profits or Losses for any fiscal year will be allocated among the Partners in proportion to their ownership interests in the Partnership, unless a different allocation is agreed to in writing by all of the Partners. 5.2 Fiscal Year and Annual Accounting. The Partnership fiscal year will be the calendar year. The Partnership books will be kept on the cash method of accounting. The Partnership will periodically furnish to the Partners, with accounting reports reflecting Partnership income and expenses. In addition, the Partnership will provide the Partners with the full annual Partnership tax return for the preceding year in a timely manner, to comply with all Code reporting deadlines. 6. DISTRIBUTIONS. 6.1 Distributions of Partnership Funds. Distributions of Distributable Cash will be made at such times as determined by a majority-in-interest of the Partners, as provided in this section 6.1. Unless agreed in writing by a transferor and transferee, Distributable Cash allocable to a transferred Partnership interest which may have been transferred during any year will be distributed to the holder of the Partnership interest who was recognized as the owner on the date of the distribution, without regard to the results of Partnership operations during the year. With regard to Distributable Cash and other Partnership Property, the Partners will make a determination, in accordance with the Partners' duty of care and loyalty to the Partnership, as to the need for the Partnership Property in the operation of the Partnership business, considering current needs for operating capital and prudent reserves for future operating capital, all in keeping with the Partnership's purposes. It is the duty of the Partners, in determining the amount of Distributable Cash available for the payment of distributions, to take into account the needs of the Partnership in its business and sums necessary in the operation of its business until the income from further operations is available, the amounts of its debts, the necessity or advisability of paying its debts, or at least reducing those debts within the limits of the Partnership's credit, and the preservation of its capital as represented in the Partnership Property as a fund for the protection of its creditors. 6.2 Loans. Any Person may, with the consent of all of the Partners, lend or advance money to the Partnership. If any Partner makes any loan or loans to the Partnership or advances money on its behalf, the amount of any such loan or advance will not be treated as a Capital Contribution, but will be a debt due from the Partnership. The amount of any such loan or advance by a lending Partner is repayable out of the Partnership's cash and will bear interest at such rate as the Partners and the lending Partner agree, but not in excess of the maximum rate permitted by law. If a Partner, or an Affiliate of a Partner, is the lending Partner, the rate of interest will be determined by the Partners, taking into consideration, without limitation, prevailing interest rates and the interest rates the Partner or an Affiliate of the Partner would be required to pay in the event the Partner or Affiliate had itself borrowed funds to loan or advance to the Partnership, and the terms and conditions of the loan, including the rate of interest, must be no less favorable to the Partnership than if the lender had been an independent third party. CopperPointe Partnership Agreement Page 6 6.3 Tax Distributions, If for any Partnership Year, the Partnership reports taxable income (including gains from the disposition of Partnership Assets), the Partners will cause the Partnership to distribute Distributable Cash in amounts. sufficient to pay the federal income tax liability of each Partner associated with the Partnership's taxable income. That distribution will be made to the Partners in proportion to the taxable income -allocated to them in accordance with the provisions of this Agreement and will be in an amount equal to the taxable income so allocated, multiplied by the maximum rate of federal income tax imposed upon individuals under the Code at the time the allocation is made. 7. POWERS RIGHTS AND DUTIES OF PARTNERS 7.1 Time Devoted to Partnership Business. The Partners will not be required to devote full time to the affairs of the Partnership, but must diligently and faithfully devote whatever time, effort, and ski it may be necessary for the conduct of the Partnership's business, and must perform all of the duties of a Partner which are provided for in this Agreement and the Code. 7.2 Management. 304 East Horton Limited Partnership is appointed as the Managing Partner of the Partnership. The Managing Partner will serve until the designation is revoked, until the Managing Partner is removed by vote of 51% of the then outstanding ownership interests of the Partners, or until the Managing Partner ceases to serve for any other reason. The Managing Partner is authorized and directed to manage and control the assets and the business of the Partnership. The Managing Partner may exercise all of the powers which could be exercised by a majority -in -interest of the Partners, subj ect to the limitations described in sections 7.4 and 7.5 of this Agreement. It is understood and agreed that the Managing Partner will consult and confer with the Partners before taking any steps resulting in any substantial change in the operation or policies of the Partnership affairs, or the sale of any portion of the Partnership assets other than in the usual course of business, or in any manner which affects the Partnership business in a manner judged unusual by the Partners in the ordinary operation of the Partnership business. If a Managing Partner is serving as such, any reference to "Partner" or "Partners" in this Agreement also includes "Managing Partner," if applicable, 7.3 Authority of Partners. Subject to the limitations of this Agreement, and to the duties, obligations and limitations imposed upon the Partners at law, the Partners will manage the day-to-day operations of the Partnership. The Partners have the authority to take any action which the Partners believe in good faith to be in furtherance of the Partnership business and purposes and to exercise all rights and powers generally conferred by law in connection therewith. No Person dealing with the Partnership is required to inquire into, or obtain any consents or other documentation as to the authority of the Partners to take any such action or to exercise any such rights or powers. Specifically: (a) The Partners have the right, power and authority on behalf of the Partnership: (1) To receive and hold all Partnership Property in the name of the Partnership; (2) To obtain and maintain insurance as the Partners deem desirable and appropriate; (3) To open, maintain, and close bank accounts, brokerage accounts and checking accounts in the name of the Partnership, to designate and change signatories on such accounts, and to draw checks and other orders for the payment of monies; CopperPointe Partnership Agreement Page 7 (4) To engage accountants, attorneys and any and all other agents and assistants, both professional and non-professional, which may include the Partners, and to compensate them reasonably for services rendered; (5) To collect all sums due to the Partnership; (6) To prepare and file all tax returns of the Partnership and to make all elections for the Partnership thereunder; (7) To the extent that funds of the Partnership are available therefor, to pay as they become due all debts and obligations of the Partnership; (8) To vote and exercise all other rights available to the holder of any securities included in the Partnership Property; and (9) To take any and all other action, including legal action, that the Partners deem necessary, appropriate or advisable in furtherance of the Partnership's business and purposes. (b) The Partners have the sole authority to manage, deal with, negotiate and contract with respect to, and convey the Partnership Property on behalf of the Partnership. (c) The Partners must act in good faith in the performance of the Partners' obligations hereunder but have no liability or obligation to any other Partner or the Partnership for any decision made or action taken in connection with the discharge of the Partners' duties hereunder, .if such decision or action is made or taken in good faith and in the exercise of due care in connection with the Partnership business. (d) The Partners have the power to designate, from time to time, a depository of Partnership funds, and to draw upon the same for Partnership purposes. (e) Any person dealing with the Partnership or the Partners may rely on a certificate signed by the Partners concerning: (1) The identity of the Partners; (2) The existence or nonexistence of any fact or facts that constitute conditions precedent to acts by the Partners or in any other manner germane to the business and affairs of the Partnership; (3) The person or persons who are authorized to execute and deliver any instrument or document of the Partnership; or (4) Any act or failure to act by the Partnership or concerning any other matter whatsoever involving the Partnership or any Partner. 7.4 Requirement of Unanimous Consent. The Partners shall not have the authority to enter into any of the following transactions without the unanimous consent of all the Partners: (a) Terminate, liquidate and wind up the Partnership, except as otherwise provided in this Agreement; CopperPointe Partnership Agreement Page 8 (b) Admit additional or substitute Partners, except as otherwise provided in this Agreement; (c) Do any act that would make it impossible to carry on the purposes of the Partnership and business of the Partnership; (d) Engage in any business activity other than that which is consistent with the purposes of the Partnership; or (e) Amend this Agreement, except as otherwise provided in this Agreement. 7.5 Restrictions on Partners. The Partners will not have the authority to enter into any of the following transactions without the consent of 51 % of the outstanding ownership interests of the Partners: (a) Prior to the actual termination of the Partnership, sell substantially all of the Partnership Property in liquidation or cessation of business; (b) Compromise any claim or dispute having an amount or value in issue in excess of 50% of the total value of the Partnership Property; (c) Sell, assign, lease, exchange, convert or otherwise transfer or dispose of all or part of the Partnership Property; (d) Mortgage, pledge, grant a security interest in, or incur, renew, or refinance any indebtedness of the Partnership; (e) Confess a judgment against the Partnership; (f) Do any act in violation of this Agreement; or (g) Make, execute or deliver any assignments for the benefit of creditors. 7.6 Dissolution or Bankruptcy of a Partner. On the dissolution or bankruptcy of a Partner, that Partner and his, her or its successors will thereafter have the status of a Transferee and may receive distributions to which such Transferee is entitled. 7.7 Indemnification of the Partners. The Partners will be jointly and severally indemnified and held harmless by the Partnership and by each other to the extent of each Partner's individual ownership in the Partnership from and against any and all claims, demands, liabilities, costs, damages and causes of action of any nature whatsoever, arising out of or incidental to the management of the Partnership affairs or to any Person acting as an employee while in the course of managing the Partnership affairs; however, no Partner will be entitled to indemnification hereunder where the claim at issue is based upon any of the following: (a) A matter entirely unrelated to the Partner's management of the Partnership affairs. (b) The proven gross negligence, misconduct, fraud or bad faith of the Partner. (c) The proven breach by the Partner of any provisions of this Agreement. CopperPointe Partnership Agreement Page 9 These indemnification rights are cumulative of, and. in addition to, any and all other rights, remedies, and resources to which the Partners, maybe entitled, whether pursuant to some other provisions of this Agreement, at law or in equity. 7.8 Mem. (a) A quorum will be present at a Partners' meeting if the holders of a majority -in - interest are represented at the meeting in person or by proxy. With respect to any matter, other than a matter for which the affirmative vote of the holders of a specified portion of the percentage interests of all Partners entitled to vote is required by the Code or this Agreement, the affirmative vote of a majority of Partners at a meeting at which a quorum is present will be the act of the Partners, except as otherwise provided by this Agreement. (b) All Partners' meetings will be held at the Partnership's principal office or at such other place within or outside the State of Texas as will be specified or fixed in the notices or waivers of notice thereof, provided that any or all Partners may participate in any such meetings by means of conference telephone or similar communications equipment pursuant to section 7.13 of this Agreement. (c) Notwithstanding the other provisions of this Agreement, the chairman of the meeting or the holders of a majority -in -interest shall have the power to adjourn the meeting from time to time, without any notice other than announcement at the meeting of the time and place of the holding -of the adjourned meeting. If the meeting is adjourned by the Partners, such time and place will be determined by a vote of the holders of a Super Majority. Upon the resumption of the adjourned meeting, any business may be transacted that might have been transacted at the meeting as originally called. (d) An annual Partners' meeting will be held at such place, within or outside the State of Texas, on such date and at such time as the Partners fix and set forth in the notice of the meeting, which date must be within thirteen (13) months subsequent to the date of organization of the Partnership or the last annual Partners' meeting, whichever most recently occurred. (e) Special Partners' meetings for any proper purpose or purposes may be called at any time by the Partners or by the holders of at least 51 % of the percentage interests of all Partners. If not otherwise stated in or fixed in accordance with the remaining provisions hereof, the record date for determining Partners entitled to call a special meeting is the date any Partner first signs the notice of that meeting. Only business within the purpose or purposes described in the notice (or waiver thereof) required by this Agreement may be conducted at a special Partners' meeting. (f) Written or printed notice stating the place, day and hour of the meeting and, in the -case of a special meeting, the purpose or purposes for which the meeting is called, must be delivered not less than 10 nor more than 30 days before the date of the meeting, either personally or by mail, by or at the direction of the Partners or person calling the meeting, to each Partner entitled to vote at such meeting. If mailed, any such notice is deemed to be delivered when deposited in the United States mail, addressed to the Partner at the Partner's address provided for in Exhibit "A" of this Agreement, with postage thereon prepaid. (g) The date on which notice of a Partners' meeting is mailed or the date on which the resolution of the Partners declaring a distribution is adopted, as the case may be, will CopperPointe Partnership Agreement Page 10 be the record date for the determination of the Partners entitled to notice of or to vote at such meeting, including any adjournment thereof, or the Partners entitled to receive such distribution. (h) Notice of meetings may be given to Partners by facsimile or electronic message (.e-mail). 7.9 Voting _Lis t. The Partners will make, at least 3 days before each Partners' meeting, a complete list of the Partners entitled to vote at such meeting or any adjournment thereof, which list will be kept on file at the Partnership's registered office or principal office and shall be subject to inspection by any Partner at any time during usual business hours. The original partnership records will be prima-facie evidence as to who are the Partners entitled to examine such list or transfer records or to vote at any Partners' meeting. Failure to comply with the requirements of this section will not affect the validity of any action taken at the meeting. 7.10 Proxies. A Partner may vote either in person or by proxy executed in writing by the Partner. A telegram, telex, cablegram or similar transmission by the Partner, or a photographic, photostatic, facsimile or similar reproduction of a writing executed by the Partner will be treated as an execution in writing for purposes of this section. Proxies for use at any Partners' meeting or in connection with the taking of any action by written consent must be filed with the Partners, before or at the time of the meeting or execution of the written consent, as the case may be. No proxy is valid after 11 months from the date of its execution unless otherwise provided in the proxy. A proxy is revocable unless the proxy form conspicuously states that the proxy is irrevocable and the proxy is coupled with an interest. 7.11 Conduct of Meetings. The chairman will preside over all Partners' meetings. The chairman will be a Partner (or representative thereof) designated by Partners holding a majority - in -interest in the Partnership. The chairman of any Partners' meeting will determine the order of business and the procedure at the meeting, including regulation of the manner of voting and the conduct of discussion as seem to him in order. 7.12 Action by Written Consent Without Meeting. (a) Subject to the requirements and restrictions imposed on the Partners by this Agreement, any action required or permitted to be taken at any annual or special Partners' meeting may be taken without a meeting, without prior notice, and without a vote, by unanimous written consent of the Partners setting forth the action so taken. Every written consent must bear the date of signature of each Partner who signs the consent, and the consent may be in one or more counterparts. A telegram, telex, cablegram or similar transmission by a Partner, or a photographic, photostatic, facsimile or similar reproduction of a writing signed by a Partner, will be regarded as signed by the Partner for purposes of this section. The signed consent or a signed copy of the consent must be kept on file at the Partnership's principal office. (b) If any action by Partners is taken by written consent, any articles or documents filed with the Secretary of State of Texas as a result of the taking of the action will state, in lieu of any statement required by the Code concerning any vote of Partners, that written consent has been given in accordance with the provisions of the Code and that any written notice required by the Code has been given. 7.13 Action by Telephone Conference or Other Remote Communications Technology. Partners may participate in and hold a meting by means of telephone conference, electronic mail, or similar communications equipment. Participation in such meeting will constitute CopperPointe Partnership Agreement Page 1 1 attendance and presence in person. at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. 7.14 Partners' Approval or Ratification of Acts or Contracts. At their discretion, the Partners may submit any act or contract for approval or ratification at any annual or special Partners' meeting called for the purpose of considering any such actor contract. Subj ect to the requirements and restrictions imposed on the Partners by this Agreement, any act or contract approved or ratified by a majority of the Partners will be as valid and as binding upon the Partnership and upon all the Partners as if it had been approved or ratified by every Partner of the Partnership. 8, MANAGEMENT FEES AND OTHER EXPENSES 8.1 Salary, Fees and Draws. Except as provided in this Article 8 or by unanimous agreement of the Partners, no Partner may receive any salary, fee, or draw for services rendered to or on behalf of the Partnership. 8.2 Expenses. In connection with the operation of the Partnership, the Partners will be reimbursed for any direct expenses reasonably incurred in connection with the Partnership's business. Without limiting the foregoing, the Partners may charge to the Partnership and pay or recover out of Partnership funds, as and when available, the following: all fees that may be required by applicable state or local authorities relating to the formation and operation of the Partnership or in compliance with the terms of this Agreement, including but not limited to, all fling fees for assumed name certificates, all reasonable expenses incurred by the Partners in connection with the organization and formation of the Partnership, all reasonable expenses incurred by the Partners to acquire, preserve, protect, or perfect the title to the Partnership Property or to operate and maintain such property, including, but not limited to, travel expenses, attorneys' fees, accountants' fees and court costs incurred in connection with such matters and any sums owed by the Partnership pursuant to any contract entered by the Partners pursuant to their authority under this Agreement; the cost of public liability insurance carried in connection with the business of the Partnership; taxes on property of the Partnership; principal and interest, and any other amounts whatsoever owing on any indebtedness of the Partnership, or any part hereof,. or any instruments securing any of same, together with any expenses incurred in connection with renewing or rearranging such or any other indebtedness incurred for the benefit of the Partnership deemed necessary by the Partners; and. normal closing costs reasonably incurred in the event of the lease, sale or other disposition of the Partnership Property. 9, TRANSFERS OF PARTNERSHIP INTERESTS, 9.1 Generallv. No Partner may transfer all or any portion of the Partner's interest in the Partnership, without the prior consent of all of the Partners, which consent may be granted or withheld in the sole discretion of any Partner. Each Partner agrees with the Partnership and all of the other Partners that the Partner will not make or permit a disposition of all or any portion of its Partnership Interest in violation of the provisions of this Article 9. 9.2 Prohibited Transfers. Any purported Transfer by any Partner of an interest in the Partnership that is not consented to by all of the Partners under section 9.1 of this Agreement is null and void and of no effect whatever; however, if the Partnership is required to recognize a Transfer that is not permitted (or if the Partnership, in its sole discretion, elects to recognize a Transfer that is not permitted), the rights of the Transferee are limited to those rights set forth in section 152.404 of the Code. In the case of a Transfer or attempted Transfer of an interest that is not a transfer consented to by all of the Partners under section 9.1 of this Agreement, the CopperPointe Partnership Agreement. page 12 parties engaging or attempting to engage in the Transfer will be liable to indemnify and hold harmless the Partnership and the other Partners from all cost, liability, and damage that any of those indemnified Persons may incur (including, without limitation, incremental tax liability and lawyers' fees and expenses) as a result of the Transfer or attempted Transfer and efforts to enforce the indemnity granted hereby. 9.3 Acouisition of an Interest Conveyed to Another Without Authoriiy. If an unauthorized Transfer occurs because: (1) any Person acquires a Partnership Interest, or becomes a Transferee, as the result of an order of a court which the Partnership is required by law to recognize; (2) a Partner's interest in the Partnership is subjected to a lawful "charging order"; (3) a Partner's ex-spouse is awarded all or a portion of a Partner's partnership interest in a divorce proceeding; (4) a Partner dies; (5) a Partner's spouse dies; (b) a Partner makes an unauthorized Transfer of an interest in the Partnership; or (7) of the dissolution or bankruptcy of a Partner, the Partnership will have the unilateral option to acquire the interest of the Transferee, or any fraction or part thereof, upon the following terms and conditions: .(a) The Partnership will have the option to acquire the interest by giving written notice to the Transferee of its intent to purchase within ninety (90) days from the date it is finally determined that the Partnership is required to recognize the Transfer. If the Partnership fails to exercise its option within that 90 -day period, the remaining Partners will have the option to acquire pro rata shares of the interest by giving written notice to the Transferee of their intent to purchase within ninety (90) days following the expiration of the expired 90 -day option period held by the Partnership. (b) The valuation date for the determination of the purchase price of the interest will be the first day of the month following the month in which the notice is delivered. (c) Unless the Partnership and the Transferee agree otherwise, the purchase price for the interest, or any fraction to be acquired by the Partnership, will the sum of the fair market value of all of the real property and other tangible assets owned by the Partnership, minus the total of all debts and other liabilities owed by the Partnership, multiplied by the Transferee's percentage interest in the Partnership. The fair market value of the Partnership's assets will be determined by a written appraisal report prepared by a Person or Persons qualified to perform appraisals of real estate and tangible personal property, describing the value of the assets owned by the Partnership. The Person(s) performing the appraisal(s) will be chosen by the Partnership. Payment for the cost of the appraisal report must be made by the Transferee. Closing of the sale will occur at the principal office of the Partnership at 10:00 a.m. on the first Tuesday of the month following the month in which the Appraisal is rendered. The purchase price paid by the Partnership will be reduced by any costs or fees incurred by the Partnership in acquiring the interest of the Transferee. (d) In order to reduce the burden upon the resources of the Partnership, the Partnership will have the option, to be exercised in writing delivered at closing, to pay its purchase money obligation in fifteen (15) equal annual installments (or for a period of time equal to the remaining term of the Partnership if the period is less than fifteen (15) years) with interest at the Default Rate of Interest. The first installment of principal, with interest, will be due and payable on the first day of the calendar year following closing, and subsequent annual installments, with accrued interest, will be due and payable on the first day of each succeeding calendar year until the entire amount of the obligation is paid. The Partnership will have the right to prepay all or any part of the purchase money obligation at any time without penalty. CopperPointe Partnership Agreement Page 13 (e) Neither the Transferee of an unauthorized Transfer nor the Partner causing the unauthorized Transfer will have the right to vote on Partnership matters during the prescribed option period or, if the option to purchase is timely exercised, until the sale 1s closed. 9.4 Survival of Liabilities. It is expressly understood and agreed that no Transfer of a Partnership Interest, even if it subsequently results in the substitution of the Transferee as a Partner herein, will release the transferor or assignor from those liabilities of the Partnership which survive the Transfer as a matter of law. 9.5 Partnership Interest Pledge or -Encumbrance. No Partner may grant a security interest or otherwise pledge, hypothecate or encumber his, her or its interest in this Partnership or such Partner's distributions without the consent of all the Partners. It is understood that the Partners are under no obligation to give consent nor are they subject to liability for withholding consent. 9.6 Nonrecop-nition of an Unauthorized Transfer. The Partnership will not be required to recognize the interest of any Transferee who has obtained a purported transferred interest as the result of a Transfer that is not authorized by this Agreement, and the Transfer will be null and void for all purposes. If there is doubt as to ownership of an interest in the Partnership or who is entitled to distributions or liquidating proceeds or other property, the Partners may accumulate such property until the issue is resolved to the satisfaction of the Partners. 10. TERMINATION AND WINDING UP PARTNERSHIP BUSINESS. 10.1 Termination and Winding U12 of Partnership. The Partnership will continue after the occurrence of an event of termination until the winding up of its business is completed, at which time the Partnership will be terminated. The following are events that will require termination and winding up of the Partnership: a. the unanimous written consent of all of the Partners; b, written notice of withdrawal by any Partner (the "Withdrawing Partner"), provided at least ninety (90) days in advance of the anticipated date of withdrawal; or C. the entry of a decree of judicial winding up and termination under Section 11.314 of the Code. 10.2 Effective Date and Notice. The winding up and termination of the Partnership will be effective as of the date on which the event causing the termination occurs, but the Partnership will not terminate until all of its affairs have been wound up and it has been terminated as provided in this Article. If a Partner withdraws from the Partnership under Section 10.1 b., the event causing termination is the Withdrawing Partner's written notice. If the Partnership is terminated for any reason, the Managing Partner will provide each of the Partners with written notice of the termination within two weeks of the event causing termination and winding up. 10.3 Withdrawals,• Reconstitution. Winding up may occur pursuant to Section 10.1 b, of this Agreement, but any of the remaining Partners who wish to continue the business of the Partnership (referred to herein as the "Remaining Partner," whether one or more) may so state in writing within thirty days after receipt of the notice of termination, that the Partnership will be reconstituted and continued. In that event, the Remaining Partner will have the option to purchase the Withdrawing Partner's partnership interest, in accordance with Section 10.6 herein. CopperPointe Paitnership Agreement Page 14 14.4 Conduct of Winding Up, a. The following Persons are authorized to wind up the business of the Partnership: (1) First, the Partners who have not withdrawn may wind up the Partnership's business; (2) Second, the legal representative of the last surviving Partner may wind UP the Partnership's business; or (3) any Person appointed by a court to carry out the winding up. b. Except as otherwise provided in this Article, the Partner(s) or other Person conducting the wind up shall have the authority to exercise all of the powers of management set forth in Section 7.3 of this Agreement, to the extent necessary to Wind up the Partnership's affairs and terminate the Partnership, subject to the same duties which are imposed on the Managing Partner by this Agreement, and subject to the same limitations on those duties and indemnification rights which are granted to the Managing Partner by this Agreement. C. A Person winding up the Partnership's business may continue the business of the Partnership in whole or in part, including delaying the disposition of Partnership Property, but only for the limited period necessary to avoid unreasonable loss of the Partnership Property or business. 10.5. Conversion of Property to Cash. If the Partnership is terminated other than under Section 10.1 b., unless other arrangements are made which are satisfactory to all of the Partners, exclusive of any Partner causing the termination of the Partnership in breach of this Agreement, the Partnership Property will be liquidated and converted to cash to the extent necessary to pay all creditors of the Partnership, including Partners to the extent allowed by the Code, except for creditors which are owed debts that consist only of liabilities owed by the Partnership which are secured by properties from which the projected net cash flow is sufficient to pay principal and interest as such obligations become due and which are not accelerated nor considered defaulted upon solely because of the termination of the Partnership and the distribution in termination of the Partnership of any properties which secure the liabilities. Any of the Partnership Property which remains after the above-described assets are converted to cash may be liquidated and converted to cash or retained for distribution in kind to the Partners as the Person conducting the wind up determines to be appropriate. The Partners must allow a reasonable time for the orderly winding up and termination of the Partnership in order to avoid losses to the extent possible. 10.6 Valuation of Partnership Property. If the Partnership is terminated under Section 10.1 b.. and the Remaining Partner elects to reconstitute and continue the Partnership business, , as provided in Section 10.3 herein, then the written statement of reconstitution will serve as notice that the Remaining Partner is exercising the option to purchase the Withdrawing Partner's `'N41 partnership p interest. The purchase price for the interest, or any fraction to be acquired by the Partnership, will the sum of the fair market value of all of the real property and other tangible assets owned by the Partnership, minus the total of all debts and other liabilities owed by the Partnership, multiplied by the Withdrawing Partner's percentage interest in the Partnership. The fair market value of the Partnership's assets will be determined by a written appraisal report prepared by a Person or Persons qualified to perform appraisals of real estate and tangible personal property, describing the value of the assets owned by the Partnership. The Person(s) performing the appraisal will be chosen by the Remaining Partner, The Withdrawing Partner and Remaining Partner each will pay one-half of the costs of the appraisal. The determination CopperPointe Patinership Agreement Page 15 of the independent appraiser iS final and hinging on ail partreo. The purchaser will pay A- — fair: market value as determined by the appraiser in four equal cash installments, the first due on closing and the remainder (together with accumulated interest on the amount unpaid at the General Interest Rate) due on each of the first three anniversaries thereof, The payment to be made to the Withdrawing Partner or its representative pursuant to this Section is in complete liquidation and satisfaction of all the rights and interest of the Withdrawing Partner (and of all Persons claiming by, through, or under the Withdrawing Partner or its representative) in and in respect of the Partnership, including, without limitation, any Partnership interest, any rights in specific Partnership Property, and any rights against the Partnership, and (insofar as the affairs of the Partnership are concerned) against the Partners, and constitutes a compromise to which all Partners have agreed. 10.7 Partner's Liability to Partnership For Incurring Ina ro riate Liability After Occurrence of Event Requiring Winding Up. A Partner who, with notice that an event requiring a winding up has occurred, incurs a Partnership liability under Section 10.4 b. by an act that is not appropriate for winding up the Partnership business will be liable to the Partnership for a loss caused to the Partnership arising from that liability. 10.8 Partner's Power to Bind Partnership After Occurrence of Event of Termination. After the occurrence of an event requiring winding up, the Partnership will be bound by a Partner's act that: a, is appropriate for winding up the Partnership business; or b. would otherwise bind the Partnership before the occurrence of the event requiring winding up, if the other party to the transaction does not have notice that an event requiring winding up has occurred. 10.9 , Rules for Distribution on WindingJo. a. In winding up the Partnership business, the Partnership Property, including the contributions of the Partners required by this section 10.9, will be applied to discharge its obligations to creditors, including, to the extent permitted by other applicable law, Partners who are creditors other than in their capacities as Partners. Any surplus must be applied to pay in cash the net amount distributable to Partners in accordance with their right to distributions under subsection 10,9 b. b. Each Partner is entitled to a settlement of all Partnership accounts on winding up the Partnership business. In settling accounts among the Partners, the Partnership interest of a withdrawn Partner that has not been redeemed under Chapter 152, Subchapter H of the Code will be credited with a share of any profits for the period after the Partner's withdrawal but shall be charged with a share of losses for that period only to the extent of profits credited for that period, and the profits and losses that result from the liquidation of the Partnership Property will be credited and charged to the Partners' capital accounts. The Partnership will make a distribution to each Partner in an amount equal to that Partner's positive balance in the Partner's capital account. Except as provided by section 152.304(b) or 152.801 of the Code, each Partner will contribute to the Partnership an amount equal to that Partner's negative balance in the Partner's capital account. c. Except as provided by section 152.304(b) or 152.801 of the Code, to the extent not taken into account in settling the accounts among Partners under subsection 10.9 b. above: Coppet -Pointe Partnership Agreement Page 16 (1) each Partner must contribute, in the proportion in which the Partner shares Partnership losses, the amount necessary to satisfy Partnership obligations, excluding liabilities that creditors have agreed may be satisfied only with Partnership Property without recourse to individual Partners; (2) if a Partner fails to contribute,the other Partners must contribute, in the proportions in which the Partners share Partnership losses, the additional amount necessary to satisfy the Partnership obligations; and (3) a Partner or Partner's legal representative may enforce or recover from the other Partners, or from the estate of a deceased Partner, contributions the Partner or estate makes to the extent the amount contributed exceeds that Partner's or the estate's share of the Partnership obligations. d. The estate of a deceased Partner is liable for the Partner's obligation to contribute to the Partnership. e. The Partnership, an assignee for the benefit of creditors of the Partnership or a Partner, or a person appointed by a court to represent creditors of the Partnership or a Partner may enforce the obligation of a Partner or the estate of a deceased Partner to contribute to the Partnership. 11. MisCULLANEOUS. 11.1 Notices. Any notices required hereunder must be sent to the Partners by personal service or by certified or registered mail, return receipt requested, at the address set forth for the parties, respectively, on Exhibit "A" of this Agreement or such other address designated by the Partner by written notice according to this section. No transferee of any interest of any Partner is entitled to receive a notice independent of the notice sent to the Partner making the transfer. 11.2 Additional Instruments. Each Partner hereby agrees to execute all agreements, certificates, tax statements, tax returns and other documents as may be required by law to effectuate the provisions contained herein. 11.3 Applicable to Successors. This Agreement and each provision herein is binding upon and applicable to, and shall inure to the benefit of, the parties hereto and their respective heirs, legatees, devisees, successors, assigns and legal representatives, except as otherwise expressly provided herein. 11.4 Waiver. No consent or waiver, express or implied, of the breach or default by a party in the performance by that party of its obligation hereunder will be deemed or construed to be a consent to or waiver of any other breach or default in the performance of any other obligation hereunder. Failure on the part of any party hereto to complain of any act of any other party or to declare any other party hereto in default, irrespective of how long the failure continues, does not constitute a waiver by the party of its rights hereunder. 11.5 Severability. If any provision of this Agreement is deemed invalid or unenforceable to any extent, the remainder of this Agreement and the application of its provisions to other Persons or circumstances will not be affected and will be enforced to the greatest extent permitted by law. CopperPointe Partnership Agreement Page 17 J 11.6 Amendment. This Agreement may be amended or modified at any time only if all Partners agree to such amendment or modification in writing. 11.7 'Waiver of Ri;7hts to Partition. Inasmuch as all real and personal property owned by the Partnership is owned by the Partnership as an entity, and no Partner, individually, has any ownership in that property, none of the Partners has any right to partition any of the Partnership Property, and all Partners irrevocably waive any and all rights they might have to maintain any action for partition of any of the Partnership Property. 11.8 Counterparts. This Agreement may be signed in a number of counterparts, each of which will be considered an original for all purposes, but all of which taken together shall constitute only one agreement. 11.9 Attorney Fees. In the event a dispute arises between any Partner(s) and the Partnership or between the Partners, the prevailing party will be entitled to recover reasonable attorney's fees and.court costs incurred. 11.10 Governing Law. This Agreement will be subject to, and governed by, the laws of the State of Texas. Venue of any disputes will be in Washington County, Texas. 11.11 Entire Agreement. The agreements and representations in this Partnership Agreement contain all of the agreements and representations of the Partners, and it is expressly provided that the Partners are not liable for any claim that may hereafter be made alleging any verbal agreement by and between the Partners, or any Partner's agents, employees or associates. 304 East Horton Limited Partnership By; PHYSICIAN ADVOCATES GROUP, INC., General rf �r i By; Wade F. e del, President ,r 2 -�, /L -X Joseph G,, Izycki CopperPointe Partnership Agreement Page 18 EXHIBIT "A" PARTNER'S NAME, ADDRESSES, PERCENTAGE INTERESTS AND INITIAL CAPITAL CONTRIBUTIONS Name and Address Percentage Partnership Initial Capital Interest Contribution Partners: 304 East Horton Limited Partnership 304 E. Blue Bell Rd. Brenham, Texas 77833 Joseph Gorzycki 1502 Misty Lane College Station, 77345 F:lwddocsTLIGNTS113350122\PARTAGR100027120. WPD 60% 40% � -") U CopperPointe Partnership Agreement Page 19