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HomeMy WebLinkAboutLegal Notice 04/22/2008 09:30 FAX Z1002/016 WELLBORN CS PLAZA, LTD. LIMITED PARTNERSHIP AGREEMENT This Limited Partnership Agreement is an agreement by Bay St. Louis GP, LLC, a Texas limited liability company (the "Managing General Partner"), and Chimney Joint Venture and David Cottrell, HI (the "Limited Partners"). The names and addresses of the Partners are listed on the signature page of this Agreement I. FORMATION OF THE PARTNERSHIP 1.01 Formation. The Partners voluntarily associate themselves together to .form the Partnership under the Texas Business Organizations Code, as amended (the "TBOC"), for the purposes stated in Section 1.03. lxcept as provided to the contrary in this Agreement, the rights, duties, status, and liabilities of the Partners, and the formation, administration, and dissolution of the Partnership, shall be as provided in the TBOC. 1.02 Name. The name of the Partnership is Wellborn CS Plaza, Ltd., and the business and activities of the Partnership shall be conducted under this name and under variations of this name as the Managing General Partner may select from time to time upon prior notice to the Limited Partners; provided that the Managing General Partner may contract or acquire real estate and personal property in the name of the Managing General Partner or in the name of an agent or nominee, in each case as nominee of the Partnership, on such terms and conditions as the Managing General Partner deems appropriate. The Managing General Partner shall execute and duly file with the proper office certificates as required by the Assumed Name Act in effect in Texas or in other states in which Partnership activities arc conducted. 1.03 Purposes. The purposes of the Partnership are (a) to acquire the real estate located at northeast corner of FM 2154 and Navarro Drive, College Station, tx Brazos County, Texas (the "Property" more fully described by Exhibit "A" attached hereto and made a part hereof) and to develop a retail center on the Property with a shopping center containing approximately 21,525 square feet of space (the "Shopping Center") , develop, hold for investment, manage, maintain, operate, lease and perhaps sell the Property and the Shopping Center at some future date, all as determined by the Managing General Partner; (b) to arrange for, negotiate, and close the financing, through a. mortgage or otherwise, as necessary to acquire the Property and construct the Shpping Center; (c) to own, hold for investment, manage, maintain, improve, renovate, develop, operate, lease, sell, exchange, or otherwise dispose of the Property, the Shopping Center, and other assets of the Partnership; (d) to engage in other business transactions necessary or desirable to carry out these purposes; and (e) to perform any other lawful business under the TROC within the contemplation of this Agreement, so long as the business is for the benefit of the Partnership. In order to carry out the purposes of the 1'artnership, the Partnership may, among other acts, enter, enforce, and perform contracts (including earnest money contracts with buyers and 4' •Vlr. nmne etc nn.l tr•u:....c\Iln..irl C'nn. i.11(ryr-ra I.ihilCI1X11 ural C.IlinoeVrem",,rnry Tglernrl , r 281 376 1726 04/22/2008 09:26 RECEIVED FROM: #1869-002 04/22/2008 09:30 FAX f�003/016 sellers of real estate), finance and refinance the activities of the Partnership, by granting deeds of trust and other security interests, lease, sell, and exchange Partnership assets, including real estate, equipment, supplies, vehicles, and other personal property, employ and retain employees, professional advisors, consultants, and independent contractors, collect and pay funds, obtain insurance, and take other actions, all on behalf of the Partnership, in furtherance of these purposes. 1.04 Certificate of Formation. The Managing General Partner shall execute and file a Certificate of Formation (and any necessary amendments) with the Texas Secretary of State. Prior to conducting any business in any state other than Texas, the Managing General Partner shall cause the partnership to comply with all filings and all other requirements for qualif in and.conducting the business as a limited partnership in that foreign state. y g 1.05 Term. The term of the Partnership shall commence on the date the Certificate of Formation is filed in the office of the Texas Secretary of State. The Partnership shall continue until March 1, 2035, unless earlier terminated in accordance with section 8.01. 1.06 Registered Office; Registered Agent; Principal Office. The registered office and registered agent shall he at the place and the person selected by the Managing General Partner in Texas. The initial registered agent is Alan Tomlin. The principal office of the Partnership shall be at the place selected by the Managing General Partner and the Partnership shall maintain its records there as required by Section 153.551 of the T13OC. 1.07 Partners. The names and mailing addresses of the Partners are as shown on the signature page. The Partnership has no other partners and no other Person has any right to take part in the ownership or management of the Partnership, except as provided in this Agreement 1.08 Merger. The Partnership may merge (as defined in the TI3OC) with another business entity only with the consent of the Managing General Partner and the Approval of the Limited Partners. 1.09 Definitions. As used in this agreement, these terms shall have the following meanings: (a) "Adjusted Capital Account Deficit" means, with respect to any Partner, the deficit balance, if any, in such Partner's capital account as of the end of the relevant fiscal period, after giving effect to the following adjustments: (1) Credit to such capital account any amounts which such Partner is deemed to be obligated to restore for purposes of Treasury Regulation. Section 1.704-1(b)(2)(ii)(c), including such Partner's minimum gain share and such Partner's share of Partner minimum gain; and 2 \ r•111nrI:mrnlc fine!S tt;nmAtl:.vir1 rrittrrlt( 1' n'� fRGT!.SpRp(';'I'r,11 nen).CrhinodTrn+nnran,Inn•mrr 281 376 1726 04/22/2008 09:26 RECEIVED FROM: #1869-003 04/22/2008 09:31 FAX 004/016 managing general partner on the vote of a Majority in interest of the Limited Partners, at a special meeting called for that purpose. The removal or withdrawal of the Managing General Partner shall cause its interest in the Partnership to be converted to a Limited Partner Partnership Interest without any right to vote except as required by law, and an amended Certificate of orniation shall be :filed to recognize the change in status. The new managing general partner shall make the Capital Contribution, in exchange for a Partnership Interest, as agreed by the majority in interest of the Limited Partners. (d) Miscellaneous. Notwithstanding the other provisions of this Section, the Managing General Partner may not be removed unless the Partnership receives an opinion from its legal counsel or other counsel acceptable to the Limited Partners consenting to the removal, that the removal of the Managing General Partner and the admission of the new managing general partner will not result in the loss of limited liability for any Limited Partner or the Partnership being taxed as a corporation for federal income tax purposes. The new managing general partner will have, for a period of one year following the withdrawal or removal of the former managing general partner, the right to purchase the Partnership Interest for its fair market value, as determined by them using reasonable methods as they shall adopt. 4.08 Liability and Indemnity of Managing General Partner. (a) Standards of Performance. The Managing General Partner shall perform its duties with respect to the Partnership in good. faith and in the best interest of the Partnership and shall devote such time and effort to the Partnership business and operations as is reasonably necessary to manage the affairs of the Partnership prudently. The Managing General Partner is liable for acts, errors, or omissions in performing its duties with respect to the Partnership only if its conduct involves fraud, gross negligence or gross misconduct. The Managing General Partner is not liable for acts, errors, or omissions in performing its duties for any other reason, including the Managing General Partner's sole, partial, or concurrent negligence. (h) Liability. Unless fraud, gross negligence, or gross misconduct is involved, the Managing General Partner shall not be liable to the partnership or the limited partners for any action taken or failure to act on behalf of the Partnership. (c) indemnification. To the fullest extent permitted by law, and subject to the procedures in Chapter 8 of the TROC and the limitations stated in the next sentence, the Partnership shall indemnify the Managing General Partner, and its officers, directors, employees, shareholders, managers, members, agents, and affiliates, (collectively, the "Indemnitees") and hold them harmless from all claims, demands, liabilities, damages, losses, costs, and expenses (including amounts paid in satisfaction of judgments, in settlements, as fines and penalties and legal or other costs and expenses of investigating or defending against a claim or alleged claim) of .1 fl__,.----.___.4(._..._--_n_...... .. .w.....a..Pn ri . !,♦ .vPL,.,... 4. 281 376 1726 04/22/2008 09:27 RECEIVED FROM: #1869-004 04/22/2008 09:31 FAX [2005/018 any nature incurred by an Indemnitee in connection with the business of the Partnership including the Indemnitee's sole, partial, or concurrent negligence, if the Indemnitee acted in good faith and in a manner that the Indemnitee reasonably believed to be in the best interests of, or not opposed to the best interests of, the Partnership and, with respect to any criminal action or proceeding, had no reasonable cause to believe its conduct was unlawful, and that Indemnitee's conduct did not constitute fraud, gross negligence, or gross misconduct. Nothing in this Section shall extend the obligation of any Limited Partner beyond his Capital Contribution and the total right to indemnification of the Managing General Partner shall not extend beyond the Partnership assets; accordingly, if the assets are insufficient to satisfy any claim brought under this Section in full, the Managing General Partner shall have no recourse against any Limited Partner for the deficiency. (d) Partnership Assets Must First Be Used. All judgments against the Partnership and the Managing General Partner or its officers, directors, employees, shareholdei,s, managers, members, agents, and Affiliates where these parties are entitled to indemnification, must be satisfied from Partnership assets only. (e) No Presumption_ The termination of any action by judgment or settlement does not, of itself, create a presumption that an Indemnitee is not entitled to indemnification and protection afforded by this Section. (f) Determination. Any indemnification under this Section, unless ordered by a court, shall be made by the Partnership only as authorized in the specific case and only on a determination by (i) independent legal counsel selected by the Managing General Partner in a written opinion, (ii) a Majority in Interest of the Limited Partners, or (iii) in the case of an Indemnitee other than the Managing General Partner, its Affiliates, and their respective directors, managers and executive officers, by the Managing General Partner that the indemnification is proper in the circumstances because the applicable standard set forth in this Section 4.08 has been met. (g) Securities Laws Violations. Irrespective of this Section, no Indcrnnitee shall be indemnified or held harmless from any liability, loss, damage or expense incurred by it in connection with a claim or settlement involving allegations that federal or state securities laws were violated by the Indemnitee unless: (i) the Indemnitee is successful in defending the action, or (ii) the indemnification is specifically approved by a court of competent jurisdiction or the matter of indemnification for violations of federal or state securities laws has been favorably settled. (h) Insurance. The Partnership may purchase and maintain insurance on behalf of the Managing General Partner and the Persons covered by this Section 4.08 15 !`.\1'�..n......._......A V....:�,..If'1....:.11'..,,....11 T•i\TTAc, i C.AlrVe411....wl�� .....n1'P.._......r.T..,.w.n. 281 376 1726 04/22/2008 09:27 RECEIVED FROM: #1869-005 04/22/2008 09: 31 FAX 0 006/016 • representative, or successors iii interest become a substituted Limited Partner, as that term is used in the TBOC, except in accordance with this Agreement. 5,06 Representations and Warranties of Limited Partners. Each Limited Partner represents and warrants the following: (a) He or she is a bona fide resident of Texas and has his principal residence in Texas, or it is a corporation or Iimited liability company, duly organized, validly existing, and in good standing under Texas law, with its principal office in Texas, has power to perform its obligations under this Agreemelnt, and its officer has been authorized to execute this Agreement. (b) He understands the nature of the risks involved in the proposed investment and is aware that the Partnership is newly organized and has no history of operations or earnings and that investment in the Partnership is therefore speculative; has been advised that the Managing General Partner is available to answer questions about the Partnershi and has asked any questions of the Managing General Partner which he desiresp d has received answers or other information from the Managing General Partnerkwiith respect to all questions; (c) He understands that no state or federal governmental authority has made or will make any determi.nation, recommendation, or endorsement relating to the in the public investment of a Partnership Interest offered by the Partnership; fairness (d) He recognizes that prior to this offering there has been no public market for the Partnership Interest offered by the Partnership and it is likely that after offering there will be no market; he understands that the transferability of the Interest is restricted, that he cannot expect to be able readily to liquidate his investment Partnership in case of emergency, and that he may have to continue to bear the risk of holdingthePartnership.Interest for an indefinite period; g (e) He is making the investment for his own account and not for the account of others, is not buying with the present intention of reselling,transferring, or subdividing all or any portion of the Partnership Interest purchased, and presentlyintendsole same until the Partnership is dissolved; to hold the (fl He understands that in the absence of either an effective registration statement Covering the Partnership Interest under the Securities Act of 1933 applicable state securities laws, or an opinion of counsel satisfactory to the Managingadany General .Partner that registration is not required under the TBOC and securities laws, he may not sell his Partnership Interest; (g) He understands that the Internal Revenue Service may disallow some or all of the deductions or losses to be claimed by the Partnership which could have an Lt C.Nnnrnmanle smrt Qrti:nvehnswiA(—nitre!'l'cyrr 19 RPi 1.SAgpC.'I'fll ural Qrff i..Rv1'T.rnnnrssn.In Mrnrt 281 376 1726 04/22/2008 09:27 RECEIVED FROM: #1869-006 04/22/2008 09: 31 FAX 007/018 adverse economic effect on the partners by (i) taxation at the partnership level resulting in double taxation and no flow through of loss and (ii) substantial reduction in yield, if any, on the Partners' investrtment in the partnership; (h) He is aware that the Managing General Partner and perhaps Affiliates of. the Managing General Partner may engage in businesses which are competitive with that of the Partnership, and he agrees to the activities even though there arc inherent conflicts of interests; (i) He understands that his obligation to make his contributions to the, Partnership referred to in Article .[1' is absolute and unconditional. 0) He is an. "Accredited investor" as that term is defined in Rule 501(a) of Regulation :U promulgated by the Securities and Exchange Commission under the Securities Act of 1933, or if not an Accredited. Investor, that he or his representative has knowledge, or has received .independent advice about investing in ventures similar to that of the Partnership, and is capable of evaluating the merits and risks of an investment in the Partnership, including the risk of holding indefinitely any Partnership Interest acquired by that person. (k) He has full power and, authority to execute and deliver this Agreement, which is his binding contract and obligation and enforceable against him in accordance with these terms and conditions. (1) He acknowledges that the Partnership Interest have not been registered under the Securities Act of 1933, as amended (the "1933 Act"), or the Texas Securities Act, as amended (the "Texas Act"), in reliance on the exemptions afforded by the 1933 Act and the Texas Act. To preserve those exemptions, the Partners agree that, notwithstanding anything contained in this Agreement to the contrary, the interests of the Partners or any substitute or additional Partners shall be nontransferable and non- assignable, except in compliance with the registration provisions of the 1933 Act and the Texas Act and any other applicable securities act, or exemptions therefrom. In additi as a condition precedent to any assignment or other transfer of an on, the Partners may require an opinion of counsel satisfactory to the Pa tnerrs that an assignment or transfer will be made in compliance with the registration provisions of the 1933 Act and the Texas Act and an.y other applicable securities act, or exemptions therefrom, and. the transferor or assignor shail be responsible for paying counsel's fee for the opinion. 5.07 .Breach. A Limited Partner will breach this Agreeinent if he or it (a) attempts to withdraw from the Partnership, (b) interferes in the management of the Partnership affairs, (c) engages in conduct which could result in the Partnership losing its tax status as a partnership, (d) engages in conduct that tends to bring the Partnership into disrepute, (e) owns a Partnership Interest that becomes subject to a legal proceeding, (f) breaches any confidentiality provisions of r , ......_�.._ . _ .__.. 20 281 376 1726 04/22/2008 09:27 RECEIVED FROM: #1869-007 04/22/2008 09:32 FAX [6008/018 this Agreement, or (g) fails to meet any commitment to the Partnership. A Limited Partner who is in breach of this Agreement shall be liable to the Partnership for damages caused by the breach in addition to the remedies provided in Section 5.08. The Partnership may offset for the damages against any distributions or return of capital to the Limited Partner who has breached this Agreement. 5.08 Alternate Right of Rescission_ If the Managing General Partner discovers any breach or untruth of any of the representations and warranties set out in Section 5.06 by a Limited Partner, the Managing General Partner may, at its election, rescind the sale of the Partnership Interest by returning to the Limited Partner an amount equal to the excess of(a) the Partner's Capital Contributions over (h) the aggregate of all cash previously distributed to the Limited Partner; provided, however, that the amount otherwise owing may, at the election of the Managing General Partner, be retained and applied toward.the satisfaction of the indemnification obligation of the Limited Partner set out in Section 5.09. 5.09 Indemnification. Each Limited Partner personally agrees to indemnify and hold harmless the Partnership, the Managing General Partner, and each other Limited Partner from any damages, claims, expenses losses, or actions resulting from (a) a breach by the Limited Partner or any of the representations and warranties contained in Section 5.07, or (b) the untruth of any of the representations and warranties contained in. section 5.07. The Limited Partner,as to whom the warranties and representations are not true or who breached the warranties and representations, shall, at the election of the Managing General Partner, be subject to the right of rescission set forth in Section 5.08 and to all other rights and remedies available to the Partnership at law or in equity. 5.10 Power of Attorney to the General Partners. Each Limited Partner appoints the Managing General Partner as his attorney-in-fact to execute, swear to, acknowledge, and. deliver the following documents and any other documents deemed by the Managing General Partner necessary for the business of the Partnership: (a) any Certificate of Formation; (h) this Agreement and any amendments; (c) any other instrument required or advisable to be filed for the Partnership; and. (d) any document which may be required to effect the continuation of the Partnership, the admission of an additional or substituted Limited Partner(in accordance with the terms of this Agreement), or the dissolution and termination of the Partnership (in accordance with the terms of this Agreement), or to reflect any reductions in amount of Contributions or Ownership interests of Partners, in each case having the power to execute such instruments on his behalf, whether the undersigned approved of such action or not. This power of attorney is irrevocable and coupled with an interest. V.I. BOOKS,RECORDS, REPORTS,BANK ACCOUNTS, AND TAX MATTERS 6.01 Books and Records. The Partnership shall continuously maintain an office in Texas, at which the following books and records shall be kept: (a) a current list of the name and last known mailing address of each Partner separately identifying in alphabetical order General 281 376 1726 04/22/2008 09:28 RECEIVED FROM: #1869-006 04/22/2008 09:32 FAX vi009/016 and Limited Partners together with the Ownership Interest of each Partner; (b) a copy of this Agreement and the Certificate of Formation and all amendments, together with executed copies of any powers of attorney under which any agreement or certificate has been executed; (c) copies of the Partnership's federal and state income tax or information returns and reports, if any, for the six most recent years; (d) financial statements of the Partnership for the six most recent fi c years; and (e)the Partnership's books and records. sal 6.02 Limited Partner's Rights Regarding Books, Records, and Tax Information; (a) Upon the request of a Limited Partner, the Managing General Partner shall promptly deliver to the Limited Partner, at the expense of the Partnership, a copy of the items set forth in Sections 6.01 (a) and (b). (b) While all Partnership information shall be kept confidential, each Limited Partner has the right, upon reasonable request, to each of the following: (i) to inspect and copy during normal business hours, at the Limited Partner's expense, any of the Partnership's records required to be kept by the Partnership and (ii) to obtain from the Managing General Partner promptly after becoming available, at the Limited Partner's expense, a copy of the Partnership's federal and state income tax or information returns for each year. (c) The Managing General Partner shall send to each Partner within 90 days after the end of each taxable year the information necessary to complete federal and state income tax or information returns and a copy of the Partnership's federal and state income tax or.information returns for the year. (d) At anytime, if requested by a Limited Partner, the Partnership books shall be audited by an accounting firm acceptable to the Partner requesting the audit, who shall be responsible for the audit expense, unless the audit reveals an error of five percent or more in the Partnership books, in which case the Partnership shall bear the expense of the audit. 6.03 Reports to Partners. The Managing General Partner shall cause an operating statement to be furnished to each of the Partners, at quarterly intervals. After the end of each Partnership fiscal year, the Managing General Partner shall cause to be prepared and furnished to each Partner, at Partnership expense, an annual report, containing a balance sheet of the Partnership and a related statement of income or loss for the Partnership (for the same all all other financial information reasonably requested by any Limited Partner, y ar), and 6.04 Confidentiality of Information. Each Partner is entitled to all information stated in this Agreement and in the TF3OC; however, each Partner shall hold .in strict confidence any inforrnation he receives regarding the Partnership that is identified as being confidential and may not disclose it to any person other than another Partner, except for disclosures (a) compelled by law, after notifying the Managing General Partner before disclosing it, (b) to advisors or 22 • 281 376 1726 04/22/2008 09:28 RECEIVED FROM: #1869-009 04/22/2008 09:32 FAX Q1010/016 Partners survive, each will be jointly and severally liable to the disabled Partner's or the decedent's estate for the purchase price; as between them, however, they will share liability in the ratio of their own Partnership Interests to each other at the date of disability or the decedent's death. The disabled Partner's or the decedents Partnership interest must in like manner, be divided between them based upon their proportionate ownership at the date of disability or the decedent's death. Regardless of who buys the Partnership interest, the closing must occur within 12 months after the date of disability or the decedent's death. (i) Community Proverty. Any right or option to purchase the Partnership Interest of a Partner includes any Partnership Interest of that Partner's spouse. Upon the death or divorce of a Partner, the Partner shall purchase his spouse's community property interest in such Partner's Partnership Interest (who shall sell) under Section 7.01(g) for Fair Market value. If the Partner fails to purchase his spouse's community property ert interest in his Partnership interest, the Partnership and the other Partners shall have the same rights to buy under this Section 7.01(i) and Section 7.01(g)_ (i) Documents. The Partnership may not recognize any purported transfer until it has received documents that bind the transferee to be bound by this Agreement: and contain representations and covenants by the transferor and transferee regarding the transfer and compliance with applicable tax and securities Iaws, as determined by the Partnership. (k) Take or Pay Offer. Irrespective of the other provisions in this Section 7.01, the partners agree to this take or pay buy-out provision, which shall supersede the other provisions of this Section 7.01. Any the Partner may at any time offer to buy all (but not part) of the Partnership interest of the other Partners by delivering a written notice containing an offer price and all the essential terms of the offer to one or more of the other Partners. The offer shall allow at least 90 days after its delivery before the recipient of the offer is required to respond and shall provide for the release of the selling Partner of all liabilities and obligations to third parties as a result of the selling Partner's guarantee or other commitment which is for the benefit of the Partnership. The party to which an offer is made shall have the option of either: (i) selling his Partnership Interest to the party making the offer; or. (ii) buying the Partnership Interest of the offeror under the terms of the original offer. Notice of the party's election to buy or sell shall be given in writing to the offer or within the 90-day period. The failure to give a written response strictly in accordance with the 90-day time limit shall he deemed an acceptance of the original offer, if the buyer under this provision does not close the purchase at the time provided in the offer, that party shall be in default and the other party, in addition to his other rights and remedies, may: (1) continue the business of the Partnership as if the offer had not been made; or (2) buy the Partnership Interest of the defaulting party at a _..._. ... . 26 • 261 376 1726 04/22/2008 09:26 RECEIVED FROM: #1869-010 04/22/2008 09:32 FAX 011/016 purchase price equal to 85% of the purchase price for which the defaulting party agreed to purchase the Partnership Interest of the other party. (1) Assignee Status. Any Person who purchases an Ownership Interest in the Partnership who is not a Partner shall only be entitled to the rights of an assignee under the TBOC until admitted as a Partner. (n1) Transfer Conditions. Any transfer is also subject to the conditions that no transfer may be made (i) except (1) rnider an effective registration statement under all applicable federal and state securities laws or in a transaction which is exempt from registration under those laws, and (2) during the period in which Partnership Interest are being sold. by the Partnership and for a period of nine months after the last of the sales to Texas residents; (ii) if the sale, assignment, or transfer, when considered with all prior sales, assignments, or transfers, would result in the termination of the Partnership for federal income tax purposes; and (iii) unless the transferor delivers to the Managing General Partner an opinion, in form and substance and issued by counsel acceptable to the Managing General Partner, covering securities laws, tax, and other aspects of the proposed transfer as the Managing General Partner may request; provided, however, the Managing General Partner can waive the requirement for this opinion in its sole discretion. Any Limited Partner who transfers all or any portion of his rights or interest in the Partnership shall promptly notify the Managing General Partner of the transfer and furnish the Managing General Partner the name and address of the transferee and other information as might be required under Code Section 6050K and the Treasury Regulations. 7.02 Substitutcd Limited Partners. Any purchaser, transferee, or assignee of the interest of a Limited Partner in the Partnership the admission of which as a substitute Limited Partner has been consented to by the Partners of the Partnership (under section 7.01) shall be admitted as a substituted Limited Partner if he (a) elects to become a substituted Limited Partner by delivering a written notice of the election to the Managing General Partner; (b) executes other instruments as the Managing General Partner may deem necessary or advisable to effect the admission of a substituted Limited Partner, including without limitation, the written acceptance and adoption by the person of the provisions of this Agreement and the assumption by the person of the obligations of the Limited Partner from whom the Partnership Interest is transferred; and (c) pays a transfer fee to the Partnership which is sufficient to cover all reasonable expenses connected with the sale, transfer, or assignment, and the admission of the Person as a substituted Limited Partner within. the meaning of the TBOC, including without limitation, the cost of preparing the filing for record an amendment to the Certificate of Formation or any amendment tiled in the office of the Secretary of State in accordance with the provisions of the TBOC, if a filing or amendment is deemed advisable by the Managing-General Partner. Neither the Managing General Partner nor the Partnership shall be required to determine the tax 27 ,,n,1 Ardlinnc\r)avi,1('..N'rrll(Y1TTtt1 1 i.SM1(:'r(.11 nrn1 Cr)Iinnc\Temnn.,r..Inhwen,I N 281 376 1726 04/22/2008 09:28 RECEIVED FROM: #1869-011 04/22/2008 09:33 FAX 012/018 consequences to a Limited Partner or his assignee, arising from the assignment of a Limited Partnership Interest 7.03 Managing General Partner Acquiring Interest as Limited Partner. If the Managing General Partner acquires an interest as a Limited Partner in the Partnership, the Managing General Partner shall, with respect to that interest, enjoy all of the rights and be subject to all of the obligations and duties of a Limited Partner, except as limited upon removal or withdrawal, 7.04 Transfer by Managing General Partner. The Limited Partners have entered into this agreement, in part, based upon the identity of the Managing General Partner. Therefore, the Managing General Partner may not sell, assign, or otherwise transfer, voluntarily or by operation of law, all or any portion of its rights, or interest in the Partnership, except to an Affiliate of the Managing General Partner, without the prior written consent of a Majority in Interest of the Limited Partners. The Limited Partners will be excused from accepting the performance of and rendering performance to any other Person as Managing General Partner (including any trustee or assignee of or from the Managing General Partner) as to whomrior written consent has not been rendered. Any transfer other than in accordance with this Section 7.04 is void. 7.05 Securities Exemption. The Partners acknowledge that their interests in the Partnership have not been registered under the 1933 Act or the Texas Act, in reliance on the exemptions afforded by the 1933 Act and the Texas Act. To preserve exemptions, the Partners agree that, notwithstanding anything in this agreement to the contrary, the interests of the Partner or any substitute or additional partners shall be nontransferable and non-assignable, except in compliance with the registration provision of the 1933 Act and the Texas Act and any other applicable securities act_ In addition, as condition precedent to any assignment or other transfer of any Partnership Interest, the Partners may require an opinion of counsel satisfactory to the Partners that assignment or transfer will be made in compliance with the registration provision of the 1933 Act and the Texas Act and any other applicable securities act, or exemptions and transferor or assignor shall be responsible for paying counsel's fees for the opinion. the 7.06 Basis Adjustment. Upon the transfer of all or part of a Partnership Interest, at the request of the transferee of the Partnership Interest, the Managing General Partner may, in its sole discretion cause the Partnership to elect under Code Section 754 or the corresponding provisions of subsequent law to adjust the basis of the Partnership properties as provided by Code Sections 734 and 743. VIII. DISSOLUTION; WINDING YIP; TERMINATION 8.01 Dissolution. Each partner expressly waives any right that it might otherwise have to dissolve the Partnership except as set forth in this Article VITT. Subject to Section 1.06, the Partnership shall be dissolved upon the first to occur of the following events: \ . 28 ("A lnrnm..ntc nnil.C..NinotkrInvid r'ntlr.11('(''I'RI:I I.t M7(:'1e07 ni•n'Ggrinogl'I',•mnnrsw htlrntrl 281 376 1726 04/22/2008 09:29 RECEIVED FROM: #1869-012 04/22/2008 09:33 FAX Z013/018 (a) The occurrence of March 1, 2035; (b) Upon the retirement, resignation, expulsion, or dissolution of the Managing General Partner upon the Managing General Partner becoming a partner in Bankruptcy, or the occurrence of any other event that would legally disqualify the Managing General Partner from acting as the Managing General Partner of the Partnership, provided however, that none of these events shall automatically dissolve the Partnership unless and until the Limited Partners vote by Majority vote to dissolve the Partnership following an event described in this Section 8.01 (b). (c) The execution by all Partners of an instrument dissolving the Partnership; (d) The occurrence of any other circumstance which under the TBOC would require that the.Partnership be dissolved. Neither the death, dissolution, mental incompetency, nor Bankruptcy of any Limited Partner nor the admission or substitution of a Person as a Partner shall dissolve the Partnership. 8.02 Reconstitution. Upon the occurrence of any event set forth in Section 8.01(a) or (d), the Partnership may he reconstituted if a Majority in interest of the Limited Partners agrees in writing to continue the Partnership and, if necessary, appoint a Managing General Partner. 8.03 Effective Date of Dissolution. The dissolution shall be effective on the date the event causing dissolution occurs, but the Partnership shall not terminate until its assets have been distributed under Section 8.04. 8.04 Winding Up. (a) If the Partnership is dissolved and is not automatically reconstituted under Section 8.02 an accounting of the Partnership assets, liabilities, and operations through the last day of the month in which the dissolution occurs shall he made and the affairs of the Partnership shall be wound up and terminated. (h) The Managing General Partner shall serve as the liquidating trustee (unless dissolution is caused by the Bankruptcy of the Managing General Partner, in which event the liquidating trustee shall be a person elected by a Majority in i..nterest of those Limited Partners that are not Affiliates of the Managing General Partner). The liquidating trustee shall be responsible for winding up and terminating the affairs of the Partnership and shall determine all matters, including, without limitation, the arrangement to he made with creditors, whether and under what terms any or all of the Partnership assets are to be sold and the amount or necessity of cash reserves to cover contingent liabilities as it deems advisable and proper. The liquidating trustee (other than the Managing General Partner) shall be entitled to receive reasonable compensation for its services as shall be agreed upon by the liquidating trustee and those Limited Partners owning more than 50% of the Ownei:ship Interests of all of the Limited Partners. The 29 (st!'•Irlrrarnrnlnnri,Setfinaalrbnviti(".hull rrTI'I RTty i.1\41(4TR11 nral Srttim,c1Ter.nrirar,,Inn•r..rr °t 281 376 1726 04/22/2008 09:29 RECEIVED FROM: #1869-013 04/22/2008 09:33 FAX V1014/016 liquidating trustee may resign. at any time by giving 15 days prior written notice and may be removed at any time with or without cause, by written notice of removal signed by those Limited Partners owning more than 50% of the Ownership interest of all Limited Partners. Upon the death, dissolution removal or resignation of the liquidating trustee, a. successor and substitute liquidating trustee (who shall have and succeeded to all the rights, powers and duties of the original Iiquidating trustee) within 30 days thereafter be appointed by those Limited Partners owning more than 50% of the Ownership Interest o:F all of the Limited Partners, evidence by written appointment and acceptance. The right to appoint a successor or substitute liquidating trustee in the maiuier provided shall be recurring. The liquidating trustee shall have and may exercise, without further authorization or consent of any of the parties, all of the powers conferred upon the Managing General Partner under the terms of this Agreement to the extent necessary or desirable in the judgment of the liquidating trustee to perform his duties and functions. The liquidating trustee (if not the Managing General Partner) shall not he liable as a Managing General Partner to the Limited Partner and shall, while acting in that capacity on behalf of the Partnership, but shall be entitled to the indemnification set forth in this Agreement. (c) As expeditiously as possible following the dissolution, the liquidating trustee shall proceed to wind-up the affairs of the Partnership, liquidate the assets, pay the liabilities, and make liquidating distributions to the Partners in the following order of priority: (i) Sell Partnership assets to the extent necessary to pay all of the debts and liabilities of the Partnership or to make adequate provision (including, without limitation, the establishment of a cash reserve) to pay for contingent liabilities; any resulting Profit or Loss shall be computed and allocated to the capital accounts of the Partners in the manner provided by this Agreement. (ii) Sell all. remaining Partnership property (other than the cash reserve) and any resulting Profit or loss shall be computed and allocated to the capital accounts of the Partners in the manner provided by this Agreement. (iii) Determine the fair market value of any Partnership property that is to he distributed in-kind, using reasonable methods as the liquidating trustee shall adopt, and adjust the capital accounts of the Partners as necessary. (iv) Distribute all remaining cash and other Partnership property (other than the cash reserve) to the Partners in accordance with the positive capital account bonds of the Partners. The distribution to the Partners with an interest in the Partnership assets shall be subject to any liens, encumbrances, obligations, or undertakings of any kind as affect the assets on the date of the distribution. The liquidating trustee may sell Partnership assets to Partners and their Affiliates. 0 ('•lrinrnmrnlc+mrl�rHin,,\Ilm+irl(nf}rrl)C YPI'RPI I_KM2r:TK\I nr,1 grNinnc\'frmnnrnry Inlrmrt 281 376 1726 04/22/2008 09:29 RECEIVED FROM: #1869-014 04/22/2008 09:33 FAX R015/016 ry 8 [a d p ' d . w y �.4, gq5 _ o 5 < r m o 3 s y oa a m a o Lo o mac, R c' p g °' = ti � in J prop CJ' O✓ Q0 `'� Z a R .m. 00 a 3 o C S' m V^, w in UO �. n• • b .1 .roy, 0 3 0• o 0 0 5' oo Fl n° 'n a er a g. g8 8 n' fD R o m R 3 ,e E. " , st a -03- a. .1. 08 a• e R w e a u a 2 o is °e < y m GL A' f< m p t► ,l �e m n .- i-.. +. m r w fD p O p a.E s R +� g 5 g. c g a. pb7 ,7° 8 -0 p gyp' G c'Pn V-J• .r.1 • '.? a a n _a 0 ci' n a S T ;s 13 r y ,c R U n �° '< R ° P. - o ir 5. ti . p. y va a F. ° m y b . a a 3 g. y ? c4 ., �. � ; g a' ,, �. c N a n P.P. CD _5C, ._ n n• w1 _ r yb. fpG m a ( y 7 ^h E. 0- h o 75 d' n r .n•, y. •', R:� O' ET `e ° ia -0 n aro a ror y7o 4 2pp' p. R R .. PO 6O y• R 9 > t. a (.‘.< eT Cp 1 O, temp S ya ` ro o ° ° 7 m' O ,$ moRoac. c2 ' ' n3. yoZy a ° om b 20g ogO , ° o-y � vb _ yo R . r o 4g5.E. 5' ° 0 =* ! ri1 ar 0.0. a n �, o w w c3 S O ""' O Z "- V el J. p PO ro s it `' to ro a y iR M � �t� t 0 rJ "' c O R q' 0 m 2 o' a ~ fi, ' w O ? a E r. R mY' n "� ` E,1 a nyO . p •08 ; on. x ti NiidQ33 oo "A fD ',• ti' n• (tip ° O n yE �n M fi' a 3 C' C A n b i p p.'. S "" a k0- m ton O e O •n ° (D tD n ti to V g f4 C (E M 'p 'Q�'' p� •ti , ...,0" Vi ti M ti ,� �' y O 3 a y `q .0, m cj f79 fp 0. ... n nop� `" p m b o (ice a UIHI 11111 /� w "-' "f w .7 eR+ l9 R O V� p' N N , R {/ h R Z 5 py O • l{ CE Y w CD i 281 376 1726 04/22/2008 09:29 RECEIVED FROM: #1869-015 04/22/2008 09: 34 FAX [6018/016 share of the costs; arbitration costs shall be as determined by the arbitrator. The prevailing party in any arbitration proceeding or legal proceeding (to enforce injunctive relief) shall he entitled to recover reasonable attorneys fees and any court costs. In the event of a dispute the parties agree to take actions to expedite mediation, arbitration, discovery, and court intervention by cooperating in the settling of meetings, depositions, hearings, trials, and all other matters, all in an effort to resolve any disputes as quickly as reasonably possible. 9.10 Texas Law to Apply. This Agreement shall be construed under and in accordance with the laws of the State of Texas, and all obligations of the parties created are . performable in Harris County, Texas. 9.11 Additional Instruments. The parties agree that they will execute any additional instruments and documents and perform additional acts as necessary or convenient to carry out the partnership created by this Agreement, including a license agreement with the Managing General Partner with regard to the name and logo of the Partnership. 9.12 Entire Agreement. This Agreement supersedes any prior understandings or written or oral agreements between the parties regarding the partnership. 9.13 Spouses Bound. The spouse of each Partner who has a community interest in such Partner's Partnership Interest has executed this Agreement in order to evidence his or her consent hereto and intention to be hound by the terms hereof, including, without limitations, Section 7.01(i). Dated Te CCIQr , 2008. GENERAL PARTNER: BAY ST. LOUIS GP, LLC By: David Cottrell Ill, President LIMITED PARTNERS: CHIMNEY INT VENTURE By: i �v�,L • George M. Lee, general partner DAVID OTTRELL III 33..