HomeMy WebLinkAbout09-00500138- 00074757RESOLUTION OF 60-JONES, LLC
A TEXAS LIMITED LIABILITY COMPANY
RESOLVED, that JAMES E. JETT, MANAGER OF 60-JONES, LLC, A
TEXAS LIMITED LIABILITY COMPANY, is authorized and directed to execute
and deliver any and all documents necessary to take care of any and all business
transactions regarding 60-JONES, LLC.
RESOLVED FURTHER, that JAMES E. JETT, MANAGER OF 60-JONES,
LLC, A TEXAS LIMITED LIABILITY COMPANY, is authorized to execute and
accept all documents and instruments necessary to carry out each of said transactions.
60-JONES, LLC, A TEXAS LIMITED
LIABILITY COMPANY
BY:
ES Z. JETT, MAN G R
.•`i'r'~'o"%,, GINGER L. URSO 1
?a°~`•~' Notary Public, State of Texas }
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y:'sec~tar $eptetTlbEf 05. 2011
AGREEMENT OF LIMITED PARTNERSHIP
OF
60-JONES ASSOCIATES, LTD.
This Agreement of Limited Partnership (this "Agreement") is made and entered by and
between 60-JONES, L.L.C., a Texas limited liability company ("General Partner") and such other
Persons (hereinafter defined) who from time to time execute this Agreement or counterparts hereof
("Limited Partners").
ARTICLE 1
FORMATION AND ORGANIZATION
1.1 Formation. Subject to the provisions of this Agreement, the parties do hereby form
a limited partnership (the "Partnership") pursuant to the provisions of the Texas Revised Limited
Partnership Act (Article 6132a-1, Vernon's Texas Civil Statutes), as amended from time to time, and
any successor to such Act (the "Act").
1.2 Name. The name of the Partnership shall be 60-JONES ASSOCIATES, LTD.
Subject to all applicable laws, the business of the Partnership shall be conducted in the name of the
Partnership unless under the law of some jurisdiction in which the Partnership does business such
business must be conducted under another name. In such a case, the business of the Partnership in
such jurisdiction may be conducted under such other name or names or assumed or fictitious name
as the General Partner shall determine to be necessary as long as it does not adversely affect the
limited liability of any Limited Partner hereunder. The General Partner shall cause to be filed on
behalf of the Partnership, such Partnership or assumed or fictitious name certificate or certificates
or similar instruments as may from time to time be required by law.
1.3 Term. The term of the Partnership shall commence with the filing of the Certificate
of Limited Partnership in the office of the Secretary of State of the State of Texas, and shall continue
until the 31St day of December, 2035 on which date the Partnership shall dissolve, unless sooner
dissolved in accordance with the Act or pursuant to Article 13 hereof.
1.4 Principal Office: Registered Office and Registered Agent.
1.4.1 Principal Office. The principal office of the Partnership (the "Partnership
Office"), where the books and records of the Partnership shall be kept, shall be 526 University Drive
East, Suite 101B, College Station, Texas 77840. The General Partner may change the Partnership
Office to such other location as the General Partner may determine to be reasonably convenient for
the General Partner, and the General Partner may accordingly designate such other location as the
Partnership office for purposes hereof.
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1.4.2 Filing of Certificate. The General Partner shall execute any certificate or
certificates required by law to be filed in connection with the formation of the Partnership, including
that required by Section 2.01 of the Act, and shall cause such certificate or certificates to be filed in
the appropriate records.
1.4.3 Registered Office. The registered office of the Partnership in Texas is located
at 526 University Drive East, Suite 101 B, College Station, Texas 77840, and the name of its
registered agent at such address is James E. Jett. The General Partner is hereby given the authority
to change the registered office and/or to appoint a new registered agent as the General Partner may
determine by compliance with applicable legal requirements.
1.4.4 Other Jurisdictions. The Partners shall also take all steps permitted, necessary
or appropriate under the applicable laws of each state in which the Partnership conducts business to
qualify the Partnership to transact business therein and to be treated as a limited partnership doing
business in such jurisdiction(s).
1.5 Purposes of the Partnership. The objectives and purposes of the Partnership shall be:
1.5.1 to acquire, own and/or hold for investment and development interests in real
property and other investment assets whether or not such investment assets are publicly traded or
privately held;
1.5.2 to sell, lease or otherwise dispose of any property owned by the Partnership;
1.5.3 to have and maintain the Partnership Office and do all such other acts as the
General Partner may deem necessary or expedient in connection with the maintenance of such office;
1. 5.4 to make, enter into, deliver, and perform all contracts, agreements, and other
undertakings, pay all costs and expenses;
1.5.5 to borrow money and to execute promissory notes and other negotiable or non-
negotiable instruments and evidences of indebtedness and to secure the payment of any such
indebtedness by mortgage, deed of trust, pledge, transfer, or assignment in trust of all or any part of
the property of the Partnership whether at such time owned or thereafter acquired;
1.5.6 to carry such insurance as the General Partner may deem necessary or
appropriate, but in all events to attempt in good faith to maintain in force and effect throughout the
term of this Agreement all insurance required to be maintained in force and effect by the terms of
any third party financing obtained by the Partnership;
1.5.7 to engage in any other such lawful business which may be engaged in by a
limited partnership organized under the Act, as such business activities may be determined by the
General Partner from time to time;
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1.5.8 to employ such persons as the General Partner may deem necessary or
desirable; and
1.5.9 to do all such other acts and things as the General Partner may deem necessary
or expedient, incidental to or convenient for the furtherance and accomplishment of the foregoing
objectives and purposes and for the protection and benefit of the Property, and for any other lawful
purpose.
1.6 Filings. Upon the request of the General Partner, the Limited Partners shall promptly
execute and deliver all such certificates and other instruments conforming hereto as shall be
necessary for the General Partner to accomplish all filing, recording, publishing and other acts
appropriate to comply with all requirements for the formation and operation of a limited partnership
under the laws of the State of Texas and for the qualification and operation of a limited partnership
(or a partnership in which the Limited Partners have limited liability) in all other jurisdictions where
the Partnership shall propose to conduct business. Prior to conducting business in any jurisdiction,
the General Partner shall cause the Partnership to comply with all requirements for the qualification
of the Partnership to conduct business as a limited partnership (or a partnership in which the Limited
Partners have limited liability) in such jurisdiction.
1.7 Names and Addresses of Partners. The General Partner is the sole general partner of
the Partnership, and the mailing address and street address of its business is set forth opposite its
name on Exhibit "A". The Limited Partners are the Limited Partners of the Partnership, and their
respective mailing addresses and street addresses are set forth opposite their names on Exhibit "A".
1.8 General Partner. The General Partner is the general partner of the Partnership. The
management of the business and affairs of the Partnership shall be conducted as provided herein.
Except to the extent otherwise specifically provided herein or prohibited by the Act, the General
Partner shall have the full power and authority to take all action in connection with the Partnership's
affairs and to exercise exclusive management, supervision, and control of the Partnership's properties
and business and shall have the full power to do all things necessary or incident thereto.
1.9 Limited Partners. The Limited Partners, in such capacity as Limited Partners, shall
have no participation in the management of the Partnership or power to transact any Partnership
business or to act for or bind the Partnership in any respect; and the Limited Partners shall not,
except to the extent otherwise provided by law, ever (i) be personally liable for any part of the debts
or other obligations of the Partnership (except as any such Limited Partner may otherwise expressly
agree in writing), (ii) be obligated to make contributions to the Partnership in excess of those
required to be made by such Limited Partners pursuant to this Agreement, (iii) have the power to
sign for or bind the Partnership, (iv) have the right to withdraw from the Partnership, (v) have the
right to cause the dissolution of the Partnership absent unanimous consent of the Limited Partners
or (vi) cause the partition of the Partnership properties and/or assets.
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1.10 Title to Partnership Property' Waiver of Right of Partition. All property owned by
the Partnership, whether real or personal, tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partner, individually, shall have any ownership of such property. The
assets and properties of the Partnership are and shall be owned by the Partnership. Each Partner, to
the extent permitted by applicable law, hereby waives its rights to partition of the assets and, to that
end, agrees that it will not seek or be entitled to partition of any such asset, whether by way of
physical partition, judicial sale or otherwise, until the termination of the Partnership.
1.11 Independent Activities. Any of the Partners, whether general or limited, may engage
in and/or possess an interest in other business ventures of every nature and description,
independently, and neither the Partnership nor any of the Partners, general or limited, shall have any
right by virtue of this Agreement in and to said independent ventures or to the income or profits
derived therefrom. Nothing contained in this Agreement shall preclude the General Partner, the
Limited Partners and their respective Affiliates from engaging in any business, purchasing any real
or personal property, or making any other investment, even though such business, real or personal
property, or other investment may be in competition with this Partnership. Any of the Partners,
whether general or limited, and any affiliated person may engage in business transactions of any kind
whatsoever with the Partnership. Similarly, the fact that a Partner, whether general or limited, or a
member of the family of a Partner is employed by or is directly or indirectly interested in or
connected with any person, firm, corporation or partnership, employed by the Partnership to render
or perform a service or from whom the Partnership may buy, lease or otherwise acquire any real or
personal property or to whom the Partnership may sell, lease or otherwise convey any real or
personal property, shall not prohibit the General Partner from dealing with such person, firm,
corporation or partnership on behalf of the Partnership; provided, however, that said dealings shall
be on terms no less favorable to the Partnership than those that could be obtained from an
unaffiliated party. Any or all of the above-described activities may be undertaken with or without
notice to or participation therein by the other Partners.
Notwithstanding anything in this section to the contrary, the General Partner recognizes its
fiduciary responsibility to the Partnership and agrees to devote such time and effort to the Partnership
as reasonably necessary to manage its affairs properly, but neither the General Partner nor any of its
agents or employees shall be obligated to devote its or their full time and attention to the Partnership
and its affairs.
ARTICLE 2
DEFINITIONS
The following terms as used herein, unless the context otherwise specifically requires, shall
have the following respective meanings:
2.1 "Act" means the Texas Revised Limited Partnership Act, Vernon's ANN. CIV. ST.
ART. 6132a-1, as from time to time amended.
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2.2 "Additional Capital" means capital reasonably needed by the Partnership for the
purposes of the Partnership after the Partners have contributed to the Partnership the Initial Capital
Contributions.
2.3 "Additional Capital Contributions" means the Capital Contributions made by the
Partners to provide funds for any Additional Capital of the Partnership pursuant to the provisions
of Section 3.2.
2.4 "Affiliate" means any Person directly or indirectly controlling, controlled by or under
common control with another Person, any Person owning or controlling 10% or more of the
outstanding voting securities of such other Person, any officer, director or partner of such Person,
and if such other Person is an officer, director or partner, any company for which such Person acts
in any such capacity.
2.5 "Agreement" means this Agreement of Limited Partnership of 60-JONES
ASSOCIATES, LTD.
2.6 "Article" refers to the numbered articles of this Agreement.
2.7 "Capital Account" means (i) the sum of each Partner's Capital Contributions to the
Partnership (credited to the Partner's account at the then fair market value of any contributed assets
other than cash and net of liabilities assumed by the Partnership relating to such contributed assets
or liabilities to which such contributed assets are subject) increased by (ii) his share ofNet Profit and
items of income or gain allocated pursuant to the provisions of Article 5, reduced by (iii) his share
of Net Loss and items of deduction or loss allocated pursuant to the provisions of Article 5, and
reduced by (iv) any distribution of Partnership cash or assets at the then fair market value of such
distributed assets and net of liabilities assumed by such Partner or liabilities to which such
distributed property is subject. It is the intention of the Partners that Capital Accounts be maintained
in accordance with the Treasury Regulations under Section 704(b) of the Internal Revenue Code, or
successor regulations.
2.8 "Capital Contributions" means (i) cash payments actually made to the Partnership and
(ii) property, other than money, contributed by the Partners to the Partnership, valued at the fair
market value stipulated by the General Partner and ratified by all other Partners by execution of this
Agreement and net of liabilities assumed by the Partnership relating to such contributed assets or
liabilities to which such contributed assets are subject.
2.9 "Code" means the Internal Revenue Code of 1986, as from time to time amended.
2.10 "Contributing Partners" shall have the meaning set forth in Section 3.3.
2.11 "Distributable Funds" means the amount, if any, by which the Partnership's available
cash, from time to time exceeds the amount estimated by the General Partner as being necessary to
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discharge anticipated Partnership expenses and to establish a reserve fund which may be used for
future expenses, investments and/or property acquisitions.
2.12 "General Partner" means 60-JONES, L.L.C., a Texas limited liability company, its
successors and assigns.
2.13 "General Partner Loan" shall have the meaning set forth in Section 3.5.
2.14 "Initial Capital Contributions" means the contributions of the Partners to the
Partnership pursuant to the provisions of Section 3.1 of this Agreement.
2.15 "Initial Limited Partners" refers to JAMES E. JETT and ADRIAN MCDONALD.
2.16 "Limited Partners" refers to all of the limited partners listed on Exhibit "A" and to
any other Person not otherwise identified and defined herein who may hereafter be admitted to the
Partnership as a Substituted Limited Partner in accordance with the provisions hereof. "Limited
Partner" shall refer to any one of the Limited Partners.
2.17 "Major Decisions" shall have the meaning set forth in Section 6.2.
2.18 "Net Cash Flow" means all amounts received or realized by the Partnership,
including, but not limited to, Capital Contributions, Third-Party Financing, General Partner Loans,
and proceeds from sale(s) of Partnership Property; less all expenditures incurred in connection with
the normal operation of the Partnership's business, payment of all expenses of sale(s) of Partnership
Property and such cash reserves as the General Partner in its sole discretion deems necessary for
proper operation of the Partnership.
2.19 "Non-Contributing Partner" shall have the meaning set forth in Section 3.3.
2.20 "Partners" refers to the General Partner and the Limited Partners. Reference to a
"Partner" shall be to any of the Partners unless the context requires otherwise.
2.21 "Partnership" means 60-JONES ASSOCIATES, LTD., a Texas Limited Partnership,
the partnership governed by this Agreement.
2.22 "Partnership Interest" means the beneficial ownership interest of a Partner in the
Partnership and is expressed as a percentage. The Partnership Interest of the General Partner is 1 %
and the Partnership Interest of the Limited Partners is as set forth in Exhibit "A" attached hereto and
made a part hereof for all purposes.
2.23 "Partnership Office" shall have the meaning set forth in Section 1.4.1.
2.24 "Preferred Return" shall have the meaning set forth in Section 3.3.
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2.25 "Section" refers to the numbered sections of this Agreement.
2.26 "Substituted Limited Partner" shall have the meaning set forth in Section 9.6.
2.27 "Third-Party Financing" means any loan or loans to the Partnership from any person
other than a Partner.
Other capitalized terms used in this Agreement shall have the meanings indicated.
2.28 References and Titles. All references in this Agreement to articles, sections,
subsections and other subdivisions refer to corresponding articles, sections, subsections and other
subdivisions of this Agreement unless expressly provided otherwise. The words "this Agreement,"
"herein," "hereof," "hereby," "hereunder" and words of similar import refer to this Agreement as a
whole and not to any particular subdivision unless expressly so limited. All references herein to this
Agreement or any other agreement or instrument shall, unless the context otherwise requires (or the
definition thereof otherwise specifies), be deemed references to the same as it may from time to time
be changed, amended or extended. There is no incorporation by reference unless stated. Titles
appearing at the beginning of any of such subdivisions are for convenience only and shall not
constitute part of such subdivisions and shall be disregarded in construing the language contained
in such subdivisions.
2.29 Rules of Construction. Unless the context otherwise requires, (i) the use of the word
"or" is not exclusive, (ii) pronouns in masculine, feminine and neuter genders shall be construed to
include any other gender, (iii) words in the singular form shall be construed to include the plural and
vice versa, (iv) an accounting term not otherwise deemed has the meaning assigned to it in
accordance with generally accepted accounting principles, (v) any date specified for any action that
is not a Business Day shall be deemed to mean the first Business Day after such date and (vi)
reference to a Person includes its successors and assigns and any Person to whom the exercise of a
right or the performance of an obligation hereunder has been delegated.
ARTICLE 3
CAPITAL CONTRIBUTIONS
3.1 Capital Contributions. Concurrently with the execution and delivery of this
Agreement, each of the Partners shall contribute to the Partnership as its Capital Contribution the
amount of cash and/or the property set forth opposite such Partner's name on Exhibit "A".
3.2 Additional Capital Contributions. In the event the General Partner determines that
Additional Capital is needed in the future to pay any costs of acquiring, holding, developing and/or
maintaining the investments or assets of the Partnership, or paying any Debt Service of the
Partnership, the General Partner shall send a notice to each Partner of the amount needed and each
Partner shall contribute a percentage of the amount needed equal to such Partner's Partnership
Interest of such amount. Except for such contributions, no Partner shall be required to make any
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additional capital contributions to the Partnership. In connection with Additional Capital
Contributions required under this Section 3.2, the General Partner shall provide written notice to the
Limited Partners. The Limited Partners shall make such Additional Capital Contribution on or before
the due date contained in the General Partner's written notice which due date shall not be less than
thirty (30) days after the date of such notice.
3.3 Failure to Make Capital Contributions. If any Partner fails to voluntarily contribute
his entire proportionate share of the Capital Contributions needed by the Partnership within the time
and in the manner specified above, such Partner will be deemed a "Non-Contributing Partner" and
the General Partner shall contribute the Non-Contributing Partner's Contribution needed. The
General Partner will be entitled to and will receive the Non-Contributing Partner's Partnership
Interest and any sums or amounts otherwise to be funded to the Non-Contributing Partner. A Non-
Contributing Partner's right to receive distributions, for all purposes and their interest in the
Partnership shall be terminated and forfeited. Notwithstanding the above language, in the event
Limited Partners owing at least an aggregate Partnership Interest of sixty percent (60%) vote to
borrow funds to develop Partnership property and a Lender requires the personal liability of the
Limited Partners for a portion of the development loan and a Limited Partner does not desire to incur
such personal liability for their pro rata share of the indebtedness incurred on a loan to develop the
Partnership Property, the General Partner shall purchase such Limited Partner's Partnership Interest
for an amount equal to the aggregate Capital Contribution of such Limited Partner at that time plus
a ten percent (10%) annual return on the aggregate Capital Contribution on such Limited Partner,
and the Limited Partner desiring not to incur such personal liability shall sell his Limited Partnership
Interest to the General Partner for such amount.
3.4 Other Funds. No Partner will be personally obligated to contribute additional
amounts to the Partnership's capital in excess ofthe applicable amounts specified in Sections 3.1 and
3.2.
3.5 General Partner Loans. In the event the Partnership at any time experiences a need
for funds and the Partnership is unable to finance the necessary amount with Third Party Financing,
the General Partner shall have the right, but not the obligation, to loan such funds to the Partnership.
If the General Partner elects to make a loan to the Partnership as herein described (a "General Partner
Loan"), such loan shall be unsecured and shall bear interest at an interest rate of fifteen percent
(15%), with accrued interest being added to the unpaid principal balance and being considered apart
of principal at the end of each calendar year. General Partner Loans shall be repaid without
prepayment charge or penalty out of the first available Distributable Funds of the Partnership after
such loan or loans are made and prior to any further distributions to the Partners. All repayments of
General Partner Loans shall be applied first to accrued interest and then to principal.
3.6 Withdrawal of Capital. No Partner shall be entitled to withdraw any part of such
Partner's contribution to Partnership capital or to receive any distribution from the Partnership except
as provided in this Agreement. No Partner shall be entitled to demand or receive from the
Partnership either interest on contributions to Partnership capital or property in kind.
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ARTICLE 4
ACCOUNTING AND TAX MATTERS
4.1 Books. The books of account of the Partnership, for financial and tax purposes, shall
be kept on a cash or other basis generally accepted for Internal Revenue Service reporting purposes,
as the General Partner determines to be appropriate to the Partnership's business. The accounting and
tax year of the Partnership shall be on a calendar year basis. The Partnership shall maintain Capital
Accounts for all Partners. Such accounts shall reflect all adjustments which the Partnership and the
Partners are separately required to take into account for Federal income tax purposes. Each Partner
shall be furnished in a timely manner each year all necessary Federal income tax reporting
information relating to his Partnership Interest.
4.2 Tax Matters.
4.2.1 Tax Returns. The General Partner shall prepare and file all income tax returns
of the Partnership and shall furnish copies thereof to the Partners.
4.2.2 Tax Matters Partner. The General Partner shall be the "Tax Matters Partner"
of the Partnership, within the meaning of Section 6231(a) (7) of the Code and any regulations issued
thereunder, unless the Code or the regulations issued thereunder requires another person to be the
tax matters partner. The expenses, if any, which the Tax Matters Partner incurs in fulfilling his duties
in such capacity shall be expenses of the Partnership. The Tax Matters Partner is authorized by the
Partners to engage attorneys and/or accountants to represent the Partnership in connection with any
audits; to negotiate with the Internal Revenue Service and enter into a binding agreement on behalf
of the Partners of the Partnership; to seek administrative and judicial review of any administrative
adjustments of Partnership items made by the Internal Revenue Service, and to take such other
actions which relate to the tax audit of the Partnership. The Tax Matters Partner shall provide each
Partner with any notice received from the Internal Revenue Service regarding any adjustments
proposed by the Internal Revenue Service. In the event a Partner other than the Tax Matters Partner
receives notice of a proposed adjustment from the Internal Revenue Service, said Partner shall
immediately upon receipt of such notice, provide a copy thereof to the Tax Matters Partners so that
the Tax Matters Partner may take such actions as the Tax Matters Partner deems necessary. The Tax
Matters Partner shall exercise reasonable business judgment in carrying out his duties and
responsibilities.
ARTICLE 5
DISTRIBUTION OF PARTNERSHIP FUNDS: ALLOCATIONS
5.1 Distributable Funds. The General Partner, from time to time, will determine the
availability of Distributable Funds which, after full payment of all Initial Capital Contributions,
Third-Party Financing and General Partner Loans, may be distributed to the Partners. All
distributions shall be made with the same priority as distribution of Net Cash Flow. Without limiting
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the effect of the foregoing provisions of this Section 5. 1, if the General Partner determines that the
Partnership has cash available for distribution, then the General Partner will use its reasonable efforts
to distribute in each year an amount of cash at least equal to the amount of Federal income tax the
Partnership would have paid with respect to its taxable income allocable to its Partners if it were an
individual paying tax at the maximum Federal income tax rate applicable to individual taxpayers.
Except as otherwise required by law, no Partner shall be required to restore to the Partnership any
funds distributed to him pursuant to the provisions of this Agreement.
5.2 Net Cash Flow. At anytime, and from time to time, the General Partner shall
determine the Net Cash Flow available for distribution. All distributions of Net Cash Flow shall be
made as follows:
5.2.1 first, to the Contributing Partners or other persons making the contribution
of a Non-Contributing Partner pursuant to Section 3.3 hereof ratably until the Preferred Returns have
been paid in full;
5.2.2 second, to each Limited Partner an amount equal to his/its previously
undistributed Initial Capital Contributions and Additional Capital Contributions (excluding,
however, amounts paid under Section 5.2.1); and
5.2.3 third, 99% to the Limited Partners, and 1 % to the General Partner, subject
to the General Partner acquiring any Limited Partner's Partnership Interest.
5.3 Limited Partner Distributions. The Distributable Funds or Net Cash Flow to be
distributed to the Limited Partners pursuant to Sections 5.1 and 5.2 shall be shared by each Limited
Partner in accordance with such Limited Partner's Partnership Interest.
5.4 Allocations.
5.4.1 In General. All profits and losses of the Partnership shall be allocated to the
Partners in the same manner as distributions are made to the Partners in accordance with Section 5.2.
5.4.2 Determination of Profits and Losses. Profits and losses for all purposes of this
Agreement shall be determined in accordance with the accounting method followed by the
Partnership for federal income tax purposes, except that any adjustments made pursuant to Section
742 of the Code shall not be taken into account. Every item of income, gain, loss, deduction, credit
or tax preference entering into the computation of such profit or loss, or applicable to the period
during which such profit or loss was realized, shall be considered allocated to each Partner in the
same proportion as profit and loss are allocated to such Partner.
Profits, losses and credits allocated to a Partnership Interest assigned during a calendar year
shall be allocated to the Person who was the holder of such Partnership Interest during such year, in
proportion to the number of days that each such holder was recognized as the owner of such
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Partnership Interest during such year or in any other proportion permitted by the Code and selected
by the General Partner in accordance with this Agreement, which may be made without regard to the
results of Partnership operations during the period in which each such holder was recognized as the
owner of such Partnership Interest during such year, and without regard to the date, amount or
recipient of any distributions that may have been made with respect to such Partnership Interest.
5.4.3 Amendments. The General Partner, with the written approval of Partners
owning at least sixty percent (60%) of the aggregate Partnership Interests, may amend this
Agreement by making appropriate changes if the Partnership is advised at any time by its legal
counsel that the allocations of profits and losses provided in this Agreement, or the allocations of
non-recourse liabilities to the Partners in accordance with their Partnership Interests, are unlikely to
be respected for federal income tax purposes, either because of the promulgation and adoption of
Regulations under Sections 704 or 752 of the Code or other developments in applicable law. In
making any such amendment, the General Partner shall use its best efforts to affect as little in the
economic and tax arrangements among the Partners as they shall determine in their sole discretion
to be necessary to provide for allocations of profits and losses and non-recourse liabilities that will
be respected for federal income tax purposes. Notwithstanding any such advice of legal counsel that
the allocations provided in this Agreement are unlikely to be respected for federal income tax
purposes due to developments in applicable law, the General Partner shall be under no obligation
to amend this Agreement, if, in the sole judgment of the General Partner, the overall interests of the
Limited Partners would be better served by leaving the economic and tax arrangements among the
Partners unchanged. Any amendment made by the General Partner pursuant hereto, or any decision
not to amend, shall be deemed to be made in accordance with the fiduciary obligations of the General
Partner to the Partnership and to the Limited Partners, if such amendment or decision not to amend,
as the case may be, is based upon any reasonable evaluation of the pertinent considerations described
by the Partnership's accountants or legal counsel.
Notwithstanding any provision of this Agreement to the contrary, income, gain, loss, and the
deductions with respect to property contributed to the Partnership by a Partner shall be allocated
among the Partners so as to take account of any variation between the basis of the property to the
Partnership and its fair market value at the time of contribution, in accordance with Section 704(c)
of the Code. Further, notwithstanding anything to the contrary that may be expressed or implied in
this Agreement, the Partnership Interests of the General Partner (excluding any Partnership Interest
which the General Partner might hold as or through a Limited Partner), in each material item of
Partnership income, gain, loss, deduction, or credit shall be equal to at least one percent of each such
item at all times during the existence of the Partnership.
ARTICLE 6
RIGHTS, POWERS, AND DUTIES OF THE PARTNERS
6.1 Power and Authority of General Partner. The General Partner shall conduct, direct
and exercise full control over all activities of the Partnership. Except as otherwise expressly provided
in this Agreement, all management powers over the business and affairs of the Partnership shall be
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exclusively vested in the General Partner, and the Limited Partners shall have no right of control over
the business and affairs of the Partnership. In addition to the powers now or hereafter granted a
General Partner of a Limited Partnership under the Act or which are granted to the General Partner
under any other provision of this Agreement, the General Partner shall have full power and authority
to do all things deemed necessary or desirable by it to conduct the business of the Partnership in the
name of the Partnership or in the General Partner's own name, including, without limitation:
6.1.1 the determination of the business activities in which the Partnership will
participate;
6.1.2 the making of any expenditures, the borrowing of money, the guaranteeing
of indebtedness and other liabilities, the issuance of evidences of indebtedness, and the incurring of
any obligations it deems necessary or advisable for the conduct of the business activities of the
Partnership;
6.1.3 the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation
or exchange of any or all of the assets of the Partnership;
6.1.4 the use of the assets of the Partnership (including, without limitation, cash on
hand) for any purposes and upon any terms it sees fit, including, without limitation, the financing
of operations of the Partnership, the lending of funds to other persons (including Partners), the
repayment of obligations of the Partnership, the conduct of additional Partnership business activities
and the acquisition of properties and other assets, including but not limited to investment assets;
6.1.5 the negotiation and execution on terms deemed desirable to the Partnership
in its sole discretion and the performance of any contracts or other instruments that it considers
useful or necessary to the conduct of Partnership business activities or the implementation of its
powers under this Agreement;
6.1.6 the selection, employment and dismissal of employees and outside attorneys,
accountants, consultants and contractors and the determination of their compensation and other terms
of employment;
6.1.7 the formation of any limited or general partnerships, joint ventures,
corporations or other relationships that it deems desirable, and the contribution to such partnerships,
ventures, corporations or other relationships of assets and properties of the Partnership;
6.1.8 the representation of the Partnership before any governmental authority or
regulatory agency and the making of all necessary or appropriate filings before such authority or
agency;
6.1.9 the appointing of attorneys-in-fact and officers who will act on behalf of the
Partnership;
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6.1.10 the control of any matters affecting the rights and obligations of the
Partnership, including the conduct of the litigation and the incurring of legal expenses and the
settlement of claims and litigation subject to the limitations set forth in Article 10;
6. 1.11 the determination of the amount of Distributable Funds from time to time;
6.1.12 making any election permitted to be made with respect to accounting policies
or for Federal income tax purposes and causing the Partnership to pay and discharge all taxes and
assessments levied and assessed against the Partnership assets;
6.1.13 the establishment of such reasonable reserves as the General Partner
determines to be advisable;
6.1.14 the opening and maintaining bank accounts for the deposit of Partnership
funds, and designating the persons who may make withdrawals therefrom (all Partnership funds shall
be maintained in accounts in the name of the Partnership and there shall be no commingling of
Partnership funds with the funds of any other Person); and
6.1.15 doing any act which is necessary and incidental to carrying out any of the
purposes of the Partnership, including, without limitation, the foregoing.
The General Partner will use its reasonable efforts to keep the Limited Partners advised of
any and all material actions to be taken by the General Partner in connection with this Section 6.1
and any other material actions effecting the Partnership which do not require the consent of a
majority of the Limited Partners.
6.2 Limitations on Powers of the General Partner. Notwithstanding the provisions of
Section 6. 1, the General Partner shall not cause the Partnership to take the following actions without
the written approval of at least sixty percent (60%) of the aggregate Partnership Interest (hereinafter
called "Major Decisions"):
6.2.1 except for a dissolution pursuant to Article 13, dissolve or wind up the
Partnership or its affairs;
6.2.2 amend this Agreement, except an amendment pursuant to Section 5.4.3 or an
amendment to reflect the admission of a Substituted Limited Partner;
6.2.3 confess a judgment against the Partnership; or
6.2.4 sell or transfer all or substantially all of the Partnership Property.
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6.2.5 encumber the Property to borrow additional funds; provided, however, the
General Partner is authorized to borrow funds to acquire the 118.22 acre tract located at the intersection
of F.M. 60 and Jones Road, Brazos County, Texas.
6.2.6 develop the Property if such development requires any additional contribution from
the Limited Partners.
6.3 Books and Records. The General Partner shall maintain full and accurate books of the
Partnership at the Partnership Office, showing the names, addresses and Partnership Interests and capital
accounts of all Partners, and all receipts, expenditures, assets, liabilities, profits and losses of the
Partnership and all other records necessary for the recording of the business and affairs of the Partnership
as well as all records required by Section 1.07 of the Act. Each Partner and his duly authorized
representative shall at all reasonable times during regular business hours have access to and may inspect
and examine the Partnership's books or records. The General Partner shall cause to be maintained at the
Registered Office or the Partnership Office the records required by Section 1.07 of the Act.
6.4 Reports. The General Partner shall render, or cause to be rendered, to the Partners:
6.4.1 within 75 days after the end of each calendar quarter an operating statement for
the immediately preceding calendar quarter;
6.4.2 within 80 days after the end of each calendar year, all information required by the
Partners for preparation of their respective income tax returns.
All decisions as to accounting matters, except as specifically provided herein, shall be made by the
General Partner and shall be in accordance with accepted accounting practices.
6.5 Income Tax Elections and Tax Returns. The General Partner shall select a certified public
accountant or firm of certified public accountants for the Partnership, and the Partnership shall employ
an accountant or accountants to prepare or cause to be prepared, at the Partnership's expense, and timely
file all federal, state and local income and other tax returns, financial statements, and reports as may be
required as a result of the business of the Partnership. The General Partner shall be designated the tax
matters Partner under Section 6231 of the Code. In the event of an audit of the Partnership's federal
income tax returns, the General Partner may, at the expense of the Partnership, retain accountants and
other professionals to participate in the audit. The General Partner shall have the right to make any
applicable elections under the Code which, in the judgment of the General Partner, are in the best
interests of the Partnership. The General Partner shall file on behalf of the Partnership an annual income
tax return within 120 days after the end of each year.
6.6 Capital and Income Accounts.
6.6.1 General Rules. The Partnership shall maintain on its books a capital account
and an income account for each Partner. Except as otherwise provided herein, each Partner's capital
account shall be maintained in accordance with Treas. Reg. Sec. 1.704-1(B) (2) (iv). There shall be
credited to the capital account of each Partner the amount of cash and the agreed value of any
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6.2.5 encumber the Property to borrow additional funds; provided, however, the
General Partner is authorized to borrow funds to acquire the 118.22 acre tract located at the intersection
of F.M. 60 and Jones Road, Brazos County, Texas.
6.2.6 develop the Property if such development requires any additional contribution from
the Limited Partners.
6.3 Books and Records. The General Partner shall maintain full and accurate books of the
Partnership at the Partnership Office, showing the names, addresses and Partnership Interests and capital
accounts of all Partners, and all receipts, expenditures, assets, liabilities, profits and losses of the
Partnership and all other records necessary for the recording of the business and affairs of the Partnership
as well as all records required by Section 1.07 of the Act. Each Partner and his duly authorized
representative shall at all reasonable times during regular business hours have access to and may inspect
and examine the Partnership's books or records. The General Partner shall cause to be maintained at the
Registered Office or the Partnership Office the records required by Section 1.07 of the Act.
6.4 Reports. The General Partner shall render, or cause to be rendered, to the Partners:
6.4.1 within 75 days after the end of each calendar quarter an operating statement for
the immediately preceding calendar quarter;
6.4.2 within 80 days after the end of each calendar year, all information required by the
Partners for preparation of their respective income tax returns.
All decisions as to accounting matters, except as specifically provided herein, shall be made by the
General Partner and shall be in accordance with accepted accounting practices.
6.5 Income Tax Elections and Tax Returns. The General Partner shall select a certified public
accountant or firm of certified public accountants for the Partnership, and the Partnership shall employ
an accountant or accountants to prepare or cause to be prepared, at the Partnership's expense, and timely
file all federal, state and local income and other tax returns, financial statements, and reports as may be
required as a result of the business of the Partnership. The General Partner shall be designated the tax
matters Partner under Section 6231 of the Code. In the event of an audit of the Partnership's federal
income tax returns, the General Partner may, at the expense of the Partnership, retain accountants and
other professionals to participate in the audit. The General Partner shall have the right to make any
applicable elections under the Code which, in the judgment of the General Partner, are in the best
interests of the Partnership. The General Partner shall file on behalf of the Partnership an annual income
tax return within 120 days after the end of each year.
6.6 Capital and Income Accounts.
6.6.1 General Rules. The Partnership shall maintain on its books a capital account
and an income account for each Partner. Except as otherwise provided herein, each Partner's capital
account shall be maintained in accordance with Treas. Reg. Sec. 1.704-1(B) (2) (iv). There shall be
credited to the capital account of each Partner the amount of cash and the agreed value of any
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property contributed to the Partnership by such Partner. Annual income, gains, losses and deductions
shall be allocated to the income accounts of the Partners as provided in Section 5.4. At the end of
each year, and following any sale of the Partnership's assets in connection with the liquidation of the
Partnership pursuant to Article 13, the income accounts of all of the Partners shall be closed out to
their respective capital accounts. The capital account of a Partner shall be charged with the amount
of any cash distributed and the fair market value of any property distributed to such Partner. Any
optional loans or advances made by a Partner to the Partnership shall not be credited to the lending
Partner's income or capital account. Distributions (whether constituting principal or interest) to a
lending Partner in repayment of any such optional loans or advances shall not be charged to the
lending Partner's income or capital account. In connection with each assignment of any interest in
the Partnership (other than an assignment intended only to secure payment of indebtedness or other
obligation), the capital and income accounts allocable to such interest in the Partnership shall be
transferred from the assignor to the assignee.
6.6.2 Hypothetical Sale. Upon liquidation of the Partnership or any Partner's
interest in the Partnership, any unsold Partnership assets shall be valued to determine the gain or loss
which would result if such assets were sold at their fair market value, as determined in good faith
by the General Partner, at the time of such liquidation. The capital accounts of the Partners shall be
adjusted to reflect how any such gain or loss would have been allocated if such assets had been sold
at such value.
6.7 Limitation on Responsibility of General Partner. In the exercise of any of its
responsibilities or authority under this Agreement or otherwise, the General Partner shall act in the
best interests of the Partnership, and so long as it acts in the best interests of the Partnership, it shall
have no liability or obligation to the Partnership or to any Partner for any decision, act or omission,
whether or not such decision, act or omission shall have been authorized or reasonably prudent, or
in the exercise of good or bad business judgment, unless such liability was the result of the gross
negligence or willful misconduct by such General Partner.
6.8 Liability of Partners and Indemnification.
6.8.1 Indemnification. THE GENERAL PARTNER, THE LIMITED
PARTNERS AND THEIR AFFILIATES, AND THEIR RESPECTIVE MEMBERS,
PARTNERS, SHAREHOLDERS, MANAGERS, DIRECTORS, OFFICERS, EMPLOYEES
AND AGENTS SHALL NOT BE LIABLE, RESPONSIBLE OR ACCOUNTABLE IN
DAMAGES OR OTHERWISE TO THE PARTNERSHIP OR THE OTHER PARTNERS
FOR ANY ACTS OR OMISSIONS THAT DO NOT CONSTITUTE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT (SIMPLE NEGLIGENCE NOT GIVING RISE TO
LIABILITY) AND THE PARTNERSHIP SHALL INDEMNIFY TO THE MAXIMUM
EXTENT PERMITTED UNDER THE ACT AND SAVE HARMLESS THE GENERAL
PARTNER, THE LIMITED PARTNERS AND THEIR AFFILIATES, AND THEIR
RESPECTIVE MEMBERS, PARTNERS, SHAREHOLDERS, MANAGERS, DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS (IN THIS SECTION 6.8 SOMETIMES
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INDIVIDUALLY CALLED AN "INDEMNITEE") FROM ALL LIABILITIES FOR WHICH
INDEMNIFICATION IS PERMITTED UNDER THE ACT. ANY ACT OR OMISSION
PERFORMED OR OMITTED BY AN INDEMNITEE ON ADVICE OF LEGAL COUNSEL
OR AN INDEPENDENT CONSULTANT WHO HAS BEEN EMPLOYED OR RETAINED
BY THE PARTNERSHIP SHALL BE PRESUMED TO HAVE BEEN PERFORMED OR
OMITTED IN GOOD FAITH WITHOUT GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. THE PARTIES RECOGNIZE THAT THIS PROVISION SHALL
RELIEVE ANY SUCH INDEMNITEE FROM ANY AND ALL LIABILITIES,
OBLIGATIONS, DUTIES, CLAIMS, ACCOUNTS AND CAUSES OF ACTION
WHATSOEVER ARISING OR TO ARISE OUT OF ANY ORDINARY NEGLIGENCE BY
ANY SUCH INDEMNITEE, AND SUCH INDEMNITEE SHALL BE ENTITLED TO
INDEMNIFICATION FROM ACTS OR OMISSIONS THAT MAY GIVE RISE TO SUCH
NEGLIGENCE.
6.8.2 Reimbursement. The Partnership shall, to the maximum extent permitted
under the Act, pay or reimburse expenses incurred by an Indemnitee in connection with the
Indemnitee's appearance as a witness or other participation in a proceeding involving or affecting
the Partnership at a time when the Indemnitee is not a named defendant or respondent in the
proceeding.
6.8.3 Other Rights. The indemnification provided by this Section 6.8 shall be in
addition to any other rights to which each Indemnitee may be entitled under any agreement or vote
of the Partners, as a matter of law or otherwise, both as to action in the Indemnitee's capacity as a
Partner or a member, Partner, manager, director, officer, employee or agent of a Partner or an
Affiliate thereof or as a person serving at the request of the Partnership as set forth above and to
action in another capacity, and shall continue as to an Indemnitee who has ceased to serve in such
capacity and shall inure to the benefit of the heirs, successors, assigns, administrators and personal
representatives of the Indemnitees.
6.8.4 No Personal Liability. In no event may an Indemnitee subj ect the Partners to
personal liability by reason of the indemnification provided by this Section 6.8.
6.8.5 Interest in Transaction. An Indemnitee shall not be denied indemnification
in whole or in part under this Section 6.8 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was otherwise permitted by the
terms of this Agreement.
6.8.6 Standards for Duty of Care. The Limited Partners hereby expressly agree that
(i) the foregoing provisions of this Section 6.8 and the other express provisions of this Agreement
shall determine the standards by which the performance of the obligation or duty of care owed by
the General Partner under Section 4.04(c) of the Texas Revised Partnership Act is to be measured
and (ii) such standards and provisions are not manifestly unreasonable.
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6.9 Contracts with Affiliates. The Partnership may enter into contracts and agreements
with any Partner (including the General Partner) or any of their respective Affiliates on such terms
as the General Partner determines in good faith to be fair and reasonable. The Partnership is
specifically authorized to contract with the General Partner and each of the Limited Partners for the
provision of services on behalf of the Partnership in instances where the Partnership lacks the
personnel or capacity to perform such services.
6.10 Resolution of Conflicts of Interest.
6. 10.1 General Partner's Resolution. Unless otherwise expressly provided in this
Agreement (i) whenever a conflict of interest exists or arises between the General Partner, on the one
hand, and the Partnership or the Limited Partners, on the other hand, or (ii) whenever this Agreement
provides that the General Partner shall act in a manner which is or provide terms which are fair and
are reasonable to the Partnership or the Limited Partners, the General Partner shall resolve such
conflict of interest, take such action or provide such terms considering, in each case, the relative
interests of each party to such conflict, agreement, transaction or situation and the benefits and
burdens relating to such interests, any customary or accepted industry practices, and any applicable
generally accepted accounting principles, and in the absence of bad faith by the General Partner, the
resolution, action or terms so made, taken or provided by the General Partner shall not constitute a
breach of this Agreement or a breach of any standard of care or duty imposed herein or under the Act
or any other applicable law, rule or regulation. Unless otherwise expressly provided in this
Agreement, any provision contained herein shall control to the fullest extent possible if it is in
conflict with such standard of care or duty, the Act or any other applicable law, rule or regulation;
and each Partner hereby waives such standard of care or duty under the Act and such applicable law,
rule or regulation and agrees that the same shall be modified and/or waived to the extent necessary
to permit the General Partner to act as described above and to give effect to the foregoing provisions
of this Section 6.10.
6.10.2 Discretion or Good Faith of General Partner. Whenever in this Agreement
the General Partner is permitted or required to make a decision (i) in its "sole discretion" or
"discretion", or under a grant of similar authority or latitude, the General Partner shall be entitled to
consider only such interests and factors as it desires and shall have no duty or obligation to give any
consideration to any interests or factors affecting the Partnership or the Limited Partners or (ii) in
"good faith" or under another express standard, the General Partner shall act under such express
standard and shall not be subject to any other or different standards imposed by this Agreement or
under the Act or any other applicable law, rule or regulation. Each Partner hereby consents and
agrees that the General Partner may so act, waives any standard of care or duty imposed in this
Agreement or under the Act or any other applicable law, rule or regulation, waives the rights and
protection provided and afforded thereby, and agrees that the same shall be modified and/or waived
to the extent necessary to permit the General Partner to act as described above and to give effect to
the foregoing provision of this Section 6.10.
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6.10.3 Ratification by Limited Partner. With respect to each transaction between the
General Partner or an Affiliate thereof, on the one hand, and the Partnership or the Limited Partners,
on the other hand, which is authorized by or consummated in accordance with Section 6. 10.1 or
6.10.2, or with respect to any actions taken by the General Partner with respect to the Partnership,
each Limited Partner hereby (i) consents and agrees to and ratifies each such transaction to the extent
that the Act and the laws of any jurisdiction to which the Partnership or this Agreement is subject
require the consent to or approval or ratification of such transaction and (ii) agrees that such consent,
agreement and ratification shall be valid and effective despite the fact that it is necessarily being
given in advance and without full disclosure of the facts and circumstances that will pertain to future
transactions of such nature.
6.10.4 Actions Not Void or Voidable. No transaction between the General Partner
or an Affiliate thereof, on the one hand, and the Partnership or the Limited Partners, on the other
hand, or any actions taken by the General Partner with respect to the Partnership, will be void or
voidable solely for this reason under the Act or any other applicable law, rule or regulation, and no
person having an interest in any such transaction shall have any liability to the Partnership or any
Partner solely by virtue of such relationship or conflict, if the material facts as to the relationship and
transaction are disclosed or are known to the Limited Partners and the transaction is approved by a
Majority Interest of the Limited Partners; provided, however, that this Section 6.10.4 shall not imply
any duty or obligation upon the General Partner to seek or obtain any such approval.
6.10.5 General Partner's Du of Low. The Limited Partners hereby expressly
agree that (i) the duty of loyalty owed by the General Partner under Section 4.04(b) of the Texas
Revised Partnership Act shall not be violated by the types or categories of activities of, and standards
applicable to, the General Partner or its Affiliates described in the foregoing provisions of this
Section 6. 10, the provisions of Section 6.9 and the other express provisions of this Agreement and
(ii) such activities, standards and provisions are not manifestly unreasonable.
6.11 Costs and Expenses. All costs and expenses incurred in the operation of the
Partnership's business shall be paid from Partnership funds.
ARTICLE 7
TRANSFER OF THE GENERAL PARTNER'S INTEREST,
WITHDRAWAL, SUCCESSOR GENERAL PARTNER
7.1 Assign, Transfer, Sell. The General Partner may freely assign, transfer or sell its
interest in the profits and losses of the Partnership, provided that the General Partner provides the
Partnership with a satisfactory opinion of counsel to the effect that such assignment does not affect
(i) the existence or validity of the Partnership as a Texas limited partnership or (ii) the Partnership's
status as a partnership for Federal income tax purposes.
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7.2 Withdrawal. The General Partner shall have the right to withdraw voluntarily from
the Partnership if and only if the Partnership has received a satisfactory opinion of counsel that such
withdrawal will not affect the classification of the Partnership as a partnership for Federal income
tax purposes.
7.3 Death Bankruptcy Insolvency or Dissolution. Notwithstanding the provisions of
Section 7.2, upon the death (if a natural person), bankruptcy, insolvency or dissolution of the General
Partner, the General Partner shall be deemed to have "withdrawn" from the Partnership.
7.4 Potential Dissolution Upon Withdrawal. The withdrawal (whether voluntary or
involuntary) of 60-JONES, L.L.C., a Texas limited liability company, as General Partner, shall cause
the dissolution of the Partnership unless, within ninety (90) days of the withdrawal, all of the
remaining Limited Partners decide in writing to continue the business of the Partnership and either
(i) elect a successor General Partner or (ii) form a new entity to carry on the business originated by
the Partnership.
7.5 Removal of General Partner. Any General Partner may be removed upon affirmative
vote of the Limited Partners owning one hundred percent (100%) of the Partnership Interests (other
than the General and Limited Partner interests owned by the General Partner to be removed).
Written notice of the removal of a General Partner shall be served upon him either by certified or by
registered mail, return receipt requested, or by personal service. Such notice shall set forth the
reasons for the removal and the date upon which the removal is to become effective, which date shall
not be less than thirty (30) days after the service of such notice upon the General Partner.
7.6 Payment for General Partner's Interest. In the event of removal or withdrawal
(hereinafter referred to as the "Terminating General Partner"), the interest of the Terminating
General Partner in the Partnership shall then be appraised by two independent appraisers, one
selected by the Terminating General Partner and one by a Majority-in-Interest of the Limited
Partners. If either party fails to select an appraiser within sixty (60) days after the date of the
terminating event, then the decision of the one appraiser shall be conclusive and binding on the
parties. In the event that such two appraisers are unable to agree on the value of the Terminating
General Partner's interest, then such appraisers shall jointly appoint a third independent appraiser
whose determination shall be final and binding. If the appraisers are unable to agree on a third
appraiser, then the average of the two appraisals shall be conclusive and binding on the parties. Said
appraisal shall include a determination of any appreciation or depreciation in Partnership assets with
respect to its adjusted tax basis. The Partnership shall pay the Terminating General Partner the value
of its interest, as so determined by delivery of a promissory note in the principal amount of such
interest, such note to bear interest of fifteen percent (15%), with interest payable monthly on the last
business day of each such month and principal payable from any Distribution which the Terminating
General Partner otherwise would have been entitled to receive. Such amounts, when received
pursuant to this Section 7.6, shall constitute complete and full discharge for all amounts owing to
such Terminating General Partner (except for any Partnership Administrative Expenses, Partnership
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Management Fee and loans to the Partnership by the Terminating General Partner) on account of its
interest in the Partnership.
7.7 Accounting. Upon receipt of such notice of removal (or upon the resignation of a
Partner), the removed General Partner shall cause an independent accounting to be prepared covering
the transactions of the Partnership since the end of the previous fiscal year through the date of receipt
of such notice or resignation, and after receipt of such notice or resignation, the removed General
Partner shall not sell or dispose of any of the Partnership Property unless such sale or disposition is
subject to a contract entered into by, and binding upon, the Partnership prior to the date upon which
such notice was received or given by the General Partner. If possible, the accounting shall be
completed by the effective date of removal or resignation and shall consist of a Statement of
Earnings and Balance Sheet for the period and as of the date specified above, in sufficient detail to
accurately and fully reflect the earnings or losses for the period and the financial condition of the
Partnership. The expenses of the accounting shall be borne by the Partnership in the event of
removal. Selection of the independent accountant to perform the accounting shall be in the
discretion of the party bearing the accounting expense.
7.8 Liabili . If, after the withdrawal of the General Partner, the business of the
Partnership shall continue, to the extent possible such withdrawn General Partner shall be and
remain liable for all obligations and liabilities incurred by the Partnership prior to such event, but
it shall be free of any obligation or liability incurred on account of the activities of the Partnership
from and after the time of such withdrawal.
7.9 General Partner's Interest in Partnership. Except as set forth herein to the contrary,
no contribution of any successor General Partner for its or his interest shall be required. The General
Partner or its successors shall, at all times have at least a one percent (1%) interest in all material
income, profit, gain, loss, deduction or credit of the Partnership. The withdrawal of the General
Partner shall in no way alter any rights of such General Partner attributable to the period prior to the
date of such withdrawal.
ARTICLE 8
RIGHTS OF LIMITED PARTNERS
8.1 Rights of Limited Partners. In addition to the other rights specified herein, the
Limited Partners shall have the right to: (i) have the records required under Section 1.07 of the Act
kept at the principal place of business of the Partnership and at all reasonable times to inspect and
copy any of them at the requesting Limited Partner's sole expense; (ii) have on demand true and full
information of all things affecting the Partnership and a formal account of Partnership affairs
whenever circumstances render it just and reasonable; (iii) have dissolution and winding up by
decree of court as provided for in the Act; and (iv) exercise all rights of a Limited Partner under the
Act (except to the extent otherwise specifically provided herein).
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8.2 Limitations on Limited Partners. Except as provided herein, the Limited Partners
shall not:
8.2.1 be permitted to take part in the business or control of the business or affairs
of the Partnership;
8.2.2 have any voice in the management or operation of any Partnership property;
8.2.3 have the authority or power to act as agent for or on behalf of the Partnership
or any other Partner, to do any act which would be binding on the Partnership or any other Partner,
or to incur any expenditures on behalf of or with respect to the Partnership; or
8.2.4 do or perform any act or thing on behalf of the Partnership or concerning the
affairs of the Partnership or involving the relationship among the Partners, whether general or
limited, which would cause or occasion any Limited Partner to be classified as or to become a
General Partner under the laws of the State of Texas.
The General Partner shall not hold out or represent to any third party that a Limited Partner has any
such power or right or that a Limited Partner is anything other than a "Limited Partner" in the
Partnership.
8.3 Limited Liability. Based on the Act, a Limited Partner, unless he is deemed to be
taking part in the control of business, shall not be bound by, or be personally liable for, the expenses,
liabilities or obligations of the Partnership or the General Partner, and his liability shall be limited
solely to the amount of his contributions to the Partnership, whether or not returned to him, including
any unpaid capital contributions it has agreed to make to the Partnership, its share of the assets
(including undistributed revenues) of the Partnership and any money or other property wrongly paid
or conveyed to him, including but not limited to money or property to which creditors were legally
entitled, and, to the extent provided by law, interest on such amounts, and as provided in the Act
with respect to distributions made to the Limited Partners by the Partnership.
8.4 Right to Vote. Except as otherwise set forth herein, Limited Partners shall have the
right to vote on the following matters affecting the Partnership:
8.4.1 amendments of the agreement materially and adversely affecting the Limited
Partners as set forth herein.
8.4.2 termination of the Partnership.
8.4.3 removal of a General Partner.
8.4.4 election of a successor General Partner.
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8.4.5 election of a liquidator to liquidate or distribute the Partnership assets upon
a dissolution caused by one of the events set forth in Section 13.1 hereof.
8.4.6 reconstitution of the Partnership as set forth in Section 13.2 hereof.
ARTICLE 9
ASSIGNMENT OR TRANSFER OF
PARTNERSHIP INTERESTS BY LIMITED PARTNERS
9.1 Conditions of Transfer. No Limited Partner may sell, assign, transfer, encumber,
mortgage, hypothecate or otherwise dispose of his Partnership Interest without the consent of the
General Partner, which may be withheld at the General Partner's sole and absolute discretion;
provided, however, that no Partnership Interest, or any portion thereof, may be transferred:
9.1.1 unless the transferee executes and delivers to the General Partner:
(a) an instrument pursuant to which such transferee agrees to be bound
by the terms of this Agreement; and
(b) such additional instruments and documents as shall be reasonably
required by the General Partner; or
9.1.2 if such transfer would:
(a) result, directly or indirectly, in the termination of the Partnership for
federal income tax purposes or, in the opinion of legal counsel to the Partnership, jeopardize its
status as a partnership for federal income tax purposes;
(b) result in the violation of the Securities Act of 1933 or any other
applicable federal or state laws; or
(c) be a violation of or an event of default under, or result in an
acceleration of any indebtedness under, any note, mortgage, loan agreement or similar instrument
or document to which the Partnership is a party or by which the Partnership is bound.
9.2 Effect of Transfer. Any Partnership Interest transferred pursuant to this Article 9 to
another Partner or to a third party with the consent of the General Partner pursuant to Section 9.1
shall remain subject to this Article 9. A transferee of a General Partner shall (except as specifically
provided above) be a Substituted Limited Partner as to the Partnership Interest received from such
General Partner, which Interest shall upon such transfer by a General Partner become a limited
Partnership Interest.
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9.3 Buy-Sell Option
9.3.1 Events Giving Rise to Buy-Sell Option. A Limited Partner may not sell any
of his/its Partnership Interest for a period of one (1) year from the effective date of this Agreement.
At any time after one (1) year from the effective date of this Agreement, a Limited Partner (the
"Offeror") may offer, by written notice (the "Buy-Sell Notice"), to sell all of his/its Partnership
Interest to the other Limited Partners (the "Offerees" whether one or more). The Offeror shall
determine, in his/its sole discretion, the value of the Partnership (the "Partnership Value") and the
selling price for the Offeror's Partnership Interest will be the amount determined by multiplying the
Offeror's percentage interest of the Partnership times the Partnership Value (the "Selling Price").
9.3.2 Effect of Buy-Sell Notice. Within thirty (30) days after the Buy-Sell Notice
is given (the "Election Period"), the Offerees (or any one or more of them) may elect to purchase the
Offeror's Partnership Interest for the Selling Price. If written notice of such election is not given to
the Offeror within such Election Period, it shall be conclusively deemed that the Offerees have
elected not to buy the Offeror's Partnership Interest. In such event, Offeror, during the one (1) year
period following the end of the Election Period, may sell his/its Partnership Interest to a third party
for the same Selling Price, subject, however, to the General Partner's approval of such third party.
In the event the Offerees elect not to purchase the Offeror's Partnership Interest and during the one
(1) year period following the end of the Election Period, the Offeror obtains an acceptable offer for
his Partnership Interest which is less than the Selling Price (the "Alternate Selling Price"), then, in
such event, the Offeror must give a new Buy-Sell Notice to all of the other Limited Partners of
Offeror's intent to sell at the Alternate Selling Price. Within thirty (30) days after receiving such
notice, the Offerees may elect to purchase Offeror's Partnership Interest for the Alternate Selling
Price. If written notice of such election is not given to the Offeror within such thirty (30) day period,
it shall be conclusively deemed that the Offerees have elected not to buy the Offeror's Partnership
Interest. In such event, Offeror may then sell his/its Partnership Interest to such third party for the
Alternate Selling Price, subject, however, to the General Partner's approval of such third party. If the
Offerees elect to purchase the Offeror's Partnership Interest at the Alternate Selling Price, then
closing shall occur within sixty (60) days as hereinafter provided. For purposes hereof, each of the
Limited Partners electing to purchase the Offeror's Partnership Interest shall be entitled to purchase
that portion of such Offeror's Partnership Interest as the Partnership Interest of such Offeree bears
to the total Partnership Interests of the Limited Partners electing to purchase.
9.4 Consummation of Purchaser Pursuant to Be-Sell Option. If the Offerees elect to
purchase Offeror's Partnership Interest, the purchase and sale of the Partnership Interest pursuant to
this Agreement shall be consummated (the "Closing") within sixty (60) days after notice of the
Offeree's election to purchase has been given to the Offeror. The Closing shall take place at the
principal place of business of the Partnership or such other location as is mutually agreeable to the
Partners. The selling price for the Partnership Interest purchased pursuant to this Agreement shall
be paid entirely in cash or readily available funds at Closing. In addition to payment of the Selling
Price or the Alternate Selling Price, as applicable, the Offerees shall be obligated to fully pay and
satisfy, or cause the Partnership to fully pay and satisfy, at or prior to Closing, any and all debt
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obligations owed by the Partnership to the Offeror. At or prior to Closing, Offerees shall use their
best efforts to obtain releases of any guarantees, liens, claims, encumbrances or obligations related
in any manner to the Partnership Interest purchased and sold pursuant to this Agreement. If the
Offerees are unable to obtain such releases after using their best efforts, Offerees hereby agree to
indemnify Offeror for any and all claims, suits, losses, damages, and attorneys fees related to such
guarantee or obligations.
9.5 Pledge of Partnership Interests. No granting of a security interest in the Partnership
Interest of a Partner shall be permitted.
9.6 Substituted Limited Partner. An assignee or transferee (other than an existing
Partner) of the interest of a Partner may be admitted as a Substituted Limited Partner only with the
consent of the General Partner and shall be admitted as of the date of such consent. An assignee or
transferee who is an existing Partner shall be admitted automatically as a Substituted Limited Partner
without any consent by Partners. The granting or denying of such consent shall be in the absolute
discretion of the General Partner. Unless the assignee is already a General Partner, any assignee of
a Partnership Interest to whose admission such consent is given (a "Substituted Limited Partner")
shall become and shall have only the rights and duties of a Limited Partner, and the assigned
Partnership Interest shall thereafter be a limited Partnership Interest. Any transferee of the interest
of a Limited Partner shall be entitled only to receive distributions hereunder until such transferee has
been admitted as a Limited Partner.
9.7 Duties of Substituted Limited Partner. Any person admitted to the Partnership as a
Substituted Limited Partner shall, prior to such admission, execute an irrevocable power of attorney
in form satisfactory to the General Partner appointing the General Partner as such person's attorney-
in-fact with full power to execute, swear to, acknowledge, and file all certificates and other
instruments necessary to carry out the provisions of this Agreement, including without limitation
such undertakings as the General Partner may require for the payment of all fees and costs necessary
to effect any such transfer and admission. Upon admission, such person shall be subject to all
provisions of this Agreement in the place and stead of his assignor as if originally a party hereto.
9.8 Effective Date. The effective date of a substitution shall be the first day of the
calendar quarter next following the date upon which the General Partner has given its written consent
to such substitution and at which time the General Partner shall, if necessary, file for recordation
with the office of the Secretary of State of the State of Texas an Amended Certificate of Limited
Partnership evidencing such substitution.
9.9 Effect of Change in Partners. Subject to all of the provisions of this Agreement, the
dissolution, liquidation, bankruptcy or substitution of any Limited Partner shall not interrupt the
continuity of or cause the termination or dissolution of the Partnership.
9.10 Section 754 Election. Upon the disposition by a Partner of all or any part of his
Partnership Interest, the General Partner, upon the request of the transferee, shall elect on behalf of
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the Partnership, pursuant to Section 754 of the Code, to cause the basis of the Partnership's property
to be adjusted, for federal income tax purposes, in the manner prescribed in Section 734 of the Code
and for state and local income tax laws, but no adjustment will be made on the Partnership's books
to reflect such election and the transferee requesting same shall be required to make appropriate
adjustments on his personal income tax return reflecting such election. All costs incurred in
connection with making such election shall be borne directly by such transferee requesting the
election.
9.11 Overriding Restriction on Transfer. No Limited Partner may transfer any Partnership
interest and no attempted or purported transfer shall be effective if:
9.11.1 the transfer would terminate the Partnership for the purpose of Code Section
708; or
9.11.2 the transfer would cause adverse tax consequences to the Partnership or any
of the non-transferring Partners; or
9.11.3 the transfer would cause adverse consequences to the Partnership or any of
the non-transferring Partners under any applicable Federal or state securities law. The General
Partner is expressly authorized to enforce this Section by notifying the partners that all subsequent
attempts at transfer will be ineffective whenever interest totaling thirty-five percent (35%) or more
in Partnership Interests of the Partnership shall have been effectively transferred in any twelve (12)
month period. Furthermore, prior to any transfer becoming effective, the General Partner may
require an opinion of counsel to the effect that the transfer will not cause adverse tax or securities
laws consequences to the Partnership or any of the non-transferring Partners, and the transferor shall
be responsible for paying counsel's fee for the opinion.
9.12 Confidentiality. Each Partner recognizes and acknowledges that the Partnership's
trade secrets and other confidential or proprietary information, as they may exist from time to time,
are valuable, special and unique assets of the Partnership's business. Accordingly, during the term
of the Partnership, each Partner shall hold in strict confidence and shall not, directly or indirectly,
disclose or reveal to any person, or use for its own personal benefit or for the benefit of anyone else,
any trade secrets, confidential dealings or other confidential or proprietary information of any kind,
nature or description (whether or not acquired, learned, obtained or developed by a Partner alone or
in conjunction with others) belonging to or concerning the Partnership, or any of its customers or
clients or others with whom they now or hereafter have a business relationship, except (i) with the
prior written consent of all the other Partners, (ii) in the course of the proper performance of the
Partner's duties hereunder or (iii) as required by applicable law or legal process. Each Partner
confirms that all such information constitutes the exclusive property of the Partnership.
9.13 Business Records. Given the secretive and competitive environment in which the
Partnership does business and the fiduciary relationship that the Partners have with the Partnership,
each Limited Partner agrees to promptly deliver to the Partnership, at any time when the General
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Partner so requests, all memoranda, notes, records, drawings, manuals and other documents (and all
copies thereof and therefrom) in any way relating to the business or affairs of the Partnership or any
of its customers and clients, whether made or compiled by such Limited Partner or furnished to it
by the Partnership or any of its employees, customers, clients, consultants or agents, which such
Limited Partner may then possess or have under its control. Each Limited Partner confirms that all
such memoranda, notes, records, drawings, manuals and other documents (and all copies thereof and
therefrom) constitute the exclusive property of the Partnership. Notwithstanding the foregoing
provisions of this Section 9.13 or any other provision of this Agreement, each Limited Partner shall
be entitled to retain any written materials received by such Limited Partner in its capacity as a
Limited Partner.
ARTICLE 10
PROSECUTION AND DEFENSE OF LITIGATION
10.1 Prosecution and Defense of Lawsuits. The General Partner shall arrange for the
Partnership's account and on its behalf (subject to any limitations imposed by applicable law):
10.1.1 to prosecute or defend any such actions as may be necessary to enforce or
protect the Partnership's best interests; and
10. 1.2 for the defense of any action brought against the Partnership or a General
Partner or its Affiliates as representative of the Partnership.
10.2 Satisfaction of Judgments. The General Partner shall cause the Partnership to satisfy
any fmal judgment, decree, decision or settlement against the Partnership; first, out of any insurance
proceeds available therefor; and next out of Partnership assets; provided, however, the General
Partner shall not settle any litigation for amounts in excess of $50,000.00 except with the prior
consent of a majority of the Partnership Interests.
ARTICLE 11
FEES OF GENERAL PARTNER AND AFFILIATES
AND RED,4BURSEMENT OF VARIOUS COSTS
11.1 Reimbursement of Costs. The initial setup fees for the Partnership, which includes
legal fees and expenses, filing fees, accounting fees and expenses and miscellaneous expenses
relating to the selection and acquisition of the property and/or the investment assets of the
Partnership, shall be paid by the Partnership. All expenses of the Partnership shall be billed directly
to and paid by the Partnership to the extent practical. The General Partner shall be reimbursed
promptly by the Partnership for all actual, reasonable, and necessary direct out-of-pocket
expenditures made by the General Partner from time to time on behalf of the Partnership, in
connection with its affairs, or the performance of its duties hereunder; provided, however, no
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reimbursement shall be made for any services for which compensation is paid in the form of a
separate fee.
11.2 Management Fee. No Management Fee will be paid to the General Partner for the
operations of the Partnership; however, if the Partnership property is to be developed, James E. Jett
may be paid a Management Fee upon the vote of sixty percent (60%) of the aggregate Partnership
Interest.
ARTICLE 12
DEATH INCOMPETENCE BANKRUPTCY OR
DISSOLUTION OF LIMITED PARTNERSHIP
12.1 Individual Limited Partner. Upon the death, legal incompetency or bankruptcy of an
individual Limited Partner, his personal representative, guardian, trustee in bankruptcy, or
comparable person shall have all of the rights of a Limited Partner for the purpose of settling or
managing his estate, but shall not become a Substituted Limited Partner without obtaining the
consent of the General Partner. He shall also have such power as the decedent, incompetent or
bankrupt possessed to assign his Partnership interests and to j oin with the assignee thereof in making
application to'substitute such assignee as a Limited Partner.
12.2 Other Limited Partners. Upon the bankruptcy, insolvency, dissolution or other
cessation to exist as a legal entity of a Limited Partner which is not an individual, the authorized
representative or trustee in bankruptcy of such Limited Partner shall have all of the rights of a
Limited Partner for the purpose of effecting the orderly disposition of that Limited Partner's affairs
or business but shall not become a Substituted Limited Partner without obtaining the consent of the
General Partner. He shall also have such power as the Limited Partner possessed to assign his
interest in the Partnership and to join with the assignee thereof in making application to substitute
such assignee as a Limited Partner.
ARTICLE 13
DISSOLUTION LIQUIDATION AND TERMINATION
13.1 Dissolution. The Partnership shall be dissolved upon the earliest to occur of any of
the following:
13.1.1 the occurrence of December 31, 2035.
13.1.2 the consent in writing of all the Partners.
13.1.3 the sale or other disposition of all or substantially all of the assets of the
Partnership.
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13.1.4 upon an order of dissolution by a court of competent jurisdiction or upon any
recognized process of dissolution as provided by the laws of the State of Texas.
13.1.5 the occurrence of any event which, under the Texas Act, causes the dissolution
of a Limited Partnership.
13.2 Continuation of Business and Reconstitution of Partnership. Upon a dissolution of
the Partnership pursuant to Section 7.4, the Partnership may be reconstituted and its business
continued without being wound up if within ninety (90) days after the occurrence of the event of
dissolution all of the remaining Partners agree in writing to continue the business of the Partnership
and agree to the appointment, effective as of the date of the dissolution, of one or more new General
Partner.
13.3 Liquidation and Termination. Upon dissolution of the Partnership (unless it is
reconstituted and its business continued without being wound up as provided for in Section 13.2),
the General Partner shall act as liquidator or may appoint in writing one or more liquidators who
shall have full authority to wind up the affairs of the Partnership and make final distribution as
provided herein; provided, however, that if the dissolution has occurred a result of an act by the
General Partner, the liquidator shall be a person selected in writing by a Majority in Interest. The
liquidator shall continue to operate the Partnership properties with all of the power and authority of
the General Partner. As promptly as possible after dissolution and again after final liquidation, the
liquidator shall cause a proper accounting to be made by the Partnership's independent accountants
of the Partnership's assets, liabilities and operations through the last day of the month in which the
dissolution occurs or the final liquidation is completed, as appropriate.
13.4 Application of Proceeds. The proceeds of such liquidation and any unsold assets shall
be applied in the following order of priority
13.4.1 first, to the expenses of such liquidation;
13.4.2 second, to the debts and liabilities of the Partnership to third parties, if any,
in the order of priority provided by law;
13.4.3 third, to a reasonable reserve to be set up to provide for any contingent or
unforeseen liabilities or obligations of the Partnership to third parties;
13.4.4 fourth, to all loans which any General Partner may have made to the
Partnership,
13.4.5 fifth, to the Contributing Partners or other persons making the contribution
of a Non-Contributing Partner pursuant to Section 3.3 hereof, ratably until the Preferred Returns
have been paid in full; and
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13.4.6 sixth, the remaining assets of the Partnership, if any, shall be distributed to
the Partners (or their successors and assigns) in accordance with their respective capital accounts.
Any distributions to the Partners in liquidation of the Partnership shall be made by the later of the
end of the taxable year in which the liquidation occurs or ninety (90) days after the date of such
liquidation. For purposes of the preceding sentence, the term "liquidation" shall have the same
meaning as set forth in Treasury Regulation § 1.704-1 (b)(2)(ii)(g) as in effect at such time.
13.5 Liquidator. Upon written request made by the General Partner (or a Majority in
Interest if the liquidator was selected by a Majority in Interest), the liquidator shall sell the assets and
properties of the Partnership that otherwise would be distributable to the Partner under this Article
13 at the best cash price available therefor and distribute such cash (after deducting all expenses
reasonably relating to such sale) to such Partner. Any gain or loss attributable to the sale shall be
allocated to such Partner.
13.5.1 If any General Partner's capital account has a deficit balance (after giving
effect to all contributions, distributions and allocations for all taxable years, including the year during
which such liquidation occurs), such General Partner shall contribute to the capital of the Partnership
the amount necessary to restore such deficit balance to zero in compliance with Treasury Regulation
Section 1.704-1(b)(2)(ii)(b)(3).
13.5.2 Except as expressly provided, herein, the liquidator shall comply with any
applicable requirements of the Act and all other applicable laws pertaining to the winding up of the
affairs of the Partnership and the final distribution of its assets.
13.5.3 The distribution of cash and/or property to the Partners in accordance with the
provisions of this Article 13 shall constitute a complete return to the Partners of their respective
Capital Contributions and a complete distribution to the Partners of their respective interest in the
Partnership and all Partnership property. No Partner with a negative balance in its capital account
shall be liable to the Partnership or any other Partner for the amount of such negative balance upon
dissolution and liquidation. The General Partner shall not be liable for the return of the capital
contributions of the Limited Partners. No person shall have the right to demand or receive property
other than cash upon dissolution and termination of the Partnership (although the General Partner
or liquidator may distribute property other than cash) or to demand the return of his capital
contributions to the Partnership prior to dissolution and termination of the Partnership.
13.5.4 The contract rights of the Partnership existing at the time of liquidation shall
be divided among, assigned to, and assumed by the Partners on a proportionate and equitable basis.
All Partners and liquidators shall act in good faith to accomplish a fair and equitable division of the
contracts of the Partnership upon dissolution and liquidation of the Partnership. Although the
distribution of contract rights need not be made in proportion to each Partner's positive capital
account balance, total distributions to each Partner in liquidation (including distributions of contract
rights) shall be in accordance with each Partner's positive capital account balance. The foregoing
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sentence is intended to assure that distributions of contract rights in liquidation satisfy the
requirement of Treasury Regulation § 1.704-1(b)(2)(ii)(b)(2).
ARTICLE 14
REPRESENTATIONS AND WARRANTIES
14.1 Representations and Warranties of the Partners. Each Partner severally represents,
warrants and covenants for and on behalf of itself to each other Partner as follows:
14.1.1 Cormoration. If that Partner is a corporation, it is duly organized, validly
existing, and in good standing under the laws of the state of its incorporation and is duly qualified
and in good standing as a foreign corporation in the jurisdiction of its principal place of business (if
not incorporated therein), and if its state of incorporation is Texas, then it is duly organized, validly
existing and in good standing under the laws of the State of Texas.
14.1.2 Partnership Trust Other Entity. If that Partner is a partnership, trust or other
entity, it is duly formed, validly existing, and (if applicable) in good standing in the jurisdiction of
its principal place of business (if not formed therein) and, if a General Partner, in the State of Texas,
then the representations and warranties in Subparagraph 14. 1.1 or 14.1.2 as applicable, are true and
correct with respect to each partner (other than limited partners), trustee, or other member thereof.
14.1.3 Power and Authori ty. Such Partner has all requisite power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
14.1.4 Requisite Authorization. The execution, delivery and performance of this
Agreement by such Partner have been duly and validly authorized in accordance with the terms of
the documents governing its organization and operation, as amended to date ("Constituent
Documents"), and no other action is required to be taken to authorize such execution, delivery and
performance.
14.1.5 No Violations Outside Agreement. The execution, delivery and performance
of this Agreement are within such Partner's powers and do not (i) contravene or violate any
provisions of its Constituent Documents or (ii) contravene or result in any breach of or constitute a
default under any applicable law, rule or regulation or any loan, note or other agreement or
instrument to which it is a party or by which it or any of its properties are bound.
14.1.6 Binding Agreement. When delivered to the Partners, this Agreement will be
duly and validly executed by such Partner and will be binding upon such Partner in accordance with
the terms hereof.
14.1.7 Continuity of Representations, Warranties and Covenants. Except for a
change of law over which the Partner has no control (and such Partner shall immediately notify the
other Partners when such Partner learns of such occurrence), the foregoing representations,
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warranties and covenants shall remain true and accurate during the term of the Partnership, and such
Partner will neither take action nor permit action to be taken which would cause any of the foregoing
representations to become untrue or inaccurate.
14.1.8 No Further Consent Approval or Authorization Required. No consent,
approval, authorization or order of any court or governmental agency or authority or of any third
party which has not been obtained is required in connection with the execution, delivery and
performance by such Partner of this Agreement.
14.1.9 Re6stration Not Required. Such Partner and its Affiliates and all Persons
acting on its behalf have not taken any action, or failed to take any action, which has caused the
organization of the Partnership and the issuance of the interests in the Partnership to come within
the registration requirements of the Securities Act of 1933 or any applicable state blue sky laws.
14. Investment for Indefinite Period. Such Partner has acquired its interest in the
Partnership for its own account for investment purposes only and not with the present intent as to
distribution or sale thereof, and such interest will not be sold or transferred by it in violation of the
Securities Act of 1933 or any applicable state securities laws. Such Partner understands that its right
to transfer all or any portion of its interest in the Partnership is restricted by the terms and provisions
of this Agreement and that it therefore must be prepared to bear the economic risks of its investment
for an indefinite period of time.
14.2 Survival of Representations and Warranties. All representations, warranties and
covenants made by the Partners in this Agreement or any other document contemplated hereby shall
be considered to have been relied upon by the other parties hereto and shall survive the execution
and delivery of this Agreement, or such other document, regardless of any investigation made by or
on behalf of any such parry.
ARTICLE 15
MISCELLANEOUS
15.1 Certificate Requirements. The General Partner hereby agrees that it shall sign and
file promptly the certificate required by Section 2.01 of the Act for the creation of the Partnership
as contemplated by this Agreement. The General Partner will sign and file, from time to time, in said
office all such writings to amend said certificate as are required by the Act for the carrying out of the
terms and provisions of this Agreement, and upon winding up of the Partnership, the General Partner
shall sign and file in said office the writing required by the Act to cancel said certificate as
theretofore amended. Each Partner hereby appoints, and each person who may subsequently become
a Partner shall be deemed to have appointed, the General Partner as such Partner's true and lawful
attorney-in-fact in such Partner's name and behalf to sign, swear under oath and acknowledge the
certificate required to form and continue the Partnership and each and every such amendment thereto
or certificate of cancellation or other instrument as may be required to carry out the terms of this
Agreement, to admit Limited Partners at a future date or dates or the substitution of a Limited
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Partner. The foregoing power of attorney shall be irrevocable and coupled with an interest, and shall
survive the transfer by a Partner of a Partnership Interest or the dissolution, death or bankruptcy of
a Partner.
15.2 Entire Agreement. This Agreement and the other agreements and documents referred
to herein contain the entire agreement between the parties hereto with respect to the subject matter
hereof and thereof and supersede all prior agreements and undertakings between the Partners relating
to the subject matters hereof and thereof. There are no additional terms, whether consistent or
inconsistent, oral or written, which are intended to be part of the Partners' understanding which have
not been incorporated into this Agreement and the other agreements and documents referred to
herein.
15.3 Notices. All notices, consents and other communications under this Agreement shall
be in writing and shall be deemed to have been duly given (i) when delivered by hand, (ii) when sent
by fax (with receipt confirmed), provided that a copy is promptly thereafter mailed by first class
postage prepaid, (iii) when received by the addressee, if sent by certified mail, return receipt
requested, or (iv) when received by the addressee, if sent by a nationally recognized overnight
delivery service in each case to the appropriate addresses and fax numbers set forth on Exhibit "A"
with respect to any Partner (or to such other addresses and fax numbers as a party may designate as
to itself by notice to other Partners).*
15.4 Governing Law. This Agreement shall be governed by, and construed in accordance
with, the law of the State of Texas.
15.5 Modification and Amendment. Except as otherwise expressly provided, this
Agreement may be modified or amended by a writing signed by Partners owning two-thirds (2/3rds)
of the aggregate Partnership Interests; provided, however, any Partnership action for the dissolution
of the Partnership will require the consent of all Partners.
15.6 Successors and Assign. This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns. However, no assignment of any interest
in this Agreement may be made otherwise than in accordance with the provisions of this Agreement.
15.7 Counterparts. This Agreement may be executed in several counterparts, each of
which shall be an original of this Agreement but all of which, taken together, shall constitute one and
the same Agreement.
15.8 Severability. If any provision of this Agreement shall be held to be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any
way be affected or impaired thereby.
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15.9 Further Assurances. Each Partner shall execute such deeds, assignments,
endorsements, evidences of transfer and other instruments and documents and shall give such farther
assurances as shall be necessary to perform its obligations hereunder.
15.10 Limitation on Rights of Others. No person other than a Partner shall have any legal
or equitable right, remedy or claim under or in respect of this Agreement.
15.11 Notice of Commission. James E. Jett is a Real Estate Broker and is being paid a three
percent (3%) commission on the purchase of the Property.
15.12 Attorney and Accountant. Doyle B. Reed shall be the accountant for the Partnership
and Jay Don Watson shall be the attorney for the Partnership.
15.13 A Limited Partner may finance fifty percent (50%) of the Limited Partners' initial
Capital Contribution with the Partnership. The rate and terms of suchfmancing shall be equal to the
interest rate being charged by First National Bank, Bryan, Texas to acquire the 118.221 acres by the
Partnership and payable over the same terms as the Partnership's loan created to purchase the
118.221 acre tract. The General Partner shall have the right to pledge the 118.221 acre tract being
acquired by the Partnership to generate funds to acquire the 118.221 acre tract from First National
Bank, Bryan, Texas. Any loan made to a Limited Partner to finance the Limited Partner's initial
Capital Contribution shall be a non-recourse loan to the Limited Partner. In the event a Limited
Partner fails to make a payment on the loan owing to the Limited Partnership to finance the Limited
Partner's initial Capital Contribution within ten (10) days of the date it is due, the Limited Partners
entire interest in the Limited Partnership shall be forfeited and become the property of the General
Partner, who shall be required to pay the remainder of such Limited Partner's Initial Capital
Contribution.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first stated above in multiple counterparts which may be combined to make one or more original
documents.
GENERAL PARTNER:
60-JONES, L.L.C., a Texas limited liability
company
By.
J.
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