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Certificate of Amendment i . 0 0 CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF LiMITED PARTNERSHIP OF CREEK MEADOWS PARTNERS,L.P. Pursuant to the provisions of Section 3.051 of the Texas Business Organizations Code. CREEK MEADOWS PARTNERS. L.P.. a Texas limited partnership (the "Limited Partnership"). files the following Certificate of Amendment to its Certificate of limited Partnership. ARTICLE I The name of the limited Partnership is CREEK MEADOWS PARTNERS. I..P. The lite number issued to the Limited Partnership by the Secretary of State is 0800583397. The Certificate of Limited Partnership for the Limited Partnership was tiled on December 13. 2005. The existing registered agent of the Limited Partnership is Pat Baker. The existing registered office of the Limited Partnership is 3988 Green Prairie Road West.College Station.Texas 77845. ARTICLE II. The registered agent of the Limited Partnership has been changed to R. K. Lowry, Jr. The i registered office of the Limited Partnership has been changed to 14505 "homey Chase Blvd., Suite 205. I louston. Texas 77014. j ARTICLE III. i 1 Bexco Operating. Inc.. a Colorado corporation. has resigned as general partner of the Limited Partnership and as a result thereof Union Gas Corporation, a Cexas corporation, is the sok 11 general partner of the limited Partnership. "Ihe name and business address of the sok general partner of the Limited Partnership is us follows: A Union Gas Corporation 14505 Torrey Chase Blvd. Suite 205 q I!Duston. I X 77014 1 1 i 1 i l 1 1 1 i C1 i 1 I 1 ARTICLE IV. I The undersigned is the sole general partner of the Partnership and has the authority to file this Amendment. ARTICLE V. This document will become effective when the document is tiled by the Secretary of State. On this 2 rday of January. 2011, the undersigned sign this document subject to J the penalties imposed by law for the submission of materially false or fraudulent instrument. UNION CAS CORPORATION, General Partner of Creek Meadows Partners. L.P. By: _r:"...,,,„0- s!i� Zandaf . Lo 'frr., President IMMINNOMMO011ir 11111111111111111101111111111111111116. ti AGREEMENT OF LIMI I'hD PARTNERSHIP OF CREEK MEADOWS PARTNE:2S,L.P. THIS AGREEMENT Or LIMITED PARTNERSHIP is made and entered into on Pete/At/44 7' , 2005. It is between BAKER & CARNES MANAGEMENT, L.L.C., a Texas limited liability company, referred to in this agreement as the"General Partner", RADR DEVELOPMENT, LTD, a Texas limited partnersiip, Limited Partner and BAKER & CARNES INVESTMENTS, L.L.C., Limited Partner,together with any additional or substituted limited partners admitted to the Partnership in accordance with the terms of this agreement, all of whom are referred to in this agreement as"Limited Partners." ARTICLE I DEFINITIONS The following terms have:he following meanings when used in this agreement: "Act"means the Texas Revised Limited Partnership.Act. "Affiliate"means any person or entity that controls or is controlled by the General Partner, or is controlled by the same persor or entity that controls the General Partner. In this definition,the term"control"includes the owners'.iip of more than 50 percent of the beneficial interest in the person or entity. "Agreement" or "partnership agreement" means this agreement of limited partnership, including any amendments that m iy be made. "Bankruptcy"means,as to any Partner,the Partner's taking, or acquiescing in the taking,of any action seeking relief under, or advantage of, any applicable debtor relief, liquidation, receivership,conservatorship, bankruptcy,moratorium,rearrangement,insolvency,reorganization or similar law affecting the rights or remedies of creditors generally,as in effect from time to time. For the purpose of this definition, the term "acquiescing" shall include, without limitation, the failure to file,within 10 days after its entry, a petition,answer,or motion to vacate or to discharge any order, judgment, or decree providing for any relief under any such law. "Capital contribution(s)"raeans the contribution(s) made to the capital of the Partnership from time to time by a Partner in cash or property. "Certificate"means the certificate of limited partnership to be filed by the General Partner with the Secretary of State of Texas in accordance with this agreement. "Code"means the Internal Revenue Code of 1986, as amended and in effect from time to time. � "Contribution Loan" shall mean the 9jC5-:.(i sail loan from RADR Development, Ltd. to Baker & Carnes Management, to fund in part the capital contribution of Baker & Carnes Management,L.L.C. as limited partner. "Involuntary Transfer Event" shall mean a Partner bankruptcy, a Partner's dissolution or death, the termination of a Partne's marital relationship, or any other event causing a Partner to Page 1 Agreement of Limited Partnership of 25 involuntary dispose of his interest in the Partnership. "Partnership" shall mean CREEK MEADOWS PARTNERS, L.P. a Texas limited partnership. "Percentage interest"means the interest of a Partner in the capital and profits and losses of the partnership as ini:ially set forth in Section 10.2 of this agreement. "Person" means an individual or a corporation,rp n, partnership, trust, unincorporated organization, association,or other entity. "His"or"he"shall also mean and refer, as appropriate,to the feminine and neuter pronouns. "Required Interest"means Dne or more of the Limite.1 Partners having among them more than 70%of the Percentage Interest of all Limited Partners in their capacity as such. "Transfer"means the mortgage,pledge,hypothecation,transfer, sale, assignment, or other disposition of any part or all of an interest in the Partnership by any Partner,whether voluntarily,by operation of law or otherwise. ARTICLE II GENERAL Formation 2.01.By this agreement,the General Partner and the Limited Partners form and establish the Partnership pursuant to the Act. Prior to conducting any business in any jurisdiction, the General Partner shall promptly file the Certificate as required by the Act and comply with all other legal requirements for the formation and operation of the Partnership.Except as expressly provided in this agreement, the Act small govern th rights and liabilities of the Partners. Name 2.02. The name of the Partnership shall be CREEK MEADOWS PARTNERS, L.P. The General Partner may change the name of the Partnership or adopt such trade or fictitious names as it may determine appropriate. Investment 2.03.Each of the Limited Partners represents that it is acquiring an interest in the Partnership for investment for its own account, and not with a view to alp,sale or distribution of that interest. Merger or Conversion 2.04. The Partnership may merge with or convert into another limited partnership or other business entity,or enter into an agmement to do so,only with the consent of the General Partner and a Required Interest of Limited Pullers. ARTICLE 111 COMMENCEMENT DATE; TERM OF:'ARTNERSHIP The Partnership shall commence and be effective on th..date the Certificate is filed with the Agreement of Limited Partnersh_:p Page 2 of 25 ARTICLE IV PURPOSES The purposes of the Partnership shall be the purchase,development, sale, service, lease and management of real properties described generally as a 266.862 acre,more or less,tract on Green's Prairie Trail in Brazos County,Texas, also known as the Vance/Goss Tract("The Property"), and to engage in any or all other lawful acts. ARTICLE V GENERAL PARTNER AND PLACE CF BUSINESS The General Partner of the Partnership is BAKER & CARNES MANAGEMENT, L.L.C., with offices at 230 Southwest Parkway, College Station,Texas 77840. The address of the General Partner is the principal place of business of the Partnership. The General Partner may maintain other offices for the Partnership as it may ietermine to be necessary or advisable from time to time. Any requests for information concerning the Partnership shall be directed to the General Partner at the principal place of business of the Partnership. Cully Lipsey snail serve as the registered agent of the Partnership. The address of the registered agent of the Partnership shall be 1021 University Drive E., Suite #102, College Station, Texas 77840.The address and the narie of the registered agent o f the Partnership may be changed as the General Partner may designate by written notice to the Limited Partners and by filing an amended Certificate with the Secretary of Stat€. ARTICLE VI CAPITAL CONTRIBUTIONS' General Partner's Contribution 6.01. At the time of execution of this Agreement,the General Partner contributed the amounts and property shown on Exhibit A, attached hereto and made a pzrt hereof. Limited Partner's Contributions 6.02.At the time of execution of this Agreement,the Limited Partners contributed the amounts and property shown on Exhibit A,attached hereto and made a part hereof. The initial Limited Partners will have the Percentage Interests in the Partnership set forth in paragraph 10.02 of this agreement.In addition, Baker & Carnes Investments, L.L.C. shall cause its rights under a purchase and sale agreement with Betty V. Goss,B.F. V ince,Jr.,and William R. Vance for the purchase of the Property to be assigned to the Partnership. The amount shcwn in Exhibit A reflects the amount of cash to be contributed, or the agreed value of a contribution in a form other than cash. Limited Liability for Limited Partners Page 3 Agreement of Limited Partnership of 25 • 6.03. The liabili y of the Limited Partners to the Partnership is limited to the amount of their respective capital contributions. Acccrdingly, the contributions called for in paragraph 6.02 are the only property the Limited Partners are required to furnish to the Partnership, whether by way of contribution, loan, or otherwise. However, the Limited Partners are entitled to a return of their respective capital contribution(s) onl) as provided in this partnership agreement. Assessment of Additional Contributions 6.04. In addition to the conributions described in paragraph 6.02, the Partners may be required to make additional capital contributions.The Partnership may assess additional contributions for expenses of the Partnership,including without limitation,payment of ad valorem taxes and interest on the purchase money loan for the Property,professional fees, ordinary expenses of conducting the business of the partnership, and reasonable and necessary overhead costs, by election of the General Partner. If such additional contributions are duly assessed,and if one or more Partners is in default on an obligation to make such a contribution for a period of 30 days or more, the General Partner or Partners may assess each non-defaultiig Partner to compensate for the deficiency. Each Partner shall be required to contribute the amount of the aggregate assessment multiplied by its then current percentage of interest in the Partnership. 6.05. In the event a Partner fails to make the required contribution hereunder on a timely basis, such Partner shall be deemed a Delinquent Partner and the General Partner may exercise any one or more of the following rights or remedies: (i) Take such action(including,without limitation, the filing of a lawsuit)as the General Partner deems appropriate to obtain payment by the Delinquent Partner of that portion of the additional capital which is in default, together with interest thereon at the Default Interest Rate from the date that such contribution was due, at the cost and expense of the Delinquent Partier; (ii) Permit the non-Delinquent Partners to advance pro rata(or in such other percentages as they may agree) that portion of the additional Capital • Contribution ti.at is in default,with the fo:.lowing result: (A) the sums thus advanced shill be deemed to be loans from the non-Delinquent Partners making such payments ("Lending Partners") to the Delinquent Partner and a contribution of such sum to the Partnership by the Delinquent Partner pursuant to this Agreement, (B) the principal balance of such loans and all accrued unpaid interest thereon shall be due and payable in whole within 10 days after written demand therefor has been given to the Delinquent Partner by the Lending Partners, Agreement of Limited Partnership Page 4 of 25 (C) the loans shall bear interes-: at the lesser of(i)eighteen percent (18%)per annum and (ii) the maximum rate permitted by applicable law(the"Default Interest Rate") from the date that the loan was made until the date that such loan,together with all interest accrued thereon, is repaid to the Lending Partners, (D) all distributions from the Partnership that would otherwise be made to the Delinquent Partner(w:-iether before or after dissolution of the Partnership)shall,instead,be paid to the Lending Partners until the loans aid all interest accrued thereon have been repaid in full to the Lending Partners(with all such payments being applied first to interest earned end unpaid and then to principal), and (E) the repayment of the loans-.nd all interest accrued thereon shall be secured by a security interest in he Delinquent Partner's Interest, as more fully set forth in Section 2.1 ;c)below; (iii) Permit the non-Delinquent Partners to make additional Capital Contributions to the Partnership prorata(cr in such other percentages as they may agree), of that portion of the additional Capital Contribution of the Delinquent Partner that is in default with the result that the Percentage Interests shall be adjust d in proportion to the aggregate Capital Contributions of all Partners after such additional Capital Contributions have been made; (iv) Exercise the rights of a secured party under the Uniform Commercial Code as in effect in the State of Texas; (v) Exercise any other rights and remedies available at law or in equity;or (vi) Abandon the proposed activities, :-eturn all payments tendered with respect to such,additional Capital Contribution and sell or otherwise dispose of or act with respect to the activity or investiuent for which the additional Capital Contribution was called. 6.06. Each Partner grants to thz Partnership, and to each Lending Partner with respect to any loans made by the Lending Partner to that Partner as a Delinquent Partner pursuant to paragraph 6.05 above, as security, equally and ratably, for the payment of all Capital Contributions that Partner has agreed to make and the payment of all loans and interest accrued on them made by Lending Partners to that Partner as a Delinquent Partner pursuant to paragraph 6.05, a security interest in and a general lien on its Interest and the proceeds thereof, all under the Uniform Commercial Code of the State of Texas. On any default in the payment:of a Capital Contribution or in the payment of such a loan or interest accrued on it,the Partnership or the Lending Partner, as applicable, is entitled to all the rights and remedies of a secured party under the Uniform Commercia. Code of the State of Texas with Page 5 of Agreement of Limited Partnership 25 • respect to the security interest granted in this paragraph 6.06. Each Partner shall execute and deliver to the Partnership and the other Partners all financing statements and other instruments that the General Partner or the Lending Partner, as applicable,may request to effectuate and carry out the preceding provisions of this paragraph 6.06. At the option of the Genera:. Partner or a Lending Partner, this Agreement or a carbon,photographic, or other copy hereof may serve as a financing statement. ARTICLE VII PROFITS AND LOSSES Interest of Each Partner 7.01. The amount of net profits and net losses of the Pan.nership to be allocated to and to be charged against each Partner will be determined by multiplying the amount of net profits or net losses by the Partner's then current percentage of interest in the Partnership. Definition of Profits and Losses 7.02. For pm-poses of paragraph 7.01, the term "profits," means income or gain of any kind actually received or deemed to be received by the Partnership according to generally accepted accounting procedures. The term "losses, "means any deduction, expenditure, or charge actually incurred or deemed to be incurred b.( the Partnership according to generally accepted accounting procedures. Establishment of Capital Accounts 7.03. Separate capital accounts shall be established and maintained for each Partner in accordance with Section 1.704-1(b)(2)(iv)of the Treasury Regulations, as amended from time to time. Credits and Debits 7.04. All Capita;Contributions of a Partner, its allocable share of Partnership income and loss, and cash or property distributions made to such Partner shall be c;-edited or charged to such Partner's individual capital account as the case may be. To the extent an allocation or adjustment is not specifically described by this provision of the agreement, that item shall be reflected in the Partners' capital accounts in accordance with Section 1.704-1(b)(2)(iv)of the Treasury Regulations, as amended from time to time. The capital accounts of limited partners shall not bear interest. Accounting For Partner's Loans 7.05. Loans made by a Partner to the Partnership shall not De considered capital contributions. Return of Capital 7.06. No Partner has the right to demand the return of its capital contribution other than in cash and except as provided in this agreement. Agreement of Limited Partnership Page 6 of 25 t Liquidation 7.07. When the Partnership is liquidated, each Partner with a deficit in its capital account (whether by virtue of failure to make an initial contribution, loans, distribution, or any other reason) will be obligated to contribute to the capital of the Partnership an amount of cash equal to the deficit in the capital account balance.The cash must be paid within 90 clays after the date of the liquidation, and the amounts so contributed may be paid to the creditors of he Partnership or distributed to the other Partners in the ratio of the then positive balances in their respective capital accounts. Partition 7.08. All interests in the property owned by the Partnership shall be deemed owned by the Partnership as an entity. Partner, individually, shall have any ownership of such property or interest except as a Partner in the Partnership. Each of the Partners irrevocably waives, during the term of the Partnership and during any period of its liquidation following any dissolution, any right that it may have to maintain any action for partit.on with respect to any of the assets of the Partnership. Distributions to Partners 7.09. (a) The General Partner does not guarantee th.t return of the Limited Partners' contributions or the making of a pro::it from the operations of the Partnership, except as provided below. (b) Subject to paragiaph 8.03,the General Partner may return capital contributions or distribute net profits to the Partners without regard to the current profits or losses of the Partnership from operations.These distributions shall be calculated in the same manner that profits and losses are calculated, as described above. However, the General Partner may never make any distributions that will impair the ability of the Partnership to pay its just debts as they mature.Furthermore,the General Partner may never make any distribution that would violate limitations set forth in Section 6.0'7(a) Article 6132a-1 of the Revised Civil Statutes of Texas. (c) A Partner who receives a distribution in violation of this Agreement shall be personally liable to return that distribution, regardless of whether the Partner knew that distribution was prohibited. ARTICLE VIII CONTROL AND MANAGEMENT Role of General Partner 8.01. (a)The General Partner has full, exclusive, and complete discretion in the management and control of the Partnership for any the purposes set forth in Article IV of this agreement, unless specifically stated otherwise in this agreement. (b)The General Partner agrees to conduct the operations contemplated under this agreement Agreement of Limited Partnership Page 7 of 25 in a careful and prudent manner, and:n accordance with good irdustry practice. (c) The General Partner(or ar.y successor to the General Partner) agrees to serve as general partner of the Partnership until the Partnership is terminated without reconstitution as provided below. General Partner's Authority 8.02. Subject to any limitatior..s expressly set forth in this agreement, the General Partner is expressly authorized to perform any cf the following acts on bel..alf of the Partnership: (a) Any and all acts necessary or appropriate to the acquisition and management of the Partnership and interests in the Partnership. (b) Maintenance of all necessary Partnership books and records. (c)Commencement of litigation or defense of litigation, including settlement of any litigation, involving the Partnership. (d)Establishment of bank accounts in which all Partnership funds shall be deposited and from which payments shall be made. (e) Procuring and maintaining insurance with responsible companies as may be available in such amounts and covering such risks as are deemed appropriate by the General Partner. (f) Taking and holding all real,personal, and mixed property of the Partnership in the name of the Partnership. (g) Executing and delivering, on behalf of and in the name of the Partnership, contracts, agreements, and other documents. (h) Coordinating all accounting and clerical functions of the Partnership and employing accountants, lawyers, engineers and other management or service personnel as may from time to time be required to carry on the business of the Partnership. (i)Filing tax returns and making elections on behalf of the Partnership as provided under the Code. Limitations 8.03. Notwithstanding the generality of the General Partner's authority, the General Partner is not empowered,without the consenr:of a Required Interest of Limited Partners, to: (a)Do any act in contraventior.of this Partnership Agreement. (b) Do any act that would make it impossible to carry out the ordinary business of the Partnership, except as specifically permitted by the terms of this agreement. (c) Confess a judgment against the Partnership. (d)Possess Partnership property or assign any rights in specific Partnership property for other Agreement of Limited Partnership Page 8 of 25 than a Partnership purpose. (e)Require any Partner to make any contribution to the capital of the Partnership not provided for in this agreement. (f)Amend this partnership agreement. (g) So long as the Contributio:a Loan remains unpaid, sell,lease for a period to exceed one(1) calendar year, exchange, mortgage, encumber or otherwise dispose of the Property or any portion thereof or enter into or make any one or series of contracts, agreements,or other undertakings having an aggregate value exceeding$50,000 without the consent of Limited Partners holding not less than a Required Interest; (h) Sell,pledge, mortgage, encumber, or otherwise transfer or dispose of all or substantially all of the Partnership assets without tae unanimous consent of al of the Limited Partners; (i) Cause or permit the Partnership to merge into or consolidate with any other entity without the unanimous consent of all of the Limited Partners; (j) Make any calls for additional Capital Contributions from the Limited Partners of the Partnership without the unanimous consent of all of the Limited Partners; (k) Cause or permit the Partnership to make distributions of cash or assets of the Partnership to its Partners without the unanimous consent of all of the Lirni:ed Partners; and (1)Enter into any contract with General Partner or any Affiliate of General Partner without the unanimous consent of all of the Limited Partners; and (m) Cause or permit the Partnership to change its purpose. Other and Competing Activities 8.04. Any Partner may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar to, or competitive with the business conducted by the Partnership. Neither the Partnership nor any Partner shall have any rights in or to such independent ventures or the income or profits derived from these other activities. Liability of General Partner 8.05. The General Partner is not liable,responsible, or accountable in damages or otherwise to the Limited Partners or the Partnership for any act performed by the General Partner in good faith and within the scope of this Agreement.The General Partner is liEble to the Limited Partners only for conduct that involves gross negligence,bad faith,or fraud. Indemnification of General Partner 8.06.The Partnership shall indemnify and hold harmless the General Partner and its officers, directors, agents, and representatives from and against any loss, damage, liability, cost or expense Page 9 of Agreement of Limited Partnership 25 (including reasonable attorneys' fees) arising out of any act or failure to act by the General Partner, specifically including its sole,partial, ,ar concurrent negligence,to the greatest extent permitted under the Act. Contracts with Affiliates 8.07. Notwithstanding anything in this agreement to the contrary, it is understood and agreed that the Partnership may employ any Partner and any person affiliated with any Partner to render services on behalf of the Partnership and may compensate the person rendering the services on customary terms and at competitive rales.Neither the Partnership:ior the other Partners shall have any rights in or to any profits derived from any fees paid by the Partnership for such services. Tax Matters Partner 8.08. The General Partner is authorized and required to recresent the Partnership in connection with all examinations of the Partnershi affairs by tax authorities,including administrative and judicial proceedings, and to expend Partnersh p funds for professional services and costs in connection with such examinations. The General Partner is be the"Tax Matters Partner"for federal tax purposes and has authority, in its sole and absolute discretion, to represent the Partnership and the Partners in this regard. The Limited Partners agree to cooperate and to do or ref min from doing any and all things reasonably required by the Tax Matters Partner to conduct these sorts of proceedings. ARTICLE IX RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS Limited Liability 9.01. The Limited Partners have no personal liability whasoever,whether to the Partnership, the General Partner, or any creditor of the Partnership,for any of the debts or losses of the Partnership beyond their respective Capital Contributions to the Partnership. Return of Distributions 9.02. To the extent that the Partnership's liabilities to its creditors are not discharged by the Partnership or by the General Partner, the Limited Partners will t e liable to return to the Partnership the proportionate amount of any distr.bution made to the Limited Partners to the extent required by the Act. No Management Rights 9.03. The Limited Partners may not take part in the management of the Partnership or transact any business for or on behalf of the Partnership. All management responsibility is vested in the General Partner, subject to the approval of the Limited Partners in those specific instances described in this agreement. Agreement of Limi ted Partnership Page 10 of 25 No Authority to Bind Partnership 9.04. The Limited Partners hare no power or authority tc sign for or to bind the Partnership. All authority to act on behalf of the P 3rtnership is vested in the General Partner. Rights Specified in the Act 9.05. A Limited Partner shall De entitled to all rights of limited partners contained in the Act to the extent that those rights have not been superseded,or may not lawfully be superseded,by the provisions of this agreement. ARTICLE X PERCENTAGE INTERESTS; ALLOCATIONS AND DISTRIBUTIONS Accounting Principles 10.01. The net income and net loss of the Partnership (and each item of income, gain, loss, deduction, or credit entering into the computation of net income and net loss) shall be determined on an annual basis in accordance with the accounting methods followed by the Partnership for federal income tax purposes and otherwise in accordance with generally accepted accounting principles and procedures. Percentage Interests. 10.02. (a) The phrase "percentage interest" of each Partner means that particular Partner's interest in the capital, net income, net loss, and distributions of the Partnership as set forth in this paragraph of this agreement. (b)The initial Percentage Interest of each Partner shall be as set forth below: Type of Partner Prrtner Name Percentage Interest General Partner BAKER& CARNES 1% MANAGEMENT, L.L.C. Limited Partner RL.DR DEVELOPMENT,LTD. 31333% Limited Partner BAKER& CARNES 65.667% INVESTMENTS,L.L.C. (c)The percentage interest of each Partner may be adjusted from time to time by the methods and for the reasons described elsewhere in this Agreement. Agreement of Limited Partnership Page 11 of 25 • Allocations 10.03. All net income,net losses, and credits and items of gain or loss of the Partnership shall be allocated to each Partner in accordance with each Partner's percentage interest. Distributions 10.04. All cash flow available for distribution to the Partners, subject to the establishment of reserves in the General Partner's reasonable determination, shall be distributed to the Partners in accordance with their respective percentage interests. Compliance with Treasury Regulations 10.05. It is intended that the allocation and distribution provisions set forth in this Article X apply in a manner consistent with the provisions of Sections 704 and 706 of the Code, and the Treasury Regulations promulgated fcr those Sections. The Ger.eral Partner shall have reasonable discretion to apply the allocation and c.istribution provisions set brth in this Article X in any manner consistent with Sections 704 and 706 of the Code and the Treasury Regulations. ARTICLE XI LOANS TO PARTNERSHIP Pursuant to a written agreement approved by the General Partner, any Partner may lend funds to the Partnership for Partnership business. The amount of any loan or advance by the Partner shall bear interest at any rate mutually agreeable between the Partner and the General Partner,provided it is equal to or less than the maximum Permissible interest rate allowable under applicable usury laws. Loans made under this provision of this agreement shall be deemed an obligation of indebtedness from the Partnership to the Partner,payable prior to any distributions to the Partners. ARTICLE XII TRANSFERS OF PARTNERSHIP INTERESTS Restriction on Transfers by Limited Partners 12.01. The Partners may not transfer any or all of their respective interest in the Partnership except as expressly provided for herein.Notwithstanding the foregoing,a Limited Partner may transfer all or any part of its interest in the Partnership to an Affiliate of such Limited Partner without complying with paragraph 12.05 hereof. Transfer Requirements 12.02.No permitted assignee cr transferee of all or part of the interest of the Limited Partners in the Partnership shall have the right to become a substitute limitei partner unless all of the following occur: (a) The transferring Limited Partner has stated the intentior. that the assignee become a limited partner in his or her own right in the instrument of assignment. Agreement of Limited Partnership Page 12 of 25 (b) The assignee has executed an instrument reasonably satisfactory to the General Partner, accepting and adopting the terms and provisions of this agreement. (c)The assignor or assignee pays any reasonable expens n in connection with the admission of the assignee as a Limited Partner. (d) The General Partner consents to the assignee becoming a substitute limited partner. The General Partner may withhold its consent, even arbitrarily, in the sole and absolute discretion of the General Partner. General Partner as Limited Partner 12.03. If the General Partner should acquire an interest as a Limited Partner, the General Partner shall,with respect to such inte-est, enjoy all the rights and be subject to all the obligations and duties of a Limited Partner to the extent of such interest. Transfer by General Partner 12.04. The General Partner may not transfer any or all of its interest in the Partnership without the prior written consent of a Required Interest of Limited Partners. If a transfer is approved, the transferee assumes all of the obligations of the General Partner and the General Partner shall be relieved of all further obligations and responsibilities. If a transfer of the General Partner's interest is approved,the transfer will not cam e the dissolution of the Partnership, which may continue with the transferee as the General Partner the same as if the transferee.aad been the initial General Partner. The restrictions on the transfer of the General Partner's interest in the partnership do not apply to a transfer by the General Partner tc an Affiliate of the General Partner. Transfer by Limited Partner 12.05. Each Limited Partner may transfer all or any portion of its Interest in the Partnership provided the conditions set forth in paragraph 12.06 are satisfied. The General Partner may transfer all or any portion of its Interest in the Partnership as a General Partner to an Affiliate or to any Person who is approved by the Limited Partners, provided the conditions set forth in paragraph 12.06 are satisfied. Any Transfer not satisfying the foregoing provisions shall be null and void. If the Partnership is required to recognize a'Transfer that does not satisf'the foregoing provisions(or,if the Partnership,in its sole discretion, elects to recognize a Transfer t:iat is not so permitted),the Interest transferred shall be strictly limited to the transferor's rights to allocations and distributions as provided in this Agreement with respect to the Transferred Interest,but the t ansferee thereof shall not otherwise be a Partner or admitted as a Partner:n the Partnership. 12.06.A Transfer shall not be effective unless and until the following conditions are satisfied: (a) The transferor and transferee shall execute and deliver to the Partnership such documents and instruments of conveyance as may be necessary or appropriate in the opinion of counsel to the Partnership to effect su;h Transfer and to confuur tae agreement of the transferee to be Page 13 of 'Agreement of Limited Partnership 25 bound by the provisions of this Article XII. In all cases, the Partnership shall be reimbursed by the transferor or transferee for all costs and expenses that it reasonaoly incurs in connection with such Transfer. Such documents furnished to the Partnership and the General Partner, unless waived by the General Partner, shall include the following: (i) A confirmation that the Transfer will not cause the Partnership to terminate for federal income tax purposes or adversely effect the Partnership, Partnership property, or the General Partner and Limited Partners under the Code and the transferor shall furnish to the Partnership an opinion of counsel to such effect. Such counsel and opinion shall be reasonably satisfactory to the General Partner, and the General Partner shall provide to such counsel any information available to the General Partner relevant to such opinion. (ii) The transferee's taxpayer identification number, sufficient information to determine the transferee's initial tax basis in the Interests transferred, and any other information reasonably necessary to permit the Partnership to file all required federa and state tax returns and other legally required in formation statements or returns. Without limiting the generality of the foregoing, the Partnership sha l not be required to make any distribution otherwise provided for in this Agreement with respect to any transferred Interests until it has received such information. (iii) A confirmation that either (a) such Interests are registered under the Securities Act of 1933, as amended, and any applicable state securities laws, or(b)such Transfer is exempt from all applicable registration requirements and will not violate any applicable laws regulatng the Transfer of securities. Such confirmation shall be accompanied by an opinion of counsel to such effect, which opinion and counsel shall be reasonably satisfactory to the General Partner. (iv) A statement that the transferee agrees to be bound by the terms of this Agreement upon the effectuation of such Transfer. (b) Except in the case of ar.Involuntary Transfer Event, a selling Partner shall give written notice to the Partnership and the General Partner that he desires to sell his Interest ("Voluntary Sale Notice"). The Voluntary Sale Notice shall contain a summary of the written bona fide offer of a prospective purchaser to buy the Interest_ Such summary shall be complete in all details of purchase price and terms of payment, and the P irtner shall certify that the offer is genuine and the summary is complete and accurate. For thirty (30) days from receipt by the Partnership of the Voluntary Sale Notice, the Partnership shall have the option to purchase the selling Partner's Interest upon the same terms and conditions contained in the Voluntary Sale Notice("Partaership Option"). If the Partnership does not exercise the Partnership Option,the remaining Partners shall each have an option to purchase the selling Partner's Interest upon the same terms and conditions for a period of thirty (30) days Agreement of Limited Partnership Page 14 of 25 following the expiration or termination of the Partnership Option("Partner Option"). The place,date and time of a sale following the exercise of a Partnership or Partner Option shall be selected by the purchaser,but shall not be more than;sixty(60) days after the exercise of such option. The purchase price of such interest shall be paid on the same terms as set forth in the Voluntary Sale Notice,or if the purchaser so elects,in cash at closing. In the event more than one purchaser elects to exercise the Partner Option,the available Interest NN,ill be divided among such purchasers on a pro rata basis,unless otherwise mutually agreed, and all such purchases and sales sha.l be conducted contemporaneously at such date and time determined by mutual agreement of the purchasers within the bounds set forth above. In the event no remaining Partr.er elects to exercise the Partner Option,the selling Partner shall be free to sell his Interest to the prospe:tive purchaser named in the Voluntary Sale Notice at the price and on the terms contained therein. (c) In the case of an Involuntary Transfer Event, a Partner may sell his Interest, or any portion thereof, only after he has complied with the following specific requirements, as applicable: (iii) If any Partner becomes a Bankrupt Partner,the Partnership shall have the option at ary time prior to the 180th day after receipt of notice of the occurrence of tie event causing it to become a Bankrupt Partner, to buy, and on exercise of that option the Bankrupt Partner or its representative shall sell, the Bankrupt Partner's Interest. If the Partnership does not exercise such option,the individual Partners shall have the option to purchase the remaining portion of the Bankrupt Partner's Interests on a pro rata basis,unless otherwise agreed, within ninety (90) days of the expiration or termination of the Partnership's option hereunder. The payment to be made to the Bankrupt Partner or its representative pursuant to this Section is in complete liquidation and satisfactior. of all the rights and interest of the Bankrupt Partner and its representative(and of all Persons claiming by,through,or under the Bankrupt Partner and its representative) in and in respect of the Partnership, including, without limitati xi, any Interest, any rights in specific Partnership property, and any rights against the Partnership and(insofar as the affairs of the Partnership are concerned) against the Partners,and constitutes a compromise to which all Partners have agreed. (iv) In the e,rent a Partner that is not a natural person(I)dissolves, disposes of all or substantially all of its assets except to an Affiliate,merges into another entity other than an Affiliate or otherwise engages in a transaction in which the Partnership would be considered to have terminated within the meaning of Section 708 of the Code, or (II) ceases to be controlled by substantially the same Persons who control it as of the date 3f its admission to the Partnership, the Partnership shall have the option at any time prior to the 30th day after receipt of notice of the occurrence of such event,to buy,and on exercise of that option such Partner shall sell, such Partner's Interest. If the Partnership does not exercise st.ch option, the individual Partners shall have the option to Page 15 of Agreement of Limited Partnership 25 a err • purchase the remaining portion of such F artner's Interest on a pro rata basis, unless otherwise agreed,within sixty(60) days of the expiration or termination of the Partnership's option hereunder. (v) If the marital relationship of a Partner is terminated by death or divorce, and such Partner does not succeed to the separate or community interest of such Partner's spout e in the Interest(either as )utright owner of such interest or as a trustee of a trust holding such interest, whether or not the Partner is a beneficiary of such trust),then such Partr..er shall have the option to purchase all interest in such Interests, and such spouse, or the deceased spouse's successor in in':erest, shall be obligated tc selI all such interest, within ninety (90) days of the award of the Interest to such spouse. If such Partner does not purchase such Interest within the time period set forth above, the Partnership shall have the option at any time prior to-:he 180th day after receipt of notice of the award Df said Interests to such spouse, or the deceased spouse's successor in interest, to buy, and on exercise of that option, the spouse, or the deceased spouse's successor in interest, shall sell his or her Interests to the Partnership. If the Partnership does not exercise such option, the individual Partners shall have the option to purchase the remaining portion of such Interests on a pro rata basis,unless otherwise agreed, within ninety(90) days of the expiraticn or termination of the Partnership's option hereunder. (vi) In the event of an Involuntary Trans Fer Event, the purchase price of the Interest sold as a result thereof shall be determined as follows: (I) for the period ending one(1)year from the date of the execution of this Agreement(the"Nonvariable Period"),the purchase price shall be equal to the Partner': Total Capital Contributions as described in Exhibit A hereto; (II) for the year beginning at the conclusion of the Nonvariable Period(the "Variable Period"), and annually thereafter at the annual meeting of the Partners, the purchase price shall be equal to the value of the selling Partner's Total Percentage Interest in the Partnership as described in Exhibit A hereto after a determination by the Partners of the value of the Partnership as a going concern using a formula or method of calculation that reasonably values the Partiership and is utilized consistently on a annual basis. If there is any reasonable disagreement regarding the value of a Partner's Interest,such person, at their sole expense,may require the determir ation of fair market value to be made by a qualified independent appraiser by providing notice to the ?artnership of his or her invent to seek such valuation. If the Partnership objects to the findings of such appraiser, and the party seeking such valuation and. Partnership then fail to agree on an independent appraiser, either may petition the United States District Judge for the Southern District of Texas(Houston Division)then senior in service to designate Agreement of Limited Partnership Page 16 of 25 an independent appraiser. The determination of the independer.t appraiser, however designated, is final and binding on all parties. (vii) The place, date and time of a sale made pursuant to and Involuntary Transfer Event shall be selected by the pn:.rchaser, but shall not be more than sixty(60) days after the exercise of the applicable option. The purchase price of such interest shall be paid in full or, at :he option of the purchaser, in sixty (60) equal monthly installments of principal, with the first installment to become due and payable on the date of c.osing and subsequent installments being due and payable on the monthly anniversary dates of the closing, and no interest shall accrue thereon. hi the event more than one Partner elects to purchase an Intsrest hereunder, the available Interest will be divided among such purchasers on a pro rata basis,unless otherwise mutually agreed, and all such purchases and sales shall be conducted contemporaneously at such date and time determined by mutual agreement of the purchasers within the bounds set forth above. (d) Upon compliance with the foregoing requirements,the transferee shall be admitted to the Partnership as a substituted Partner. It is the intention of the parties hereto that the terms of this Section 10.2 shall be legally binding upon the Partnership, all of the Partners of the Partnership and their spouses, if any, and their respective successors in interest. By executing this Agreement, all parties indicate their consent to be bo and solely by the terms of this Agreement and represent and warrant that they are fully aware of,ur.derstand, and fully consentand agree to the provisions of this Section 10.2 and its binding effect upon any community or separate property interest now or thereafter owned in the Partnership. 12.07_ If any Interest is sold, as signed,or Transferred durir.-g any fiscal year of the Partnership in compliance with the provisions of this Article XII,profits, losses, each item thereof, and all other items attributable to the Transferred Interest for such fiscal year shall be divided and allocated between the transferor and the transferee by taking into account their varyrig Interests during such fiscal year in accordance with Code Section 706(d),using any conventions permitted by law and selected by the General Partner. All distributions on or before the date of such Transfer shall be made to the transferor, and all distributions thereafter shall be made to the transferee. ARTICLE XIII DISSOLUTION AND TERMINATION Events of Dissolution 13.01.The Partnership shall be dissolved and its business wound up on the earliest occurrence of any one of the following events: (a)The expiration of the term of the Partnership as set forth in Article III. Page 17 of Agreement of Limited Partnership 25 • (b)The General Partner's determination,with the Limited Partners'prior written consent,that the Partnership should be dissolved. (c) The dissolution,withdrawal, or bankruptcy of the General Partner, unless the Partnership is reconstituted in the manner prescribed in paragraph 13.02 of this agreement. The dissolution, withdrawal, or bankruptcy of the General Partner will not result :n the dissolution of the Partnership so long as the successor to the General Partner's interest in the Partnership, in accordance with paragraph 13.02, assumes all of the General Partner's obligations under this agreement. Election of New General Partner 13.02. At the time of the withIrawal, dissolution, or bankruptcy of the General Partner, the business of the Partnership shall be continued on the terms and subject to the conditions of this agreement if,within 90 days after such event,the Limited Partners unanimously elect that the business of the Partnership should be continued and, in such election, designate one or more persons to be substituted as general partner.New General Partner(s) elected by this procedure will succeed to all of the powers, privileges, and obligations of the then-existing General Partner. The interest in the Partnership of the General Partner whc is succeeded by new Gene:al Partner(s)will become a Limited Partner's interest in the Partnership. In the event of the dissolution, withdrawal, or bankruptcy of the General Partner and the failure of the Limited Partners to ele:t to continue the business of the Partnership, the Partnership shall be terminated forthwith. No Release From Liabilities 13.03. It is understood and agreed that no dissolution of the Partnership releases or relieves any of the parties to this agreement of their contractual obligations under this agreement. • Distributions in Liquidation 13.04.If the business of the Painership is not continued,the General Partner shall,if possible, act as liquidator. If the General Partner has itself dissolved, withdrawn from the Partnership, or declared or suffered a bankruptcy, and if the Partnership is not reconstituted with a new General Partner as provided in this agreement. a Limited Partner shall ac:as liquidator. The liquidator shall liquidate the assets of the Partnership, make appropriate adjustments made to the capital accounts of the Partners, and distribute the proceec s in the following order of priorities, so far as the proceeds will go: (a)To the payment of debts of the Partnership(other than .oans made from the Partners to the Partnership), including the expenses of liquidation. (b) To the repayment of any loans that have been made by the Partners to the Partnership, but if the amount available for such repayment is insufficient, then pro rata up to the amounts available. (c) To all Partners pro rata acc 3rding to their respective percentage interests in the partnership. Agreement of Limited Partnership Page 28 of 25 Distributions In Kind 13.05.In the event any or all of the assets of the Partnership cannot be liquidated,those assets are to be distributed in kind according to the priorities set forth in paragraph 13.04. Assets of the partnership distributed to the Partners shall be held and owned by the Partners as tenants in common. In the event of the distribution of Partnership properties in kind,the fair market value of such assets shall be determined by agreement of the Partners.The amount of gain or loss which would have been realized by the Partnership for federal income tax purposes if the assets had been sold at such fair market value rather than distributed in kind shall be treated as gain or loss from a disposition of the assets of the Partnership, and allocated among the Partners in accordance with Article X, such allocations then being reflected in the Partners' respective capital accounts. ARTICLE XIV ACCOUNTING Fiscal Year 14.01. The fiscal year of the Partnership shall be the cale:idar year. Books and Records 14.02. The General Partner shall keep, or cause to be kept, full and accurate records of all transactions of the Partnership in accordance with principles and Dractices generally accepted for the cash or accrual method of accounting. Inspection of Records 14.03. Any Partner may, for any proper purpose during regular business hours, inspect and copy any of the Partnership books and records at the principal pla-ie of business of the Partnership as provided in Article V, or make other reasonable inquiries a:. to Partnership affairs. Costs of reproducing or copying Partnership books and records shall be at the expense of the Partnership. Tax Returns 14.04. Within 90 days after the: end of each fiscal year, the General Partner shall prepare, or cause to be prepared, state and federal income tax returns for the Partnership and, in connection with those tax returns,make any available or necessary elections. Copies of all income tax returns of the Partnership proposed to be filed for any year shall be furnished to each Partner at least fifteen(15)days prior to the date for filing the returns(including any extensions applicable to such returns).The returns shall be filed by the General Partner o a or before the due date (including extensions). Page 19 of Agreement of Limited Partnership 25 ARTICLE XV REPORTS AND STAIhMENTS Within 90 days after the end •)f each fiscal year of the F'artnership, the General Partner will deliver to the Limited Partners, at the Partnership's expense, financial statements setting forth, as of the end of and for that fiscal year, the following: (a)A profit and loss statement and a balance sheet of the Partnership. (b) The balance in the capital account of each Partner. (c) Any other information that, in the judgment of the General Partner, is be reasonably necessary for the Limited Partner to be advised of the results of operations of the Partnership. ARTICLE XVI BANK ACCOUNTS The General Partner shall open and maintain a special bank account or accounts in which all funds of the Partnership shall be deposited.Withdrawals from this such account or these accounts may be made on the signature or signatures of those persons designated by the General Partner. The General Partner may not commingle the assets of the Partnership with the assets of any other entity or person. However, the revenues and other receipts.3f the Partnership may be deposited in a central account in the name of the General Partner or an affiliate of the General Partner, so long as separate entries are made on the books and records of the Partnership and on the books and records of the affiliate reflecting deposits in the bank account of the affiliate with respect to amounts received from the Partnership and withdrawals from the bank accounts math for the purpose of disbursing funds • to the Partnership or for the purpose of paying liabilities of the Partnership. ARTICLE XVII NOTICES Whenever any notice is required or permitted to be given under this agreement,the notice must be in writing and signed by or on beha.If of the person giving the notice. The notice will be deemed to have been given when delivered by personal delivery or deposited in the United States mail,postage prepaid, certified mail, return receipt -equested, properly addressed to the persons who must receive notice at the addresses listed in this agreement or as changed by written notice given according to this provision of this agreement. ARTICLE XVIII POWER OF ATTORNEY • The Limited Partners irrevocably appoint the General Partner, its successors and assigns, as their respective true and lawful attorny-in-fact, with full power and authority, on their behalf and in their respective names, to execute, acknowledge, swear to, deliver and, if appropriate, file in such Agreement of Limited Partnership Page 20 of 25 offices and places as may be required t law(i)any amendment to this agreement that may be required by a change in the name of the Partnership, change in registered agent, or similar matter, and(ii) any amendment to this agreement made in compliance with Article XIX. The power of attorney granted by the Limited Partners to the Geneial Partner is a special power coupled with an interest and is irrevocable, and may be exercised by any party who, at the time of exercise, is a General Partner of the Partnership. The power of attorney shall survive any transfer or abandonment of a Limited Partner's Partnership interest, or the Limited Partner's withdrawal from the Partnership. ARTICLE XIX AMENDMENT This agreement may be amended or modified by written instrument executed by both the General Partner and a Required Interest of the Limited Partners. ARTICLE XX RELIANCE ON AUTHORITY Any person dealing with the General Partner as the representative of the Partnership may rely on the authority of the General Partne:-.Persons dealing with the General Partner have no obligation to ascertain the General Partner's compliance with the terms of this agreement. Every contract, agreement, deed, mortgage, note, or other document or instrument executed by the General Partner with respect to any property of the Parnership shall be conclusive evidence in favor of any and every person relying on the signature of the General Partner that(i) at the time of the execution or delivery of the document this Agreement was in full force and effect, (ii)the instrument or document was duly executed in accordance with the tenns and provisions of this agreement and is binding on the Partnership and all Partners, and (iii) the General Partner was culy authorized and empowered to execute and deliver any and every such instrument or document on behalf of the Partnership. ARTICLE XXI MISCELLANEOUS Applicable Laws 21.01_ This partnership agreement, and its application o:: interpretation, shall be governed exclusively by its terms and construed in accordance with the substantive federal laws of the United States and by the laws of the State of Texas,including the Texas conflicts of laws rules. Cumulative Remedies 21.02. Each party to this partnership agreement is entitled to all remedies provided by this agreement or in law or equity.All remedies in this agreement and in law or equity are cumulative, and the use of one right or remedy by any party does not preclude or waive the right to use any or all other remedies. Counterparts Agreement of Limited Partnership Page 21 of 25 21.03. This partnership agreement may be executed in any number of counterparts with the same effect as if all parties had all signed the same document. All counterparts shall be construed together and shall constitute one agreement. Successors and Assigns 21.04. The terms,provisions, and agreements contained in this agreement are binding on and inure to the benefit of the parties ani, to the extent permitted by this agreement, their respective successors and assigns. Entire Agreement 21.05. This partnership agreement shall constitute the entire contract between the parties. There are no other or further agreements outstanding not specifically mentioned in this agreement.However, the parties may amend and supplement this agreement, in writing, from time to time, in a manner and to the extent provided by the terms of this agreement, including but not limited to the terms set out in Article XIX. Personal Property 21.06. The interests owned by the Partners in this Partnership are personal property. Invalidity of Provisions 21.07.In case any one or mon:of the provisions contained in this agreement are subsequently determined to be invalid, illegal, or unenforceable in any respeci., that invalidity or unenforceability does not destroy the basis of the bargain among the Partners as expressed in this agreement. The validity, legality, and enforceability of the remaining provisions contained in this agreement shall not be affected or impaired in any way by the determination that some portion or portions are invalid, illegal,or unenforceable. Signature Pages 21.08. Each Partner authorizes the General Partner to attach an executed signature page to this partnership agreement. Attorneys Fees 21.09. If any litigation is ini':iated by any Partner against another Partner relating to this agreement or its subject matter, the Partner prevailing in such litigation shall be entitled to recover, in addition to all damages allowed by law and other relief, all cc•urt costs and reasonable attorney's fees incurred in connection with the litigation. Agreement of Limited Partnership Page 22 of 25 EXECUTED AND DATED as follows: GENERAL PARTNER: BAKER& CARNES MANAGEMENT, L.L.C. BY — Pat B. er,Managing Member 230 Southwest Parkway College Station,Texas 77840 . Date signed: l e 7 , 200_` • By: :�i 1 Told-Carnes,Managing Member 230 Southwest Parkway College Station, Texas 77840 acizA,Ati Date signed: November / , 200_) LIMITED PARTNERS: RADR DEVELOPMENT, LTD. Limited Partner By:Union Gas Corpora ••n, its Gene::al Partner By: R.K. OWR , ., Pre .' Date signed: em er , 200'; ,anCGe'hog Agreement of Limited Partnership Page 23 of 25 • BAKER&CARNES INVESTMENTS,L.L.C. Limited Partner fa,—Z By: _. .i/ / Pat Baker, ar g Member 230 Southwest Parkway College Station,Texas 77840 Date signed:4eaite,r2I ,2005 By: Todd Carnes,Managing Member 230 Southwest Parkway College Station,Texas 77840 44/4.4 Date signed:November ,caber ,2005 7 Agreement of Limited Partnership Page 24 of 25 0— EXHIBIT A GENERAL PARTNER Name Mailing Address BAKER& CARNES 220 Southwest Parkway MANAGEMENT,L.L.C. College Station,Texas 77840 LIMITED PARTNERS Mailing Address Name RADR DEVELOPMENT,LTD. 14511 Falling Creek, Suite 200 Limited Partner Houston, Texas 77014 BAKER& CARNES 230 Southwest Parkway INVESTMENTS,L.L.C. College Station,Texas 77840 Limited Partner (A) BAKER & CARNES MANAGEMENT, L.L.C. has made a cash contribution of $ ,which purchase:, 10 units, at the rate of$__ per unit. (B)RADR DEVELOPMENT, LTD. has made a cash contribution of$ all of which has a value of$ _, and has obligated itself as a guarantor of the Note,which guaranty has a value of $ , all of which purchases 330 units, at the rate of $ per unit and has obligated itself as a guarantor of the Note. (C) BAKER & CARNES INVESTMENTS, L.L.C. has made a contribution of the contract to acquire the Property, and has arranged for financing for acquisitio:l of the Property, and has obligated itself as a guarantor of the Note, all of which has a value of$ ; which purchases 660 units, at the rate of$ per unit. Page 25 of Agreement of Limited Partnership 25 C 1 • • 2