Exhibit 10.1

 

MASTER AGREEMENT

REGARDING

FRISCO SQUARE PARTNERSHIPS

 

This Master Agreement Regarding Frisco Square Partnerships (the “Agreement”) is
made this 31st day of December, 2004, by and between Fairways Frisco, L.P., a
Texas limited partnership (“Fairways Frisco”), Fairways B1-6 F1-11, LLC, a Texas
limited liability company (“Fairways B1-6”), Fairways B1-7 F1-10, LLC, a Texas
limited liability company (“Fairways B1-7”) and Fairways FS Properties, LLC, a
Texas limited liability company (“Fairways FS”) (Fairways Frisco, Fairways B1-6,
Fairways B1-7 and Fairways FS are hereinafter collectively referred to as the
“Fairways Group”), and Cole McDowell (“McDowell”), Mary Pat McDowell (“Mary”),
Five Star Development Co, Inc., a Texas corporation (“Five Star”), CMP
Management, LLC a Texas limited liability company (“CMP Management”) and CMP
Family Limited Partnership, a Texas limited partnership (“CMP Family”),
(McDowell, Mary, Five Star, CMP Management and CMP Family are hereinafter
collectively referred to as the “Five Star Group”), and is joined in for the
limited purposes described herein below by Frisco Square B1-6 F1-11, Ltd., a
Texas limited partnership (“Frisco Square B1-6”), Frisco Square B1-7 F1-10,
Ltd., a Texas limited partnership (“Frisco Square B1-7”), Frisco Square
Properties, Ltd., a Texas limited partnership (“FS Properties”), and Frisco
Square Ltd., a Texas limited partnership (“FSLTD”) (Frisco Square B1-6, Frisco
Square B1-7, Frisco Square Properties and FSLTD are hereinafter collectively
referred to as the “Partnerships” and singularly referred to as a
“Partnership”).

 

R E C I T A L S:

 

A. McDowell and his wife, Mary, collectively own directly, or indirectly through
entities they own, 100% of the legal and equitable ownership of each of the
Partnerships.

 

B. The Partnerships own those certain improved and unimproved tracts of real
property identified on Exhibit “I” attached hereto and incorporated herein for
all purposes (“Property” or “Properties”).

 

C. Each of the Partnerships needs to raise capital in order to pay certain debts
and obligations and Fairways Frisco is willing to invest capital into the
Partnerships on the terms and conditions provided in this Agreement.

 

D. Time is of the essence because the Partnerships are obligated to make certain
payments on the date hereof.

 

E. Pursuant to this Agreement, Fairways Frisco will contribute capital to Frisco
Square B1-6, Frisco Square B1-7 and FS Properties (such Partnerships are
collectively referred to as the “Equity Partnerships” and singularly referred to
as an “Equity Partnership”) and will become a limited partner in each of the
Equity Partnerships and, further, three subsidiary limited liability companies
(Fairways B1-6, Fairways B1-7 and Fairways FS) will become co-general partners
in the respective Equity Partnerships.

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F. Pursuant to this Agreement, Fairways Frisco will purchase from FSLTD an
option to acquire partnership interests in FSLTD.

 

G. This Agreement shall serve as an amendment to the agreements of limited
partnership, as may have been amended, of each of the respective Equity
Partnerships (the “Existing Partnership Agreements” or “Existing Partnership
Agreement” if singular), and the Existing Partnership Agreements and this
Agreement together shall govern the rights and responsibilities of the parties
hereto (and their affiliates) with respect to the Existing Partnerships.

 

AGREEMENT:

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged and agreed to by the parties hereto, the parties
hereby agree that the Existing Partnership Agreements are hereby amended in
accordance with this Agreement and further agree as follows:

 

1. Definitions. All terms used in this Agreement shall, to the extent possible
and consistent with the terms and intent of this Agreement, have the same
meaning that such terms have in the respective Existing Partnership Agreements
unless otherwise expressly provided for in this Agreement.

 

2. Admission of Partners to Equity Partnerships.

 

  (a) Fairways B1-6 is hereby admitted as a general partner of Frisco Square
B1-6 and its Partnership Interest, Sharing Ratio and percentage interest in such
Partnership for all purposes shall be equal to 0.5%. Fairways B1-6 shall make
capital contributions to Frisco Square B1-6 of cash in amounts equal to 0.1% of
the amounts set forth on Schedule “A” attached hereto and incorporated herein
for all purposes relating to Frisco Square B1-6 on the dates set forth on
Schedule “A”.

 

  (b) Fairways Frisco is hereby admitted as a limited partner of Fairways Square
B1-6 and shall have a Partnership Interest, Sharing Ratio and percentage
interest in such Partnership for all purposes equal to 49.5%. Fairways Frisco
shall make capital contributions to Frisco B1-6 of cash in amounts equal to
99.9% of the amounts set forth on Schedule “A” relating to Frisco Square B1-6 on
the dates set forth on Schedule “A”.

 

  (c) Fairways B1-7 is hereby admitted as a general partner of Frisco Square
B1-7 and its Partnership Interest, Sharing Ratio and percentage interest in such
Partnership for all purposes shall be equal to 0.5%. Fairways B1-7 shall make
capital contributions to Frisco Square B1-7 of cash in amounts equal to 0.1% of
the amounts set forth on Schedule “A” relating to Frisco Square B1-7 on the
dates set forth on Schedule “A”.

 

  (d) Fairways Frisco is hereby admitted as a limited partner of Fairways Square
B1-7 and shall have a Partnership Interest, Sharing Ratio and percentage
interest in such Partnership for all purposes equal to 49.5%. Fairways Frisco
shall make

 

MASTER AGREEMENT REGARDING     FRISCO SQUARE PARTNERSHIPS   Page 2

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capital contributions to Frisco Square B1-7 of cash in amounts equal to 99.9% of
the amounts set forth on Schedule “A” relating to Frisco Square B1-7 on the
dates set forth on Schedule “A”.

 

  (e) Fairways FS is hereby admitted as a general partner of Frisco Square
Properties and its Partnership Interest, Sharing Ratio and percentage interest
in such Partnership for all purposes shall be equal to 0.5%. Fairways FS shall
make capital contributions to Frisco Square Properties of cash in amounts equal
to 0.1% of the amounts set forth on Schedule “A” relating to Frisco Square
Properties on the dates set forth on Schedule “A”.

 

  (f) Fairways Frisco is hereby admitted as a limited partner of Fairways Square
Properties and shall have a Partnership Interest, Sharing Ratio and percentage
interest in such Partnership for all purposes equal to 49.5%. Fairways Frisco
shall make capital contributions to Frisco Square Properties of cash in amounts
equal to 99.9% of the amounts set forth on Schedule “A” relating to Frisco
Square Properties on the dates set forth on Schedule “A”.

 

For purposes of the foregoing paragraphs 2(a), 2(b), 2(c), 2(d), 2(e) and 2(f),
a member of the Fairways Group shall be deemed to have satisfied its obligation
to make capital contributions to a respective Equity Partnership to the extent
that the obligations to be paid with such capital contributions as set forth on
Schedule “A”, as more specifically described in paragraph 4 below, are otherwise
satisfied as a result of either a refinancing, discount, discharge or deferral
arrangement by the respective Equity Partnership. Notwithstanding the provisions
of any Existing Partnership Agreement, a member of the Fairways Group shall have
the right to transfer its Partnership Interest in an Equity Partnership to any
person that is controlled or managed by James C. Leslie.

 

3. Dilution of Five Star Group and Special Distributions and Development Fee.

 

  (a) The Partnership Interest, Sharing Ratios and percentage interest in the
Equity Partnerships owned by the Partners of the Equity Partnerships immediately
preceding the execution of this Agreement, each of which Partners is a member
(directly or indirectly) of the Five Star Group, is hereby reduced by 50%. The
parties agree that (i) cash flow from any source to be distributed by any of the
Equity Partnerships shall be distributed, first, to members of the Fairways
Group until such members have collectively received aggregate distributions from
all Equity Partnerships equal to One Million Dollars ($1,000,000) and, second,
cash flow shall be distributed to members of the Five Star Group until such
members have collectively received aggregate distributions from the Equity
Partnerships equal to Two Million Five Hundred Thousand Dollars ($2,500,000),
and such distribution shall be treated as a return of capital for all purposes
for all such Partners, and thereafter (ii) all income, loss and distributions of
the Equity Partnerships, from any source whatsoever, shall be shared equally
between the Fairways Group and the Five Star Group, with no partner having any
preferential right to income, loss or distributions as it relates to previous
capital contributions made by members (directly or indirectly) of the Five Star
Group or as it relates to

 

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the capital contributions to be made by the members of the Fairways Group
pursuant to this Agreement. Consequently, the capital accounts of the members
(directly or indirectly) of the Five Star Group with respect to each Equity
Partnership shall be adjusted (without making any further capital contributions)
on the date hereof and on such other dates as may be necessary, in such manner
and at such times to ensure that the capital accounts of the Five Star Group in
each Equity Partnership is collectively equal to the collective capital accounts
of the members of the Fairways Group with respect to such Partnership (after the
preferential $1,000,000 and $2,500,000 distributions have been made).

 

  (b) Each Partnership shall pay to the Five Star Group or its designee a
developer fee for all development and construction undertaken with respect to
the Property equal to two percent (2%) of the total hard costs incurred for all
improvements to or upon all Property.

 

4. Utilization of Capital Contributions. The capital contributions made by
members of the Fairways Group pursuant to paragraph 2 shall be used by the
Existing Partnerships solely for the purpose of paying the obligations described
on Schedule “A” attached hereto in accordance with the dates and amounts set
forth on Schedule “A”.

 

5. Management and Governance.

 

  (a) Those entities controlled by members of the Five Star Group that are the
general partners of Frisco Square B1-6, Frisco Square B1-7 and Frisco Square
Properties, respectively, immediately preceding the execution of this Agreement
shall remain as general partners of the respective Equity Partnerships and,
further, shall serve as the managing general partner (“Managing General
Partner”) of the respective Equity Partnership following the admission of
Fairways B1-6, Fairways B1-7 and Fairways FS as general partners (each being a
“Co-General Partner”) of the Equity Partnerships pursuant to paragraph 2. The
Managing General Partner shall have the right to manage the day to day business
and affairs of the respective Equity Partnership and to implement and execute
the business plans and operations of the respective Equity Partnership provided
that the Managing General Partner acts in accordance with the Business Plan (as
hereinafter defined) and Budget (as hereinafter defined) adopted for the
respective Equity Partnership.

 

  (b) On or before January 31, 2005 for the year 2005, and on or before November
30 of each year for the year immediately following, each Managing General
Partner shall prepare and present to the Co-General Partner for such Equity
Partnership a proposed business plan for such Partnership, which shall include
plans and proposals for development, construction, leasing and any sales for
such Partnership, and a proposed operating budget and capital budget for such
Partnership. Each Co-General Partner shall review such business plan, capital
budget and operating budget and both the Managing General Partner and the
Co-General Partner must agree to a final business plan (the “Business Plan”) and
final capital budget and operating budget (collectively, the “Budget”) on or
before February 28, 2005 for the 2005 year and on or before January 1 each year
thereafter for such year.

 

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  (c) Notwithstanding any provision in this Agreement or the existing
Partnership Agreements to the contrary, and in addition to any other limitations
on the authority and rights of a General Partner contained in the Existing
Partnership Agreements, a Managing General Partner shall have no right, power or
authority to do any of the following (“Major Decisions”) with respect to its
respective Equity Partnership without first obtaining the written consent of
both the Managing General Partner and the respective Co-General Partner:

 

  (i) Incur any expense or obligation or commit to incur any expense or
obligation that is not in accordance with the Budget, except that (A) the
Managing General Partner may incur or commit to incur any expense or obligation
if either (I) an emergency has arisen such that the expense or obligation must
be incurred before consent of the Co-General Partner can be obtained and such
emergency would cause a material adverse consequence to the Partnership if such
expense or obligation were not incurred or (II) the amount of such expense is
not within the control of the Partnership or the Managing General Partner (e.g.,
property taxes increase or insurance costs increase beyond the budgeted amount),
and (B) the Managing General Partner may incur an expense or obligation in an
amount in excess of the amount provided for in the Budget so long as the overall
expenses of the Budget are not exceeded;

 

  (ii) Take any non-ministerial action, or omit to take any non-ministerial
action, that is not provided for or contemplated by the Business Plan, or that
is not consistent with the Business Plan;

 

  (iii) Sell, transfer or otherwise dispose of any material assets or property
other than in accordance with the Business Plan;

 

  (iv) Purchase or enter into any agreements to purchase assets or property
other than in accordance with the Business Plan and the Budget;

 

  (v) Borrow any money or incur any indebtedness;

 

  (vi) Mortgage, pledge or otherwise encumber (except for easements,
restrictions and the like granted in the ordinary course of developing, owning,
leasing and operating the Property in accordance with the Business Plan) any
property;

 

  (vii) Enter into, modify, amend or terminate (except for default or non
performance by the other party) any material agreement other than as provided
for or contemplated by the Business Plan or the Budget;

 

  (viii) Modify or refinance any existing indebtedness;

 

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  (ix) Enter into any commitment or agreement not provided for or contemplated
in the Business Plan or Budget if such commitment or agreement creates a
financial obligation in excess of $10,000, except that the Managing General
Partner may enter into such a commitment or agreement if either (A) an emergency
has arisen such that the commitment or agreement must be entered into before
consent of the Co-General Partner can be obtained and such emergency would cause
a material adverse consequence to the Partnership if such commitment or
agreement were not entered into or (B) the commitment or agreement relates to an
obligation of the Partnership that is not within the control of the Partnership
or the Managing General Partner;

 

  (x) Lease any portion of the Property unless such lease is in accordance with
the Business Plan;

 

  (xi) Pay compensation to or enter into or commit to enter into any transaction
with a member of or an affiliate of the Five Star Group that is not provided for
or contemplated in the Business Plan, Budget or Schedule “A”;

 

  (xii) Request any additional capital contributions (other than those provided
for in this Agreement) from any Partner;

 

  (xiii) Make any distribution to any Partner;

 

  (xiv) Hire any employee that is not provided for or contemplated in the
Business Plan or Budget;

 

  (xv) Select any accountant or legal counsel;

 

  (xvi) Prosecute or settle litigation or other controversies or act in
contravention of this Agreement or the Existing Partnership Agreement;

 

  (xvii) Any act which would make it impossible to carry on the ordinary
business;

 

  (xviii) Confess a judgment against the Partnership;

 

  (xix) Possess property or assign any rights in property for other than a
Partnership purpose;

 

  (xx) Except for the Partners to be admitted pursuant to this Agreement, admit
a person as an additional or substitute general partner except for an entity
that is wholly owned directly or indirectly by the Five Star Group;

 

  (xxi) Except for the Partners to be admitted pursuant to this Agreement, admit
a person as a limited partner (other than as otherwise provided in the Existing
Partnership Agreements);

 

  (xxii) Make any tax elections;

 

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  (xxiii) Enter into any agreements or make any determinations as the “tax
matters partner”;

 

  (xxiv) Enter into an agreement to merge or consolidate with, acquire or enter
into any other business combination with any other person;

 

  (xxv) Amend the Existing Partnership Agreement or the Certificate of Limited
Partnership; and

 

  (xxvi) Liquidate or file voluntary bankruptcy or receivership.

 

6. Responsibility of Co-General Partner. Each Co-General Partner will be
primarily responsible for determining and negotiating alternative sources of
financing for its respective Equity Partnership, provided that no Co-General
Partner is firmly committing, guaranteeing or warranting, and shall not be
required to expend any of its own funds to receive, a commitment for or to
obtain such financing.

 

7. Minimum Construction Requirements. With respect to Frisco Square B1-7, any
improvements to be constructed on the Property owned by such Equity Partnership
will have at least 71,700 gross square feet. With respect to Frisco Square
Properties, improvements to be constructed on the following pad sites owned by
such Equity Partnership will have the following minimum amounts of gross square
feet:

 

Pad Site

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   Minimum Square Feet

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B1-8

   108,700

F1-8

   108,700

F1-1

   68,000

B1-5

   74,200

 

8. Representations and Warranties. McDowell, CMP Management, CMP Family and Five
Star, jointly and severally, hereby represent and warrant the following as of
the date hereof, and such representations and warranties shall survive
indefinitely:

 

  (a) Schedule “B” attached hereto and incorporated herein by reference for all
purposes sets forth, for each Partnership, each and every monetary or financial
debt, liability or obligation of each Partnership;

 

  (b) McDowell and his wife, Mary Pat McDowell, collectively own directly, or
indirectly through entities they own, 100% of the legal and equitable ownership
of each of the Partnerships;

 

  (c) The capital contributed by Fairways Frisco pursuant to paragraph 2 shall
be used solely to pay the liabilities described on Schedule “A” and such
liabilities shall be paid at the times and in the amounts set forth on Schedule
“A” (provided that Fairways Frisco makes such capital contributions);

 

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  (d) The Five Star Group has or will provide to the Fairways Group true and
accurate copies of all loan documents and instruments (and related documents and
instruments), and all partnership agreements (and related documents), and all
amendments and modifications of any such documents, and, to the Five Star
Group’s knowledge, all financial information relating to the business and
operations, all tax returns, all title work related to the Properties, and all
material contracts relating to the Partnerships, and all other information
requested by the Fairways Group, and the Five Star Group hereafter shall
continue to provide such documents and other information as may be reasonably
requested by the Fairways Group;

 

  (e) Each Partnership has good and indefeasible title to its respective
Property as described on Exhibit “I”, which the Five Star Group has identified
to the Fairways Group that such Partnership in fact owns, subject to only (1)
easements, restrictions, reservations and covenants now of record and validly
existing, (2) liens for current real property taxes or assessments not yet due
and payable, and (3) liens and security interests for liabilities set forth on
Schedule “B”;

 

  (f) All federal tax returns required to be filed by or with respect to the
Partnerships have been filed (or timely extensions have been filed);

 

  (g) The Partnerships have no employees;

 

  (h) No member of the Five Star Group is aware of, nor has received, any
notices from any insurance companies, governmental authority or any other party
(1) of any conditions, defects or inadequacies with respect to any Property
(including health hazards or dangers, nuisance or waste), which, if not
corrected, would result in termination of insurance coverage or increase its
costs therefore, (2) with respect to any violation of any applicable zoning,
building, health, environmental, traffic, flood control, fire safety, handicap
or other law, code, ordinance, rule or regulation (collectively, the “Legal
Requirements”), (3) of any pending or threatened condemnation proceeding with
respect to any Property or (4) of any proceedings which could cause the change,
redefinition or other modification of the zoning classification of any Property;

 

  (i) There is no pending or, to the Five Star Group’s knowledge, threatened,
judicial, municipal or administrative proceedings with respect to, or in any
manner affecting any Property or in which any Partnership is or will be a party,
including proceedings for or involving evictions, collections, condemnations,
eminent domain, alleged building code, zoning or environmental violations,
personal injuries or property damage alleged to have occurred on any Property or
by reason of the construction of any improvements thereon or the use and
operation of any Property or any present plan or study by any governmental
authority, agency or employee thereof which in any way challenges, affects or
would challenge or affect the continued authorization of the ownership,
construction, development, use, management, maintenance and operation of any
Property;

 

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  (j) To the Five Star Group’s knowledge, no Property has been the site of any
activity that would violate any past or present environmental law or regulation
of any governmental body or agency having jurisdiction over the Property, except
as disclosed in the environmental reports that the Five Star Group has delivered
to the Fairways Group;

 

  (k) To the Five Star Group’s knowledge, there are not storage tanks located on
any Property (either above or below ground) and none of the Properties have been
used as a land fill or site for disposal of garbage or refuse, except as
disclosed in the environmental reports that the Five Star Group has delivered to
the Fairways Group;

 

  (l) The Five Star Group has no knowledge of any fact or conditions existing
regarding the presence of, or remediation of, mildew, mold or mold spores on any
Property;

 

  (m) The Five Star Group has no knowledge of any facts or conditions existing
which would result or could reasonably be expected to result in the termination
or reduction of the current access from any Property to the existing highways
and roads that provide access to such Property, or of any reduction in or to
sewer or other utility services presently serving any Property;

 

  (n) To the Five Star Group’s knowledge, all Properties are now in full
compliance with all Legal Requirements;

 

  (o) To the Five Star Group’s knowledge, there are no petitions, actions,
hearings, planned or contemplated, relating to or affecting the zoning or use of
any Property;

 

  (p) To the Five Star Group’s knowledge, no material license, permit or
authorization is necessary to own and operate any Property in accordance with
its current operations that has not been obtained;

 

  (q) To the Five Star Group’s knowledge, all of the information concerning the
Partnerships and all Property, and all reports, contracts, or other items
delivered to the Fairways Group by the Five Star Group in connection with the
Partnerships and Properties are true, complete and correct in all respects, and
fairly present the information set forth in a manner that is not misleading, and
the Five Star Group has not omitted any information required to be included in
order to make the information furnished not misleading;

 

  (r) Each Partnership is a Texas limited partnership and is validly existing;

 

  (s) Each Partnership has the full right, power and authority and has obtained
any and all consents required to enter into this Agreement and to consummate or
cause to be consummated the transactions contemplated hereby, except consents
which may be required by existing secured lenders;

 

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  (t) Each member of the Five Star Group has the full right, power and authority
and has obtained any and all consents required to enter into this Agreement and
to consummate or cause to be consummated the transactions contemplated hereby,
except consents which may be required by existing secured lenders;

 

  (u) This Agreement has been authorized and duly executed and delivered by each
Partnership and each member of the Five Star Group and constitutes the legal,
valid and binding obligation of such party;

 

  (v) There is no agreement to which any of the Partnerships or any member of
the Five Star Group is a party or that is binding on such person which is in
conflict with this Agreement, except consents which may be required by existing
secured lenders;.

 

  (w) Except as previously disclosed to the Fairways Group, there is no action
or proceeding pending or, to their knowledge, threatened against any of the
Partnerships or any member of the Five Star Group or any Property, which
challenges or impairs the ability to execute or perform the obligations under
this Agreement or with respect to any such Property; and

 

  (x) None of the Partnerships have committed or obligated itself in any manner
whatsoever to sell, lease or encumber any Property or any interest therein to
any other party except as expressly disclosed to the Fairways Group;

 

9. Representations and Warranties of the Fairways Group. The Fairways Group,
jointly and severally, hereby represent and warrant to the Five Star Group the
following, and such representations and warranties shall survive indefinitely:

 

  (a) Each member of the Fairways Group has the full right, power and authority
and has obtained any and all consents required to enter into this Agreement and
to consummate or cause to be consummated the transactions contemplated hereby;

 

  (b) This Agreement has been authorized and duly executed and delivered by each
member of the Fairways Group and constitutes the legal, valid and binding
obligation of such party;

 

  (c) There is no agreement to which any member of the Fairways Group is a party
or that is binding on such person which is in conflict with this Agreement; and

 

  (d) There is no action or proceeding pending or, to their knowledge,
threatened against any member of the Fairways Group, which challenges or impairs
the ability to execute or perform the obligations under this Agreement.

 

10. Special Remedy for Undisclosed Liabilities. In addition to any other
remedies permitted at law or in equity, in the event that an Equity Partnership
has liabilities in amounts exceeding the sum of (i) the amounts set forth on
Schedule B (the “Excess Amounts”) plus (ii) $200,000, then the following shall
apply:

 

  (a) The Five Star Group, jointly and severally, shall cause such Excess
Amounts to be timely paid and such payments shall not be treated as capital
contributions to any Partnership; and

 

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  (b) If the Five Star Group fails to timely make such Excess Payments with
respect to a Partnership, and Five Star Group fails to cure such default within
ten (10) days after receipt of notice of default from a member of the Fairways
Group, then Fairways Frisco shall thereupon have the right to be exercised
within sixty (60) days after such notice, to purchase all of the Partnership
Interests in such Partnership owned by the members of the Five Star Group and
their subsidiaries and affiliates for a purchase price equal to $100 in cash.

 

11. Buy Sell Agreement. With respect to each Equity Partnership, the following
Buy Sell provisions shall apply:

 

If at any time after December 31, 2005, and for any reason, those Partners of
such Partnership who are members, subsidiaries of members or affiliates of the
Five Star Group (the “Five Star Partners”) desire to either sell their
collective Partnership Interests in such Partnership to those Partners of such
Partnership who are members, subsidiaries of members or affiliates of members of
the Fairways Group (“Fairways Partners”), or the Fairways Group desires to sell
its Partnership Interests in such Partnership to the Five Star Group, then such
group desiring to sell (“Offeror”) shall send a written notice (“Notice”) of
such desire to sell to the other group (“Offeree”) which Notice shall set forth
a gross value for all Property owned by such Partnership. Within sixty (60) days
of delivery of such Notice, Offeree shall elect either to purchase all of the
Offeror’s Partnership Interests in such Partnership, or Offeree may elect to
sell all of its Partnership Interests in such Partnership to Offeror, in which
event Offeror shall be obligated to purchase all of Offeree’s Partnership
Interests in such Partnership. Such election shall be made in writing, and if
Offeree fails to make such written election, Offeree shall be deemed to have
elected to sell its Partnership Interests. The purchase price to be paid by the
purchasing group to the selling group for all of the selling group’s Partnership
Interests shall be equal to the amount that the selling group would receive if
all of the assets of such Partnership were sold at a price equal to the gross
value set forth in the Notice, all liabilities of such Partnership as of the
closing date were paid in full and the remaining proceeds distributed to the
Partners pursuant to the terms of the Existing Partnership Agreement as amended
by this Agreement. The purchase price shall be paid 20% in cash at closing and
the remaining balance (80%) of the purchase price shall be evidenced by a
promissory note secured by the Partnership Interests purchased, bearing interest
at the prime or base rate of interest plus two percent (2%) at Bank of America,
NA, and payable in equal quarterly installments of principal and interest for
sixteen successive quarters on the last day of the month of each such quarter,
commencing with the last day of the third month following the closing. The
closing of such purchase and sale shall occur on or before the one hundred
twentieth (120th) day following the delivery of the Notice.

 

12. Option for FSLTD. For and in consideration of the sum of $273,152 (the
“Option Price”) paid on or before January 5, 2005 by Fairways Frisco to FSLTD,
FSLTD hereby grants to Fairways Frisco the right and option to acquire a fifty
percent (50%) Partnership Interest, Sharing Ratio and interest in FSLTD upon the
refinancing of such Partnership’s current indebtedness payable to CoServe/Denton
Realty Partners, provided that such refinancing occurs

 

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on or before June 30, 2005, and provided further that the terms of such
refinancing are reasonable and market terms. Fairways Frisco will be primarily
responsible for determining and negotiating alternative sources of financing for
FSLTD, and FSLTD hereby authorizes and designates Fairways Frisco to negotiate
with CoServe/Denton Realty Partners and to negotiate with potential lenders with
respect to the financing for the FSLTD, provided that Fairways Frisco shall have
no right, power, or authority to commit or bind FSLTD without the written
consent of FSLTD; and provided further, that FSLTD hereby agrees to accept any
financing or refinancing presented by Fairways Frisco so long as the terms of
such refinancing are reasonable and market terms. For purposes of this paragraph
12, such refinancing must have a term of at least three (3) years and must, as a
consequence, cause all members of the Five Star Group to be released from any
and all personal liability that they had under the current indebtedness payable
to CoServe/Denton Realty Partners. Fairways Frisco shall have the right to
assign all or any portion of its rights and option granted under this paragraph
12 to any person controlled by or managed by James C. Leslie. All of the option
price shall be paid immediately by FSLTD to CoServe/Denton Realty Partners as a
payment on FSLTD’s outstanding indebtedness. If Fairways Frisco (or its assigns)
exercises its right and option pursuant to this paragraph 12, then the
Partnership Agreement of FSLTD shall thereupon, ipso facto, without any further
action required on the part of Fairways Frisco, members of the Five Star Group,
or FSLTD or its general partner, be deemed to be amended for and to the same
extent that the Existing Partnership Agreements for the Equity Partnerships are
amended pursuant to this Agreement, as more specifically provided in the
foregoing paragraphs, provided that (i) Fairways Frisco will specifically
designate an entity to be the Co-General Partner and (ii) Fairways Frisco shall
receive credit for a capital contribution equal to the Option Price (and the
capital account of Partners of FSLTD who are members of, subsidiaries of or
affiliates of members of the Five Star Group will adjust their respective
capital accounts to be collectively equal to the Option Price). Prior to June
30, 2005, the Five Star Group covenants and agrees that it shall not amend the
Partnership Agreement of FSLTD or cause FSLTD or the general partner of FSLTD to
take any action that would be a Major Decision (as described in paragraph 5(c))
without first obtaining the written consent of Fairways Frisco.

 

13. Financial Statements. On or before January 15, 2005, the Five Star Group
shall deliver unaudited balance sheets and income statements (prepared on a tax
basis) as of December 31, 2004 for each Partnership. If any such balance sheet
or income statement is not delivered by such date, then Fairways Frisco shall
have the right to engage an outside accountant to prepare such financial
statements and the Five Star Group shall pay for such accountant’s services.

 

14. Municipal Management District Bond Debt. The parties hereby agree to
endeavor to meet with the City of Frisco and determine all rights and
obligations with respect to that certain municipal management district bond debt
in the approximate amount of $12,500,000 on or before January 31, 2005.

 

15. Further Assurances. Each party to this Agreement agrees to act in good faith
and make its best efforts to prepare, execute and deliver such additional
documents and take such additional actions as may be reasonably necessary or
appropriate to implement, effectuate and fulfill all of the terms, provisions,
rights and obligations set forth in or contemplated by this Agreement. Without
limiting the generality of the foregoing, each party hereto understands and
agrees that the Existing Partnership Agreements may need further amendment to
address inconsistencies, or ambiguities with this Agreement or to address
matters that have not been covered by this Agreement.

 

MASTER AGREEMENT REGARDING     FRISCO SQUARE PARTNERSHIPS   Page 12

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16. Agreement Controls. If and to the extent that any provision of this
Agreement is inconsistent or contradicts or is ambiguous with the terms and
provisions of any Existing Partnership Agreement, the terms and provisions of
this Agreement shall control.

 

17. Successors and Assigns. This Agreement shall be binding upon and shall enure
to the benefit of each of the parties hereto and its respective heirs,
administrators, representatives, successors and assigns.

 

18. Headings. The headings used in this Agreement are for convenience only and
in no way limit or enlarge the scope or meaning of the language hereof.

 

19. Invalidity and Waiver. If any portion of this Agreement is held invalid or
inoperative, then, so far as is reasonable and possible, the remainder of this
Agreement shall be deemed valid and operative, and, to the greatest extent
legally possible, effect shall be given to the intent manifested by the portion
held invalid or inoperative. The failure by any party to enforce against any
other party any term or provision of this Agreement shall not be deemed to be a
waiver of such party’s right to enforce against any other party the same or any
other such term or provision in the future.

 

20. Entirety and Amendments. This Agreement embodies the entire agreement
between the parties and supersedes all prior agreements and understandings
relating to the transactions contemplated hereby. This Agreement may be amended
or supplemented only by instrument in writing executed by the party against whom
enforcement is sought.

 

21. Time. Time is of the essence in the performance of the Agreement.

 

22. Notices. All notices required or permitted hereunder shall be in writing and
shall be served on the parties at the addresses previously given in writing to
the other parties hereto, or at such other address as subsequently may be given
in writing to the parties. Any such notice shall, unless otherwise provided
herein, be given or served (a) by depositing the same in the United States mail,
postage paid, certified and addressed to the party to be notified, with return
receipt requested, (b) by overnight delivery using a nationally recognized
overnight courier, (c) by personal delivery, or (d) by facsimile transmission
with a confirmation copy delivered by another method permitted under this
paragraph 22. Notice given in accordance herewith for all permitted forms of
notice shall be effective upon the earlier to occur of actual delivery to the
address of the addressee or refusal of receipt by the addressee. Notices given
by counsel to a party shall be deemed given by such party.

 

23. Construction and Waiver. The parties acknowledge that the parties and their
counsel have reviewed and revised this Agreement and agree that the normal rule
of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this Agreement
or any exhibits or amendments hereto.

 

24. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, and all of such counterparts
shall constitute one

 

MASTER AGREEMENT REGARDING     FRISCO SQUARE PARTNERSHIPS   Page 13

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Agreement. To facilitate execution of this Agreement, the parties may execute
and exchange by telephone facsimile counterparts of the signature pages, and
such executed originals thereof shall be forwarded to the other party on the
same day by any of the delivery methods set forth in the paragraph for Notices
(other than facsimile).

 

MASTER AGREEMENT REGARDING     FRISCO SQUARE PARTNERSHIPS   Page 14

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This Agreement is executed as of and effective as of the date first written
above.

 

 

FAIRWAYS GROUP: FAIRWAYS FRISCO, L.P., a Texas limited partnership By:  
Fairways Equities, LLC     General Partner     By:  

/s/ James C. Leslie

--------------------------------------------------------------------------------

    Name:   James C. Leslie     Title:   Manager FAIRWAYS B1-6 F1-11, LLC, a
Texas limited liability company By:  

/s/ James C. Leslie

--------------------------------------------------------------------------------

Name:   James C. Leslie Title:   Manager FAIRWAYS B1-7 F1-10, a Texas limited
liability company By:  

/s/ James C. Leslie

--------------------------------------------------------------------------------

Name:   James C. Leslie Title:   Manager FAIRWAYS FS PROPERTIES, LLC, a Texas
limited liability company By:  

/s/ James C. Leslie

--------------------------------------------------------------------------------

Name:   James C. Leslie Title:   Manager

 

MASTER AGREEMENT REGARDING     FRISCO SQUARE PARTNERSHIPS   Page 15

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FIVE STAR GROUP:

/s/ Cole McDowell

--------------------------------------------------------------------------------

COLE MCDOWELL

/s/ Mary Pat McDowell

--------------------------------------------------------------------------------

MARY PAT MCDOWELL FIVE STAR DEVELOPMENT CO., INC., a Texas corporation By:  

/s/ Joseph C. McDowell, Jr.

--------------------------------------------------------------------------------

    Joseph C. McDowell, Jr.,     President CMP MANAGEMENT, LLC, a Texas limited
liability company By:  

/s/ Joseph C. McDowell, Jr.

--------------------------------------------------------------------------------

    Joseph C. McDowell, Jr.,     Member CMP FAMILY LIMITED PARTNERSHIP, a Texas
limited partnership By:   CMP Management, LLC,     a Texas limited liability
company     By:  

/s/ Joseph C. McDowell, Jr.

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        Joseph C. McDowell, Jr.,         Member

 

MASTER AGREEMENT REGARDING     FRISCO SQUARE PARTNERSHIPS   Page 16

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FRISCO SQUARE B1-6 F1-11, LTD., a Texas limited partnership By:   Frisco Square
Development One, L.L.C.,     a Texas limited liability company     By:  

/s/ Joseph C. McDowell, Jr.

--------------------------------------------------------------------------------

        Joseph C. McDowell, Jr.,         Manager FRISCO SQUARE B1-7 F1-10, LTD.,
a Texas limited partnership By:   Frisco Square Development Two, L.L.C.,     a
Texas limited liability company     By:  

/s/ Joseph C. McDowell, Jr.

--------------------------------------------------------------------------------

        Joseph C. McDowell, Jr.,         Manager

 

MASTER AGREEMENT REGARDING     FRISCO SQUARE PARTNERSHIPS   Page 17

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FRISCO SQUARE PROPERTIES, LTD., a Texas limited partnership By:   Frisco Square
Properties GP, L.L.C.,     a Texas limited liability company     By:  

/s/ Joseph C. McDowell, Jr.

--------------------------------------------------------------------------------

        Joseph C. McDowell, Jr.,         Manager FRISCO SQUARE LTD., a Texas
limited partnership By:   Five Star Development Co., Inc.     By:  

/s/ Joseph C. McDowell, Jr.

--------------------------------------------------------------------------------

        Joseph C. McDowell, Jr., President

 

MASTER AGREEMENT REGARDING     FRISCO SQUARE PARTNERSHIPS   Page 18