EXHIBIT
10.91


 


AGREEMENT OF LIMITED PARTNERSHIP OF


BEHRINGER HARVARD FRISCO SQUARE LP


 


THIS AGREEMENT  OF LIMITED PARTNERSHIP (“Agreement”) is made and
entered into effective as of the 3rd day of August 2007, among
BEHRINGER HARVARD FRISCO SQUARE GP, LLC, a Delaware limited liability company
(the “General Partner”), BEHRINGER HARVARD FRISCO SQUARE INVESTOR, LLC,
a Delaware limited liability company or its subsidiary (the “BH Investor”), and FRISCO SQUARE LAND, LTD., a Texas
limited partnership, FRISCO SQUARE PROPERTIES, LTD., a Texas limited
partnership, FRISCO SQUARE B1-6, F1-11, LTD., a Texas limited partnership, and
FRISCO SQUARE B1-7, F1-10, LTD., a Texas limited partnership (collectively, the “Fairways Investor”).


 


ARTICLE I.


 


FORMATION,
NAME, PRINCIPAL PLACE OF BUSINESS - AGENT


PURPOSES,
TERM AND DEFINITIONS


 


1.1          Formation. For and in
consideration of the mutual covenants herein contained, the Partners hereby
form a limited partnership (hereinafter the “Partnership”) under and
pursuant to the Delaware Revised Uniform Limited Partnership Act, as amended
from time to time (the “Act”). The Partnership shall be governed by the
Act. The Certificate (as hereinafter defined) has been or shall promptly be
filed and recorded in such office and places as is required by the Act.


 


1.2          Name. The business of the
Partnership shall be conducted under the name of “Behringer Harvard Frisco
Square LP.”


 


1.3          Partnership Office, Registered Office and
Registered Agent. The Partnership shall maintain its principal
office in the State of Texas at 15601 Dallas Parkway, Suite 600, Addison, Texas
75001, or at such other place as the BH Investor may from time to time
designate. The Registered Office in the State of Delaware is c/o of the
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, and
the agent for service of process at such address shall be the Corporation Trust
Center. The Partnership may maintain such different or additional offices as
the Partners may determine.


 


1.4          Purposes. The nature and
business of the Partnership and the purposes to be conducted and promoted by
the Partnership are to engage solely in the following activities:


 


(a)     To acquire, improve, develop, redevelop, renovate, construct, maintain,
operate, manage, finance, lease, refinance, and sell or exchange the Property
(as hereinafter defined);


 


(b)     To exercise all powers enumerated in the Act or this Agreement
necessary or convenient to the conduct, promotion or attainment of the business
or purposes set forth in Section 1.4(a); and


 


(c)     Notwithstanding anything in this Agreement to the contrary, the
Partnership shall not take, or refrain from taking, any action which, in the
judgment of the BH Investor, in its sole and absolute discretion, (i) could
adversely affect the ability of Behringer Harvard Opportunity REIT I, Inc., a
Maryland corporation (“BH REIT”) to achieve or maintain qualification as
a real estate


 


1





















 


investment trust, (ii) could subject BH REIT to any additional taxes
under Section 857 or Section 4981 of the Code or (iii) could violate any law or
regulation of any governmental body or agency having jurisdiction over BH REIT
or its securities, unless such action (or inaction) shall have been
specifically consented to by BH REIT in writing. Any such action or inaction in
contravention of Section 1.4 of this Agreement shall be void ab
initio, and shall not be given any effect.


 


1.5          Term. The Partnership shall
continue until December 31, 2057, unless earlier dissolved pursuant to the
provisions of this Agreement.


 


1.6          Definitions. As used in this
Agreement, unless the context clearly requires otherwise, the following words
and phrases shall have the following meanings:


 


“Additional
Capital Contributions” means all amounts contributed (or deemed to be
contributed) to the Partnership as additional Capital Contributions by the
Partners under Section 3.3.


 


“Additional
Capital Investment Base” means the Additional Capital Contributions as they
may be adjusted pursuant to Section 3.4 of this Agreement.


 


“Additional
Development Capital Contributions” means all amounts contributed to the
Partnership as additional development Capital Contributions by the Partners
under Section 3.2.


 


“Additional
Development Equity Investment Base” means the Additional Development
Capital Contributions as they may be adjusted pursuant to Section 3.4 of this
Agreement.


 


“Adjustment
Date” means the close of business on the last day of any fiscal year of the
Partnership and any other date as of which Profits and Losses are allocable
under this Agreement.


 


“Affiliate”
means, with respect to any Person (a) any other Person, directly or indirectly
controlling, controlled by or under common control with such Person; (b) any
Person owning or controlling ten percent (10%) or more of the outstanding
voting securities of such specified Person; (c) any officer, director, partner,
member or trustee of such specified Person; and (d) if any Person who is an
Affiliate is an officer, director, partner, member or trustee of another Person,
such other Person. The term “control” shall mean the ability, directly
or indirectly, to control the management of an entity.


 


“Agreement”
means this Agreement of Limited Partnership.


 


“Approval
by Partnership Vote” means approval by a Majority in Interest of the
Partners pursuant to a Partnership Vote. Any determination made by Approval by
Partnership Vote shall be binding on all Partners without further consent and
approval.


 


“Asset
Management Fee” has the meaning set forth in Section 4.8(d).


 


“Assets”
means all of the assets of the Partnership (including, without limitation, the
Property).


 


“Business
Plan” means any business plan prepared by the Fairways Investor and
approved by the BH Investor and setting forth the estimated business activities
of the Partnership for the then current or immediately succeeding calendar year
and for each month and each calendar quarter of such calendar year, in such
detail as determined by the Partners.


 


“Capital
Account” means, with respect to each Partner, the account established and


 


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maintained on the books and records of the Partnership for each Partner
pursuant to Section 3.7 below, adjusted as provided for therein.


 


“Capital
Contribution” means the amount of money and the Gross Asset Value of other
property or consideration contributed to the capital of the Partnership (net of
liabilities securing such property that the Partnership has assumed or taken
subject to, under Section 752 of the Code) by a Partner.


 


“Capital
Contribution Balance” means, for the Partners, the cumulative Capital
Contributions of that Partner less the cumulative distributions which
constitute a return of capital to that Partner thereof pursuant to Sections
6.1(a), (b)  (c) and (d).


 


“Cash Needs” has the
meaning set forth in Section 3.3.


 


“Certificate” means
the Certificate of Limited Partnership of the Partnership.


 


“City Development
Agreement” means that certain Frisco Square Development Agreement among the
City of Frisco, Frisco Square Ltd. and Five Star Development Co., Inc. dated as
of July 28, 2000, as amended by that certain First Supplement to Frisco Square
Development Agreement dated as of February 12, 2007 among the City of Frisco,
Frisco Square Land, Ltd, Frisco Square B1-6F1-11, Ltd., Frisco Square
B1-7F1-10, Ltd and Frisco Square Properties, Ltd. and as further amended by
that certain Amendment to First Supplement to Frisco Square Development
Agreement dated as of May 1, 2007 among the City of Frisco, Frisco Square Land,
Ltd, Frisco Square B1-6F1-11, Ltd., Frisco Square B1-7F1-10, Ltd and Frisco
Square Properties, Ltd.


 


“Class A Limited Partners”  means the BH Investor and any successors,
assigns, substitutions or replacements thereof in accordance with this
Agreement.


 


“Class A Partners”  means the General Partner, the Class A
Limited Partners and any successors, assigns, substitutions or replacements
thereof in accordance with this Agreement.


 


“Class A Partnership
Percentage”  means with respect to
each Class A Partner, the percentage set forth opposite each Class A Partner’s
name on the attached Exhibit B, as such percentages may be adjusted
as set forth in this Agreement.


 


“Class B Limited Partners”  means Frisco Square Land, Ltd., Frisco
Square Properties, Ltd., Frisco Square B1-6, F1-11, Ltd., Frisco Square B1-7,
F1-10, Ltd., and any successors,
assigns, substitutions or replacements thereof in accordance with this
Agreement. The Class B Limited Partners shall act collectively through their
Designated Representative.


 


“Class B Limited
Partnership Percentage”  means with
respect to each Class B Limited Partner, the percentage set forth opposite such
Class B Limited Partner’s name on the attached Exhibit B as such
percentages may be adjusted as set forth in this Agreement.


 


“Class of Partners”
means, as applicable, either (a) all the Class A Partners, or (b) all the Class
B Limited Partners.


 


“Code” means the
Internal Revenue Code of 1986 as it may be amended or revised from time to
time, or any provision of succeeding law.


 


“Delinquent Class”
has the meaning set forth in Section 3.4.


 


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“Depreciation” means,
with regard to any Partnership asset for any fiscal year or other period, the
depreciation, depletion or amortization, as the case may be, allowed or
allowable for federal income tax purposes; provided, however, that if there is
a difference between the Gross Asset Value and the adjusted tax basis of such
asset, Depreciation shall mean “book depreciation, depletion or amortization”
as determined under Section 1.704-1(b)(2)(iv)(g)(3) of the
Regulations.


 


“Designated
Representative” means (a) the General Partner, with respect to the Class of
Partners comprised of the Class A Partners, and (b) Fairways Equities, LLC,
with respect to the Class of Partners comprised of the Class B Limited
Partners.


 


“Developer” means
Frisco Square Development, Ltd., a Texas limited partnership.


 


“Development Agreement”
means those Development Agreements by and between the Partnership and Developer
providing for the performance by Developer of development services with respect
to different Phases of the Development of the Property pursuant to the terms of
the Master Development Agreement.


 


“Development Budget”
means the budget or budgets for construction of the Improvements and the
development of the Property prepared by or at the direction of Fairways
Investor and approved by the BH Investor and setting forth the estimated
capital and operating expenses of the Partnership (and Reserves) for the then
current or immediately succeeding calendar year and for each month and each
calendar quarter of such calendar year, in such detail as determined by the
Partners.


 


“Distributable Cash”
means all cash, revenues, and funds received by the Partnership from any
source, and any amounts released from Reserves pursuant to an approved
Development Budget to the extent the BH Investor deems that the amount released
is no longer required to be retained in Reserves, less the sum of the following
to the extent paid or set aside by the Partnership: (a) all principal and
interest payments on indebtedness of the Partnership and all other sums paid to
lenders; (b) all cash expenditures incurred incident to the normal operation of
the Partnership business; (c) such amounts as may be added to Reserves pursuant
to an approved Development Budget as the BH Investor deems reasonably necessary
to the proper operation of the Partnership’s business.


 


“General Partner”  means Behringer Harvard Frisco Square GP,
LLC, a Delaware limited liability company, and any other Person who has been
admitted as a General Partner in the Partnership pursuant to the provisions of
this Agreement.


 


“Gross Asset Value”
means, except as set forth below, the adjusted basis of an asset for federal
income tax purposes:


 


(a)     The
initial Gross Asset Value of any asset contributed by a Partner to the
Partnership shall be the gross fair market value of such asset at the time of
contribution, as determined by the BH Investor (subject to Approval by
Partnership Vote);


 


(b)     The
Gross Asset Value of all Partnership assets shall be adjusted to equal their
respective gross fair market values, as determined by the BH Investor (subject
to Approval by Partnership Vote), as of the following times: (i) the
acquisition of an additional interest in the Partnership by any new or existing
Partners in exchange for more than a de minimis
Capital Contribution and any such other time as the BH Investor reasonably
determines that such adjustment is necessary or appropriate to reflect the
relative economic interest of the Partners in the Partnership; (ii) the
distribution by the Partnership to a Partner of more than a de minimis amount of Partnership property as consideration
for an interest in the Partnership and any such other time as the BH Investor


 


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reasonably
determines that such adjustment is necessary or appropriate to reflect the
relative economic interests of the Partners in the Partnership; and (iii) the
liquidation of the Partnership within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g);


 


(c)     The
Gross Asset Value of any Partnership asset distributed to any Partner shall be
the gross fair market value of such asset on the date of distribution, as
determined by the BH Investor (subject to Approval by Partnership Vote); and


 


(d)     The
Gross Asset Values of Partnership assets shall be increased or decreased to
reflect any adjustments to the adjusted basis of such assets pursuant to Code
Section 734(b) or Code Section 743(b) as determined by the BH Investor (subject
to Approval by Partnership Vote), but only to the extent that such adjustments
are taken into account in determining Capital Accounts pursuant to Section
1.704-1(b)(2)(iv)(m) of the Regulations; provided, however, that Gross Asset
Values shall not be adjusted pursuant to this subsection (d) to the extent the
BH Investor, determines that an adjustment pursuant to subsection (b) hereof is
necessary or appropriate in connection with a transaction that would otherwise
result in an adjustment pursuant this subsection (d).


 


(e)     After
the Gross Asset Value of an asset has been determined or adjusted pursuant to
subsections (a), (b), or (d) hereof, Gross Asset Value will be adjusted by the
Depreciation taken into account with respect to the asset for purposes of
computing Profits or Losses. If the Gross Asset Value of an asset has been
determined or adjusted pursuant to subsections (a), (b), (c) or (d) of this
provision, such Gross Asset Value shall thereafter be computed in accordance with
Section 1.704-1(b)(2)(iv) of the Regulations.


 


“Improvements”
means any improvements and related amenities now located or to be constructed
on the Property.


 


“Initial
Capital Contributions” means all amounts contributed (or deemed to be
contributed) to the Partnership as a Capital Contribution by the Partners under
Section 3.1.


 


“Investment Base” means the Initial Capital
Contributions, the Additional Development Equity Investment Base and the
Additional Capital Investment Base.


 


“IRR” means, as to the Partners, the actual
internal rate of return on the investment in the Partnership made by the
Partners, as calculated by the General Partner on a compounded annual basis
taking into consideration the timing and amount of the Capital Contributions
made by the Partners, as well as the timing and amount of all distributions
received as a result of such investment. For purposes of calculating the IRR,
all Property owned by the Partnership shall be treated as a single investment
and the income from the Property owned by the Partnership shall be treated as
from a single source. For purposes of calculating the IRR, the Capital
Contributions made by the Partners shall be deemed invested on the date
received by the Partnership, and all distributions shall be deemed to have been
made on the date paid by the Partnership. An example of the IRR methodology and
calculation is attached hereto as Exhibit D.


 


“Major Decision” has the meaning set forth in Section
4.2 of this Agreement.


 


“Majority in Interest of Partners” shall mean
Partners owning more than fifty percent (50%) of the Partnership Percentages.


 


“Management Agreements” means the Office/Retail
Management Agreement and the Multifamily Management Agreement.


 


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“Management Subcontracts” means the
Office/Retail Management Subcontract and the Multifamily Management
Subcontract.


 


“Manager” means HPT Management Services LP, a
Texas limited partnership.


 


“Master Development Agreement” means that
certain Master Development Agreement between the Partnership and the Developer
providing for a mechanism to determine whether to proceed with new phases of
development and for determination of future development fees in the form of Exhibit F
attached hereto.


 


“Multifamily Management Agreement” means that
certain Property Management Agreement between the Partnership and Manager
providing for the performance by Manager of management services with respect to
the 114 multifamily units in existence as of the date hereof.


 


“Multifamily Management Subcontract” means that
certain property management subcontract between Subcontractor and Manager
providing for the performance by Subcontractor of management services with
respect to the 114 multifamily units in existence as of the date hereof.


 


“Nonrecourse Deductions” has the meaning set
forth in Sections 1.704-2(b)(1) and 1.704-2(c) of the Regulations. Subject to
the preceding sentence, the amount of Nonrecourse Deductions for a Partnership
fiscal year equals the excess, if any, of the net increase, if any, in the
amount of Partnership Minimum Gain during the fiscal year (determined under
Section 1.704-2(d) of the Regulations) over the aggregate amount of any
distributions during the fiscal year of proceeds of a Nonrecourse Liability
that are allocable to an increase in Partnership Minimum Gain (determined under
Section 1.704-2(h) of the Regulations).


 


“Nonrecourse Liability” has the meaning set
forth in Section 1.704-2(b)(3) of the Regulations.


 


“Office/Retail Management Agreement” means that
certain Property Management Agreement between the Partnership and the Manager
providing for the performance by the Manager of management services with
respect to the existing office and retail components of the Property.


 


“Office/Retail Management Subcontract” means
that certain Property Management Agreement between the Manager and the
Subcontractor providing for the performance by the Subcontractor of
management services with respect to the existing office and retail
components of the Property.


 


“Operating Expenses” means all the cash
expenditures made or required to be made by the Partnership in connection with
the operation of the Partnership in the ordinary course of business, including
without limitation, cash expenditures made or required to be made by the Partnership
in connection with the development, ownership, management, improvement,
operation, maintenance, financing and upkeep of the Property, as well as debt
service (principal and interest) and capital expenditures of the Partnership;
provided, however, Operating Expenses shall not include (a) any overhead or
general administrative costs or expenses of the Partners or salaries or other
compensation paid to its employees, officers, directors or shareholders (unless
specifically provided for in this Agreement); (b) any expenditures paid or
payable from cash Reserves of the Partnership (provided that to the extent any
capital expenditures are made in excess of any such Reserves established for
such capital expenditures, such excess amounts shall be included as an
Operating Expense); and (c) non-cash items such as depreciation and
amortization.


 


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“Parcel” means one of the legally divisible
separate parcels identified on Exhibit A attached hereto.


 


“Partially Adjusted Capital Accounts” means,
with respect to any Partner as of an Adjustment Date, the Capital Account of
such Partner as of the beginning of the fiscal year ending on such Adjustment
Date (where such Capital Account does not reflect such Partner’s share of
either cumulative Partner Minimum Gain or cumulative Partnership Minimum Gain),
after giving effect to all allocations of items of income, gain, loss or
deduction not included in Profits and Losses and all Capital Contributions and
distributions during such period, but before giving effect to any allocations
of Profits or Losses for such period pursuant to Section 7.1 hereof,
increased by (a) such Partner’s share of Partnership Minimum Gain as of the end
of such fiscal year, and (b) such Partner’s share of Partner’s Minimum Gain as
of the end of such fiscal year.


 


“Partner Minimum Gain” means an amount, with
respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain
that would result if such Partner Nonrecourse Debt were treated as a
Nonrecourse Liability.


 


“Partner Nonrecourse Debt” has the meaning set
forth in Section 1.704-2(b)(4) of the Regulations.


 


“Partner Nonrecourse Deductions” has the
meaning set forth in Section 1.704-2(i) of the Regulations. Subject to the
foregoing, the amount of Partner Nonrecourse Deductions with respect to a
Partner Nonrecourse Debt for a Partnership fiscal year equals the excess, if
any, of the net increase, if any, in the amount of Partner Minimum Gain
attributable to such Partner Nonrecourse Debt during that fiscal year over the
aggregate amount of any distribution during that fiscal year to the Partner
that bears the economic risk of loss for such Partner Nonrecourse Debt to the
extent such distributions are from the proceeds of such Partner Nonrecourse
Debt and are allocable to an increase in Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Section 1.704-2(i)
of the Regulations.


 


“Partners” means each of the General Partner,
the BH Investor, Frisco Square Land, Ltd., Frisco Square Properties, Ltd.,
Frisco Square B1-6, F1-11, Ltd. and Frisco Square B1-7, F1-10, Ltd., and any
other Person that is admitted as a Partner in the Partnership pursuant to the
provisions of Article VIII, and “Partners” means collectively all of
such Partners.


 


“Partnership” means Behringer Harvard Frisco
Square LP, a Delaware limited partnership.


 


“Partnership Minimum Gain” has the meaning set
forth in Section 1.704-2(d) of the Regulations. Subject to the foregoing,
Partnership Minimum Gain shall equal the amount of gain, if any, which would be
recognized by the Partnership with respect to each nonrecourse liability of the
Partnership (or Property owner) if the Partnership were to Transfer the
Partnership property (or the Property owner were to Transfer the Property owner
property) which is subject to such nonrecourse liability in full satisfaction
thereof.


 


“Partnership Percentage” means initially (a)
seventy percent (70%) as to the Class A Partners, and (b) thirty percent (30%) as
to the Class B Limited Partners, subject to adjustment in accordance with the
terms of this Agreement.


 


“Partnership Vote” shall mean a vote of the
Partners. A Partnership Vote may be conducted at a meeting of the Partners,
which meeting may take place by means of telephone conference,


 


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video conference or
similar communications equipment by means of which all Persons participating
therein can hear each other. Alternatively, a Partnership Vote may be conducted
by notice sent by one of the Partners, which notice shall set forth the matter
with respect to which the Partnership Vote is to be made. If a written consent
or consents setting forth the matter to be determined is signed by a Majority
in Interest of the Partners, Approval by Partnership Vote shall be deemed to
have been obtained with respect to such matter. If a written consent or
consents setting forth the Major Decision to be determined is signed by the
Partners, then approval of such Major Decision shall be deemed to have been
obtained with respect to such matter.


 


“Person” means any individual or entity, and
the heirs, executors, administrators, legal representatives, successors and
assigns of such Person where the context so admits, and, unless the context
otherwise requires, the singular shall include the plural, and the masculine
gender shall include the feminine and the neuter and vice versa.


 


“Phase” means a phase of development on the
Property proposed by or at the direction of Fairways Investor and agreed to by
the Partnership (by Approval by Partnership Vote) pursuant to the Master
Development Agreement.


 


“Profits” and “Losses” means, for each fiscal
year or other period, an amount equal to the Partnership’s taxable income or
loss for such year or period, determined in accordance with Code Section 703(a)
(for this purpose, all items of income, gain, loss or deduction required to be
stated separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:


 


(a)     Any
income of the Partnership that is exempt from federal income tax and not
otherwise taken into account in computing Profits and Losses pursuant to this
subsection (a) shall be added to such taxable income or loss;


 


(b)     Any
expenditure of the Partnership described in Code Section 705(a)(2)(B) or
treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations
Section 1.704(b)(2)(iv)(i), and not otherwise taken into account in computing
Profits or Losses pursuant to this subsection (b) shall be subtracted from such
taxable income or loss;


 


(c)     In
the event the Gross Asset Value of any of the Partnership assets is adjusted
pursuant to subsections (b) or (c) of the definition of Gross Asset Value, the
amount of such adjustment shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing Profits or Losses;


 


(d)     Gain
or loss resulting from any disposition of Partnership assets with respect to
which gain or loss is recognized for federal income tax purposes shall be
computed by reference to the Gross Asset Value of the property disposed of,
notwithstanding that the adjusted tax basis of such property differs from its
Gross Asset Value;


 


(e)     In
lieu of the depreciation, amortization and other cost recovery deductions taken
into account in computing such taxable income or loss, there shall be taken
into account depreciation computed in accordance with Section
1.704-1(b)(2)(iv)(g) of the Regulations for such fiscal year or other period;
and


 


(f)      Notwithstanding
anything contained herein to the contrary, any items which are specially
allocated pursuant to Sections 7.3(a), 7.3(b), 7.3(c), 7.3(d),
7.3(e) and 7.3(f) shall not be taken into account in computing
Profits or Losses.


 


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“Property” means that certain portion of a
master planned development located on approximately 50.4236 -acres of land (and all rights and appurtenances incident
thereto) consisting of the Parcels described in Exhibit A attached
hereto and all Improvements located, or to be constructed, or developed
thereon.


 


“Regulations” means the federal income tax
regulations, including temporary regulations, promulgated under the Code, as
such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).


 


“Reserves” means funds set aside or amounts
allocated to reserves for working capital, taxes, insurance, debt service or
other costs and expenses incident to the ownership, development and operation
of the Property. The amount of funds to be set aside in Reserves shall be
determined by the BH Investor.


 


“Subcontractor” means Frisco Square
Development, Ltd., a Texas limited partnership.


 


“Target Account” means, with respect to any
Partner as of any Adjustment Date, a balance (which may be positive or
negative) equal to the hypothetical amount that such Partner would receive upon
the liquidation of the Partnership, assuming that (a) all assets of the
Partnership were sold for an amount equal to their respective Gross Asset
Values, (b) all liabilities of the Partnership became due and were satisfied in
accordance with their terms (limited with respect to each non-recourse
liability, to the Gross Asset Value of the asset securing such liability), and
(c) all net assets of the Partnership were distributed pursuant to Section
6.2 hereof, computed after the Capital Contributions have been made for the
period ending on such Adjustment Date.


 


“Transfer” means, with respect to a particular
property, right or interest, the assignment, sale, transfer, pledge,
disposition, hypothecation, mortgage, pledge or the grant of a lien or security
interest in such right or interest (or any part thereof), whether voluntarily,
involuntarily or by operation of law, and whether for consideration or no
consideration.


 


ARTICLE
II.


 


PARTNERS


 


2.1          General Partner. The name and
address of the General Partner is as follows:


 


	
  Name

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  
	
  Behringer Harvard
  Frisco Square GP, LLC

  	
   

  	
  15601 Dallas Parkway,
  Suite 600

  
	
   

  	
   

  	
  Addison, Texas 75001

  
	
   

  	
   

  	
  Attn: Chief Legal
  Officer

  



 


2.2          Limited Partners. The names and addresses of the
Limited Partners are as follows:


 


	
  Name

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  
	
  Behringer Harvard
  Frisco Square Investor, LLC

  	
   

  	
  15601 Dallas Parkway,
  Suite 600

  
	
   

  	
   

  	
  Addison, Texas 75001

  
	
   

  	
   

  	
  Attn: Chief Legal
  Officer

  
	
   

  	
   

  	
   

  
	
  Frisco Square Land,
  Ltd.

  	
   

  	
  16250
  Dallas Parkway, #102

  
	
   

  	
   

  	
  Dallas,
  Texas 75248

  



 


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  Frisco Square
  Properties, Ltd.

  	
   

  	
  16250
  Dallas Parkway, #102

  
	
   

  	
   

  	
  Dallas,
  Texas 75248

  
	
   

  	
   

  	
   

  
	
  Frisco Square B1-6,
  F1-11, Ltd.

  	
   

  	
  16250
  Dallas Parkway, #102

  
	
   

  	
   

  	
  Dallas,
  Texas 75248

  
	
   

  	
   

  	
   

  
	
  Frisco Square B1-7,
  F1-10, Ltd.

  	
   

  	
  16250
  Dallas Parkway, #102

  
	
   

  	
   

  	
  Dallas,
  Texas 75248

  



 


ARTICLE
III.


 


CAPITAL


 


3.1          Initial Capital Contributions. The Partners shall each make an
Initial Capital Contribution to the Partnership of cash and/or property in the
amount set forth on Exhibit B attached hereto and made a part
hereof and in accordance with the schedule set forth in Exhibit B
(it being agreed that time is of the essence with respect to the making of such
Initial Capital Contributions).


 


3.2          Additional Development Capital Contributions.
After the Initial Capital Contributions are made, the parties agree that
additional funds will be necessary pursuant to the Development Budget and the
parties agree that each party will make Additional Development Capital
Contributions in the amounts set forth in the Development Budget.


 


3.3          Additional Capital Contributions.


 


(a)     If at any time the General Partner determines that the Partnership requires
(or will require) additional funds for any purpose set forth in Section 1.4
herein excluding any Additional Development Capital Contributions (“Cash
Needs”), then the General Partner shall use reasonable efforts to secure
third party or Partner loans to fulfill such Cash Needs. If such efforts to
secure third party or Partner loans are unsuccessful, the General Partner may
send the Partners written notice (“Additional Capital Notice”)
requesting that the Partners contribute in cash such amounts as are necessary
to satisfy such Cash Needs and describing the purpose for which the funds are
needed. If so requested, each Partner shall be obligated to make an Additional
Capital Contribution equal to the product of its Partnership Percentage and the
amount of the Cash Needs. The time for the payment of any Additional Capital
Contribution to the Partnership shall be determined by the General Partner, but
shall in no event be less than thirty (30) days after the delivery of the
Additional Capital Notice.


 


(b)     With
respect to any efforts by the General Partner to obtain loans to the
Partnership from a third party or a Partner, the financing terms must be
substantially similar to (or more favorable than) loans which the Partnership
could obtain on a competitive arms-length basis. If the General Partner is
unable to determine whether the financing terms are competitive on an
arms-length basis, the General Partner may seek and rely upon the advice of an
independent expert in financing. If any Partner makes any loan or loans to the
Partnership or advances money on its behalf, the amount of any loan or advance
shall not be treated as a Capital Contribution but shall be treated as a debt
due from the Partnership to such Partner.


 


3.4          Delinquent Class.


 


(a)     If a Class of Partners fails to timely contribute all or any portion of
any Additional Development Capital Contribution or any Additional Capital
Contribution required of such Class of Partners, then such Class of Partners
shall be considered a “Delinquent Class.”  The Partnership


 


10





















 


may, upon notice to the Delinquent Class, exercise the following as its
sole and exclusive remedy: permit the non-Delinquent Class of Partners to
contribute that portion of the Additional Development Capital Contribution or
the Additional Capital Contribution that is in default as an Additional
Development Capital Contribution or an Additional Capital Contribution made by
the non-Delinquent Class of Partners, in which case the non-Delinquent Class of
Partners shall have its Partnership Percentage increased and the Delinquent
Class shall have its Partnership Percentage decreased in the following manner:
(A) the Partnership Percentage of the non-Delinquent Class of Partners
immediately following such Additional Development Capital Contributions or
Additional Capital Contributions shall be increased by an amount equal to 200%
x A/B, where ‘A’ equals the amount the non-Delinquent Class of Partners
contributed in respect of the Delinquent Class’ required Additional Development
Capital Contribution or Additional Capital Contribution, and ‘B’ equals the
Capital Contributions Balance previously made to the Partnership after giving
effect to the amounts advanced under this Section 3.4(a) on behalf of the
Delinquent Class; (B) the Partnership Percentage of the Delinquent Class shall
be decreased by the increase of the non-Delinquent Class of Partner’s
Partnership Percentage. The Class A Partnership Percentages or the Class B
Limited Partnership Percentages would then be decreased for the Delinquent
Class on a pro rata basis per Partner of the Delinquent Class and increased for
the non-delinquent Class of Partners on a pro rata basis per Partner of the
non-delinquent Class of Partners. In addition, the non-Delinquent Class of
Partners shall have its Investment Base increased in the following manner: the
Investment Base of the non-Delinquent Class of Partners immediately following
such Additional Development Capital Contributions or Additional Capital Contribution
shall be increased by an amount equal to 200% of the Delinquent Class’ required
Additional Development Capital Contribution or Additional Capital Contribution
(which shall be inclusive of the Additional Development Capital Contribution or
Additional Capital Contribution made by the non-Delinquent Class of Partners on
behalf of the Delinquent Class). For purposes of Section 6.1 below, such
increase in the Investment Base shall be applied to either the Additional
Development Investment Base or to the Additional Equity Investment Base,
depending on the type of Capital Contribution required. An example of the
operation of this Section 3.4(a) is set forth in Exhibit C
attached hereto.


 


(b)     The
exercise by the Partnership of the remedy set forth in Section 3.4(a)
above shall be determined by the non-Delinquent Class of Partners in their sole
discretion and not by any Delinquent Class.


 


3.5          Financing. The Partnership
will assume a portion of the existing debt (consisting of a the existing
Comerica, Compass Bank and First National Bank of Omaha loans to the Fairways
Investor secured by the Property) totaling approximately $35 million and then
seek new financing with an anticipated initial funding of approximately $60
million. The BH Investor may, in its sole discretion, elect to offer mezzanine
financing to the Partnership in connection with any development project. Such
mezzanine financing will be on such terms and at such a rate that is consistent
with then current market pricing.


 


3.6          Bridge Financing. Upon the execution hereof, BH Investor
shall make a loan to the Company (the “Payoff Loan”) in the amount of
$20,071,929.00 which is the amount of outstanding debt under the Citibank loan
made to the Fairways Investor plus a six month interest reserve, at an interest
rate of ten percent (10%) which interest shall be paid current to be used
solely in connection with the payoff of the Citibank loan which Payoff Loan
shall be secured by that portion of the Property currently encumbered by the
Citibank loan and the two parking lot parcels to be acquired from the City of
Frisco. Such Payoff Loan shall mature six months after its execution date. The
Members agree that permanent third party financing shall be obtained as soon as
is commercially reasonable (which shall be no later than six months after the
acquisition of the Property) and the Payoff Loan shall be repaid to BH Investor
along with any accrued interest out of the proceeds of such financing.


 


11





















 


3.7          Capital Accounts. The
Partnership shall establish and maintain on its books and records for each
Partner a capital account (collectively the “Capital Accounts”) in
accordance with Section 1.704-1(b)(2)(iv) of the Regulations. Subject to the
foregoing, each Partner’s Capital Account generally shall be:


 


(a)     increased by (i) the amount of money contributed by such Partner to the
Partnership, including Partnership liabilities assumed by such Partner; (ii)
the fair market value of property (net of liabilities securing such property
that the Partnership has assumed, or taken subject to, under Section 752 of the
Code), or other consideration contributed by such Partner to the Partnership;
and (iii) allocations to such Partner of Net Profits (and items thereof,
including certain tax exempt income) and income and gain described in Section
1.704-1(b)(2)(iv)(g) of the Regulations; and


 


(b)     decreased by (i) the amount of money distributed to such Partner by the
Partnership, including such Partner’s individual liabilities assumed by the
Partnership; (ii) the fair market value of all property distributed to such
Partner by the Partnership (net of liabilities that such Partner is considered
to assume or take subject to under Section 752 of the Code); and (iii)
allocations to such Partner of Net Losses and deductions, including expenses
described in Section 705(a)(2)(B) of the Code which are not deductible for tax
purposes.


 


3.8          Interest on and Withdrawal of Capital
Contributions. The Partners shall not be entitled to receive any
interest on Capital Contributions, nor shall the Partners be entitled to
withdraw or otherwise receive a return of their Capital Contributions from the
Partnership, except pursuant to the terms and conditions of this Agreement. No
Partner shall be required to contribute or lend any cash or property to the
Partnership to enable the Partnership to return any Partner’s Capital
Contributions.


 


3.9          Resignation; Redemption. Except
as otherwise expressly permitted by this Agreement, no Partner may resign or
withdraw from the Partnership without Approval by Partnership Vote. Except as
otherwise expressly permitted by this Agreement, a Partner’s interest in the
Partnership may not be redeemed or purchased by the Partnership without prior
approval by all of the Partners.


 


3.10        Transfers. If any interest in
the Partnership is Transferred in accordance with the terms of this Agreement,
the Transferee will succeed to the Capital Account of the Transferor to the
extent it relates to the Transferred interest.


 


3.11        Assumed Financing. Fairways Investor acknowledges that the
Partnership has agreed to assume certain loans currently encumbering the
Property including loans made to certain of the Class B Limited Partners by
Comerica and First National Bank of Omaha (the “Comerica and FNBO Loans”).
In the event that an uncured event of Default is discovered or arises as a
result or action or inaction by the Class B Limited Partners prior to the date
of this Agreement under the Comerica or FNBO Loans then Fairways Investor
agrees to be responsible for curing such event of default in full whether
monetary or non-monetary. In the event that BH Investor or either lender under
the Comerica and FNBO Loans provides notice to Fairways Investor of such a
default and Fairways Investor fails to cure such default within five (5)
business days and BH Investor cures such default, then the Class B Limited
Partners shall have their Investment Base reduced by an amount equal to 300% of
the amount of the existing default plus any interest or fees associated with
the default or if the default is non-monetary, the Investment Base shall be
reduced by 300% of the amount expended by BH Investor to cause such default to
be cured


 


12





















 


ARTICLE
IV.


 


MANAGEMENT


 


4.1          General Powers of the General Partner.
Except as provided in Section 4.2 hereof, the day-to-day administrative
management of the Partnership and the implementation of the policy and
decisions of the Partnership (as approved by a Majority in Interest of
Partnership Percentages) shall be the obligation of and rest with the General
Partner, which shall have all the rights and powers as are necessary, advisable
or convenient to the management of the business and affairs of the Partnership,
subject to the limitations contained herein, including those matters described
in Section 4.2 below. The General Partner shall exercise sound business
judgment in managing the affairs of the Partnership. Notwithstanding anything
set forth to the contrary in this Agreement, the General Partner shall be the
only Partner entitled to bind the Partnership and enter into agreements and
sign on the Partnership’s behalf. Notwithstanding the foregoing, the General
Partner may give express written authorization, in its sole discretion, to the other
Partners, delegating the authority to sign on the Partnership’s behalf. In
addition, the General Partner hereby approves of the delegation of certain
administrative rights to the Fairways Investor through the approval process of
the Development Budget and Business Plan, and to the Developer as set forth in
any Development Agreement, to the Manager as set forth in the Management
Agreements and to the Subcontractor as set forth in any Management Subcontracts.
In addition, no Partner may make or implement any decision set forth in this
Agreement to be made or implemented by the General Partner or give any notices
required to be given without the written approval of the General Partner or
pursuant to Approval by Partnership Vote.


 


4.2          Major Decisions. The General
Partner must obtain the approval of the BH Investor and the Fairways Investor
prior to implementing a Major Decision (as hereinafter defined). A “Major
Decision” as used in this Agreement means any decision with respect to the
following matters


 


(a)     any merger or consolidation of the Partnership with another entity;


 


(b)     any borrowing by the Partnership secured by a deed of trust or lien
against the Property in excess of $2,000,000 or any guarantee of debt of any
other Person;


 


(c)     causing the Partnership to file a voluntarily bankruptcy petition,
seeking or consenting to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator, custodian or any similar official for the Partnership or
a substantial portion of its assets, causing the Partnership to file a petition
or answer seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation or similar relief under any statute, law or
regulation, causing the Partnership to file an answer or other pleading admitting
or failing to contest the material allegations of a petition filed against it
in any proceeding of this nature or to take any action in furtherance of the
foregoing;


 


(d)     causing the Partnership to file or settle any lawsuit involving an
amount in dispute in excess of $1,000,000;


 


(e)     any payment by the Partnership of any compensation to a Partner or an
Affiliate of a Partner, or any transaction between the Partnership and any
Partner or Affiliate of a Partner, except to the extent that any payment to, or
transaction with, a Partner is set forth in an approved Operating Budget or
expressly authorized or approved pursuant to the terms of this Agreement;


 


(f)      the dedication of any portion of the Property to any federal, state or
local government or political subdivision;


 


13





















 


(g)     executing or approving any agreement, contract, or arrangement that
imposes an obligation or liability on the Partnership in excess of $1,000,000
except as provided for in 4.2(b) above;


 


(h)     assigning the Partnership’s rights in specific Partnership property for
other than Partnership purposes;


 


(i)      any act which would make it substantially impractical to carry on the
ordinary business of the Partnership;


 


(j)      any confession of a judgment against the Partnership;


 


(k)     making, executing or delivering any assignment for the benefit of
creditors of the Partnership, or signing any bond, confession of judgment,
indemnity bond or surety bond by or on behalf of the Partnership;


 


(l)      any sale or other disposition of any asset of the Partnership having a
value in excess of $1,000,000;


 


(m)    any mezzanine financing offered to the Partnership by the BH Investor;


 


(n)     any admission of any new Partner to the Partnership; and


 


(o)     the dissolution or termination of the Partnership


 


4.3          Operating Budgets.
The Partnership shall operate under annual Operating Budgets which shall be
prepared by the Fairways Investor and approved by the BH Investor. After an
annual Operating Budget has been approved by the BH Investor, the General
Partner shall implement it on behalf of the Partnership as set forth in the
Development Agreement, the Management Agreements or the Management Subcontracts
and may cause the Partnership to incur the expenditures and obligations therein
provided.


 


4.4          Payment of Costs and Expenses.
The Partnership will be responsible for paying all costs and expenses of
forming and continuing the Partnership (including reasonable legal fees of each
Partner with regard to the negotiation of this Agreement), conducting the
business of the Partnership, including, without limitation, accounting costs,
legal expenses and office supplies. In the event any such costs and expenses
are incurred and paid by the General Partner on behalf of the Partnership,
then, except as expressly provided to the contrary in this Agreement, such
Partner shall be entitled to be reimbursed for such payment so long as such
cost or expense was reasonably necessary and is reasonable in amount. The
Partnership may use the proceeds of any revenues of the Partnership to
reimburse a Partner for any such costs and expenses so paid.


 


4.5          Transactions with Affiliates. The
Partners hereby acknowledge and agree that approval of the BH Investor and the
Fairways Investor has been obtained with respect to the Management Agreement,
Development Agreement, Management Subcontracts and other fees payable by the
Partnership to Affiliates of the Partners as set forth in Section 4.8 below.


 


4.6          Delegated Authority to Management.
The General Partner may delegate certain of its powers and responsibilities to
the officers of the Partnership (the “Officers”), and in such event, the
Officers shall have such power and authority specified by the General Partner. The
current officers of the Partnership are set forth on Schedule 4.6. The General
Partner shall appoint the Officers including any


 


14





















 


successors. Any Officer appointed by the General
Partner may be removed by the General Partner whenever it determines. No Officer
shall be paid any compensation unless approved by all of the Partners and such
compensation shall be reasonable, at market rates and subject to industry
standard for the tasks performed.


 


4.7          No Employees. The Partnership
shall have no employees.


 


4.8          Fees Payable by the Partnership.


 


(a)     The Partnership shall enter into the Management Agreements, pursuant to
which the Manager will receive a base management fee as more specifically set
forth in the Management Agreements.


 


(b)     The Manager shall enter into the Office/Retail Subcontract in
substantially the form of Exhibit E-1 attached hereto and into the
Multifamily Subcontract in substantially the form of Exhibit E-2
attached hereto pursuant to which the Subcontractor will receive a base
management fee as more specifically set forth in the Management Subcontracts. The
Manager may, but is not obligated to, enter into subsequent Management
Subcontracts in substantially the form attached hereto as Exhibit E-1
with Manager for additional Phases as they are completed.


 


(c)     The Partnership shall enter into the Development Agreements with
Developer  to perform development services in
respect of Phase I and Phase II, pursuant to which the Developer will receive a
development fee from the Partnership, as more specifically set forth in the
Development Agreements. The Partnership may enter into subsequent Development
Agreements for each Phase with Developer pursuant to the terms of the Master
Development Agreement attached hereto as Exhibit F.


 


(d)     The Partnership shall pay to Behringer Harvard Opportunity Advisors LP,
an affiliate of the BH Investor (“BH Advisors”) and Fairways Equities,
LLC, a Texas limited liability company an affiliate of the Fairways Investor,
each an annual asset management fee (the “Asset Management Fee”). Such
Asset Management Fee shall be 0.75% of the total amount invested in the
Partnership by the BH Investor and the Fairways Investor as pro rata debt and
equity, respectively. The Asset Management Fee will be calculated and paid
monthly in arrears.


 


(e)     Upon the initial loan funding of any project financing (for each stage
of development), the Partnership shall pay to BH Advisors a fee equal to one
percent (1%) of the loan amount out of which BH Advisors shall pay any
additional broker’s fees up to one half of one percent (.5%) of the loan amount.
Any financing fee over one percent (1%) of the loan amount shall be approved by
the BH Investor and the Fairways Investor.


 


(f)      Upon the sale of the Property or any portion thereof, and the related
operating components of the Property or any portion thereof, the Partnership
shall pay to BH Advisors a fee equal to one percent (1.0%) of the gross selling
price out of the proceeds of the sale.


 


4.9          Other Compensation. Except as
provided in this Agreement, no Partner or its Affiliate shall be entitled to
any compensation unless Approval by Partnership Vote is obtained with respect
thereto or pursuant to Section 4.2(e) if required.


 


4.10        Construction Requirements. The
completion or renovation of improvements which are to be constructed on the
Property shall be guaranteed at the price contracted either by an adequate
completion bond or by other assurances satisfactory to the Partners, which
assurances shall include one or


 


15





















 


more (at the discretion of the Partners) of the
following: (a) a written personal guarantee of one or more of the general
contractor’s principals accompanied by the financial statements of such
guarantor indicating a substantial net worth; (b) a written fixed price
contract with a general contractor that has a substantial net worth; (c) a
retention of a reasonable portion of construction costs as a potential offset
to such construction costs in the event the general contractor does not perform
in accordance with the construction contract; or (d) a program of disbursements
control which provides for direct payments to subcontractors and suppliers. The
Partnership shall make no periodic progress or other advance payments to the
general contractor or any subcontractor unless the Partnership has first
received an architect’s certification as to the percentage of the improvements
which has been completed and as to the dollar amount of the construction then
completed.


 


4.11        Financing. The BH Investor shall
be responsible for identifying sources of project financing including both
acquisition and construction financing. Such source of financing will require
Approval by Partnership Vote. The BH Investor will use reasonable efforts to
obtain non-recourse financing. However, if such non-recourse financing is not
available or commercially reasonable, the BH Investor and the Fairways Investor
shall provide guarantees for their pro-rata portion of the financing.


 


4.12        Assignment of City Development Agreement. The Class B Limited Partners that
constitute the Fairways Investor are party to the City Development Agreement. Unless
otherwise instructed in writing by the BH Investor, the Fairways Investor shall
use its best efforts to cause the City of Frisco to partially assign the City
Development Agreement to the Partnership, with respect to only the Property
owned by the Partnership or its wholly-owned subsidiaries, within 180 days
after the execution of this Agreement in a form reasonably acceptable to BH
Investor. If such City Development Agreement is not partially assigned to the
Partnership in a form reasonably acceptable to the BH Investor within 180 days
after the execution of this Agreement then Fairways Investor shall have its
Investment Base reduced by 25%, which reduction shall be applicable to the
Initial Capital Contributions. If such City Development Agreement is still not
partially assigned to the Partnership in a form reasonably acceptable to the BH
Investor within 270 days after the execution of this Agreement, then Fairways
Investor shall have its Investment Base reduced by an additional 25%. BH
Investor agrees to assume 70% of the liability with respect to the Property
owned by the Partnership under the City Development Agreement and BH Investor
agrees to execute a guaranty in a form reasonably acceptable to BH Investor for
the benefit of the City of Frisco evidencing the same. From the date of this
Agreement until the City Development Agreement is assigned to the Partnership,
Fairways Investor agrees that it will (a) obtain the consent of the BH Investor
prior to taking any action under the City Development Agreement, (b) take such
action in accordance with the City Development Agreement as is directed by the
BH Investor, and (c) will complete all obligations under the City Development
Agreement such that no event of default will exist thereunder.


 


ARTICLE
V.


 


RIGHTS
AND POWERS OF PARTNERS


 


5.1          Limitation of
Liability.


 


(a)     Limitation of Liability of Limited Partners. The Limited Partners shall not be bound by, or personally liable for,
obligations or liabilities of the Partnership to outside third parties beyond
the amount of their Capital Contributions to the Partnership, and the Limited
Partners shall not be required to contribute any capital to the Partnership for
any obligations to third parties in excess of the Capital Contributions
actually made under Sections Sections 3.1, 3.2 and 3.3
hereof.


 


16





















 


(b)     Limitation on Liability of
General Partner. The General
Partner (including its members, officers, directors, agents, employees and
representatives) shall not be liable or responsible in damages or otherwise to
the Partnership or any Partner for any liability or loss relating to the
performance or nonperformance of any act concerning the business of the
Partnership, provided the General Partner was not guilty of gross negligence or
willful misconduct.


 


5.2          Indemnification.


 


(a)     The General Partner (including its members, partners, officers,
directors, agents, employees and representatives) shall be indemnified by the
Partnership to the fullest extent permitted by law, against any losses,
judgments, liabilities, expenses and amounts paid in settlement of any claims
sustained by it or any of them in connection with the Partnership, provided
that the General Partner has determined in good faith that such course of
conduct was in, and not opposed to, the best interests of the Partnership and
such liability or loss was not the result of gross negligence or willful
misconduct, or a material breach of this Agreement on the part of the General
Partner or such person, and (2) any such indemnification will only be
recoverable from the assets of the Partnership and the General Partner shall
not have any liability on account thereof. All rights to indemnification
permitted herein and payment of associated expenses shall not be affected by
the dissolution or other cessation of the existence of any General Partner, or
the withdrawal, adjudication of bankruptcy or insolvency of any General
Partner.


 


(b)     Expenses incurred in defending a threatened or pending civil,
administrative or criminal action, suit or proceeding against any person who
may be entitled to indemnification pursuant to this Section 5.2 may be
paid by the Partnership in advance of the final disposition of such action,
suit or proceeding, if (i) the legal action relates to the performance of
duties or services by such person on behalf of the Partnership, (ii) the legal
action is initiated by a third party who is not a Partner, and (iii) such
person undertakes to repay the advanced funds to the Partnership in cases in
which it is not entitled to indemnification under this Section 5.2.


 


(c)     The term “General Partner” as used in this Section 5.2 shall include
any additional or substitute general partner and any Affiliate of a General
Partner performing services on behalf of the Partnership.


 


5.3          Other Business Activities. Subject
to the other express provisions of this Agreement, each Partner and any
Affiliate thereof may engage in and possess interests in other business
ventures of any and every type and description, independently or with others,
including ones in direct or indirect competition with the Partnership, with no
obligation to offer to the Partnership or any other Partner the right to
participate therein or to account therefor. Notwithstanding the foregoing, the
Fairways Investor and its affiliates shall not own an interest in or
participate in the acquisition, development or redevelopment of any project similar
to any component of the Property in or within the city limits of Frisco, Texas
on their own or with any other party during the term of the Management
Agreement or Development Agreement.


 


5.4          Information. In addition to
the other rights specifically set forth in this Agreement, each Partner is
entitled to the following information: (a) true and full information regarding
the status of the business and financial condition of the Partnership; (b)
promptly after becoming available, a copy of the Partnership’s federal, state
and local income tax returns for each year; (c) a current list of the name and
last known business, residence or mailing address of each Partner; (d) a copy
of this Agreement, the Certificate, and all amendments to such documents; and (e)
other information regarding the affairs of the Partnership to which that
Partner is entitled pursuant to the Act.


 


17





















 


5.5          Press Releases. No public
announcement, press release or other similar public disclosure of the terms of
this Agreement, the activities of the Partnership, or the plans of the
Partnership will be made unless same is authorized in writing by the BH
Investor. However, notwithstanding the preceding sentence, any Partner shall
have the right, without obtaining the consent of any other Partner, to make
such disclosures as may, in the reasonable judgment of such Partner’s counsel,
be required by applicable law. Furthermore, it is agreed that the foregoing
provisions of this Section 5.5 shall not prohibit a Partner from
disclosing such information to the accountants, attorneys, consultants, lenders
and vendors of the Partnership as is necessary to allow such parties to provide
services, funds or goods to the Partnership. The Partners have agreed that if a
Partner breaches the obligation set forth in the first sentence of this Section
5.5 (the “Non-Disclosure Obligation”), the actual damages that will
be incurred by the other Partners as a result of such breach would be extremely
difficult or impracticable to determine. Therefore, the Partners agree that if
a Partner or any Affiliate of a Partner breaches the Non-Disclosure Obligation,
such Partner shall pay to each of the other Partners liquidated damages (the “Liquidated
Damages”) in the amount of Fifty Thousand Dollars ($50,000) for each such
breach, such amount having been agreed upon, after negotiation, as the Partners’
reasonable estimate of the damages that will be suffered by reason of a breach
of the Non-Disclosure Obligation. Any Liquidated Damages becoming payable
pursuant to this Section 5.5 shall be paid within ten (10) days after
the breach of the Non-Disclosure Obligation giving rise to the Liquidated
Damages. If not paid within such ten (10) day period, the Liquidated Damages
shall thereafter bear interest at the lesser of twelve percent (12%) per annum
or the highest rate permitted by applicable law. All Partnership distributions
and other payments that otherwise would be made to the Partner that is liable
for Liquidated Damages shall be paid to the other Partners until the Liquidated
Damages and all interest accrued thereon are paid in full (with all such
payments being applied first to accrued and unpaid interest and then to the
Liquidated Damages).


 


ARTICLE
VI.


 


DISTRIBUTIONS/ALLOCATIONS
OF PROFITS AND LOSSES


 


6.1          Distributions of Distributable Cash.
Within twenty (20) days following the end of each calendar quarter, the
Partnership shall distribute Distributable Cash in the following order of
priority:


 


(a)     First, to the Partners in proportion to their respective Additional
Capital Investment Base, until they have each received distributions resulting
from their Additional Capital Investment Base sufficient to provide an annual
IRR of twenty-five percent (25%) and including the return of any unrecovered
Additional Capital Investment Base


 


(b)     Second, to the Class A Partners, in proportion to their Initial Capital
Contributions, until they have received distributions resulting from their
Initial Capital Contributions sufficient to provide an annual IRR of twenty-one
and one half percent (21.5%) and including the return of their Initial Capital
Contributions;


 


(c)     Third, to the Class B Limited Partners, in proportion to their Initial
Capital Contributions, until they have each received distributions resulting
from their Initial Capital Contributions sufficient to provide an annual IRR of
twenty-one and one half percent (21.5%) and including the return of their
Initial Capital Contributions;


 


(d)     Fourth, to each Class of Partners, in proportion to their Additional
Development Investment Base, until each Class of Partners has received
distributions resulting from their respective Additional Development Investment
Base sufficient to provide an annual IRR of 21.5% to each Class of Partners and
including the return of their Additional Development Investment Base;


 


18





















 


(e)     Fifth, fifty percent (50%) to the Class A Partners and fifty percent
(50%) to the Class B Limited Partners as adjusted in accordance with their
Partnership Percentages as set forth in (f) below.


 


(f)      Notwithstanding anything to the contrary set forth above, if any
Partner’s Partnership Percentage has been diluted by failure to make an
Additional Development Capital Contribution or an Additional Capital
Contribution pursuant to Section 3.2 or 3.3, then the
distribution percentage with respect to the Delinquent Partner set forth in
paragraph (e) above shall be reduced by the same percentage as the Partner’s
Partnership Percentage has been reduced as a result of the dilution and the
percentage of the non-diluted Partner shall be increased by the same amount.


 


(g)     For the purposes of Sections 6.1(a), (b), (c) and (d), the
Distributable Cash will be distributed first to the return of Capital
Contributions and then to provide the IRR set forth therein.


 


(h)     An example of the calculation of the Distributions contemplated above
is set forth in Exhibit D attached hereto.


 


ARTICLE
VII.


 


ALLOCATION
OF PROFITS AND LOSSES


 


7.1          Allocation of Profits and Losses.
After application of Section 7.3 hereof, Profits and Losses for each
fiscal year or a portion thereof shall be allocated among the Partners as of
each Adjustment Date so as to reduce, proportionately, in the case of any
Profits, the difference between their respective Target Accounts and Partially
Adjusted Capital Accounts as of each Adjustment Date and, in the case of
Losses, the difference between their respective Partially Adjusted Capital
Accounts and Target Accounts as of each Adjustment Date. To the extent that, in
the fiscal year in which all or substantially all of the Partnership’s assets
are disposed of, or in the fiscal year in which the Partnership is liquidated,
the allocation of Profit or Loss set forth in the preceding sentence does not
cause each Partner’s Partially Adjusted Capital Account balance to equal the
balance of its Target Account, items of income or gain will be reallocated to
any Partner with a Partially Adjusted Capital Account which is less than its
Target Account, and items of loss, deduction or expense will be reallocated to
any Partner with a Partially Adjusted Capital Account that is greater than its
Target Account in such manner as to reduce, to the greatest extent possible,
the difference between each Partner’s respective balance in its Target Account
and its Partially Adjusted Capital Account balance.


 


7.2          Limitation on Loss Allocations.
Notwithstanding anything in this Agreement to the contrary, no Losses or item
of deduction shall be allocated to a Partner if such allocation would cause the
Capital Account of such Partner to have a deficit in excess of the sum of (a)
the amount of additional capital such Partner would be required to contribute
to the Partnership if the Partnership were to dissolve on the last day of the
accounting period to which such allocation relates, if any, plus (b) such
Partner’s distributive share of Partnership Minimum Gain as of the last day of
such accounting period, determined pursuant to Regulations Section
1.704-2(g)(1), plus (c) such Partner’s share of Partner Minimum Gain as of the
last day of such year, determined pursuant to Regulation Section 1.704-2(i)(5).
Any amounts not allocated to a Partner pursuant to the limitations set forth in
this paragraph shall be allocated to the other Partners to the extent possible
without violating the limitations set forth in this paragraph. For purposes of
the foregoing provisions, the balance of a Partner’s Capital Account shall be
determined after reducing such Capital Account by (i) all anticipated
allocations of loss or deduction pursuant to Sections 704(e)(2) and 706(d) of
the Code, and Section 1.751-1(b)(2)(ii) of the Regulations, and (ii)
anticipated distributions to such Partner to the extent such anticipated
distributions exceed anticipated increases to such Partner’s Capital Account
during or prior to the year of distribution (other than increases which may not
be taken


 


19





















 


into account pursuant to Section
1.704-1(b)(2)(ii)(d)(6) of the Regulations).


 


7.3          Special Allocations. The
following special allocations shall be made in the following order:


 


(a)     Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(f) of the Regulations, in the event there is a net
decrease in Partnership Minimum Gain during a Partnership taxable year, each
Partner shall be allocated (before any other allocation is made pursuant to
this Section 7.3) items of income and gain for such year (and, if
necessary, for subsequent years) equal to that Partner’s share of the net
decrease in Partnership Minimum Gain. The determination of a Partner’s share of
the net decrease in Partnership Minimum Gain shall be determined in accordance
with Regulations Section 1.704-2(g). The items to be specially allocated to the
Partners in accordance with this Section 7.3(a) shall be determined in
accordance with Regulation Section 1.704-2(f)(6). This Section 7.3(a) is
intended to comply with the Minimum Gain chargeback requirement set forth in
Section 1.704-2(f) of the Regulations and shall be interpreted consistently
therewith.


 


(b)     Partner Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i)(4), in the event there is a net decrease in Partner
Minimum Gain during a Partnership taxable year, each Partner who has a share of
that Partner Minimum Gain as of the beginning of the year, to the extent
required by Regulation Section 1.704-2(i)(4), shall be specially allocated
items of Partnership income and gain for such year (and, if necessary,
subsequent years) equal to that Partner’s share of the net decrease in Partner
Minimum Gain. Allocations pursuant to this subparagraph (b) shall be made in
accordance with Regulation Section 1.704-2(i)(4). This Section 7.3(b) is
intended to comply with the requirement set forth in Regulation Section
1.704-2(i)(4) and shall be interpreted consistently therewith.


 


(c)     Qualified Income Offset Allocation. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulation
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6)
or which would cause the negative balance in such Partner’s Capital Account to
exceed the sum of (i) his obligation to restore a Capital Account deficit upon
liquidation of the Partnership, plus (ii) his share of Partnership Minimum Gain
determined pursuant to Regulation Section 1.704-2(g)(1), plus (iii) such
Partner’s share of Partner Minimum Gain determined pursuant to Regulation
Section 1.704-2(i)(5), items of Partnership income and gain shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate such
excess negative balance in his Capital Account as quickly as possible. This Section
7.3(c) is intended to comply with the alternative test for economic effect
set forth in Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.


 


(d)     Gross Income Allocation. In the event any Partner has a deficit
Capital Account at the end of any Partnership fiscal year which is in excess of
the sum of (i) any amounts such Partner is obligated to restore pursuant to
this Agreement, plus (ii) such Partner’s distributive share of Minimum Gain as
of such date, plus such Partner’s share of Partner Minimum Gain determined
pursuant to Regulation Section 1.704-2(i)(5), each such Partner shall be
specially allocated items of Partnership income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this Section
7.3(d) shall be made only if and to the extent that such Partner would have
a deficit Capital Account in excess of such sum after all other allocations
provided for in this Section 7.3 have been made, except assuming that Section
7.3(c) above and this Section 7.3(d) were not contained in this
Agreement.


 


(e)     Allocation of Nonrecourse Deductions. Nonrecourse Deductions shall be


 


20




















 


allocated to the Partners in accordance with their respective
Partnership Percentages.


 


(f)      Allocation of Partner
Nonrecourse Deductions. Partner
Nonrecourse Deductions shall be allocated as prescribed by the Regulations.


 


(g)     Basis Adjustment under Section 754. To the extent an adjustment to the adjusted
tax basis of any Partnership assets pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain, if the adjustment increases the basis of the asset, or loss, if
the adjustment decreases such basis, and such gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations.


 


7.4          Built-In Gain or Loss/Section 704(c) Tax
Allocations. In the event that the Capital Accounts of the
Partners are credited with or adjusted to reflect the Gross Asset Value of the
Partnership’s property and assets, the Partners’ distributive shares of
depreciation, depletion, amortization, and gain or loss, as computed for tax
purposes, with respect to such property, shall be determined pursuant to
Section 704(c) of the Code and the Regulations thereunder, so as to take
account of the variation between the adjusted tax basis and Gross Asset Value
of such property in a manner determined by Approval by Partnership Vote. Any
deductions, income, gain or loss specially allocated pursuant to this Section
7.4 shall not be taken into account for purposes of determining Profits or
Losses or for purposes of adjusting a Partner’s Capital Account. The partners agree
that for purposes of these allocations, the traditional method with curative
allocation will be used.


 


7.5          Recapture. Ordinary income
arising from the recapture of depreciation and unrecaptured Section 1250 gain
shall be allocated to the Partners in the manner that is prescribed by the
Regulations, or if the Regulations do not prescribe a manner in which
depreciation is to be recaptured, then depreciation shall be recaptured in the
same manner as such depreciation was allocated to the Partners.


 


7.6          Retention of Section 751 Assets.
Upon the occurrence of an event which would otherwise cause a reduction in a
Partner’s respective interest in the Partnership’s Section 751 assets (“substantially
appreciated inventory” and “unrealized receivables” as defined in Section 751
of the Code), such as the admission of new Partners or otherwise, no such
reduction shall occur with respect to Partners who were Partners immediately
preceding such event and who continue to be Partners after the occurrence of
such event but, rather, each such Partner shall retain his respective interest
in the Partnership’s Section 751 assets existing immediately prior to such
event.


 


7.7          Prohibition Against Retroactive Allocations.
Notwithstanding anything in this Agreement to the contrary, no Partner shall be
allocated any loss, credit or income attributable to a period prior to his
admission to the Partnership. In the event that a Partner Transfers all or a
portion of his Partnership interest, or if there is a reduction in a Partner’s
Partnership Percentage due to the admission of new Partners or otherwise, each
Partner’s distributive share of Partnership items of income, loss, credit,
etc., shall be determined by taking into account each Partner’s varying
interests in the Partnership during the Partnership’s taxable year. For this
purpose, each Partner’s distributive share shall be estimated by taking the pro
rata portion of the distributive share such Partner would have included in his
taxable income had he maintained his Partnership Percentage throughout the
Partnership year. Such proration shall be based upon the portion of the year
during which such Partner held the Partnership, except that extraordinary,
nonrecurring items shall be allocated to the persons holding Partnership
interests at the time such extraordinary items occur.


 


21





















 


7.8          Allocation of Nonrecourse Liabilities.
The “excess nonrecourse liabilities” of the Partnership (within the meaning of
Section 1.752-3(a)(3) of the Regulations) shall be allocated to the Partners in
accordance with their respective Partnership Percentage.


 


ARTICLE VIII.


 


TRANSFER OF PARTNERSHIP INTEREST


 


8.1          Prohibition on Disposition of General Partner’s
Interest. Unless
Approval by Partnership Vote is obtained, the General Partner may not, directly
or indirectly, by operation of law or otherwise (a) withdraw or resign from the
Partnership, or (b) Transfer any or all of its interest in the Partnership. In
addition, the General Partner shall not permit the Transfer of any interest in
the General Partner unless Approval by Partnership Vote is obtained with
respect to such Transfer. Any act in violation of this Section 8.1 shall be
null and void as against the Partnership and the Limited Partners, except as
otherwise required by law.


 


8.2          General Partner Ceasing To Be A General
Partner. Unless
Approval by Partnership Vote is otherwise obtained, a General Partner shall
cease to be a General Partner of the Partnership upon the happening of any of
the following events (hereinafter each referred to as an “Event of
Withdrawal”):


 


(a)     such General Partner makes an assignment for the benefit of creditors;
files a voluntary petition of bankruptcy; is adjudicated as bankrupt or
insolvent or is the subject of an order for relief under the bankruptcy laws;
files a petition or answer seeking for itself any reorganization, arrangement
or similar relief under any statute, law or regulation; files an answer or
other pleading admitting or failing to contest the material allegations of a
petition filed against it in any proceeding of this nature; or seeks, consents
to or acquiesces in the appointment of a trustee, receiver or liquidator of all
or any substantial part of its properties;


 


(b)     such General Partner fails to dismiss within one hundred twenty (120)
days after the commencement of any proceeding which attempts to attach or
charge the General Partner’s Partnership interest or which seeks
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief against the General Partner under any statute,
law or regulation, or if within ninety (90) days after a court order attaching
or charging its Partnership interest or the appointment without its consent or
acquiescence of a trustee, receiver or liquidator of such General Partner or
all or any substantial part of its properties, the order or appointment is not
vacated or stayed, or within ninety (90) days after the expiration of any such
stay, the order or appointment is not vacated;


 


(c)     In the case of any General Partner which is a corporation, limited
partnership or limited liability company, the filing of a certificate of
dissolution or its equivalent for the corporation, limited partnership or
limited liability company, or the revocation of its charter or authority to do
business in the jurisdiction of its formation;


 


(d)     The withdrawal of a General Partner from the Partnership as provided in
Section 8.1 above; or


 


(e)     The Transfer by a General Partner of all or any part of its interest in
the Partnership except as approved by Partnership Vote pursuant to Section 8.1.


 


Any person ceasing to be
a General Partner (other than as a result of paragraph (d) and (e) of this
Section 8.2) shall automatically become a limited partner of the Partnership
having the same


 


22

















 


percentage
interest in the profits, losses and distributions of the Partnership that it
had while it was a general partner, and provided further that in the event that
the Partners elect to continue the Partnership pursuant to Section 12.1(b)
below, and a new General Partner is admitted to the Partnership to enable the
Partnership to continue, then the General Partner being converted to a limited
partner shall Transfer a .005% Class B Partnership Percentage to the newly
admitted general partner. Such Transfer shall not reduce the interest in the
Partnership of any Partner other than the General Partner which is being
converted to a limited partner.


 


8.3          General Prohibition Against Transfers of a
Limited Partner’s Interest. A Limited Partner may not Transfer
any or all of such Partner’s interest in the Partnership except as permitted in
Section 8.4 or 8.6; provided, however, that the BH Investor may
Transfer all or any portion of its interest in the Partnership to an Affiliate
without the consent of any other Partner. Any act in violation of this Article
shall be null and void as against the Partnership and the Partners, except as
otherwise provided by law.


 


8.4          Conditions Upon Transfers by a Limited
Partner. A Limited Partner may Transfer all or any part of such
Partner’s interest in the Partnership only with the written consent of the
General Partner (subject to Approval by Partnership Vote); provided, however,
that the General Partner’s written consent shall not be given unless:


 


(i)            the
General Partner is satisfied that the proposed Transfer will not have any
adverse effect upon the Partnership or the Partners under federal income tax
laws then in effect or cause any default in any loan documents of the
Partnership or the Property owner;


 


(ii)           the
General Partner has received, if requested, an opinion from counsel for the
Partnership to the effect that such Transfer will not violate federal or state
securities laws or regulations;


 


(iii)          the person, firm or entity to acquire such
interest agrees to comply with all terms of this Agreement, including without
limitation Section 8.5 below;


 


(iv)          the
Partners confirm with tax counsel for BH REIT that such transfer will not
adversely impact the REIT Status of BH REI; and


 


(v)           if
the Transfer would violate the terms of any agreements to which the Partnership
is a party, the requisite consent of other parties to such agreement is
obtained.


 


8.5          Substitution of Assignee. Except
as otherwise permitted herein, no Transferee of the whole or any portion of a
Partner’s interest in the Partnership shall have the right to be admitted to
the Partnership and become a Limited Partner unless and until all of the
Partners in their absolute discretion consent and all of the following
conditions are satisfied:


 


(a)     the Transferor and Transferee execute and acknowledge a written
instrument of assignment, together with such other instruments as the General
Partner may deem necessary or desirable to effect the admission of the
Transferee as a substitute Limited Partner; and


 


(b)     an instrument specifically Transferring such interest, signed by both
assignor and assignee, shall be filed with the General Partner, and until such
instrument is so filed, the Partnership shall not recognize any Transfer of
interest for the purposes of making payments of profits, income or any other
distribution with respect to such interest.


 


23





















 


8.6          Buy-Sell Agreement.


 


(a)     Interests in Partnership


 


(i)            For
purposes of this Section 8.6(a), the Class A Partners and the Class B
Partners must act collectively through their respective Designated
Representatives. At any time during the term of this Agreement, a Designated
Representative, acting on behalf of the Class of Partners that it represents
(the “Offeror Class”), may make an offer in writing (the “Offer”)
to the Designated Representative of the other Class of Partners (the “Offeree
Class”), which shall state an amount (the “Buy-Sell Value”) determined
in the sole and absolute discretion of the Offeror Class for all of the Assets
of the Partnership. Notwithstanding the preceding sentence, however, if any
Class of Partners is a Delinquent Class at the time, then the Delinquent Class
shall not have the right to be the Offeror Class under this Section 8.6(a).
An offer made pursuant to this Section 8.6 for all of the Assets of the
Partnership shall constitute an irrevocable offer by the Offeror Class to the
Offeree Class either (i) to sell all, but not less than all, of the interests
in the Partnership owned by all Partners of the Offeror Class (including any
interests held by, or Transferred to, Affiliates of such Partners) at the price
described in Section 8.6(a)(ii) below, or (ii) to purchase all, but not
less than all, of the interests in the Partnership owned by all Partners of the
Offeror Class (including any interests held by or Transferred to Affiliates of
such Partners) at the price described in Section 8.6(a)(ii) below.


 


(ii)           The
Offeree Class shall have thirty (30) days after receipt of an Offer made
pursuant to this Section 8.6(a) (the “Buy-Sell Election Period”)
to elect, through its Designated Representative, either (A) to sell all
interests in the Partnership owned by the Offeree Class at a price equal to the
amount the Offeree Class would have received pursuant to a liquidation of the
Partnership if the Assets had been sold to a third party for the Buy-Sell Value
and the proceeds therefrom had been applied and distributed in accordance with
Section 12.2 (assuming that all allocations resulting from the sale had been
made and no reserves are established); or (B) to buy all interests in the
Partnership owned by the Offeror Class at a price equal to the amount the
Offeror Class would have received pursuant to a liquidation of the Partnership
if the Assets had been sold to a third party for the Buy-Sell Value and the
proceeds therefrom had been applied and distributed in accordance with Section
12.2 (assuming that all allocations resulting from the sale had been made and
no reserves are established). If the Designated Representative of the Offeree
Class fails to send notice of such election to the Designated Representative of
the Offeror Class within the Buy-Sell Election Period, then the Offeree Class
shall be deemed to have elected to sell all interests in the Partnership owned
by the Offeree Class. Within ten (10) days after the expiration of the Buy-Sell
Election Period, the purchasing Class of Partners shall deposit into escrow a
non-refundable amount equal to one percent (1%) of the Buy-Sell Value (the “Escrow
Deposit”) with a nationally recognized title insurance company mutually
acceptable to the Designated Representatives, which amount shall be applied to
the purchase price as of the Closing. Once the Offeree Class has made (or is
deemed to have made) its election, (1) each Partner comprising the selling
Class of Partners shall be bound to sell its interest in the Partnership for
its proportionate share (based upon its Class A Partnership Percentage or Class
B Limited Partnership Percentage, as applicable) of the purchase price paid by
the purchasing Class of Partners, and (2) each member of the purchasing Class
of Partners shall be bound to purchase its proportionate share (based upon its
Class A Partnership Percentage or Class B Limited Partnership Percentage, as
applicable) of the interests in the Partnership owned by the selling Class of
Partners.


 


(iii)          Closing shall occur at the offices of the
Partnership no later than sixty (60) days following the date after the
expiration of the Buy-Sell Election Period. It is understood and agreed that if
a portion of the Assets are sold between the time that the Offeror Class
initiates the procedure set forth Section 8.6(a) above and closing,
the proceeds of such sale shall be retained by the Partnership and not
distributed to the Partners. At the closing, the applicable interests in the
Partnership


 


24





















 


owned by the selling Class of Partners shall be duly conveyed,
free of all liens and encumbrances, and the purchase price shall be paid by the
purchasing Class of Partners by wire transfer of immediately available federal
funds. At the election of the Designated Representative of the purchasing Class
of Partners, the applicable interests in the Partnership to be purchased may be
acquired in the name of a nominee (whether or not such nominee is an Affiliate
of any Partner within the purchasing Class of Partners); provided, however,
that the Designated Representative of the purchasing Class of Partners shall
have designated such nominee by written notice to the Designated Representative
of the selling Class of Partners prior to the date of purchase. It shall be a
condition of the obligation of the selling Class of Partners to proceed with
any such purchase and sale of interests in the Partnership that the purchasing
Class of Partners shall have obtained (A) any consents from lenders that are
necessary for such purchase and sale of interests in the Partnership, and (B)
releases of any guaranties of indebtedness or other obligations on behalf of or
for the benefit of the Partnership executed by any Partner within the selling
Class of Partners or any Affiliates of (or principals in) such selling Partner.
The purchasing Class of Partners shall be responsible for the payment of costs
associated with obtaining such consents, partial releases of liens and releases
of guaranties. The purchasing Class of Partners, in addition to paying at the
closing the purchase price, shall be obligated to loan to the Partnership an
amount sufficient to discharge at the closing all outstanding and unpaid
obligations of the Partnership owed as of such time to any Partner within the
selling Class of Partners.


 


(iv)          Upon
receipt of the purchase price, each Partner within the selling Class of
Partners shall execute and deliver all documents reasonably required to
transfer the interests in the Partnership being sold. Each Partner within the
selling Class of Partners shall also execute such resignations and other
documents as may be reasonably required by counsel for the Partnership to
accomplish the withdrawal of each of the selling Partners as a Partner of the
Partnership, and the purchasing Class of Partners shall assume all of the
selling Partners’ obligations to the Partnership and any of its creditors under
any loans to the Partnership permitted by this Agreement, such assumptions to
be in form reasonably satisfactory to counsel for the selling Class of
Partners.


 


(v)           It
is expressly agreed that the remedy at law for breach of any of the obligations
set forth in this Section 8.6 is inadequate in view of (i) the
complexities and uncertainties in measuring the actual damages that would be
sustained by reason of the failure of a Partner to comply fully with each of
said obligations, and (ii) the uniqueness of the Partnership business and
Partners’ relationship. Accordingly, each of the aforesaid obligations shall
be, and is hereby expressly made, enforceable by specific performance. An
example of such sale of Interest in the Partnership is set forth on Schedule
8.6 attached here.


 


(b)     Interest in Parcel


 


(i)            For
purposes of this Section 8.6(b), the Class A Partners and the Class B
Limited Partners must act collectively through their respective Designated
Representatives. If (A) Fairways Investor or its affiliate proposes that a
Parcel (the “Deferred Parcel”) be the subject of a new phase of
development pursuant to the Master Development Agreement, (B) the BH Investor
does not wish to proceed with development of the Deferred Parcel, (C) the
Deferred Parcel is then legally divisible from the remaining land owned by the
Partnership, and (D) the Class of Partners is not a Delinquent Class at the
time, then the Designated Representative of the Class B Limited Partners may
make an offer in writing (the “Parcel Offer”) to the Designated
Representative of the Class A Partners, which shall state an amount (the “Parcel
Buy-Sell Value”) to be paid to the Partnership for the Deferred Parcel
determined in the sole and absolute discretion of the Class B Limited Partners;
provided, however, that the Parcel Offer must be sent within thirty (30) days
after BH Investor has given written notice that it does not wish to proceed
with development of the Deferred Parcel. A Parcel Offer made pursuant to this Section
8.6(b)(i) for a Deferred Parcel shall constitute an irrevocable offer and
consent by the Class B Limited Partners


 


25





















 


either (i) to purchase all, but not less than all, of
the Deferred Parcel from the Partnership for the Parcel Buy-Sell Value; or (ii)
to have the Partnership sell all, but not less than all, of the Deferred Parcel
to the Class A Partners for the Parcel Buy-Sell Value.


 


(ii)           The
Class A Partners shall have thirty (30) days after the receipt of a Parcel
Offer (the “Parcel Buy-Sell Election Period”) made pursuant to this Section
8.6(b) to elect either (A) to cause the Partnership to sell its interest in
the Deferred Parcel to the Class B Limited Partners (or their designee) for the
Parcel Buy-Sell Value; or (B) to cause the Partnership to sell its interest in
the Deferred Parcel to the Class A Partners (or their designee) for the Parcel
Buy-Sell Value. If the Designated Representative of the Class A Partners fails
to send notice of such election to the Designated Representative of the Class B
Limited Partners within the Parcel Buy-Sell Election Period, then the Class A
Partners shall be deemed to have elected to cause the Partnership to sell its
interest in the Deferred Parcel to the Class B Limited Partners (or their
designee). Within ten (10) days after the expiration of the Parcel Buy-Sell
Election Period, the purchasing Class of Partners shall deposit into escrow a
non-refundable amount equal to one percent (1%) of the Parcel Buy-Sell Value
(the “Escrow Deposit”) with a nationally recognized title insurance
company mutually acceptable to the Designated Representatives, which amount
shall be applied to the purchase price as of the Closing.


 


(iii)          Closing of the purchase and sale of the
Deferred Parcel shall occur at the offices of the Partnership no later than
thirty (30) days following the date after the expiration of the Parcel Buy-Sell
Election Period. At the closing, the Partnership shall convey its interest in
the Deferred Parcel to the designee of the purchasing Class of Partners free of
voluntary liens, and the purchase price shall be paid to the Partnership by
wire transfer of immediately available federal funds. It shall be a condition
of the Partnership’s obligation to convey the Deferred Parcel that the
purchasing Class of Partners shall have obtained (A) any consents or partial
releases of liens from lenders that are necessary for the Partnership to so
convey the Deferred Parcel, and (B) releases of any debt instruments or
guaranties of indebtedness or other obligations of or for the benefit of the
Partnership executed in respect to the Deferred Parcel by the Partnership or
any Partner (or any Affiliates of or principals in such Partner) that is not a
member of the purchasing Class of Partners. The purchasing Class of Partners
shall be responsible for the payment of costs associated with obtaining such
consents, partial releases of liens and releases of guaranties. The purchasing
Class of Partners shall also be responsible for paying the costs of any title
insurance policy or survey desired to be obtained by the purchasing Class of
Partners in respect of the Deferred Parcel. At closing, there shall be
customary prorations of taxes and other items customarily prorated upon the
sale of property similar to the Deferred Parcel.


 


(iv)          Upon
receipt of the purchase price, the Partnership shall execute and deliver a
special warranty deed conveying the Deferred Parcel to the designee of the
purchasing Class of Partners.


 


(v)           It
is expressly agreed that the remedy at law for breach of any of the obligations
set forth in this Section 8.6(b) is inadequate in view of (i) the
complexities and uncertainties in measuring the actual damages that would be
sustained by reason of the failure of a Partner to comply fully with each of
said obligations, and (ii) the uniqueness of the Deferred Parcel and the
Partnership business and Partners’ relationship. Accordingly, each of the
aforesaid obligations shall be, and is hereby expressly made, enforceable by
specific performance.


 


8.7          Cost and Expense of
Transfer; Allocation of Profits and Losses. All costs and expenses incurred by the
Partnership (except the fees and disbursements of counsel) in connection with
any disposition of a Partner’s interest or sale of a Deferred Parcel, including
any filing, recording and publishing costs, shall be paid by the purchasing
Class of Partners. If an interest in the Partnership is disposed of pursuant to
this Article VIII, the selling Partner shall nevertheless be entitled to a
portion of


 


26





















 


the profits and be charged
with a portion of the losses allocated to such interest or part thereof for the
fiscal year of the Partnership in which such disposition occurs, consistent
with Section 7.7 above.


 


ARTICLE IX.


 


OWNERSHIP OF PARTNERSHIP PROPERTY


 


All real or personal
property, including all improvements placed or located thereon, acquired by the
Partnership shall be owned by and in the name of the Partnership, such
ownership being subject to the other terms and provisions of this Agreement.


 


ARTICLE X.


 


FISCAL MATTERS


 


10.1        Fiscal Year. The fiscal year
of the Partnership shall be the calendar year.


 


10.2        Records; Financial Statements.


 


(a)     Proper books and records shall be kept with reference to all
Partnership transactions at the principal place of business of the Partnership,
and each Partner shall at all reasonable times during business hours have
access thereto. The books shall be kept in such manner of accounting as shall
properly reflect the actions of the Partnership in accordance with accounting
principles generally accepted within the United States and consistently applied
on such basis as will, in the opinion of the Partnership’s accountants, be most
advantageous to the Partnership. The books and records shall include the
designation and identification of any property in which the Partnership owns a
beneficial interest. The books and records of the Partnership shall be reviewed
annually at the expense of the Partnership by an independent certified public
accountant selected by the BH Investor, who shall prepare and deliver to the
Partnership, for filing, the appropriate federal Partnership income tax
return(s) before June 30 of each year. Each Partner shall receive a copy of the
Partnership income tax return at least ten (10) business days prior to filing
such return. The Partnership shall report its operations for tax purposes on
the accrual basis.


 


(b)     The BH Investor shall, at Partnership expense, furnish (or request the
manager of the Property to furnish) to the Partners (i) on or before the
twentieth (20th) day of each calendar quarter, an unaudited
statement setting forth and describing in reasonable detail the receipts and
expenditures of the Partnership during the preceding calendar quarter and
comparing the results of operations of the Partnership for such calendar
quarter and for the year to date to the appropriate Operating Budget, (ii) on
or before one hundred twenty (120) days after the end of each fiscal year, a
balance sheet of the Partnership dated as of the end of such fiscal year, a
statement of the Partners’ Capital Accounts and Capital Contribution Balances,
a statement of Distributable Cash, and a statement setting forth the Profits
and Losses for such fiscal year, audited by an independent firm of certified
public accountants as determined by the BH Investor, and (iii) from time to
time, all other information relating to the Partnership and the business and
its affairs reasonably requested by any Partner.


 


(c)     Within ten (10) days after the end of each month, the Fairways Investor
shall prepare and deliver to the Partners an unaudited financial report and
asset trend analysis for the Property for the preceding month (the “Monthly
Report”). The Monthly Report shall include a balance sheet, an income
statement, a cash flow statement, an analysis of Capital Accounts, GAAP/Tax
Fixed Asset Depreciation Ledgers and any management reports, such as rent
rolls, various


 


27





















 


accounts analysis, variance explanations and any other property
management reports.


 


(d)     The parent company of BH
Investor is a real estate fund that issues securities, maintains U.S. GAAP
audited financial statements and/or is publicly registered with the United
States Securities and Exchange Commission (“SEC”).
As a result, such parent company is subject to GAAP financial statement
requirements and other reporting requirements. These requirements include but
are not limited to quarterly and annual financial reporting (including the
reports for public companies on Form 10-Q and Form 10-K and reporting under
Rules 3-05, 3-09 or 3-14 of Regulation S-X). In addition, certain accounting
requirements may dictate that BH Investor report the Partnership and/or the
Property as a subsidiary of BH Investor. Therefore Fairways Investor agrees to
provide such information requested by BH Investor that Fairways Investor or its
Affiliates have in their possession, and Fairways Investor will obtain such
information not in its possession, as BH Investor reasonably requires in order
to consolidate, audit and/or review financial statements of the Property, or
the Partnership for the applicable reporting periods. As of the execution
hereof, BH Investor’s fiscal year for purposes of such reporting ends on
December 31st, and BH Investor shall give reasonable notice to
Fairways Investor of any change in such fiscal year or any other such reporting
requirements.


 


10.3        Accounts. All funds of the
Partnership shall be deposited in its name in an account or accounts maintained
at a bank designated by the General Partner or with an agent designated by the
Partners. Such funds shall not be commingled with the funds of any other person.
Checks shall be drawn upon the Partnership account or accounts only for
purposes of the Partnership and shall be signed by the General Partner or such
officers as the General Partner shall designate.


 


10.4        Federal Tax Elections. All
elections for federal tax purposes, including but not limited to an election to
adjust the basis of the assets of the Partnership pursuant to Section 754 of
the Code, and the adoption of accelerated depreciation or cost recovery methods
required or permitted to be made by the Partnership under the Code shall be
determined by the General Partner.


 


10.5        Tax Audits. The General
Partner shall be designated as the “tax matters partner” of the Partnership as
defined in Sections 6221 et. seq., of the Code and, in the event of an
audit of the Partnership by the Internal Revenue Service (“IRS”), the
General Partner, at Partnership expense, shall have the exclusive right to
conduct all negotiations with the Internal Revenue Service on behalf of the
Partnership, and the attorneys and accountants selected by the Partners to
conduct such negotiations are hereby specifically authorized by the Partners to
act on behalf of the Partnership in such negotiations, and each Partner will
execute such further authority as the IRS may require to permit the General
Partner and its selected attorneys and accountants to so represent the
Partners; provided the General Partner shall not take any action take any
action contemplated by Sections 6222 through 6232 of the Code without prior
Approval by Partnership Vote. This provision is not intended to authorize the
General Partner to take any action left to the determination of an individual
Partner under Sections 6222 through 6232 of the Code.


 


ARTICLE XI.


 


AMENDMENT


 


This Agreement may not be altered or amended except
by a written instrument signed by the Partner holding a Majority in Interest of
the Partnership Percentages, provided that no amendment may reduce a Partner’s
economic interest in the Partnership without the Partner’s prior written
consent.


 


28

















 


ARTICLE XII.


 


DISSOLUTION OF THE PARTNERSHIP


 


12.1        Dissolution.


 


(a)     It is the intention of the Partners that the Partnership shall be
continued by the Partners, or those remaining, pursuant to the provisions of
this Agreement, notwithstanding the occurrence of any event which would
otherwise result in a dissolution of the Partnership pursuant to the law of the
State of Delaware, and no Partner shall be released or relieved of any duty or
obligation hereunder by reason of any such dissolution; provided, however, that
the Partnership shall be terminated, its affairs wound up and its property and
assets distributed on the earlier of:


 


(i)            expiration
of the Partnership term as provided in Section 1.5 hereof;


 


(ii)           the
written consent of the Partners;


 


(iii)          an Event of Withdrawal of a General Partner
(as defined in Article VIII hereof) unless at the time of the Event of
Withdrawal, there is at least one (1) other General Partner or the provisions
of Section 12.1(b) below are satisfied;


 


(iv)          the
disposition (including condemnation or casualty loss) of all or substantially
all of the property and assets (which shall include all of the real property
owned by the Partnership) of the Partnership and receipt of the proceeds from
such sale of other disposition (except under circumstances where (x) all or a
portion of the purchase price is payable after the closing of the sale or other
disposition, or (y) the Partnership retains a material economic or ownership
interest in the entity to which all or substantially all of its assets are
Transferred); or


 


(v)           dissolution
by law or appropriate judicial decree.


 


(b)     Upon the occurrence of any Event of Withdrawal of a General Partner at
a time when there is no other General Partner, the Partnership shall be
continued if, within a period of ninety (90) days from the date of such
occurrence, all other Partners agree in writing that the Partnership shall be
continued and designate one or more individuals or legal entities to be
admitted to the Partnership as a General Partner, which agreement shall be
effective as of the date of the occurrence of the applicable Event of
Withdrawal. Any such individual or legal entity shall, upon admission to the
Partnership, succeed to all of the rights and powers of a General Partner
hereunder.


 


(c)     Dissolution of the Partnership shall be effective on December 31, 2057
or the day on which the event occurs giving rise to the dissolution, but the
Partnership shall not terminate until the Certificate shall have been canceled
and the assets of the Partnership shall have been distributed as provided below.
Notwithstanding the dissolution of the Partnership, prior to the termination of
the Partnership as aforesaid, the business of the Partnership and the affairs
of the Partners shall continue to be governed by this Agreement.


 


(d)     The bankruptcy, insolvency, dissolution, or adjudication of
incompetency of a Partner shall not cause the dissolution of the Partnership. In
the event of the bankruptcy, or incompetency of a Partner, its administrators
or representatives (“Successor”) shall have the same rights that such
Partner would have had if it had not become bankrupt, except that, in the event
of bankruptcy, such Successor shall have no right to participate in the
management of the Partnership or vote on any Partnership matter unless such
Successor is admitted to the Partnership as a Partner


 


29





















 


pursuant to Section 8.5, and the interest of such Partner in the
Partnership shall, until the termination of the Partnership, otherwise be
subject to the terms, provisions and conditions of this Agreement as if such
Partner had not become bankrupt. In the event of any other withdrawal of a
Partner, the Partner shall only be entitled to Partnership distributions
distributable to it but not actually paid to it prior to such withdrawal and
shall not have any right to have its interest in the Partnership purchased or
paid for.


 


(e)     Notwithstanding anything in this Agreement to the contrary, upon a sale
of all or substantially all of the assets of the Partnership in a single
transaction (which shall include all of the real property owned by the
Partnership) (a “Single Sale Transaction”) where all or any portion of
the consideration payable to the Partnership is to be received by the
Partnership more than ninety (90) days after the date on which such Single Sale
Transaction occurs, the Partnership shall continue for purposes of collecting
the deferred payments and making distributions to the Partners. In such event
(i) gain recognized and cash distributed in any year as a result of such Single
Sale Transaction shall be allocated and distributed among the Partners in the
same proportion as such gain and cash would have been allocated and distributed
were the entire gain resulting from such Single Sale Transaction required to be
recognized for Federal income tax purposes in the year in which such Single
Sale Transaction occurred; and (ii) income attributable to interest on deferred
payments shall be allocated among, and such interest shall be distributed to,
the Partners as if the deferred payment obligations received by the Partnership
had been distributed to the Partners pursuant to Section 6.1.


 


12.2        Wind-Up of Affairs. As
expeditiously as possible following the occurrence of an event giving rise to a
termination of the Partnership pursuant to Section 12.1 above, a
liquidator appointed by the General Partner or the BH Investor is referred to
herein as the “Liquidator”) shall liquidate the assets of the Partnership,
apply and distribute the proceeds thereof as contemplated by this Agreement and
cause the cancellation of the Certificate. As soon as possible after the
dissolution of the Partnership, a full account of the assets and liabilities of
the Partnership shall be taken, and a statement shall be prepared by the
independent accountants then acting for the Partnership setting forth the
assets and liabilities of the Partnership. A copy of such statement shall be
furnished to each of the Partners within ninety (90) days after such
dissolution. Thereafter, the Liquidator shall wind up the affairs of the
Partnership and distribute the Partnership assets in the following order of
priority:


 


(a)     to creditors (including Partners who are creditors) in satisfaction of
the liabilities of the Partnership, other than liabilities to existing and
former Partners for distributions from the Partnership;


 


(b)     to the establishment of any reserves which the Liquidator deems
reasonably necessary for any contingencies or unforeseen liabilities or
obligations of the Partnership. Such reserves shall be paid over by the
Liquidator to an escrow agent or shall be held by the Liquidator for the
purpose of disbursing such reserves in payment of any of such contingencies. At
the expiration of such period as the Liquidator deems advisable, the balance
thereof shall be distributed in the manner and order provided in this Section;
and


 


(c)     to the Partners in accordance with Section 6.1 above.


 


Notwithstanding anything to
the contrary, in the event the Partnership is “liquidated” within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g) and an event described in Section
12.1(a) shall have occurred, liquidating distributions shall be made
pursuant to this Section 12.2 by the end of the taxable year in which
the Partnership is liquidated, or, if later, within ninety (90) days after the
date of such liquidation. Distributions pursuant to the preceding sentence may
be made to a trust for the purpose of an orderly liquidation of the Partnership
by the trust in accordance with the Act.


 


30





















 


12.3        Compliance with Treasury Regulations.
It is the intent of the Partners that the allocations provided in Section
7.1 result in distributions required pursuant to Section 12.2(d)
being in accordance with positive Capital Accounts as provided for in the
Treasury Regulations under Code Section 704(b). However, if after giving
hypothetical effect to the allocations required by Section 7.1, the
Capital Accounts of the Partners are in such ratios or balances that
distributions pursuant to Section 12.2(d) would not be in accordance
with the positive Capital Accounts of the Partners as required by the Treasury
Regulations under Code Section 704(b), such failure shall not affect or alter
the distributions required by Section 12.2(d). Rather, the liquidator
will have the authority to make other allocations of Profits and Losses (or
items thereof) among the Partners which, to the extent possible, will result in
the Capital Accounts of each Partners having a balance prior to distribution
equal to the amount of distributions to be received by such Partners pursuant
to Section 12.2(d).


 


12.4        No Deficit Capital Account Obligation.
Notwithstanding anything else to the contrary in this Agreement, upon a
liquidation within the meaning of Section 1.704-1(b)(2)(ii)(g) of the
Regulations, if any Partner has a deficit Capital Account (after giving effect
to all contributions, distributions, allocations and other Capital Account
adjustments for all taxable years, including the year during which such
liquidation occurs), such Partner shall have no obligation to make any Capital
Contribution, and the negative balance of such Partner’s Capital Account shall
not be considered a debt owed by such Partner to the Partnership or to any
other Person for any purpose whatsoever.


 


12.5        Distribution in Kind. If any
assets of the Partnership are to be distributed in kind, which shall require
Approval by Partnership Vote, the net fair market value of such assets as of
the date of dissolution shall be determined by independent appraisal or by
agreement of the Partners. Prior to distribution, such assets shall be deemed
to have been sold for their fair market values and the Capital Accounts of the
Partners shall be adjusted pursuant to the terms of this Agreement to reflect
the allocation of gain or loss which would have resulted from such deemed sale.


 


12.6        Cancellation of Certificate. Upon
the dissolution and the final liquidation of the Partnership, there shall be
filed for record as provided by Delaware law a Certificate of Cancellation
executed by the Partner holding the Majority in Interest of the Partnership
Percentages.


 


12.7        Return of Contribution Nonrecourse to Other
Partners. Except as provided by law or as expressly provided in
this Agreement, upon dissolution each Partner shall look solely to the assets
of the Partnership for the return of its Capital Contribution. If the
Partnership property remaining after the payment or discharge of the debts and
liabilities of the Partnership is insufficient to return the cash contribution
of one or more Partners, such Partner or Partners shall have no recourse
against any other Partner.


 


ARTICLE XIII.


 


MISCELLANEOUS PROVISIONS


 


13.1        Notices. Except as may be
otherwise specifically provided in this Agreement, all notices required or
permitted hereunder shall be in writing and shall be deemed to be delivered on
the earlier of (i) when delivered in person, or (ii) when delivered by
commercial courier such as Federal Express, Express Mail or other overnight
delivery service where delivery is evidenced by written receipt, addressed to
the appropriate party at the addresses set forth in Article II, or such other
address of the party as may have been changed as provided herein. Any party may
change the address to which notices will be given by giving notice of such
change to the other parties, in accordance with the provisions of this Section
14.1.


 


31





















 


13.2        Governing Law. This Agreement
shall be construed under and in accordance with the laws of the State of
Delaware, excluding any conflicts of law rule or principle which might refer
such construction to the laws of another state or country.


 


13.3        Execution of Other Agreements.
The parties hereto covenant and agree that they will execute such other further
instruments and documents as are or may become necessary or convenient to
effectuate and carry out the Partnership created by this Agreement.


 


13.4        No Action for Partition. No
Partner shall be entitled to bring an action for partition against the
Partnership, and each Partner hereby irrevocably waives, during the term of the
Partnership and during the period of its liquidation following any dissolution,
any right to maintain an action for partition with respect to any of the assets
of the Partnership.


 


13.5        Paragraph Headings. The
headings used in this Agreement are used for administrative purposes only and
do not constitute substantive matter to be considered in construing the terms
of this Agreement.


 


13.6        Binding Effect and Benefit. This
Agreement is binding on, and shall inure to the benefit of, all of the parties
hereto and to their respective heirs, executors, administrators, legal
representatives, and successors and assigns where permitted by this Agreement.


 


13.7        Severability. In case any one
or more of the provisions contained in this Agreement shall for any reason be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision hereof, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.


 


13.8        Counterparts. This Agreement
may be executed in any number of counterparts, all of which together shall
constitute a single contract, and each of such counterparts shall for all
purposes be deemed to be an original. This Agreement may be executed and
delivered by fax (telecopier); any original signatures that are initially delivered
by fax shall be physically delivered with reasonable promptness thereafter. This
Agreement shall become binding when one or more counterparts hereof,
individually or taken together, shall bear the signatures of all of the parties
reflected hereon as the signatories.


 


13.9        Gender. Wherever the context
so requires, all words herein in the neuter gender shall be deemed to include
the feminine or masculine genders, and vice versa, all singular words shall
include the plural, and all plural words shall include the singular.


 


13.10      Entire Agreement. This
Agreement, together with all Exhibits hereto and all other documents referred
to herein, constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understanding, inducements or conditions, express
or implied, oral or written.


 


13.11      Validity. In the event that
all or any portion of any provision of this Agreement shall be held to be
invalid, the same shall not affect in any respect whatsoever the validity of
the remainder of this Agreement.


 


13.12      Indulgences, Etc. Neither the
failure nor any delay on the part of any party hereto to exercise any right,
remedy, power or privilege under this Agreement shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power
or privilege preclude any other or further exercise of the same or any other
right, remedy, power or privilege; nor shall any waiver of any right,


 


32





















 


remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and signed by the party asserted to have granted such waiver.


 


13.13      Remedies. In the event of any
breach of this Agreement by any Partner or default by any Partner in connection
with performing any obligation of such Partner under this Agreement, the
Partnership’s and the non-defaulting Partner’s rights and remedies contained
herein or in any other agreement shall be cumulative and shall not be exclusive
of any other rights or remedies which the Partnership or the non-defaulting
Partner may have at law or in equity.


 


13.14      Interpretation. No provision
of this Agreement is to be interpreted for or against either party because that
party or that party’s legal representative drafted such provision.


 


13.15      Time of Essence. TIME IS OF
THE ESSENCE in connection with this Agreement.


 


13.16      Dispute Resolution. The
Partners have agreed to submit disputes to mandatory arbitration in accordance
with the provisions of this Section 13.16. Each Partner waives the right
to commence an action in connection with this Agreement in any court and
expressly agrees to be bound by the decision of the arbitrator determined in
this Section 13.16; provided, however, the waiver in this Section
13.16 will not prevent any Partner from commencing an action in any court
for the sole purposes of enforcing the obligation of another Partner to submit
to binding arbitration or the enforcement of an award granted by arbitration
herein. Notwithstanding the foregoing, prior to submitting any dispute
hereunder to arbitration, the Partners shall first attempt in good faith, for
thirty (30) days after the first notice given under this Agreement regarding
such dispute, to resolve any such dispute promptly by negotiation between
executives of each party who have authority to settle the dispute, which shall
include an in-person meeting between such executives in Dallas, Texas.


 


(a)     Any
dispute between the Partners as to the interpretation of any provision of this
Agreement or the rights and obligations of any party hereunder shall be
resolved through binding arbitration as hereinafter provided in Dallas, Texas.


 


(b)     If arbitration is required to
resolve a dispute between the Partners, a panel of three (3) arbitrators shall
be convened. Each of the BH Investor and the Fairways Investor shall each
select one (1) arbitrator with at least five (5) years experience in commercial
real estate, and those two (2) arbitrators shall by agreement select a third
arbitrator having recognized expertise and at least five (5) years experience
in commercial real estate.


 


(c)     The arbitrators selected
pursuant to Section 13.16(b) above will establish the rules for
proceeding with the arbitration of the dispute, which will be binding upon all
parties to the arbitration proceeding. The arbitrators may use the rules of the
American Arbitration Association for commercial arbitration but are encouraged
to adopt the rules the arbitrators deem appropriate to accomplish the
arbitration in the quickest and least expensive manner possible. Accordingly,
the arbitrators may (i) dispense with any formal rules of evidence and
allow hearsay testimony so as to limit the number of witnesses required,
(ii) minimize discovery procedures as the arbitrators deem appropriate,
(iii) limit the time for presentation of any party’s case as well as the
amount of information or number of witnesses to be presented in connection with
any hearing, and (iv) impose any other rules which the arbitrators believe
appropriate to effect a resolution of the dispute as quickly and inexpensively
as possible. In any event, the arbitrators (A) shall permit each side no more
than two (2) depositions (including any deposition of experts), which
depositions may not exceed four (4) hours each, one set of 10 interrogatories
(inclusive of sub-parts) and one set of five (5) document requests (inclusive
of sub-parts); (B) shall not permit any requests for admissions; (C) shall
limit the hearing, if


 


33





















 


any, to two (2)
days; and (D) shall render their decision within sixty (60) days of the filing
of the arbitration.


 


(d)     The arbitrators will have the
exclusive authority to determine and award costs of arbitration and the costs
incurred by any party for its attorneys, advisors and consultants.


 


(e)     Any award made by the
arbitrators shall be binding on the Partners and all parties to the arbitration
and shall be enforceable to the fullest extent of the law.


 


(f)      In
reaching any determination or award, the arbitrators will apply the laws of the
state of Texas. Except as permitted under Section 13.16(d) above, the
arbitrators’ award will be limited to actual damages and will not include
consequential, special, punitive or exemplary damages. Nothing contained in
this Agreement will be deemed to give the arbitrators any authority, power or
right to alter, change, amend, modify, add to or subtract from any of the
provisions of this Agreement. All privileges under state and federal law,
including, without limitation, attorney-client, work product and party
communication privileges, shall be preserved and protected. All experts engaged
by a party must be disclosed to the other party within fourteen (14) days after
the date of notice and demand for arbitration is given.


 


(g)     Notwithstanding
any provision of this Agreement to the contrary, any party may seek injunctive
relief or other form of ancillary relief at any time from any court of
competent jurisdiction in Dallas County, Texas. In the event that a dispute or
controversy requires emergency relief before the matter may be resolved under
the arbitration procedures of this Section 13.16, notwithstanding the
fact that any court of competent jurisdiction may enter an order providing for
injunctive or other form of ancillary relief, the parties expressly agree that
such arbitration procedures will still govern the ultimate resolution of that
portion of the dispute or controversy not resolved pursuant to said court
order.


 


13.17      NOTICE OF INDEMNIFICATION. THE PARTIES TO THIS AGREEMENT HEREBY
ACKNOWLEDGE AND AGREE THAT THIS AGREEMENT CONTAINS CERTAIN INDEMNIFICATION
PROVISIONS PURSUANT TO SECTION 5.2.


 


ARTICLE XIV.


 


SECURITIES LAW CONSIDERATIONS


 


14.1        No Registration/Restriction on Sale.
THE PARTNERSHIP INTERESTS HAVE NOT BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, NOR HAVE
THEY BEEN REGISTERED WITH THE SECURITIES COMMISSION OF ANY OTHER APPLICABLE
STATE, INCLUDING WITHOUT LIMITATION THE STATE OF DELAWARE. THE PARTNERSHIP
INTERESTS MAY BE ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE OFFERED FOR
SALE, PLEDGED, HYPOTHECATED, SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE WITH THE
TERMS AND CONDITIONS OF THIS AGREEMENT AND IN A TRANSACTION WHICH IS EITHER
EXEMPT FROM REGISTRATION UNDER SUCH ACTS OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACTS.


 


14.2        Compliance with Securities Laws.
The Partners acknowledge and confirm that their Partner interests have not been
registered under any federal or state securities laws by virtue of exemptions
from the registration provisions thereof and consequently cannot be sold except
pursuant to appropriate registration or exemption from registration as
applicable. No Transfer of all or any part of a


 


34





















 


Partner interest (except a Transfer upon the death,
incapacity or bankruptcy of a Partner to his personal representative and
beneficiaries), including, without limitation, any Transfer of a right to
distributions, profits and/or losses to a person who does not become a Partner,
may be made unless the Partnership is provided with an opinion of counsel
acceptable to the Partners (both as to the identity of the counsel and the
substance of the opinion) to the effect that such offer or assignment (a) may
be effected without registration under the Securities Act of 1933, as amended,
or the Investment Partnership Act of 1940, as amended, and (b) does not violate
any applicable federal or state securities laws (including any investment
suitability standards) applicable to the Partnership or the Partners. Each of
the Partners hereby (1) represents and warrants that it is an “accredited
investor,” as such term is defined in Rule 501(a) of Regulation D promulgated
under the Securities Act of 1933, as amended, and that the investment made by
such Partner in the Partnership is for its own account for investment and (2)
covenants that such Partner shall not sell, transfer, hypothecate or assign its
interest in the Partnership or transfer interests in such Partner in
contravention of the Securities Act of 1933, as amended, or any applicable
state securities laws.


 


14.3        Access to Information. Each of
the Partners represents to the Partnership that before determining to enter
into this Agreement and to invest in the Partnership, each Partner made an
independent investigation into the Partnership and that it received whatever
information it deemed necessary or relevant in order to decide whether to enter
into this Agreement or invest in the Partnership. Each Partner acknowledges
that the financial materials provided to the Partners are only estimates of
expected future operations based on assumptions about future markets and there
is no assurance that such projections will be realized.


 


14.4        Limitations of Fees. Reference
is made to that certain Amended and Restated Agreement of Limited Partnership
of Behringer Harvard Opportunity OP I LP dated as of November 24, 2004
(together with all amendments thereto, the “BH Investor Agreement”) in
respect of the BH Investor. Notwithstanding anything contained in this
Agreement to the contrary, if any fee paid by the Partnership to any general
partner in the BH Investor or any Affiliate of any such general partner (each a
“BH Investor Manager Party”) results in the BH Investor paying, through
its interest in the Partnership, fees in excess of those fees permitted to be
paid to such BH Investor Manager Party under the terms of the BH Investor
Agreement or any other related agreement, then such BH Investor Manager Party
shall reimburse directly to the BH Investor its allocable share of such fee to
the extent necessary to comply with the terms of the BH Investor Agreement. In
the event that a BH Investor Manager Party receives from the Partnership a fee
whose retention by such BH Investor Manager Party is, under the terms of the BH
Investor Agreement or any other related agreement, contingent upon the
happening of future events, such BH Investor Manager Party shall hold the BH
Investor’s allocable share of such fee until the applicable contingencies are
resolved, and shall thereafter dispose of the BH Investor’s allocable share of
such fee in accordance with the BH Investor Agreement or any other related
agreement. It is understood and agreed that the limitations and provisions set
forth in this Section 14.4 are for the sole benefit of the BH Investor,
and, accordingly, no other party shall be entitled to a refund of fees paid by
the Partnership under this Agreement or any other benefit set forth in this Section
14.4. Furthermore, it is understood and agreed that the limitations and
other provisions set forth in this Section 14.4 shall not be applicable
at such time as the BH Investor no longer owns a direct or indirect interest in
the Partnership.


 


14.5        Amendments to Agreement. Notwithstanding
anything contained herein to the contrary, in the event that legal counsel for
the BH Investor reasonably determines that a reasonable amendment to this
Agreement is necessary or advisable in order for this Agreement to comply with
applicable securities laws, the BH Investor Agreement, or NASAA Guidelines (as such
term is defined in the BH Investor Agreement), then each Partner shall, within
ten (10) days after request from the BH Investor, execute such an amendment;
provided, however, that no such amendment may reduce a Partner’s economic
interest in the Partnership or increase a Partner’s liabilities or obligations
under this Agreement without such Partner’s prior written consent.


 


35





















 


14.6        Limitation on Liability of Partners.
Notwithstanding anything contained in this Agreement to the contrary, any
liability of a Partner arising under this Agreement or in respect of the
Partnership shall be satisfied solely from the interest of such Partner in the
Partnership, and each Partner and any other Person having the right to enforce
such liability shall look solely to the interest of such Partner in the
Partnership for the satisfaction of such liability and shall have no claim or
recourse against any other asset of such Partner. In no event shall any of the
partners, officers, directors, agents or advisors of a Partner be held to any
personal liability whatsoever or be liable for any of the obligations of the
Partner, nor shall the property of any such Persons be subject to the payment
of any obligations of the Partner arising under this Agreement or in respect of
the Partnership.


 


[Signatures Follow
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36

















 


IN WITNESS WHEREOF, the
parties hereto have executed this Agreement of Limited Partnership as of the
date first above written.


 


	
   

  	
  GENERAL PARTNER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER
  HARVARD FRISCO SQUARE GP,

  
	
   

  	
  LLC,

  
	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Gerald J. Reihsen, III

  	
   

  
	
   

  	
   

  	
  Gerald
  J. Reihsen, III

  	
   

  
	
   

  	
   

  	
  Executive
  Vice President

  	
   

  



 


 


[This space intentionally left blank]


 

















 


	
   

  	
  CLASS A LIMITED PARTNER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER
  HARVARD FRISCO SQUARE

  
	
   

  	
  INVESTOR,
  LLC,

  
	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Gerald J. Reihsen, III

  	
   

  
	
   

  	
   

  	
  Gerald
  J. Reihsen, III

  	
   

  
	
   

  	
   

  	
  Executive Vice
  President

  	
   

  



 

















 


	
   

  	
  CLASS B LIMITED PARTNERS

  
	
   

  	
   

  
	
   

  	
  FRISCO
  SQUARE LAND, LTD.,

  
	
   

  	
  a
  Texas limited partnership

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Fairways
  FS Land, LLC,

  	
   

  
	
   

  	
   

  	
  a
  Texas limited liability company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James C. Leslie

  	
   

  
	
   

  	
   

  	
   

  	
  James C. Leslie,
  Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  FRISCO
  SQUARE PROPERTIES, LTD.,

  	
   

  
	
   

  	
  a
  Texas limited partnership

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Fairways
  FS Properties, LLC,

  	
   

  
	
   

  	
   

  	
  a
  Texas limited liability company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James C. Leslie

  	
   

  
	
   

  	
   

  	
   

  	
  James C. Leslie,
  Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  FRISCO
  SQUARE B1-6, F1-11, LTD.,

  	
   

  
	
   

  	
  a
  Texas limited partnership

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Fairways
  B1-6, F1-11, LLC,

  	
   

  
	
   

  	
   

  	
  a
  Texas limited liability company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James C. Leslie

  	
   

  
	
   

  	
   

  	
   

  	
  James C. Leslie,
  Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  FRISCO
  SQUARE B1-7, F1-10, LTD.,

  	
   

  
	
   

  	
  a
  Texas limited partnership

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Fairways
  B1-7 F1-10, LLC,

  	
   

  
	
   

  	
   

  	
  a
  Texas limited liability company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James C. Leslie

  	
   

  
	
   

  	
   

  	
   

  	
  James C. Leslie,
  Manager

  	
   

  



 

















 


Exhibit A


 


LEGAL DESCRIPTION OF PROPERTY


 


BHFS I,
LLC PROPERTIES:


 


TRACT 1:


 


BEING a tract of land
situated in the W. B. Watkins Survey Abstract No. 1004, in the City of Frisco,
Collin County, Texas; said tract being part of land conveyed to Frisco Square
Ltd. as recorded in Collin County Clerk’s File No. 2005-004994 Deed Records
Collin County, Texas (DRCCT); and being more particularly described as follows:


 


BEGINNING at a 1/2” iron
rod found for corner at the north end of a corner clip at the intersection of
the east line of Dallas North Tollway (a 310 ft. right-of-way) with the south
line of Main Street (a variable width right-of-way as recorded in Collin County
Clerk’s File No. 2005-0071194 DRCCT;


 


THENCE North 86°07’47”
East, along the south line of said Main Street, for a distance of 3 9.33 feet
to a 1/2” iron rod for corner on the south line of a 24 ft. wide strip of land
conveyed to the City of Frisco as recorded in Collin County Clerk’s File No.
2000-0081361 DRCCT;


 


THENCE along the south
line of said City of Frisco tract with a circular curve to the left having a
central angle of 02°34’14”, a radius of 5,793.61 feet, a tangent length of
129.98 feet, and a chord of North 87°01’27” East 259.90 feet, for an arc
distance of 259.92 feet to a 1/2” iron rod found at said curve’s point of
tangency;


 


THENCE North 85°44’20”
East, continuing along said south line, for a distance of 8.48 feet to a 1/2”
iron rod found for corner;


 


THENCE North 86°07’47”
East, continuing along said south line, continuing along said south line for a
distance of 776.11 ft. to a 1/2” iron rod found for corner on the west line of
Lot Bl-10 of Frisco Square Phase 2 as conveyed to the City of Frisco and
recorded in Cabinet P, Page 724 DRCCT;


 


THENCE South 03°52’13”
East, departing said south line and along the west line of said City of Frisco
tract, for a distance of 99.38 ft. to a 1/2” iron rod found for corner;


 


THENCE South 83°23’44”
West, along a north line of said Frisco tract, for a distance of 184.15 ft. to
a 1/2” iron rod found for corner;


 


THENCE South 06°36’16”
East, along a west line of said Frisco tract, for a distance of 67.00 ft. to a
1/2” iron rod found for corner;


 


THENCE South 83°23’44”
West, along a north line of said Frisco tract, for a distance of 105.76 ft. to
a 1/2” iron rod found for corner;


 


THENCE South 06°36’16”
East, along a west line of said Frisco tract, for a distance of 246.50 ft. to a
1/2” iron rod found for corner;


 


THENCE North 83°23’44”
East, along a south line of said Frisco tract, for a distance of 57.76 ft. to a
1/2” iron rod found for corner;


 


THENCE South 06°36’16”
East, along a west line of said Frisco tract, for a distance of 111.50 ft. to a
1/2” iron rod found for corner;


 


1
















 


THENCE North 83°23’44”
East, along a south line of said Frisco tract, for a distance of 62.41 ft. to a
1/2” iron rod found for corner at the northwest corner of future Lot Bl-8 per
deed to Frisco Square Properties, Ltd. as recorded in Collin County Clerk’s
File No. 2003-0213220 DRCCT;


 


THENCE South 06°36’16”
East, along the west line of said future Lot Bl-8, for a distance of 87.25 ft.
to a 1/2” iron rod found for corner;


 


THENCE South 83°23’44”
West, continuing along said west line, for a distance of 25.33 ft. to a 1/2”
iron rod found for corner;


 


THENCE South 06°36’16”
East, continuing along said west line, for a distance of 81.75 ft. to a 1/2”
iron rod found for corner on the north line of Frisco Square Blvd. (recorded as
W. Main St.) per the Conveyance Plat recorded in Cabinet N, Page 690 DRCCT;


 


THENCE South 83°23’44”
West, along said north line, for a distance of 902.58 ft. to a 1/2” iron rod
found for corner at the southeast end of a corner clip at the intersection of
said north line with the east line of said Dallas North Tollway;


 


THENCE North 51°36’16”
West, along said corner clip, for a distance of 28.28 ft. to a 1/2” iron rod
found for corner on the east line of said Dallas North Tollway and at the
northwest end of said corner clip;


 


THENCE North 06°36’16”
West, along said east line, for a distance of 689.45 to a 1/2” iron rod found
for corner;


 


THENCE North 38°46’11”
East, along the corner clip at the intersection of said east line with the
south line of said Main Street, for a distance of 56.24 feet to the POINT OF
BEGINNING and containing 15.24 90 acres of land.


 


TRACT 2:


 


BEING a tract of land
situated in the W.B. Watkins Survey Abstract No. 1004, in the City of Frisco,
Collin County, Texas; said tract being part of land conveyed to Frisco Square
Land, Ltd. as recorded in Collin County Clerk’s (C.C.) File No. 2005-004 994
Deed Records Collin County, Texas (DRCCT); and being more particularly
described as follows:


 


BEGINNING at a 1/2” iron
rod found for corner at the north end of a corner clip at the intersection of
the east line of Dallas North Tollway (a 310 ft. right-of-way) with the south
line of Frisco Square Blvd. (recorded as W. Main St.)(a 73 ft. right-of-way)
per the Conveyance Plat recorded in Cabinet N Page 690 DRCCT;


 


THENCE North 83°23’44”
East, along said south line, for a distance of 978.97 ft. to a 1⁄2” iron rod
found for corner;


 


THENCE North 06°36’16”
West, continuing along said south line, for a distance of 12.00 ft. to a 1⁄2”
iron rod found for corner;


 


THENCE North 83°23’44”
East, continuing along said south line, for a distance of 30.00 ft. to a 1⁄2”
iron rod found for corner at the intersection of said south line with the west
line of Church Street (a 121 ft. right-of-way) as recorded in Cabinet N Page
690 DRCCT;


 


THENCE South 06°36’16”
East, along said west line, for a distance of 539.00 ft. to a 1⁄2” iron rod found
for corner at the intersection of said west line with the north line of Page
Street (a 67 ft. right-of-way) as recorded in Cabinet N Page 690 DRCCT and in
C.C. No. 2006-955330 DRCCT;


 


2

















 


THENCE South 83°23’44”
West, along the said north line of Page Street, for a distance of 1,008.97 ft.
to a 1⁄2” iron rod found for corner at the south end of a corner clip at the
intersection of said north line with the east line of said Dallas North
Tollway;


 


THENCE North 51°36’16”
West, along said corner clip, for a distance of 28.28 ft. to a 1⁄2” iron rod
found for corner on the east line of said Dallas North Tollway;


 


THENCE North 06°36’16” West,
along said east line, for a distance of 487.00 ft. to a 1⁄2” iron rod found for
corner at the southwest end of a corner clip at the intersection of said east
line with the south line of said Frisco Square Blvd.;


 


THENCE North 38°23’44”
East, along said corner clip, for a distance of 28.28 ft. to the POINT OF
BEGINNING and containing 12.4478 acres of land SAVE AND EXCEPT THE FOLLOWING
DESCRIBED TRACT:


 


SAVE AND EXCEPT
FROM TRACT 2:


 


BEING a tract of land
situated in the W.B. Watkins Survey Abstract No. 1004, in the City of Frisco,
Collin County, Texas; said tract being part of land conveyed to Frisco Square
Land, Ltd. as recorded in Collin County Clerk’s (C.C.) File No. 2005-004 994
Deed Records Collin County, Texas (DRCCT); and being more particularly described
as follows:


 


BEGINNING at a 1/2” iron
rod found for corner at the north end of a corner clip at the intersection of
the east line of Dallas North Tollway, with the north line of Page Street (a 67
ft. right-of-way) as recorded in Cabinet N Page 690 DRCCT and in C.C. No.
2006-955330 DRCCT;


 


THENCE North 06°36’16”,
along said east line, for a distance of 171.00 ft. to a point for corner;


 


THENCE North 83°23’44”
East, departing said east line, for a distance of 220.50 ft. to a point for
corner;


 


THENCE South 06°36’16”
East, for a distance of 191.00 ft. to a point for corner on the north line of
said Page Street;


 


THENCE South 83°23’44”
West, along said north line, for a distance of 200.50 ft. to a 1/2” iron rod
found for corner at the south end of a corner clip at the intersection of said
north line with the east line of said Dallas North Tollway;


 


THENCE North 51°36’16”
West, along said corner clip, for a distance of 28.28 ft. to the POINT OF
BEGINNING and containing 0.9622 acres of land.


 


LEAVING A NET AREA OF
11.4856 ACRES OF LAND FOR TRACT 2.


 


TRACT 3
(SHOWN ON SURVEY [PREPARED
BY RUDY RANGEL, R.P.L.S. NO. 5664, DATED 07/12/07] AS TRACT 4A):


 


BEING a tract of land
situated in the W.B. Watkins Survey Abstract No. 1004, in the City of Frisco,
Collin County, Texas; said tract being part of a tract conveyed to Frisco
Square Land, Ltd., as recorded in Collin County Clerk’s (C.C.) File No.
2005-004994 Deed Records Collin County, Texas (DRCCT), and being more
particularly described as follows:


 


3

















 


BEGINNING at a 1/2” iron
rod found for corner at the intersection of the south line of a 24 ft. wide
strip of land conveyed to the City of Frisco as recorded in Collin County Clerk’s
File No. 2000-0081361 DRCCT with the east line of Lot Fl-9 of Frisco Square
Phase 2 as recorded in Cabinet P Page 724 DRCCT, said Lot Fl-9 as conveyed to
the City of Frisco per said Frisco Square Phase 2 final plat;


 


THENCE North 86°07’47”
East, along the south line of said City of Frisco 24 ft. wide strip of land,
for a distance of 162.14 ft. to a 1/2” iron rod found for corner and for the
beginning of a circular curve to the right;


 


THENCE continuing along
said south line, with said circular curve to the right having a central angle
of 15°46’18”, a radius of 2,608.02 ft., a tangent length of 361.23 ft., and a
chord of South 85°59’04” East 715.63 ft., for an arc distance of 717.90 ft. to
a 1/2” iron rod found for corner and for a point of tangency;


 


THENCE South 78°05’56”
East, continuing along said south line, for a distance of 162.10 ft. to a 1/2”
iron rod found for corner at the intersection of said south line with the west
line of John W. Elliot Drive (a 60 ft. right-of-way);


 


THENCE South 12°16’44”
West, along said west line, for a distance of 500.65 ft. to a 1/2” iron rod
found for corner at the intersection of said west line with the north line of
Frisco Square Blvd. as recorded in C.C. No. 2006-955350 DRCCT;


 


THENCE South 83°23’44”
West, along said north line, for a distance of 657.91 feet to a 1/2” iron rod
found for corner at the southeast corner of a tract conveyed to Frisco Square
Properties, Ltd. as Future Lot Fl-8, as recorded in C.C. No. 2003-0213220 DRCCT;


 


THENCE North 06°36’16”
West, departing said north line, and along the east line of said future Lot
Fl-8, for a distance of 81.75 ft. to a 1/2” iron rod found for corner;


 


THENCE South 83°23’44”
West, continuing along said east line, for a distance of 25.33 ft. to a 1/2”
iron rod found for corner;


 


THENCE North 06°36’16”
West, continuing along said east line, for a distance of 87.25 ft. to a 1/2”
iron rod found for corner on a south line of said City of Frisco Lot Fl-9;


 


THENCE North 83°23’44”
East, along said south line, for a distance of 15.91 ft. to a 1/2” iron rod
found for corner;


 


THENCE North 06°36’16”
West, along an east line of said Lot Fl-9, for a distance of 58.99 ft. to a 1/2”
iron rod found for corner;


 


THENCE North 83°23’44”
East, along a south line of said Lot Fl-9, for a distance of 209.26 ft. to a
1/2” iron rod found for corner;


 


THENCE North 06°36’16”
West, along an east line of said Lot Fl-9, for a distance of 24 9.00 ft. to a
1/2” iron rod found for corner;


 


THENCE South 83°23’44”
West, along a north line of said Lot Fl-9, for a distance of 252.44 ft. to a
1/2” iron rod found for corner;


 


THENCE North 03°52’13”
East, along an east line of said Lot Fl-9, for a distance of 84.59 ft. to a 1/2”
iron rod found for corner;


 


4

















 


THENCE South 86°07’47”
West, along a north line of said Lot Fl-9, for a distance of 155.29 ft. to a
1/2” iron rod found for corner;


 


THENCE North 03°52’13”
East, along an east line of said Lot Fl-9, for a distance of 96.00 ft. to the
POINT OF BEGINNING and containing 9.5992 acres of land.


 


BHFS II, LLC PROPERTIES:


 


Tract 1
(SHOWN ON SURVEY [PREPARED
BY RUDY RANGEL, R.P.L.S. NO. 5664, DATED 07/12/07 AND AS SHOWN ON SURVEY
PREPARED BY DANA BROWN R.P.L.S. #5336, DATED 06/27/07, LAST REVISED 07/10/07 AS
TRACT 12):


 


BEING a tract of land
situated in the W.B. Watkins Survey, Abstract No. 1004, Collin County, Texas,
and being all of Lot Bl-7, Block B-l, Frisco Square Phase 2, an addition to the
City of Frisco, Texas recorded in Cabinet P, Page 724, Map Records, Collin
County, Texas, and being more particularly described as follows:


 


BEGINNING at an X-cut set
in concrete at the southeast corner of said Lot Bl-7 at the intersection of the
west Right-of-Way line of Coleman Boulevard (114’ Right-of-Way) and the north
Right-of-Way line of Frisco Square Boulevard (70.5’ Right-of-Way) as dedicated
to the City of Frisco recorded in Cabinet N, Page 690, Map Records, Collin
County, Texas;


 


THENCE with the north
Right-of-Way line of said Frisco Square Boulevard the following calls:


 


South 82°20’57” West a
distance of 23.08 feet to an X-cut set in concrete for corner; North 07°3 9’03”
West a distance of 2.50 feet to an X-cut set in concrete for corner;


 


South 82°20’57” West a
distance of 67.33 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


South 07°39’03” East a
distance of 2.50 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


South 82°20’57” West a
distance of 19.33 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


North 07°39’03” West a
distance of 2.50 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


South 82°20’57” West a
distance of 29.25 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


South 07°39’03” East a
distance of 2.50 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


South 82°20’57” West a
distance of 25.28 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


North 07°3 9’03” West a
distance of 2.50 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


South 82°20’57” West a
distance of 31.85 feet to a 5/8” iron rod with red cap marked KHA set for
corner in the east line of future Lot 8, Block B-l;


 


THENCE North 07°39’03”
West with the east line of said future Lot 8, Block B-l a distance of 81.75
feet to a 5/8” iron rod with red cap marked KHA set for corner;


 


THENCE departing the east
line of said future Lot 8, Block B-l and with the north line of said Lot Bl -7
the following calls:


 


5

















 


North 82°20’57” East a
distance of 17.08 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


South 07°39’03” East a
distance of 0.75 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


North 82°20’57” East a
distance of 14.77 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


North 07°39’03” West a
distance of 1.50 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


North 82°20’57” East a
distance of 25.28 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


South 07°39’03” East a
distance of 1.50 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


North 82°20’57” East a
distance of 15.19 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


North 07°39’03” West a
distance of 0.75 feet to a 5/8” iron rod with red cap marked KHA set for corner;


 


North 82°20’57” East a
distance of 17.34 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


South 07°39’03” East a
distance of 0.75 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


North 82°20’57” East a
distance of 12.20 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


North 37°20’57” East a
distance of 10.61 feet to an X-cut set in concrete for corner; North 07°3 9’03”
West a distance of 23.75 feet to an X-cut set in concrete for corner;


 


North 82°20’57” East a
distance of 82.75 feet to an X-cut set in concrete for corner in the west
Right-of-Way line of said Coleman Boulevard;


 


THENCE with the west
Right-of-Way line of said Coleman Boulevard the following calls: South 07°3 9’03”
East a distance of 91.13 feet to an X-cut set in concrete for corner; North
82°20’57” East a distance of 4.00 feet to an X-cut set in concrete for corner;


 


South 07°39’03” East a
distance of 23.62 feet to the POINT OF BEGINNING and containing 0.424 5 acres
of land.


 


Tract 2
(SHOWN ON SURVEY [PREPARED
BY RUDY RANGEL, R.P.L.S. NO. 5664, DATED 07/12/07 AND AS SHOWN ON SURVEY
PREPARED BY DANA BROWN R.P.L.S. #5336, DATED 06/27/07, LAST REVISED 07/10/07AS
TRACT 13):


 


BEING a tract of land
situated in the W.B. Watkins Survey, Abstract No. 1004, Collin County, Texas,
and being all of Lot Fl-10, Block F-l, Frisco Square Phase 2, an addition to
the City of Frisco, Texas recorded in Cabinet P, Page 724, Map Records, Collin
County, Texas, and being more particularly described as follows:


 


BEGINNING at an X-cut set
in concrete at the southeast corner of said Lot Fl-10 at the intersection of
the east Right-of-Way line of Coleman Boulevard (114’ Right-of-Way) and the
north Right-of-Way line of Frisco Square Boulevard (70.5’ Right-of-Way) as dedicated
to the City of Frisco recorded in Cabinet N, Page 690, Map Records, Collin
County, Texas,-


 


6

















 


THENCE with the east
Right-of-Way line of said Coleman Boulevard the following calls: North 07°39’03”
West a distance of 23.62 feet to an X-cut set in concrete for corner; North
82°20’57” East a distance of 4.00 feet to an X-cut set in concrete for corner;


 


North 07°39’03” West a
distance of 91.13 feet to an X-cut set in concrete at the northwest corner of
said Lot Fl-10;


 


THENCE with north line of
said Lot Fl-10 the following calls:


 


North 82°20’57” East a
distance of 82.75 feet to an X-cut set in concrete for corner;


 


South 07°3 9’03” East a
distance of 23.75 feet to an X-cut set in concrete for corner;


 


South 52°39’03” East a
distance of 10.61 feet to an X-cut set in concrete for corner;


 


North 82°20’57” East a
distance of 12.20 feet to an X-cut set in concrete for corner;


 


North 07°39’03” West a
distance of 0.75 feet to an X-cut set in concrete for corner;


 


North 82°20’57” East a
distance of 17.34 feet to an X-cut set in concrete for corner;


 


South 07°39’03” East a
distance of 0.75 feet to an X-cut set in concrete for corner;


 


North 82°20’57” East a
distance of 15.19 feet to an X-cut set in concrete for corner;


 


North 07°3 9’03” West a
distance of 1.50 feet to an X-cut set in concrete for corner;


 


North 82°20’57” East a
distance of 25.28 feet to an X-cut set in concrete for corner;


 


South 07°39’03” East a
distance of 1.50 feet to an X-cut set in concrete for corner;


 


North 82°20’57” East a
distance of 14.77 feet to an X-cut set in concrete for corner; North 07°3 9’03”
West a distance of 0.75 feet to an X-cut set in concrete for corner;


 


North 82°20’57” East a
distance of 17.08 feet to an X-cut set in concrete for corner in the west line
of future Lot 8, Block F-l;


 


7

















 


THENCE South 07°39’03”
East with the west line of said future Lot 8, Block F-l a distance of 81.75
feet to a pk nail set in concrete for corner in the north Right-of-Way line of
said Frisco Square Boulevard;


 


THENCE with the north
Right-of-Way line of said Frisco Square Boulevard the following calls:


 


South 82°20’57” West a
distance of 31.85 feet to a point for corner,-South 07°3 9’03” East a distance
of 2.50 feet to an X-cut set in concrete for corner; South 82°20’57” West a
distance of 25.28 feet to an X-cut set in concrete for corner; North 07°39’03”
West a distance of 2.50 feet to an X-cut set in concrete for corner; South
82°20’57” West a distance of 29.25 feet to an X-cut set in concrete for corner;
South 07°39’03” East a distance of 2.50 feet to an X-cut set in concrete for
corner; South 82°20’57” West a distance of 19.33 feet to an X-cut set in
concrete for corner; North 07°39’03” West a distance of 2.50 feet to an X-cut
set in concrete for corner; South 82°20’57” West a distance of 67.33 feet to
X-cut set in concrete for corner; South 07°39’03” East a distance of 2.50 feet
to X-cut set in concrete for corner;


 


South 82°20’57” West a
distance of 23.08 feet to the POINT OF BEGINNING and containing 0.4245 acre of
land.


 


BHFS III, LLC PROPERTY:


 


BEING a tract of land
situated in the W.B. Watkins Survey, Abstract No. 1004, Collin County, Texas,
and being all of Lot Fl-1, Block F-l, Frisco Square Phase 2, an addition to the
City of Frisco, Texas recorded in Cabinet P, Page 724, Map Records, Collin
County, Texas, and being more particularly described as follows:


 


BEGINNING at a 5/8” iron
rod with red cap marked KHA set at the corner clip intersection of the south
Right-of-Way line of Main Street (variable width Right-of-Way) and the most
easterly northeast corner of Coleman Boulevard (114’ Right-of-Way) as dedicated
to the City of Frisco recorded in Cabinet N, Page 690, Map Records, Collin
County, Texas;


 


THENCE North 85°05’00”
East with the south Right-of-Way line of said Main Street a distance of 190.04
feet to a 5/8” iron rod with red cap marked KHA set for corner;


 


THENCE South 04°55’00”
East departing the south Right-of-Way line of said Main Street a distance of
96.67 feet to a 5/8” iron rod with red cap marked KHA set for corner, said
point being an inner ell corner in the north line of Lot Fl-11 of said Frisco
Square Phase 2;


 


THENCE with the north
line of said Lot Fl-11 the following calls:


 


South 85°05’00” West a
distance of 112.09 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


South 07°39’03” East a
distance of 14.21 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


South 82°20’57” West a
distance of 85.74 feet to a 5/8” iron rod with red cap marked KHA set for
corner in the east Right-of-Way line of said Coleman Boulevard;


 


8

















 


THENCE with the east
Right-of-Way line of said Coleman Boulevard the following calls:


 


North 07°39’03” West a
distance of 102.58 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


North 38°42’59” East a
distance of 17.25 feet to the POINT OF BEGINNING and containing 0.4746 acre of
land.


 


BHFS IV, LLC PROPERTIES:


 


Tract 1
(SHOWN ON SURVEY [PREPARED
BY DANA BROWN R.P.L.S. #5336, DATED 06/27/07, LAST REVISED 07/10/07] AS
TRACT 8):


 


BEING a tract of land
situated in the W.B. Watkins Survey, Abstract No. 1004, Collin County, Texas,
and being all of Lot Bl-5, Block B-l, Frisco Square Phase 2, an addition to the
City of Frisco, Texas recorded in Cabinet P, Page 724, Map Records, Collin
County, Texas, and being more particularly described as follows:


 


BEGINNING at a 5/8” iron
rod with red cap marked KHA set at the corner clip intersection of the south
Right-of-Way line of Main Street (variable width Right-of-Way) and the most
westerly northwest corner of Coleman Boulevard (114’ Right-of-Way) as dedicated
to the City of Frisco recorded in Cabinet N, Page 690, Map Records, Collin
County, Texas;


 


THENCE with the west
Right-of-Way line of said Coleman Boulevard the following calls:


 


South 51°17’01” East a
distance of 18.09 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


South 07°39’03” East a
distance of 108.03 feet to a 5/8” iron rod with red cap marked KHA set for
corner from which a 1/2” iron rod found bears South 22°06’46” East a distance
of 0.60 feet;


 


THENCE departing the west
Right-of-Way line of said Coleman Boulevard the following calls:


 


South 82°20’57” West a
distance of 85.74 feet to a 5/8” iron rod with red cap marked KHA set for
corner from which a 1/2” iron rod found bears South 47°57’00” East a distance
of 1.34 feet;


 


North 07°39’03” West a
distance of 24.51 feet to a 1/2” iron rod found for corner;


 


South 85°05’00” West a
distance of 120.62 feet to a 5/8” iron rod with red cap marked KHA set for
corner,-


 


North 04°55’00” West a
distance of 100.00 feet to a 5/8” iron rod with red cap marked KHA set for
corner in the south Right-of-Way line of said Main Street;


 


THENCE North 85°05’00”
East with the south Right-of-Way line of said Main Street a distance of 189.18
feet to the POINT OF BEGINNING and containing 0.5109 acre of land.


 


Tract 2
(SHOWN ON SURVEY PREPARED
BY DANA BROWN R.P.L.S. #5336, DATED 06/27/07, LAST REVISED 07/10/07] AS
TRACT 9):


 


BEING a tract of land
situated in the W.B. Watkins Survey, Abstract No. 1004, Collin County, Texas,
and being part of a tract of land described in a deed to Frisco Square, Ltd.
recorded in Volume 4721, Page 2560, Land Records, Collin County, Texas, and
being more particularly described as follows:


 


BEGINNING at 5/8” iron
rod with red cap marked KHA set at the southwest corner of Lot Bl-7, Block Bl,
Frisco Square Phase 2, an addition to the City of Frisco, Texas recorded in
Cabinet P, Page 724, Map 


 


9

















 


Records, Collin County,
Texas, said point being in the north Right-of-Way line of Frisco Square
Boulevard (70.5’ Right-of-Way) as dedicated to the City of Frisco recorded in
Cabinet N, Page 690, Map Records, Collin County, Texas;


 


THENCE with the north
Right-of-Way line of said Frisco Square Boulevard the following calls:


 


South 82°20’57” West a
distance of 100.05 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


South 37°20’57” West a
distance of 59.54 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


South 07°3 9’03” East a
distance of 57.90 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


South 82°20’57” West a
distance of 30.00 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


North 07°39’03” West a
distance of 12.00 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


South 82°20’57” West a
distance of 76.39 feet to a 1/2” iron rod with cap found for corner;


 


THENCE departing the
north Right-of-Way line of said Frisco Square Boulevard the following calls:


 


North 07°3 9’03” West a
distance of 81.75 feet to a 1/2” iron rod with cap found for corner;


 


North 82°20’57” East a
distance of 25.33 feet to a 1/2” iron rod with cap found for corner;


 


North 07°39’03” West a
distance of 87.25 feet to a 1/2” iron rod with cap found for corner in the
south line of Lot Bl-10, Lot Bl of said Frisco Square Phase 2, from which a 5/8”
iron rod found bears South 78°45’27” West a distance of 2.23 feet;


 


THENCE North 82°20’57”
East with the south line of said Lot Bl-10 a distance of 223.21 feet to a 5/8”
iron rod with red cap marked KHA set for corner in the west line of said Lot
Bl-7;


 


THENCE South 07°3 9’03”
East with the west line of said Lot Bl -7 a distance of 81.00 feet to the POINT
OF BEGINNING and containing 0.6550 acres of land.


 


Tract 3
(SHOWN ON SURVEY PREPARED
BY DANA BROWN R.P.L.S. #5336, DATED 06/27/07, LAST REVISED 07/10/07] AS
TRACT 10):


 


BEING a tract of land
situated in the W.B. Watkins Survey, Abstract No. 1004, Collin County, Texas,
and being part of a tract of land described in a deed to Frisco Square, Ltd.
recorded in Volume 4721, Page 2560, Land Records, Collin County, Texas, and
being more particularly described as follows:


 


BEGINNING at 5/8” iron
rod with red cap marked KHA set at the intersection the north Right-of-Way line
of Frisco Square Boulevard (70.5’ Right-of-Way) and the east Right-of-Way line
of Library Street (variable width Right-of-Way) as dedicated to the City of
Frisco recorded in Cabinet N, Page 690, Map Records, Collin County, Texas;


 


THENCE with the northeast
Right-of-Way line of said Frisco Square Boulevard the following calls:


 


North 07°39’03” West a
distance of 57.90 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


North 52°39’03” West a
distance of 59.54 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


10

















 


South 82°20’57” West a
distance of 100.05 feet to a PK nail set in concrete for corner in the east
line of Lot Fl-10, Lot Fl, Frisco Square Phase 2, an addition to the City of
Frisco, Texas recorded in Cabinet P, Page 724, Map Records, Collin County,
Texas;


 


THENCE North 07°39’03”
West with the east line of said Lot Fl-10 a distance of 81.00 feet to an X-cut
in concrete set for corner in the south line of Lot Fl-9, Lot Fl, of said
Frisco Square Phase 2;


 


THENCE North 82°20’57”
East with the south line of said Lot Fl-9 a distance of 223.21 feet to a 1/2”
iron rod with cap found for corner;


 


THENCE South 07°3 9’03”
East a distance of 87.25 feet to a 1/2” iron rod with cap found for corner;


 


THENCE North 82°20’57”
East a distance of 25.33 feet to a 1/2” iron rod with cap found for corner;


 


THENCE South 07°39’03”
East a distance of 81.75 feet to a 1/2” iron rod with cap found for corner in
the north Right-of-Way line of said Frisco Square Boulevard;


 


THENCE with the north
Right-of-Way line of said Frisco Square Boulevard the following calls:


 


South 82°20’57” West a
distance of 76.39 feet to a 1/2” iron rod with cap found for corner;


 


South 07°39’03” East a
distance of 12.00 feet to a 5/8” iron rod with red cap marked KHA set for
corner;


 


South 82°20’57” West a
distance of 30.00 feet to the POINT OF BEGINNING and containing 0.6550 acres of
land.


 


Tract 4
(SHOWN ON SURVEY [PREPARED
BY DANA BROWN R.P.L.S. #5336, DATED 06/27/07, LAST REVISED 07/10/07] AS
TRACT 11/LOT Fl-11):


 


BEING a tract of land
situated in the W.B. Watkins Survey, Abstract No. 1004, Collin County, Texas,
and being all of Lot Fl-11, Block F-l, Frisco Square Phase 2, an addition to
the City of Frisco, Texas recorded in Cabinet P, Page 724, Map Records, Collin
County, Texas, and being more particularly described as follows:


 


BEGINNING at an X-cut set
in concrete at the northwest corner of said Lot Fl-11 in the east Right-of-Way
line of Coleman Boulevard (114’ Right-of-Way) as dedicated to the City of
Frisco recorded in Cabinet N, Page 690, Map Records, Collin County, Texas;


 


THENCE North 82°20’57”
East a distance of 82.97 feet to an X-cut set in concrete for corner;


 


THENCE South 07°39’03”
East a distance of 5.50 feet to an X-cut set in concrete for corner;


 


THENCE North 82°20’57”
East a distance of 71.70 feet to a 5/8” iron rod with red cap marked KHA set
for corner;


 


THENCE South 07°39’03”
East a distance of 280.50 feet to a 5/8” iron rod with red cap marked KHA set
for corner;


 


THENCE South 82°20’57”
West a distance of 71.70 feet to an X-cut set in concrete for corner;


 


THENCE South 07°39’03”
East a distance of 4.84 feet to an X-cut set in concrete for corner;


 


THENCE South 82°20’57”
West a distance of 82.97 feet to an X-cut set in concrete for corner in the
east Right-of-Way line of said Coleman Boulevard;


 


11

















 


THENCE North 07°39’03”
West with the east Right-of-Way line of said Coleman Boulevard a distance of
290.84 feet to the POINT OF BEGINNING and containing 1.0157 acres of land.


 


Tract 5
(SHOWN ON SURVEY [PREPARED
BY DANA BROWN R.P.L.S. #5336, DATED 06/27/07, LAST REVISED 07/10/07] AS
TRACT 11 / LOT Bl-6):


 


BEING a tract of land
situated in the W.B. Watkins Survey, Abstract No. 1004, Collin County, Texas,
and being all of Lot Bl-6, Block. B-l, Frisco Square Phase 2, an addition to
the City of Frisco, Texas recorded in Cabinet P, Page 724, Map Records, Collin
County, Texas, and being more particularly described as follows:


 


BEGINNING at an X-cut set
in concrete at the northeast corner of said Lot Bl-6 in the west Right-of-Way
line of Coleman Boulevard (114’ Right-of-Way) as dedicated to the City of
Frisco recorded in Cabinet N, Page 690, Map Records, Collin County, Texas;


 


THENCE South 07°39’03”
East with the west Right-of-Way line of said Coleman Boulevard a distance of
290.84 feet to an X-cut set in concrete for corner;


 


THENCE South 82°20’57”
West departing the west Right-of-Way line of said Coleman Boulevard a distance
of 82.97 feet to an X-cut set in concrete for corner;


 


THENCE North 07°39’03”
West a distance of 4.84 feet to an X-cut set in concrete for corner;


 


THENCE South 82°20’57”
West a distance of 71.70 feet to a 5/8” iron rod with red cap marked KHA set
for corner;


 


THENCE North 07°39’03”
West a distance of 280.50 feet to a 5/8” iron rod with red cap marked KHA set
for corner;


 


THENCE North 82°20’57”
East a distance of 71.70 feet to an X-cut set in concrete for corner;


 


THENCE North 07°39’03”
West a distance of 5.50 feet to an X-cut set in concrete for corner;


 


THENCE North 82°20’57”
East a distance of 82.97 feet to the POINT OF BEGINNING and containing 1.0157
acres of land.


 


12

















 


Exhibit B


 


PARTNERSHIP
PERCENTAGES AND INITIAL CAPITAL CONTRIBUTIONS


 


	
  Partners

  	
   

  	
  Partnership 

  Percentage

  	
   

  	
  Capital Contribution

  Value

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Behringer
  Harvard Frisco Square GP, LLC 

  	
   

  	
  0.1

  	
  %

  	
  $

  	
  15,499 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Behringer
  Harvard Frisco Square Investor, LLC

  	
   

  	
  69.9

  	
  %

  	
  $

  	
  15,483,843

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Frisco
  Square Land, Ltd.   

  	
   

  	
  5.36 

  	
  %

  	
  $

  	
  1,186,807 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Frisco
  Square Properties, Ltd.

  	
   

  	
  2.68 

  	
  %

  	
  $

  	
  593,403 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Frisco
  Square B1-6, F1-11, Ltd.

  	
   

  	
  10.08 

  	
  %

  	
  $

  	
  2,231,905 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Frisco
  Square B1-7, F1-10, Ltd/

  	
   

  	
  11.88

  	
  %

  	
  $

  	
  2,630,460

  	
   

  



 


CLASS A PARTNERSHIP PERCENTAGES


 


	
  Class A Partners

  	
   

  	
  Class A Partnership

  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Behringer
  Harvard Frisco Square GP, LLC

  	
   

  	
  0.1

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Behringer
  Harvard Frisco Square Investor, LLC

  	
   

  	
  99.9

  	
  %

  



 


CLASS B LIMITED PARTNERSHIP PERCENTAGES


 


	
  Class B Limited Partners

  	
   

  	
  Class B Partnership

  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Frisco
  Square Land, Ltd.

  	
   

  	
  17.87

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Frisco
  Square Properties, Ltd.

  	
   

  	
  8.93

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Frisco
  Square B1-6, F1-11, Ltd.

  	
   

  	
  33.60

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Frisco
  Square B1-7, F1-10, Ltd.

  	
   

  	
  39.60

  	
  %

  



 


1

















 


Exhibit C


 


DILUTION EXAMPLE


 


For purposes of example,
assume that the Capital Contributions made to the Partnership total $2,000,000.
The Class A Partners (owning a company percentage of 70%) have contributed
$1,400,000 and the Class B Limited Partners (owning a company percentage of
30%) have contributed $600,000. Assume that the General Partner sends an
Additional Capital Notice for $400,000 to the Partners, and that in response
thereto the Class A Partners make an Additional Capital Contribution of
$280,000 and the Class B Limited Partners fail to make their Additional Capital
Contribution of $120,000. If the Class A Partners contribute said $120,000 as
an Additional Capital Contribution (thus making the total Capital Contributions
equal $2,400,000), then the following adjustments to the Partnership
Percentages and Investment Base would be made effective as of the date (the “Applicable
Contribution Date”) upon which the Class A Partners contributed said
$120,000 as an Additional Capital Contribution:


 


(1)           The Partnership
Percentage of the Class A Partners would be increased by 10.00% (being 200% of
5.00%, which is $120,000 divided by $2,400,000, expressed as a percentage). The
Partnership Percentage of the Class A Partners would thus be adjusted to 80%. The
Additional Capital Investment Base of the Class A Partners would be increased
by $240,000 (being 200% of $120,000, which is inclusive of the Additional
Capital Contribution made on behalf of the delinquent Class B Limited Partners)
and thus would be $520,000 and the Investment Base of the Class A Partners
would be $1,920,000. As of the Applicable Contribution Date, any IRR accruing
for the benefit of the Class A Partners on the Additional Capital Investment
Base would accrue on the amount of $520,000.


 


(2)           The Partnership
Percentage of the Class B Limited Partners would be decreased by 10.00%, and
thus would be adjusted to 20%.


 


(3)           The increase in the Partnership
Percentage of the Class A Partners and the decrease in the Partnership
Percentage of Class B Limited Partners would remain applicable after any
scheduled adjustment in the Partnership Percentage of such Partners. For
example, if it was originally contemplated that the Class A Partners and the
Class B Limited Partners would have their Partnership Percentages adjusted to
50% and 50%, respectively, at such time as the Partners had received the return
of their Capital Contributions, then, based upon the adjustments set forth in
clauses (1) and (2) above, upon the return of such Capital Contributions the
Partnership Percentages of the Class A Partners would be 60% and the
Partnership Percentage of the Class B Limited Partners would be 40%.


 


(4)           The Partnership
Percentage of each of the Class B Limited Partners would be adjusted on a pro
rata basis such that if the Class B Limited Partnership Percentages were 5% as
to Partner 1, 5% as to Partner 2, 5% as to Partner 3 and 15% as to Partner 4
then the Class B Limited Partnership Percentage of each Class B Limited Partner
after the Class A Partners contributed the $120,000 as an Additional
Development Capital Contribution or Additional Capital Contribution would be as
follows: 3.33% to Partner 1, 3.33% to Partner 2, 3.33% to Partner 3 and 10% to
Partner 4.


 


1

















 


Exhibit D


 


DISTRIBUTION EXAMPLE


 


Distribution Example                     Frisco
Square


 


	
   

  	
   

  	
  DEAL LEVE 100%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Acquisition

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8/31/2007

  	
   

  	
  9/30/2007

  	
   

  	
  10/31/2007

  	
   

  	
  11/30/2007

  	
   

  	
  12/31/2007

  	
   

  	
  1/31/2008

  	
   

  	
  2/28/2008

  	
   

  	
  3/31/2008

  	
   

  
	
   

  	
   

  	
  0

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  
	
  Intial
  Equity(1)

  	
   

  	
  (1,000,000

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Development
  Equity (2)

  	
   

  	
   

  	
   

  	
  (100,000

  	
  )

  	
  (250,000

  	
  )

  	
  (250,000

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (100,000

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net
  Income (3)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  50,000

  	
   

  	
  55,000

  	
   

  	
  60,000

  	
   

  	
  60,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net
  Reversion (4)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cash
  Flow

  	
   

  	
  (1,000,000

  	
  )

  	
  (100,000

  	
  )

  	
  (250,000

  	
  )

  	
  (250,000

  	
  )

  	
  50,000

  	
   

  	
  55,000

  	
   

  	
  60,000

  	
   

  	
  (40,000

  	
  )

  



 


	
   

  	
   

  	
  4/30/2008

  	
   

  	
  5/31/2008

  	
   

  	
  6/30/2008

  	
   

  	
  7/31/2008

  	
   

  	
  8/31/2008

  	
   

  	
  9/30/2008

  	
   

  	
  10/31/2008

  	
   

  	
  11/30/2008

  	
   

  	
  12/31/2008

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
   

  	
   

  
	
  Intial
  Equity

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Development
  Equity (2)

  	
   

  	
   

  	
   

  	
  (100,000

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net
  Income (3)

  	
   

  	
  60,000

  	
   

  	
  60,000

  	
   

  	
  60,000

  	
   

  	
  60,000

  	
   

  	
  60,000

  	
   

  	
  70,000

  	
   

  	
  70,000

  	
   

  	
  70,000

  	
   

  	
  70,000

  	
   

  	
  Net Proceeds

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net
  Reversion (4)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2,900,000

  	
   

  	
   

  	
   

  
	
  Cash
  Flow

  	
   

  	
  60,000

  	
   

  	
  (40,000

  	
  )

  	
  60,000

  	
   

  	
  60,000

  	
   

  	
  60,000

  	
   

  	
  70,000

  	
   

  	
  70,000

  	
   

  	
  70,000

  	
   

  	
  2,970,000

  	
   

  	
   

  	
   

  



 


Overall Deal


XIRR      94.11%


 






(1)   Venture
contributes $1,000,000 (70/30) initial equity. BH equity maintains a senior
position and carries preferred 21.5% annual return.


(2)   Venture
contributes periodic development equity 70/30 pari passu to 21.5%, split 50/50
thereafter


(3)   Net Income
distributed to Venture


(4)   Net
Sales proceeds: After each partner receives initial equity plus 21.5% annual
return, 70/30 pari passu to 21.5%, 50/50 thereafter


 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Acquisition

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Solve for

  	
   

  	
  8/31/2007

  	
   

  	
  3/30/2007

  	
   

  	
  10/31/2007

  	
   

  	
  11/30/2007

  	
   

  	
  12/31/2007

  	
   

  	
  1/31/2008

  	
   

  	
  2/29/2008

  	
   

  	
  3/31/2008

  	
   

  
	
  21.5% IRR

  	
   

  	
  0

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  
	
  Intial
  Equity(1)

  	
   

  	
  (1,000,000

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Development
  Equity (2)

  	
   

  	
   

  	
   

  	
  (100,000

  	
  )

  	
  (250,000

  	
  )

  	
  (250,000

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (100,000

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net
  Income (3)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  50,000

  	
   

  	
  55,000

  	
   

  	
  60,000

  	
   

  	
  60,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net
  Reversion (4)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cash
  Flow

  	
   

  	
  (1,000,000

  	
  )

  	
  (100,000

  	
  )

  	
  (250,000

  	
  )

  	
  (250,000

  	
  )

  	
  50,000

  	
   

  	
  55,000

  	
   

  	
  60,000

  	
   

  	
  (40,000

  	
  )

  



 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4/30/2008

  	
   

  	
  5/31/2008

  	
   

  	
  6/30/2008

  	
   

  	
  7/31/2008

  	
   

  	
  8/31/2008

  	
   

  	
  9/30/2008

  	
   

  	
  10/31/2008

  	
   

  	
  11/30/2008

  	
   

  	
  12/31/2008

  	
   

  	
   

  	
   

  
	
  Distribution Example

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
   

  	
   

  
	
  Intial
  Equity

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Development
  Equity (2)

  	
   

  	
   

  	
   

  	
  (100,000

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net
  Income (3)

  	
   

  	
  60,000

  	
   

  	
  60,000

  	
   

  	
  60,000

  	
   

  	
  60,000

  	
   

  	
  60,000

  	
   

  	
  70,000

  	
   

  	
  70,000

  	
   

  	
  70,000

  	
   

  	
  70,000

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net
  Reversion (4)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1,391,300

  	
   

  	
  solve @
  21.5%

  
	
  Cash
  Flow

  	
   

  	
  60,000

  	
   

  	
  (40,000

  	
  )

  	
  60,000

  	
   

  	
  60,000

  	
   

  	
  60,000

  	
   

  	
  70,000

  	
   

  	
  70,000

  	
   

  	
  70,000

  	
   

  	
  1,461,300

  	
   

  	
   

  	
   

  



 


Solve for hurdle


XIRR      21.50%


 


	
   

  	
   

  	
   

  	
   

  	
  Distribution of Proceeds

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  2,970,000

  	
   

  	
  total profit

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (888,125

  	
  )

  	
  BH 21.5%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (308,063

  	
  )

  	
  FE 21.5%

  	
   

  
	
  312,513

  	
   

  	
   

  	
   

  	
  1,773,813

  	
   

  	
   

  	
   

  
	
  remaining

  	
   

  	
  Split 70/30

  	
   

  	
  #######

  	
   

  	
  amt to 21.5% return

  	
   

  
	
  to be split 50/50

  	
   

  	
  split 50/50

  	
   

  	
  312,513

  	
   

  	
   

  	
   

  



 


	
   

  	
   

  	
  BH 70%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8/31/2007

  	
   

  	
  9/30/2007

  	
   

  	
  10/31/2007

  	
   

  	
  11/30/2007

  	
   

  	
  12/31/2007

  	
   

  	
  1/31/2008

  	
   

  	
  2/29/2008

  	
   

  	
  3/31/2008

  	
   

  	
  4/30/2008

  	
   

  
	
   

  	
   

  	
  0

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  
	
  Initial
  Equity (1)

  	
   

  	
  (700,000

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Development
  Equity (2)

  	
   

  	
   

  	
   

  	
  (70,000

  	
  )

  	
  (175,000

  	
  )

  	
  (175,000

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (70,000

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net Income (3)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  35,000

  	
   

  	
  38,500

  	
   

  	
  42,000

  	
   

  	
  42,000

  	
   

  	
  42,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial
  Equity return of 21.5%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reversion
  (4) PP to 21.5%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Add’l
  Promote

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cash
  Flow

  	
   

  	
  (700,000

  	
  )

  	
  (70,000

  	
  )

  	
  (175,000

  	
  )

  	
  (175,000

  	
  )

  	
  35,000

  	
   

  	
  38,500

  	
   

  	
  42,000

  	
   

  	
  (28,000

  	
  )

  	
  42,000

  	
   

  



 


	
   

  	
   

  	
  5/31/2008

  	
   

  	
  6/30/2008

  	
   

  	
  7/31/2008

  	
   

  	
  8/31/2008

  	
   

  	
  9/30/2008

  	
   

  	
  10/31/2008

  	
   

  	
  11/30/2008

  	
   

  	
  12/31/2008

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial
  Equity (1)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Development
  Equity (2)

  	
   

  	
  (70,000

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net Income (3)

  	
   

  	
  42,000

  	
   

  	
  42,000

  	
   

  	
  42,000

  	
   

  	
  42,000

  	
   

  	
  49,000

  	
   

  	
  49,000

  	
   

  	
  49,000

  	
   

  	
  49,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial
  Equity return of 21.5%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  888,125

  	
   

  	
  21.50%  

  	
  (initial equity + interest)

  
	
  Reversion
  (4) PP to 21.5%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1,022,910

  	
   

  	
  70.00

  	
  %

  	
   

  	
   

  
	
  Add’l
  Promote

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  156,256

  	
   

  	
  50.00

  	
  %

  	
   

  	
   

  
	
  Cash
  Flow

  	
   

  	
  (28,000

  	
  )

  	
  42,000

  	
   

  	
  42,000

  	
   

  	
  42,000

  	
   

  	
  49,000

  	
   

  	
  49,000

  	
   

  	
  49,000

  	
   

  	
  2,116,291

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


BH


XIRR       96.49%


 


1

















 


	
   

  	
   

  	
  Acquisition

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8/31/2007

  	
   

  	
  9/30/2007

  	
   

  	
  10/31/2007

  	
   

  	
  11/30/2007

  	
   

  	
  12/31/2007

  	
   

  	
  1/31/2008

  	
   

  	
  2/28/2008

  	
   

  	
  3/31/2008

  	
   

  
	
   

  	
   

  	
  0

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
   

  	
   

  	
  4/30/2008

  	
   

  	
  5/31/2008

  	
   

  	
  6/30/2008

  	
   

  	
  7/31/2008

  	
   

  	
  8/31/2007

  	
   

  	
  9/30/2008

  	
   

  	
  10/31/2008

  	
   

  	
  11/30/2008

  	
   

  	
  12/31/2008

  	
   

  
	
   

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
   

  	
   

  	
  Fairway 30%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8/31/2007

  	
   

  	
  9/30/2007

  	
   

  	
  10/31/2007

  	
   

  	
  11/30/2007

  	
   

  	
  12/31/2007

  	
   

  	
  1/31/2008

  	
   

  	
  2/29/2008

  	
   

  	
  3/31/2008

  	
   

  	
  4/30/2008

  	
   

  
	
   

  	
   

  	
  0

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  
	
  Initial
  Equity (1)

  	
   

  	
  (300,000

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Development
  Equity (2)

  	
   

  	
   

  	
   

  	
  (30,000

  	
  )

  	
  (75,000

  	
  )

  	
  (75,000

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (30,000

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net
  Income (3)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  15,000

  	
   

  	
  16,500

  	
   

  	
  18,000

  	
   

  	
  18,000

  	
   

  	
  18,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial
  Equity return of 21.5%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Reversion
  (4) PP to 21.5%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Add’l
  Promote

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cash
  Flow

  	
   

  	
  (300,000

  	
  )

  	
  (30,000

  	
  )

  	
  (75,000

  	
  )

  	
  (75,000

  	
  )

  	
  15,000

  	
   

  	
  16,500

  	
   

  	
  18,000

  	
   

  	
  (12,000

  	
  )

  	
  18,000

  	
   

  



 


	
   

  	
   

  	
  5/31/2008

  	
   

  	
  6/30/2008

  	
   

  	
  7/31/2008

  	
   

  	
  8/31/2008

  	
   

  	
  9/30/2008

  	
   

  	
  10/31/2008

  	
   

  	
  11/30/2008

  	
   

  	
  12/31/2008

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial
  Equity (1)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Development
  Equity (2)

  	
   

  	
  (30,000

  	
  )

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net
  Income (3)

  	
   

  	
  18,000

  	
   

  	
  18,000

  	
   

  	
  18,000

  	
   

  	
  18,000

  	
   

  	
  21,000

  	
   

  	
  21,000

  	
   

  	
  21,000

  	
   

  	
  21,000

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial
  Equity return of 21.5%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  308,063

  	
   

  	
  21.50 

  	
  % (initial equity + interest)

  
	
  Reversion
  (4) PP to 21.5%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  438,390

  	
   

  	
  30.00

  	
  %

  	
   

  	
   

  
	
  Add’l
  Promote

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  156,256

  	
   

  	
  50.00

  	
  %

  	
   

  	
   

  
	
  Cash
  Flow

  	
   

  	
  (12,000

  	
  )

  	
  18,000

  	
   

  	
  18,000

  	
   

  	
  18,000

  	
   

  	
  21,000

  	
   

  	
  21,000

  	
   

  	
  21,000

  	
   

  	
  923,709

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


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XIRR       98.98%


 


2