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Exhibit 10.2COMPREHENSIVE RELEASE AND SEVERANCE AGREEMENT

1.        Agreement and Comprehensive Release.  I, J. PATRICK MCGOLDRICK, hereby acknowledge that I resigned my employment in all capacities with Rivoli BanCorp Inc., and Rivoli Bank & Trust, effective August 3, 2005, and my position as a director of Rivoli Bank & Trust was terminated as of August 23, 2005. For valid consideration described more fully below, the sufficiency of which is hereby acknowledged, I hereby release and forever discharge Rivoli BanCorp Inc., Rivoli Bank & Trust, and their affiliates, and all their respective officers, directors, employees, agents, attorneys, successors, and assigns (hereinafter referred to collectively as the Company) from any and all claims, demands and causes of action that I may have against the Company arising on or before the Effective Date, including, by way of example and without limitation, all statutory, common law, and other claims based upon:
A.        Actual or alleged violations of the Equal Employment Opportunity Act, Title VII of the Civil Rights Act of 1964, as amended by subsequent congressional legislation including, without limitation, the Civil Rights Act of 1991, 42 U.S.C. Section 2000e, et seq.; the Equal Pay Act of 1963; and the Civil Rights Act of 1866, 42 U.S.C. Section 1981;
B.        Actual or alleged violations of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, 29 U.S.C. Section 1001, et seq.;
C.        Actual or alleged violations of the Rehabilitation Act of 1973, as amended, 29 U.S.C. Section 701, et seq.; the Family and Medical Leave Act of 1993 (FMLA), 29 U.S.C. Section 2601 et seq., the Americans with Disabilities Act of 1990 (ADA), 42 U.S.C. Section 12101, et seq.; and the Age Discrimination in Employment Act, as amended (ADEA), 29 U.S.C. Section 621, et seq.;
D        Actual or alleged violations of Georgia Equal Employment for Persons with Disabilities Code; 
E.        Actual or alleged violations of any other federal, state or local law, including without limitation those which prohibit employment discrimination based upon race, sex, religion, age, disability, handicap, national origin or any other protected characteristic or classification;
F.        Actual or alleged breaches of contract;
G.        Actual or alleged torts, including but not limited to defamations, or invasions of privacy; and
H.        Any and all other claims, demands, and causes of action based upon actual or alleged legal restrictions, express or implied, on the Company's right to control the terms and conditions of my employment, to terminate my employment or that of other employees, or to terminate my position as a director of Rivoli Bank & Trust.
2.        Covenant Not To Sue.  I hereby agree not to accept or receive, directly or indirectly, any money, payment, settlement, reward, or other financial gain or consideration, or other benefit, for the filing, commencement or initiation of any claims before any federal agency, and I further agree not to file, commence, or initiate any demands or causes of action in any state or federal court against the Company based upon or relating to any of the claims covered by this Comprehensive Release and Severance Agreement. This Comprehensive Release and Severance Agreement shall constitute a complete defense to any such legal action brought in violation of this paragraph.
3.        Warranties/Representations.  I hereby warrant and represent that:
A.        I have carefully read and fully understand the terms and conditions of this Comprehensive Release and Severance Agreement; 
B        I am executing this Comprehensive Release and Severance Agreement knowingly and voluntarily, without any duress, coercion or undue influence and of my own free will and without relying upon any representations by the Company or its representatives, except such as are contained herein;
C.        I am hereby advised by the Company to consult with an attorney of my choice before executing this Comprehensive Release and Severance Agreement and, in fact, have had ample opportunity to do so;
D.        I hereby agree not to disclose any matters relating to the contents of this Comprehensive Release and Severance Agreement unless necessary to enforce the terms of this Comprehensive Release and Severance Agreement. This shall not preclude me from disclosing the contents of this Comprehensive Release and Severance Agreement to my attorneys, tax advisors or spouse. Because I have had access during my employment to information concerning the Company that is confidential, I agree not to disclose any confidential information concerning the Company at any time to any person or entity. I further agree that if I do not maintain this confidentiality, I will immediately forfeit and reimburse the Company for all of the monetary consideration and related benefits furnished or to be furnished by the Company as referred to in Paragraph 4;
E.        I hereby agree to refrain from any negative comments or public criticisms about the Company or its officers and employees. The Company and its Board members agree to refrain from any negative comments or public criticism about me as an employee or member of the Company. I agree that if I do not maintain at least a neutral position in this area, I will immediately forfeit and reimburse the Company for all of the monetary consideration and related benefits furnished or to be furnished by the Company as referred to in Paragraph 1 and as described in Paragraph 4. This provision will not preclude me from describing my reason for separation to the Georgia Department of Labor for purposes of obtaining unemployment compensation benefits;
F.        I specifically agree that the waiver provisions set forth herein include any rights or claims I may have against the Company under the Age Discrimination in Employment Act, as amended (ADEA), 29 U.S.C. Section 621, et seq., that arose on or before the execution of the Comprehensive Release and Severance Agreement. In consideration of this waiver of rights under the ADEA, I acknowledge that I will accept and receive the consideration set forth in Paragraph 4. I further acknowledge that prior to signing this Comprehensive Release and Severance Agreement, I was given a copy of this Comprehensive Release and Severance Agreement and allowed to fully review it. I also agree and acknowledge that I consider this portion of the Comprehensive Release and Severance Agreement as a written directive from the Company advising me that I have twenty-one (21) days in which to consider signing. I acknowledge that I was given this Comprehensive Release and Severance Agreement on August 31, 2005.
G.        This Comprehensive Release and Severance Agreement shall take effect seven (7) days after I sign below, and I may revoke this Comprehensive Release and Severance Agreement within that seven (7) day period. Thereafter, unless revoked during said seven (7) day period, this Comprehensive Release and Severance Agreement will be effective and enforceable on and after the eighth day following my signing (said eighth day being the "Effective Date").
H.        I understand and agree that the promises made herein are several and separate, and if any portion of this Comprehensive Release and Severance Agreement is held to be void, illegal, or otherwise unenforceable, such unenforceability shall not affect the validity of the other portions of this Comprehensive Release and Severance Agreement set forth herein. This Comprehensive Release and Severance Agreement shall be construed under applicable laws in effect in Georgia.
I.        I agree not to seek, accept, or engage in employment in an executive capacity by or for any bank, savings and loan, credit union, or mortgage lender in Bibb County, Georgia, during the period ending twelve months following the Effective Date, nor to solicit on behalf of any other entity the employment of any employee of the Company, nor to solicit on behalf of any other entity the banking business of any person or entity known by me to be a customer of the Company. I understand that if I breach the covenants in this sub-paragraph I., the Company is entitled to terminate the payment or provision of any benefit under this Comprehensive Release and Severance Agreement and to be reimbursed for the full value of any consideration already provided hereunder, and I agree that the Company may seek injunctive relief, if necessary, to enforce the terms of this sub-paragraph.
J.        During the period ending twelve months following the Effective Date, I agree to make myself available and to co-operate fully with management of the company and with any committee of the Board of Rivoli BanCorp Inc., and Rivoli Bank & Trust in assessing strategic alternatives and providing all necessary support to the smooth transition for current and future management.
4.        Consideration.  In exchange for my agreement to the terms contained in this Comprehensive Release and Severance Agreement, I will receive nine equal monthly payments in the amount of $ 15, 416.67 (Fifteen Thousand Four Hundred Sixteen and 67/100 Dollars), with the last of said payments to occur not later than nine months following the Effective Date, less all applicable withholdings and deductions required by state and federal law. In addition, during the period ending nine months following the Effective Date, I will be maintained on the Company's current health insurance plan and accidental death insurance, the Company will pay $ 400.00 (Four Hundred and no/100 Dollars) per month (for a total of $ 3600.00) in lieu of my monthly dues and charges to my account at Idle Hour Golf and Country Club, and the Company will continue to pay my car allowance of $ 1000.00 (One Thousand and no/100 Dollars) per month (for a total of $ 9,000.00). At the end of the period ending nine months following the Effective Date, I will be offered continuation of health benefits coverage as required by federal law ("COBRA" coverage). Notwithstanding the foregoing, if, as the result of agreements entered into between the Company and Security Bank Corporation within the period ending nine (9) months following the Effective Date, a change of control occurs between the Company and Security Bank Corporation, including its subsidiaries and affiliates, the monetary consideration amounts described above shall be increased in each instance by an amount equal to an additional three months' payments, and said additional amounts shall be paid to me at the time of closing and in a lump sum. In the event of such a change of control, I understand that my obligations under this Comprehensive Release and Severance Agreement shall continue to be in force and effect without modification or reduction as to term. I understand that any request received by the Company for an employment reference shall be referred to the Chairman of the board of Rivoli BanCorp Inc., who shall provide a positive reference.
5.        Continued Service on the Board of Rivoli BanCorp Inc.  I will continue to serve as a director of Rivoli BanCorp Inc., in accordance with the applicable by-laws and legal obligations; provided however, that I hereby agree to resign my position as a director, in writing, not later than nine months following the Effective Date, unless a change of control of the Company takes place prior to that time. Nothing herein confers upon me any right to continue to serve as a director on any re-constituted or newly-constituted board, in the event of a change of control of the Company. I acknowledge that nothing in this Comprehensive Release and Severance Agreement affects or excuses my fiduciary obligations as a director of Rivoli BanCorp Inc., for so long as I continue to serve in that capacity.
6.        Unemployment Compensation.  I understand that, at the end of the nine-month period during which I will receive my benefits, the Company will issue a Separation Notice to me and that the company will state in said Notice that the reason for my separation was due to philosophical differences.
7.        COBRA Entitlement.  I understand that I am entitled to continuation of health benefits coverage under the provisions of the Consolidated Omnibus Budget Reconciliation Act, 29 U.S.C. 1161, et seq., regardless of whether I enter into this Comprehensive Release and Severance Agreement. Furthermore, I acknowledge that nothing herein affects my eligibility for COBRA continuation coverage consistent with federal requirements, upon the termination of my Company-provided health benefits.
8.        Merger Clause.  This Comprehensive Release and Severance Agreement constitutes the full understanding between the Company and me relating to the subject matter covered herein; the terms and conditions of this Comprehensive Release and Severance Agreement may not be altered or changed except in writing signed by both the Company and me.
9.        Knowing/Voluntary Waiver.  I affirm that I have carefully read this entire Comprehensive Release and Severance Agreement. I attest that I fully understand the extent and impact of its provisions and that I have been afforded the opportunity to discuss it fully with an attorney of my choice.  I affirm that I am fully competent to execute this Comprehensive Release and Severance Agreement and that I do so voluntarily and without any coercion, undue influence, threat, or intimidation of any kind or type. 
Dated this 7th day of September, 2005.

/s/ J. Patrick McGoldrick                        
J. Patrick McGoldrick
420 Ashley Place
Macon, Georgia 31204                        Accepted by Rivoli BanCorp Inc., and Rivoli                                                 Bank & Trust:
/s/ Cindy McGoldrick                                By: /s/ F. Tredway Shurling        
Witness                                                (Its Chairman)
September 12, 2005
Page 5 of 5Form of Agreement

EXHIBIT
10.1

 

FORM
OF

AGREEMENT
OF LIMITED PARTNERSHIP

OF

BEHRINGER
HARVARD OPPORTUNITY OP I, LP

__________,
2005

 

 

 

 

 

 

-i-

AGREEMENT
OF LIMITED PARTNERSHIP

OF

BEHRINGER
HARVARD OPPORTUNITY OP I, LP

__________,
2005

 

This
Agreement of Limited Partnership (this “Agreement”) is
entered into effective as of the __ day of ______, 2005 by and among Behringer
Harvard Opportunity REIT I, Inc., a Maryland corporation (the “General
Partner”), BHO
Partners, LLC, a Delaware limited liability company (the “Original
Limited Partner”), and
the Limited Partner(s) set forth or which may, in the future, be set forth on
Exhibit
A hereto,
as amended from time to time, with respect to Behringer Harvard Opportunity OP
I, LP (the “Partnership”), a
limited partnership formed under the laws of the State of Texas, pursuant to a
Certificate of Limited Partnership filed with the Office of the Secretary of
State of the State of Texas effective as of __________, 200__.

 

RECITALS

 

WHEREAS, the
parties hereto desire to enter into this Agreement in order to set forth the
terms and conditions under which the Partnership will be operated as well as the
rights, obligations, and limitations of the General Partner and the Limited
Partners with respect to each other and the Partnership as a whole;

NOW,
THEREFORE, in
consideration of the foregoing, of mutual covenants between the parties hereto,
and of other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the parties, the parties hereto agree as
follows: 

 

AGREEMENT

 

ARTICLE
I

 

DEFINED
TERMS

 

The
following defined terms used in this Agreement shall have the meanings specified
below: 

“Act” means
the Texas Revised Uniform Limited Partnership Act, as it may be amended from
time to time. 

“Additional
Funds” has the
meaning set forth in Section 4.03 hereof. 

“Additional
Limited Partner” means a
Person admitted to the Partnership as a Limited Partner pursuant to Section 4.02
hereof and who is shown as such on the books and records of the Partnership.

“Additional
Securities” means
any additional REIT Shares (other than REIT Shares issued in connection with an
exchange pursuant to Section 8.05 hereof) or rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe for or
purchase REIT Shares, as set forth in Section 4.02(a)(ii). 

“Administrative
Expenses” means
(i) all administrative and operating costs and expenses incurred by the
Partnership, (ii) those administrative costs and expenses of the General
Partner, including any salaries 

 

 

-1-

 

 

or other
payments to directors, officers or employees of the General Partner, and any
accounting and legal expenses of the General Partner, which expenses, the
Partners have agreed, are expenses of the Partnership and not the General
Partner, and (iii) to the extent not included in clause (ii) above, REIT
Expenses; provided, however, that Administrative Expenses shall not include any
administrative costs and expenses incurred by the General Partner that are
attributable to Properties or partnership interests in a Subsidiary Partnership
that are owned by the General Partner directly. 

“Advisor” or
“Advisors” means
the Person or Persons, if any, appointed, employed or contracted with by the
General Partner pursuant to its Articles of Incorporation and responsible for
directing or performing the day-to-day business affairs of the General Partner,
including any Person to whom the Advisor subcontracts all or substantially all
of such functions.

“Affiliate” or
“Affiliated” means,
with respect to any Person, (i) any Person directly or indirectly owning,
controlling or holding, with the power to vote, 10% or more of the outstanding
voting securities of such other Person; (ii) any Person 10% or more of whose
outstanding voting securities are directly or indirectly owned, controlled or
held, with the power to vote, by such other Person; (iii) any Person directly or
indirectly controlling, controlled by or under common control with such other
Person; (iv) any executive officer, director, trustee or general partner of such
other Person; and (v) any legal entity for which such Person acts as an
executive officer, director, trustee or general partner.

“Agreed
Value” means
(i) the fair market value of a Partner’s non-cash Capital Contribution as of the
date of contribution as agreed to by such Partner and the General Partner as of
the date of contribution as set forth on Exhibit
A hereto,
as it may be amended from time to time, or (ii) in the case of any contribution
or distribution of property other than cash not set forth on Exhibit
A, the
fair market value of such property as determined by the General Partner at the
time such property is contributed or distributed, reduced by liabilities either
assumed by the Partnership or Partner upon such contribution or distribution or
to which such property is subject when the property is contributed or
distributed. 

“Agreement” means
this Agreement of Limited Partnership, as it may be amended or restated from
time to time. 

“Articles
of Incorporation” means
the Articles of Incorporation of the General Partner filed with the Maryland
State Department of Assessments and Taxation, as amended or restated from time
to time. 

“Behringer
Harvard Opportunity REIT I” means
Behringer Harvard Opportunity
REIT I, Inc., a Maryland corporation. 

 

“Call
Notice” means a
Call Notice, as defined in Section 8.06(a) hereof and substantially in the form
of Exhibit
C hereto.

“Call
Right” has the
meaning provided in Section 8.06(a) hereof. 

“Capital
Account” has the
meaning provided in Section 4.04 hereof. 

“Capital
Contribution” means
the total amount of cash, cash equivalents, and the Agreed Value of any Property
or other asset contributed or agreed to be contributed, as the context requires,
to the Partnership by each Partner pursuant to the terms of the Agreement. Any
reference to the Capital Contribution of a Partner shall include the Capital
Contribution made by a predecessor holder of the Partnership Interest of such
Partner. 

“Cash
Amount” means
an amount of cash equal to the Value of the REIT Shares Amount on the date of
receipt by the General Partner of an Exchange Notice. 

 

 

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“Certificate” means
any instrument or document that is required under the laws of the State of
Texas, or any other jurisdiction in which the Partnership conducts business, to
be signed and sworn to by the Partners of the Partnership (either by themselves
or pursuant to the power-of-attorney granted to the General Partner in Section
8.02 hereof) and filed for recording in the appropriate public offices within
the State of Texas or such other jurisdiction to perfect or maintain the
Partnership as a limited partnership, to effect the admission, withdrawal, or
substitution of any Partner from or to the Partnership, or to protect the
limited liability of the Limited Partners as limited partners under the laws of
the State of Texas or such other jurisdiction. 

“Code” means
the Internal Revenue Code of 1986, as amended, and as hereafter amended from
time to time. Reference to any particular provision of the Code shall mean that
provision in the Code at the date hereof and any successor provision of the
Code. 

“Commission” means
the U.S. Securities and Exchange Commission. 

“Competent
Independent Expert” shall
mean a Person with no material current or prior business or personal
relationship with the General Partner or the Partnership who is engaged to a
substantial extent in the business of rendering opinions regarding the value of
the assets of the type held by the Partnership and who is qualified to perform
such work. Membership in a nationally recognized appraisal society such as the
American Institute of Real Estate Appraisers or the Society of Real Estate
Appraisers shall be conclusive evidence of such qualification. 

“Conversion
Factor” means
1.0, provided, that in the event that the General Partner (i) declares or pays a
dividend on its outstanding REIT Shares in REIT Shares or makes a distribution
to all holders of its outstanding REIT Shares in REIT Shares, (ii) subdivides
its outstanding REIT Shares, or (iii) combines its outstanding REIT Shares into
a smaller number of REIT Shares, the Conversion Factor shall be adjusted by
multiplying the Conversion Factor by a fraction, the numerator of which shall be
the number of REIT Shares issued and outstanding on the record date for such
dividend, distribution, subdivision or combination (assuming for such purposes
that such dividend, distribution, subdivision or combination has occurred as of
such time), and the denominator of which shall be the actual number of REIT
Shares (determined without the above assumption) issued and outstanding on such
date, and provided further, that in the event that an entity other than an
Affiliate of the General Partner shall become General Partner pursuant to any
merger, consolidation or combination of the General Partner with or into another
entity (the “Successor
Entity”), the
Conversion Factor shall be adjusted by multiplying the Conversion Factor by the
number of shares of the Successor Entity into which one REIT Share is converted
pursuant to such merger, consolidation or combination, determined as of the date
of such merger, consolidation or combination. Any adjustment to the Conversion
Factor shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event; provided, however, that
if the General Partner receives an Exchange Notice after the record date, but
prior to the effective date of such dividend, distribution, subdivision or
combination, the Conversion Factor shall be determined as if the General Partner
had received the Exchange Notice immediately prior to the record date for such
dividend, distribution, subdivision or combination; and provided further,
however, that if the General Partner, in its sole and absolute discretion,
causes the Partnership to make a distribution of Partnership Units or to
subdivide or combine the outstanding Partnership Units in order to give
equivalent effect to a dividend or distribution of REIT Shares or a subdivision
or combination or REIT Shares, then the Conversion Factor shall remain the
factor which it was immediately prior to such dividend or distribution of REIT
Shares or subdivision or combination of REIT Shares. 

“Dissenting
Limited Partner” has the
meaning provided in Section 12.03(a) hereof.

“Event
of Bankruptcy” as to
any Person means (i) the filing of a petition for relief as to such Person as
debtor or bankrupt under the Bankruptcy Code of 1978 or similar provision of law
of any jurisdiction (except if such petition is contested by such Person and has
been dismissed within 90 days); (ii) the 

 

 

-3-

 

 

insolvency
or bankruptcy of such Person as finally determined by a court proceeding; (iii)
the filing by such Person of a petition or application to accomplish the same or
for the appointment of a receiver or a trustee for such Person or a substantial
part of his assets; and (iv) the commencement of any proceedings relating to
such Person as a debtor under any other reorganization, arrangement, insolvency,
adjustment of debt or liquidation law of any jurisdiction, whether now in
existence or hereinafter in effect, either by such Person or by another,
provided, that if such proceeding is commenced by another, such Person indicates
his approval of such proceeding, consents thereto or acquiesces therein, or such
proceeding is contested by such Person and has not been finally dismissed within
90 days. 

“Exchange
Amount” means
either the Cash Amount or the REIT Shares Amount, as selected by the General
Partner in its sole and absolute discretion pursuant to Section 8.05(b) hereof.

“Exchange
Notice” means a
Notice of Exercise of Exchange Right, as defined in Section 8.05(a) hereof and
substantially in the form of Exhibit
B hereto.

“Exchange
Right” has the
meaning provided in Section 8.05(a) hereof. 

“Exchanging
Partner” has the
meaning provided in Section 8.05(a) hereof. 

“General
Partner” means
Behringer Harvard Opportunity REIT I,
and any Person who becomes a substitute or additional General Partner as
provided herein, and any successors thereto. 

“General
Partnership Interest” means a
Partnership Interest held by the General Partner that is a general partnership
interest. 

“GP
Capital” means
the aggregate of Capital Contributions of cash made by the General Partner in
accordance with Sections 4.01 and 4.02 hereof. 

“GP
Minimum Return” means
such amount as may be necessary or required to allow the General Partner to meet
its distribution requirement for qualification as a REIT as set forth in Section
857 of the Code and to avoid any federal income or excise tax liability imposed
by the Code. 

“Holding
Period” means,
with respect to Partnership Units acquired by Additional Limited Partners
hereunder, the period commencing on the date of issuance of such Units through
and including the fourth anniversary of such date of acquisition.

“Indemnitee” means
(i) any Person made a party to a proceeding by reason of its status as the
General Partner or a director, officer or employee of the General Partner or the
Partnership, and (ii) such other Persons (including Affiliates of the General
Partner or the Partnership) as the General Partner may designate from time to
time, in its sole and absolute discretion. 

“Independent
Director” means a
member of the board of directors of the General Partner who is not on the date
of determination, and within the last two (2) years from the date of
determination has not been, directly or indirectly associated with the General
Partner, the Sponsor or the Advisor or any of their respective Affiliates by
virtue of (i) ownership of an interest in the Sponsor or the Advisor or any of
their respective Affiliates, other than the General Partner, (ii) employment by
the General Partner, the Sponsor or the Advisor or any of their respective
Affiliates, (iii) service as an officer or director of the Sponsor or the
Advisor or their respective Affiliates, other than as a director of the General
Partner, (iv) performance of services, other than as a director of the General
Partner, (v) service as a director or trustee of more than three (3) real estate
investment trusts organized by the Sponsor or advised by the Advisor, or
(vi) maintenance of a material business or professional relationship with
the General Partner, the Sponsor or the Advisor or any of their respective
Affiliates. A business or professional relationship is considered “material” if
the gross revenue derived by the director from the Sponsor and the Advisor and
their 

 

 

-4-

 

 

Affiliates
exceeds five percent (5%) of either the director’s annual gross income during
either of the last two (2) years or the director’s net worth on a fair market
value basis. An indirect relationship with the Sponsor or the Advisor shall
include circumstances in which a director’s spouse, parent, child, sibling,
mother- or father-in-law, son- or daughter-in-law or brother- or sister-in-law
is or has been associated with the Sponsor or the Advisor, any of their
respective Affiliates or the General Partner. 

“Joint
Venture” means
any joint venture or partnership arrangement in which the Partnership is a
co-venturer or general partner established to acquire or hold Properties,
Mortgages or other investments of the General Partner. 

“Limited
Partner” means
the Original Limited Partner, any Person named as a Limited Partner on
Exhibit
A attached
hereto, and any Person who becomes a Substitute or Additional Limited Partner in
such person’s capacity as a Limited Partner in the Partnership. 

“Limited
Partnership Interest” means
the ownership interest of a Limited Partner in the Partnership at any particular
time, including the right of such Limited Partner to any and all benefits to
which such Limited Partner may be entitled as provided in this Agreement and in
the Act, together with the obligations of such Limited Partner to comply with
all the provisions of this Agreement and of such Act. 

“Liquidating
Event” has the
meaning set forth in Section 2.04 hereof. 

“Loss” has the
meaning provided in Section 5.01(f) hereof. 

“LP
Capital” means
the aggregate of Capital Contributions in cash or cash equivalents and the
Agreed Value of any non-cash contributions to the Partnership made by a Limited
Partner in accordance with Sections 4.01 and 4.02 hereof. 

“LP
Return” means,
with regard to any Limited Partner, an amount equal to the aggregate cash
dividends that would have been payable to such Limited Partner with respect to
the applicable fiscal period if such Limited Partner had owned REIT Shares equal
in number to the number of Partnership Units owned by such Limited Partner
during such fiscal period. 

“Mortgage” means,
in connection with mortgage financing provided, invested in or purchased by the
Partnership, any note, deed of trust, security interest or other evidence of
indebtedness or obligations, which is secured or collateralized by real property
owned by the borrower under such note, deed of trust, security interest or other
evidence of indebtedness or obligations. 

“Net
Capital Proceeds” means
the net cash proceeds received by the Partnership in connection with
(i) any Sale, (ii) any borrowing or refinancing of borrowing(s) by the
Partnership, (iii) any condemnation or deeding in lieu of condemnation of all or
a portion of any Property, (iv) any collection in respect of property, hazard,
or casualty insurance (but not business interruption insurance) or any damage
award; or (v) any other transaction the proceeds of which, in accordance with
generally accepted accounting principles, are considered to be capital in
nature, in each case, after deduction of (a) all costs and expenses incurred by
the Partnership with regard to such transactions (including, without limitation,
any repayment of any indebtedness required to be repaid as a result of such
transaction or which the General Partner elects to pay out of the proceeds of
such transaction, together with accrued interest and premium, if any, thereon
and any sales commissions or other costs or expenses due and payable to any
Person in connection therewith, including to a Partner or its Affiliates), and
(b) all amounts expended by the Partnership for the acquisition of additional
Properties, Mortgages or other investments or for capital repairs or
improvements to any Property with such cash proceeds. 

“Offer” has the
meaning set forth in Section 7.01(c)(ii) hereof. 

 

 

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“Offering” means
the initial offer and sale by the General Partner and the purchase by the Dealer
Manager (as defined in the Prospectus) of REIT Shares for sale to the public.

“Original
Limited Partner” means
the Limited Partner designated as such on Exhibit
A hereto.

“Partner” means
any General Partner or Limited Partner. 

“Partner
Nonrecourse Debt Minimum Gain” has the
meaning set forth in Regulations Section 1.704-2(i). A Partner’s share of
Partner Nonrecourse Debt Minimum Gain shall be determined in accordance with
Regulations Section 1.704-2(i)(5). 

“Partnership” means
Behringer Harvard Opportunity OP I, LP, a Texas limited partnership.

“Partnership
Interest” means
an ownership interest in the Partnership held by either a Limited Partner or the
General Partner and includes any and all benefits to which the holder of such a
Partnership Interest may be entitled as provided in this Agreement, together
with all obligations of such Person to comply with the terms and provisions of
this Agreement. 

“Partnership
Minimum Gain” has the
meaning set forth in Regulations Section 1.704-2(b)(2). In accordance with
Regulations Section 1.704-2(d), the amount of Partnership Minimum Gain is
determined by first computing, for each Partnership nonrecourse liability, any
gain the Partnership would realize if it disposed of the property subject to
that liability for no consideration other than full satisfaction of the
liability, and then aggregating the separately computed gains. A Partner’s share
of Partnership Minimum Gain shall be determined in accordance with Regulations
Section 1.704-2(g)(1). 

“Partnership
Record Date” means
the record date established by the General Partner for the distribution of cash
pursuant to Section 5.02 hereof, which record date shall be the same as the
record date established by the General Partner for a distribution to its
stockholders. 

“Partnership
Unit” means a
fractional, undivided share of the Partnership Interests of all Partners issued
hereunder. The number of Partnership Units held by the Original Limited Partner
will, as of any relevant date, equal the difference between (a) the product of
the number of shares of the General Partner issued since the formation of the
General Partner through such relevant date (adjusted to reflect any subdivisions
or combinations of shares of the General Partner through such relevant date),
multiplied by the inverse of the Conversion Factor as of such relevant date
(i.e., one (1) divided by the Conversion Factor as of such relevant date), and
(b) the sum of (i) the number of Partnership Units of the Original Limited
Partner deemed purchased or redeemed pursuant to Section 6.10 since the
inception of the Partnership through such relevant date and (ii) all Partnership
Units held by the General Partner. It is acknowledged that the Original Limited
Partner will contribute the proceeds from the sale of shares in the General
Partner to the Partnership and the Partnership Units resulting from the
contribution of such proceeds by the Original Limited Partner to the Partnership
will be issued by the Partnership to the Original Limited Partner. Furthermore,
it is acknowledged that if the Partnership makes a distribution of Partnership
Units or subdivides or combines the outstanding Partnership Units in order to
give equivalent effect to a dividend or distribution of the General Partner’s
shares or a subdivision or combination of the General Partner’s shares, then the
Partnership Units held by the Original Limited Partner will not be entitled to
any such distribution of Partnership Units or affected by any such subdivision
or combination of Partnership Units because the number of the Original Limited
Partner’s Partnership Units will have already been adjusted by virtue of the
dividend or distribution of the General Partner’s shares or the subdivision or
combination of the General Partner’s shares.

“Percentage
Interest” means
the percentage ownership interest in the Partnership of each Partner, as
determined by dividing the number of Partnership Units owned by a Partner by the
aggregate number of Partnership Units owned by all Partners. 

 

 

-6-

 

“Person” means
any individual, partnership, corporation, joint venture, limited liability
company, trust or other entity. 

“Profit” has the
meaning provided in Section 5.01(f) hereof. 

“Property” means
any office, industrial or other commercial real property in which the
Partnership holds an ownership interest, either directly or pursuant to the
Partnership’s ownership of an interest in a subsidiary which owns an interest in
any such office, industrial or other commercial real property. 

“Prospectus” means
the final prospectus delivered to purchasers of REIT Shares in the Offering.

“Regulations” means
the Federal Income Tax Regulations, including temporary or proposed regulations,
issued under the Code, as amended and as hereafter amended from time to time.
Reference to any particular provision of the Regulations shall mean that
provision of the Regulations on the date hereof and any successor provision of
the Regulations. 

“REIT” means a
real estate investment trust under Sections 856 through 860 of the Code.

“REIT
Expenses” means
(i) costs and expenses relating to the formation and continuity of existence and
operation of the General Partner and any Subsidiaries thereof (which
Subsidiaries shall, for purposes hereof, be included within the definition of
General Partner), including taxes, fees and assessments associated therewith,
any and all costs, expenses or fees payable to any director, officer, or
employee of the General Partner, (ii) costs and expenses relating to (A) any
registration and public offering of securities by the General Partner, the net
proceeds of which were used to make a contribution to the Partnership, and (B)
all statements and reports incidental thereto, including, without limitation,
underwriting discounts and selling commissions applicable to any such offering
of securities, and any costs and expenses associated with any claims made by any
holders of such securities or any underwriters or placement agents thereof,
(iii) costs and expenses associated with any repurchase of any securities by the
General Partner, (iv) costs and expenses associated with the preparation and
filing, of any periodic or other reports and communications by the General
Partner under federal, state or local laws or regulations, including filings
with the Commission, (v) costs and expenses associated with compliance by the
General Partner with laws, rules and regulations promulgated by any regulatory
body, including the Commission and any securities exchange, (vi) costs and
expenses associated with any section 401(k) plan, incentive plan, bonus plan or
other plan providing for compensation for the employees of the General Partner,
(vii) costs and expenses incurred by the General Partner relating to any
issuance or redemption of Partnership Interests or REIT Shares, and (viii) all
other operating or administrative costs of the General Partner incurred in the
ordinary course of its business on behalf of or in connection with the
Partnership. 

“REIT
Share” means a
share of common stock in the General Partner (or Successor Entity, as the case
may be). 

“REIT
Shares Amount” means a
number of REIT Shares equal to the product of the number of Partnership Units
offered for exchange by an Exchanging Partner, multiplied by the Conversion
Factor as adjusted to and including the Specified Exchange Date; provided that
in the event the General Partner issues to all holders of REIT Shares rights,
options, warrants or convertible or exchangeable securities entitling the
stockholders to subscribe for or purchase REIT Shares, or any other securities
or property (collectively, the “Rights”), and
the rights have not expired at the Specified Exchange Date, then the REIT Shares
Amount shall also include the rights issuable to a holder of the REIT Shares on
the record date fixed for purposes of determining the holders of REIT Shares
entitled to Rights. 

“Sale” means
any transaction or series of transactions whereby (i) the Partnership directly
or indirectly (except as described in other subsections of this definitions)
sells, grants, transfers, conveys or 

 

 

-7-

 

 

relinquishes
its ownership of any Property or portion thereof, including the lease of any
Property consisting of a building only, and including any event with respect to
any Property which gives rise to a significant amount of insurance proceeds or
condemnation awards; (ii) the Partnership directly or indirectly (except as
described in other subsections of this definition) sells, grants, transfers,
conveys or relinquishes its ownership of all or substantially all the interest
of the Partnership in any Joint Venture in which it is a co-venturer or partner;
(iii) any Joint Venture directly or indirectly (except as described in other
subsections of this definition) in which the Partnership as a co-venturer or
partner sells, grants, transfers, conveys or relinquishes its ownership of any
Property or portion thereof, including any event with respect to any Property
which gives rise to insurance claims or condemnation awards; (iv) the
Partnership directly or indirectly (except as described in other subsections of
this definition) sells, grants, conveys or relinquishes its interest in any
Mortgage or portion thereof (including with respect to any Mortgage, all
payments thereunder or in satisfaction thereof other than regularly scheduled
interest payments) of amounts owed pursuant to such Mortgage and any event with
respect to a Mortgage which gives rise to a significant amount of insurance
proceeds or similar awards, or (v) the Partnership directly or indirectly
(except as described in other subsections of this definition) sells, grants,
transfers, conveys or relinquishes its ownership of any other asset (other than
investments in bank accounts, money market funds or other current assets) not
previously described in this definition or any portion thereof.

“Securities
Act” means
the Securities Act of 1933, as amended. 

“Service” means
the Internal Revenue Service. 

“Specified
Exchange Date” means
the first business day of the month first occurring after the expiration of 60
business days from the date of receipt by the General Partner of the Exchange
Notice. 

“Sponsor” means
any Person which (i) is directly or indirectly instrumental in organizing,
wholly or in part, Behringer Harvard Opportunity
REIT I, (ii) will manage or participate in the management of Behringer Harvard
Opportunity REIT I, and any Affiliate of any such Person, other than a Person
whose only relationship with Behringer Harvard Opportunity REIT I is that of an
independent property manager and whose only compensation is as such, (iii) takes
the initiative, directly or indirectly, in founding or organizing Behringer
Harvard Opportunity REIT I, either alone or in conjunction with one or more
other Persons, (iv) receives a material participation in Behringer Harvard
Opportunity REIT I in connection with the founding or organizing of the business
of Behringer Harvard Opportunity REIT I, in consideration of services or
property, or both services and property, (v) has a substantial number of
relationships and contacts with Behringer Harvard Opportunity REIT I, (vi)
possesses significant rights to control Properties, (vii) receives fees for
providing services to Behringer Harvard Opportunity REIT I which are paid on a
basis that is not customary in the industry, or (viii) provides goods or
services to Behringer Harvard Opportunity REIT I on a basis which was not
negotiated at arm's-length with Behringer Harvard Opportunity REIT
I.

“Subsidiary” means,
with respect to any Person, any corporation or other entity of which a majority
of (i) the voting power of the voting equity securities or (ii) the
outstanding equity interests is owned, directly or indirectly, by such Person.

“Subsidiary
Partnership” means
any partnership, limited liability company or other entity taxed as a
partnership for federal income tax purposes in which interests are owned by the
General Partner or by a wholly-owned Subsidiary or Subsidiaries of the General
Partner. 

“Substitute
Limited Partner” means
any Person admitted to the Partnership as a Limited Partner pursuant to Section
9.03 hereof. 

“Successor
Entity” has the
meaning provided in the definition of “Conversion Factor” contained herein.

 

 

-8-

 

“Survivor” has the
meaning set forth in Section 7.01(d) hereof. 

“Transaction” has the
meaning set forth in Section 7.01(c) hereof. 

“Transfer” has the
meaning set forth in Section 9.02(a) hereof. 

“Transfer
Restriction Date” means
the effective date upon which Behringer Harvard Opportunity Advisors I LP, a
Texas limited partnership, shall cease acting as the advisor to the General
Partner under the terms of an advisory agreement entered into between Behringer
Harvard Opportunity Advisors I LP and the General Partner.

 

“Unaffiliated
Percentage Interest” means a
Percentage Interest held by a Limited Partner that is not an Affiliate of the
General Partner.

“Unpaid
Return” means
any accrued but unpaid LP Return or GP Minimum Return less all amounts
distributed by the Partnership to a Limited Partner or the General Partner in
reduction thereof. 

“Value” means,
with respect to any security, the average of the daily market price of such
security for the ten consecutive trading days immediately preceding the date as
of which such Value is to be determined. The market price for each such trading
day shall be: (i) if the security is listed or admitted to trading on any
securities exchange, the sale price, regular way, on such day, or if no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, on such day; (ii) if the security is not listed or admitted to
trading on any securities exchange, the last reported sale price on such day or,
if no sale takes place on such day, the average of the closing bid and asked
prices on such day, as reported by a reliable quotation source designated by the
General Partner; or (iii) if the security is not listed or admitted to trading
on any securities exchange and no such last reported sale price or closing bid
and asked prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reliable quotation source designated
by the General Partner, or if there shall be no bid and asked prices on such
day, the average of the high bid and low asked prices, as so reported, on the
most recent day (not more than ten days prior to the date in question) for which
prices have been so reported; provided, that if there are no bid and asked
prices reported during the ten days prior to the date in question, the value of
the security shall be determined by the General Partner acting in good faith on
the basis of such quotations and other information as it considers, in its
reasonable judgment, appropriate. In the event the security includes any
additional rights, then the value of such rights shall be determined by the
General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate.

 

ARTICLE
II

 

PARTNERSHIP
FORMATION AND IDENTIFICATION

 

	2.01  	Formation. The
      Partnership is a limited partnership formed pursuant to the Act and upon
      the terms and conditions set forth in this Agreement.

 

 

-9-

 

 

2.02   Name,
Office and Registered Agent. The name
of the Partnership is “Behringer Harvard Opportunity
OP I, LP.” The registered office and principal place of business of the
Partnership shall be 15601 Dallas Pkwy., Ste. 600, Addison, Texas 75001. The
General Partner may at any time change the location of such office, provided the
General Partner gives notice to the Partners of any such change. The name and
address of the Partnership’s registered agent is Robert M. Behringer, 15601
Dallas Pkwy., Ste. 600, Addison, Texas 75001. The sole duty of the registered
agent as such is to forward to the Partnership any notice that is served on it
as registered agent. 

 

2.03        
Partners. 

 

(a)     The
General Partner of the Partnership is Behringer Harvard Opportunity REIT I,
Inc., a Maryland corporation. Its principal place of business is the same as
that of the Partnership. 

 

(b)     The
Limited Partners are those Persons identified as Limited Partners (including the
Original Limited Partner) on Exhibit
A hereto,
as it may be amended from time to time. 

 

2.04   Term
and Dissolution. 

 

(a)     The term
of the Partnership shall continue in full force and effect until
December 31, 2054, except that the Partnership shall be dissolved earlier
upon the first to occur of any of the following events (“Liquidating
Events”):

 

            (i)     the
occurrence of an Event of Bankruptcy as to a General Partner or the dissolution,
death, removal or withdrawal of a General Partner unless the business of the
Partnership is continued pursuant to Section 7.03(b) hereof, provided, that if a
General Partner is on the date of such occurrence a partnership, the dissolution
of such General Partner as a result of the dissolution, death, withdrawal,
removal or Event of Bankruptcy of a partner in such partnership shall not be an
event of dissolution of the Partnership if the business of such General Partner
is continued by the remaining partner or partners thereof, either alone or with
additional partners, and such General Partner and such partners comply with any
other applicable requirements of this Agreement; 

 

   
(ii)    the
passage of 90 days after the sale or other disposition of all or substantially
all of the assets of the Partnership (provided, that if the Partnership receives
an installment obligation as consideration for such sale or other disposition,
the Partnership shall continue, unless sooner dissolved under the provisions of
this Agreement, until such time as such obligation is paid in full);

 

    
(iii)    the
exchange of all Limited Partnership Interests (other than any of such interests
held by the General Partner or Affiliates of the General Partner); or

 

    
(iv)    the
election by the General Partner that the Partnership should be dissolved.

 

(b)               
Upon
dissolution of the Partnership (unless the business of the Partnership is
continued pursuant to Section 7.03(b) hereof), the General Partner (or its
trustee, receiver, successor or legal representative) shall amend or cancel the
Certificate and liquidate the Partnership’s assets and apply and distribute the
proceeds thereof in accordance with Section 5.06 hereof. Notwithstanding the
foregoing, the liquidating General Partner may either (i) defer liquidation of,
or withhold from distribution for a reasonable time, any assets of the
Partnership (including those necessary to satisfy the Partnership’s debts and
obligations), or (ii) distribute the assets to the Partners in kind.

 

2.05   Filing
of Certificate and Perfection of Limited Partnership. The
General Partner shall execute, acknowledge, record and file, at the expense of
the Partnership, the Certificate and any and all amendments thereto and all
requisite fictitious name statements and notices in such places and

 

 

-10-

 

 

jurisdictions
as may be necessary to cause the Partnership to be treated as a limited
partnership under, and otherwise to comply with, the laws of each state or other
jurisdiction in which the Partnership conducts business. 

 

2.06  Certificates
Describing Partnership Units. 
At the
request of a Limited Partner, the General Partner may, at its option and in its
discretion, issue a certificate summarizing the terms of such Limited Partner’s
interest in the Partnership, including the number of Partnership Units owned as
of the date of such certificate. If issued, any such certificates (a) shall be
in form and substance as approved by the General Partner, (b) shall not be
negotiable, and (c) shall bear a legend substantially similar to the following:

 

“This
certificate is not negotiable. The Partnership Units 

represented
by this certificate are governed by and transferable only 

in
accordance with the provisions of the Agreement of Limited

Partnership
of Behringer Harvard Opportunity OP I, LP, as 

amended
from time to time.”

 

ARTICLE
III

 

BUSINESS
OF THE PARTNERSHIP

 

The
purpose and nature of the business to be conducted by the Partnership is (a) to
conduct any business that may be lawfully conducted by a limited partnership
organized pursuant to the Act, provided, however, that such business shall be
limited to and conducted in such a manner as to permit the General Partner at
all times to qualify as a REIT, unless the General Partner otherwise ceases to
qualify as a REIT, (b) to enter into any partnership, joint venture or other
similar arrangement to engage in any of the foregoing or the ownership of
interests in any entity engaged in any of the foregoing, and (c) to do anything
necessary or incidental to the foregoing. In connection with the foregoing, and
without limiting the General Partner’s right in its sole and absolute discretion
to cease qualifying as a REIT, the Partners acknowledge that the General
Partner’s current status as a REIT and the avoidance of income and excise taxes
on the General Partner inures to the benefit of all the Partners and not solely
to the General Partner. Notwithstanding the foregoing, the Limited Partners
agree that the General Partner may terminate its status as a REIT under the Code
at any time to the full extent permitted under its Articles of Incorporation.
The General Partner shall also be empowered to do any and all acts and things
necessary or prudent to ensure that the Partnership will not be classified as a
“publicly traded partnership” for purposes of Section 7704 of the Code.

 

ARTICLE
IV

 

CAPITAL
CONTRIBUTIONS AND ACCOUNTS

 

4.01   Capital
Contributions. The
General Partner and the Original Limited Partner made initial Capital
Contributions of One Hundred Seventy Dollars ($170) and One Hundred Seventy
Thousand Dollars ($170,000), respectively, to the Partnership in exchange for
seventeen (17) Partnership Units and seventeen thousand (17,000) Partnership
Units, respectively. At such time as Additional Limited Partners are admitted to
the Partnership, each shall make Capital Contributions as set forth opposite
their names on Exhibit
A, as it
may be amended from time to time. Exhibit
A shall be
deemed amended upon, and the General Partner may, without the approval of any
other Partner, attach an amended Exhibit
A to this
Agreement to reflect: (a) the issuance of Partnership Units issued to Additional
Limited Partners or to any existing Limited Partner pursuant to Section 4.02
(including the Original Limited Partner), (b) any Partnership Units purchased or
redeemed pursuant to Section 6.10, (c) any redemption or purchase of Partnership
Units by the Partnership or the General Partner by reason of the exercise by a
Limited Partner 

 

 

-11-

 

 

of the
Exchange Right and (d) any purchase by the General Partner (or any of its
Affiliates) of Partnership Units pursuant to the Call Right.

 

4.02     Additional
Capital Contributions and Issuances of Additional Partnership
Interests. 
Except as
provided in this Section 4.02 or in Section 4.03, the Partners shall have no
right or obligation to make any additional Capital Contributions or loans to the
Partnership. The General Partner may contribute additional capital to the
Partnership, from time to time, and receive additional Partnership Units in
respect thereof in the manner contemplated by this Section 4.02. 

 

    
(a)     Issuances
of Additional Partnership Interests. 

 

         
 (i)     General. The
General Partner is hereby authorized to cause the Partnership to issue
additional Partnership Interests in the form of Partnership Units for any
Partnership purpose, at any time or from time to time, to the Partners
(including the General Partner) or to other Persons for such consideration and
on such terms and conditions as shall be established by the General Partner in
its sole and absolute discretion, all without the approval of any Limited
Partners. Any additional Partnership Interests issued thereby may be issued in
one or more classes, or one or more series of any of such classes, with such
designations, preferences and relative participating, optional or other special
rights, powers and duties, including rights, powers and duties senior to Limited
Partnership Interests, all as shall be determined by the General Partner in its
sole and absolute discretion and without the approval of any Limited Partner,
subject to Texas law, including, without limitation, (A) the allocations of
items of Partnership income, gain, loss, deduction and credit to each such class
or series of Partnership Interests; (B) the right of each such class or
series of Partnership Interests to share in Partnership distributions; and (C)
the rights of each such class or series of Partnership Interests upon
dissolution and liquidation of the Partnership; provided, however, that no
additional Partnership Interests shall be issued to the General Partner or the
Original Limited Partner unless:

 

                                       
(1)    the
additional Partnership Interests are issued in connection with an issuance of
REIT Shares or other interests in, the General Partner, which shares or
interests have designations, preferences and other rights such that the economic
interests are substantially similar to the designations, preferences and other
rights of the additional Partnership Interests issued to the General Partner by
the Partnership in accordance with this Section 4.02, and the General Partner,
on its own or with the Original Limited Partner, shall make a Capital
Contribution to the Partnership in an amount equal to the aggregate proceeds
raised in connection with the issuance of such shares of stock of or other
interests in the General Partner;

 

                                       
(2)        
the
additional Partnership Interests are issued in exchange for property or other
assets owned by the General Partner or Original Limited Partner with a fair
market value, as determined by the General Partner, in good faith, equal to the
value of the Partnership Interests; or 

 

                                        
(3)    the
additional Partnership Interests are issued to all Partners in proportion to
their respective Percentage Interests. 

 

                   
Without limiting the foregoing, the General Partner is expressly authorized to
cause the Partnership to issue Partnership Units for less than fair market
value, so long as the General Partner concludes in good faith that such issuance
is in the best interests of the General Partner and the Partnership.

 

       
(ii)   Issuance
of Additional Securities. The
General Partner shall not issue any additional REIT Shares (other than REIT
Shares issued in connection with an exchange made

 

 

-12-

 

pursuant
to Section 8.05 hereof) or rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase REIT
Shares (collectively, “Additional Securities”) other than to all holders of REIT
Shares, unless (A) the General Partner shall cause the Partnership to issue to
the General Partner (or to the General Partner and the Original Limited
Partner), as the General Partner may designate, Partnership Interests or rights,
options, warrants or convertible or exchangeable securities of the Partnership
having designations, preferences and other rights such that the economic
interests are substantially similar to those of the Additional Securities, and
(B) the General Partner (or the General Partner and the Original Limited
Partner) contributes the proceeds from the issuance of such Additional
Securities and from any exercise of rights contained in such Additional
Securities, directly and through the General Partner (or the General Partner and
the Original Limited Partner), to the Partnership; provided, however, that the
General Partner is allowed to issue Additional Securities in connection with an
acquisition of a Property or other asset to be held directly by the General
Partner, but if and only if, such direct acquisition and issuance of Additional
Securities have been approved and determined to be in the best interests of the
General Partner and the Partnership by a majority of the Independent Directors
and Limited Partners holding more than 50% of the Unaffiliated Percentage
Interests. Without limiting the foregoing, the General Partner is expressly
authorized to issue Additional Securities for less than fair market value, and
to cause the Partnership to issue to the General Partner (or to the General
Partner and the Original Limited Partner) corresponding Partnership Interests,
so long as (1) the General Partner concludes in good faith that such issuance is
in the best interests of the General Partner and the Partnership, including
without limitation, the issuance of REIT Shares and corresponding Partnership
Units pursuant to an employee share purchase plan providing for employee
purchases of REIT Shares at a discount from fair market value or employee stock
options that have an exercise price that is less than the fair market value of
the REIT Shares, either at the time of issuance or at the time of exercise, and
(2) the General Partner contributes directly or directly and through the
Original Limited Partnership all proceeds from such issuance to the Partnership.

 

(b)     Certain
Deemed Contributions of Proceeds of Issuance of REIT Shares. In
connection with any and all issuances of REIT Shares, the General Partner shall
make directly or directly and through the Original Limited Partner Capital
Contributions to the Partnership of the proceeds therefrom, provided, that if
the proceeds actually received and contributed by the General Partner are less
than the gross proceeds of such issuance as a result of any underwriter’s
discount or other fees or expenses paid or incurred in connection with such
issuance, then the General Partner (or the General Partner together with the
Original Limited Partner, as applicable) shall be deemed to have made Capital
Contributions to the Partnership in the aggregate amount of the gross proceeds
of such issuance and the Partnership shall be deemed simultaneously to have paid
such offering expenses in accordance with Section 6.05 hereof and in connection
with the required issuance of additional Partnership Units for such Capital
Contributions pursuant to Section 4.02(a) hereof. 

 

(c)     Original
Limited Partner Deemed Contributions. In the
event the Original Limited Partner elects to defer any distribution of cash
hereunder to be made to it pursuant to Section 5.02(a) hereof, then such amount
shall be deemed to be an additional contribution of capital to the Partnership
by the Original Limited Partner, which shall be added to the Original Limited
Partner’s Capital Contribution to the Partnership and the Original Limited
Partner’s Capital Account as established and maintained under Section 4.04
hereof. 

 

4.03   Additional
Funding. 
If the
General Partner determines that it is in the best interests of the Partnership
to provide for additional Partnership funds (“Additional
Funds”) for
any Partnership purpose, the General Partner may (a) cause the Partnership to
obtain such funds from outside borrowings, or (b) elect to have the General
Partner or any of its Affiliates provide such Additional Funds to the
Partnership through loans or otherwise. 

 

 

-13-

 

 

4.04   Capital
Accounts. 
A
separate capital account (a “Capital
Account”) shall
be established and maintained for each Partner in accordance with Regulations
Section 1.704-1(b)(2)(iv). If (a) a new or existing Partner acquires an
additional Partnership Interest in exchange for more than a de minimis Capital
Contribution, (b) the Partnership distributes to a Partner more than a de
minimis amount of Partnership property as consideration for the redemption of a
Partnership Interest, or (c) the Partnership is liquidated within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), the General Partner shall revalue the
property of the Partnership to its fair market value (as determined by the
General Partner, in its sole and absolute discretion, and taking into account
Section 7701(g) of the Code) in accordance with Regulations Section
1.704-l(b)(2)(iv)(f). When the Partnership’s property is revalued by the General
Partner, the Capital Accounts of the Partners shall be adjusted in accordance
with Regulations Sections 1.704-1(b)(2)(iv)(f) and (g), which generally require
such Capital Accounts to be adjusted to reflect the manner in which the
unrealized gain or loss inherent in such property (that has not been reflected
in the Capital Accounts previously) would be allocated among the Partners
pursuant to Section 5.01 hereof if there were a taxable disposition of such
property for its fair market value (as determined by the General Partner, in its
sole and absolute discretion, and taking into account Section 7701(g) of the
Code) on the date of the revaluation. 

 

4.05   Percentage
Interests. 
If the
number of outstanding Partnership Units increases or decreases during a taxable
year, each Partner’s Percentage Interest shall be adjusted by the General
Partner effective as of the date of each such increase or decrease to a
percentage equal to the number of Partnership Units held by such Partner divided
by the aggregate number of Partnership Units outstanding after giving effect to
such increase or decrease. In such event, the General Partner shall revalue the
property of the Partnership and the Capital Account for each Partner shall be
adjusted as set forth in Section 4.04 hereof. If the Partners’ Percentage
Interests are adjusted pursuant to this Section 4.05, the Profit and Loss for
the taxable year in which the adjustment occurs shall be prorated between the
part of the year ending on the day when the Partnership’s property is revalued
by the General Partner and the part of the year beginning on the following day
and, as so divided, shall be allocated to the Partners based on their Percentage
Interests before adjustment, and their adjusted Percentage Interests,
respectively, either (a) as if the taxable year had ended on the date of the
adjustment or (b) based on the number of days in each part. The General Partner,
in its sole and absolute discretion, shall determine which method shall be used
to allocate Profit and Loss for the taxable year in which an adjustment occurs,
as may be required or permitted under Section 706 of the Code. 

 

4.06   No
Interest on Contributions. 
No
Partner shall be entitled to interest on its Capital Contribution. 

 

4.07   Return
of Capital Contributions. 
No
Partner shall be entitled to withdraw any part of its Capital Contribution or
its Capital Account or to receive any distribution from the Partnership, except
as specifically provided in this Agreement. Except as otherwise provided herein,
there shall be no obligation to return to any Partner or withdrawn Partner any
part of such Partner’s Capital Contribution for so long as the Partnership
continues in existence.

 

4.08   No
Third-Party Beneficiary. 
No
creditor or other third party having dealings with the Partnership shall have
the right to enforce the right or obligation of any Partner to make Capital
Contributions or loans or to pursue any other right or remedy hereunder or at
law or in equity, it being understood and agreed that the provisions of this
Agreement shall be solely for the benefit of, and may be enforced solely by, the
parties hereto and their respective successors and assigns. None of the rights
or obligations of the Partners herein set forth to make Capital Contributions or
loans to the Partnership shall be deemed an asset of the Partnership for any
purpose by any creditor or other third party, nor may such rights or obligations
be sold, transferred or assigned by the Partnership or pledged or encumbered by
the Partnership to secure any debt or other obligation of the Partnership or of
any of the Partners. In addition, it is the intent of the parties hereto that no
distribution to any Limited Partner shall be deemed a return of money or other
property in violation of the Act. However, if any court of competent
jurisdiction holds 

 

 

-14-

 

 

that,
notwithstanding the provisions of this Agreement, any Limited Partner is
obligated to return such money or property, such obligation shall be the
obligation of such Limited Partner and not of the General Partner. Without
limiting the generality of the foregoing, a deficit Capital Account of a Partner
shall not be deemed to be a liability of such Partner nor an asset or property
of the Partnership. 

 

ARTICLE
V

 

PROFIT
AND LOSS; DISTRIBUTIONS

 

5.01   Allocation
of Profit and Loss. 

 

(a)    After
giving effect to the special allocations set forth in Sections 5.01(b), (c) and
(d), Profit for each fiscal year of the Partnership shall be allocated as
follows: (i) first to the Partners, pro rata, in accordance with and in
proportion to their respective Partnership Interests, in amounts equal to the
amount of cash distributed to the Partners pursuant to Section 5.02(a) hereof
with respect to such fiscal year; (ii) second, to the extent the amount of
Profit for such fiscal year exceeds the amount of cash distributed to the
Partners pursuant to Section 5.02(a) hereof, such excess shall be allocated to
the General Partner and the Limited Partners in amounts and in proportion to the
cumulative Loss allocated to the General Partner pursuant to clause (y) of this
Section 5.01(a) and the cumulative Loss allocated to the Limited Partners
pursuant to clause (x) of this Section 5.01(a), respectively; and (iii) finally,
the balance, if any, of Profit shall be allocated to the Partners in accordance
with and in proportion to their respective Percentage Interests. Notwithstanding
the foregoing, however, it is the intent of the Partners that allocations of
Profit to the Limited Partners be such that the amount of Profit allocated to
each Limited Partner be equal to the amount of income that would have been
allocated to such Limited Partner with respect to the applicable fiscal period
if such Limited Partner had owned REIT Shares equal in number to the number of
Partnership Units owned by such Limited Partner during such fiscal period, and
if, for any reason, the foregoing allocations of Profit result in any material
variation from this concept, Profit shall be allocated to each Limited Partner
in an amount equal to the aggregate amount of income that would have been
allocated to such Limited Partner with respect to the applicable fiscal period
if such Limited Partner had owned REIT Shares equal in number to the number of
Partnership Units owned by such Limited Partner during such fiscal period. After
giving effect to the special allocations set forth in Sections 5.01(b), (c) and
(d), Loss for a fiscal year of the Partnership shall be allocated as follows:
(w) first, to the Partners, pro rata, in accordance with and in proportion to
their respective Partnership Interests, until the cumulative Loss allocated to
each Partner under this clause (w) equals the cumulative Profit allocated to
each Partner under clause (ii) of this Section 5.01(a); (x) second, to the
Limited Partners in an amount equal to each such Limited Partner’s Capital
Account balance prior to the allocation made under this clause (x); (y) third,
to the General Partner in an amount equal to the General Partner’s Capital
Account balance prior to the allocation made under this clause (y); and (z)
fourth, to the General Partner to the extent that any further allocation of Loss
to Limited Partners would result in any such Limited Partners having a deficit
balance in their Capital Accounts. 

 

(b)    Notwithstanding
any provision to the contrary herein, (i) any expense of the Partnership that is
a “nonrecourse deduction” within the meaning of Regulations Section
1.704-2(b)(1) shall be allocated in accordance with the Partners’ respective
Percentage Interests, (ii) any expense of the Partnership that is a “partner
nonrecourse deduction” within the meaning of Regulations Section 1.704-2(i)(2)
shall be allocated to the Partner that bears the “economic risk of loss” of such
deduction in accordance with Regulations Section 1.704-2(i)(1), (iii) if there
is a net decrease in Partnership Minimum Gain within the meaning of Regulations
Section 1.704-2(f)(1) for any Partnership taxable year, then, subject to the
exceptions set forth in Regulations Section 1.704-2(f)(2), (3), (4) and (5),
items of gain and income shall be allocated among the Partners in accordance
with Regulations Section 1.704-2(f) and the ordering rules contained in
Regulations Section 1.704-2(j), and (iv) if there is a net decrease in Partner
nonrecourse debt minimum gain within the meaning of Regulations Section
1.704-2(i)(4) for any Partnership taxable year, then, subject to the exceptions
set forth in Regulations Section 1.704-2(g), items 

 

 

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of gain
and income shall be allocated among the Partners, in accordance with Regulations
Section 1.704-2(i)(4) and the ordering rules contained in Regulations Section
1.704-2(j). A Partner’s “interest in partnership profits” for purposes of
determining its share of the nonrecourse liabilities of the Partnership within
the meaning of Regulations Section 1.752- 3(a)(3) shall be such Partner’s
Percentage Interest. 

 

(c)    If a
Partner receives in any taxable year an adjustment, allocation, or distribution
described in subparagraphs (4), (5), or (6) of Regulations Section
1.704-1(b)(2)(ii)(d) that causes or increases a deficit balance in such
Partner’s Capital Account that exceeds the sum of such Partner’s shares of
Partnership Minimum Gain and Partner nonrecourse debt minimum gain, as
determined in accordance with Regulations Sections 1.704-2(g) and 1.704-2(i),
such Partner shall be allocated specially for such taxable year (and, if
necessary, later taxable years) items of income and gain in an amount and manner
sufficient to eliminate such deficit Capital Account balance as quickly as
possible as provided in Regulations Section 1.704-1(b)(2)(ii)(d). After the
occurrence of an allocation of income or gain to a Partner in accordance with
this Section 5.01(c), to the extent permitted by Regulations Section 1.704-1(b),
items of expense or loss shall be allocated to such Partner in an amount
necessary to offset the income or gain previously allocated to such Partner
under this Section 5.01(c). 

 

(d)    Loss
shall not be allocated to a Limited Partner to the extent that such allocation
would cause a deficit in such Partner’s Capital Account (after reduction to
reflect the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5)
and (6)) to exceed the sum of such Partner’s shares of Partnership Minimum Gain
and Partner nonrecourse debt minimum gain. Any Loss in excess of that limitation
shall be allocated to the General Partner. After the occurrence of an allocation
of Loss to the General Partner in accordance with this Section 5.01(d), to the
extent permitted by Regulations Section 1.704-1(b), Profit shall be allocated to
the General Partner in an amount necessary to offset the Loss previously
allocated to the General Partner under this Section 5.01(d). 

 

(e)    If a
Partner transfers any part or all of its Partnership Interest, the distributive
shares of the various items of Profit and Loss allocable among the Partners
during such fiscal year of the Partnership shall be allocated between the
transferor and the transferee Partner either (i) as if the Partnership’s fiscal
year had ended on the date of the transfer, or (ii) based on the number of days
of such fiscal year that each was a Partner without regard to the results of
Partnership activities in the respective portions of such fiscal year in which
the transferor and the transferee were Partners. The General Partner, in its
sole and absolute discretion, shall determine which method shall be used to
allocate the distributive shares of the various items of Profit and Loss between
the transferor and the transferee Partner. 

 

(f)    “Profit” and
“Loss” and any
items of income, gain, expense, or loss referred to in this Agreement shall be
determined in accordance with federal income tax accounting principles, as
modified by Regulations Section 1.704-(b)(2)(iv), except that Profit and Loss
shall not include items of income, gain and expense that are specially allocated
pursuant to Sections 5.01(b), 5.01(c), or 5.01(d). All allocations of income,
Profit, gain, Loss, and expense (and all items contained therein) for federal
income tax purposes shall be identical to all allocations of such items set
forth in this Section 5.01, except as otherwise required by Section 704(c) of
the Code and Regulations Section 1.704-1(b)(4). The General Partner shall have
the authority, in its sole and absolute discretion and without the need for
consent from any Partner, to elect the method or methods to be used by the
Partnership for allocating items of income, gain, expense and deductions as
required by Section 704(c) of the Code, including election of a method that may
result in one or more Partners receiving or being allocated a disproportionately
larger share of items of Partnership income, gain, expense or deduction, and any
such election shall be binding on all Partners.

 

(g)    If the
General Partner determines that is advantageous to the business of the
Partnership to amend the allocation provisions of this Agreement so as to permit
the Partnership to avoid the characterization of Partnership income allocable to
various qualified plans, IRAs and other entities which are exempt from federal
income taxation (“Tax
Exempt Partners”) as
constituting Unrelated Business 

 

 

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Taxable
Income (“UBTI”) within
the meaning of the Code, specifically including, but not limited to, amendments
to satisfy the so-called “fractions rule” contained in Code
Section 514(c)(9), the General Partner is authorized, in its discretion, to
amend this Agreement so as to allocate income, gain, loss, deduction or credit
(or items thereof) arising in any year differently than as provided for in this
Section if, and to the extent, that such amendments will achieve such result or
otherwise permit the avoidance of characterization of Partnership income as UBTI
to Tax Exempt Partners. Any allocation made pursuant to this
Section 5.01(g) shall be deemed to be a complete substitute for any
allocation otherwise provided for in this Agreement, and no further amendment of
this Agreement or approval by any Limited Partner shall be required to
effectuate such allocation. In making any such allocations under this
Section 5.01(g) (“New
Allocations”), the
General Partner is authorized to act in reliance upon advice of counsel to the
Partnership or the Partnership’s regular certified public accountants that, in
their opinion, after examining the relevant provisions of the Code and any
current or future proposed or final Treasury Regulations thereunder, the New
Allocation will achieve the intended result of this
Section 5.01(g).

 

New
Allocations made by the General Partner in reliance upon the advice of counsel
or accountants as described above shall be deemed to be made in the best
interests of the Partnership and all of the Partners, and any such New
Allocations shall not give rise to any claim or cause of action by any Partner
against the Partnership or any General Partner. Nothing herein shall require or
obligate the General Partner, by implication or otherwise, to make any such
amendments or undertake any such action. 

 

5.02   Distributions
of Cash. 

 

(a)    The
Partnership shall distribute cash on a quarterly (or, at the election of the
General Partner, more frequent) basis, in an amount determined by the General
Partner in its sole and absolute discretion, to the Partners who are Partners on
the Partnership Record Date with respect to such quarter (or other distribution
period) in the following manner: (i) first, to the General Partner in an amount
equal to the GP Minimum Return with respect to the fiscal year of the General
Partner; (ii) second, to the Limited Partners pro rata among them in proportion
to the their respective Unpaid Return, if any, owing to each such Limited
Partners with respect to prior fiscal years, in an amount equal to their
respective Unpaid Return for such prior fiscal years owing to each such Limited
Partner; (iii) third, after the establishment of reasonable cash reserves to
meet REIT Expenses and other obligations of the Partnership, as determined in
the sole and absolute discretion of the General Partner, to the General Partner
and the Limited Partners in such aggregate amount as may be determined by the
General Partner in its sole and absolute discretion to be allocated among the
General Partner and the Limited Partners such that each Limited Partner will
receive an amount equal to its LP Return for such fiscal year; and
(iv) finally, to the Partners in accordance with and in proportion to their
respective Percentage Interests; provided, however, that if a new or existing
Partner acquires an additional Partnership Interest in exchange for a Capital
Contribution on any date other than a Partnership Record Date, the cash
distribution attributable to such additional Partnership Interest relating to
the Partnership Record Date next following the issuance of such additional
Partnership Interest shall be reduced to the proportion thereof which equals (i)
the number of days that such additional Partnership Interest is held by such
Partner divided by (ii) the number of days between such Partnership Record Date
and the immediately preceding Partnership Record Date. Notwithstanding the
foregoing, however, the Original Limited Partner may, in its sole and absolute
discretion, elect to defer any distribution to be made to it, in which case the
amount so deferred shall be deemed to be an additional Capital Contribution made
on behalf of the Original Limited Partner under Section 4.02(c) hereof, to be
distributed to the Original Limited Partner upon liquidation of the Partnership
under Section 5.06 hereof, or at such time as the Original Limited Partner may
otherwise be allowed to withdraw from the Partnership after the Transfer
Restriction Date. 

 

(b)    Notwithstanding
any other provision of this Agreement, the General Partner is authorized to take
any action that it determines to be necessary or appropriate to cause the
Partnership to comply 

 

 

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with any
withholding requirements established under the Code or any other federal, state
or local law including, without limitation, the requirements of Sections 1441,
1442, 1445 and 1446 of the Code. To the extent that the Partnership is required
to withhold and pay over to any taxing authority any amount resulting from the
allocation or distribution of income to a Partner or its assignee (including by
reason of Section 1446 of the Code), either (i) if the actual amount to be
distributed to the Partner or assignee equals or exceeds the amount required to
be withheld by the Partnership, the amount withheld shall be treated as a
distribution of cash in the amount of such withholding to such Partner or
assignee, or (ii) if the actual amount to be distributed to the Partner or
assignee is less than the amount required to be withheld by the Partnership, the
amount required to be withheld shall be treated as a loan (a “Partnership
Loan”) from
the Partnership to the Partner or assignee on the day the Partnership pays over
such amount to a taxing authority. A Partnership Loan shall be repaid through
withholding by the Partnership with respect to subsequent distributions to the
applicable Partner or assignee. In the event that a Limited Partner (a
“Defaulting
Limited Partner”) fails
to pay any amount owed to the Partnership with respect to the Partnership Loan
within 15 days after demand for payment thereof is made by the Partnership on
the Limited Partner, the General Partner, in its sole and absolute discretion,
may elect to make the payment to the Partnership on behalf of such Defaulting
Limited Partner. In such event, on the date of payment, the General Partner
shall be deemed to have extended a loan (a “General
Partner Loan”) to the
Defaulting Limited Partner in the amount of the payment made by the General
Partner and shall succeed to all rights and remedies of the Partnership against
the Defaulting Limited Partner as to that amount. Without limitation, the
General Partner shall have the right to receive any distributions that otherwise
would be made by the Partnership to the Defaulting Limited Partner until such
time as the General Partner Loan has been paid in full, and any such
distributions so received by the General Partner shall be treated as having been
received by the Defaulting Limited Partner and immediately paid to the General
Partner. Any amounts treated as a Partnership Loan or a General Partner Loan
pursuant to this Section 5.02(b) shall bear interest at the lesser of (A) the
base rate on corporate loans at large United States money center commercial
banks, as published from time to time in The Wall Street Journal, or
(B) the maximum lawful rate of interest on such obligation, such interest
to accrue from the date the Partnership or the General Partner, as applicable,
is deemed to extend the loan until such loan is repaid in full. 

 

(c)    To the
extent not utilized for expenses of the Partnership or for investment in
additional Properties, the General Partner may, in its discretion, cause the
Partnership to distribute Net Capital Proceeds in such amount as shall be
determined by the General Partner in its discretion in accordance with the
provisions of Section 5.02(a) hereof. 

 

(d)    In no
event may a Partner receive a distribution of cash with respect to a Partnership
Unit if such Partner is entitled to receive a cash dividend as the holder of
record of a REIT Share for which all or part of such Partnership Unit has been
or will be exchanged, and the Unpaid Return with respect to such Partnership
Unit shall be deemed to be reduced by the amount of any such cash dividend.

 

5.03   REIT
Distribution Requirements. 
The
General Partner shall use its reasonable efforts to cause the Partnership to
distribute amounts sufficient to enable the General Partner to pay stockholder
dividends that will allow the General Partner to (a) meet its distribution
requirement for qualification as a REIT as set forth in Section 857 of the Code
and (b) avoid any federal income or excise tax liability imposed by the Code.

 

5.04   No
Right to Distributions in Kind. 
No
Partner shall be entitled to demand property other than cash in connection with
any distributions by the Partnership. 

 

5.05   Limitations
on Return of Capital Contributions. 
Notwithstanding
any of the provisions of this Article V, no Partner shall have the right to
receive and the General Partner shall not have the right to make a distribution
that includes a return of all or part of a Partner’s Capital Contributions,
unless after giving effect to the return of a Capital Contribution, the sum of
all Partnership liabilities, other than the 

 

 

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liabilities
to a Partner for the return of its Capital Contribution, does not exceed the
fair market value of the Partnership’s assets. 

 

5.06   Distributions
Upon Liquidation. 
Upon
liquidation of the Partnership, after payment of, or adequate provision for,
debts and obligations of the Partnership, including any Partner loans, any
remaining assets of the Partnership shall be distributed to all Partners with
positive Capital Accounts in accordance with their respective positive Capital
Account balances. For purposes of the preceding sentence, the Capital Account of
each Partner shall be determined after all adjustments made in accordance with
Sections 5.01 and 5.02 resulting from Partnership operations and from all sales
and dispositions of all or any part of the Partnership’s assets have been made.
To the extent deemed advisable by the General Partner, appropriate arrangements
(including the use of a liquidating trust) may be made to assure that adequate
funds are available to pay any contingent debts or obligations. 

 

5.07   Substantial
Economic Effect. 
It is the
intent of the Partners that the allocations of Profit and Loss under this
Agreement have substantial economic effect (or be consistent with the Partners’
interests in the Partnership in the case of the allocation of losses
attributable to nonrecourse debt) within the meaning of Section 704(b) of the
Code as interpreted by the Regulations promulgated pursuant thereto. Article V
and other relevant provisions of this Agreement shall be interpreted in a manner
consistent with such intent.

 

5.08   Withholding. 
All
amounts required to be withheld pursuant to Section 1446 of the Code or any
other provision of federal, state, or local tax law shall be treated as amounts
actually distributed to the affected Partners for all purposes under this
Agreement. If the Partnership’s withholding obligations with respect to a
Partner shall exceed the cash distributable to such Partner, such Partner shall
be liable for a mandatory capital contribution equal to such excess. Failure to
make such capital contribution shall result in the deemed sale by such Partner
of a portion of such Partner's Partnership Interest; such portion having an
agreed value equal to such excess.

 

5.09   Tax
Consequences to Limited Partners.
In
exercising its authority under this Agreement, the General Partner may, but
shall be under no obligation to, take into account the tax consequences to any
Partner (including the General Partner) of any action taken by it. The General
Partner and the Partnership shall not have liability to a Partner under any
circumstances as a result of an income tax liability incurred by such Limited
Partner as a result of an action (or inaction) by the General Partner pursuant
to its authority under this Agreement.

 

ARTICLE
VI

 

RIGHTS,
OBLIGATIONS AND

POWERS
OF THE GENERAL PARTNER

 

6.01   Management
of the Partnership. 

 

(a)    Except as
otherwise expressly provided in this Agreement, the General Partner shall have
full, complete and exclusive discretion to manage and control the business of
the Partnership for the purposes herein stated, and shall make all decisions
affecting the business and assets of the Partnership. Subject to the
restrictions specifically contained in this Agreement, the powers and
obligations, as the context requires, of the General Partner shall include,
without limitation, the authority to take the following actions on behalf of the
Partnership: 

 

(i)    to
acquire, purchase, own, operate, lease and dispose of any real property and any
other property or assets including, but not limited to notes, Mortgages,
partnership or joint venture interests or securities, that the General Partner
determines are necessary or appropriate or in the best interests of the business
of the Partnership; 

 

 

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(ii)    to
construct buildings and make other improvements on the Properties owned or
leased by the Partnership; 

 

(iii)   to
authorize, issue, sell, redeem or otherwise purchase any Partnership Interests
or any securities (including secured and unsecured debt obligations of the
Partnership, debt obligations of the Partnership convertible into any class or
series of Partnership Interests, or options, rights, warrants or appreciation
rights relating to any Partnership Interests) of the Partnership; 

 

(iv)   to borrow
or lend money for the Partnership, issue or receive evidences of indebtedness in
connection therewith, refinance, increase the amount of, modify, amend or chance
the terms of, or extend the time for the payment of, any such indebtedness, and
secure such indebtedness by mortgage, deed of trust, pledge or other lien on the
Partnership’s assets; 

 

(v)    to pay,
either directly or by reimbursement, for all operating costs and general
administrative expenses of the Partnership to third parties or to the General
Partner or its Affiliates as set forth in this Agreement; 

 

(vi)   to
guarantee or become a co-maker of indebtedness of the General Partner or any
Subsidiary thereof, refinance, increase the amount of, modify, amend or change
the terms of, or extend the time for the payment of, any such guarantee or
indebtedness, and secure such guarantee or indebtedness by mortgage, deed of
trust, pledge or other lien on the Partnership’s assets; 

 

(vii)         
 to use
assets of the Partnership (including, without limitation, cash on hand) for any
purpose consistent with this Agreement, including, without limitation, payment,
either directly or by reimbursement, of all operating costs and general
administrative expenses of the General Partner, the Partnership or any
Subsidiary of either, to third parties or to the General Partner as set forth in
this Agreement;

 

(viii)        
to lease
all or any portion of any of the Partnership’s assets, whether or not the terms
of such leases extend beyond the termination date of the Partnership and whether
or not any portion of the Partnership’s assets so leased are to be occupied by
the lessee, or, in turn, subleased in whole or in part to others, for such
consideration and on such terms as the General Partner may
determine;

 

(ix)    to
prosecute, defend, arbitrate, or compromise any and all claims or liabilities in
favor of or against the Partnership, on such terms and in such manner as the
General Partner may reasonably determine, and similarly, to prosecute, settle or
defend litigation with respect to the Partners, the Partnership, or the
Partnership’s assets; 

 

(x)    to file
applications, communicate, and otherwise deal with any and all governmental
agencies having jurisdiction over, or in any way affecting, the Partnership’s
assets or any other aspect of the Partnership business; 

 

(xi)    to make
or revoke any election permitted or required of the Partnership by any taxing
authority; 

 

(xii)    to
maintain such insurance coverage for public liability, fire and casualty, and
any and all other insurance for the protection of the Partnership, for the
conservation of Partnership assets, or for any other purpose convenient or
beneficial to the Partnership, in such amounts and such types, as it shall
determine from time to time;

 

 

-20-

 

(xiii)    to
determine whether or not to apply any insurance proceeds for any Property to the
restoration of such Property or to distribute the same;

 

(xiv)    to
establish one or more divisions of the Partnership, to hire and dismiss
employees of the Partnership or any division of the Partnership, and to retain
legal counsel, accountants, consultants, real estate brokers, and such other
persons, as the General Partner may deem necessary or appropriate in connection
with the Partnership business and to pay such persons remuneration as the
General Partner may deem reasonable and proper;

 

(xv)     to retain
other services of any kind or nature in connection with Partnership business and
to pay such remuneration as the General Partner may deem reasonable and proper
for same; 

 

(xvi)    to
negotiate and conclude agreements on behalf of the Partnership with respect to
any of the rights, powers and authority conferred upon the General
Partner;

 

(xvii)    to
maintain accurate accounting records and to file promptly all federal, state and
local income tax returns on behalf of the Partnership;

 

(xviii)           
to
distribute Partnership cash or other Partnership assets in accordance with this
Agreement;

 

(xix)     to form
or acquire an interest in, and contribute property to, any further limited or
general partnerships, joint ventures, limited liability companies or other
entities or relationships that it deems desirable (including, without
limitation, the acquisition of interests in, and the contributions of property
to, its Subsidiaries and any other Person in which it has an equity interest
from time to time);

 

(xx)               
to
establish Partnership reserves for working capital, capital expenditures,
contingent liabilities, or any other valid Partnership purpose; 

 

(xxi)     to merge,
consolidate or combine the Partnership with or into another Person;

 

(xxii)     to do any
and all acts and things necessary or prudent to ensure that the Partnership will
not be classified as a “publicly traded partnership” for purposes of Section
7704 of the Code; and

 

(xxiii)     to take
such other action, execute, acknowledge, swear to or deliver such other
documents and instruments, and perform any and all other acts that the General
Partner deems necessary or appropriate for the formation, continuation and
conduct of the business and affairs of the Partnership (including, without
limitation, all actions consistent with allowing the General Partner at all
times to qualify as a REIT unless the General Partner voluntarily terminates its
REIT status) and to possess and enjoy all of the rights and powers of a general
partner as provided by the Act.

 

(b)    Except as
otherwise provided herein, to the extent the duties of the General Partner
require expenditures of funds to be paid to third parties, the General Partner
shall not have any obligations hereunder except to apply Partnership funds to
the extent that Partnership funds are reasonably available to it for the
performance of such duties, and nothing herein contained shall be deemed to
authorize or require the General Partner, in its capacity as such, to expend its
individual funds for payment to third parties or to undertake any individual
liability or obligation on behalf of the Partnership. 

 

(c)    Any
actions taken by the General Partner pursuant to its authority under this
Agreement on behalf of the Partnership regarding the approval of any transaction
between the Partnership and the 

 

 

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Sponsor,
Advisor, a member of the Board of Directors of Behringer Harvard Opportunity
REIT I or any Affiliate thereof, shall require approval by a majority of the
members of the Board of Directors of Behringer Harvard Opportunity REIT I
(including a majority of the independent directors) not otherwise interested in
such transaction as being fair and reasonable to Behringer Harvard Opportunity
REIT I and the Partnership on terms and conditions not less favorable to
Behringer Harvard Opportunity REIT I or the Partnership, as applicable, than
those available from unaffiliated third parties. 

 

6.02   Delegation
of Authority. 
The
General Partner may delegate any or all of its powers, rights and obligations
hereunder, and may appoint, employ, contract or otherwise deal with any Person
(including without limitation officers or other agents of the Partnership or the
General Partner appointed by the General Partner) for the transaction of the
business of the Partnership, which Person may, under supervision of the General
Partner, perform any acts or services for the Partnership as the General Partner
may approve. 

 

6.03   Indemnification
and Exculpation of Indemnitees. 

 

(a)    The
Partnership shall indemnify an Indemnitee from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including reasonable
legal fees and expenses), judgments, fines, settlements, and other amounts
arising from any and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative, that relate to the operations of the
Partnership as set forth in this Agreement in which any Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, as a result
of acting on behalf of or performing services for the Partnership, only if it is
determined that (i) the Indemnitee acted in good faith and (ii) that the
Indemnitee reasonably believed that the act or omission was in the Partnership’s
best interests, or if the act or omission was outside the Indemnitee’s official
capacity as a general partner of the Partnership, that the act or omission was
at least not opposed to the Partnership’s best interests. Notwithstanding the
foregoing, each Indemnitee shall be liable, responsible and accountable, and the
Partnership shall not be liable to an Indemnitee, other than for reasonable
expenses actually incurred by the Indemnitee with respect to a proceeding in
which (i) the Indemnitee is found liable on the basis that the Indemnitee
improperly received personal benefit, whether or not the benefit resulted from
an action taken in the Indemnitee’s official capacity, or (ii) the Indemnitee is
found liable to the Partnership or the Limited Partners. The Partnership shall
not indemnify or hold harmless the Indemnitee: (a) in the case in which the
Indemnitee is an Independent Director, if the loss or liability was the result
of gross negligence or willful misconduct by the Indemnitee, or (b) in any other
case, if the loss or liability was the result of negligence or misconduct by the
Indemnitee. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 6.03(a). The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
an entry of an order of probation prior to judgment, does not alone determine
that the Indemnitee acted in a manner contrary to that specified in this Section
6.03(a). Any indemnification pursuant to this Section 6.03 shall be made only
out of the assets of the Partnership. 

 

(b)    Notwithstanding
anything to the contrary contained in the provisions of subsection (a) of this
Section, the Partnership shall not provide indemnification for any loss,
liability or expense arising from or out of an alleged violation of federal or
state securities laws by an Indemnitee unless one or more of the following
conditions are met: (i) there has been a successful adjudication on the merits
of each count involving alleged securities law violations as to the particular
Indemnitee, (ii) such claims have been dismissed with prejudice on the merits by
a court of competent jurisdiction as to the particular Indemnitee, or (iii) a
court of competent jurisdiction approves a settlement of the claims against a
particular Indemnitee and finds that indemnification of the settlement and the
related costs should be made, and the court considering the request for
indemnification has been advised of the position of the SEC and of the published
position of any state securities regulatory authority in which securities of the
Partnership were offered or sold as to indemnification for violations of
securities laws.

 

 

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(c)    The
Partnership shall pay or reimburse reasonable legal expenses and other costs
incurred by an Indemnitee in advance of final disposition of a proceeding if all
of the following are satisfied: (i) the proceeding relates to acts or
omissions with respect to the performance of duties for services on behalf of
the Partnership, (ii) the Indemnitee provides the Partnership with written
affirmation of the Indemnitee’s good faith belief that the Indemnitee has met
the standard of conduct necessary for indemnification by the Partnership as
authorized in this Section 6.03, (iii) the legal proceeding was initiated by a
third party who is not a stockholder of the General Partner or, if by a
stockholder of the General Partner acting in his or her capacity as such, a
court of competent jurisdiction approves such advancement, and (iv) the
Indemnitee provides the Partnership with a written agreement to repay the amount
paid or reimbursed by the Partnership, together with the applicable legal rate
of interest thereon, if it is ultimately determined that the Indemnitee did not
comply with the requisite standard of conduct and is not entitled to
indemnification.

 

(d)    The
Indemnification provided by this Section 6.03 shall be in addition to any other
rights to which an Indemnitee or any other Person may be entitled under any
agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, and shall continue as to an Indemnitee who has ceased to serve in
such capacity. 

 

(e)    The
Partnership may purchase and maintain insurance or establish other arrangements,
including without limitation trust arrangements and letters of credit on behalf
of or to secure indemnification obligations owed to the Indemnitees and such
other Persons as the General Partner shall determine against any liability that
may be asserted against or expenses that may be incurred by such Person in
connection with the Partnership’s activities, regardless of whether the
Partnership would have the power to indemnify such Person against such liability
under the provisions of this Agreement. 

 

(f)    For
purposes of this Section 6.03, (i) the Partnership shall be deemed to have
requested an Indemnitee to serve as a fiduciary of an employee benefit plan
whenever the performance by the Indemnitee of its duties to the Partnership also
imposes duties on the Indemnitee, or otherwise involves services by the
Indemnitee to the plan or participants or beneficiaries of the plan; (ii) excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute fines within the meaning of this
Section 6.03; and (iii) actions taken or omitted by the Indemnitee with respect
to an employee benefit plan in the performance of its duties for a purpose
reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the Partnership. 

 

(g)    In no
event may an Indemnitee subject the Limited Partners to personal liability by
reason of the indemnification provisions set forth in this Agreement.

 

(h)    An
Indemnitee shall not be denied indemnification in whole or in part under this
Section 6.03 because the Indemnitee had an interest in the transaction with
respect to which the indemnification applies if the transaction was otherwise
permitted by the terms of this Agreement. 

 

(i)    The
provisions of this Section 6.03 are for the benefit of the Indemnitees, their
heirs, successors, assigns and administrators and shall not be deemed to create
any rights in or be for the benefit of any other Persons. 

 

6.04   Liability
of the General Partner. 

 

(a)    Notwithstanding
anything to the contrary set forth in this Agreement, the General Partner shall
not be liable for monetary damages to the Partnership or any Partners for losses
sustained or liabilities incurred as a result of errors in judgment or any act
or omission if the General Partner acted in good faith. The General Partner
shall not be in breach of any duty that the General Partner may owe to the
Limited Partners or the Partnership or any other Persons under this Agreement or
of any duty stated or 

 

 

-23-

 

 

implied
by law or equity, provided, the General Partner, acting in good faith, abides by
the terms of this Agreement. In addition, to the extent the General Partner or
any officer, director, employee, agent or stockholder of the General Partner
performs its duties in accordance with the standards provided by the Act, as it
may be amended from time to time, or under any successor statute thereto, such
Person or Persons shall have no liability by reason of being or having been the
General Partner, or by reason of being an officer, director, employee, agent or
stockholder of the General Partner. To the maximum extent that the Act and the
general laws of the State of Texas, in effect from time to time, permit
limitation of the liability of general partners of a limited partnership, the
General Partner and its officers, directors, employees, agents and stockholders
shall not be liable to the Partnership or to any Partner for money damages
except to the extent that (i) the General Partner or its officers, directors,
employees, agents or stockholders actually received an improper benefit or
profit in money, property or services, in which case the liability shall not
exceed the amount of the benefit or profit in money, property or services
actually received; or (ii) a judgment or other final adjudication adverse to the
General Partner or one or more of its officers, directors, employees, agents or
stockholders is entered in a proceeding based on a finding in the proceeding
that the action or failure to act of the General Partner or one or more of its
officers, directors, employees, agents or stockholders was the result of active
and deliberate dishonesty and was material to the cause of action adjudicated in
the proceeding. Neither the amendment nor repeal of this Section 6.04(a), nor
the adoption or amendment of any other provision of this Agreement inconsistent
with this Section 6.04(a), shall apply to or affect in any respect the
applicability of the preceding sentence with respect to any act or failure to
act which occurred prior to such amendment, repeal or adoption. In the absence
of any Texas statute limiting the liability of the General Partner or its
directors or officers for money damages in a suit by or on behalf of the
Partnership or by any Partner, the General Partner and the officers, directors,
employees, agents and stockholders of the General Partner shall not be liable to
the Partnership or to any Partner for money damages except to the extent that
(i) the General Partner or one or more of its officers, directors, employees,
agents or stockholders actually received an improper benefit or profit in money,
property or services, in which case the liability shall not exceed the amount of
the benefit or profit in money, property or services actually received; or (ii)
a judgment or other final adjudication adverse to the General Partner or one or
more of its officers, directors, employees, agents or stockholders is entered in
a proceeding based on a finding in the proceeding that the action of the General
Partner or one or more of its officers, directors, employees or stockholders
action or failure to act was the result of active and deliberate dishonesty and
was material to the cause of action adjudicated in the proceeding. 

 

(b)    The
Limited Partners expressly acknowledge that the General Partner is acting on
behalf of the Partnership, itself and its stockholders collectively, that the
General Partner is under no obligation to consider the separate interests of the
Limited Partners (including, without limitation, the tax consequences to Limited
Partners or the tax consequences of some, but not all, of the Limited Partners)
in deciding whether to cause the Partnership to take (or decline to take) any
actions. In the event of a conflict between the interests of its stockholders on
the one hand and the Limited Partners on the other, the General Partner shall
endeavor in good faith to resolve the conflict in a manner not adverse to either
its stockholders or the Limited Partners; provided, however, that for so long as
the General Partner directly owns a controlling interest in the Partnership, any
such conflict that the General Partner, in its sole and absolute discretion,
determines cannot be resolved in a manner not adverse to either its stockholders
or the Limited Partners shall be resolved in favor of its stockholders. The
General Partner shall not be liable for monetary damages for losses sustained,
liabilities incurred, or benefits not derived by Limited Partners in connection
with such decisions, provided that the General Partner has acted in good faith.

 

(c)    Subject
to its obligations and duties as General Partner set forth in Section 6.01
hereof, the General Partner may exercise any of the powers granted to it under
this Agreement and perform any of the duties imposed upon it hereunder either
directly or by or through its agents. The General Partner shall not be
responsible for any misconduct or negligence on the part of any such agent
appointed by it in good faith. 

 

 

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(d)    Notwithstanding
any other provisions of this Agreement or the Act, any action of the General
Partner on behalf of the Partnership or any decision of the General Partner to
refrain from acting on behalf of the Partnership, undertaken in the good faith
belief that such action or omission is necessary or advisable in order to (i)
protect the ability of the General Partner to continue to qualify as a REIT or
(ii) prevent the General Partner from incurring any taxes under Section
857, Section 4981, or any other provision of the Code, is expressly authorized
under this Agreement and is deemed approved by all of the Limited Partners.

 

(e)    Any
amendment, modification or repeal of this Section 6.04 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
General Partner’s liability to the Partnership and the Limited Partners under
this Section 6.04 as in effect immediately prior to such amendment, modification
or repeal with respect to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when claims relating to such
matters may arise or be asserted. 

 

6.05   Reimbursement
of General Partner. 

 

(a)    Except as
provided in this Section 6.05 and elsewhere in this Agreement (including the
provisions of Articles V and VI regarding distributions, payments, and
allocations to which it may be entitled), the General Partner shall not be
compensated for its services as general partner of the Partnership.

 

(b)    The
General Partner shall be reimbursed on a monthly basis, or such other basis as
the General Partner may determine in its sole and absolute discretion, for all
REIT Expenses and Administrative Expenses. 

 

6.06   Outside
Activities. 
Subject
to the Articles of Incorporation and any agreements entered into by the General
Partner or its Affiliates with the Partnership or a Subsidiary, or any officer,
director, manager, employee, agent, trustee, Affiliate or owner of the General
Partner, the Affiliates of the General Partner and the officers, directors,
managers, agents, trustees and owners of the General Partner and its Affiliates
shall be entitled to and may have business interests and engage in business
activities in addition to those relating to the Partnership, including business
interests and activities substantially similar or identical to those of the
Partnership. Neither the Partnership nor any of the Limited Partners shall have
any rights by virtue of this Agreement in any such business ventures, interests
or activities. None of the Limited Partners or any other Person shall have any
rights by virtue of this Agreement or the partnership relationship established
hereby in any such business ventures, interests or activities, and neither the
General Partner, nor any Affiliates of the General Partner nor any officers,
directors, managers, employees, agents, trustees or owners of the General
Partner or the General Partner’s Affiliates shall have any obligation pursuant
to this Agreement to offer any interest in any such business ventures, interests
and activities to the Partnership or any Limited Partner, even if such
opportunity is of a character which, if presented to the Partnership or any
Limited Partner, could be taken by such Person. Without
the consent of the Limited Partners holding more than 50% of the Percentage
Interests, the General Partner shall not, directly or indirectly, enter into or
conduct any business, other than in connection with the ownership, acquisition
and disposition of Partnership Interests as a General Partner and the management
of the business of the Partnership, its operation of the General Partner as a
REIT and such activities as are incidental to the same. Without the consent of
the Limited Partners holding more than 50% of the Unaffiliated Percentage
Interests, the General Partner shall not, directly or indirectly, participate in
or otherwise acquire any interest in any real or personal property, except its
General Partner interest or its minority interest in any Subsidiary of the
Partnership (held directly or indirectly through a qualified REIT subsidiary (as
defined in Code Section 856(i)(2)), limited liability company or taxable
corporate affiliate as the General Partner shall determine consistent with its
need to maintain its status as a REIT) that the General Partner holds in order
to maintain such Subsidiary’s status as a partnership for federal income tax
purpose or to satisfy any covenants or terms of any documents evidencing a loan
that is either made to such Subsidiary or that relates to any property owned
directly or indirectly by such Subsidiary, and such bank accounts, similar
instruments or other short-term 

 

 

-25-

 

investments
as it deems necessary to carry out its responsibilities contemplated under this
Agreement and the Certificate.

 

6.07   Employment
or Retention of Affiliates. 

 

(a)    Any
Affiliate of the General Partner may be employed or retained by the Partnership
and may otherwise deal with the Partnership (whether as an advisor, buyer,
lessor, lessee, manager, property management agent, asset manager, furnisher of
goods or services, broker, agent, lender or otherwise) and may receive from the
Partnership any compensation, price, or other payment therefor which the General
Partner determines to be fair and reasonable. 

 

(b)    The
Partnership may lend or contribute to its Subsidiaries or other Persons in which
it has an equity investment, and such Persons may borrow funds from the
Partnership, on terms and conditions established in the sole and absolute
discretion of the General Partner. The foregoing authority shall not create any
right or benefit in favor of any Subsidiary or any other Person. 

 

(c)    The
Partnership may transfer assets to joint ventures, limited liability companies,
other partnerships, corporations or other business entities in which it is or
thereby becomes a participant upon such terms and subject to such conditions as
the General Partner deems to be consistent with this Agreement and applicable
law. 

 

(d)    Except as
expressly permitted by this Agreement, neither the General Partner nor any of
its Affiliates shall sell, transfer or convey any property to, or purchase any
property from, the Partnership, directly or indirectly, except pursuant to
transactions that are on terms that are fair and reasonable to the Partnership.

 

6.08   Reserved. 

 

6.09   Title
to Partnership Assets. 
Partnership
assets, whether real, personal or mixed and whether tangible or intangible,
shall be deemed to be owned by the Partnership as an entity, and no Partner,
individually or collectively, shall have any ownership interest in such
Partnership assets or any portion thereof; provided, that title to any or all of
the Partnership assets may be held in the name of the Partnership, the General
Partner or one or more nominees, as the General Partner may determine, including
Affiliates of the General Partner. The General Partner hereby declares and
warrants that any Partnership assets for which legal title is held in the name
of the General Partner or any nominee or Affiliate of the General Partner shall
be held by such Person for the use and benefit of the Partnership in accordance
with the provisions of this Agreement; provided, that the General Partner shall
use its best efforts to cause legal title to such assets to be vested in the
Partnership as soon as reasonably practicable. All Partnership assets shall be
recorded as the property of the Partnership in its books and records,
irrespective of the name in which legal title to such Partnership assets is
held. 

 

6.10   Miscellaneous. 
In the
event the General Partner redeems any REIT Shares, then the Partnership will be
deemed to have purchased from the Original Limited Partner a number of
Partnership Units determined by, and based upon, the application of the
Conversion Factor on the same terms upon which the General Partner redeemed such
REIT Shares. Moreover, if the General Partner makes a cash tender offer or other
offer to acquire REIT Shares, then the General Partner shall be deemed to have
made a corresponding offer to the Original Limited Partner to acquire an
equivalent number of Partnership Units held by the Original Limited Partner
based on the application of the Conversion Factor. In the event any REIT Shares
are redeemed by the General Partner pursuant to such offer, then the Partnership
shall be deemed to have redeemed an equivalent number of the Original Limited
Partner’s Partnership Units for an equivalent purchase price based on the
application of the Conversion Factor. If the Original Limited Partner holds an
insufficient number of Partnership Units to effect a purchase or redemption
contemplated by this Section 6.10, then the Partnership will be deemed to have
purchased or redeemed from the 

 

 

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General
Partner, after it has purchased or redeemed all of the Original Limited
Partner’s Partnership Units, the number of Partnership Units necessary to effect
such purchase or redemption. 

 

ARTICLE
VII

 

CHANGES
IN GENERAL PARTNER

 

7.01   Transfer
of the General Partner’s Partnership Interest. 

 

(a)    The
General Partner shall not transfer all or any portion of its General Partnership
Interest or withdraw as General Partner except as provided in or in connection
with a transaction contemplated by Sections 7.01(c), 7.01(d) or 7.01(e).

 

(b)    The
General Partner agrees that the Percentage Interest for it will at all times, be
in the aggregate, at least 0.1%. 

 

(c)    Except as
otherwise provided in Section 7.01(d) or (e) hereof, the General Partner shall
not engage in any merger, consolidation or other combination with or into
another Person or sale of all or substantially all of its assets (other than in
connection with a change in the General Partner’s state of incorporation or
organizational form), which, in any such case, results in a change of control of
the General Partner (a “Transaction”),
unless:

 

(i)    the
consent of Limited Partners holding more than 50% of the Percentage Interests of
the Limited Partners is obtained; or 

 

(ii)    as a
result of such Transaction all Limited Partners are granted the right to receive
for each Partnership Unit an amount of cash, securities, or other property equal
to the product of the Conversion Factor and the greatest amount of cash,
securities or other property paid in the Transaction to a holder of one REIT
Share in consideration of the transfer of one REIT Share; provided, that if, in
connection with the Transaction, a purchase, tender or exchange offer
(“Offer”) shall
have been made to and accepted by the holders of more than 50% of the
outstanding REIT Shares, each holder of Partnership Units shall be given the
option to exchange its Partnership Units for the greatest amount of cash,
securities, or other property which a Limited Partner would have received had it
(A) exercised its Exchange Right and (B) sold, tendered or exchanged pursuant to
the Offer the REIT Shares received upon exercise of the Exchange Right
immediately prior to the expiration of the Offer; or 

 

(iii)    the
General Partner is the surviving entity in the Transaction and either (A) the
holders of REIT Shares do not receive cash, securities, or other property in the
Transaction or (B) all Limited Partners (other than the General Partner or
any Subsidiary) receive an amount of cash, securities, or other property
(expressed as an amount per REIT Share) that is no less than the product of the
Conversion Factor and the greatest amount of cash, securities, or other property
(expressed as an amount per REIT Share) received in the Transaction by any
holder of REIT Shares. 

 

(d)    Notwithstanding
Section 7.01(c), the General Partner may merge with or into or consolidate with
another entity if immediately after such merger or consolidation (i)
substantially all of the assets of the successor or surviving entity (the
“Survivor”), other than Partnership Units held by the General Partner, are
contributed, directly or indirectly, to the Partnership as a Capital
Contribution in exchange for Partnership Units with a fair market value equal to
the value of the assets so contributed as determined by the Survivor in good
faith and (ii) the Survivor expressly agrees to assume all obligations of the
General Partner, as appropriate, hereunder. Upon such contribution and
assumption, the Survivor shall have the right and duty to amend this Agreement
as set forth in this Section 7.01(d). The Survivor 

 

 

-27-

 

 

shall in
good faith arrive at a new method for the calculation of the Cash Amount, the
REIT Shares Amount and the Conversion Factor for a Partnership Unit after any
such merger or consolidation so as to approximate the existing method for such
calculation as closely as reasonably possible. Such calculation shall take into
account, among other things, the kind and amount of securities, cash and other
property that was receivable upon such merger or consolidation by a holder of
REIT Shares or options, warrants or other rights relating thereto, and which a
holder of Partnership Units could have acquired had such Partnership Units been
exchanged immediately prior to such merger or consolidation. Such amendment to
this Agreement shall provide for adjustments to such method of calculation,
which shall be as nearly equivalent as may be practicable to the adjustments
provided for herein with respect to the Conversion Factor. The Survivor also
shall in good faith modify the definition of REIT Shares and make such
amendments to Section 8.05 hereof so as to approximate the existing rights and
obligations set forth in Section 8.05 as closely as reasonably possible. The
above provisions of this Section 7.01(d) shall similarly apply to successive
mergers or consolidations permitted hereunder. 

 

In
respect of any transaction described in the preceding paragraph, the General
Partner is required to use its commercially reasonable efforts to structure such
transaction to avoid causing the Limited Partners to recognize a gain for
federal income tax purposes by virtue of the occurrence of or their
participation in such transaction, provided, such efforts are consistent with
the exercise of the Board of Directors’ fiduciary duties to the stockholders of
the General Partner under applicable law. 

 

(e)    Notwithstanding
Section 7.01(c), 

 

(i)    a General
Partner may transfer all or any portion of its General Partnership Interest to
(A) a wholly-owned Subsidiary of such General Partner or (B) the owner of all of
the ownership interests of such General Partner, and following a transfer of all
of its General Partnership Interest, may withdraw as General Partner; and

 

(ii)    the
General Partner may engage in a transaction not required by law or by the rules
of any national securities exchange on which the REIT Shares are listed to be
submitted to the vote of the holders of the REIT Shares.

 

7.02   Admission
of a Substitute or Additional General Partner. 
A Person
shall be admitted as a substitute or additional General Partner of the
Partnership only if the following terms and conditions are satisfied:

 

(a)    the
Person to be admitted as a substitute or additional General Partner shall have
accepted and agreed to be bound by all the terms and provisions of this
Agreement by executing a counterpart hereof and such other documents or
instruments as may be required or appropriate in order to effect the admission
of such Person as a General Partner, a certificate evidencing the admission of
such Person as a General Partner shall have been filed for recordation and all
other actions required by Section 2.05 hereof in connection with such admission
shall have been performed; 

 

(b)    if the
Person to be admitted as a substitute or additional General Partner is a
corporation or a partnership, it shall have provided the Partnership with
evidence satisfactory to counsel for the Partnership of such Person’s authority
to become a General Partner and to be bound by the terms and provisions of this
Agreement; and 

 

(c)    counsel
for the Partnership shall have rendered an opinion (relying on such opinions
from other counsel in the state or any other jurisdiction as may be necessary)
that the admission of the Person to be admitted as a substitute or additional
General Partner is in conformity with the Act, and that none of the actions
taken in connection with the admission of such Person as a substitute or
additional General Partner will cause (i) the Partnership to be classified other
than as a partnership for federal income tax purposes, or (ii) the loss of any
Limited Partner’s limited liability. 

 

 

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7.03   Effect
of Bankruptcy, Withdrawal, Death or Dissolution of a General
Partner. 

 

(a)    Upon the
occurrence of an Event of Bankruptcy as to a General Partner (and its removal
pursuant to Section 7.04(a) hereof) or the death, withdrawal, removal or
dissolution of a General Partner (except that, if a General Partner is, on the
date of such occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to, or removal of a partner in, such partnership shall be
deemed not to be a dissolution of such General Partner if the business of such
General Partner is continued by the remaining partner or partners thereof), the
Partnership shall be dissolved and terminated unless the Partnership is
continued pursuant to Section 7.03(b) hereof. The merger of the General Partner
with or into any entity that is admitted as a substitute or successor General
Partner pursuant to Section 7.02 hereof shall not be deemed to be the
withdrawal, dissolution or removal of the General Partner. 

 

(b)    Following
the occurrence of an Event of Bankruptcy as to a General Partner (and its
removal pursuant to Section 7.04(a) hereof) or the death, withdrawal, removal or
dissolution of a General Partner (except that, if a General Partner is, on the
date of such occurrence a partnership, the withdrawal, death, dissolution, Event
of Bankruptcy as to, or removal of a partner in, such partnership shall be
deemed not to be a dissolution of such General Partner if the business of such
General Partner is continued by the remaining partner or partners thereof), the
Limited Partners, within 90 days after such occurrence, may elect to continue
the business of the Partnership for the balance of the term specified in Section
2.04 hereof by selecting, subject to Section 7.02 hereof and any other
provisions of this Agreement, a substitute General Partner by consent of a
majority in interest of the Limited Partners. If the Limited Partners elect to
continue the business of the Partnership and admit a substitute General Partner,
the relationship with the Partners and of any Person who has acquired an
interest of a Partner in the Partnership shall be governed by this Agreement.

 

7.04   Removal
of a General Partner. 

 

(a)    Upon the
occurrence of an Event of Bankruptcy as to, or the dissolution of, a General
Partner, such General Partner shall be deemed to be removed automatically;
provided, however, that if a General Partner is on the date of such occurrence a
partnership, the withdrawal, death, dissolution, Event of Bankruptcy as to or
removal of a partner in such partnership shall be deemed not to be a dissolution
of the General Partner if the business of such General Partner is continued by
the remaining partner or partners thereof. The Limited Partners may not remove
the General Partner, with or without cause. 

 

(b)    If a
General Partner has been removed pursuant to this Section 7.04 and the
Partnership is continued pursuant to Section 7.03 hereof, such General Partner
shall promptly transfer and assign its General Partnership Interest in the
Partnership to the substitute General Partner approved by a majority in interest
of the Limited Partners in accordance with Section 7.03(b) hereof and otherwise
admitted to the Partnership in accordance with Section 7.02 hereof. At the time
of assignment, the removed General Partner shall be entitled to receive from the
substitute General Partner the fair market value of the General Partnership
Interest of such removed General Partner as reduced by any damages caused to the
Partnership by such General Partner’s removal. Such fair market value shall be
determined by an appraiser mutually agreed upon by the General Partner and
Limited Partners holding more than 50% of the Percentage Interests of the
Limited Partners within 10 days following the removal of the General Partner. In
the event that the parties are unable to agree upon an appraiser, the removed
General Partner and Limited Partners holding more than 50% of the Percentage
Interests of the Limited Partners shall each select an appraiser. Each such
appraiser shall complete an appraisal of the fair market value of the removed
General Partner’s General Partnership Interest within 30 days of the General
Partner’s removal, and the fair market value of the removed General Partner’s
General Partnership Interest shall be the average of the two appraisals;
provided, however, that if the higher appraisal exceeds the lower appraisal by
more than 20% of the amount of the lower appraisal, the two appraisers, no later
than 40 days after the removal of the General Partner, shall select a third
appraiser who shall complete an appraisal of the fair market value of the
removed General Partner’s General Partnership Interest no later than 60 days
after the 

 

 

-29-

 

 

removal
of the General Partner. In such case, the fair market value of the removed
General Partner’s General Partnership Interest shall be the average of the two
appraisals closest in value. 

 

(c)    The
General Partnership Interest of a removed General Partner, during the time after
removal until the date of transfer under Section 7.04(b), shall be converted to
that of a special Limited Partner; provided, however, such removed General
Partner shall not have any rights to participate in the management and affairs
of the Partnership, and shall not be entitled to any portion of the income,
expense, Profit, gain or Loss allocations or cash distributions allocable or
payable, as the case may be, to the Limited Partners. Instead, such removed
General Partner shall receive and be entitled only to retain distributions or
allocations of such items that it would have been entitled to receive in its
capacity as General Partner, until the transfer is effective pursuant to Section
7.04(b). 

 

(d)    All
Partners shall have given and hereby do give such consents, shall take such
actions and shall execute such documents as shall be legally necessary and
sufficient to effect all the foregoing provisions of this Section 7.04.

 

ARTICLE
VIII

 

RIGHTS
AND OBLIGATIONS OF THE LIMITED PARTNERS

 

8.01   Management
of the Partnership. 
The
Limited Partners shall not participate in the management or control of
Partnership business nor shall they transact any business for or on behalf of
the Partnership, nor shall they have the power to sign for or bind the
Partnership, such powers being vested solely and exclusively in the General
Partner. 

 

8.02   Power
of Attorney. 
Each
Limited Partner hereby irrevocably appoints the General Partner its true and
lawful attorney-in-fact, who may act for each Limited Partner and in its name,
place and stead, and for its use and benefit, sign, acknowledge, swear to,
deliver, file or record, at the appropriate public offices, any and all
documents, certificates, and instruments as may be deemed necessary or desirable
by the General Partner to carry out fully the provisions of this Agreement and
the Act in accordance with their terms, which power of attorney is coupled with
an interest and shall survive the death, dissolution or legal incapacity of the
Limited Partner, or the transfer by the Limited Partner of any part or all of
its Partnership Interest. 

 

8.03   Limitation
on Liability of Limited Partners. 
No
Limited Partner shall be liable for any debts, liabilities, contracts or
obligations of the Partnership. A Limited Partner shall be liable to the
Partnership only to make payments of its Capital Contribution, if any, as and
when due hereunder. After its Capital Contribution is fully paid, no Limited
Partner shall, except as otherwise required by the Act, be required to make any
further Capital Contributions or other payments or lend any funds to the
Partnership. 

 

8.04   Ownership
by Limited Partner of Corporate General Partner or
Affiliate. No
Limited Partner shall at any time, either directly or indirectly, own any stock
or other interest in the General Partner or in any Affiliate thereof, if such
ownership by itself or in conjunction with other stock or other interests owned
by other Limited Partners would, in the opinion of counsel for the Partnership,
jeopardize the classification of the Partnership as a partnership for federal
income tax purposes. The General Partner shall be entitled to make such
reasonable inquiry of the Limited Partners as is required to establish
compliance by the Limited Partners with the provisions of this Section
8.04.  

 

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8.05   Exchange
Right. 

 

(a)    Subject
to Sections 8.05(b), 8.05(c), 8.05(d) and 8.05(e) hereof, and subject to the
potential modification of any rights or obligations provided for herein by
agreement(s) between the Partnership and any one or more Limited Partners with
respect to Partnership Units held by them, each Limited
Partner shall have the right (the “Exchange
Right”) to
require the Partnership to redeem on a Specified Exchange Date all or a portion
of the Partnership Units held by such Limited Partner at an exchange price equal
to and in the form of the Cash Amount to be paid by the Partnership; provided,
that such Partnership Units shall have been outstanding for at least one year.
The Exchange Right shall be exercised pursuant to the delivery of an Exchange
Notice to the Partnership (with a copy to the General Partner) by the Limited
Partner who is exercising the Exchange Right (the “Exchanging
Partner”);
provided, however, that the Partnership shall not be obligated to satisfy such
Exchange Right if the General Partner elects to purchase the Partnership Units
subject to the Exchange Notice pursuant to Section 8.05(b); and provided
further, that no Limited Partner may deliver more than two Exchange Notices
during each calendar year. A Limited Partner may not exercise the Exchange Right
for less than 1,000 Partnership Units or, if such Limited Partner holds less
than 1,000 Partnership Units, all of the Partnership Units held by such Partner.
The Exchanging Partner shall have no right, with respect to any Partnership
Units so exchanged, to receive any distribution paid with respect to such
Partnership Units if the record date for such distribution is on or after the
Specified Exchange Date. 

 

(b)    Notwithstanding
the provisions of Section 8.05(a), a Limited Partner that exercises the Exchange
Right shall be deemed to have also offered to sell the Partnership Units
described in the Exchange Notice to the General Partner, and the General Partner
may, in its sole and absolute discretion, elect to purchase directly and acquire
such Partnership Units by paying to the Exchanging Partner either the Cash
Amount or the REIT Shares Amount, as elected by the General Partner (in its sole
and absolute discretion), on the Specified Exchange Date, whereupon the General
Partner shall acquire the Partnership Units offered for exchange by the
Exchanging Partner and shall be treated for all purposes of this Agreement as
the owner of such Partnership Units. If the General Partner shall elect to
exercise its right to purchase Partnership Units under this Section 8.05(b) with
respect to an Exchange Notice, it shall so notify the Exchanging Partner within
five business days after the receipt by the General Partner of such Exchange
Notice. Unless the General Partner (in its sole and absolute discretion) shall
exercise its right to purchase Partnership Units from the Exchanging Partner
pursuant to this Section 8.05(b), the General Partner shall have no obligation
to the Exchanging Partner or the Partnership with respect to the Exchanging
Partner’s exercise of an Exchange Right. In the event the General Partner shall
exercise its right to purchase Partnership Units with respect to the exercise of
an Exchange Right in the manner described in the first sentence of this Section
8.05(b), the Partnership shall have no obligation to pay any amount to the
Exchanging Partner with respect to such Exchanging Partner’s exercise of such
Exchange Right, and each of the Exchanging Partner and the General Partner shall
treat the transaction between the General Partner and the Exchanging Partner for
federal income tax purposes as a sale of the Exchanging Partner’s Partnership
Units to the General Partner. Each Exchanging Partner agrees to execute such
documents as the General Partner may reasonably require in connection with the
issuance of REIT Shares to such Exchanging Partner upon exercise of its Exchange
Right. 

 

(c)    Notwithstanding
the provisions of Sections 8.05(a) and 8.05(b), a Limited Partner shall not be
entitled to exercise the Exchange Right if the delivery of REIT Shares to such
Partner on the Specified Exchange Date by the General Partner pursuant to
Section 8.05(b) (regardless of whether or not the General Partner would in fact
exercise its rights under Section 8.05(b)) would (i) result in such Partner or
any other person owning, directly or indirectly, REIT Shares in excess of the
ownership limitations described in the Articles of Incorporation and calculated
in accordance therewith, (ii) result in REIT Shares being owned by fewer than
100 persons (determined without reference to any rules of attribution), except
as provided in the Articles of Incorporation, (iii) result in the General
Partner being “closely held” within the meaning of Section 856(h) of the Code,
(iv) cause the General Partner to own, directly or constructively, 10% or more
of the ownership interests in a tenant of the General Partner’s, the
Partnership’s, or a Subsidiary Partnership’s real property within the meaning of
Section 856(d)(2)(B) of the Code, or (v) cause the acquisition of REIT Shares by
such Partner to be “integrated” with any other distribution of REIT Shares for
purposes of complying with the registration provisions of the Securities Act,
provided, that if such Partner delivers an opinion of counsel that is reasonably
satisfactory to the General Partner providing that the acquisition of REIT
Shares by such Partner will not be “integrated”

 

 

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with any
other distribution of REIT Shares for purposes of complying with the Securities
Act, then the General Partner may not prevent such Partner from exercising the
Exchange Right by virtue of this clause (v). The General Partner, in its sole
and absolute discretion, may waive any of the restrictions on exchange set forth
in this Section 8.05(c); provided, however, that in the event any such
restriction is waived, the Exchanging Partner shall be paid the Cash Amount.

 

(d)    Any Cash
Amount to be paid to an Exchanging Partner pursuant to this Section 8.05 shall
be paid on the Specified Exchange Date; provided, however, that the General
Partner may elect to cause the Specified Exchange Date to be delayed for up to
180 days to the extent required for the General Partner to cause additional REIT
Shares to be issued to provide financing to be used to make such payment of the
Cash Amount. Notwithstanding the foregoing, the General Partner agrees to use
its best efforts to cause the closing of the acquisition of exchanged
Partnership Units hereunder to occur as quickly as reasonably possible.

 

(e)    Notwithstanding
any other provision of this Agreement, the General Partner shall place
appropriate restrictions on the ability of the Limited Partners to exercise
their Exchange Rights as and if deemed necessary to ensure that the Partnership
does not constitute a “publicly traded partnership” under Section 7704 of the
Code. If and when the General Partner determines that imposing such restrictions
is necessary, the General Partner shall give prompt written notice thereof (a
“Restriction
Notice”) to
each of the Limited Partners, which notice shall be accompanied by a copy of an
opinion of counsel to the Partnership which states that, in the opinion of such
counsel, restrictions are necessary in order to avoid the Partnership being
treated as a “publicly traded partnership” under Section 7704 of the Code.

 

8.06   Call
Right. 

 

(a)    Subject
to Section 8.06(c) below, and subject to the modification of any rights or
obligations provided for herein by agreement(s) between the General Partner and
any one or more Limited Partners with respect to the Partnership Units held by
them, at any time after the expiration of the Holding Period for the Partnership
Units in question, the General Partner shall have the right (the “Call
Right”) to
purchase all of the Partnership Units held by a Limited Partner at a price equal
to the Cash Amount; provided, however, that the General Partner may, in its sole
and absolute discretion, elect to purchase such Partnership Units by paying to
the Partner in question the REIT Shares Amount in lieu of the Cash Amount. The
Call Right shall be exercised pursuant to a Call Notice delivered by the General
Partner to any such Limited Partner. The General Partner may not exercise the
Call Right for less than the entire interest of a Limited Partner in the
Partnership. A Limited Partner receiving the Call Notice described above shall
have no rights with respect to any interest in the Partnership other than the
right to receive payment for its interest in the Partnership in cash or REIT
Shares in accordance with this Section 8.06. An assignee of a Limited Partner
shall be bound by and subject to the Call Right of the General Partner pursuant
to this Section 8.06. In connection with any exercise of such Call Right by the
General Partner with respect to an assignee, the Cash Amount (or REIT Shares
Amount) shall be paid by the General Partner directly to such assignee and not
to the Limited Partner from which such assignee acquired its Partnership Units.
The General Partner shall be unable to exercise the Call Right and the Call
Right shall lapse upon the occurrence of a Liquidating Event unless and until
the Partners shall continue the business of the Partnership under Section 7.03
hereof. 

 

(b)    (i)    Within 30
days after the delivery of the Call Notice by the General Partner to a Limited
Partner under this Section 8.06, the General Partner (subject to the limitations
set forth in Section 8.06(c)) shall transfer and deliver the Cash Amount (or the
REIT Shares Amount) to such Limited Partner or, as applicable, its assignee,
whereupon the General Partner (or its designee) shall acquire the Partnership
Units of such Limited Partner or, as applicable, its assignee, and shall be
treated for all purposes of this Agreement as the owner of such Partnership
Units (and as a Limited Partner with respect to such Partnership Units).

 

 

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(ii)    In the
event that the General Partner elects to pay such Limited Partner in the form of
the REIT Shares Amount and such REIT Shares Amount is not a whole number of REIT
Shares, the Limited Partner shall be paid (A) the number of REIT Shares which
equals the nearest whole number less than such amount plus (B) an amount of cash
which the General Partner determines, in its reasonable discretion, to represent
the fair value of the remaining fractional REIT Share which would otherwise be
payable to the Limited Partner. 

 

(iii)    Each
Limited Partner agrees to deliver to the General Partner the Partnership Unit
Certificate(s) representing its Limited Partnership Interest and to execute such
documents as the General Partner may reasonably require in connection with the
issuance of REIT Shares upon exercise of the Call Right (including without
limitation an assignment of Partnership Units pursuant to the terms of which
such Limited Partner (A) represents, warrants and certifies that it has
marketable and unencumbered title to its Partnership Units, free and clear of
the rights of or interest of any other person or entity, that it has the full
right, power and authority to transfer and surrender its Partnership Units, and
that it has obtained the consent or approval of all persons or entities, if any,
having the right to consent to or approve of such transfer and surrender, and
(B) agrees to indemnify and hold the General Partner harmless from and
against any and all liabilities, charges, costs and expenses relating to such
Limited Partner’s Partnership Units which are subject to the Call Right or the
exercise of the Call Right). 

 

(c)    Notwithstanding
the provisions of Sections 8.06(a) and 8.06(b) above, the General Partner shall
not be entitled to exercise the Call Right if (i) a Liquidating Event has
occurred with regard to the Partnership and the Partnership has not been
continued under Section 7.03 hereof; or (ii) the delivery of REIT Shares to the
Limited Partner (A) would be prohibited under the Articles of Incorporation, (B)
would adversely affect the ability of the General Partner to continue to qualify
as a REIT or subject the General Partner to any additional taxes under Section
857 or Section 4981 of the Code, or (C) would be prohibited under applicable
federal or state securities laws or regulations. 

 

(d)    Each
Limited Partner covenants and agrees with the General Partner that all
Partnership Units delivered in connection with the Call Right shall be delivered
to the General Partner free and clear of all liens and encumbrances and,
notwithstanding anything contained herein to the contrary, the General Partner
shall not be under any obligation to acquire a Limited Partner’s Partnership
Units (i) to the extent that any such Partnership Units are subject to any such
liens or encumbrances or (ii) in the event that the Limited Partner shall fail
to give the General Partner adequate assurances that such Partnership Units are
not subject to any such liens or encumbrances or shall fail to agree to fully
indemnify the General Partner from any such liens or encumbrances as well as the
liabilities, charges, costs and expenses referenced in the last section of
Section 8.06(b)(iii). Each Limited Partner further agrees that, in the event any
state or local transfer tax is payable as a result of the transfer of its
Partnership Units to the General Partner, such Limited Partner shall assume and
pay such transfer tax. 

 

8.07   Duties
and Conflicts.  The
General Partner recognizes that the Limited Partners and their Affiliates have
or may have other business interests, activities and investments, some of which
may be in conflict or competition with the business of the Partnership, and that
such Persons are entitled to carry on such other business interests, activities
and investments. The Limited Partners and their Affiliates may engage in or
possess an interest in any other business or venture of any kind, independently
or with others, on their own behalf or on behalf of other entities with which
they are affiliated or associated, and such Persons may engage in any
activities, whether or not competitive with the Partnership, without any
obligation to offer any interest in such activities to the Partnership or to any
Partner. Neither the Partnership nor any Partner shall have any right, by virtue
of this Agreement, in or to such activities, or the income or profits derived
therefrom, and the pursuit of such activities, even if competitive with the
business of the Partnership, and such activities shall not be deemed wrongful or
improper. 

 

 

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ARTICLE
IX

 

TRANSFERS
OF LIMITED PARTNERSHIP INTERESTS

 

9.01   Purchase
for Investment. 

 

(a)    Each
Limited Partner hereby represents and warrants to the General Partner and to the
Partnership that the acquisition of its Partnership Interest is made as a
principal for its account for investment purposes only and not with a view to
the resale or distribution of such Partnership Interest. 

 

(b)    Each
Limited Partner agrees that it will not sell, assign or otherwise transfer its
Partnership Interest or any fraction thereof, whether voluntarily or by
operation of law or at judicial sale or otherwise, to any Person who does not
make the representations and warranties to the General Partner set forth in
Section 9.01(a) above. 

 

9.02   Restrictions
on Transfer of Limited Partnership Interests. 

 

(a)    Subject
to the provisions of Sections 9.02(b), 9.02(c) and 9.02(d), no Limited Partner
may offer, sell, assign, hypothecate, pledge or otherwise transfer all or any
portion of its Limited Partnership Interest, or any of such Limited Partner’s
economic rights as a Limited Partner, whether voluntarily or by operation of law
or at judicial sale or otherwise (collectively, a “Transfer”),
without the consent of the General Partner, which consent may be granted or
withheld in its sole and absolute discretion. Any such purported transfer
undertaken without such consent shall be considered to be null and void ab
initio and shall not be given effect. The Original Limited Partner acknowledges
that the General Partner has agreed not to grant its consent with respect to any
Transfer by the Original Limited Partner prior to the Transfer Restriction Date;
provided, that the Original Limited Partner shall not be prohibited from a
Transfer of its Partnership Interest pursuant to the exercise of its right to
exchange its Partnership Interest for REIT Shares pursuant to Section 8.05
above, in which case the Original Limited Partner acknowledges that the General
Partner has also agreed not to grant its consent with respect to any Transfer of
said REIT Shares prior to the Transfer Restriction Date. The General Partner may
require, as a condition of any Transfer to which it consents, that the
transferor assume all costs incurred by the Partnership in connection therewith.

 

(b)    No
Limited Partner may withdraw from the Partnership other than as a result of: (i)
a permitted Transfer (i.e., a Transfer consented to as contemplated by paragraph
(a) above or paragraph (c) below or a Transfer made pursuant to Section
9.05 below) of all of its Partnership Units pursuant to this Article IX pursuant
to an exchange of all of its Partnership Units pursuant to Section 8.05 above;
or (iii) a Transfer made pursuant to the sale of all its Partnership Units
pursuant to Section 8.06 above. Upon the permitted Transfer or redemption of all
of a Limited Partner’s Partnership Units, such Limited Partner shall cease to be
a Limited Partner. 

 

(c)    Subject
to Sections 9.02(d), 9.02(e) and 9.02(f), a Limited Partner may Transfer, with
the consent of the General Partner, all or a portion of its Partnership Units to
(i) a parent or parent’s spouse, natural or adopted descendants, a spouse of any
such descendant, a brother or sister, or a trust created by such Limited Partner
for the benefit of such Limited Partner and/or any such person(s), for which
trust such Limited Partner or any such person(s) is a trustee, (ii) a
corporation controlled by a Person or Persons named in (i) above, or (iii) if
the Limited Partner is an entity, its beneficial owners. 

 

(d)    No
Limited Partner may effect a Transfer of its Limited Partnership Interest, in
whole or in part, if, in the opinion of legal counsel for the Partnership, such
proposed Transfer would require the registration of the Limited Partnership
Interest under the Securities Act, or would otherwise violate any applicable
federal or state securities or blue sky law (including investment suitability
standards). 

 

 

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(e)    No
Transfer by a Limited Partner of its Partnership Units, in whole or in part, may
be made to any Person if (i) in the opinion of legal counsel for the
Partnership, the transfer would result in the Partnership’s being treated as an
association taxable as a corporation (other than a qualified REIT subsidiary
within the meaning of Section 856(i) of the Code), (ii) in the opinion of legal
counsel for the Partnership, it would adversely affect the ability of the
General Partner to continue to qualify as a REIT or subject the General Partner
to any additional taxes under Section 857 or Section 4981 of the Code, or
(iii) such transfer is effectuated through an “established securities
market” or a “secondary market” (or the substantial equivalent thereof) within
the meaning of Section 7704 of the Code. 

 

(f)    No
transfer of any Partnership Units may be made to a lender to the Partnership or
any Person who is related (within the meaning of Regulations Section 1.752-4(b))
to any lender to the Partnership whose loan constitutes a nonrecourse liability
(within the meaning of Regulations Section 1.752-1(a)(2)), without the consent
of the General Partner, which may be withheld in its sole and absolute
discretion; provided, that as a condition to such consent the lender will be
required to enter into an arrangement with the Partnership and the General
Partner to exchange or redeem for the Cash Amount any Partnership Units in which
a security interest is held simultaneously with the time at which such lender
would be deemed to be a partner in the Partnership for purposes of allocating
liabilities to such lender under Section 752 of the Code. 

 

(g)    Any
Transfer in contravention of any of the provisions of this Article IX shall be
void and ineffectual and shall not be binding upon, or recognized by, the
Partnership. 

 

(h)    Prior to
the consummation of any Transfer under this Article IX, the transferor and/or
the transferee shall deliver to the General Partner such opinions, certificates
and other documents as the General Partner shall request in connection with such
Transfer. 

 

9.03   Admission
of Substitute Limited Partner. 

 

(a)    Subject
to the other provisions of this Article IX, an assignee of the Limited
Partnership Interest of a Limited Partner (which shall be understood to include
any purchaser, transferee, donee or other recipient of any disposition of such
Limited Partnership Interest) shall be deemed admitted as a Limited Partner of
the Partnership only with the consent of the General Partner and upon the
satisfactory completion of the following: 

 

(i)    the
assignee shall have accepted and agreed to be bound by the terms and provisions
of this Agreement by executing a counterpart or an amendment thereof, including
a revised Exhibit
A, and
such other documents or instruments as the General Partner may require in order
to effect the admission of such Person as a Limited Partner; 

 

(ii)    to the
extent required, an amended Certificate evidencing the admission of such Person
as a Limited Partner shall have been signed, acknowledged and filed for record
in accordance with the Act; 

 

(iii)    the
assignee shall have delivered a letter containing the representation set forth
in Section 9.01(a) hereof and the agreement set forth in Section 9.01(b) hereof;

 

(iv)    if the
assignee is a corporation, partnership or trust, the assignee shall have
provided the General Partner with evidence satisfactory to counsel for the
Partnership of the assignee’s authority to become a Limited Partner under the
terms and provisions of this Agreement; 

 

(v)    the
assignee shall have executed a power of attorney containing the terms and
provisions set forth in Section 8.02 hereof; 

 

 

-35-

 

 

(vi)    the
assignee shall have paid all legal fees and other expenses of the Partnership
and the General Partner and filing and publication costs in connection with its
substitution as a Limited Partner; and 

 

(vii)    the
assignee shall have obtained the prior written consent of the General Partner to
its admission as a Substitute Limited Partner, which consent may be given or
denied in the exercise of the General Partner’s sole and absolute discretion.

 

(b)    For the
purpose of allocating Profit and Loss and distributing cash received by the
Partnership, a Substitute Limited Partner shall be treated as having become, and
appearing in the records of the Partnership as, a Partner upon the filing of the
Certificate described in Section 9.03(a)(ii) hereof or, if no such filing is
required, the later of the date specified in the transfer documents or the date
on which the General Partner has received all necessary instruments of transfer
and substitution. 

 

(c)    The
General Partner shall cooperate with the Person seeking to become a Substitute
Limited Partner by preparing the documentation required by this Section 9.03 and
making all official filings and publications. The Partnership shall take all
such action as promptly as practicable after the satisfaction of the conditions
in this Article IX to the admission of such Person as a Limited Partner of the
Partnership. 

 

9.04   Rights
of Assignees of Partnership Interests. 

 

(a)    Subject
to the provisions of Sections 9.01 and 9.02 hereof, except as required by
operation of law, the Partnership shall not be obligated for any purposes
whatsoever to recognize the assignment by any Limited Partner of its Partnership
Interest until the Partnership has received notice thereof. 

 

(b)    Any
Person who is the assignee of all or any portion of a Limited Partner’s Limited
Partnership Interest, but who does not become a Substitute Limited Partner and
desires to make a further assignment of such Limited Partnership Interest, shall
be subject to all the provisions of this Article IX to the same extent and in
the same manner as any Limited Partner desiring to make an assignment of its
Limited Partnership Interest. 

 

9.05   Effect
of Bankruptcy, Death, Incompetence or Termination of a Limited
Partner. 
The
occurrence of an Event of Bankruptcy as to a Limited Partner, the death of a
Limited Partner or a final adjudication that a Limited Partner is incompetent
(which term shall include, but not be limited to, insanity) shall not cause the
termination or dissolution of the Partnership, and the business of the
Partnership shall continue if an order for relief in a bankruptcy proceeding is
entered against a Limited Partner, the trustee or receiver of his estate or, if
he dies, his executor, administrator or trustee, or, if he is finally
adjudicated incompetent, his committee, guardian or conservator, and any such
Person shall have the rights of such Limited Partner for the purpose of settling
or managing his estate property and such power as the bankrupt, deceased or
incompetent Limited Partner possessed to assign all or any part of his
Partnership Interest and to join with the assignee in satisfying conditions
precedent to the admission of the assignee as a Substitute Limited Partner.

 

9.06   Joint
Ownership of Interests. 
A
Partnership Interest may be acquired by two individuals as joint tenants with
right of survivorship, provided, that such individuals either are married or are
related and share the same personal residence. The written consent or vote of
both owners of any such jointly-held Partnership Interest shall be required to
constitute the action of the owners of such Partnership Interest; provided,
however, that the written consent of only one joint owner will be required if
the Partnership has been provided with evidence satisfactory to the counsel for
the Partnership that the actions of a single joint owner can bind both owners
under the applicable laws of the state of residence of such joint owners. Upon
the death of one owner of a Partnership Interest held in a joint tenancy with a

 

 

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right of
survivorship, the Partnership Interest shall become owned solely by the survivor
as a Limited Partner and not as an assignee. The Partnership need not recognize
the death of one of the owners of a jointly held Partnership Interest until it
shall have received notice of such death. Upon notice to the General Partner
from either owner, the General Partner shall cause the Partnership Interest to
be divided into two equal Partnership Interests, which shall thereafter be owned
separately by each of the former joint owners. 

 

ARTICLE
X

 

BOOKS
AND RECORDS; ACCOUNTING; TAX MATTERS

 

10.01   Books
and Records. 
At all
times during the continuance of the Partnership, the Partners shall keep or
cause to be kept at the Partnership’s specified office true and complete books
of account maintained in accordance with generally accepted accounting
principles, including (a) a current list of the full name and last-known
business address of each Partner; (b) a copy of the Certificate of Limited
Partnership and all certificates of amendment thereto; (c) copies of the
Partnership’s federal, state and local income tax returns and reports; (d)
copies of the Agreement and any financial statements of the Partnership for the
three most recent years; and (e) all documents and information required under
the Act. Any Partner or its duly authorized representative, and any stockholder
of the General Partner, upon paying the costs of collection, duplication and
mailing, shall be entitled to inspect or copy such records during ordinary
business hours. 

 

10.02   Custody
of Partnership Funds; Bank Accounts. 

 

(a)    All funds
of the Partnership not otherwise invested shall be deposited in one or more
accounts maintained in such banking or brokerage institutions as the General
Partner shall determine, and withdrawals shall be made only on such signature or
signatures as the General Partner may, from time to time, determine.

 

(b)    All
deposits and other funds not needed in the operation of the business of the
Partnership may be invested by the General Partner in investment grade
instruments (or investment companies whose portfolio consists primarily thereof,
government obligations, certificates of deposit, bankers’ acceptances and
municipal notes and bonds. The funds of the Partnership shall not be commingled
with the funds of any other Person except for such commingling as may
necessarily result from an investment in those investment companies permitted by
this Section 10.02(b). 

 

10.03   Fiscal
and Taxable Year. 
The
fiscal and taxable year of the Partnership shall be the calendar year.

 

10.04   Annual
Tax Information and Report. The
General Partner will use its best efforts to supply within 75 days after the end
of each fiscal year of the Partnership to each person who was a Limited Partner
at any time during such year the tax information necessary to file such Limited
Partner’s individual tax returns as shall be reasonably required by law, and in
all events the General Partner shall furnish such information within the time
required by applicable law. 

 

10.05   Tax
Matters Partner; Tax Elections; Special Basis
Adjustments. 

 

(a)    The
General Partner shall be the Tax Matters Partner of the Partnership within the
meaning of Section 6231(a)(7) of the Code. As Tax Matters Partner, the General
Partner shall have the right and obligation to take all actions authorized and
required, respectively, by the Code for the Tax Matters Partner. The General
Partner shall have the right to retain professional assistance in respect of any
audit of the Partnership by the Service and all out-of-pocket expenses and fees
incurred by the General Partner on behalf of the Partnership as Tax Matters
Partner shall constitute Partnership expenses. 

 

 

-37-

 

 

In the
event the General Partner receives notice of a final Partnership adjustment
under Section 6223(a)(2) of the Code, the General Partner shall either (i) file
a court petition for judicial review of such final adjustment within the period
provided under Section 6226(a) of the Code, a copy of which petition shall be
mailed to all Limited Partners on the date such petition is filed, or (ii) mail
a written notice to all Limited Partners, within such period, that describes the
General Partner’s reasons for determining not to file such a petition.

 

(b)    All
elections required or permitted to be made by the Partnership under the Code or
any applicable state or local tax law shall be made by the General Partner in
its sole and absolute discretion. 

 

(c)    In the
event of a transfer of all or any part of the Partnership Interest of any
Partner, the Partnership, at the option and in the sole and absolute discretion
of the General Partner, may elect pursuant to Section 754 of the Code to adjust
the basis of the Properties. Notwithstanding anything contained in Article V of
this Agreement, any adjustments made pursuant to Section 754 shall affect only
the successor-in-interest to the transferring Partner and in no event shall be
taken into account in establishing, maintaining or computing Capital Accounts
for the other Partners for any purpose under this Agreement. Each Partner will
furnish the Partnership with all information necessary to give effect to such
election. 

 

10.06   Reports
to Limited Partners. 

 

(a)    As soon
as practicable after the close of each fiscal quarter (other than the last
quarter of the fiscal year), the General Partner shall cause to be mailed to
each Limited Partner a quarterly report containing financial statements of the
Partnership, or of the General Partner if such statements are prepared solely on
a consolidated basis with the General Partner, for such fiscal quarter presented
in accordance with generally accepted accounting principles. As soon as
practicable after the close of each fiscal year, the General Partner shall cause
to be mailed to each Limited Partner an annual report containing financial
statements of the Partnership, or of the General Partner if such statements are
prepared solely on a consolidated basis with the General Partner, for such
fiscal year, presented in accordance with generally accepted accounting
principles. The annual financial statements shall be audited by accountants
selected by the General Partner. 

 

(b)    Any
Partner shall further have the right to a private audit of the books and records
of the Partnership, provided such audit is made for Partnership purposes and at
the expense of the Partner desiring it, and it is made during normal business
hours. 

 

ARTICLE
XI

 

AMENDMENT
OF AGREEMENT; MEETINGS

 

11.01   Amendment. 
The
General Partner’s consent shall be required for any amendment to this Agreement.
The General Partner, without the consent of the Limited Partners, may amend this
Agreement in any respect; provided, however, that the following amendments shall
require the consent of Limited Partners holding more than 50% of the Percentage
Interests of the Limited Partners: 

 

(a)    any
amendment affecting the operation of the Conversion Factor or the Exchange Right
(except as provided in Sections 8.05(d) or 7.01(d) hereof) in a manner adverse
to the Limited Partners; 

 

(b)    any
amendment that would adversely affect the rights of the Limited Partners to
receive the distributions payable to them hereunder, other than with respect to
the issuance of additional Partnership Units pursuant to Section 4.02 hereof;

 

 

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(c)    any
amendment that would alter the Partnership’s allocations of Profit and Loss to
the Limited Partners, other than with respect to the issuance of additional
Partnership Units pursuant to Section 4.02 hereof; or 

 

(d)    any
amendment that would impose on the Limited Partners any obligation to make
additional Capital Contributions to the Partnership.

 

The
foregoing notwithstanding, the approval of any amendment to this Agreement that
shall be part of a plan of merger, plan of exchange or plan of conversion
involving the Partnership or the Partnership Interests shall be governed by
Article XII. 

 

11.02   Meetings
of Partners. 

 

(a)    The
Partners may but shall not be required to hold any annual, periodic or other
formal meetings. Meetings of the Partners may be called by the General Partner
or by any Limited Partner or Limited Partners holding at least 10% of the
Partnership Units in the Partnership.

 

(b)    The
Partner or Partners calling the meeting may designate any place within the State
of Texas as the place of meeting for any meeting of the Partners; and Partners
holding at least a majority of the Partnership Units in the Partnership may
designate any place outside the State of Texas as the place of meeting for any
meeting of the Partners. If no designation is made, or if a special meeting is
called, the place of meeting shall be the principal place of business of the
Partnership.

 

(c)    Except as
provided in Section 11.02(d), written notice stating the place, day and hour of
the meeting and the purpose or purposes for which the meeting is called shall be
delivered not less than ten (10) nor more than ninety (90) days before the date
of the meeting, either personally or by mail, by or at the direction of the
Partner or Partners calling the meeting, to each Partner entitled to vote at
such meeting and to each Partner not entitled to vote who is entitled to notice
of the meeting.

 

(d)    Anything
in this Agreement to the contrary notwithstanding, with respect to any meeting
of the Partners, any Partner who in person or by proxy shall have waived in
writing notice of the meeting, either before or after such meeting, or who shall
attend the meeting in person or by proxy, shall be deemed to have waived notice
of such meeting unless such Partner attends for the express purpose of
objecting, at the beginning of the meeting, and does so object to the
transaction of any business because the meeting is not lawfully called or
convened.

 

(e)    If all of
the Partners shall meet at any time and place, either within or outside of the
State of Texas, in person or by proxy, and consent to the holding of a meeting
at such time and place, such meeting shall be valid without call or notice, and
at such meeting lawful action may be taken.

 

(f)    For the
purpose of determining Partners entitled to notice of or to vote at any meeting
of Partners or any adjournment thereof, the date on which notice of the meeting
is mailed shall be the record date. When a determination of Partners entitled to
vote at any meeting of Partners has been made as provided in this Section, such
determination shall apply to any adjournment thereof.

 

(g)    Partners
holding at least a majority of the Partnership Units entitled to vote at a
meeting, represented in person or by proxy, shall constitute a quorum at any
meeting of Partners. In the absence of a quorum at any such meeting, Partners
holding at least a majority of Partnership Units so represented may adjourn the
meeting to another time and place. Any business which might have been transacted
at the original meeting may be transacted at any adjourned meeting at which a
quorum is present. No notice of an adjourned meeting need be given if the time
and place are announced at the meeting at which the adjournment is taken unless
the adjournment is for more than 120 days. The Partners present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal 

 

 

-39-

 

 

during
such meeting of that number Partnership Units whose absence would cause less
than a quorum to be present.

 

(h)    If a
quorum is present, the affirmative vote of Partners holding a majority of the
Partnership Units entitled to vote, present in person or represented by proxy,
shall be binding on all Partners, unless the vote of a greater or lesser
proportion or number of Partnership Units or Partners is otherwise required by
applicable law or by this Agreement. Unless otherwise expressly provided herein
or required under applicable law, Partners who have an interest (economic or
otherwise) in the outcome of any particular matter upon which the Partners' vote
or consent is required may vote or consent upon any such matter and their
Partnership Units, vote or consent, as the case may be, shall be counted in the
determination of whether the requisite matter was approved by the
Partners.

 

(i)    At all
meetings of Partners, a Partner may vote in person or by proxy executed in
writing by the Partner or by the Partner's duly authorized attorney-in-fact.
Such proxy shall be filed with the General Partner before or at the time of the
meeting. No proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.

 

(j)    Action
required or permitted to be taken at a meeting of Partners may be taken without
a meeting if the action is evidenced by one or more written consents or
approvals describing the action taken and signed by sufficient Partners or
Partners holding sufficient Partnership Units, as the case may be, to approve
such action had such action been properly voted on at a duly called meeting of
the Partners. Action taken under this Section 11.02(j) is effective when the
requisite Partners or Partners with the requisite Partnership Units, as the case
may be, have signed the consent or approval, unless the consent specifies a
different effective date.

 

ARTICLE
XII

 

MERGER,
EXCHANGE OR CONVERSION

 

12.01   Merger,
Exchange or Conversion of Partnership. 
(a) The
Partnership may (i) adopt a plan of merger and may merge with or into one or
more domestic or foreign limited partnerships or other entities with the
resulting entity being one or more surviving entities, (ii) adopt a plan of
exchange by which a domestic or foreign limited partnership or other entity is
to acquire all of the outstanding Partnership Interests of the Partnership in
exchange for cash, securities or other property of the acquiring domestic or
foreign limited partnership or other entity or (iii) adopt a plan of conversion
and convert to a foreign limited partnership or other entity. Any such plan of
merger, plan of exchange, or plan of conversion shall otherwise comply with the
requirements of this Agreement and the Act.

 

(b)    Any
merger pursuant to a plan of merger described in Section 12.01(a)(i) hereof
shall be conditioned upon the merger being permitted by the laws under which
each other entity that is a party to the merger is incorporated or organized or
by the constituent documents of such other entity that are not inconsistent with
such laws. Any exchange pursuant to a plan of exchange described in Section
12.01(a)(ii) hereof shall be conditioned upon the issuance of shares or other
interests of the acquiring foreign limited partnership or other entity being
permitted by the laws under which such foreign limited partnership or other
entity is incorporated or organized or is not inconsistent with such laws. Any
conversion pursuant to a plan of conversion described in Section 12.01(a)(iii)
hereof shall be conditioned upon such conversion being permitted by, or not
inconsistent with, the laws of the jurisdiction in which the converted entity is
to be incorporated, formed or organized and the incorporation, formation or
organization of the converted entity is effected in compliance with such
laws.

 

 

-40-

 

 

(c)    The
Partnership may adopt a plan of merger, plan of exchange or plan of conversion
if the General Partner acts upon and the Limited Partners (if required by
Section 12.02 below) approve the plan of merger, plan of exchange or plan of
conversion in the manner prescribed in Section 12.02 below.

 

12.02   Approval
of Plan of Merger, Exchange or Conversion.

 

(a)    Except as
provided by Section 12.02(g) below, after acting on a plan of merger, plan of
exchange or plan of conversion in the manner prescribed by Section 12.02(b)(i),
the General Partner shall submit the plan of merger, plan of exchange or plan of
conversion for approval by the Limited Partners.

 

(b)    Except as
provided by Section 12.02(f) below, for a plan of merger, plan of exchange or
plan of conversion to be approved:

 

(i)    the
General Partner shall adopt a resolution recommending that the plan of merger,
plan of exchange or plan of conversion be approved by the Limited Partners,
unless the General Partner determines that for any reason it should not make
that recommendation, in which case the General Partner shall adopt a resolution
directing that the plan of merger, plan of exchange or plan of conversion be
submitted to the Limited Partners for approval without recommendation;
and

(ii)    the
Limited Partners entitled to vote on the plan of merger, plan of exchange or
plan of conversion must approve the plan.

 

(c)    The
General Partner may condition its submission to the Limited Partners of a plan
of merger, plan of exchange or plan of conversion, and the effectiveness of such
plan, on any basis, including without limitation that a specified percentage of
the Percentage Interests of the Limited Partners in excess of a majority of the
Percentage Interests of the Limited Partners be required for the approval of the
plan of merger, plan of exchange or plan of conversion.

 

(d)    The
General Partner shall notify each Limited Partner, whether or not entitled to
vote, of the meeting of the Limited Partners at which the plan of merger, plan
of exchange or plan of conversion is to be submitted for approval in accordance
with this Section 12.02 and applicable law. The notice shall be given at least
twenty (20) days before the meeting and shall state that the purpose, or one of
the purposes, of the meeting is to consider the plan of merger, plan of exchange
or plan of conversion and shall contain or be accompanied by a copy or summary
of the plan. Any such approval may be by written consent of the requisite
Limited Partners as would be required to approve the plan at any meeting where
all the Limited Partners are present.

 

(e)    Unless
the General Partner (acting pursuant to Section 12.02(c)) requires a greater
vote, the vote of the Limited Partners required for approval of a plan of
merger, plan of exchange or plan of conversion shall be the affirmative vote of
the holders of more than 50% of the Percentage Interests of the Limited Partners
entitled to vote thereon.

 

(f)    Unless
applicable law otherwise requires (in which case the approval of the Limited
Partners shall continue to be required and the foregoing provisions of this
Section 12.02 shall continue to apply), (1) approval by the Limited Partners on
a plan of exchange shall not be required, and the foregoing provisions of this
Section 12.02 do not apply, if the Partnership is the acquiring entity in the
plan of exchange, and (2) approval by the Limited Partners on a plan of merger
or a plan of conversion shall not be required and the foregoing provisions of
this Section 12.02 do not apply, if:

(i)    a limited
partnership is the sole surviving or resulting entity;

 

 

-41-

 

 

(ii)    the
partnership agreement of the surviving or resulting limited partnership will not
materially differ from this Agreement before the merger or conversion in any
manner other than as to applicable law or other insignificant conforming
differences;

(iii)    Limited
Partners who held Limited Partnership Interests immediately before the effective
date of the merger or conversion will hold interests in the surviving or
resulting entity in the same proportions, immediately after the effective date
of the merger or conversion; and

(iv)    the
General Partner adopts a resolution approving the plan of merger or plan of
conversion.

 

(g)    After a
plan of merger, plan of exchange or plan of conversion is approved, and at any
time before the merger, exchange or conversion has become effective, the plan of
merger, plan of exchange or plan of conversion may be abandoned (subject to any
contractual rights by any of the entities that are a party thereto), without
action by the Limited Partners, in accordance with the procedures set forth in
the plan of merger, plan of exchange or plan of conversion or, if no such
procedures are set forth in the plan, in the manner determined by the General
Partner.

 

12.03   Rights
of Dissenting Limited Partners. 

 

(a)    In the
absence of fraud in the transaction, the remedy provided by this Section 12.03
to a Limited Partner voting against any merger, exchange or conversion or
objecting to a merger, exchange or conversion approved by the written consent of
Limited Partners (a “Dissenting
Limited Partner”) is the
exclusive remedy for the recovery of the value of his Limited Partnership
interests or money damages with respect to the transaction. If the existing,
surviving, or new corporation or limited partnership (foreign or domestic) or
other entity, as the case may be, complies with the requirements of this Section
12.03, any Dissenting Limited Partner who fails to comply with the requirements
of this Section 12.03 shall not be entitled to bring suit for the recovery of
the value of his Limited Partnership interests or money damages with respect to
the transaction. A “Dissenting Limited Partner” in respect of any merger,
exchange or conversion shall expressly exclude any Limited Partner who votes in
favor of the related plan of merger, plan of exchange or plan of conversion or
who abstains or fails to timely vote therefor. In the event of a plan of merger,
plan of exchange or plan of conversion approved by written consent, a
“Dissenting Limited Partner” in respect of any related merger, exchange or
conversion shall expressly exclude Limited Partners who provide such written
consent and Limited Partners who fail to object to the merger, exchange or
conversion and demands payment for such Limited Partner’s Limited Partnership
Interest in writing to the General Partner within twenty (20) days after notice
to the Limited Partners of the receipt by the Partnership of written consents
sufficient to approve such merger, exchange or conversion. All such Limited
Partners who are not included within the definition of Dissenting Limited
Partner in respect of any merger, exchange or conversion shall participate in
the merger, exchange or conversion according to the approved plan of merger,
plan of exchange or plan of conversion.

 

(b)    Any
Dissenting Limited Partner who has opted for payment for his Limited Partnership
interests shall not thereafter be entitled to vote or exercise any other rights
of a Limited Partner except the right to receive payment for his Limited
Partnership interests and the right to maintain an appropriate action to obtain
relief on the ground that the transaction would be or was fraudulent. Limited
Partnership Interests of Dissenting Limited Partners for which payment has been
made shall not thereafter be considered outstanding for the purposes of any
subsequent vote of the Limited Partners.

 

(c)    Within
twenty (20) days after a Dissenting Limited Partner votes against any plan of
merger, plan of exchange or plan of conversion which is approved by a vote of
the Limited Partners, or in connection with a Limited Partner’s objection to any
plan of merger, plan of exchange or plan of conversion approved by the written
consent of the Limited Partners, the Dissenting Limited Partner may demand by
written notice to the General Partner that payment for his Limited Partnership
Interest be 

 

 

-42-

 

 

made.
Upon receipt of such a payment demand, the General Partner shall (i) make a
notation on the records of the Partnership that such demand has been made and
(ii) within a reasonable period of time after the later of the receipt of a
payment demand or the consummation of the merger, exchange or conversion, cause
the Partnership to pay to the Dissenting Limited Partner the fair value of such
Dissenting Limited Partner’s Partnership Interest without interest. The fair
value of a Dissenting Limited Partner’s Partnership Interest shall be an amount
equal to the Dissenting Limited Partner’s pro rata share (as would be determined
under Section 5.06 hereof if the Partnership were liquidating) of the appraised
value of the net assets of the Partnership based on an appraisal of all assets
of the Partnership from a Competent Independent Expert. The assets of the
Partnership shall be appraised on a consistent basis. The appraisal shall be
based on an evaluation of all relevant information and shall include the current
value of the Partnership’s assets as of the date immediately prior to the
proposed merger, exchange or conversion. The appraisal shall assume an orderly
liquidation of the Partnership’s assets over a twelve (12) month period, shall
consider other balance sheet items, and shall be net of the assumed cost of
sale. The terms of the engagement of the appraiser shall clearly state that the
engagement is for the benefit of the Partnership and its Limited Partners. A
summary of the independent appraisal, including all material assumptions
underlying the appraisal, shall be provided to Dissenting Limited Partners in
connection with the payment of the fair value of their Limited Partnership
Interests.

 

(d)    If a
Dissenting Limited Partner shall fail to make a payment demand within the period
provided in Section 12.03(c) hereof or, in respect of a plan of merger, plan of
exchange or plan of conversion approved by written consent of the Limited
Partners, shall fail to provide notice of dissent within the period set forth in
Section 12.03(a) hereof, such Dissenting Limited Partner and all persons
claiming under him shall be conclusively presumed to have approved and ratified
the merger, conversion or exchange and shall be bound thereby, the right of such
Dissenting Limited Partner to be paid the fair value of his Limited Partnership
Interest shall cease, and his status as a Limited Partner shall be restored
without prejudice to any proceedings which may have been taken during the
interim, and such Dissenting Limited Partner shall be entitled to receive any
distributions made to Limited Partners in the interim.

 

12.04   Roll-Up
Transactions. 
If the
Partnership adopts any plan of merger, plan of exchange or plan of conversion
which, if effected, would result in a “Roll-Up Transaction”, as defined in the
Articles of Incorporation, then any such transaction shall be subject to and
effected strictly in compliance with the provisions applicable to Roll-Up
Transactions set forth in Section 13.3 of the Articles of
Incorporation.

 

ARTICLE
XIII

 

GENERAL
PROVISIONS

 

13.01   Notices. 
All
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been given when delivered personally or upon deposit
in the United States mail, registered, postage prepaid return receipt requested,
if to the General Partner, at 15601 Dallas Parkway, Suite 600, Addison, Texas
75001, if to any other Partner, at such address set forth in Exhibit
A attached
hereto; provided, however, that any Partner may specify a different address by
notifying the General Partner in writing of such different address. Notices to
the Partnership shall be delivered at or mailed to its specified office.

 

13.02   Survival
of Rights. 
Subject
to the provisions hereof limiting transfers, this Agreement shall be binding
upon and inure to the benefit of the Partners and the Partnership and their
respective legal representatives, successors, transferees and assigns.

 

13.03   Additional
Documents. 
Each
Partner agrees to perform all further acts and execute, swear to, acknowledge
and deliver all further documents which may be reasonable, necessary,
appropriate or desirable to carry out the provisions of this Agreement or the
Act. 

 

 

-43-

 

 

13.04    Severability. 
If any
provision of this Agreement shall be declared illegal, invalid, or unenforceable
in any jurisdiction, then such provision shall be deemed to be severable from
this Agreement (to the extent permitted by law) and in any event such
illegality, invalidity or unenforceability shall not affect the remainder
hereof. 

 

13.05   Entire
Agreement. 
This
Agreement and exhibits attached hereto constitute the entire Agreement of the
Partners and supersede all prior written agreements and prior and
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof, except as otherwise set forth herein. 

 

13.06   Pronouns
and Plurals. 
When the
context in which words are used in the Agreement indicates that such is the
intent, words in the singular number shall include the plural and the masculine
gender shall include the neuter or female gender as the context may require.

 

13.07   Headings. 
The
Article and Section headings in this Agreement are for convenience only and
shall not be used in construing the scope of this Agreement or any particular
Article or Section hereof. 

 

13.08   Counterparts. 
This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original copy and all of which together shall constitute one and the
same instrument binding on all parties hereto, notwithstanding that all parties
shall not have signed the same counterpart. 

 

13.09      
Governing
Law. 
This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas; provided, however, that any cause of action for violation of
federal or state securities law shall not be governed by this Section 13.09.

 

13.10   Arbitration. 
Notwithstanding
anything to the contrary contained in this Agreement, all claims, disputes and
controversies between the parties hereto (including, without limitation, any
claims, disputes and controversies between the Partnership and any one or more
of the Partners and between or among any Partners) arising out of or in
connection with this Agreement or the Partnership created hereby, or any act or
failure to act by the General Partner or any other Partner hereunder, shall be
resolved by binding arbitration in Dallas, Texas by the American Arbitration
Association (the “AAA”), in
accordance with this Section 13.10. Any arbitration called for by this Section
13.10 shall be conducted in accordance with the following procedures:

 

(a)    The
Partnership or any Partner (the “Requesting
Party”) may
demand arbitration pursuant to this Section 13.10 at any time by giving written
notice of such demand (the “Demand
Notice”) to all
other Partners and (if the Requesting Party is not the Partnership) to the
Partnership which Demand Notice shall describe in reasonable detail the nature
of the claim, dispute or controversy.

 

(b)    Within 15
days after the giving of a Demand Notice or such additional time as required by
the AAA, the AAA shall select and designate in writing three reputable,
disinterested individuals willing to act as an arbitrator of the claim, dispute
or controversy in question.

 

(c)    The
presentations of the parties hereto in the arbitration proceeding shall be
commenced and completed within sixty (60) days after the selection of the
arbitration panel pursuant to subsection B above, and the arbitration panel
shall render its decision (and specify in reasonable detail its reasons
therefor) in writing within thirty (30) days after the completion of such
presentations. Any decision concurred in by any two (2) of the arbitrators shall
constitute the decision of the arbitration panel, and unanimity shall not be
required.

 

(d)    The
arbitration panel shall include in its decision a direction that all of the
attorneys’ fees and costs of any party or parties and the costs of such
arbitration be paid by the losing party or parties in the arbitration. On the
application of a party before or after the initial decision of the arbitration
panel, 

 

 

-44-

 

 

and proof
of its attorneys’ fees and costs, the arbitration panel shall order the other
party to make any payments directed pursuant to the preceding
sentence.

 

Any
decision rendered by the arbitration panel in accordance herewith shall be final
and binding on the parties hereto, and judgment thereon may be entered by any
state or federal court of competent jurisdiction. Arbitration shall be the
exclusive method available for resolution of claims, disputes and controversies
arising between and among the parties relating to this Agreement and the conduct
of the parties hereto in relation to Partnership matters, and the Partnership
and its Partners stipulate that the provisions hereof shall be a complete
defense to any suit, action or proceeding in any court or before any
administrative or arbitration tribunal with respect to any such claim,
controversy or dispute. The provisions of this Section 13.10 shall survive the
dissolution of the Partnership.

 

Nothing
contained herein shall 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. 

 

13.11   Vote
of Affiliated Limited Partners. Notwithstanding
any provision to the contrary set forth in this Agreement, in each instance in
which the consent, approval or vote of Limited Partners is required hereunder,
any Partnership Interest held as a Limited Partner by any Affiliate of the
Sponsor shall not be included for purposes of calculating whether the requisite
approval of Partners is obtained unless, as of the date of determination, there
are no Limited Partners entitled to vote or consent who are not Affiliates of
the Sponsor.

 

13.12   Acknowledgement
as to Exculpation and Indemnification.  
THE
PARTIES HERETO ACKNOWLEDGE AND AGREE THAT THIS AGREEMENT CONTAINS EXCULPATION
AND INDEMNIFICATION IN RESPECT OF THE ACTIONS OR OMISSIONS OF THE GENERAL
PARTNER AND DIRECTORS, OFFICERS AND AFFILIATES OF THE GENERAL PARTNER BY THE
PARTNERSHIP EVEN IF SUCH ACTIONS OR OMISSIONS CONSTITUTE
NEGLIGENCE OF SUCH PERSONS.

 

-45-

 

IN
WITNESS WHEREOF, the
parties hereto have hereunder affixed their signatures to this Agreement of
Limited Partnership of Behringer Harvard Opportunity OP I, LP as of the _____
day of __________, 2005.

GENERAL
PARTNER:

BEHRINGER
HARVARD 

OPPORTUNITY
REIT I, INC.

By:_________________________________________

        
Gerald J. Reihsen, III, Executive Vice President

ORIGINAL
LIMITED PARTNER:

BHO
PARTNERS, LLC

By:_________________________________________

         
Joshua C. Miller, Vice President

-46-

 

INDEX
OF EXHIBITS

EXHIBIT A
- Limited Partners and Limited Partners’ Capital Contributions and Partnership
Units 

EXHIBIT B
- Notice of Exercise of Exchange Right 

EXHIBIT C
- Call Notice 

-47-

 

EXHIBIT
A

LIMITED
PARTNERS AND LIMITED PARTNERS’ CAPITAL CONTRIBUTIONS AND PARTNERSHIP
UNITS

As of
_________, 2005

 

 

 

	Partners	 	
       Cash 

      Contribution 
	
       Agreed Value 

      of Property 

      Contribution 
	
      Partnership

      Units

	 
      General
      Partner:
	 	 	 	 
	
       

      Behringer
      HarvardOpportunity
      REIT I, Inc.

      15601
      Dallas Parkway

      Suite
      600

      Addison,
      Texas 75001 
	 	
      $170 
	
      N/A
	
      17

	 
      Original
      Limited Partner:
	 	 	 	 
	 
      BHO
      Partners, LLC 
	 	
      $170,000 
	
      N/A 
	
      17,000*

	 
      Mail:

      P.
      O. Box 50401

      Henderson,
      Nevada 89016
	 	 	 	 
	 
      Hand
      Delivery:

      101
      Convention Center Drive

      Suite
      850

      Las
      Vegas, Nevada 89101
	 	 	 	 
	 
      Additional
      Limited Partners:
	 	 	 	 

*Such
amount will be automatically adjusted from time to time as provided in the
definition of “Partnership Unit” contained in Article I.

 

 

 

 

EXHIBIT
B

NOTICE
OF EXERCISE OF EXCHANGE RIGHT

 

In
accordance with the Agreement of Limited Partnership of Behringer Harvard
Opportunity OP I, LP, as amended (the “Agreement”), the
undersigned hereby irrevocably (i) presents for exchange ___________ Partnership
Units in Behringer Harvard Opportunity OP I, LP in accordance with the terms of
the Agreement and the Exchange Right referred to therein; (ii) surrenders such
Partnership Units and all right, title and interest therein; and (iii) directs
that the Cash Amount or REIT Shares Amount (as defined in the Agreement) as
determined by the General Partner deliverable upon exercise of the Exchange
Right be delivered to the address specified below, and if REIT Shares (as
defined in the Agreement) are to be delivered, such REIT Shares be registered or
placed in the name(s) and at the address(es) specified below. 

 

 

	Dated:___________________ 	
      ____________________________

      (Signature
      of Limited Partner)

      

      

      ____________________________

       (Printed
      Name of Limited Partner) 

      

      Mailing
      Address and Phone No.:

      

       ____________________________

      
       ____________________________

      
      ____________________________

      
       ____________________________

      (_____)
      _______-______________

 

Signature
Guaranteed by:  ____________________________________

If REIT
Shares are to be issued, issue to: 

Name:
____________________________________ 

Mailing
Address and Phone No.:

         
____________________________

         
____________________________

         
____________________________

         
____________________________

         
(_____) _______-______________

Social
security or other tax identification number: ___________________________

 

 

 

EXHIBIT
C

CALL
NOTICE

 

In
accordance with the Agreement of Limited Partnership of Behringer Harvard
Opportunity OP I, LP, as amended (the “Agreement”), the
undersigned hereby irrevocably exercises its Call Right (as defined in the
Agreement) with regard to all of the Partnership Units owned by
_______________________ in Behringer Harvard Opportunity OP I, LP. The
undersigned shall pay the [Cash Amount/REIT Shares Amount] to
_____________________ at the notice address of provided in the Agreement upon
receipt of (i) the duly executed Partnership Unit Certificate of
______________________________ transferring all right, title and interest in
Partnership Units to the undersigned, (ii) if REIT Shares are to be delivered,
instructions as to the name, address and taxpayer identification number of the
person to whom such REIT Shares will be registered or placed, and (iii) the
representation, warranty and certification of that ___________________________
(a) has marketable and unencumbered title to such Partnership Units, free and
clear of the rights of or interests of any other person or entity; (b) has the
full right, power and authority to transfer and surrender such Partnership Units
as provided herein; and (c) has obtained the consent or approval of all persons
or entities, if any, having the right to consent to or approve of such transfer
and surrender. 

 

 

	 	BEHRINGER
       HARVARD AND OPPORTUNITY REIT I, INC
	 	 
	 	By:________________________________________________ 
	 	Name:______________________________________________ 
	 	Title:_______________________________________________

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