<PAGE>
EXHIBIT 10.1
FORM OF
AGREEMENT OF LIMITED PARTNERSHIP
OF
BEHRINGER HARVARD OPPORTUNITY OP I, LP
NOVEMBER ___, 2004
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AGREEMENT OF LIMITED PARTNERSHIP
OF
BEHRINGER HARVARD OPPORTUNITY OP I, LP
NOVEMBER ___, 2004
This Agreement of Limited Partnership (this "AGREEMENT") is entered
into
effective as of the __ day of November __,
2004 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
November __, 2004.
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).
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"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 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.
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"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.
"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.
"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
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(except if such petition is contested by
such Person and has been dismissed
within 90 days); (ii) the 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
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(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 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
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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.
"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 allocation of Partnership Units
among the Partners shall be as set forth on
EXHIBIT A, as it may be amended from
time to time.
"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.
"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.
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"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 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
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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.
"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.
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"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.
"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.
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
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."
<PAGE>
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 have made Capital Contributions to
the Partnership in exchange for the
Partnership Units set forth opposite their
names on EXHIBIT A. 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.
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
<PAGE>
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 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.
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
<PAGE>
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.
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.
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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.
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
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(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 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.
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(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
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.
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:
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(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;
(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,
