AGREEMENT OF LIMITED PARTNERSHIP OF BEHRINGER HARVARD NORTHWEST HIGHWAY LP

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AGREEMENT OF LIMITED PARTNERSHIP OF

BEHRINGER HARVARD NORTHWEST HIGHWAY LP

THIS AGREEMENT OF LIMITED PARTNERSHIP (the "AGREEMENT") is made and

entered into effective as of the ___ day of March, 2005, by and among BEHRINGER

HARVARD NORTHWEST HIGHWAY GP, LLC, a Texas limited liability company (the

"GENERAL PARTNER"), BEHRINGER HARVARD SHORT-TERM OPPORTUNITY FUND I LP, a Texas

limited partnership (the "CLASS A LIMITED PARTNER"), and J.L. ARMSTRONG TRUST, a

Texas trust, and PAUL AND WILMA NOTHERN FAMILY TRUST, a Texas trust

(collectively, the "CLASS B LIMITED PARTNERS").

ARTICLE I.

FORMATION, NAME, PRINCIPAL PLACE OF BUSINESS - AGENT

PURPOSES, TERM AND DEFINITIONS

1.0 FORMATION. For and in consideration of the mutual covenants

herein contained, the Partners hereby form a limited partnership (hereinafter

the "PARTNERSHIP") under and pursuant to the Texas Revised Limited Partnership

Act, Tex. Rev. Civ. Stat. Ann., art 6132a-1 (such Act hereinafter referred to as

"TRLPA"). The Partnership shall be governed by TRLPA. The Certificate of Limited

Partnership of the Partnership has been or shall promptly be filed and recorded

in such office and places as is required by TRLPA.

1.1. NAME. The business of the Partnership shall be conducted under

the name of "Behringer Harvard Northwest Highway LP".

1.2. PARTNERSHIP OFFICE, REGISTERED OFFICE AND REGISTERED AGENT. The

Partnership shall maintain its principal office in the State of Texas at 15601

Dallas Parkway, Suite 600, Addison, Texas 75001, or at such other place as the

General Partner may from time to time designate. The Registered Office in the

State of Texas is 15601 Dallas Parkway, Suite 600, Addison, Texas 75001, and the

agent for service of process at such address shall be Gerald J. Reihsen, III.

The Partnership may maintain such different or additional offices as the General

Partner may determine.

1.3. PURPOSES. The nature and business of the Partnership and the

purposes to be conducted and promoted by the Partnership are to engage solely in

the following activities:

(a) To acquire the Property, and to develop, own, maintain,

operate, finance, refinance, and sell or exchange the Project on the Property;

and

(b) To exercise all powers enumerated in TRLPA necessary or

convenient to the conduct, promotion or attainment of the business or purposes

otherwise set forth herein.

1.4. TERM. The Partnership shall continue until December 31, 2055,

unless the business of the Partnership is terminated sooner pursuant to Article

XV below.

1.5. DEFINITIONS. As used in this Agreement, unless the context

clearly requires otherwise, the following words and phrases shall have the

following meanings:

"ADDITIONAL CAPITAL CONTRIBUTIONS" means all amounts paid by the

Partners to the Partnership as additional capital contributions under Section

3.2 of this Agreement, except that, as

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provided in Section 3.2, any amounts over $25,000 paid by the Class B Limited

Partners to the Partnership pursuant to Section 3.2 shall not count as

Additional Capital Contributions for purposes of this Agreement.

"ADDITIONAL CAPITAL CONTRIBUTIONS ACCOUNT" means an account

maintained for each Partner equal to (i) all Additional Capital Contributions

made by such Partner to the Partnership pursuant to Section 3.2 of this

Agreement, less (ii) the aggregate distributions made to such Partner pursuant

to Sections 6.1(a) and 6.2(a) of this Agreement.

"ADJUSTMENT DATE" means the close of business on the last day of

any fiscal year of the Partnership.

"AFFILIATE" of a Person means (i) any Person, directly or

indirectly controlling, controlled by or under common control with the specified

Person; (ii) any Person owning or controlling 10% or more of the outstanding

voting securities of such specified Person; (iii) any officer, director,

partner, member or trustee of such specified Person and (iv) if any Person who

is an Affiliate is an officer, director, partner, member or trustee of another

Person, such other Person. The term "control" shall mean the ability, directly

or indirectly, to control the management of an entity.

"AGREEMENT" means this Agreement of Limited Partnership.

"CAPITAL ACCOUNT" means, with respect to each Partner, the

account established and maintained on the books and records of the Partnership

for each Partner pursuant to Section 3.4 below, adjusted as provided for

therein.

"CAPITAL CONTRIBUTION" means the amount of money and the agreed

fair market value of other property or consideration contributed to the capital

of the Partnership by a Partner.

"CLASS A LIMITED PARTNER" means Behringer Harvard Short-Term

Opportunity Fund I LP, a Texas limited partnership, and any other Person who has

been admitted as a Class A Limited Partner in the Partnership pursuant to the

provisions of this Agreement.

"CLASS B LIMITED PARTNERS" means, collectively, J.L. Armstrong

Trust, a Texas trust, and Paul and Wilma Nothern Family Trust, a Texas trust,

and any other Person who has been admitted as a Class B Limited Partner in the

Partnership pursuant to the provisions of this Agreement.

"CODE" means the Internal Revenue Code of 1986 as it may be

amended or revised from time to time, or any provision of succeeding law.

"CONSTRUCTION LOAN" means the loan contemplated to be obtained

by the Partnership in the amount of approximately $4,550,000, the proceeds of

which will be used to pay a portion of the costs of constructing the Project.

"DISTRIBUTABLE CASH" means all cash, revenues, and funds

received by the Partnership, and any amounts released from Reserves to the

extent the General Partner deems that the amount released is no longer required

to be retained in Reserves, less the sum of the following to the extent paid or

set aside by the Partnership: (a) all principal and interest payments on

indebtedness of the Partnership and all other sums paid to lenders; (b) all cash

expenditures incurred incident to the operation of the Partnership business; (c)

such amounts as may be added to Reserves as the General Partner deems reasonably

necessary to the proper operation of the Partnership's business.

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"EQUITY INVESTORS" means the limited partners in Behringer

Harvard Short-Term Opportunity Fund I LP.

"GENERAL PARTNER" means Behringer Harvard Northwest Highway GP,

LLC, a Delaware limited liability company, and any other Person who has been

admitted as a General Partner in the Partnership pursuant to the provisions of

this Agreement.

"IMPROVEMENTS" shall mean any improvements and related amenities

now located or to be constructed on the Property.

"INITIAL CAPITAL CONTRIBUTIONS" means each Partner's Capital

Contribution pursuant to Section 3.1.

"INITIAL CAPITAL CONTRIBUTION ACCOUNT" means, as to each

Partner, (a) the Initial Capital Contribution made by such Partner pursuant to

Section 3.1 of this Agreement, less (ii) the aggregate distributions made to

such Partner pursuant to Sections 6.1(b) and 6.2(b) of this Agreement.

"IRR" means, as to the Class A Limited Partner, the actual

internal rate of return on the actual investment made by the Class A Limited

Partner in respect of the Partnership (not including any internal "load"

assessed by the Class A Limited Partner with respect to the investments by the

Equity Investors), as calculated by the General Partner on a compounded annual

basis taking into consideration the timing and amount of the investments made by

the Class A Limited Partner in respect of the Partnership as well as the timing

and amount of all distributions received as a result of such investment. For

purposes of calculating the IRR, all Property owned by the Partnership shall be

treated as a single investment and the income from the Property owned by the

Partnership shall be treated as from a single source.

"IRR RETURN" means an amount which, when aggregated with all

other distributions from the Partnership received by the Class A Limited

Partner, results in an IRR to the Class A Limited Partner of twenty-five percent

(25%).

"LIMITED PARTNERS" means the Class A Limited Partner, the Class

B Limited Partners and any other Person who is admitted as a limited partner in

the Partnership pursuant to the provisions of Article VIII.

"MAJORITY IN INTEREST" shall mean Limited Partners owning more

than fifty percent (50%) of the Residual Percentages.

"NONRECOURSE DEDUCTIONS" has the meaning set forth in Sections

1.704-2(b)(1) and 1.702-2(c) of the Regulations. Subject to the preceding

sentence, the amount of Nonrecourse Deductions for a Partnership fiscal year

equals the excess, if any, of the net increase, if any, in the amount of

Partnership Minimum Gain during the fiscal year (determined under Section

1.704-2(d) of the Regulations) over the aggregate amount of any distributions

during the fiscal year of proceeds of a Nonrecourse Liability that are allocable

to an increase in Partnership Minimum Gain (determined under Section 1.704-2(h)

of the Regulations).

"NONRECOURSE LIABILITY" has the meaning set forth in Section

1.704-2(b)(3) of the Regulations.

"OPERATING EXPENSES" means all the cash expenditures made or

required to be made by the Partnership in connection with the operation of the

Partnership in the ordinary course of business,

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including without limitation, cash expenditures made or required to be made by

the Partnership in connection with the construction, development, ownership,

management, improvement, operation, maintenance, financing and upkeep of the

Project, as well as debt service (principal and interest) and capital

expenditures of the Partnership; provided, however, Operating Expenses shall not

include (i) any overhead or general administrative costs or expenses of the

General Partner or salaries or other compensation paid to its employees,

officers, directors or shareholders (unless specifically provided for in this

Agreement); (ii) any expenditures paid from cash Reserves of the Partnership

(provided that to the extent any capital expenditures are made in excess of any

such Reserves established for such capital expenditures, such excess amounts

shall be included as an Operating Expense); and (iii) non-cash items such as

depreciation and amortization.

"PARTIALLY ADJUSTED CAPITAL ACCOUNTS" means, with respect to any

Partner as of an Adjustment Date, the Capital Account of such Partner as of the

beginning of the fiscal year ending on such Adjustment Date (where such Capital

Account does not reflect such Partner's share of either cumulative Partner

Minimum Gain or cumulative Partnership Minimum Gain), after giving effect to all

allocations of items of income, gain, loss or deduction not included in Profits

and Losses and all Capital Contributions and distributions during such period,

but before giving effect to any allocations of Profits or Losses for such period

pursuant to Section 7.1 hereof, increased by (a) such Partner's share of

Partnership Minimum Gain as of the end of such fiscal year, and (b) such

Partner's share of Partner Minimum Gain as of the end of such fiscal year.

"PARTNER" means each of the General Partner and the Limited

Partners, and "Partners" means collectively all of such Partners.

"PARTNER MINIMUM GAIN" means an amount, with respect to each

Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would

result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability.

"PARTNER NONRECOURSE DEBT" has the meaning set forth in Section

1.704-2(b)(4) of the Regulations.

"PARTNER NONRECOURSE DEDUCTIONS" has the meaning set forth in

Section 1.704-2(i) of the Regulations. Subject to the foregoing, the amount of

Partner Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a

Partnership fiscal year equals the excess, if any, of the net increase, if any,

in the amount of Partner Minimum Gain attributable to such Partner Nonrecourse

Debt during that fiscal year over the aggregate amount of any distribution

during that fiscal year to the Partner that bears the economic risk of loss for

such Partner Nonrecourse Debt to the extent such distributions are from the

proceeds of such Partner Nonrecourse Debt and are allocable to an increase in

Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined

in accordance with Section 1.704-2(i) of the Regulations.

"PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Section

1.704-2(d) of the Regulations. Subject to the foregoing, Partnership Minimum

Gain shall equal the amount of gain, if any, which would be recognized by the

Partnership with respect to each nonrecourse liability of the Partnership (or

Property Owner) if the Partnership were to transfer the Partnership property (or

the Property Owner were to transfer the Property Owner property) which is

subject to such nonrecourse liability in full satisfaction thereof.

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"PARTNERSHIP VOTE" shall mean a vote of the Partners. A

Partnership Vote may be conducted at a meeting of the General Partner and the

Limited Partners, which meeting may take place by means of telephone conference,

video conference or similar communications equipment by means of which all

Persons participating therein can hear each other. Alternatively, a Partnership

Vote may be conducted by notice sent by the General Partner to the Limited

Partners, which notice shall set forth (a) the matter with respect to which the

Partnership Vote is to be made and (b) the time period within which the General

Partner and the Limited Partners must respond to the notice. Such time period

shall not be less than seven (7) business days or more than fourteen (14)

business days. If the General Partner or any Limited Partner does not respond to

the notice within the time period specified in the notice, such Partner shall be

deemed to have given its written consent in favor of the matter set forth in the

notice. If a written consent or consents setting forth the matter to be

determined is signed by the General Partner and a Majority in Interest of the

Limited Partners, Approval by Partnership Vote shall be deemed to have been

obtained with respect to such matter.

"PERSON" means any individual or entity, and the heirs,

executors, administrators, legal representatives, successors and assigns of such

Person where the context so admits, and, unless the context otherwise requires,

the singular shall include the plural, and the masculine gender shall include

the feminine and the neuter and vice versa.

"PREFERRED RETURN" means, for each Limited Partner, an amount

that accrues at the rate of twelve percent (12%) per annum on all Capital

Contributions from the date such contributions are made to the Partnership until

they are returned to the contributing Limited Partner.

"PRIME RATE" means the "prime rate" as published in The Wall

Street Journal (Eastern Edition) under its "Money Rates" column and specified as

"[t]he base rate on corporate loans at large U.S. commercial banks," or, if no

longer published as such, the rate of interest announced from time to time by

Bank of America, N.A., as its prime rate, base rate or reference rate. If The

Wall Street Journal (Eastern Edition) publishes more than one "Prime Rate" under

its "Money Rates" column, then the Prime Rate shall be the average of such

rates. If The Wall Street Journal (Eastern Edition) is not published on a date

when Prime Rate is to be determined, then Prime Rate shall be the Prime Rate

published on the first date of publication which precedes the date on which the

Prime Rate is to be determined.

"PROFITS" AND "LOSSES" means, for each fiscal year or other

period, an amount equal to the Partnership's taxable income or loss for such

year or period, determined in accordance with Code Section 703(a) (for this

purpose, all items of income, gain, loss or deduction required to be stated

separately pursuant to Code Section 703(a)(1) shall be included in taxable

income or loss), with the following adjustments:

(a) Any income of the Partnership that is exempt from federal

income tax and not otherwise taken into account in computing Profits and Losses

pursuant to this subsection (a) shall be added to such taxable income or loss;

(b) Any expenditure of the Partnership described in Code Section

705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to

Regulations Section 1.704(b)(2)(iv)(i), and not otherwise taken into account in

computing Profits or Losses pursuant to this subsection (b) shall be subtracted

from such taxable income or loss;

(c) In the event the Gross Asset Value of any of the Partnership

assets is adjusted pursuant to subsections (b) or (c) of the definition of Gross

Asset Value, the amount of such adjustment shall be taken into account as gain

or loss from the disposition of such asset for purposes of computing Profits or

Losses;

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(d) Gain or loss resulting from any disposition of Partnership

assets with respect to which gain or loss is recognized for federal income tax

purposes shall be computed by reference to the Gross Asset Value of the property

disposed of, notwithstanding that the adjusted tax basis of such property

differs from its Gross Asset Value;

(e) In lieu of the depreciation, amortization and other cost

recovery deductions taken into account in computing such taxable income or loss,

there shall be taken into account depreciation computed in accordance with

Section 1.704-1(b)(2)(iv)(g) of the Regulations for such fiscal year or other

period; and

(f) Notwithstanding anything contained herein to the contrary,

any items which are specially allocated pursuant to Sections 7.3(a), 7.3(b),

7.3(c), 7.3(d), 7.3(e) and 7.3(f) shall not be taken into account in computing

Profits or Losses.

"PROJECT" means the residential subdivision containing a minimum

of 19 lots to be developed by the Partnership on the Property.

"PROPERTY" means the tract of land (and all rights and

appurtenances incident thereto) described in EXHIBIT A attached hereto and all

Improvements located, or to be constructed, or developed thereon.

"PURCHASE AGREEMENT" means the contract of sale dated January

21, 2005, between Milli A. Brown and J.D. Whitworth, as Seller, and HomeAmerica,

Inc. or assigns, as Buyer, covering the Property.

"REGULATIONS" means the federal income tax regulations,

including temporary regulations, promulgated under the Code, as such regulations

may be amended from time to time (including corresponding provisions of

succeeding regulations).

"RESERVES" means funds set aside or amounts allocated to

reserves for working capital, taxes, insurance, debt service or other costs and

expenses incident to the ownership and operation of the Properties. The amount

of funds to be set aside in Reserves shall be determined by the General Partner

in the General Partner's sole discretion.

"RESIDUAL PERCENTAGE" means (a) one tenth of one percent (.1%)

as to the General Partner, (b) seventy-nine and nine-tenths percent (79.9%) as

to the Class A Limited Partner, and (c) twenty percent (20%) as to the Class B

Limited Partners.

"TARGET ACCOUNT" means, with respect to any Partner as of any

Adjustment Date, a balance (which may be positive or negative) equal to the

hypothetical amount that such Partner would receive upon the liquidation of the

Partnership, assuming that (a) all assets of the Partnership were sold for an

amount equal to their respective Gross Asset Values, (b) all liabilities of the

Partnership allocable to those properties became due and were satisfied in

accordance with their terms (limited with respect to each non-recourse

liability, to the Gross Asset Value of the asset securing such liability), and

(c) all net assets of the Partnership were distributed pursuant to Section 6.1

hereof, computed after the Capital Contributions have been made for the period

ending on such Adjustment Date. The General Partner shall determine Gross Asset

Value from year to year or at any point in time as needed.

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ARTICLE II.

PARTNERS

2.1. GENERAL PARTNER. The name and address of the General Partner is

as follows:

NAME ADDRESS

Behringer Harvard Northwest 15601 Dallas Parkway

Highway GP, LLC Suite 600

Addison, Texas 75001

Attn: Gerald J. Reihsen, III

2.2. LIMITED PARTNERS. The name and address of the Limited Partners

are as follows:

NAME ADDRESS

Behringer Harvard Short-Term Opportunity 15601 Dallas Parkway

Fund I LP Suite 600

Addison, Texas 75001

Attn: Gerald J. Reihsen, III

J.L. Armstrong Trust 5956 Sherry Lane

Suite 1000

Dallas, Texas 75225

Attn: David Carruth

Paul and Wilma Nothern Family Trust 5956 Sherry Lane

Suite 1000

Dallas, Texas 75225

Attn: Paul Nothern

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ARTICLE III.

CAPITAL

3.1. INITIAL CAPITAL CONTRIBUTIONS.

(a) The General Partner has contributed or shall contribute

cash in the amount of $1.00 to the capital of the Partnership.

(b) The Class A Limited Partner has contributed or shall

contribute cash in the amount of $__________ to the capital of the Partnership.

(c) The Class B Limited Partners have contributed or shall

contribute cash in the amount of $25,000.00 each (for an aggregate of

$50,000.00) to the capital of the Partnership.

3.3. ADDITIONAL CAPITAL CONTRIBUTIONS.

(a) If at any time the General Partner determines that the

Partnership requires funds over and above the Initial Capital Contributions and

the proceeds of the Construction Loan to pay development expenses in respect of

the Project or for Operating Expenses (collectively, "CASH NEEDS"), then the

General Partner may send the Limited Partners written notice ("ADDITIONAL

CAPITAL NOTICE") describing the purpose for which the funds are needed and

requesting that the Limited Partners contribute in cash such amounts as are

necessary to satisfy such Cash Needs as an Additional Capital Contribution to

the Partnership. If so requested, the Class A Limited Partner and the Class B

Limited Partners shall each be obligated to make an Additional Capital

Contribution in an amount equal to fifty percent (50%) of the Cash Needs

specified in the Additional Capital Notice. The time for the payment of any

Additional Capital Contribution to the Partnership shall be determined by the

General Partner, but shall in no event be less than ten (10) days after the

delivery of the Additional Capital Notice. Notwithstanding anything contained

herein to the contrary, only the first $25,000 of funds contributed by the Class

B Limited Partners pursuant to this Section 3.2(a) shall be counted as

Additional Capital Contributions, and the Class B Limited Partners' Capital

Account shall be adjusted accordingly. All funds contributed by the Class A

Limited Partner pursuant to this Section 3.2(a) shall be counted as Additional

Capital Contributions.

(b) In addition to, or in lieu of, requesting Additional

Capital Contributions to the Partnership pursuant to Section 3.2(a) above, the

General Partner, or any other Partner upon request by the General Partner, may

lend or advance money to the Partnership to pay Operating Expenses, provided the

financing terms are substantially similar to (or more favorable than) loans

which the Partnership could obtain on a competitive arms-length basis. If the

General Partner is unable to determine whether the financing terms are

competitive on an arms length basis, the General Partner may seek a Partnership

Vote on the issue, or may seek and rely upon the advice of an independent expert

in financing. If any Partner makes any loan or loans to the Partnership or

advances money on its behalf, the amount of any loan or advance shall not be

treated as a Capital Contribution but shall be treated as a debt due from the

Partnership to such Partner.

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3.3 FAILURE TO MAKE CAPITAL CONTRIBUTION.

(a) If any Partner fails to timely contribute all or any

portion of any Initial Capital Contribution or Additional Capital Contribution

required of such Partner, then such Partner shall be considered a "DELINQUENT

PARTNER." The Partnership may, upon notice to a Delinquent Partner, exercise

either one of the following remedies as its sole remedy:

(i) permit the non-Delinquent Partner(s) to advance

that portion of the required Capital Contribution that is in default as a loan

(a "DEFAULT LOAN") with the following results: (A) the sum thus advanced shall

constitute a loan to the Delinquent Partner; (B) such loan and all accrued

unpaid interest thereon shall be due on demand, or if no demand is made, twelve

(12) months after such advance is made; (C) the loan shall bear interest at the

lesser of twelve percent (12%) per annum or the highest rate permitted by

applicable law, from the date made until the date fully repaid compounding

monthly; (D) all Partnership distributions and other payments that otherwise

would be made to the Delinquent Partner (whether before or after dissolution of

the Partnership) under this Agreement (including those under Article 6) shall be

paid to the non-Delinquent Partner until the loan and all interest accrued

thereon is paid in full (with all such payments being applied first to accrued

and unpaid interest and then to principal and being deemed to be a distribution

or payment (as may apply) to the Delinquent Partner, and, in turn, a payment by

the Delinquent Partner with respect to the loan from the non-Delinquent

Partner); and (E) the non-Delinquent Partner may, in addition to the other

rights granted herein, take such action as the non-Delinquent Partner may deem

appropriate to obtain payment of the loan at the expense of the Delinquent

Partner; or

(ii) permit the non-Delinquent Partner to contribute

the Capital Contribution not made by the Delinquent Partner as a Capital

Contribution made by the non-Delinquent Partner, in which case the

non-Delinquent Partner shall have its Residual Percentage increased and the

Delinquent Partner shall have its Residual Percentage decreased in the following

manner: (A) if the Capital Contribution not made by the Delinquent Partner and

made by the non-Delinquent Partner is an Initial Capital Contribution, then (1)

the Residual Percentage of the non-Delinquent Partner immediately following such

Capital Contribution shall be increased by an amount equal to 175% x A/B

(expressed as a percentage), where `A' equals the amount the non-Delinquent

Partner contributed in respect of the Delinquent Partner's required Initial

Capital Contribution, and `B' equals the sum of all unreturned Capital

Contributions previously made to the Partnership after giving effect to the

amounts advanced under this Section 3.3(a)(ii) on behalf of the Delinquent

Partner; and (2) the Residual Percentage of the Delinquent Partner shall be

decreased by the increase of the non-Delinquent Partner's Residual Percentage;

and (B) if the Capital Contribution not made by the Delinquent Partner and made

by the non-Delinquent Partner is an Additional Capital Contribution, then (1)

the Residual Percentage of the non-Delinquent Partner immediately following such

Capital Contribution shall be increased by an amount equal to 125% x A/B

(expressed as a percentage), where `A' equals the amount the non-Delinquent

Partner contributed in respect of the Delinquent Partner's required Additional

Capital Contribution, and `B' equals the sum of all unreturned Capital

Contributions previously made to the Partnership after giving effect to the

amounts advanced under this Section 3.3(a)(ii) on behalf of the Delinquent

Partner; and (2) the Residual Percentage of the Delinquent Partner shall be

decreased by the increase of the non-Delinquent Partner's Residual Percentage.

An example of the operation of this Section 3.3(a)(ii) is attached hereto as

EXHIBIT B.

(b) The exercise by the Partnership of the remedies set

forth in Section 3.3(a) above shall be determined by the non-Delinquent Partners

in their sole discretion and not by the Delinquent Partners.

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(c) With respect to any efforts by the General Partner to

obtain loans to the Partnership from a third party or a Partner (including the

General Partner), the financing terms must be substantially similar to (or more

favorable than) loans which the Partnership could obtain on a competitive

arms-length basis. If the General Partner is unable to determine whether the

financing terms are competitive on an arms-length basis, the General Partner may

seek a Partnership Vote on the issue, or may seek and rely upon the advice of an

independent expert in financing. If any Partner makes any loan or loans to the

Partnership or advances money on its behalf, the amount of any loan or advance

shall not be treated as a Capital Contribution but shall be treated as a debt

due from the Partnership to such Partner.

3.4 CAPITAL ACCOUNTS. The Partnership shall establish and maintain

on its books and records for each Partner a capital account (collectively the

"CAPITAL ACCOUNTS") in accordance with Section 1.704-1(b)(2)(iv) of the

Regulations. Subject to the foregoing, each Partner's Capital Account generally

shall be:

(a) increased by (i) the amount of money contributed by such

Partner to the Partnership, including Partnership liabilities assumed by such

Partner; (ii) the fair market value of property (net of liabilities securing

such property that the Partnership has assumed, or taken subject to, under

Section 752 of the Code), or other consideration contributed by such Partner to

the Partnership; and (iii) allocations to such Partner of Net Profits (and items

thereof, including certain tax exempt income) and income and gain described in

Section 1.704-(b)(2)(iv)(g) of the Regulations; and

(b) decreased by (i) the amount of money distributed to such

Partner by the Partnership, including such Partner's individual liabilities

assumed by the Partnership; (ii) the fair market value of all property

distributed to such Partner by the Partnership (net of liabilities that such

Partner is considered to assume or take subject to under Section 752 of the

Code); and (iii) allocations to such Partner of Net Losses and deductions,

including expenses described in Section 705(a)(2)(B) of the Code which are not

deductible for tax purposes.

3.5 INTEREST ON AND WITHDRAWAL OF CAPITAL CONTRIBUTIONS. Neither the

General Partner nor the Limited Partners shall be entitled to receive any

interest on Capital Contributions, nor shall the General Partner or the Limited

Partners be entitled to withdraw their Capital Contributions from the

Partnership, except pursuant to the terms and conditions of this Agreement.

ARTICLE IV.

MANAGEMENT OF PARTNERSHIP AND DEVELOPMENT OF THE PROJECT

4.1. GENERAL POWERS OF GENERAL PARTNER. The General Partner, acting

alone, shall be authorized and empowered to make all decisions and to act on

behalf of the Partnership and be solely responsible for the operation and

management of the business of the Partnership, with all rights and powers

generally conferred by applicable law or necessary, advisable or consistent in

connection therewith, including without limitation to cause the Partnership to

make all decisions, take all actions as may be necessary for the Partnership to

perform fully, and promptly satisfy and discharge each and every obligation or

responsibility of the Partnership.

4.2 SPECIFIC POWERS OF THE GENERAL PARTNER. By way of illustration

of the General Partner's power and authority pursuant to Section 4.1 and not as

a limitation thereon, the General Partner shall have the unilateral right and

power to take any and all of the following actions on behalf of the Partnership:

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(a) to take actions normal or customary for the owner of

businesses similar to that operated by the Partnership;

(b) to perform any and all acts necessary or appropriate in

connection with the business of the Partnership;

(c) to procure and maintain appropriate insurance covering

the property of the Partnership;

(d) to take and hold all property and assets of the

Partnership, real, personal and mixed, in the name of the Partnership;

(e) to execute and deliver deeds, deeds of trust, notes,

leases, subleases, mortgages, bills of sale, financing statements, security

agreements and any and all other instruments necessary or incidental to the

conduct of the business of the Partnership and the financing thereof;

(f) to coordinate all accounting and clerical functions of

the Partnership and employ and contract such accountants, lawyers, managers,

agents and other management or service personnel as may from time to time be

required to carry on the business of the Partnership;

(g) to sell, lease, sublease, assign, convey, transfer,

exchange, grant easements and servitudes or otherwise dispose of all or any part

of the property and assets of the Partnership;

(h) to borrow money, whether on a secured or unsecured

basis, or to refinance, recast, modify or extend any loan to the Partnership

which is secured by the Properties or other assets of the Partnership (this

provision being intended, without limitation, to enable the General Partner to

take all actions necessary to obtain and refinance, recast, modify or extend the

Construction Loan);

(i) to engage in any kind of activity and to perform and

carry out contracts of any kind necessary to, or in connection with, or

incidental to, the development and operation of the Property as may be lawfully

carried on or performed by a limited partnership under the laws of each state in

which the Partnership is then formed, qualified, or does business;

(j) to file on behalf of the Partnership a voluntarily

bankruptcy petition, or an action seeking or consenting to the appointment of a

receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar

official for the Partnership or a substantial portion of its assets, or a

petition or answer seeking reorganization, arrangement, composition,

readjustment, liquidation or similar relief under any statute, law or

regulation, or to take any action in furtherance of the foregoing;

(k) to admit any new Partner to the Partnership;

(l) to enter into a merger, to execute appropriate

documents, including without limitation deeds, in connection with any such sale

or merger, and to collect and administer the proceeds of any such merger; and

(m) to adjust, settle or compromise any claim, obligation,

debt, demand, suit or judgment against the Partnership or any Partner in its

capacity as a Partner, or waive any breach of or default in any monetary or

non-monetary obligation owed to the Company,

4.3. LIMITED PARTNER PARTICIPATION IN MANAGEMENT. The Limited

Partners, as limited partners, shall not participate in the operation or

management of the business of the Partnership, or

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transact any business for or in the name of the Partnership, and the Limited

Partners, as the limited partners, shall not have any right or power to sign for

or bind the Partnership in any manner, except as expressly provided under the

provisions of this Agreement. Any rights of the Limited Partners to consent to

and approve of certain matters under the provisions of this Agreement shall not

be deemed a participation in the operation and management of the business of the

Partnership or the exercise of control of the Partnership business. Except as

may be otherwise expressly provided herein, the Limited Partners shall not have

the right to vote on any matter concerning the management and affairs of the

Partnership.

4.3. PAYMENT OF COSTS AND EXPENSES. The Partnership will be

responsible for paying all costs and expenses of forming and continuing the

Partnership, acquiring the Property, and conducting the business of the

Partnership, including, without limitation, accounting costs, legal expenses and

office supplies. In the event any such costs and expenses are incurred and paid

by the General Partner on behalf of the Partnership, then, except as expressly

provided to the contrary in this Agreement, such Partner shall be entitled to be

reimbursed for such payment so long as such cost or expense was reasonably

necessary and is reasonable in amount. The Partnership may use the proceeds of

any revenues of the Partnership to reimburse a Partner for any such costs and

expenses so paid.

4.4. DEVELOPMENT OF PROJECT. The Partnership shall enter into a

Development Agreement with MHC HomeAmerica, Inc., a Texas corporation ("MHC"),

pursuant to which MHC shall be obligated to complete the development of the

Project by having all lots ready for residential construction (i.e., fully

improved, with all streets and utilities in place and ready for the issuance of

building permits) within twelve (12) months after the date of acquisition of the

Property, subject to extension on a day-for-day basis for documented rain

delays.

4.5. REIMBURSEMENT OF EXPENSES. Upon the closing of the Construction

Loan, the Partnership shall reimburse each Partner (or its Affiliate) for all

amounts advanced by such Partner (or its Affiliates) prior to the formation of

the Partnership in connection with the acquisition of the Property, together

with interest thereon at the rate of 12% from the date advanced until repaid.

4.6. FEES PAYABLE BY THE PARTNERSHIP TO PARTNERS AND AFFILIATES

(a) DEVELOPMENT FEE. Pursuant to the Development Agreement,

MHC shall be paid a general/administrative fee in the total amount of $66,000,

which fee shall be payable in twelve (12) equal monthly installments of $5,500

each, commencing upon the date of acquisition of the Property and continuing

until the expiration of twelve (12) months after the date of acquisition of the

Property. In the event all of the lots are completed and conveyed prior to the

expiration of such twelve (12) month period, then the remaining balance of such

fee shall be payable in a lump sum at the closing of the conveyance of the final

lot. Notwithstanding anything contained herein to the contrary, no further

installments of such fee shall be payable if MHC is no longer diligently and

actively pursuing the completion of the Project.

(b) BROKERAGE COMMISSION. Upon the closing of the Purchase

Agreement, David Carruth (an Affiliate of the Class B Limited Partners) shall

receive a brokerage commission in the amount of $242,000 from the Seller of the

Property.

4.7 OTHER COMPENSATION. Except as provided in this Agreement, no

Partner or its Affiliate shall be entitled to any compensation unless approved

by Partnership Vote.

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4.8. PURCHASE AGREEMENT. Concurrently with the execution of this

Agreement, the Class B Limited Partners shall cause HomeAmerica, Inc. to execute

an assignment in form satisfactory to the General Partner, assigning all of its

rights under the Purchase Agreement, specifically including, without limitation,

all earnest money deposited thereunder, to the Partnership.

4.9. CONSTRUCTION LOAN. In order to fund a portion of the costs of

the acquisition of the Property and the development of the Project, the General

Partner shall use its commercially reasonable efforts to obtain for the

Partnership the Construction Loan. The General Partner shall provide or cause

its Affiliates to provide any guarantees required in connection with the

Construction Loan. Upon the closing of the Construction Loan, the Class A

Limited Partner shall receive a distribution in the amount necessary to reduce

its Capital Account to $2,000,000.

4.10. DEED RESTRICTIONS. The Property will be subject to deed

restrictions to be recorded prior to the conveyance of the first lot, including

(without limitation) a provision that the General Partner or its Affiliates

shall have the right to repurchase, at the original sales price, any lot on

which construction of a residence has not been commenced within twenty-four (24)

months from the date of the original sale of the lot. The repurchase right with

respect to each respective lot shall terminate upon the earlier of (a) the

commencement of construction of a residence on the applicable lot, or (b) the

date on which all of the lots in the Project have been conveyed by the

Partnership to purchasers. At the General Partner's discretion, such period may

be extended subject to the purchasing ability of a specific buyer.

4.11. SALE OF LOTS. The price and other terms and conditions for all

contracts for the sale of lots shall be subject to the prior approval of the

General Partner in its sole discretion, with the exception of the current

offering from Zachary Custom Builders for eleven (11) designated lots (i.e.,

lots 2, 3, 4, and 11 through 18) at an aggregate price of $4,402,000. Without

limiting the foregoing, the Partnership shall not be obligated to pay any

commissions on lot sales without the prior approval of the General Partner in

each instance. No Partner or its Affiliates shall be entitled to any commissions

for lot sales.

ARTICLE VI.

RIGHTS AND POWERS OF PARTNERS

5.1. LIMITATION OF LIABILITY.

(a) LIMITATION ON LIABILITY OF LIMITED PARTNERS. The Limited

Partners shall not be bound by, or personally liable for, obligations or

liabilities of the Partnership to outside third parties beyond the amount of

their Capital Contributions to the Partnership, and the Limited Partners shall

not be required to contribute any capital to the Partnership for any obligations

to third parties in excess of the Capital Contributions actually made under

Sections 3.1 and 3.2 hereof.

(b) LIMITATION ON LIABILITY OF GENERAL PARTNER. The General

Partner (including its members, officers, directors, agents, employees and

representatives) shall not be liable or responsible in damages or otherwise to

the Partnership or any Partner for any liability or loss relating to the

performance or nonperformance of any act concerning the business of the

Partnership, provided the General Partner was not guilty of gross negligence or

willful misconduct.

5.2. INDEMNIFICATION.

(a) The General Partner (including its members, officers,

directors, agents, employees and representatives) shall be indemnified by the

Partnership to the fullest extent permitted by law, against any losses,

judgments, liabilities, expenses and amounts paid in settlement of any claims

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sustained by it or any of them in connection with the Partnership, provided that

(1) the General Partner has determined, in good faith, that such course of

conduct was in, and not opposed to, the best interests of the Partnership and

such liability or loss was not the result of gross negligence or willful

misconduct, or a material breach of this Agreement on the part of the General

Partner or such person, and (2) any such indemnification will only be

recoverable from the assets of the Partnership and the Limited Partners shall

not have any liability on account thereof. All rights to indemnification

permitted herein and payment of associated expenses shall not be affected by the

dissolution or other cessation of the existence of the General Partner, or the

withdrawal, adjudication of bankruptcy or insolvency of the General Partner.

(b) Expenses incurred in defending a threatened or pending

civil, administrative or criminal action, suit or proceeding against any person

who may be entitled to indemnification pursuant to this Section 6.2 may be paid

by the Partnership in advance of the final disposition of such action, suit or

proceeding, if (1) the legal action relates to the performance of duties or

services by such person on behalf of the Partnership, (2) the legal action is

initiated by a third party who is not a Limited Partner, and (3) such person

undertakes to repay the advanced