Exhibit 10.1

 

AGREEMENT OF LIMITED PARTNERSHIP

 

OF

 

ASSET INVESTORS OPERATING PARTNERSHIP, L.P.

 

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As of

April 30, 1997

 

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TABLE OF CONTENTS

 

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ARTICLE I

    

Definitions; Etc.

   3

1.1

  

Definitions

   3

1.2

  

Exhibit, Etc.

   17

ARTICLE II

    

Formation

   17

2.1

  

Formation

   17

2.2

  

Name

   18

2.3

  

Character of the Business

   19

2.4

  

Location of the Principal Place of Business

   20

2.5

  

Registered Agent and Registered Office

   20

ARTICLE III

    

Term

   21

3.1

  

Commencement

   21

3.2

  

Dissolution

   21

ARTICLE IV

    

Contribution to Capital

   21

4.1

  

General Partner Capital Contributions

   21

4.2

  

Limited Partner Capital Contributions

   23

4.3

  

No Obligation to Make Further Capital Contributions; No Third Party Beneficiary

   24

4.4

  

No Interest; No Return

   24

4.5

  

Capital Accounts

   25

4.6

  

Additional Funds

   29

ARTICLE V

    

Representations and Warranties

   31

 

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5.1

  

Representation and Warranties by the General Partner

   31

5.2

  

Representation and Warranties by the Limited Partners

   33

5.3

  

Acknowledgment by Each Partner

   33

ARTICLE VI

    

Allocations, Distributions and Other Tax and Accounting Matters

   34

6.1

  

Allocations

   34

6.2

  

Distributions

   43

6.3

  

Books of Account

   44

6.4

  

Reports

   45

6.5

  

Audits

   46

6.6

  

Tax Returns and Elections

   46

6.7

  

Tax Matters Partner

   47

6.8

  

Withholding

   48

ARTICLE VII

    

Rights, Duties and Restrictions of the General Partner

   49

7.1

  

Expenditures by Partnership

   49

7.2

  

Powers and Duties of General Partner

   50

7.3

  

Amendment of Agreement

   56

7.4

  

General Partner Participation

   57

7.5

  

Proscriptions

   57

7.6

  

Waiver and Indemnification

   58

7.7

  

Limitation of Liability of Directors, Shareholders and Officers of the General
Partner

   59

ARTICLE VIII

    

Dissolution, Liquidation and Winding-Up

   60

8.1

  

Accounting

   60

8.2

  

Distribution on Dissolution

   60

8.3

  

Sale of Partnership Assets

   61

8.4

  

Distributions in Kind

   62

8.5

  

Documentation of Liquidation

   62

8.6

  

Liability of the Liquidating Agent

   62

 

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ARTICLE IX

    

Transfer of Partnership Interests and Related Matters

   63

9.1

  

General Partner Transfers and Deemed Transfers

   63

9.2

  

Transfers by Limited Partners

   65

9.3

  

Issuance of Additional Partnership Units

   67

9.4

  

Restrictions on Transfer, Pledge or Issuance

   68

ARTICLE X

    

Right and Obligations of the Limited Partners

   69

10.1

  

No Participation in Management

   69

10.2

  

Bankruptcy of a Limited Partner

   69

10.3

  

No Withdrawal

   70

10.4

  

Duties and Conflicts

   70

ARTICLE XI

    

Grant of Rights to the Limited Partners

   71

11.1

  

Grant of Rights

   71

11.2

  

Limitation on Exercise of Rights

   72

11.3

  

Computation of Purchase Price; Form of Payment

   73

11.4

  

Closing

   73

11.5

  

Closing Deliveries

   74

11.6

  

Term of Rights

   74

11.7

  

Covenants of the General Partner

   74

11.8

  

Limited Partners’ Covenants

   75

ARTICLE XII

    

General Provisions

   76

12.1

  

Investment Representations

   76

12.2

  

Notices

   77

12.3

  

Successors

   78

12.4

  

Liability of Limited Partners

   78

12.5

  

Effect and Interpretation

   78

12.6

  

Counterparts

   79

12.7

  

Partners Not Agents

   79

12.8

  

Entire Understanding; Etc.

   79

12.9

  

Severability

   79

12.10

  

Trust Provision

   79

12.11

  

Pronouns and Headings

   80

 

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12.12

  

Assurances

   80

12.13

  

Title Holder

   80

12.14

  

Power of Attorney

   80

 

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EXHIBITS

    

A

   Contributed General Partner Property    83

B

  

Initial Limited Partners

Contributed Limited Partner Property

   84

C

   Form of Exercise Notice    85

 

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AGREEMENT OF LIMITED PARTNERSHIP

OF

ASSET INVESTORS OPERATING PARTNERSHIP, L.P.

 

THIS AGREEMENT OF LIMITED PARTNERSHIP, dated as of April 30, 1997, is made by
and among ASSET INVESTORS CORPORATION, a Maryland corporation having an office
at 3600 South Yosemite Street, Suite 1000, Denver, Colorado 80237, as general
partner (the “General Partner”). Terry Considine, Thomas Rhodes and HFIC Inc., a
Missouri corporation, as initial limited partners (each of Terry Considine,
Thomas Rhodes and HFIC Inc., an “Initial Limited Partner” and together, the
“Initial Limited Partners”), and those parties who may become parties to this
Agreement as limited partners from time to time in accordance with the terms of
this Agreement. Capitalized terms used herein but not otherwise defined shall
have the meanings given them in Section 1.1.

 

W I T N E S S E T H:

 

WHEREAS, the General Partner currently qualifies as a REIT;

 

WHEREAS, Asset Investors Operating Partnership, L.P. (the “Partnership”), was
formed on April 28, 1997 as a limited partnership pursuant to the Act, and the
Certificate of Limited Partnership reflecting the foregoing was filed in the
appropriate offices of the State of Delaware on April 28, 1997;

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WHEREAS, the General Partner desires to conduct its current and future business
through the Partnership;

 

WHEREAS, in furtherance of the foregoing, the General Partner desires to
contribute certain of its Property and other assets to the Partnership;

 

WHEREAS, in exchange for the General Partner’s contributions of Property and
other assets, the parties desire that the Partnership issue Partnership Units to
the General Partner in accordance with the terms of this Agreement;

 

WHEREAS, each of the Initial Limited Partners agrees to contribute certain of
his or its property to the Partnership in exchange for Partnership Units in
accordance with the terms of this Agreement;

 

WHEREAS, the parties are considering that, in furtherance of the Partnership’s
business, the Partnership may acquire Property and other assets from time to
time by means of the contribution of such Property or other assets to the
Partnership by the owners thereof in exchange for Partnership Units; and

 

WHEREAS, the parties hereto wish to establish herein their respective rights and
obligations in connection with all of the foregoing and certain other matters.

 

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NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, the parties hereto, intending
legally to be bound, hereby agrees as follows:

 

ARTICLE I

 

Definitions; Etc.

 

1.1 Definitions. Except as otherwise herein expressly provided, the following
terms and phrases shall have the meanings set forth below:

 

“Accountants” shall mean the firm or firms of independent certified public
accountants selected by the General Partner from time to time on behalf of the
Partnership to audit the books and records of the Partnership and to prepare
statements and reports in connection therewith.

 

“Act” shall mean the Revised Uniform Limited Partnership Act as enacted in the
State of Delaware, as the same may hereafter be amended from time to time, or
any successor statute.

 

“Administrative Expenses” shall mean (i) all administrative and operating costs
and expenses incurred by the Partnership and (ii) all administrative and
operating costs and expenses and accounting and legal expenses incurred by the
General Partner on behalf or for the benefit of the Partnership.

 

“Affiliate” shall mean, with respect to any Partner (or with respect to any
other Person the Affiliates of whom are relevant for purposes of any of the
provisions of this Agreement), (i) any member of the Immediate Family of such
Partner or Person; (ii) any partner, trustee, director, officer, beneficiary or
shareholder of such Partner or Person; (iii) any trustee or trust for the
benefit of any Person referred to in the preceding clauses (i) or (ii); or (iv)
any Entity which,

 

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directly or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, such Partner or any Person
referred to in the preceding clauses (i) through (iii).

 

“Affiliate Financing” shall mean financing or refinancing obtained from a
Partner or an Affiliate of a Partner by the Partnership.

 

“Agreement” shall mean this Agreement of Limited Partnership, as amended,
modified, supplemented or restated from time to time, as the context requires.

 

“Bankruptcy” shall mean, with respect to any Partner, (i) the commencement by
such Partner of any proceeding seeking relief under any provision or chapter of
the federal Bankruptcy Code or any other federal or state law relating to
insolvency, bankruptcy or reorganization, (ii) an adjudication that such Partner
is insolvent or bankrupt, (iii) the entry of an order for relief under the
federal Bankruptcy Code with respect to such Partner, (iv) the filing of any
such petition or the commencement of any such case or proceeding against such
Partner, unless such petition and the case or proceeding initiated thereby are
dismissed within ninety (90) days from the date of such filing, (v) the filing
of an answer by such Partner admitting the allegations of any such petition,
(vi) the appointment of a trustee, receiver or custodian for all or
substantially all of the assets of such Partner unless such appointment is
vacated or dismissed within ninety (90) days from the date of such appointment
but not less than five (5) days before the proposed sale of any assets of such
Partner, (vii) the execution by such Partner of a general assignment for the

 

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benefit of creditors, (viii) the convening by such Partner of a meeting of its
creditors, or any class thereof, for purposes of effecting a moratorium upon or
extension or composition of its debts, (ix) the levy, attachment, execution or
other seizure of substantially all of the assets of such Partner where such
seizure is not discharged within thirty (30) days thereafter, or (x) the
admission by such Partner in writing of its inability to pay its debts as they
mature or that it is generally not paying its debts as they become due.

 

“Book Value Per Share” on any date shall mean the value obtained by (i)
subtracting the sum of intangible assets, total liabilities and the par value of
preferred stock from total assets, all as determined from the most recent
balance sheet of the General Partner prepared in accordance with GAAP and (ii)
dividing the number obtained in (i) by the number of Shares.

 

“Capital Account” shall have the meaning set forth in Section 4.5(a).

 

“Capital Contribution” shall mean, with respect to any Partner, the amount of
cash and the initial Gross Asset Value of any asset (other than cash)
contributed to the Partnership in exchange for Partnership Units (net of
liabilities to which such asset is subject).

 

“Certificate” shall mean the Certificate of Limited Partnership establishing the
Partnership, as filed with the office of the Secretary of State of the State of
Delaware on April 28, 1997, as the same may be amended or restated from time to
time in accordance with the terms of this Agreement and the Act.

 

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“Charter” shall mean the articles of incorporation of the General Partner and
all amendments, supplements and restatements thereof.

 

“Closing Price” on any date shall mean the last sale price, regular way, of the
Shares or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, of the Shares in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Shares are not then listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Shares are listed or admitted to trading or, if the Shares are not
then listed or admitted to trading on any national securities exchange, the last
quoted price, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System for the Shares or, if
such system is no longer in use, the principal other automated quotations system
that may then be in use or, if the Snares are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Shares who is selected from
time to time by the Board of Directors of the General Partner.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended, or any
corresponding provisions of succeeding law.

 

“Computation Date” shall have the meaning set forth in Section 11.3.

 

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“Consent of the Limited Partners” shall mean the written consent of a
Majority-In-Interest of the Limited Partners, which consent shall be obtained
prior to the taking of any action for which it is required by this Agreement and
may be given or withheld by a Majority-In-Interest of the Limited Partners,
unless otherwise expressly provided herein, in their sole and absolute
discretion. Whenever the Consent of the Limited Partners is sought by the
General Partner, the request for such consent, outlining in reasonable detail
the matter or matters for which such consent is being requested, shall be
submitted to all of the Limited Partners, and each Limited Partner shall have at
least fifteen (15) days from the date such notice is given in accordance with
Section 12.2 to act upon such request.

 

“Contributed General Partner Property” shall have the meaning set forth in
Section 4.1(a).

 

“Contributed Limited Partner Property” shall mean (i) in the case of each
Initial Limited Partner, all of the property and assets described on Exhibit B
next to the name of such Initial Limited Partner contributed to the Partnership,
and (ii) in the case of any Limited Partner, the property or other assets
contributed to the Partnership from time to time in exchange for Partnership
Units pursuant to Contribution Agreements.

 

“Contribution Agreements” shall mean agreements between the Partnership and one
or more Persons who will become Limited Partners in accordance with the terms of
this Agreement, to be entered into from time to time, pursuant to which, among
other things, such Persons, directly or indirectly, will contribute

 

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Contributed Limited Partner Property to the Partnership in exchange for
Partnership Units.

 

“Contribution Date” shall mean, with respect to any property or other assets,
the date such property or other assets are contributed to the capital of the
Partnership.

 

“Control” shall mean the ability, whether by the direct or indirect ownership of
shares or other equity interests, by contract or otherwise, to elect a majority
of the directors of a corporation, to select the managing partner of a
partnership, or otherwise to select, or have the power to remove and then
select, a majority of those Persons exercising governing authority over an
Entity. In the case of a limited partnership, the sole general partner, all of
the general partners to the extent each has equal management control and
authority, or the managing general partner or managing general partners thereof
shall be deemed to have control of such partnership and, in the case of a trust,
any trustee thereof or any Person having the right to select any such trustee
shall be deemed to have control of such trust.

 

“Current Per Share Market Price” on any date shall mean the average of the
Closing Price for the five consecutive Trading Days ending on such date.

 

“Deemed Partnership Unit Value” as of any date shall mean the greater of (i)
Book Value Per Share or (ii) the Current Per Share Market Price as of the
Trading Day immediately preceding such date; provided, however, that Deemed
Partnership Unit Value shall be adjusted as described in Section 11.7(d) in the
event

 

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of any stock dividend, stock split, stock distribution or similar transaction
affecting or with respect to the Shares.

 

“Depreciation” shall mean, for each Partnership Fiscal Year or other period, an
amount equal to the depreciation, amortization, or other cost recovery deduction
allowable under the Code with respect to a Partnership asset for such year or
other period, except that if the Gross Asset Value of a Partnership asset
differs from its adjusted basis for federal income tax purposes at the beginning
of such year or other period, Depreciation shall be an amount which bears the
same ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization or other cost recovery deduction for such year or
other period bears to such beginning adjusted tax basis; provided, however, that
if the federal income tax depreciation, amortization, or other cost recovery
deduction for such year is zero, Depreciation shall be determined with reference
to such beginning Gross Asset Value using any reasonable method selected by the
General Partner.

 

“Directors” shall mean the Board of Directors of the General Partner.

 

“Entity” shall mean any general partnership, limited partnership, limited
liability company, limited liability partnership, corporation, joint venture,
trust, business trust, cooperative or association.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time (or any corresponding provisions of succeeding laws).

 

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“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

 

“Exercise Notice” shall have the meaning set forth in Section 11.1.

 

“GAAP” shall mean generally accepted accounting principles, consistently applied
over prior periods.

 

“General Partner” shall mean Asset Investors Corporation, a Maryland
corporation, its duly admitted successors and assigns and any other Person who
is a general partner of the Partnership at the time of reference thereto.

 

“Gross Asset Value” shall have the meaning set forth in Section 4.5(b).

 

“Gross Income” shall mean the income of the Partnership determined pursuant to
Section 61 of the Code before deduction of items of expense or deduction.

 

“Immediate Family” shall mean, with respect to any Person, such Person’s spouse,
parents, parents-in-law, descendants by blood or adoption, nephews, nieces,
brothers, sisters, brothers-in-law, sisters-in-law and children-in-law.

 

“Initial Limited Partner” shall mean each of Terry Considine, Thomas Rhodes and
HFIC Inc. or their duly admitted successors or assigns.

 

“Institutional Lender” shall mean a commercial bank or trust company, a savings
and loan association or an insurance company.

 

“Lien” shall mean any liens, security interests, mortgages, deeds of trust,
charges, claims, encumbrances, restrictions, pledges, options, rights of first
offer or first refusal and any other rights or interests of others of any kind
or nature, actual or contingent, or other similar encumbrances of any nature
whatsoever.

 

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“Limited Partners” shall mean those Persons who become parties to this Agreement
from time to time as limited partners (including each of the Initial Limited
Partners), their permitted successors or assigns as limited partners hereof,
and/or any Person who, at the time of reference thereto, is a limited partner of
the Partnership.

 

“Liquidating Agent” shall mean such Person as is selected as the Liquidating
Agent hereunder by the General Partner, which Person may include the General
Partner or an Affiliate of the General Partner, provided such Liquidating Agent
agrees in writing to be bound by the terms of this Agreement. The Liquidating
Agent shall be empowered to give and receive notices, reports and payments in
connection with the dissolution, liquidation and/or winding-up of the
Partnership and shall hold and exercise such other rights and powers as are
necessary or required to permit all parties to deal with the Liquidating Agent
in connection with the dissolution, liquidation and/or winding-up of the
Partnership.

 

“Losses” shall have the meaning set forth in Section 6.1(a).

 

“Majority-In-Interest of the Limited Partners” shall mean Limited Partner(s) who
hold in the aggregate more than fifty percent (50%) of the Partnership Units
then held by all the Limited Partners, as a class (but excluding any Partnership
Units held by the General Partner).

 

“Minimum Gain” shall have the meaning set forth in Section 6.1(d)(i).

 

“Minimum Gain Chargeback” shall have the meaning set forth in Section 6.1(d)(i).

 

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“Net Financing Proceeds” shall mean the cash proceeds received by the
Partnership in connection with any borrowing by or on behalf of the Partnership
(whether or not secured), or distributed to the Partnership in respect of any
such borrowing by any Subsidiary Entity, after deduction of all costs and
expenses incurred by the Partnership in connection with such borrowing, and
after deduction of that portion of such proceeds used to repay any other
indebtedness of the Partnership, or any interest or premium thereon.

 

“Net Operating Cash Flow” shall mean, with respect to any fiscal period of the
Partnership, the aggregate amount of all cash received by the Partnership from
any source for such fiscal period (including Net Sale Proceeds and Net Financing
Proceeds), less the aggregate amount of all expenses or other amounts paid with
respect to such period and such additional cash reserves as of the last day of
such period as the General Partner deems necessary for any capital or operating
expenditure permitted hereunder.

 

“Net Sale Proceeds” shall mean the cash proceeds received by the Partnership in
connection with a sale of any asset by or on behalf of the Partnership or a sale
of any asset by or on behalf of any Subsidiary Entity, after deduction of any
costs or expenses incurred by the Partnership, or payable specifically out of
the proceeds of such sale (including, without limitation, any repayment of any
indebtedness required to be repaid as a result of such sale or which the General
Partner elects to repay out of the proceeds of such sale, together with accrued
interest and

 

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premium, if any, thereon and any sales commissions or other costs and expenses
due and payable to any Person in connection with a sale).

 

“Nonrecourse Liabilities” shall have the meaning set forth in Section 6.1(d)(i).

 

“Offered Units” shall mean the Partnership Units of Limited Partner identified
in an Exercise Notice which, pursuant to the exercise of Rights, are to be
acquired by the General Partner under the terms of this Agreement.

 

“Off Market Shares” shall mean any Shares issued by the General Partner in
connection with the exercise of any warrants to issue Shares or in connection
with an issuance under any stock option, dividend reinvestment or like plan,
whether now existing or adopted after the date of this Agreement.

 

“Partner Nonrecourse Debt” shall have the meaning set forth in Section
6.1(d)(ii).

 

“Partner Nonrecourse Debt Minimum Gain” shall have the meaning set forth in
Section 6.1(d)(ii).

 

“Partner Nonrecourse Deduction” shall have the meaning set forth in Section
6.1(d)(ii).

 

“Partners” shall mean the General Partner and the Limited Partners or any Person
who is a general or limited partner of the Partnership at the time of reference
thereto.

 

“Partnership” shall mean the limited partnership constituted hereby, as such
limited partnership may from time to time be constituted.

 

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“Partnership Fiscal Year” shall mean the calendar year.

 

“Partnership Minimum Gain” shall have the meaning set forth in Section
1.704-2(b)(2) of the Regulations.

 

“Partnership Units” shall mean interests in the Partnership which entitle a
Partner to the allocations (and each item thereof) specified in Section 6.1 and
all distributions from the Partnership, and its rights of management, consent,
approval or participation, if any, as provided in this Agreement. Each Partner’s
percentage of ownership interest in the Partnership shall be determined by
dividing the number of Partnership Units then owned by each Partner by the total
number of Partnership Units then outstanding. The number of Partnership Units to
be held by each Partner and the percentage interest of each Partner in the
Partnership will be recorded on the books and records of the Partnership, which
record, absent manifest error, shall be binding on all Persons.

 

“Person” shall mean any individual or Entity.

 

“Pledge” shall mean a pledge or grant of a mortgage, security interest, lien or
other encumbrance in respect of a Partnership Unit.

 

“Profits” shall have the meaning set forth in Section 6.1(a).

 

“Property” or “Properties” shall mean any ownership interest in residential
mortgage loans and residential mortgage loan securitizations (rated or unrated)
and any other property within the scope of the investment policies of the
General Partner.

 

“Purchase Price” shall have the meaning set forth in Section 11.3.

 

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“Registered Agent” shall have the meaning set forth in Section 2.5.

 

“Registered Office” shall have the meaning set forth in Section 2.5.

 

“Registration Rights Agreement” shall mean any registration rights agreement
entered into between the General Partner and certain Limited Partners.

 

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

 

“REIT” shall mean a real estate investment trust as defined in Section 856 of
the Code, or the corresponding provision of subsequent law.

 

“REIT Expenses” shall mean all (i) costs and expenses relating to the continuity
of existence of the General Partner and its subsidiaries, including taxes, fees
and assessments associated therewith, and any and all costs, expenses, salaries
or fees payable to any director, officer, agent, attorney, trustee or employee
of the General Partner or any of such subsidiaries, (ii) costs and expenses
associated with the preparation and filing of any periodic reports by the
General Partner under federal, state or local laws or regulations, including tax
returns and filings with the SEC and any stock exchanges on which the Shares are
listed, (iii) costs and expenses associated with compliance by the General
Partner with laws, rules and regulations promulgated by any regulatory body,
including the SEC, (iv) costs and expenses associated with any 401(k) plan,
pension plan, incentive plan, bonus plan or other plan providing for
compensation for the employees of the General Partner and (v) all operating,
administrative and other costs incurred by the General Partner (including

 

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accountant’s fees, office rent and other administrative expenses of the General
Partner’s office, but excluding costs of any repurchase by the General Partner
of any of its securities).

 

“REIT Requirements” shall mean all actions or omissions as may be necessary
(including making appropriate distributions from time to time) to permit the
General Partner to continue to qualify as a REIT.

 

“Rights” shall have the meaning set forth in Section 11.1.

 

“SEC” shall mean the Securities and Exchange Commission.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

 

“Shares” shall mean the shares of common stock, par value $.01 per share, of the
General Partner.

 

“Subsidiary Entity” shall mean any Entity in which the Partnership owns a direct
or indirect equity interest.

 

“Substituted Limited Partner” shall mean a Limited Partner admitted to the
Partnership as such as provided in Section 9.2.

 

“Tax Matters Partner” shall have the meaning set forth in Section 6.7.

 

“Third Patty” or “Third Parties” shall mean a Person or Persons who is or are
neither a Partner or Partners nor an Affiliate or Affiliates of a Partner or
Partners.

 

“Third Party Financing” shall mean financing or refinancing obtained from a
Third Party by the Partnership.

 

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“Trading Day” shall mean a day on which the principal national securities
exchange on which the Shares are listed or admitted to trading is open for the
transaction of business or, if the Shares are not listed or admitted to trading
on any national securities exchange, shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.

 

“Transfer” means any assignment, sale, transfer or other disposition (other than
a Pledge), whether voluntary or involuntary, or by operation of law.

 

1.2 Exhibit, Etc. References to “Exhibit” are, unless otherwise specified, to
one of the Exhibits attached to this Agreement, and references to an “Article”
or a “Section” are, unless otherwise specified, to one of the Articles or
Sections of this Agreement. Each Exhibit attached hereto and referred to herein
is hereby incorporated herein by reference.

 

ARTICLE II

 

Formation

 

2.1 Formation. The Partnership was formed as a limited partnership pursuant to
the provisions of the Act, and all other pertinent laws of the State of
Delaware, for the purposes and upon the terms and conditions hereinafter set
forth. The Partners agree that the rights and liabilities of the Partners shall
be as provided in the Act except as otherwise herein expressly provided.
Promptly upon the execution and delivery hereof, the General Partner shall cause
each notice,

 

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instrument, document or certificate as may be required by applicable law and
which may be necessary to enable the Partnership to continue to conduct its
business, and to own its properties, under the Partnership name, to be filed or
recorded in all appropriate public offices. Upon request of the General Partner,
the Limited Partners shall execute any assumed or fictitious name certificate or
certificates required by law to be filed in connection with the Partnership. The
General Partner shall cause the execution and delivery of such additional
documents and shall perform such additional acts consistent with the terms of
this Agreement as may be necessary to comply with the requirements of law for
the formation, qualification and operation of a limited partnership under the
laws of the State of Delaware (it being understood that the General Partner
shall be required to provide the Limited Partners with copies of any amended
Certificates of Limited Partnership required to be filed under such laws only
upon request) and for the qualification or reformation and operation of a
limited partnership in each other jurisdiction in which the Partnership shall
conduct business.

 

2.2 Name. The business of the Partnership shall be conducted under the name of
Asset Investors Operating Partnership, L.P. or such other name as the General
Partner may select, and all transactions of the Partnership, to the extent
permitted by applicable law, shall be carried on and completed in such name (it
being understood that the Partnership may adopt assumed or fictitious names in
certain jurisdictions); provided, however, that the General Partner may not
select the name (or any derivation thereof) of any Limited Partner without the
prior consent of such Limited Partner.

 

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2.3 Character of the Business. The purpose of the Partnership shall be to
acquire, hold, own, sell, transfer, encumber, convey, exchange and otherwise
dispose of or deal with Properties; to acquire, hold, own, develop, redevelop,
construct, improve, maintain, operate, sell, lease, transfer, encumber, convey,
exchange and otherwise dispose of or deal with real and personal property and
interests therein of all kinds; to deal with any other assets and to undertake
all activities as may be permitted for a REIT pursuant to the provisions of
Section 856, et seq. of the Code; to acquire, hold, own, sell, transfer,
encumber, convey, exchange and otherwise dispose of or deal with interests in
any Entity engaged in any of the foregoing activities; to undertake such other
activities as may be necessary, advisable, desirable or convenient to the
business of the Partnership, and to engage in such other ancillary activities as
shall be necessary or desirable to effectuate the foregoing purposes. The
Partnership shall have all powers necessary or desirable to accomplish the
purposes enumerated. In connection with the foregoing, but subject to all of the
terms, covenants, conditions and limitations contained in this Agreement and any
other agreement entered into by the Partnership, the Partnership shall have full
power and authority to enter into, perform and carry out contracts of any kind,
to borrow or lend money and to issue evidences of indebtedness, whether or not
secured by mortgage, trust deed, pledge or other Lien, and, directly or
indirectly, to acquire, hold, own, develop, redevelop, construct, improve,
maintain, operate, sell, lease, transfer, encumber, convey, exchange and
otherwise dispose of or deal with additional Properties or other assets
necessary or useful in connection with its

 

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business. Notwithstanding anything to the contrary set forth in this Section
2.3, the Partnership shall not engage in any activity in which a REIT is not
permitted to engage pursuant to Section 856 et seq. of the Code.

 

2.4 Location of the Principal Place of Business. The location of the principal
place of business of the Partnership shall be at 3600 South Yosemite Street,
Suite 1000, Denver, Colorado 80237, or such other location as shall be selected
from time to time by the General Partner in its sole discretion; provided,
however, that the General Partner shall promptly notify the Limited Partners of
any change in the location of the principal place of business of the
Partnership.

 

2.5 Registered Agent and Registered Office. The Registered Agent of the
Partnership shall be The Prentice-Hall Corporation System, Inc. or such other
Person as the General Partner may select in its sole discretion. The Registered
Office of the Partnership shall be c/o The Prentice-Hall Corporation System,
Inc., 32 Loockerman Square, Suite L-100, Dover, Delaware 19901, County of Kent,
or such other location as the General Partner may select in its sole and
absolute discretion. The General Partner shall promptly notify the Limited
Partners of any change in the Registered Agent or Registered Office of the
Partnership.

 

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ARTICLE III

 

Term

 

3.1 Commencement. The Partnership commenced business as a limited partnership on
April 28, 1997 upon the filing of the Certificate with the Secretary of State of
the State of Delaware.

 

3.2 Dissolution. The Partnership shall continue until dissolved and terminated
upon the occurrence of the earliest of the following events:

 

(a) the dissolution, termination, retirement, resignation, or Bankruptcy of any
General Partner, unless the Partnership is continued as provided in Section 9.1;

 

(b) the election to dissolve the Partnership made in writing by the General
Partner;

 

(c) the sale or other disposition of all or substantially all the assets of the
Partnership; or

 

(d) the dissolution of the Partnership as required by operation of law.

 

ARTICLE IV

 

Contributions to Capital

 

4.1 General Partner Capital Contributions.

 

(a) As of the date hereof, the General Partner shall contribute, or cause to be
contributed, to the Partnership, all of the Property and

 

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assets described on Exhibit A (the “Contributed General Partner Property”). To
the extent the Contributed General Partner Property was financed by borrowings
made by the General Partner or is otherwise subject to any liability, the
Partnership shall take subject to or assume the obligations of the General
Partner with respect to such indebtedness (or such other liability) concurrently
with the contribution by the General Partner thereof (or, if such assumption is
not possible, the Partnership shall obligate itself to the General Partner in an
amount and on terms equal to such indebtedness or other liability). In exchange
for the Contributed General Partner Property, the Partnership shall issue to the
General Partner the number of Partnership Units set forth on Exhibit A.

 

(b) At any time, and from time to time, the General Partner may contribute to
the capital of the Partnership, in exchange for Partnership Units, additional
Property or other assets (including cash) which the General Partner in good
faith determines are desirable to further the purposes or business of the
Partnership. Except as otherwise provided in the succeeding sentence, in the
event Partnership Units are issued by the Partnership to the General Partner in
accordance with this Section 4.1(b), the number of Partnership Units so issued
shall be determined by dividing (i) the aggregate amount of cash (in the case of
contributed assets consisting of cash) plus the Gross Asset Value (net of
liabilities secured by such contributed asset that the Partnership assumes or
takes subject to) of the Property or other assets so contributed as of the
Contribution Date (in the case of contributed assets not consisting of cash) by
(ii) the Deemed Partnership Unit Value; provided, that to the

 

22

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extent such contributed asset was financed by borrowings made by the General
Partner or is otherwise subject to any liability, the Partnership shall take
subject to or assume the obligations of the General Partner with respect to such
indebtedness (or other liability) concurrently with the contribution by the
General Partner of such asset (or, if such assumption is not possible, the
Partnership shall obligate itself to the General Partner in an amount and on
terms equal to such indebtedness or other liability). In the event Partnership
Units are issued by the Partnership to the General Partner in exchange for the
contribution of cash that was acquired by the General Partner in connection with
the issuance of Off Market Shares, the number of Partnership Units so issued by
the Partnership shall be equal to the number of Off Market Shares issued by the
General Partner.

 

4.2 Limited Partner Capital Contributions.

 

(a) Each Initial Limited Partner shall contribute, as a contribution to the
capital of the Partnership, the Property and other assets described on Exhibit B
next to the name of such Initial Limited Partner. In exchange for such
Contributed Limited Partner Property to be contributed by the Initial Limited
Partners, the Partnership shall issue to each Initial Limited Partner the number
of Partnership Units set forth on Exhibit B next to the name of each such
Initial Limited Partner.

 

(b) At such time as additional Limited Partners are admitted to the Partnership
or additional Partnership Units are issued to Limited Partners pursuant to
Section 9.3, such Limited Partners shall contribute, or cause to be

 

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contributed, as their initial (or additional, as the case may be) contribution
to the capital of the Partnership, in exchange for Partnership Units, Property
or other assets as shall be set forth in, and in accordance with and subject to
the terms and conditions of, Contribution Agreements.

 

4.3 No Obligation to Make Further Capital Contributions; No Third Party
Beneficiary. Except as set forth above, no Partner shall have any obligation to
make contributions to the capital of the Partnership. 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 contributions to the capital of the
Partnership 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 contributions to the
capital of 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.

 

4.4 No Interest; No Return. No Partner shall be entitled to interest on its
Capital Contribution or on such Partner’s Capital Account. Except as provided
herein or by law, no Partner shall have any right to withdraw any part of its

 

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Capital Account or to demand or receive the return of its Capital Contribution
from the Partnership.

 

4.5 Capital Accounts.

 

(a) Each Partner, including a substitute Partner who shall pursuant to the
provisions of this Agreement acquire a Partnership Unit, shall have a separate
capital account maintained by the Partnership (a “Capital Account”). The Capital
Account of each Partner shall be:

 

(i) credited with: the amount of cash contributed by such Partner to the capital
of the Partnership; the initial Gross Asset Value (net of liabilities secured by
such contributed asset that the Partnership assumes or takes subject to) of any
other asset contributed by such Partner to the capital of the Partnership; the
amount of unsecured liabilities of the Partnership assumed by such Partner; such
Partner’s distributive share of Profits; and any other items in the nature of
income or gain that are allocated to such Partner pursuant to Section 6.1, but
excluding tax items described in Regulations Section 1.704-1(b)(4)(i); and

 

(ii) debited with: the amount of cash distributed to such Partner pursuant to
the provisions of this Agreement; the Gross Asset Value (net of liabilities
secured by such distributed asset that such Partner assumes or takes subject to)
of any Partnership asset distributed to such Partner pursuant to any provision
of this Agreement; the amount of unsecured liabilities of such Partner assumed
by the Partnership; such Partner’s

 

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distributive share of Losses; in the case of the General Partner, payments of
REIT Expenses by the Partnership; and any other items in the nature of expenses
or losses that are allocated to such Partner pursuant to Section 6.1, but
excluding tax items described in Regulations Section 1.704-1(b)(4)(i).

 

In the event that any or all of a Partner’s Partnership Units are transferred
within the meaning of Regulations Section 1.704-1(b)(2)(iv)(l), the transferee
thereof shall succeed to the Capital Account of the transferor to the extent
that it relates to the Partnership Units so transferred.

 

In the event the Gross Asset Values of Partnership assets are adjusted pursuant
to Section 4.5(b)(ii), the Capital Accounts of the Partners shall be adjusted to
reflect the aggregate net adjustments as if the Partnership sold all of its
property for its fair market values and recognized gain or loss for federal
income tax purposes equal to the amount of such aggregate net adjustment.

 

The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Section
1.704-1(b) of the Regulations, and shall be interpreted and applied as provided
in the Regulations.

 

(b) The term “Gross Asset Value” or “Gross Asset Values” means, with respect to
any asset of the Partnership, such asset’s adjusted basis for federal income tax
purposes, except as follows:

 

(i) the initial Gross Asset Value of any asset contributed by a Partner to the
Partnership shall be (A) in the case of any asset

 

26

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contributed by the General Partner and described on Exhibit A, the number of
Partnership Units issued therefor multiplied by the greater of Book Value Per
Share or the Current Per Share Market Price as of the Trading Day immediately
preceding the Contribution Date, plus the amount of any liabilities assumed by
the Partnership in connection with such contribution, or to which the
contributed asset is otherwise subject (which Gross Asset Value is set forth on
Exhibit A), (B) in the case of any asset contributed by an Initial Limited
Partner and described on Exhibit B, the Gross Asset Value as set forth on
Exhibit B, (C) in the case of any asset contributed after the date hereof by a
Limited Partner, the gross fair market value of such asset (as reasonably
determined by the General Partner) and (D) in the case of any other asset
contributed after the date hereof by the General Partner, (X) if such asset was
acquired by the General Partner after the date hereof directly or indirectly in
exchange for the issuance of its Shares, the greater of Book Value Per Share or
the Current Per Share Market Price as of the Trading Day immediately preceding
the Contribution Date multiplied by the number of Shares issued in connection
with such acquisition, (Y) if such asset was acquired by the General Partner
after the date hereof for consideration other than its Shares and in
contemplation of, or substantially contemporaneously with, the contribution
thereof to the Partnership, the amount of such consideration plus, in the case
of clauses (X) and (Y), (aa) the amount of any costs or expenses incurred, or
reasonably expected to be incurred, by the General Partner in

 

27

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connection with such acquisition and contribution, plus (bb) the amount of any
liabilities assumed by the General Partner or to which such asset is subject,
and (Z) if such asset was acquired by the General Partner after the date hereof
and is not an asset referred to in clauses (X) or (Y), the gross fair market
value of such asset (as reasonably determined by the General Partner) plus the
amount of any costs or expenses incurred, or reasonably expected to be incurred,
by the General Partner in connection with such acquisition and contribution;

 

(ii) the Gross Asset Values of all Partnership assets shall be adjusted to equal
their respective gross fair market values, as reasonably determined by the
General Partner, immediately prior to the following events:

 

(A) a Capital Contribution (other than a de minimis Capital Contribution, within
the meaning of Section 1.704-l(b)(2)(iv)(f)(5)(i) of the Regulations) to the
Partnership by a new or existing Partner as consideration for Partnership Units;

 

(B) the distribution by the Partnership to a Partner of more than a de minimis
amount (within the meaning of Section l.704-l(b)(2)(iv)(f)(5)(ii) of the
Regulations) of Partnership property as consideration for the redemption of
Partnership Units; and

 

(C) the liquidation of the Partnership within the meaning of Section
1.704-l(b)(2)(ii)(g) of the Regulations;

 

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(iii) the Gross Asset Values of Partnership assets distributed to any Partner
shall be the gross fair market values of such assets, as reasonably determined
by the General Partner, as of the date of distribution.

 

At all times, Gross Asset Values shall be adjusted by any Depreciation taken
into, account with respect to the Partnership’s assets for purposes of computing
Profits and Losses. Any adjustment to the Gross Asset Values of Partnership
property shall require an adjustment to the Partners’ Capital Accounts as
described in Section 4.5(a).

 

4.6 Additional Funds.

 

(a) The Partnership may obtain funds from time to time (“Required Funds”) which,
in the sole discretion of the General Partner, are necessary or desirable to
meet the needs, obligations or requirements of the Partnership, or-to maintain
adequate working capital, or to repay Partnership indebtedness, and to carry out
the Partnership’s purposes, from the proceeds of Third Party Financing or
Affiliate Financing, in each case pursuant to such terms and conditions and in
such manner (including the engagement of brokers and/or investment bankers to
assist in providing such financing) and amounts as the General Partner shall
determine in its sole discretion to be in the best interests of the Partnership,
and subject to the terms and conditions of this Agreement. Any and all funds
required or expended, directly or indirectly, by the Partnership for capital
expenditures may be obtained or replenished through Partnership borrowings. Any
Third Party Financing or Affiliate Financing obtained by the General Partner on
behalf of the Partnership may be convertible in whole or in part into
Partnership Units (to be issued in accordance with Section 9.3),

 

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and (i) may be secured by a mortgage or deed of trust, assignments and/or other
Lien on or in respect of all or any portion of the assets of the Partnership or
any other security made available by the Partnership, or may be unsecured, (ii)
may include or be obtained through the public or private placement of debt
and/or other instruments, domestic and foreign, (iii) may provide for the option
to acquire Partnership Units (to be issued in accordance with Section 9.3), and
(iv) may include or provide for interest rate swaps, credit enhancers, and/or
other transactions or items in respect of such Third Party Financing or
Affiliate Financing; provided, however, that in no event may the Partnership
obtain any Affiliate Financing or Third Party Financing that is recourse to any
Partner or any Affiliate, partner, shareholder, beneficiary, principal, officer,
or director of any Partner without the consent of the affected Person or -
Persons to whom such recourse may be had.

 

(b) To the extent the Partnership does not borrow all of the Required Funds (and
whether or not the Partnership is able to borrow all or part of the Required
Funds), the General Partner (or in Affiliate thereof) may (i) itself borrow such
Required Funds, in which case the General Partner shall lend such Required Funds
to the Partnership on the same economic terms and otherwise on substantially
identical terms, or (ii) raise such Required Funds in any other manner
(including, without limitation, by an offering of the General Partner’s capital
stock), in which case the General Partner shall contribute lo the Partnership as
an additional Capital Contribution the amount of the Required Funds so raised (“
Contributed Funds”) (hereinafter, each date on which the General Partner so
contributes

 

30

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Contributed Funds pursuant to this paragraph (b) is referred to as an
“Adjustment Date”). In the event the General Partner advances Required Funds to
the Partnership pursuant to this paragraph (b), the Partnership shall assume and
pay (or reflect on its books as additional Required Funds) the expenses
(including any applicable under-writing discounts) incurred by the General
Partner (or such Affiliate) in connection with the raising of such Required
Funds through a public offering of its securities or otherwise. In addition, in
the event the General Partner advances Required Funds to the Partnership as
Contributed Funds pursuant to this paragraph (b), additional Partnership Units
shall be issued to the General Partner to reflect its contribution of the
Contributed Funds. The number of Partnership Units so issued shall be determined
by dividing the amount of Contributed Funds by the Deemed Partnership Unit
Value.

 

ARTICLE V

 

Representations and Warranties

 

5.1 Representations and Warranties by the General Partner. The General Partner
represents and warrants to the Limited Partners and to the Partnership that (i)
it is a corporation duly formed, validly existing and in good standing under the
laws of the State of Maryland, with full right, corporate power and authority to
fulfill all of its obligations hereunder or as contemplated herein; (ii) all
transactions contemplated by this Agreement to be performed by it have been duly
authorized by all necessary action; (iii) this Agreement has been duly executed
and

 

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delivered by and is the legal, valid and binding obligation of the General
Partner, and is enforceable in accordance with its terms, except as such
enforcement may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or transfer or other laws of general
application affecting the rights and remedies of creditors and (b) general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law); (iv) no authorization, approval, consent or
order of any court or governmental authority or agency or any other entity is
required in connection with the execution and delivery of this Agreement by the
General Partner, except as may have been received prior to the date of this
Agreement; (v) the execution and delivery of this Agreement by the General
Partner and the consummation of the transactions contemplated hereby will not
conflict with or constitute a breach or violation of, or default under, any
contract, indenture, mortgage, loan agreement, note, lease, joint venture or
partnership agreement or other instrument or agreement to which the General
Partner is a party; (vi) the Partnership Units, upon payment of the
consideration therefore pursuant to this Agreement, will be validly issued,
fully paid and, except as otherwise provided in accordance with applicable law,
non-assessable; and (vii) there is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now pending, or,
to the knowledge of the General Partner, threatened against the General Partner
that, if determined adversely to the General Partner, could reasonably be
expected to (A) result in any adverse change in the condition, financial or
otherwise, of the General Partner, or (B) adversely affect the ability of the
General

 

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Partner to consummate the transactions contemplated hereby or perform its
obligations hereunder.

 

5.2 Representations and Warranties by the Limited Partners. Each Limited
Partner, for itself only, represents and warrants to the General Partner, the
other Limited Partners and the Partnership that (i) all transactions
contemplated by this Agreement to be performed by such Limited Partner have been
duly authorized by all necessary action; and (ii) this Agreement is binding
upon, and enforceable against, such Limited Partner in accordance with its
terms, except as such enforcement may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or other laws of
general application affecting the rights and remedies of creditors and (b)
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).

 

5.3 Acknowledgment by Each Partner. Except as otherwise provided herein, each
Partner hereby acknowledges that (i) no representations as to potential profit,
cash flows or yield, if any, in respect of the Partnership or any one or more or
all of the Properties or other assets of the Partnership have been made by any
Partner or any employee or representative or Affiliate of any Partner, and (ii)
any projections or any other information, including, without limitation,
financial and descriptive information and documentation, which may have been in
any manner submitted to such Partner shall not constitute any representation or
warranty, express or implied.

 

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ARTICLE VI

 

Allocations, Distributions and Other

Tax and Accounting Matters

 

6.1 Allocations.

 

(a) For the purpose of this Agreement, the terms “Profits” and “Losses” mean,
respectively, for each Partnership Fiscal Year or other period, the
Partnership’s taxable income or loss for such Partnership Fiscal Year or other
period, determined in accordance with Section 703(a) of the Code (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or loss), adjusted as follows:

 

(i) any income of the Partnership that is exempt from federal income tax and not
otherwise taken into account in computing Profits or Losses pursuant to this
Section 6.1(a) shall be added to such taxable income or loss;

 

(ii) 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 for such Partnership Fiscal Year or
other period;

 

(iii) any items that are specially allocated pursuant to Section 6.1(d) and the
gross income allocation under Section 6.1(b) shall not be taken into account in
computing Profits or Losses; and

 

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(iv) any expenditures of the Partnership described in Section 705(a)(2)(B) of
the Code (or treated as such under Regulation Section 1.704-l(b)(2)(iv)(i)) and
not otherwise taken into account in computing Profits or Losses pursuant to this
Section 6.1(a) shall be deducted from such taxable income or loss.

 

(b) Except as otherwise provided in Section 6.1(d) and this Section 6.1(b), the
Profits and Losses of the Partnership (and each item thereof) for each
Partnership Fiscal Year (including the Partnership Fiscal Year beginning on
April 28, 1997 and ending on December 31, 1997) shall be allocated among the
Partners in accordance with their proportionate ownership of Partnership Units.
Not withstanding the foregoing, an amount of gross income shall be allocated to
the General Partner for each Partnership Fiscal Year (prior to any allocation of
Profits and Losses for such Partnership Fiscal Year) equal to the total REIT
Expenses paid to or on behalf of the General Partner pursuant to Section 7.1 for
the current and all prior Partnership Fiscal Year less all amounts of gross
income previously allocated to the General Partner pursuant to this sentence.

 

(c) For the purpose of Section 6.l(b), gain or loss resulting from any
disposition of Partnership property shall be computed by reference to the Gross
Asset Value of the property disposed of, notwithstanding that the adjusted tax
basis of such property for federal income tax purposes differs from its Gross
Asset Value.

 

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(d) Notwithstanding the foregoing provisions of this Section 6.1, the following
provisions shall apply:

 

(i) A Partner shall not receive an allocation of any Partnership deduction that
would result in total loss allocations attributable to “Nonrecourse Liabilities”
(as defined in Regulations Section 1.704-2(b)(3)) in excess of such Partner’s
share of Minimum Gain (as determined under Regulations Section 1.704-2(g)). The
term “Minimum Gain” means an amount determined in accordance with Regulations
Section 1.704-2(d) by computing, with respect to each Nonrecourse Liability of
the Partnership, the amount of gain, if any, that the Partnership would realize
if it disposed of the property subject to such liability for no consideration
other than full satisfaction thereof, and by then aggregating the amounts so
computed. If the Partnership makes a distribution allocable to the proceeds of a
Nonrecourse Liability, in accordance with Regulation Section 1.704-2(h) the
distribution will be treated as allocable to an increase in Partnership Minimum
Gain to the extent the increase results from encumbering Partnership property
with aggregate Nonrecourse Liabilities that exceed the property’s adjusted tax
basis. If there is a net decrease in Partnership Minimum Gain for a Partnership
Fiscal Year, in accordance with Regulations Section 1.704-2(f) and the
exceptions contained therein, the Partners shall be allocated items of
Partnership income and gain for such Partnership Fiscal Year (and, if necessary,
for subsequent Partnership Fiscal Years) equal to the Partners’ respective
shares of the net decrease in Minimum

 

36

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Gain within the meaning of Regulations Section 1.704-2(g)(2) (the “Minimum Gain
Chargeback”). The items to be allocated pursuant to this Section 6.1(d)(i) shall
be determined in accordance with Regulations Sections 1.704-2(f) and (j).

 

(ii) Any item of “Partner Nonrecourse Deduction” (as defined in Regulations
Section 1.704-2(i)) with respect to a “Partner Nonrecourse Debt” (as defined in
Regulations Section 1.704-2(b)(4)) shall be allocated to the Partner or Partners
who bear the economic risk of loss for such Partner Nonrecourse Debt in
accordance with Regulations Section 1.704-2(i)(1). If the Partnership makes a
distribution allocable to the proceeds of a Partner Nonrecourse Debt, in
accordance with Regulation Section 1.704- 2(i)(6), the distribution will be
treated as allocable to an increase in Partner Minimum Gain to the extent the
increase results from encumbering Partnership property with aggregate Partner
Nonrecourse Debt that exceeds the property’s adjusted tax basis. Subject to
Section 6.l(d)(i), but notwithstanding any other provision of this Agreement, in
the event that there is a net decrease in Minimum Gain attributable to a Partner
Nonrecourse Debt (such Minimum Gain being hereinafter referred to as “Partner
Nonrecourse Debt Minimum Gain”) for a Partnership Fiscal Year, then after taking
into account allocations pursuant to Section 6.1(d)(i), but before any other
allocations are made for such taxable year, and subject to the exceptions set
forth in Regulations Section 1.704-2(i)(4), each Partner with a share of Partner
Nonrecourse Debt

 

37

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Minimum Gain at the beginning of such Partnership Fiscal Year shall be allocated
items of income and gain for such Partnership Fiscal Year (and, if necessary,
for subsequent Partnership Fiscal Years) equal to such Partner’s share of the
net decrease in Partner Nonrecourse Debt Minimum Gain as determined in a manner
consistent with the provisions of Regulations Section 1.704-2(g)(2). The items
to be allocated pursuant to this Section 6.1(d)(ii) shall be determined in
accordance with Regulations Sections 1.704-2(i)(4) and (j).

 

(iii) Pursuant to Regulations Section 1.752-3(a)(3), for the purpose of
determining each Partner’s share of excess nonrecourse liabilities of the
Partnership, and solely for such purpose, each Partner’s - interest in
Partnership profits is hereby specified to be the quotient of (i) the number of
Partnership Units then held by such Partner, and (ii) the aggregate amount of
Partnership Units then outstanding.

 

(iv) No Limited Partner shall be allocated any item of deduction or loss of the
Partnership if such allocation would cause such Limited Partner’s Capital
Account to become negative by more than the sum of (i) any amount such Limited
Partner is obligated to restore upon liquidation of the Partnership, plus (ii)
such Limited Partner’s share of the Partnership’s Minimum Gain and Partner
Nonrecourse Debt Minimum Gain. An item of deduction or loss that cannot be
allocated to a Limited Partner pursuant to this Section 6.1(d)(iv) shall be
allocated to the General Partner. For this purpose,

 

38

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in determining the Capital Account balance of such Limited Partner, the items
described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6) shall be
taken into account. In the event that (A) any Limited Partner unexpectedly
receives any adjustment, allocation, or distribution described in Regulations
Section 1.704-l(b)(2)(ii)(d)(4), (5), or (6), and (B) such adjustment,
allocation, or distribution causes or increases a deficit balance (net of
amounts which such Limited Partner is obligated to restore or deemed obligated
to restore under Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and
determined after taking into account any adjustments, allocations, or
distributions described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5), or
(6) that, as of the end of the Partnership Fiscal Year, reasonably are expected
to be made to such Limited Partner) in such Limited Partner’s Capital Account as
of the end of the Partnership Fiscal Year to which such adjustment, allocation,
or distribution relates, then items of Gross Income (consisting of a pro rata
portion of each item of Gross Income) for such Partnership Fiscal Year and each
subsequent Partnership Fiscal Year shall be allocated to such Limited Partner
until such deficit balance or increase in such deficit balance, as the case may
be, has been eliminated. In the event that this Section 6.1(d)(iv) and Section
6.1(d)(i) and/or (ii) apply, Section 6.1(d)(i) and/or (ii) shall be applied
prior to this Section 6.1(d)(iv).

 

(e) In accordance with Sections 704(b) and 704(c) of the Code and the
Regulations thereunder, income, gain, loss, and deduction with respect to any

 

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property contributed to the capital of the Partnership shall, solely for federal
income tax purposes, be allocated among the Partners so as to take account of
any variation between the adjusted basis of such property to the Partnership for
federal income tax purposes and the initial Gross Asset Value of such property.
If the Gross Asset Value of any Partnership property is adjusted as described in
the definition of Gross Asset Value, subsequent allocations of income, gain,
loss, and deduction with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and the Gross Asset Value of such asset in the manner prescribed under
Sections 704(b) and 704(c) of the Code and the Regulations thereunder. In
furtherance of the foregoing, the General Partner shall determine, in its sole
and absolute discretion, which of the methods prescribed in Regulation § 1.704-3
or the equivalent successor provision(s) of proposed, temporary or final
Regulations the Partnership shall employ.

 

(f) Notwithstanding anything to the contrary contained in this Section 6.1, the
allocation of Profits and Losses for any Partnership Fiscal Year during which a
Person acquires a Partnership Unit (other than upon formation of the
Partnership) pursuant to Section 4.6(b) or otherwise, shall take into account
the Partners’ varying interests for such Partnership Fiscal Year pursuant to any
method permissible under Section 706 of the Code that is selected by the General
Partner (notwithstanding any agreement between the assignor and assignee of such
Partnership Unit although the General Partner may recognize any such agreement),
which method

 

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may take into account the date on which the Transfer or an agreement to Transfer
becomes irrevocable pursuant to its terms, as determined by the General Partner.

 

(g) In the event of a sale or exchange of any outstanding Partnership Unit or
upon the death of a Partner, if the Partnership has not theretofore elected,
pursuant to Section 754 of the Code, to adjust the basis of Partnership
property, the General Partner may, in the exercise of its reasonable discretion,
cause the Partnership to elect pursuant to Section 754 of the Code to adjust the
basis of Partnership property. In addition, in the event of a distribution
referred to in Section 734(b) of the Code, if the Partnership has not
theretofore so elected, the General Partner may, in the exercise of its
reasonable discretion, cause the Partnership to elect, pursuant to Section 754
of the Code, to adjust the basis of Partnership property. Except as provided in
Regulations Section 1.704-1(b)(2)(iv)(m), such adjustment shall not be reflected
in the Partners’ Capital Accounts and shall be effective solely for federal and
(if applicable) state and local income tax purposes. Each Partner hereby agrees
to provide the Partnership with all information necessary to give effect to such
election. With respect to such election:

 

(i) Any change in the amount of the Depreciation deducted by the Partnership and
any change in the gain or loss of the Partnership, for federal income tax
purposes, resulting from an adjustment pursuant to Section 743(b) of the Code
shall be allocated entirely to the transferee of the Partnership Units so
transferred. Neither the Capital Contribution obligations of, nor the
Partnership Units of, nor the amount of

 

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any cash distributions to, the Partners shall be affected as a result of such
election, and except as provided in Regulations Section 1.704-l(b)(2)(iv)(m),
the making, of such election shall have no effect except for federal and (if
applicable) state and local income tax purposes.

 

(ii) Solely for federal and (if applicable) state and local income tax purposes
and not for the purpose of maintaining the Partners’ Capital Accounts (except as
provided in Regulations Section 1.704-l(b)(2)(iv)(m)), the Partnership shall
keep a written record for those assets, the bases of which are adjusted as a
result of such election, and the amount at which such assets are carried on such
record shall be debited (in the case of an increase in basis) or credited (in
the case of a decrease in basis) by the amount of such basis adjustment. Any
change in the amount of the Depreciation deducted by the Partnership and any
change in the gain or loss of the Partnership, for federal and (if applicable)
state and local income tax purposes, attributable to the basis adjustment made
as a result of such election shall be debited or credited, as the case may be,
on such record.

 

(h) The Profits, Losses, gains, deductions, and credits of the Partnership (and
all items thereof) for each Partnership Fiscal Year shall be determined in
accordance with the accounting method followed by the Partnership for federal
income tax purposes.

 

(i) Except as provided in Sections 6.1(e) and 6.l(g), for federal income tax
purposes, each item of income, gain, loss, or deduction shall be

 

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allocated among the Partners in the same manner as its correlative item of
income, gain, loss, or deduction, as determined for purposes of Profits and
Losses, has been allocated pursuant to this Section 6.1.

 

(j) To the extent permitted by Regulations Sections 1.704-2(h)(3) and
1.704-2(i)(6), the General Partner shall endeavor to treat distributions as
having been made from the proceeds of Nonrecourse Liabilities or Partner
Nonrecourse Debt only to the extent that such distributions would cause or
increase a deficit balance in any Partner’s Capital Account that exceeds the
amount such Partner is otherwise obligated to restore (within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(c)) as of the end of the Partnership’s
taxable year in which the distribution occurs.

 

(k) If any Partner sells or otherwise disposes of any property, directly or
indirectly, to the Partnership and, as a result thereof, gain on a subsequent
disposition of such property by the Partnership is reduced pursuant to Section
267(d) of the Code, then, to the extent permitted by applicable law, gain for
federal income tax purposes attributable to such subsequent disposition shall
first be allocated among the Partners other than the selling Partner in an
amount equal to such Partners’ allocations of gain, as determined for purposes
of Profits and Losses, on the property pursuant to this Section 6.1, and any
remaining gain for federal income tax purposes shall be allocated to the selling
Partner.

 

6.2 Distributions. Except with respect to a liquidation of the Partnership
following a dissolution pursuant to Section 3.2, the General Partner shall

 

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cause the Partnership to distribute all or a portion of Net Operating Cash Flow
to the Partners from time to time as determined by the General Partner, but in
any event not less frequently than quarterly, in such amounts as the General
Partner shall determine in its sole discretion; provided, however, that all such
distributions shall be made pro rata in accordance with the outstanding
Partnership Units as of the date that coincides with the date that is the record
date for the payment of dividends on the Shares. No distributions of Net
Operating Cash Flow shall be made until June 30, 1997. In no event may a Partner
receive a distribution of Net Operating Cash Flow with respect to a Partnership
Unit to the extent such Partner is entitled to receive a distribution out of
such Net Operating Cash Flow with respect to a Share for which such Partnership
Unit has been converted, and the General partner may take such action as may be
appropriate, in its sole discretion, to assure compliance with the foregoing.

 

6.3 Books of Account. At all times during the continuance of the Partnership,
the General Partner shall maintain or cause to be maintained full, true,
complete and correct books of account in accordance with GAAP wherein shall be
entered particulars of all monies, goods or effects belonging to or owing to or
by the Partnership, or paid, received, sold or purchased in the course of the
Partnership’s business, and all of such other transactions, matters and things
relating to the business of the Partnership as are usually entered in books of
account kept by Persons engaged in a business of a like kind and character. In
addition, the Partnership shall keep all records as required to be kept pursuant
to the Act. The books and records of account shall be kept at the principal
office of the Partnership, and each Partner and its

 

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representatives shall at all reasonable times have access to such books and
records and the right to inspect and copy the same at such Partner’s expense.

 

6.4 Reports. Within ninety (90) days after the end of each Partnership Fiscal
Year, the Partnership shall cause to be prepared and transmitted to each Partner
an annual report of the Partnership relating to the previous Partnership Fiscal
Year containing a balance sheet as of the year then ended, a statement of
financial condition as of the year then ended, and statements of operations,
cash flow and Partnership equity for the year then ended, which annual
statements shall be prepared in accordance with GAAP and shall be audited by the
Accountants. The Partnership shall also cause to be prepared and transmitted to
each Partner within forty-five (45) days after the end of each of the first
three (3) quarters of each Partnership Fiscal Year, a quarterly unaudited report
containing a balance sheet; a statement of the Partnership’s financial condition
and statements of operations, cash flow and Partnership equity, in each case
relating to the fiscal quarter then just ended, and prepared in accordance with
GAAP. The Partnership shall further cause to be prepared and transmitted to the
General Partner (i) such reports and/or information as are necessary for the
General Partner to fulfill its obligations under the Securities Act, the
Exchange Act, applicable stock exchange rules and any other regulations to which
the General Partner or the Partnership may be subject, and (ii) such other
reports and/or information as are necessary for the General Partner to determine
and maintain its qualification as a REIT under the REIT Requirements, the
earnings and profits of the General Partner derived from the Partnership, its
liability for a tax as a

 

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consequence of its Partnership Interest and distributive share of taxable income
or loss and items thereof, in each case, in a manner that will permit the
General Partner to comply with its obligations to file federal, state and local
tax returns and information returns and to provide its shareholders with tax
information. The General Partner shall provide to each Limited Partner copies of
all reports it provides to its stockholders at the same time such reports are
distributed to such stockholders. The General Partner shall also promptly notify
the Limited Partners of all actions taken by the General Partner for which it
has obtained the Consent of the Limited Partners.

 

6.5 Audits. Not less frequently than annually, the books and records of the
Partnership shall be audited by the Accountants.

 

6.6 Tax Returns and Elections.

 

(a) Consistent with all other provisions of this Agreement, the General Partner
shall determine the methods to be used in the preparation of federal, state and
local income and other tax returns for the Partnership in connection with all
items of income and expense, including, but not limited to, valuation of assets,
the methods of Depreciation and cost recovery, elections, credits and tax
accounting methods and procedures.

 

(b) The Partnership shall timely cause to be prepared and transmitted to the
Partners federal and appropriate state and local Partnership Income Tax
Schedules “K-1,” or any substitute therefor, with respect to each Partnership
Fiscal Year on appropriate prescribed forms. Beginning with its taxable year
ending December 31, 1997, the Partnership shall make reasonable efforts to
prepare and

 

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submit such forms before the due date for filing federal income tax returns for
the fiscal year in question (determined without extensions), and shall in any
event prepare and submit such forms on or before July 15 of the year following
the fiscal year in question.

 

(c) The General Partner and each Limited Partner hereto intend that the
Partnership be classified as a partnership for federal tax purposes and the
General Partner shall make no elections contrary to such classification. The
General Partner shall, for and on behalf of the Partnership, take all steps as
may be required to maintain the Partnership’s classification as a partnership
for federal tax purposes, including affirmatively or protectively filing
Internal Revenue Service Form 8832 if such filing is required under Section
301.7701-3 of the Regulations. By executing this Agreement, each of the parties
hereto consents to the authority of the General Partner to make any such
election and shall cooperate in the making of such election (including providing
consents and other authorizations that may be required).

 

6.7 Tax Matters Partner. The General Partner is hereby designated as the Tax
Matters Partner for the Partnership within the meaning of Section 6231(a)( 7) of
the Code; provided, however, (i) in exercising its authority as Tax Matters
Partner it shall be limited by the provisions of this Agreement affecting tax
aspects of the Partnership; (ii) the General Partner shall give prompt notice to
the Limited Partners of the receipt of any written notice that the Internal
Revenue Service or any state or local taxing authority intends to examine
Partnership income tax returns for any year, receipt of written notice of the
beginning of an administrative

 

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proceeding at the Partnership level relating to the Partnership under Section
6223 of the Code, receipt of written notice of the final Partnership
administrative adjustment relating to the Partnership pursuant to Section 6223
of the Code, and receipt of any request from the Internal Revenue Service for
waiver of any applicable statute of limitations with respect to the filing of
any tax return by the Partnership; (iii) the General Partner shall promptly
notify the Limited Partners if the General Partner does not intend to file for
judicial review with respect to the Partnership; and (iv) the Tax Matters
Partner shall not be entitled to bind a Limited Partner by any settlement
agreement (within the meaning of Section 6224 of the Code) unless such Limited
Partner consents thereto in writing and shall notify the Limited Partners in a
manner and at such time as is sufficient to allow the Limited Partners, to
exercise their rights pursuant to Section 6224(c)(3) of the Code.

 

6.8 Withholding. Each Partner hereby authorizes the Partnership to withhold from
or pay on behalf of or with respect to such Partner any amount of federal,
state, local, or foreign taxes that the General Partner determines the
Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Sections 1441,1442, 1445 or 1446 of the Code. Any amount
paid on behalf of or with respect to a Partner shall constitute a loan by the
Partnership to such Partner, which loan shall be due within fifteen (15) days
after repayment is demanded of the Partner in question, and shall be repaid
through withholding of subsequent

 

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distributions to such Partner (which withheld distributions shall nevertheless
be deemed to have been distributed to such Partner for all purposes of this
Agreement). Any amounts payable by a Limited Partner hereunder shall bear
interest at the lesser of (i) 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 (ii) the maximum lawful rate of interest on such obligation,
such interest to accrue from the date such amount is due (i.e., fifteen (15)
days after demand) until such amount is paid in full. To the extent the payment
or accrual of withholding tax results in a federal, state or local tax credit to
the Partnership, such credit shall be allocated to the Partner to whose
distribution the tax is attributable.

 

ARTICLE VII

 

Rights, Duties and Restrictions of the General Partner

 

7.1 Expenditures by Partnership. The General Partner is hereby authorized to pay
compensation for accounting, administrative, legal, technical, management and
other services rendered to the Partnership and any other expenses necessary for
the prudent operation of the General Partner and the Partnership. All of the
aforesaid expenditures shall be made on behalf of the Partnership (whether
incurred by the General Partner or the Partnership), and the General Partner
shall be entitled to reimbursement by the Partnership for any expenditures
incurred by it on behalf of the Partnership which shall have been made other
than out of the funds of the Partnership. The Partnership shall also assume, be
liable for and pay when due

 

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all Administrative Expenses and REIT Expenses, and the General Partner may pay
such Expenses on behalf of the Partnership and be reimbursed therefor.

 

7.2. Powers and Duties of General Partner. The General Partner shall be
responsible for the management of the Partnership’s business and affairs. Except
as otherwise herein expressly provided, the General Partner shall have, and is
hereby granted, full and complete power, authority and discretion to take such
action for and on behalf of the Partnership and in its name as the General
Partner shall, in its sole and absolute discretion, deem necessary or
appropriate to carry out the purposes for which the Partnership was organized.
Except as otherwise expressly provided herein, the General Partner shall have
the right, power and authority:

 

(a) To manage, control, hold, invest, lend, reinvest, acquire by purchase, lease
or otherwise sell, contract to purchase or sell, grant, obtain or exercise
options to purchase, options to sell or conversion rights, assign, transfer,
convey, deliver, endorse, exchange, pledge, mortgage or otherwise encumber,
abandon, improve, repair, maintain, operate, insure, lease for any term and
otherwise deal with any and all property of whatsoever kind and nature, and
wheresoever situated, in furtherance of the purposes of the Partnership and to
sell or otherwise dispose of all or substantially all of the assets of the
Partnership;

 

(b) To acquire, directly or indirectly, interests in real or personal property
of any kind and of any type, and any and all kinds of interests therein, and to
determine the manner in which title thereto is to be held; to manage, insure
against loss, protect and subdivide any of the real or personal property,

 

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interests therein or parts thereof; to improve, develop or redevelop any such
real or personal property; to participate in the ownership and development of
any such property; to dedicate for public use, to vacate any subdivisions or
parts thereof, to resubdivide, to contract to sell, to grant options to purchase
or lease and to sell on any terms any such real or personal property; to convey,
to mortgage, pledge or otherwise encumber any such property, or any part
thereof; to lease any such property or any part thereof from time to time, upon
any terms and for any period of time, and to renew or extend leases, to amend,
change or modify the terms and provisions of any leases and to grant options to
lease and options to renew leases and options to purchase any such property; to
partition or to exchange any real property, or any part thereof, for other real
or personal property; to grant easements or charges of any kind; to release,
convey or assign any right, title or interest in or about or easement
appurtenant to any property or any part thereof; to construct and reconstruct,
remodel, alter, repair, add to or take from buildings on any real property; to
insure any Person having an interest in or responsibility for the care,
management or repair of any such property;

 

(c) To employ, engage or contract with or dismiss from employment or engagement
Persons to the extent deemed necessary by the General Partner for the operation
and management of the Partnership business, including but not limited to,
employees, contractors, subcontractors, engineers, architects, surveyors,
mechanics, consultants, accountants, attorneys, insurance brokers, real estate
brokers and others;

 

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(d) To enter into contracts on behalf of the Partnership;

 

(e) To borrow or lend money, procure loans and advances from any Person for
Partnership purposes, and to apply for and secure, from any Person, credit or
accommodations; to contract liabilities and obligations, direct or contingent
and of every kind and nature, with or without security; and to repay, discharge,
settle, adjust, compromise or liquidate any such loan, advance, credit,
obligation or liability (including by deeding property to a lender in lieu of
foreclosure);

 

(f) To pledge, hypothecate, mortgage, assign, deposit, deliver, enter into sale
and leaseback arrangements or otherwise give as security or as additional or
substitute security, or enter into arrangements for sale or other disposition;
any and all Partnership property, tangible or intangible, including, but not
limited to, ownership interests in mortgage loans and mortgage loan
securitizations and real estate and beneficial interests in land trusts, and to
make substitutions thereof, and to receive any proceeds thereof upon the release
or surrender thereof; to sign, execute and deliver any and all assignments,
deeds and other contracts and instruments in writing; to authorize, give, make,
procure, accept and receive moneys, payments, property, notices, demands,
vouchers, receipts, releases, compromises and adjustments; to waive notices,
demands, protests and authorize and execute waivers of every kind and nature; to
enter into, make, execute, deliver and receive written agreements, undertakings
and instruments of every kind and nature; to give oral instructions and make
oral agreements; and generally to do any and all other acts and

 

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things incidental to any of the foregoing or with reference to any dealings or
transactions which any attorney may deem necessary, proper or advisable;

 

(g) To acquire and enter into any contract of insurance which the General
Partner deems necessary or appropriate for the protection of the Partnership or
any Affiliate thereof, for the conservation of the Partnership’s assets (or the
assets of any Affiliate thereof) or for any purpose convenient or beneficial to
the Partnership or any Affiliate thereof;

 

(h) To conduct any and all banking transactions on behalf of the Partnership; to
open and maintain checking, savings and other accounts with such institutions as
the General Partner shall deem appropriate; to draw, sign, execute, accept,
endorse, guarantee, deliver, receive and pay any checks, drafts, bills of
exchange, acceptances, notes, obligations, undertakings and other instruments
for or relating to the payment of money in, into or from any account in the
Partnership’s name; to execute, procure, consent to and authorize extensions and
renewals of the same; to make deposits and withdraw the same and to negotiate or
discount commercial paper, acceptances, negotiable instruments, bills of
exchange and dollar drafts;

 

(i) To demand, sue for, receive, and otherwise take steps to collect or recover
all debts, rents, proceeds, interests, dividends, goods, chattels, income from
property, damages and all other property to which the Partnership may be
entitled or which are or may become due the Partnership from any Person; to
commence, prosecute or enforce, or to defend, answer or oppose, contest and

 

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abandon all legal proceedings in which the Partnership is or may hereafter be
interested; and to settle, compromise or submit to arbitration any accounts,
debts, claims, disputes and matters which may arise between the Partnership and
any other Person and to grant an extension of time for the payment or
satisfaction thereof on any terms, with or without security;

 

(j) To make arrangements for financing, including the taking of all action
deemed necessary or appropriate by the General Partner to cause any approved
loans to be closed;

 

(k) To take all reasonable measures necessary to insure compliance by the
Partnership with applicable arrangements, and other contractual obligations and
arrangements entered into by the Partnership from time to time in accordance
with the provisions of this Agreement, including periodic reports as required to
lenders and using all due diligence to insure that the Partnership is in
compliance with its contractual obligations;

 

(l) To maintain the Partnership’s books and records;

 

(m) To delegate to Third Parties or Affiliates any activity that the Partnership
could itself undertake, and to reimburse such other Persons for all costs or
expenses reasonably incurred by such Persons (whether directly or indirectly) in
connection with the performance of such delegated duties;

 

(n) To prepare and deliver, or cause to be prepared and delivered by the
Accountants, all financial and other reports with respect to the

 

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operations of the Partnership, and to prepare and file all federal and state tax
returns and reports;

 

(o) To enter into Contribution Agreements with Persons who may become additional
Limited Partners on such terms as the General Partner, in its sole discretion,
deems appropriate;

 

(p) To grant to Persons who may become additional Limited Partners registration
rights with respect to the Shares that may be issued to such Persons upon the
exchange of Partnership Units pursuant to Article XI, on such terms as the
General Partner, in its sole discretion, deems appropriate; and

 

(q) To establish a stock option plan, stock appreciation right plan or other
benefit plan for the benefit of employees of the Partnership or its Affiliates
on such terms as the General Partner, in its sole discretion, deems appropriate.

 

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

 

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7.3 Amendment of Agreement. The General Partner shall not, without the prior
Consent of the Limited Partners, on behalf of the Partnership, amend, modify or
terminate this Agreement other than to reflect (A) the admission of additional
Limited Partners pursuant to Section 9.3, (B) the making of additional Capital
Contributions and the issuance of additional Partnership Units by reason
thereof, all in accordance with the terms of this Agreement, (C) the withdrawal
or assignment of the interest of any Partner in accordance with the terms of
this Agreement, (D) any changes necessary to satisfy the REIT Requirements or to
maintain the status of the Partnership as a partnership for federal income tax
purposes or (E) such other changes as shall be necessary from time to time to
cure any ambiguity, to correct or supplement any provision herein which may be
defective or inconsistent with any other provision herein or to make any other
modification with respect to matters or questions arising under this Agreement
to more fully reflect the intent of this Agreement. Notwithstanding the
foregoing, this Agreement shall not be modified or amended in such manner as to
reduce the interest of any Partner in the Partnership, to reduce any Partner’s
share of distributions made by the Partnership, to create any obligations for
any Partner or to deprive any Partner of (or otherwise impair) any other rights
it may have under this Agreement unless, in each such case, such reduction,
deprivation or impairment shall apply to all the then Partners of the
Partnership on a uniform or pro rata basis, as applicable, or unless the
affected Partner shall execute or consent in writing to the modification or
amendment in question.

 

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7.4 General Partner Participation. To the extent feasible (after taking into
account contractual restrictions and the incurrence of undue expense), the
General Partner agrees that all activities and business operations of the
General Partner, including, but not limited to, activities pertaining to the
acquisition, development, redevelopment and ownership of properties, shall be
conducted directly or indirectly through the Partnership. Without the Consent of
the Limited Partners, to the extent feasible (after taking into account
contractual restrictions and the incurrence of undue expense), the General
Partner shall not, directly or indirectly, participate in or otherwise acquire
any interest in any real or personal property other than through the
Partnership, unless the General Partner upon the acquisition of such interest
contributes such interest to the Partnership in accordance with the provisions
of this Agreement.

 

7.5 Proscriptions. The General Partner shall not have the authority to:

 

(a) Do any act in contravention of this Agreement;

 

(b) Possess any Partnership property or assign rights in specific Partnership
property for other than Partnership purposes; or

 

(c) Do any act in contravention of applicable law. Nothing herein contained
shall impose any obligation on any Person doing business with the Partnership to
inquire as to whether or not the General Partner has properly exercised its
authority in executing any contract, lease, mortgage, deed or any other

 

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instrument or document on behalf of the Partnership, and any such third Person
shall be fully protected in relying upon such authority.

 

7.6 Waiver and Indemnification. Neither the General Partner nor any of its
Affiliates, directors, officers, shareholders, nor any Person acting on its or
their behalf pursuant hereto, shall be liable, responsible or accountable in
damages or otherwise to the Partnership or to my Partner for any acts or
omissions performed or omitted to be performed by them within the scope of the
authority conferred upon the General Partner by this Agreement and the Act,
provided that the General Partner’s or such other Person’s conduct or omission
to act was taken in good faith and in the belief that such conduct or omission
was in, or not opposed to, the best interests of the Partnership and, provided
further, that the General Partner or such other Person was not guilty of fraud,
willful misconduct or gross negligence. The General Partner acknowledges that it
owes fiduciary duties both to its shareholders and to the Limited Partners and
it shall use its reasonable efforts to discharge such duties to each; provided,
however, that in the event of a conflict between the interests of the
shareholders of the General Partner and the interests of the Limited Partners,
the Limited Partners agree that the General Partner shall discharge its
fiduciary duties to the Limited Partners by acting in the best interests of the
General Partner’s shareholders. The Partnership shall, and hereby does,
indemnify and hold harmless the General Partner and its Affiliates, their
respective directors, officers, shareholders and any other individual acting on
its or their behalf to the extent such Persons would be indemnified by the
General Partner pursuant to Article VI Section 7 (or any succeeding

 

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provision) of the Charter of the General Partner if such persons were directors,
officers, agents or employees of the General Partner; provided, however, that no
Partner shall have any personal liability with respect to the foregoing
indemnification, any such indemnification to be satisfied solely out of the
assets of the Partnership. The Partnership shall, and hereby does, indemnify
each Limited Partner and its Affiliates, their respective directors, officers,
partners, shareholders and any other individual acting on its or their behalf,
from and against any costs (including costs of defense) incurred by it as a
result of any litigation in which any Limited Partner is named as a defendant
and relating to the operations of the Partnership, unless such costs are the
result of misconduct on the part of, or a breach of this agreement by, such
Limited Partner; provided, however, that no Partner shall have any personal
liability with respect to the foregoing indemnification, any such
indemnification to be satisfied solely out of the assets of the Partnership.

 

7.7 Limitation of Liability of Directors, Shareholders and Officers of the
General Partner. Any obligation or liability whatsoever of the General Partner
which may arise at any time under this Agreement or any other instrument,
transaction or undertaking contemplated hereby shall be satisfied, if at all,
out of the assets of the General Partner or the Partnership only; No such
obligation or liability shall be personally binding upon, nor shall resort for
the enforcement thereof be had to, any of the General Partner’s directors,
shareholders, officers, employees or agents, regardless of whether such
obligation or liability is in the nature of contract, tort or otherwise.

 

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ARTICLE VII

 

Dissolution, Liquidation and Winding-Up

 

8.1 Accounting. In the event of the dissolution, liquidation and winding-up of
the Partnership, a proper accounting (which shall be certified) shall be made of
the Capital Account of each Partner and of the Profits or Losses of the
Partnership from the date of the last previous accounting to the date of
dissolution. Financial statements presenting such accounting shall include a
report of the Accountants.

 

8.2 Distribution on Dissolution. In the event of the dissolution and liquidation
of the Partnership for any reason, the assets of the Partnership shall be
liquidated for distribution or distributed in kind, as determined by the General
Partner in its sole discretion, in the following rank and order:

 

(a) Payment of creditors of the Partnership (other than Partners) in the order
of priority as provided by law;

 

(b) Establishment of reserves as determined by the General Partner to provide
for contingent liabilities, if any;

 

(c) Payment of debts of the Partnership to Partners, if any, in the order of
priority provided by law;

 

(d) To the Partners in accordance with the positive balances in their Capital
Accounts after giving effect to all contributions, distributions

 

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and allocations for all periods, including the period in which such distribution
occurs (other than those distributions made pursuant to this Section 8.2(d)).

 

If upon dissolution and termination of the Partnership the Capital Account of
any Partner is less than zero, then such Partner shall have no obligation to
restore the negative balance in its Capital Account. Whenever the Liquidating
Agent reasonably determines that any reserves established pursuant to paragraph
(b) above are in excess of the reasonable requirements of the Partnership, the
amount determined to be excess shall be distributed to the Partners in
accordance with the above provisions.

 

8.3 Sale of Partnership Assets. In the event of the liquidation of the
Partnership in accordance with the terms of this Agreement, the Liquidating
Agent may sell Partnership property; provided, however, all sales, leases,
encumbrances or transfers of Partnership assets shall be made by the Liquidating
Agent solely on an “arm’s-length” basis, at the best price and on the best terms
and conditions as the Liquidating Agent in good faith believes are reasonably
available at the time and under the circumstances and on a non-recourse basis to
the limited Partners. The liquidation of the Partnership shall not be deemed
finally terminated until the Partnership shall have received cash payments in
full with respect to obligations such as notes, purchase money mortgages,
installment sale contracts or other similar receivables received by the
Partnership in connection with the sale of Partnership assets and all
obligations of the Partnership have been satisfied or assumed by the General
Partner. The Liquidating Agent shall continue to act to enforce all of the
rights of the Partnership pursuant to any such obligations until paid in full.

 

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8.4 Distributions in Kind. In the event it becomes necessary to make a
distribution of Partnership property in kind, the General Partner may transfer
and convey such property to the distributees as tenants in common, subject to
any liabilities attached thereto, so as to vest in them undivided interests in
the whole of such property in proportion to their respective rights to share in
the proceeds of the sale of such property (other than as a creditor) in
accordance with the provisions of Section 8.2. Immediately prior to the
distribution of Partnership property in kind to a Partner, the Capital Account
of each Partner shall be increased or decreased, as the case may be, to reflect
the manner in which the unrealized income, gain, loss and deduction inherent in
such property (to the extent not previously reflected in the Capital Accounts)
would be allocated among the Partners if there were a taxable disposition of
such property for its fair market value as of the date of the distribution.

 

8.5 Documentation of Liquidation. Upon the completion of the dissolution and
liquidation of the Partnership, the Partnership shall terminate and the
Liquidating Agent shall have the authority to execute and record any and all
documents or instruments required to effect the dissolution, liquidation and
termination of the Partnership.

 

8.6 Liability of the Liquidating Agent. The Liquidating Agent shall be
indemnified and held harmless by the Partnership from and against any and all
claims, demands, liabilities, costs, damages and causes of action of any nature
whatsoever arising out of or incidental to the Liquidating Agent’s taking of any
action authorized under or within the scope of this Agreement; provided,
however, that no

 

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Partner shall have any personal liability with respect to the foregoing
indemnification, any such indemnification to be satisfied solely out of the
assets of the Partnership; and provided further, however, that the Liquidating
Agent shall not be entitled to indemnification, and shall not be held harmless,
where the claim, demand, liability, cost, damage or cause of action at issue
arose out of:

 

(a) a matter entirely unrelated to the liquidating Agent’s action or conduct
pursuant to the provisions of this Agreement; or

 

(b) the proven misconduct or negligence of the Liquidating Agent

 

ARTICLE IX

 

Transfer of Partnership Interests and Related Matters

 

9.1 General Partner Transfers and Deemed Transfers. The General Partner shall
not Transfer all or any portion of its Partnership Units or otherwise withdraw
as a general partner of the Partnership, in each case, unless it shall have
obtained the written consent of the Limited Partner(s) who hold in the aggregate
more than 50% of the Partnership Units then held by all of the Limited Partners,
as a class (but excluding any Partnership Units held by the General Partner or
any Affiliate thereof). In the event all Partnership Units are held by the
General Partner and Affiliates thereof, the General Partner shall be prohibited
from Transferring its Partnership Units or otherwise withdrawing as a general
partner. Notwithstanding anything to the contrary, this Section 9.1 shall not
prohibit, nor

 

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require the consent of Limited Partners in connection with, a merger in which
the General Partner is the Entity surviving the merger, a Transfer of all or any
portion of the Partnership Units of the General Partner to another Partner or
any Transfer of Shares. Upon any Transfer by the General Partner of its interest
in the Partnership in accordance with the provisions of this Agreement, to the
extent of such Transfer the transferee General Partner shall become vested with
the powers and rights of the transferor General Partner, and shall be liable for
all obligation and responsible for all duties of the General Partner, once such
transferee has executed such instruments as may be necessary to effectuate such
admission and to confirm the agreement of such transferee to be bound by all the
terms and provisions of this Agreement with respect to the Partnership Units so
acquired. It is a condition to any Transfer otherwise permitted hereunder that
the transferee assumes by operation of law or express agreement all of the
obligations of the transferor General Partner under this Agreement with respect
to the Partnership Units of the transferor General Partner and no such Transfer
(other than pursuant to a statutory merger or consolidation wherein all
obligations and liabilities of the transferor General Partner are assumed by a
successor corporation by operation of law) shall relieve the transferor General
Partner of its obligations under this Agreement accruing prior to the date of
such Transfer. In the event of any Transfer permitted hereunder of all of the
General Partner’s interest in the Partnership, the transferee of such interest
shall be deemed admitted to the Partnership as a General Partner immediately
prior to the withdrawal of the transferor General Partner and the business of
the Partnership shall be carried on by

 

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such transferee General Partner. In the event of the withdrawal by any General
Partner from the Partnership, in violation of this Agreement or otherwise, or
the dissolution, termination or Bankruptcy (or any other event of withdrawal (as
defined in Section 17-402 of the Act)) of any General Partner, within ninety
(90) days after the occurrence of any such event, Partners who hold in the
aggregate more than fifty percent (50%) of the Partnership Units then held by
all of the remaining Partners may elect in writing to continue the Partnership
business by selecting a substitute general partner effective as of the date of
the occurrence of any such event.

 

9.2 Transfers by Limited Partners. Except as otherwise provided in this Section
9.2, the Limited Partners shall not Transfer or Pledge all or any portion of
their Partnership Units to any transferee or pledgee without the consent of the
General Partner, which consent may be withheld in its sole and absolute
discretion; provided, however, that the foregoing shall not be considered a
limitation on the ability of the Limited Partners to exercise their Rights under
Article XI. Notwithstanding the foregoing sentence, but subject to the
provisions of Section 9.4 and this Section 9.2, any Limited Partner may at any
time, without the consent of the General Partner, (i) Transfer all or a portion
of its Partnership Units to an Affiliate of such Limited Partner or (ii) Pledge
some or all of its Partnership Units to any Institutional Leader (it being
understood that any subsequent Transfer to a pledgee of Partnership Units
pursuant to this clause (ii) may be made without the consent of the General
Partner but such pledgee shall hold the Partnership Units so conveyed to it
subject to all the restrictions set forth in this Section 9.2 and Section 9.4).
It is a

 

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condition to any Transfer otherwise permitted hereunder that the transferee
assumes, by operation of law or express agreement, all of the obligations of the
transferor Limited Partner under this Agreement with respect to such transferred
Partnership Units arising either before or after the effective date of the
Transfer and no such Transfer (other than pursuant to a statutory merger or
consolidation wherein all obligations and liabilities of the transferor Limited
Partner are assumed by a successor Entity by operation of law, and other than
pursuant to an exercise of the Rights under Article XI wherein all obligations
and liabilities of the transferor Limited Partner arising from and after the
date of such Transfer shall be assumed by the General Partner) shall relieve the
transferor Limited Partner of its obligations under this Agreement prior to the
effective date of such Transfer. Upon a Transfer in accordance with this Section
9.2 and Section 9.4, the transferee shall be admitted as a Substituted Limited
Partner and shall succeed to all of the rights, including rights with respect to
the Rights, of the transferor Limited Partner under this Agreement in the place
and stead of such transferor Limited Partner; provided, however, that
notwithstanding the foregoing, any transferee of any transferred Partnership
Unit shall be subject to any and all ownership limitations contained in the
Charter of the General Partner, as the same may be amended from time to time,
which may limit or restrict such transferee’s ability to exercise the Limited
Partner’s Rights, if any. Any transferee (whether or not admitted as a
Substituted Limited Partner) or pledgee shall take the Partnership Units so
transferred or pledged subject to the obligations of the transferor hereunder.
Unless admitted as a Substituted Limited Partner, no transferee

 

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of a Partnership Unit pursuant to this Section 9.2, whether by a voluntary
Transfer, by operation of law or otherwise, shall have rights hereunder, other
than to receive such portion of the distributions made by the Partnership as are
allocable to the Partnership Units transferred.

 

9.3 Issuance of Additional Partnership Units. At any time, and from time to
time, subject to the provisions of Section 9.4, the General Partner may, upon
its determination that the issuance of additional Partnership Units is in the
best interests of the Partnership, cause the Partnership to issue Partnership
Units to any then existing Limited Partner, or to issue Partnership Units to,
and admit as a limited partner in the Partnership, any Person, in each case in
exchange for the contribution by such Person of Property or other assets which
the General Partner determines is desirable to further the purposes and business
of the Partnership and has a value that justifies the issuance of Partnership
Units. In the event that Partnership Units are issued by the Partnership
pursuant to this Section 9.3, the number of Partnership Units issued shall be
determined by (i) dividing the Gross Asset Value (net of liabilities secured by
such contributed asset that the Partnership assumes or takes subject to) of the
Property or other assets contributed as of the Contribution Date by the Deemed
Partnership Unit Value, computed in the case of Current Per Share Market Price
as of the Trading Day immediately preceding the Contribution Date, or (ii) such
other manner as reasonably determined by the General Partner and as set forth in
the Contribution Agreement between the Partnership and the party to whom
Partnership Units will be issued.

 

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9.4 Restrictions on Transfer, Pledge or Issuance. In addition to any other
restrictions on Transfer contained in this Agreement, in no event shall any
Transfer or Pledge of a Partnership Unit by any Partner be made nor shall any
new Partnership Unit be issued by the Partnership: (i) to any person or entity
who lacks the legal right, power or capacity to own a Partnership Unit (or, in
the case of a Pledge, to have a Pledge of a Partnership Unit); (ii) in violation
of applicable law; (iii) of any component portion of a Partnership Unit, such as
the Capital Account, or rights to distributions (except in connection with
Pledges to Institutional Lenders), separate and apart from all other components
of a Partnership Unit (unless the General Partner shall have consented thereto,
which it may do in its sole and absolute discretion); (iv) if such Transfer or
Pledge would immediately or with the passage of time cause the General Partner
to fail to comply with the REIT Requirements, such determination to be made
assuming that the General Partner does comply with the REIT Requirements
immediately prior to the proposed Transfer or Pledge; (v) if such Transfer or
Pledge would cause the Partnership to become, with respect to any employee
benefit plan subject to Title I of ERISA, a “party-in-interest” (as defined in
Section 3(14) of ERISA) of with respect to any plan described in Section
4975(e)(l), a “disqualified person” (as defined in Section 4975(e) of the Code);
(vi) if such Transfer or Pledge would, in the opinion of counsel to the
Partnership, cause any portion of the underlying assets of the Partnership to
constitute assets of any employee benefit plan within the meaning of Department
of Labor Regulations Section 2510.3-101; (vii) if such Transfer or Pledge would
constitute or result in a non-exempt

 

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prohibited transaction subject to Section 406 of ERISA or Section 4975 of the
Code; or (viii) if such Transfer or Pledge would result in a deemed distribution
to any Partner attributable to a failure to meet the requirements of Regulations
Section 1.752-2(d)(l), unless such Partner consents thereto. The General Partner
may request such documentation from the transferee/pledgee and the
transferor/pledgor as, in its sole discretion, it determines is necessary to
evidence compliance with this Section 9.4.

 

ARTICLE X

 

Rights and Obligations of the Limited Partners

 

10.1 No Participation in Management. Except as expressly permitted hereunder,
the Limited Partners shall not take part in the management of the Partnership’s
business, transact any business in the Partnership’s name or have the power to
sign documents for or otherwise bind the Partnership; provided, that the
foregoing shall not be deemed to limit the ability of a Limited Partner (or any
officer or director thereof) who is an officer, director or employee of the
Partnership, the General Partner or any Affiliate thereof to act in such
capacity.

 

10.2 Bankruptcy of a Limited Partner. The Bankruptcy of any Limited Partner
shall not cause a dissolution of the Partnership, but the rights of such Limited
Partner to share in the Profits or Losses of the Partnership and to receive
distributions of Partnership funds shall, on the happening of such event,
devolve to its successors or assigns, subject to the terms and conditions of
this Agreement, and the

 

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Partnership shall continue as a limited partnership. However, in no event shall
such assignee(s) become a Substituted Limited Partner without the consent of the
General Partner, which consent may be withheld in its sole and absolute
discretion.

 

10.3 No Withdrawal. No Limited Partner may withdraw from the Partnership without
the prior written consent of the General Partner, other than in connection with
a Transfer in accordance with the terms of this Agreement.

 

10.4 Duties and Conflicts. The Partners recognize that each of the other
Partners and their Affiliates have or may have other business interests,
activities and investments, some of which may be in conflict or competition with
the business of the Partnership, and that such persons are entitled to carry on
such other business interests, activities and investments. In deciding whether
to take any actions in such capacity, such Partners and their Affiliates shall
be under no obligation to consider the separate interests of the Partnership and
shall have no fiduciary obligations to the Partnership and shall not be liable
for monetary damages for losses sustained, liabilities incurred or benefits not
derived by the other Partners in connection with such actions; nor shall the
Partnership or the General Partner be under any obligation to consider the
separate interests of the Limited Partners and their Affiliates in such capacity
or have any fiduciary obligations to the Limited Partners and their Affiliates
in such capacity or be liable for monetary damages for losses sustained,
liabilities incurred or benefits not derived by the Limited Partners and their
Affiliates in such capacity arising from actions or omissions taken by the
Partnership. The Partners and their Affiliates may engage in or possess an
interest in any other business or venture

 

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of any kind, independently or with others, on their own behalf or on behalf of
other entities with which they art affiliated or associated, and such persons
may engage in any activities, whether or not competitive with the Partnership,
without any obligation to offer any interest in such activities to the
Partnership or to any Partner or otherwise. Neither the Partnership nor any
Partner shall have any right, by virtue of this Agreement, in or to such
activities, or the income or profits derived therefrom, and the pursuit of such
activities, even if competitive with the business of the Partnership, shall not
be deemed wrongful or improper.

 

ARTICLE XI

 

Grant of Rights to the Limited Partners

 

11.1 Grant of Rights. Subject to compliance with applicable securities laws, the
General Partner does hereby grant to each of the Limited Partners and each of
the Limited Partners does hereby accept the right, but not the obligation
(hereinafter such right sometimes referred to as the “Rights”), to convert all
or a portion of such Limited Partner’s Partnership Units into Shares or cash, as
selected by the General Partner, at any time or from time to time, on the terms
and subject to the conditions and restrictions contained in this Article XI. The
Rights granted hereunder may be exercised by a Limited Partner, on the terms and
subject to the conditions and restrictions contained in this Article XI, upon
delivery to the General Partner of a notice in the form of Exhibit C (an
“Exercise Notice”), which notice shall specify the Partnership Units to be
converted by such Limited Partner. Once delivered, the

 

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Exercise Notice shall be irrevocable, subject to payment by the General Partner
of the Purchase Price in respect of such Partnership Units in accordance with
the terms hereof; provided that if such Limited Partner has registration rights
under a Registration Rights Agreement, such Limited Partner may indicate in its
Exercise Notice that such exercise shall be conditioned on the effectiveness of
a registration requested to be made by such Limited Partner; provided further
that in the event such registration does not become effective, such Exercise
Notice shall be deemed to be canceled. In the event the General Partner elects
to cause such Units to be converted into cash, the General Partner shall effect
such conversion by causing the Partnership to redeem the Partnership Units
subject to the Exercise Notice for cash.

 

11.2 Limitation on Exercise of Rights. Rights may be exercised at any time and
from time to time; provided, however, that in no event shall Rights be
exercisable by a Limited Partner if such exercise would cause the Partnership to
cease to be a limited partnership under the Act; and provided further, that in
no event shall Rights be exercisable by a Limited Partner with respect to any
Partnership Unit that was issued by the Partnership less than one year from the
date of such exercise. In addition, if an Exercise Notice is delivered to the
General Partner but, as a result of restrictions contained in the Charter of the
General Partner, the Rights cannot be exercised in full for Shares, the Exercise
Notice shall be deemed to be modified such that the Rights shall be exercised
only to the extent permitted under the Charter of the General Partner.

 

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11.3 Computation of Purchase Price: Form of Payment. The purchase price
(“Purchase Price”) payable to the Limited Partners shall be equal to the Deemed
Partnership Unit Value multiplied by the number of Offered Units with respect to
which the Rights are being exercised computed as of the date on which the
Exercise Notice was delivered to the General Partner (the “Computation Date”).
The Purchase Price for the Offered Units shall be payable, at the option of the
General Partner, by causing the Partnership to redeem the Partnership Units for
cash in the amount of the Purchase Price, or by the issuance by the General
Partner of the number of Shares equal to the number of Offered Units with
respect to which the Rights are being exercised (adjusted as appropriate to
account for stock splits, stock dividends or other similar transactions between
the Computation Date and the closing of the purchase and sale of the Offered
Units in the manner specified in Section 11.7(d)).

 

11.4 Closing. The closing of the acquisition of Offered Units shall, unless
otherwise mutually agreed, be held at the principal offices of the General
Partner, on the date agreed to by the General Partner and the relevant Limited
Partner, which date shall be the later of (i) ten (10) days after the date of
the Exercise Notice (or, if the provisions of a Registration Rights Agreement
apply, ten (10) days after the date the registration requested in accordance
with the Registration Rights Agreement is effected) and (ii) the date of the
expiration or termination of the waiting period applicable to the Limited
Partner, if any, under the Hart-Scott-Rodino Act.

 

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11.5 Closing Deliveries. At the closing of the purchase and sale of Offered
Units, payment of the Purchase Price shall be accompanied by proper instruments
of transfer and assignment and by the delivery of (i) representations and
warranties of (A) the Limited Partner with respect to its due authority to sell
all of the right, title and interest in and to such Offered Units to the General
Partner and with respect to the status of the Offered Units being sold, free and
clear of all Liens, and (B) the General Partner with respect to due authority to
acquire such Offered Units for Shares or to cause the Partnership to redeem
Partnership Units subject to an Exercise Notice for cash and, in the case of
payment by Shares, (ii) (A) an opinion of counsel for the General Partner,
reasonably satisfactory to the Limited Partner, to the effect that such Shares
have been duly authorized, are validly issued, fully-paid and non-assessable,
and (B) a stock certificate or certificates evidencing the Shares to be issued
and registered in the name of the Limited Partner or its designee.

 

11.6 Term of Rights. The rights of the parties with respect to the Rights shall
remain in effect, subject to the terms hereof, throughout the existence of the
Partnership.

 

11.7 Covenants of the General Partner. To facilitate the General Partner’s
ability to fully perform its obligations hereunder, the General Partner
covenants and agrees as follows:

 

(a) At all times during the pendency of the Rights, the General Partner shall
reserve for issuance such number of Shares as may be necessary to enable the
General Partner to issue such Shares in full payment of the Purchase

 

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Price in regard to all partnership Units which are from time to time outstanding
and held by any limited Partner.

 

(b) As long as the General Partner shall be obligated to file periodic reports
under the Exchange Act, the General Partner will timely file such reports in
such manner as shall enable any recipient of Shares issued to a Limited Partner
hereunder in reliance upon an exemption from registration under the Securities
Act to continue to be eligible to utilize Rule 144 promulgated by the SEC
pursuant to the Securities Act, or any successor rule or regulation or statute
thereunder, for the resale thereof.

 

(c) During the pendency of the Rights, the relevant Limited Partners shall
receive in a timely manner all reports filed by the General Partner with the SEC
and all other communications transmitted from time to time by the General
Partner to the owners of its Shares.

 

(d) Under no circumstances shall the General Partner declare any stock dividend,
stock split, stock distribution or the like, unless fair and equitable
arrangements are provided, to the extent necessary, to fully adjust the Rights
to avoid any dilution in the Rights of any Limited Partner under this Agreement.

 

11.8 Limited Partners’ Covenants. Each of the Limited Partners covenants and
agrees with the General Partner that all Offered Units tendered to the General
Partner or the Partnership, as the case may be, in accordance with the exercise
of Rights herein provided shall be delivered free and clear of all Liens and
should any Liens exist or arise with respect to such Offered Units, the General

 

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Partner or the Partnership, as the case may be, shall be under no obligation to
acquire the same unless, in connection with such acquisition, the General
Partner has elected to cause the Partnership to pay such portion of the Purchase
Price in the form of cash consideration in circumstances where such
consideration will be sufficient to cause such existing Lien to be discharged in
full upon application of all or a part of such consideration and the Partnership
is expressly authorized to apply such portion of the Purchase Price as may be
necessary to satisfy any indebtedness in full and to discharge such Lien in
full. In the event any transfer tax is payable by the Limited Partner as a
result of a transfer of Partnership Units pursuant to the exercise by a Limited
Partner of the Rights, the Limited Partner shall pay such transfer tax.

 

ARTICLE XII

 

General Provisions

 

12.1 Investment Representations.

 

(a) Each Limited Partner acknowledges that it (i) has been given full and
complete access to the Partnership and those persons who will manage the
Partnership in connection with this Agreement and the transactions contemplated
hereby, (ii) has had the opportunity to review all documents relevant to its
decision to enter into this Agreement, and (iii) has had the opportunity to ask
questions of the Partnership and those persons who will manage the Partnership
concerning its investment in the Partnership and the transactions contemplated
hereby.

 

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(b) Each Limited Partner acknowledges that it understands that the Partnership
Units to be acquired by it hereunder will not be registered under the Securities
Act in reliance upon the exemption afforded by Section 4(2) thereof for
transactions by an issuer not involving any public offering, and will not be
registered or qualified under any applicable state securities laws. Each Limited
Partner represents that (i) it is acquiring such Partnership Units for
investment only and not with a view toward distribution thereof in violation of
any applicable securities laws, and it will not sell or otherwise dispose of
such Partnership Units except pursuant to the exercise of the Rights or
otherwise in accordance with the terms hereof, and except in compliance with the
registration requirements or exemption provisions of any applicable securities
laws, (ii) its economic circumstances are such that it is able to bear all risks
of the investment in the Partnership Units for an indefinite period of time,
including the risk of a complete loss of its investment in the Partnership Units
and (iii) it has knowledge and experience in financial and business matters
sufficient to evaluate the risks of investment in the Partnership Units. Each
Limited Partner further acknowledges and represents that it has made its own
independent investigation of the Partnership.

 

12.2 Notices. All notices, offers or other communications required or permitted
to be given pursuant to this Agreement shall be in writing and may be personally
delivered or sent by United States mail or by reputable overnight delivery
service and shall be deemed to have been given when delivered in person, upon
receipt when delivered by overnight delivery service or three (3) business days
after

 

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deposit in United States mail, registered or certified, postage prepaid, and
properly addressed, by or to the appropriate party. For purposes of this Section
12.2, the address of the General Partner shall be as set forth in the
introductory paragraph to this Agreement, and the addresses of the Limited
Partners shall be as set forth in the books and records of the Partnership. The
address of any Limited Partner may be changed by a notice in writing given to
the General Partner in accordance with the provisions of this Section. The
address of the General Partner may be changed by a notice in writing given to
the Limited Partners in accordance with the provisions of this Section. A copy
of any communication to the General Partner shall be delivered at the same time
to Bartlit Beck Herman Palenchar & Scott, The Kittredge Building, 511 Sixteenth
Street, Denver CO 80202 Attention: Thomas R. Stephens.

 

12.3 Successors. This Agreement and all the terms and provisions hereof shall be
binding upon and shall inure to the benefit of all Partners, and their legal
representatives, heirs, successors and permitted assigns, except as expressly
herein otherwise provided.

 

12.4 Liability of Limited Partners. The liability of the Limited Partners for
their obligations, covenants, representations and warranties under this
Agreement shall be several and not joint

 

12.5 Effect and Interpretation. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN CONFORMITY WITH THE LAWS OF THE STATE OF DELAWARE.

 

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12.6 Counterparts. This Agreement may be executed in counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.

 

12.7 Partners Not Agents. Nothing contained herein shall be construed to
constitute any Partner the agent of another Partner, except as specifically
provided herein, or in my manner to limit the Partners in the carrying on of
their own respective businesses or activities.

 

12.8 Entire Understanding: Etc. This Agreement and the other agreements
referenced herein or therein or to which the signatories hereto or thereto are
parties constitute the entire agreement and understanding among the Partners and
supersede any prior understandings and/or written or oral agreements among them
respecting the subject matter within.

 

12.9 Severability. If any provision of this Agreement, or the application of
such provision to any person or circumstance, shall be held invalid by a court
of competent jurisdiction, the remainder of this Agreement, or the application
of such provision to persons or circumstances other than those to which it is
held invalid by such court, shall not be affected thereby.

 

12.10 Trust Provision. This Agreement, to the extent executed by the trustee of
a trust, is executed by such trustee solely as trustee and not in a separate
capacity. Nothing herein contained shall create any liability on, or require the
performance of any covenant by, any such trustee individually, nor shall
anything

 

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contained herein subject the individual personal property of any trustee to any
liability.

 

12.11 Pronouns and Headings. As used herein, all pronouns shall include the
masculine, feminine and neuter, and all defined terms shall include the singular
and plural thereof wherever the context and facts require such construction. The
headings, titles and subtitles herein are inserted for convenience of reference
only and are to be ignored in any construction of the provisions hereof. Any
references in this Agreement to the word “including” shall be deemed to mean
“including without limitation.”

 

12.12 Assurances. Each of the Partners shall hereafter execute and deliver such
further instruments (provided such instruments are in form and substance
reasonably satisfactory to the executing Partner) and do such further acts and
things as may be reasonably required or useful to carry out the intent and
purpose of this Agreement and as are not inconsistent with the terms hereof.

 

12.13 Title Holder. To the extent allowable under applicable law, title to all
or any part of the Properties of the Partnership may be held in the name of the
Partnership or any other Person, the beneficial interest in which shall at all
times be vested in the Partnership. Any such title holder shall perform any and
all of its respective functions to the extent and upon such terms and conditions
as may be determined from time to time by the General Partner.

 

12.14 Power of Attorney. Each Limited Partner hereby makes, constitutes and
appoints the General Partner such Limited Partner’s true and lawful

 

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agent and attorney-in-fact, with full power of substitution and full power and
authority in such Limited Partner’s name, place and stead, to make, execute,
sign, acknowledge, swear to, record and file, on behalf of such Limited Partner
or of the Partnership, such documents, instruments, conveyances and certificates
as may be necessary or appropriate to carry out the provisions and purposes of
this Agreement, including, without limitation: (i) any modification to the
Certificate and all amendments thereto required or permitted by law or the
provisions of this Agreement, or modifications of any documents, instruments or
agreements deemed appropriate to reflect the admission of any Partner in
accordance with the terms of this Agreement in accordance with the terms hereof;
(ii) any modification to this Agreement in accordance with the terms hereof,
including the execution on behalf of such Limited Partner of amendments to this
Agreement in accordance with the terms hereof; (iii) all certificates and other
instruments deemed advisable to permit the Partnership to qualify to do business
or to protect the limited liability of the Limited Partners in any jurisdiction;
(iv) all conveyances and other instruments (including a Certificate of
Cancellation) deemed advisable to effect the dissolution and termination of the
Partnership in accordance with the terms of this Agreement; (v) any Registration
Rights Agreement (to the extent such Limited Partner is entitled to become a
party thereto); and (vi) all other instruments and documents that may be
required or permitted by law to be executed or filed on behalf of the
Partnership. The foregoing power of attorney is coupled with an interest, shall
be irrevocable, and shall survive, and shall not be affected by, the subsequent
dissolution or bankruptcy of such Limited Partner.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this Agreement to be executed as of the date and year first above written, which
Agreement shall be effective on the date it is executed and delivered by the
parties hereto.

 

GENERAL PARTNER: ASSET INVESTORS CORPORATION By:   /s/    ILLEGIBLE            

Name:

  Illegible    

Title:

  President

 

INITIAL LIMITED PARTNERS:     /s/    TERRY CONSIDINE             Terry Considine
    /s/    THOMAS RHODES             Thomas Rhodes

 

    HFIC INC.     By:       /s/    TIMOTHY HEUER                

Name:

  Timothy Heuer        

Title:

  Vice President

 

 

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CONTRIBUTED GENERAL PARTNER PROPERTY

 

[To be completed by Asset Investors Corporation]

 

I. Contributed General Partner Properties:

 

Cash: $                    

 

Description of Properties:

 

Gross Asset Values of Properties:

 

II. Partnership Units issued to General Partner:                     *

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* The number of outstanding shares of Asset Investors Corporation as of the date
hereof.

 

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INITIAL LIMITED PARTNERS

 

CONTRIBUTED LIMITED PARTNER PROPERTY

 

Description of Property:

      

Terry Considine

   $ 2,500

Thomas Rhodes

   $ 2,500

HFIC Inc.

           

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

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

Gross Asset Value of Property:

   $       

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

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

Terry Considine

   $ 2,500

Thomas Rhodes

   $ 2,500

HFIC Inc.

   $       

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

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

Partnership Units issued to the Initial Limited Partners:

           

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

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

Terry Considine

           

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

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

Thomas Rhodes

           

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

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

HFIC Inc.

           

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

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

 

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FORM OF EXERCISE NOTICE

 

[Limited Partner], as of [date of exercise], hereby irrevocably elects, pursuant
to the rights granted to it in Section 11.1 of the Agreement of Limited
Partnership of [            ] Limited Partnership (the “Agreement”) to convert
             of its              Partnership Units (as such term is defined in
the Agreement) into shares of common stock of Asset Investors Corporation or
cash, as selected by Asset Investors Corporation. [Limited Partner] hereby
certifies that the Partnership Units to be converted were issued at least one
year prior to the date hereof. [This Exercise Notice is subject to the
provisions of Section [            ] of the Registration Rights Agreement
attached hereto.

 

[Limited Partner] By:        

Name:

       

Title:

   

 

85