<PAGE>

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                                                                    EXHIBIT 10.4

                              AMENDED AND RESTATED

                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                        ARBOR REALTY LIMITED PARTNERSHIP

                         a Delaware limited partnership

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

            THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
            OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,
           TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
         REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP
         AN OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM
          AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO THE EFFECT
          THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE
        EFFECTED WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND UNDER
                 APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.

                            dated as of July 1, 2003

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

<PAGE>


<TABLE>
<S>                                                                                                           <C>
                                              ARTICLE I DEFINED TERMS

                                         ARTICLE II ORGANIZATIONAL MATTERS

Section 2.1       Organization..........................................................................      15

Section 2.2       Name..................................................................................      15

Section 2.3       Registered Office and Agent; Principal Office.........................................      15

Section 2.4       Power of Attorney.....................................................................      15

Section 2.5       Term..................................................................................      16

                                                ARTICLE III PURPOSE

Section 3.1       Purpose and Business..................................................................      17

Section 3.2       Powers................................................................................      17

Section 3.3       Partnership Only for Partnership Purposes.............................................      17

Section 3.4       Representations and Warranties by the Parties.........................................      17

                                         ARTICLE IV CAPITAL CONTRIBUTIONS

Section 4.1       Capital Contributions of the Partners.................................................      19

Section 4.2       Issuances of Additional Partnership Interests.........................................      19

Section 4.3       Additional Funds and Capital Contributions............................................      20

Section 4.4       Stock Option Plan.....................................................................      21

Section 4.5       No Interest; No Return................................................................      22

Section 4.6       Conversion or Redemption of Preferred Shares..........................................      22

Section 4.7       Conversion or Redemption of Junior Shares.............................................      22

Section 4.8       Other Contribution Provisions.........................................................      23

Section 4.9       Not Publicly Traded...................................................................      23

Section 4.10      Warrants..............................................................................      23

Section 4.11      Class A Preferred Units...............................................................      23

Section 4.12      Restricted Units......................................................................      23

                                              ARTICLE V DISTRIBUTIONS

Section 5.1       Requirement and Characterization of Distributions.....................................      23

Section 5.2       Distributions in Kind.................................................................      24

Section 5.3       Amounts Withheld......................................................................      24

Section 5.4       Distributions Upon Liquidation........................................................      24

Section 5.5       Distributions to Reflect Issuance of Additional Partnership Units.....................      24

Section 5.6       Restricted Distributions..............................................................      24

                                              ARTICLE VI ALLOCATIONS

Section 6.1       Timing and Amount of Allocations of Net Income and Net Loss...........................      24

Section 6.2       General Allocations...................................................................      24

Section 6.3       Additional Allocation Provisions......................................................      25
</TABLE>

                                        i
<PAGE>

<TABLE>
<S>                                                                                                           <C>
Section 6.4       Tax Allocations.......................................................................      27

                                 ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS

Section 7.1       Management............................................................................      28

Section 7.2       Certificate of Limited Partnership....................................................      31

Section 7.3       Restrictions on General Partner's Authority...........................................      31

Section 7.4       Reimbursement of the General Partner..................................................      32

Section 7.5       Outside Activities of the General Partner.............................................      33

Section 7.6       Contracts with Affiliates.............................................................      33

Section 7.7       Indemnification.......................................................................      34

Section 7.8       Liability of the General Partner......................................................      35

Section 7.9       Other Matters Concerning the General Partner..........................................      36

Section 7.10      Title to Partnership Assets...........................................................      37

Section 7.11      Reliance by Third Parties.............................................................      37

                              ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

Section 8.1       Limitation of Liability...............................................................      37

Section 8.2       Management of Business................................................................      37

Section 8.3       Outside Activities of Limited Partners................................................      37

Section 8.4       Return of Capital.....................................................................      38

Section 8.5       Adjustment Factor.....................................................................      38

Section 8.6       Redemption Rights of Qualifying Parties...............................................      38

Section 8.7       Partnership Right to Call Limited Partner Interests...................................      42

Section 8.8       Mergers...............................................................................      42

                                 ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 9.1       Records and Accounting................................................................      42

Section 9.2       Partnership Year......................................................................      43

Section 9.3       Reports...............................................................................      43

                                               ARTICLE X TAX MATTERS

Section 10.1      Preparation of Tax Returns............................................................      43

Section 10.2      Tax Elections.........................................................................      43

Section 10.3      Tax Matters Partner...................................................................      43

Section 10.4      Withholding...........................................................................      44

Section 10.5      Organizational Expenses...............................................................      45

                                       ARTICLE XI TRANSFERS AND WITHDRAWALS

Section 11.1      Transfer..............................................................................      45

Section 11.2      Transfer of General Partner's Partnership Interest....................................      45
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                                           <C>
Section 11.3      Transfer of Limited Partners' Partnership Interests...................................      46

Section 11.4      Substituted Limited Partners..........................................................      47

Section 11.5      Assignees.............................................................................      48

Section 11.6      General Provisions....................................................................      48

                                         ARTICLE XII ADMISSION OF PARTNERS

Section 12.1      Admission of Successor General Partner................................................      49

Section 12.2      Admission of Additional Limited Partners..............................................      49

Section 12.3      Amendment of Agreement and Certificate of Limited Partnership.........................      50

Section 12.4      Limit on Number of Partners...........................................................      50

                               ARTICLE XIII DISSOLUTION, LIQUIDATION AND TERMINATION

Section 13.1      Dissolution...........................................................................      50

Section 13.2      Winding Up............................................................................      50

Section 13.3      Deemed Distribution and Recontribution................................................      52

Section 13.4      Rights of Limited Partners............................................................      52

Section 13.5      Notice of Dissolution.................................................................      52

Section 13.6      Cancellation of Certificate of Limited Partnership....................................      52

Section 13.7      Reasonable Time for Winding-Up........................................................      52

                 ARTICLE XIV PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENTS; MEETINGS

Section 14.1      Procedures for Actions and Consents of Partners.......................................      53

Section 14.2      Amendments............................................................................      53

Section 14.3      Meetings of the Partners..............................................................      53

                                           ARTICLE XV GENERAL PROVISIONS

Section 15.1      Addresses and Notice..................................................................      53

Section 15.2      Titles and Captions...................................................................      54

Section 15.3      Pronouns and Plurals..................................................................      54

Section 15.4      Further Action........................................................................      54

Section 15.5      Binding Effect........................................................................      54

Section 15.6      Waiver................................................................................      54

Section 15.7      Counterparts..........................................................................      54

Section 15.8      Applicable Law........................................................................      54

Section 15.9      Entire Agreement......................................................................      54

Section 15.10     Invalidity of Provisions..............................................................      55

Section 15.11     Limitation to Preserve REIT Status....................................................      55

Section 15.12     No Partition..........................................................................      55

Section 15.13     No Third-Party Rights Created Hereby..................................................      55

Section 15.14     No Rights as Stockholders.............................................................      56
</TABLE>

                                       iii
<PAGE>

<TABLE>
<S>                                                                                                           <C>
Section 15.15     Parent REIT...........................................................................      56
</TABLE>

<TABLE>
<S>              <C>                                            <C>
Exhibit A        PARTNERS AND PARTNERSHIP UNITS                 A-1

Exhibit B        EXAMPLES REGARDING FACTOR                      B-1

Exhibit C        NOTICE OF REDEMPTION                           C-1

Exhibit D        FORM OF UNIT CERTIFICATE                       D-1
</TABLE>

                                       iv
<PAGE>

                         AMENDED AND RESTATED AGREEMENT
                                       OF
                               LIMITED PARTNERSHIP
                                       OF
                        ARBOR REALTY LIMITED PARTNERSHIP

                  THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
ARBOR REALTY LIMITED PARTNERSHIP, dated as of July 1, 2003, is entered into by
and among ARBOR REALTY GPOP, INC., a Delaware corporation (the "General
Partner"), ARBOR REALTY LPOP, INC., a Delaware corporation (the "Initial Limited
Partner"), ARBOR COMMERCIAL MORTGAGE, LLC, a New York limited liability company
(as a Limited Partner, and, together with the Initial Limited Partner, the
"Limited Partners") and ARBOR REALTY TRUST, INC., a Maryland corporation that
intends to elect to be taxed as a real estate investment trust (the "Parent
REIT").

                  WHEREAS, ARBOR REALTY LIMITED PARTNERSHIP (the "Partnership")
was formed by ARBOR REALTY GPOP, INC., as general partner, and ARBOR REALTY
LPOP, INC., as initial limited partner, as a limited partnership under the laws
of the State of Delaware by the filing of a Certificate of Limited Partnership
with the Secretary of State of Delaware on June 24, 2003;

                  WHEREAS, ARBOR REALTY GPOP, INC. and ARBOR REALTY LPOP, INC.
entered into that certain Agreement of Limited Partnership of Arbor Realty
Limited Partnership on June 24, 2003;

                  WHEREAS, ARBOR REALTY GPOP, INC. and ARBOR REALTY LPOP, INC.
now desire to admit and ARBOR COMMERCIAL MORTGAGE, LLC wishes to join the
Partnership as a limited partner;

                  WHEREAS, ARBOR REALTY GPOP, INC., ARBOR REALTY LPOP, INC. and
ARBOR COMMERCIAL MORTGAGE, LLC wish to establish their relative general and
limited partnership interests in the Partnership;

                  WHEREAS, ARBOR REALTY GPOP, INC. and ARBOR REALTY LPOP, INC.
are wholly-owned subsidiaries of Parent REIT; and

                  WHEREAS, the Limited Partners, the General Partner and the
Parent REIT desire to enter into this Amended and Restated Agreement of Limited
Partnership as of July 1, 2003.

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

                                    ARTICLE I
                                  DEFINED TERMS

                  The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement.

                  "Act" means the Delaware Revised Uniform Limited Partnership
Act (6 Del. C. Section 17-101 et seq.), as it may be amended from time to time,
and any successor to such statute.

                  "Actions" has the meaning set forth in Section 7.7 hereof.

                  "Additional Funds" has the meaning set forth in Section 4.3.A
hereof.

<PAGE>

                  "Additional Limited Partner" means a Person who is admitted to
the Partnership as a Limited Partner pursuant to Section 4.2 and Section 12.2
hereof and who is shown as such on the books and records of the Partnership.

                  "Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Partnership Year, after giving effect to the following
adjustments:

                                    (i)      decrease such deficit by any
         amounts that such Partner is obligated to restore pursuant to this
         Agreement or by operation of law upon liquidation of such Partner's
         Partnership Interest or is deemed to be obligated to restore pursuant
         to the penultimate sentence of each of Regulations Sections
         1.704-2(g)(1) and 1.704-2(i)(5); and

                                    (ii)     increase such deficit by the items
         described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

The foregoing definition of "Adjusted Capital Account Deficit" is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.

                  "Adjustment Factor" means 1.0; provided, however, that in the
event that:

                                    (i)      the Parent REIT (a) declares or
         pays a dividend on its outstanding REIT Shares in REIT Shares or makes
         a distribution to all holders of its outstanding REIT Shares in REIT
         Shares, (b) splits or subdivides its outstanding REIT Shares or (c)
         effects a reverse stock split or otherwise combines its outstanding
         REIT Shares into a smaller number of REIT Shares, the Adjustment Factor
         shall be adjusted by multiplying the Adjustment Factor previously in
         effect by a fraction, (i) the numerator of which shall be the number of
         REIT Shares issued and outstanding on the record date for such
         dividend, distribution, split, subdivision, reverse split or
         combination (assuming for such purposes that such dividend,
         distribution, split, subdivision, reverse split or combination has
         occurred as of such time) and (ii) the denominator of which shall be
         the actual number of REIT Shares (determined without the above
         assumption) issued and outstanding on the record date for such
         dividend, distribution, split, subdivision, reverse split or
         combination;

                                    (ii)     the Parent REIT distributes any
         rights, options or warrants to all holders of its REIT Shares to
         subscribe for or to purchase or to otherwise acquire REIT Shares (or
         other securities or rights convertible into, exchangeable for or
         exercisable for REIT Shares) at a price per share less than the Value
         of a REIT Share on the record date for such distribution (each a
         "Distributed Right"), then the Adjustment Factor shall be adjusted by
         multiplying the Adjustment Factor previously in effect by a fraction
         (a) the numerator of which shall be the number of REIT Shares issued
         and outstanding on the record date plus the maximum number of REIT
         Shares purchasable under such Distributed Rights and (b) the
         denominator of which shall be the number of REIT Shares issued and
         outstanding on the record date plus a fraction (1) the numerator of
         which is the maximum number of REIT Shares purchasable under such
         Distributed Rights times the minimum purchase price per REIT Share
         under such Distributed Rights and (2) the denominator of which is the
         Value of a REIT Share as of the record date; provided, however, that,
         if any such Distributed Rights expire or become no longer exercisable,
         then the Adjustment Factor shall be adjusted, effective retroactive to
         the date of distribution of the Distributed Rights, to reflect a
         reduced maximum number of REIT Shares or any change in the minimum
         purchase price for the purposes of the above fraction; and

                                    (iii)    the Parent REIT shall, by dividend
         or otherwise, distribute to all holders of its REIT Shares evidences of
         its indebtedness or assets (including securities, but excluding any
         dividend or distribution referred to in subsection (i) above), which
         evidences of indebtedness or assets relate to assets not received by
         the Parent REIT pursuant

                                        2
<PAGE>

         to a pro rata distribution by the Partnership, then the Adjustment
         Factor shall be adjusted to equal the amount determined by multiplying
         the Adjustment Factor in effect immediately prior to the close of
         business on the date fixed for determination of shareholders entitled
         to receive such distribution by a fraction (i) the numerator of which
         shall be such Value of a REIT Share on the date fixed for such
         determination and (ii) the denominator of which shall be the Value of a
         REIT Share on the dates fixed for such determination less the then fair
         market value (as determined by the General Partner, whose determination
         shall be conclusive) of the portion of the evidences of indebtedness or
         assets so distributed applicable to one REIT Share.

Any adjustments to the Adjustment Factor shall become effective immediately
after the effective date of such event, retroactive to the record date, if any,
for such event, provided, however, that any Limited Partner may waive, by
written notice to the General Partner, the effect of any adjustment to the
Adjustment Factor applicable to the Partnership Common Units held by such
Limited Partner, and, thereafter, such adjustment will not be effective as to
such Partnership Common Units. For illustrative purposes, examples of
adjustments to the Adjustment Factor are set forth on Exhibit B attached hereto.

                  "Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling or controlled by or under common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

                  "Agreement" means this Amended and Restated Agreement of
Limited Partnership of Arbor Realty Limited Partnership, as it may be amended,
supplemented or restated from time to time.

                  "Applicable Percentage" has the meaning set forth in Section
8.6.B hereof.

                  "Appraisal" means, with respect to any assets, the written
opinion of an independent third party experienced in the valuation of similar
assets, selected by the General Partner in good faith. Such opinion may be in
the form of an opinion by such independent third party that the value for such
property or asset as set by the General Partner is fair, from a financial point
of view, to the Partnership.

                  "Assignee" means a Person to whom one or more Partnership
Common Units have been Transferred in a manner permitted under this Agreement,
but who has not become a Substituted Limited Partner, and who has the rights set
forth in Section 11.5 hereof.

                  "Available Cash" means, with respect to any period for which
such calculation is being made,

                                    (i)      the sum, without duplication, of:

                                             (1)      the Partnership's Net
         Income or Net Loss (as the case may be) for such period,

                                             (2)      Depreciation and all other
         noncash charges to the extent deducted in determining Net Income or Net
         Loss for such period,

                                             (3)      the amount of any
         reduction in reserves of the Partnership referred to in clause (ii)(6)
         below (including, without limitation, reductions resulting because the
         General Partner determines such amounts are no longer necessary),

                                             (4)      the excess, if any, of the
         net cash proceeds from the sale, exchange, disposition, financing or
         refinancing of Property for such period over the gain (or loss, as the
         case may be), if any, recognized from such sale, exchange, disposition,

                                        3
<PAGE>

         financing or refinancing during such period (excluding Terminating
         Capital Transactions), and

                                             (5)      all other cash received
         (including amounts previously accrued as Net Income and amounts of
         deferred income) or any net amounts borrowed by the Partnership for
         such period that was not included in determining Net Income or Net Loss
         for such period;

                                    (ii)     less the sum, without duplication,
         of:

                                             (1)      all principal debt
         payments made during such period by the Partnership,

                                             (2)      capital expenditures made
         by the Partnership during such period,

                                             (3)      investments in any entity
         (including loans made thereto) to the extent that such investments are
         not otherwise described in clause (ii)(1) or clause (ii)(2) above,

                                             (4)      all other expenditures and
         payments not deducted in determining Net Income or Net Loss for such
         period (including amounts paid in respect of expenses previously
         accrued),

                                             (5)      any amount included in
         determining Net Income or Net Loss for such period that was not
         received by the Partnership during such period,

                                             (6)      the amount of any increase
         in reserves (including, without limitation, working capital reserves)
         established during such period that the General Partner determines are
         necessary or appropriate in its sole and absolute discretion, and

                                             (7)      any amount distributed or
         paid in redemption of any Limited Partner Interest or Partnership Units
         including, without limitation, any Cash Amount paid.

Notwithstanding the foregoing, Available Cash shall not include (a) any cash
received or reductions in reserves, or take into account any disbursements made,
or reserves established, after dissolution and the commencement of the
liquidation and winding up of the Partnership or (b) any Capital Contributions,
whenever received.

                  "Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York, New York are authorized or
required by law to close.

                  "Capital Account" means, with respect to any Partner, the
Capital Account maintained by the General Partner for such Partner on the
Partnership's books and records in accordance with the following provisions:

                  A.    To each Partner's Capital Account, there shall be added
such Partner's Capital Contributions, such Partner's distributive share of Net
Income and any items in the nature of income or gain that are specially
allocated pursuant to Section 6.3 hereof, and the principal amount of any
Partnership liabilities assumed by such Partner or that are secured by any
property distributed to such Partner.

                  B.    From each Partner's Capital Account, there shall be
subtracted the amount of cash and the Gross Asset Value of any property
distributed to such Partner pursuant to any provision of this Agreement, such
Partner's distributive share of Net Losses and any items in the nature of
expenses or losses that

                                        4
<PAGE>

are specially allocated pursuant to Section 6.3 hereof, and the principal amount
of any liabilities of such Partner assumed by the Partnership or that are
secured by any property contributed by such Partner to the Partnership.

                  C.    In the event any interest in the Partnership is
Transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent that it relates
to the Transferred interest.

                  D.    In determining the principal amount of any liability for
purposes of subsections (A) and (B) hereof, there shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code and
Regulations.

                  E.    The provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulations Sections
1.704-1(b) and 1.704-2, and shall be interpreted and applied in a manner
consistent with such Regulations. If the General Partner shall determine that it
is prudent to modify the manner in which the Capital Accounts are maintained in
order to comply with such Regulations, the General Partner may make such
modification provided that such modification will not have a material effect on
the amounts distributable to any Partner without such Partner's Consent. The
General Partner also shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Partners
and the amount of Partnership capital reflected on the Partnership's balance
sheet, as computed for book purposes, in accordance with Regulations Section
1.704-1(b)(2)(iv)(q) and (ii) make any appropriate modifications in the event
that unanticipated events might otherwise cause this Agreement not to comply
with Regulations Section 1.704-1(b) or Section 1.704-2.

                  "Capital Account Deficit" has the meaning set forth in Section
13.2.C hereof.

                  "Capital Contribution" means, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any Contributed Property
that such Partner contributes to the Partnership pursuant to Section 4.1, 4.2 or
4.3 hereof or is deemed to contribute pursuant to Section 4.4 hereof.

                  "Cash Amount" means, with respect to a Tendering Party, an
amount of cash equal to the product of (A) the Value of a REIT Share and (B)
such Tendering Party's REIT Shares Amount determined as of the date of receipt
by the General Partner of such Tendering Party's Notice of Redemption or, if
such date is not a Business Day, the immediately preceding Business Day;
provided, however, that,

                  (1)   in the event of a Declination not followed by an
         Offering Funding, the Cash Amount shall be an amount of cash equal to
         the product of (x) 100% minus such Tendering Party's Applicable
         Percentage, and (y) the product of the amounts contemplated by clauses
         (A) and (B) above, and

                  (2)   in the event of a Declination followed by an Offering
         Funding, the Cash Amount shall be an amount of cash equal to the
         product of: (i) the amount contemplated by clause (B) above, (ii)100%
         minus such Tendering Party's Applicable Percentage, and (iii) the
         Offering Value. The term "Offering Value" shall be the quotient
         obtained by dividing the Offering Funding Amount by the number of
         Offering Funding Shares sold in such Offering Funding.

                  "Certificate" means the Certificate of Limited Partnership of
the Partnership filed in the office of the Secretary of State of the State of
Delaware, as amended from time to time in accordance with the terms hereof and
the Act.

                  "Charter" means the Articles of Incorporation of the Parent
REIT filed with the State Department of Assessments and Taxation of Maryland, as
amended, supplemented or restated from time to time.

                  "Class A Preferred Units" have the meaning set forth in
Section 4.11 hereof.

                  "Closing Price" has the meaning set forth in the definition of
"Value."

                                        5
<PAGE>

                  "Code" means the Internal Revenue Code of 1986, as amended and
in effect from time to time or any successor statute thereto, as interpreted by
the applicable Regulations thereunder. Any reference herein to a specific
section or sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.

                  "Company Employees" means the employees of the Partnership,
the Parent REIT and any of their subsidiaries.

                  "Consent" means the consent to, approval of, or vote in favor
of a proposed action by a Partner given in accordance with Article 14 hereof.

                  "Consent of the Limited Partners" means the 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, except as otherwise provided in this Agreement, may be given or withheld by
a Majority in Interest of the Limited Partners.

                  "Contributed Property" means each item of Property or other
asset, in such form as may be permitted by the Act, but excluding cash,
contributed or deemed contributed to the Partnership (or deemed contributed by
the Partnership to a "new" partnership pursuant to Code Section 708).

                  "Controlled Entity" means, as to any Limited Partner, (a) any
corporation more than fifty percent (50%) of the outstanding voting stock of
which is owned by such Limited Partner or such Limited Partner's Family Members,
(b) any trust, whether or not revocable, of which such Limited Partner or such
Limited Partner's Family Members are the sole beneficiaries, (c) any partnership
of which such Limited Partner is the managing partner and in which such Limited
Partner or such Limited Partner's Family Members hold partnership interests
representing at least twenty-five percent (25%) of such partnership's capital
and profits and (d) any limited liability company of which such Limited Partner
is the manager or managing member and in which such Limited Partner or such
Limited Partner's Family Members hold membership interests representing at least
twenty-five percent (25%) of such limited liability company's capital and
profits.

                  "Cut-Off Date" means the fifth (5th) Business Day after the
General Partner's receipt of a Notice of Redemption.

                  "Debt" means, as to any Person, as of any date of
determination, (i) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services; (ii) all amounts owed by such
Person to banks or other Persons in respect of reimbursement obligations under
letters of credit, surety bonds and other similar instruments guaranteeing
payment or other performance of obligations by such Person; (iii) all
indebtedness for borrowed money or for the deferred purchase price of property
or services secured by any lien on any property owned by such Person, to the
extent attributable to such Person's interest in such property, even though such
Person has not assumed or become liable for the payment thereof; and (iv) lease
obligations of such Person that, in accordance with generally accepted
accounting principles, should be capitalized.

                  "Declination" has the meaning set forth in Section 8.6.D
hereof.

                  "Depreciation" means, for each Partnership Year or other
applicable period, an amount equal to the federal income tax depreciation,
amortization or other cost recovery deduction allowable with respect to an asset
for such year or other period, except that if the Gross Asset Value of an asset
differs from its adjusted basis for federal income tax purposes at the beginning
of such year or period, Depreciation shall be in an amount that 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 or period is zero, Depreciation shall be determined with
reference to such beginning Gross Asset Value using any reasonable method
selected by the General Partner.

                                        6
<PAGE>

                  "Distributed Right" has the meaning set forth in the
definition of "Adjustment Factor."

                  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

                  "Family Members" means, as to a Person that is an individual,
such Person's spouse, ancestors, descendants (whether by blood or by adoption),
brothers and sisters and inter vivos or testamentary trusts of which only such
Person and his spouse, ancestors, descendants (whether by blood or by adoption),
brothers and sisters are beneficiaries.

                  "Funding Debt" means any Debt incurred by or on behalf of the
Parent REIT for the purpose, in whole or in part, of providing funds to the
Partnership.

                  "General Partner" means Arbor Realty GPOP, Inc., a Delaware
corporation, and its successors and assigns, as the general partner of the
Partnership in their capacities as general partner of the Partnership; provided,
however, that as the context requires, references herein to the General Partner
shall also mean the General Partner's corporate parent, the Parent REIT.

                  "General Partner Interest" means the Partnership Interest held
by the General Partner, which Partnership Interest is an interest as a general
partner under the Act. A General Partner Interest may be expressed as a number
of Partnership Common Units, Partnership Preferred Units or any other
Partnership Units.

                  "General Partner Loan" has the meaning set forth in Section
4.3.D hereof.

                  "Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for federal income tax purposes, except as follows:

                        (a)      The initial Gross Asset Value of any asset
contributed by a Partner to the Partnership shall be the gross fair market value
of such asset as determined by the General Partner and agreed to by the
contributing Partner. In any case in which the General Partner and the
contributing Partner are unable to agree as to the gross fair market value of
any contributed asset or assets, such gross fair market value shall be
determined by Appraisal.

                        (b)      The Gross Asset Values of all Partnership
assets immediately prior to the occurrence of any event described in clause (i),
clause (ii), clause (iii), clause (iv) or clause (v) hereof shall be adjusted to
equal their respective gross fair market values, as determined by the General
Partner using such reasonable method of valuation as it may adopt, as of the
following times:

                                    (i)      the acquisition of an additional
         interest in the Partnership (other than in connection with the
         execution of this Agreement but including, without limitation,
         acquisitions pursuant to Section 4.2 hereof or contributions or deemed
         contributions by the General Partner pursuant to Section 4.2 hereof) by
         a new or existing Partner in exchange for more than a de minimis
         Capital Contribution, if the General Partner reasonably determines that
         such adjustment is necessary or appropriate to reflect the relative
         economic interests of the Partners in the Partnership;

                                    (ii)     the distribution by the Partnership
         to a Partner of more than a de minimis amount of Property as
         consideration for an interest in the Partnership, if the General
         Partner reasonably determines that such adjustment is necessary or
         appropriate to reflect the relative economic interests of the Partners
         in the Partnership;

                                    (iii)    the liquidation of the Partnership
         within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);

                                        7
<PAGE>

                                    (iv)     upon the admission of a successor
         General Partner pursuant to Section 12.1 hereof; and

                                    (v)      at such other times as the General
         Partner shall reasonably determine necessary or advisable in order to
         comply with Regulations Sections 1.704-1(b) and 1.704-2.

                        (c)      The Gross Asset Value of any Partnership asset
distributed to a Partner shall be the gross fair market value of such asset on
the date of distribution as determined by the distributee and the General
Partner provided that, if the distributee is the General Partner or if the
distributee and the General Partner cannot agree on such a determination, such
gross fair market value shall be determined by Appraisal.

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

                        (e)      If the Gross Asset Value of a Partnership asset
has been determined or adjusted pursuant to subsection (a), subsection (b) or
subsection (d) above, such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset for purposes of
computing Net Income and Net Losses.

                  "Holder" means either (a) a Partner or (b) an Assignee, owning
a Partnership Unit, that is treated as a member of the Partnership for federal
income tax purposes.

                  "Incapacity" or "Incapacitated" means, (i) as to any Partner
who is an individual, death, total physical disability or entry by a court of
competent jurisdiction adjudicating such Partner incompetent to manage his or
her person or his or her estate; (ii) as to any Partner that is a corporation or
limited liability company, the filing of a certificate of dissolution, or its
equivalent, or the revocation of the corporation's charter; (iii) as to any
Partner that is a partnership, the dissolution and commencement of winding up of
the partnership; (iv) as to any Partner that is an estate, the distribution by
the fiduciary of the estate's entire interest in the Partnership; (v) as to any
trustee of a trust that is a Partner, the termination of the trust (but not the
substitution of a new trustee); or (vi) as to any Partner, the bankruptcy of
such Partner. For purposes of this definition, bankruptcy of a Partner shall be
deemed to have occurred when (a) the Partner commences a voluntary proceeding
seeking liquidation, reorganization or other relief of or against such Partner
under any bankruptcy, insolvency or other similar law now or hereafter in
effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner, (c) the Partner
executes and delivers a general assignment for the benefit of the Partner's
creditors, (d) the Partner files an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Partner in any proceeding of the nature described in clause (b) above, (e) the
Partner seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator for the Partner or for all or any substantial part of the
Partner's properties, (f) any proceeding seeking liquidation, reorganization or
other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within one hundred twenty (120) days
after the commencement thereof, (g) the appointment without the Partner's
consent or acquiescence of a trustee, receiver or liquidator has not been
vacated or stayed within ninety (90) days of such appointment, or (h) an
appointment referred to in clause (g) above is not vacated within ninety (90)
days after the expiration of any such stay.

                  "Indemnitee" means (i) any Person made a party to a proceeding
by reason of its status as (A) the General Partner, (B) the Parent REIT or (C) a
director of the General Partner or the Parent REIT or an officer or employee of
the Partnership, the Parent REIT or the General Partner and (ii) such other
Persons (including Affiliates of the General Partner or the Partnership) as the
General Partner may designate from time to time (whether before or after the
event giving rise to potential liability), in its sole and absolute discretion.

                                        8
<PAGE>

                  "Independent Director" shall have the meaning assigned to such
term in the Charter, provided that if the Parent REIT has completed a Qualified
Public Offering, the term "Independent Director" shall have the meaning assigned
to such term under the rules and regulations of the principal national
securities exchange or interdealer quotation system on which the REIT Shares are
then listed.

                  "Initial Limited Partner" means Arbor Realty LPOP, Inc., a
Delaware corporation.

                  "Interest" means interest, original issue discount and other
similar payments or amounts paid by the Partnership for the use or forbearance
of money.

                  "IRS" means the Internal Revenue Service, which administers
the internal revenue laws of the United States.

                  "Junior Share" means a share of capital stock of the Parent
REIT now or hereafter authorized or reclassified that has dividend rights, or
rights upon liquidation, winding up and dissolution, that are inferior or junior
to the REIT Shares.

                  "Limited Partner" means any Person named as a Limited Partner
in Exhibit A attached hereto, as such Exhibit A may be amended from time to
time, or any Substituted Limited Partner or Additional Limited Partner, in such
Person's capacity as a Limited Partner in the Partnership.

                  "Limited Partner Interest" means a Partnership Interest of a
Limited Partner in the Partnership representing a fractional part of the
Partnership Interests of all Limited Partners and includes any and all benefits
to which the holder of such a Partnership Interest may be entitled as provided
in this Agreement, together with all obligations of such Person to comply with
the terms and provisions of this Agreement. A Limited Partner Interest may be
expressed as a number of Partnership Common Units, Partnership Preferred Units
or other Partnership Units.

                  "Liquidating Event" has the meaning set forth in Section 13.1
hereof.

                  "Liquidator" has the meaning set forth in Section 13.2.A
hereof.

                  "Majority in Interest of the Limited Partners" means Limited
Partners holding more than fifty percent (50%) of the outstanding Partnership
Common Units held by all Limited Partners.

                  "Market Price" has the meaning set forth in the definition of
"Value."

                  "Net Income" or "Net Loss" means, for each Partnership Year of
the Partnership, an amount equal to the Partnership's taxable income or loss for
such year, determined in accordance with Code Section 703(a) (for this purpose,
all items of income, gain, loss or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or loss),
with the following adjustments:

                        (a)      Any income of the Partnership that is exempt
from federal income tax and not otherwise taken into account in computing Net
Income (or Net Loss) pursuant to this definition of "Net Income" or "Net Loss"
shall be added to (or subtracted from, as the case may be) such taxable income
(or loss);

                        (b)      Any expenditure of the Partnership described in
Code Section 705(a)(2)(B) or treated as a Code Section 705(a)(2)(B) expenditure
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken
into account in computing Net Income (or Net Loss) pursuant to this definition
of "Net Income" or "Net Loss," shall be subtracted from (or added to, as the
case may be) such taxable income (or loss);

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

                                        9
<PAGE>

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

                        (e)      In lieu of the depreciation, amortization and
other cost recovery deductions that would otherwise be taken into account in
computing such taxable income or loss, there shall be taken into account
Depreciation for such Partnership Year;

                        (f)      To the extent that an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or
Code Section 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts
as a result of a distribution other than in liquidation of a Partner's interest
in the Partnership, the amount of such adjustment shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases the basis of the asset) from the disposition of the asset
and shall be taken into account for purposes of computing Net Income or Net
Loss; and

                        (g)      Notwithstanding any other provision of this
definition of "Net Income" or "Net Loss," any item that is specially allocated
pursuant to Section 6.3 hereof shall not be taken into account in computing Net
Income or Net Loss. The amounts of the items of Partnership income, gain, loss
or deduction available to be specially allocated pursuant to Section 6.3 hereof
shall be determined by applying rules analogous to those set forth in this
definition of "Net Income" or "Net Loss."

                  "New Securities" means (i) any rights, options, warrants or
convertible or exchangeable securities having the right to subscribe for or
purchase REIT Shares or Preferred Shares, excluding Preferred Shares, Junior
Shares and grants under the Stock Option Plans, or (ii) any Debt issued by the
General Partner that provides any of the rights described in clause (i).

                  "Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for
a Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).

                  "Nonrecourse Liability" has the meaning set forth in
Regulations Section 1.752-1(a)(2).

                  "Notice of Redemption" means the Notice of Redemption
substantially in the form of Exhibit C attached to this Agreement.

                  "Offering Funding" has the meaning set forth in Section
8.6.D(2) hereof.

                  "Offering Funding Amount" means the dollar amount equal to (i)
the product of (x) the number of Offering Funding Shares sold in an Offering
Funding and (y) the offering price per share of such Offering Funding Shares in
such Offering Funding, less (ii) the aggregate underwriting discounts and
commissions in such Offering Funding.

                  "Offering Funding Shares" has the meaning set forth in Section
8.6.D(2) hereof.

                  "Ownership Limit" means the applicable restriction or
restrictions on ownership of shares of the Parent REIT imposed under the
Charter.

                  "Paired Common Unit" has the meaning set forth in the Pairing
Agreement.

                  "Pairing Agreement" means the Pairing Agreement by and among
the Parent REIT, the General Partner, the Initial Limited Partner, the
Partnership, and Arbor Commercial Mortgage, LLC, dated as of July 1, 2003.

                                       10
<PAGE>

                  "Parent REIT" means Arbor Realty Trust, Inc., a Maryland
corporation that intends to be taxed as a REIT and is the corporate parent of
the General Partner and the Initial Limited Partner.

                  "Partner" means the General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.

                  "Partner Minimum Gain" means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).

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

                  "Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).

                  "Partnership" means the limited partnership formed under the
Act and pursuant to this Agreement, and any successor thereto.

                  "Partnership Common Unit" means a fractional share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2
hereof, but does not include any Partnership Preferred Unit or any other
Partnership Unit specified in a Partnership Unit Designation or this Agreement
as being other than a Partnership Common Unit; provided, however, that the
General Partner Interest and the Limited Partner Interests shall have the
differences in rights and privileges as specified in this Agreement. The
ownership of Partnership Common Units may (but need not, in the sole and
absolute discretion of the General Partner) be evidenced by the form of
certificate for Partnership Common Units attached hereto as Exhibit D.

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

                  "Partnership Junior Unit" means a fractional share of the
Partnership Interests that the General Partner has authorized pursuant to
Section 4.1 or Section 4.2 or Section 4.3 hereof that has distribution rights,
or rights upon liquidation, winding up and dissolution, that are inferior or
junior to the Partnership Common Units.

                  "Partnership Minimum Gain" has the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in Partnership Minimum Gain, for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).

                  "Partnership Preferred Unit" means a fractional share of the
Partnership Interests that the General Partner has authorized pursuant to
Section 4.1, Section 4.2 or Section 4.3 hereof that has distribution rights, or
rights upon liquidation, winding up and dissolution, that are superior or prior
to the Partnership Common Units.

                  "Partnership Record Date" means a record date established by
the General Partner for the distribution of Available Cash pursuant to Section
5.1 hereof, which record date shall generally be the same as the record date
established by the General Partner for a distribution to its shareholders of
some or all of its portion of such distribution.

                  "Partnership Unit" shall mean a Partnership Common Unit, a
Partnership Preferred Unit, a Partnership Junior Unit or any other fractional
share of the Partnership Interests that the General Partner has authorized
pursuant to Section 4.1, Section 4.2 or Section 4.3 hereof.

                  "Partnership Unit Designation" shall have the meaning set
forth in Section 4.2 hereof.

                                       11
<PAGE>

                  "Partnership Year" means the fiscal year of the Partnership,
which shall be the calendar year.

                  "Percentage Interest" means, as to each Partner, its interest,
if any, in the Partnership Common Units as determined by dividing the
Partnership Common Units owned by such Partner by the total number of
Partnership Common Units then outstanding as specified in Exhibit A attached
hereto, as such Exhibit may be amended from time to time. To the extent that the
Partnership issues more than one class or series of Partnership Interests, the
interest of such class or series shall be determined as set forth in this
Agreement or any amendment hereto.

                  "Person" means an individual or a corporation, partnership,
trust, unincorporated organization, association, limited liability company or
other entity.

                  "Preferred Share" means a share of capital stock of the Parent
REIT now or hereafter authorized or reclassified that has dividend rights, or
rights upon liquidation, winding up and dissolution, that are superior or prior
to the REIT Shares.

                  "Primary Offering Notice" has the meaning set forth in Section
8.6.F(4) hereof.

                  "Properties" means any assets and property of the Partnership
such as, but not limited to, interests in real property and personal property,
including, without limitation, fee interests, interests in ground leases,
interests in limited liability companies, joint ventures or partnerships,
interests in mortgages, and Debt instruments as the Partnership may hold from
time to time and "Property" shall mean any one such asset or property.

                  "Qualified Public Offering" means the sale in a public
offering registered under the Securities Act of shares of common stock in which
the REIT Shares are listed on a national securities exchange or interdealer
quotation system.

                  "Qualified REIT Subsidiary" means a qualified REIT subsidiary
of the Parent REIT within the meaning of Code Section 856(i)(2).

                  "Qualified Transferee" means an "accredited investor" as
defined in Rule 501 promulgated under the Securities Act.

                  "Qualifying Party" means (a) a Limited Partner, (b) an
Additional Limited Partner, or (c) a Substituted Limited Partner succeeding to
all or part of a Limited Partner Interest of (i) a Limited Partner, or (ii) an
Additional Limited Partner, in each case other than the Initial Limited Partner.

                  "Redemption" has the meaning set forth in Section 8.6.A
hereof.

                  "Registration Rights Agreement" means the Registration Rights
Agreement between Parent REIT and JMP Securities LLC, dated as of July 1, 2003.

                  "Regulations" means the applicable income tax regulations
under the Code, whether such regulations are in proposed, temporary or final
form, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).

                  "Regulatory Allocations" has the meaning set forth in Section
6.3.B(viii) hereof.

                  "Restricted Partnership Common Units" has the meaning set
forth in Section 4.12 hereof.

                  "REIT" means a real estate investment trust qualifying under
Code Section 856.

                  "REIT Consideration" means the aggregate number of REIT Shares
equal to the product of the REIT Shares Amount and the Applicable Percentage.

                                       12
<PAGE>

                  "REIT Partner" means (a) a Partner, including, without
limitation, the General Partner, that is, or has made an election to qualify as,
a REIT, (b) any Qualified REIT Subsidiary of any Partner that is, or has made an
election to qualify as, a REIT and (c) any Partner that is a Qualified REIT
Subsidiary of a REIT.

                  "REIT Party" means the Parent REIT, the General Partner and/or
the Initial Limited Partner.

                  "REIT Payment" has the meaning set forth in Section 15.11
hereof.

                  "REIT Requirements" means the requirements for qualification
as a REIT under the Code and regulations, including, without limitation, the
distribution requirements contained in Section 857(a) of the Code.

                  "REIT Share" means a share of the Parent REIT's Common Stock,
par value $.01 per share. Where relevant in this Agreement, "REIT Shares"
includes shares of the Parent REIT's Common Stock, par value $.01 per share,
issued upon conversion of Preferred Shares or Junior Shares.

                  "REIT Shares Amount" means a number of REIT Shares equal to
the product of (a) the number of Tendered Units and (b) the Adjustment Factor in
effect on the Specified Redemption Date with respect to such Tendered Units;
provided, however, that, in the event that the Parent REIT issues to all holders
of REIT Shares as of a certain record date rights, options, warrants or
convertible or exchangeable securities entitling the Parent REIT's shareholders
to subscribe for or purchase REIT Shares, or any other securities or property
(collectively, the "Rights"), with the record date for such Rights issuance
falling within the period starting on the date of the Notice of Redemption and
ending on the day immediately preceding the Specified Redemption Date, which
Rights will not be distributed before the relevant Specified Redemption Date,
then the REIT Shares Amount shall also include such Rights that a holder of that
number of REIT Shares would be entitled to receive, expressed, where relevant
hereunder, in a number of REIT Shares determined by the General Partner in good
faith.

                  "Related Party" means, with respect to any Person, any other
Person whose ownership of shares of the General Partner's capital stock would be
attributed to the first such Person under Code Section 544 (as modified by Code
Section 856(h)(1)(B)).

                  "Rights" has the meaning set forth in the definition of "REIT
Shares Amount."

                  "SEC" means the Securities and Exchange Commission.

                  "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.

                  "Services Agreement" means any management, development or
advisory agreement with a property and/or asset manager for the provision of
property management, asset management, leasing, development and/or similar
services with respect to the Properties and any agreement for the provision of
services of accountants, legal counsel, appraisers, insurers, brokers, transfer
agents, registrars, developers, financial advisors and other professional
services.

                  "Single Funding Notice" has the meaning set forth in Section
8.6.D(3) hereof.

                  "Special Voting Preferred Stock" means shares of Special
Voting Preferred Stock, $0.01 par value per share, of Parent REIT, as designated
by articles supplementary to the Charter and subject to the Pairing Agreement.

                  "Specified Redemption Date" means the later of (a) the tenth
(10th) Business Day after the receipt by the General Partner of a Notice of
Redemption or (b) in the case of a Declination followed by an Offering Funding,
the Business Day next following the date of the closing of the Offering Funding;
provided, however, that the Specified Redemption Date, as well as the closing of
a Redemption, or an acquisition of Tendered Units by a REIT Party pursuant to
Section 8.6.B hereof, on any Specified Redemption Date, may be

                                       13
<PAGE>

deferred, in the REIT Party's sole and absolute discretion, for such time (but
in any event not more than one hundred fifty (150) days in the aggregate) as may
reasonably be required to effect, as applicable, (i) an Offering Funding or
other necessary funding arrangements, (ii) compliance with the Securities Act or
other law (including, but not limited to, (a) state "blue sky" or other
securities laws and (b) the expiration or termination of the applicable waiting
period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended) and (iii) satisfaction or waiver of other commercially reasonable
and customary closing conditions and requirements for a transaction of such
nature.

                  "Stock Option Plan" means any stock option plan hereafter
adopted by the Partnership or the Parent REIT.

                  "Subsidiary" means, with respect to any Person, any other
Person (which is not an individual) of which a majority of (i) the voting power
of the voting equity securities or (ii) the outstanding equity interests is
owned, directly or indirectly, by such Person; provided, however, that, with
respect to the Partnership, "Subsidiary" means solely a partnership or limited
liability company (taxed, for federal income tax purposes, as a partnership and
not as an association or publicly traded partnership taxable as a corporation)
of which the Partnership is a partner or member, as applicable, unless the
General Partner has received an unqualified opinion from independent counsel of
recognized standing, or a ruling from the IRS, that the ownership of shares of
stock of a corporation or other entity will not jeopardize the Parent REIT's
status as a REIT, in which event the term "Subsidiary" shall include the
corporation or other entity which is the subject of such opinion or ruling.

                  "Substituted Limited Partner" means a Person who is admitted
as a Limited Partner to the Partnership pursuant to Section 11.4 hereof.

                  "Tax Items" has the meaning set forth in Section 6.4.A hereof.

                  "Tendered Units" has the meaning set forth in Section 8.6.A
hereof.

                  "Tendering Party" has the meaning set forth in Section 8.6.A
hereof.

                  "Terminating Capital Transaction" means any sale or other
disposition of all or substantially all of the assets of the Partnership or a
related series of transactions that, taken together, result in the sale or other
disposition of all or substantially all of the assets of the Partnership.

                  "Transfer," when used with respect to a Partnership Unit, or
all or any portion of a Partnership Interest, means any sale, assignment,
bequest, conveyance, devise, gift (outright or in trust), pledge, encumbrance,
hypothecation, mortgage, exchange, transfer or other disposition or act of
alienation, whether voluntary or involuntary or by operation of law; provided,
however, that when the term is used in Article 11 hereof, "Transfer" does not
include (a) any Redemption of Partnership Common Units by the Partnership, or
acquisition of Tendered Units by a REIT Party, pursuant to Section 8.6 hereof or
(b) any redemption of Partnership Units pursuant to any Partnership Unit
Designation. The terms "Transferred" and "Transferring" have correlative
meanings.

                  "Unitholder" means the General Partner or any Holder of
Partnership Units.

                  "Value" means, on any date of determination with respect to a
REIT Share, the average of the daily Market Prices for ten (10) consecutive
trading days immediately preceding the date of determination except that, as
provided in Section 4.4.B. hereof, the Market Price for the trading day
immediately preceding the date of exercise of a stock option under any Stock
Option Plans shall be substituted for such average of daily market prices for
purposes of Section 4.4 hereof; provided, however, that for purposes of Section
8.6, the "date of determination" shall be the date of receipt by the General
Partner of a Notice of Redemption or, if such date is not a Business Day, the
immediately preceding Business Day. The term "Market Price" on any date shall
mean, with respect to any class or series of outstanding REIT Shares, the
Closing Price for such REIT Shares on such date. The "Closing Price" on any date
shall mean the last sale price for such REIT Shares, regular way, or, in case no
such sale takes place on such day, the average of the closing bid and asked
prices, regular way, for such REIT Shares, in either case as reported in the
principal consolidated transaction reporting system with

                                       14
<PAGE>

respect to securities listed or admitted to trading on the New York Stock
Exchange or, if such REIT Shares are not listed or admitted to trading on the
New York Stock Exchange, as reported on the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such REIT Shares are listed or admitted to trading
or, if such REIT Shares are not 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 Quotation System
or, if such system is no longer in use, the principal other automated quotation
system that may then be in use or, if such REIT Shares 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 such REIT Shares selected by
the Board of Directors of the General Partner or, in the event that no trading
price is available for such REIT Shares, the fair market value of the REIT
Shares, as determined in good faith by the Board of Directors of the General
Partner.

         In the event that the REIT Shares Amount includes Rights (as defined in
the definition of "REIT Shares Amount") that a holder of REIT Shares would be
entitled to receive, then the Value of such Rights shall be determined by the
General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate.

                  "Warrants" mean warrants to purchase additional Partnership
Common Units pursuant to the Warrant Agreement.

                  "Warrant Agreement" means the Warrant Agreement between the
Partnership, the Parent REIT, and Arbor Commercial Mortgage, LLC, dated as of
July 1, 2003.

                                   ARTICLE II
                             ORGANIZATIONAL MATTERS

                  Section 2.1 Organization. The Partnership is a limited
partnership organized pursuant to the provisions of the Act and upon the terms
and subject to the conditions set forth in this Agreement. Except as expressly
provided herein to the contrary, the rights and obligations of the Partners and
the administration and termination of the Partnership shall be governed by the
Act. The Partnership Interest of each Partner shall be personal property for all
purposes.

                  Section 2.2 Name. The name of the Partnership is "ARBOR REALTY
LIMITED PARTNERSHIP." The Partnership's business may be conducted under any
other name or names deemed advisable by the General Partner, including the name
of the General Partner or any Affiliate thereof. The words "Limited
Partnership," "LP," "L.P.," "Ltd." or similar words or letters shall be included
in the Partnership's name where necessary for the purposes of complying with the
laws of any jurisdiction that so requires. The General Partner in its sole and
absolute discretion may change the name of the Partnership at any time and from
time to time and shall notify the Partners of such change in the next regular
communication to the Partners.

                  Section 2.3 Registered Office and Agent; Principal Office. The
address of the registered office of the Partnership in the State of Delaware is
located at 1209 Orange Street, Wilmington, Delaware, 19801, and the registered
agent for service of process on the Partnership in the State of Delaware at such
registered office is The Corporation Trust Company. The principal office of the
Partnership is located at 333 Earle Ovington Blvd., Suite 900, Uniondale, NY
11553, or such other place as the General Partner may from time to time
designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Delaware as
the General Partner deems advisable.

                  Section 2.4 Power of Attorney.

                  A.       Each Limited Partner and each Assignee hereby
irrevocably constitutes and appoints the General Partner, any Liquidator, and
authorized officers and attorneys-in-fact of each, and each of those acting
singly, in each case with full power of substitution, as its true and lawful
agent and attorney-in-fact, with full power and authority in its name, place and
stead to:

                                       15
<PAGE>

                                                      (1) execute, swear to,
         seal, acknowledge, deliver, file and record in the appropriate public
         offices (a) all certificates, documents and other instruments
         (including, without limitation, this Agreement and the Certificate and
         all amendments, supplements or restatements thereof) that the General
         Partner or the Liquidator deems appropriate or necessary to form,
         qualify or continue the existence or qualification of the Partnership
         as a limited partnership (or a partnership in which the limited
         partners have limited liability to the extent provided by applicable
         law) in the State of Delaware and in all other jurisdictions in which
         the Partnership may conduct business or own property; (b) all
         instruments that the General Partner or the Liquidator deems
         appropriate or necessary to reflect any amendment, change, modification
         or restatement of this Agreement in accordance with its terms; (c) all
         conveyances and other instruments or documents that the General Partner
         or the Liquidator deems appropriate or necessary to reflect the
         dissolution and liquidation of the Partnership pursuant to the terms of
         this Agreement, including, without limitation, a certificate of
         cancellation; (d) all conveyances and other instruments or documents
         that the General Partner or the Liquidator deems appropriate or
         necessary to reflect the distribution or exchange of assets of the
         Partnership pursuant to the terms of this Agreement; (e) all
         instruments relating to the admission, withdrawal, removal or
         substitution of any Partner pursuant to, or other events described in,
         Article 11, Article 12 or Article 13 hereof or the Capital Contribution
         of any Partner; and (f) all certificates, documents and other
         instruments relating to the determination of the rights, preferences
         and privileges relating to Partnership Interests; and

                                                      (2) execute, swear to,
         acknowledge and file all ballots, consents, approvals, waivers,
         certificates and other instruments appropriate or necessary, in the
         sole and absolute discretion of the General Partner or the Liquidator,
         to make, evidence, give, confirm or ratify any vote, consent, approval,
         agreement or other action that is made or given by the Partners
         hereunder or is consistent with the terms of this Agreement or
         appropriate or necessary, in the sole and absolute discretion of the
         General Partner or the Liquidator, to effectuate the terms or intent of
         this Agreement.

Nothing contained herein shall be construed as authorizing the General Partner
or the Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.

                  B.       The foregoing power of attorney is hereby declared to
be irrevocable and a special power coupled with an interest, in recognition of
the fact that each of the Limited Partners and Assignees will be relying upon
the power of the General Partner or the Liquidator to act as contemplated by
this Agreement in any filing or other action by it on behalf of the Partnership,
and it shall survive and not be affected by the subsequent Incapacity of any
Limited Partner or Assignee and the Transfer of all or any portion of such
Limited Partner's or Assignee's Partnership Units or Partnership Interest and
shall extend to such Limited Partner's or Assignee's heirs, successors, assigns
and personal representatives. Each such Limited Partner or Assignee hereby
agrees to be bound by any representation made by the General Partner or the
Liquidator, acting in good faith pursuant to such power of attorney; and each
such Limited Partner or Assignee hereby waives any and all defenses that may be
available to contest, negate or disaffirm the action of the General Partner or
the Liquidator, taken in good faith under such power of attorney. Each Limited
Partner or Assignee shall execute and deliver to the General Partner or the
Liquidator, within fifteen (15) days after receipt of the General Partner's or
the Liquidator's request therefor, such further designation, powers of attorney
and other instruments as the General Partner or the Liquidator, as the case may
be, deems necessary to effectuate this Agreement and the purposes of the
Partnership.

                  Section 2.5 Term. Pursuant to Section 17-217(d) of the Act,
the term of the Partnership commenced on June 24, 2003 and shall continue until
the Partnership is dissolved pursuant to the provisions of Article 13 hereof or
as otherwise provided by law.

                                   ARTICLE III
                                     PURPOSE

                                       16
<PAGE>

                  Section 3.1 Purpose and Business. The purpose and nature of
the Partnership is to conduct any business, enterprise or activity permitted by
or under the Act; provided, however, such business and arrangements and
interests may be limited to and conducted in such a manner as to permit the
Parent REIT, in the sole and absolute discretion of the General Partner, at all
times to be classified as a REIT. In connection with the foregoing, the
Partnership shall have full power and authority to enter into, perform and carry
out contracts of any kind, to borrow and lend money and to issue and guarantee
evidence of indebtedness, whether or not secured by mortgage, deed of trust,
pledge or other lien and, directly or indirectly, to acquire and construct
additional Properties necessary, useful or desirable in connection with its
business.

                  Section 3.2 Powers.

                  A.       The Partnership shall be empowered to do any and all
acts and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described herein and for the protection and benefit of the Partnership.

                  B.       The Partnership may contribute from time to time
Partnership capital to one or more newly formed entities solely in exchange for
equity interests therein (or in a wholly-owned subsidiary entity thereof).

                 C.       Notwithstanding any other provision in this
Agreement, the General Partner may cause the Partnership not to take, or to
refrain from taking, any action that, in the judgment of the General Partner, in
its sole and absolute discretion, (i) could adversely affect the ability of the
Parent REIT to continue to qualify as a REIT, (ii) could subject the Parent REIT
to any additional taxes under Code Section 857 or Code Section 4981 or any other
related or successor provision of the Code, or (iii) could violate any law or
regulation of any governmental body or agency having jurisdiction over Parent
REIT or the General Partner, their securities or the Partnership.

                  Section 3.3 Partnership Only for Partnership Purposes. This
Agreement shall not be deemed to create a company, venture or partnership
between or among the Partners with respect to any activities whatsoever other
than the activities within the purposes of the Partnership as specified in
Section 3.1 hereof. Except as otherwise provided in this Agreement, no Partner
shall have any authority to act for, bind, commit or assume any obligation or
responsibility on behalf of the Partnership, its properties or any other
Partner. No Partner, in its capacity as a Partner under this Agreement, shall be
responsible or liable for any indebtedness or obligation of another Partner, and
the Partnership shall not be responsible or liable for any indebtedness or
obligation of any Partner, incurred either before or after the execution and
delivery of this Agreement by such Partner, except as to those responsibilities,
liabilities, indebtedness or obligations incurred pursuant to and as limited by
the terms of this Agreement and the Act.

                  Section 3.4 Representations and Warranties by the Parties.

                  A.       Each Partner (including, without limitation, each
Additional Limited Partner or Substituted Limited Partner as a condition to
becoming an Additional Limited Partner or a Substituted Limited Partner,
respectively) that is an individual represents and warrants to each other
Partner that (i) the consummation of the transactions contemplated by this
Agreement to be performed by such Partner will not result in a breach or
violation of, or a default under, any material agreement by which such Partner
or any of such Partner's property is bound, or any statute, regulation, order or
other law to which such Partner is subject, (ii) subject to the last sentence of
this Section 3.4.A, such Partner is neither a "foreign person" within the
meaning of Code Section 1445(f) nor a "foreign partner" within the meaning of
Code Section 1446(e), (iii) such Partner does not own, directly or indirectly,
(a) nine and nine tenths percent (9.9%) or more of the total combined voting
power of all classes of stock entitled to vote, or nine and nine tenths percent
(9.9%) or more of the total number of shares of all classes of stock, of any
corporation that is a tenant of either (I) the Parent REIT, the General Partner
or any Qualified REIT Subsidiary, (II) the Partnership or (III) any partnership,
venture or limited liability company of which the Parent REIT, the General
Partner, any Qualified REIT Subsidiary or the Partnership is a member or (b) an
interest of nine and nine tenths percent (9.9%) or more in the assets or net
profits of any tenant of either (I) the Parent REIT, the General Partner or any
Qualified REIT Subsidiary, (II) the Partnership or (III) any partnership,
venture, or limited liability company of which the Parent REIT, the General
Partner, any Qualified REIT Subsidiary or the Partnership is a member and (iv)
this Agreement is binding upon, and enforceable against, such Partner in
accordance with its terms. Notwithstanding anything

                                       17
<PAGE>

contained herein to the contrary, in the event that the representation contained
in the foregoing clause (ii) would be inaccurate if given by a Partner, such
Partner (w) shall not be required to make and shall not be deemed to have made
such representation, if it delivers to the General Partner in connection with or
prior to its execution of this Agreement written notice that it may not
truthfully make such representation, (x) hereby agrees that it is subject to,
and hereby authorizes the General Partner to withhold, all withholdings to which
such a "foreign person" or "foreign partner", as applicable, is subject under
the Code and (y) hereby agrees to cooperate fully with the General Partner with
respect to such withholdings, including by effecting the timely completion and
delivery to the General Partner of all governmental forms required in connection
therewith.

                  B.       Each Partner (including, without limitation, each
Additional Limited Partner or Substituted Limited Partner as a condition to
becoming an Additional Limited Partner or a Substituted Limited Partner,
respectively) that is not an individual represents and warrants to each other
Partner(s) that (i) all transactions contemplated by this Agreement to be
performed by it have been duly authorized by all necessary action, including,
without limitation, that of its general partner(s), committee(s), trustee(s),
beneficiaries, directors and/or shareholder(s), as the case may be, as required,
(ii) the consummation of such transactions shall not result in a breach or
violation of, or a default under, its partnership or operating agreement, trust
agreement, articles, charter or bylaws, as the case may be, any material
agreement by which such Partner or any of such Partner's properties or any of
its partners, members, beneficiaries, trustees or shareholders, as the case may
be, is or are bound, or any statute, regulation, order or other law to which
such Partner or any of its partners, members, trustees, beneficiaries or
shareholders, as the case may be, is or are subject, (iii) subject to the last
sentence of this Section 3.4.B, such Partner is neither a "foreign person"
within the meaning of Code Section 1445(f) nor a "foreign partner" within the
meaning of Code Section 1446(e), (iv) such Partner does not own, directly or
indirectly, (a) nine and nine tenths percent (9.9%) or more of the total
combined voting power of all classes of stock entitled to vote, or nine and
eight nine percent (9.9%) or more of the total number of shares of all classes
of stock, of any corporation that is a tenant of either (I) the Parent REIT, the
General Partner or any Qualified REIT Subsidiary, (II) the Partnership or (III)
any partnership, venture or limited liability company of which the Parent REIT,
the General Partner, any Qualified REIT Subsidiary or the Partnership is a
member or (b) an interest of nine and nine tenths percent (9.9%) or more in the
assets or net profits of any tenant of either (I) the Parent REIT, the General
Partner or any Qualified REIT Subsidiary, (II) the Partnership or (III) any
partnership, venture or limited liability company for which the Parent REIT, the
General Partner, any Qualified REIT Subsidiary or the Partnership is a member
and (v) this Agreement is binding upon, and enforceable against, such Partner in
accordance with its terms. Notwithstanding anything contained herein to the
contrary, in the event that the representation contained in the foregoing clause
(iii) would be inaccurate if given by a Partner, such Partner (w) shall not be
required to make and shall not be deemed to have made such representation, if it
delivers to the General Partner in connection with or prior to its execution of
this Agreement written notice that it may not truthfully make such
representation, (x) hereby agrees that it is subject to, and hereby authorizes
the General Partner to withhold, all withholdings to which such a "foreign
person" or "foreign partner", as applicable, is subject under the Code and (y)
hereby agrees to cooperate fully with the General Partner with respect to such
withholdings, including by effecting the timely completion and delivery to the
General Partner of all internal revenue forms required in connection therewith.

                  C.       Each Partner (including, without limitation, each
Substituted Limited Partner as a condition to becoming a Substituted Limited
Partner) represents, warrants and agrees that it has acquired and continues to
hold its interest in the Partnership for its own account for investment purposes
only and not for the purpose of, or with a view toward, the resale or
distribution of all or any part thereof, and not with a view toward selling or
otherwise distributing such interest or any part thereof at any particular time
or under any predetermined circumstances. Each Partner further represents and
warrants that it is a sophisticated investor, able and accustomed to handling
sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds that it has invested in the Partnership in what
it understands to be a highly speculative and illiquid investment.

                  D.       The representations and warranties contained in
Sections 3.4.A, 3.4.B and 3.4.C hereof shall survive the execution and delivery
of this Agreement by each Partner (and, in the case of an Additional Limited
Partner or a Substituted Limited Partner, the admission of such Additional
Limited Partner or Substituted Limited Partner as a Limited Partner in the
Partnership) and the dissolution, liquidation and termination of the
Partnership.

                                       18
<PAGE>

                  E.       Each Partner (including, without limitation, each
Substituted Limited Partner as a condition to becoming a Substituted Limited
Partner) hereby acknowledges that no representations as to potential profit,
cash flows, funds from operations or yield, if any, in respect of the
Partnership or the Parent REIT have been made by any Partner or any employee or
representative or Affiliate of any Partner, and that projections and any other
information, including, without limitation, financial and descriptive
information and documentation, that may have been in any manner submitted to
such Partner shall not constitute any representation or warranty of any kind or
nature, express or implied.

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

                  Section 4.1 Capital Contributions of the Partners. The
Partners have made Capital Contributions to the Partnership and own Partnership
Units in the amount set forth for such Partner on Exhibit A, as the same may be
amended from time to time by the General Partner to the extent necessary to
reflect accurately sales, exchanges or other Transfers, redemptions, Capital
Contributions, the issuance of additional Partnership Units, or similar events
having an effect on a Partner's ownership of Partnership Units. Except as
provided by law or in Sections 4.2, 4.3, 4.10 or 10.4 hereof, the Partners shall
have no obligation or right to make any additional Capital Contributions or
loans to the Partnership.

                  Section 4.2 Issuances of Additional Partnership Interests.

                  A.       General. The General Partner is hereby authorized to
cause the Partnership to issue additional Partnership Interests, in the form of
Partnership Units, for any Partnership purpose, at any time or from time to
time, to the Partners (including the General Partner) or to other Persons, and
to admit such Persons as Additional Limited Partners, for such consideration and
on such terms and conditions as shall be established by the General Partner in
its sole and absolute discretion, all without the approval of any Limited
Partners. Without limiting the foregoing, the General Partner is expressly
authorized to cause the Partnership to issue Partnership Units (i) upon the
conversion, redemption or exchange of any Debt, Partnership Units or other
securities issued by the Partnership, (ii) for less than fair market value, so
long as the General Partner concludes in good faith that such issuance is in the
best interests of the General Partner and the Partnership, and (iii) in
connection with any merger of any other Person into the Partnership or any
Subsidiary of the Partnership if the applicable merger agreement provides that
Persons are to receive Partnership Units in exchange for their interests in the
Person merging into the Partnership or any Subsidiary of the Partnership.
Subject to Delaware law, any additional Partnership Interests may be issued in
one or more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other special
rights, powers and duties as shall be determined by the General Partner, in its
sole and absolute discretion without the approval of any Limited Partner, and
set forth in this Agreement or a written document thereafter attached to and
made an exhibit to this Agreement (each, a "Partnership Unit Designation").
Without limiting the generality of the foregoing, the General Partner shall have
authority to specify (a) the allocations of items of Partnership income, gain,
loss, deduction and credit to each such class or series of Partnership
Interests; (b) the right of each such class or series of Partnership Interests
to share in Partnership distributions; (c) the rights of each such class or
series of Partnership Interests upon dissolution and liquidation of the
Partnership; (d) the voting rights, if any, of each such class or series of
Partnership Interests; and (e) the conversion, redemption or exchange rights
applicable to each such class or series of Partnership Interests. Upon the
issuance of any additional Partnership Interest, the General Partner shall amend
Exhibit A as appropriate to reflect such issuance.

                  B.       Issuances to the General Partner. No additional
Partnership Units shall be issued to the General Partner or the Initial Limited
Partner unless (i) the additional Partnership Units are issued to all Partners
in proportion to their respective Percentage Interests with respect to the class
of Partnership Units so issued, (ii) (a) the additional Partnership Units are
(x) Partnership Common Units issued in connection with an issuance of REIT
Shares, or (y) Partnership Units (other than Partnership Common Units) issued in
connection with an issuance, conversion or exercise of Preferred Shares, New
Securities or other interests in the Parent REIT (other than REIT Shares), which
Preferred Shares, New Securities or other interests have designations,
preferences and other rights, terms and provisions that are substantially the
same as the designations,

                                       19
<PAGE>

preferences and other rights, terms and provisions of the additional Partnership
Units issued to the General Partner or the Initial Limited Partner, and (b) the
Parent REIT contributes or otherwise causes to be transferred to the Partnership
the cash proceeds or other consideration received in connection with the
issuance of such REIT Shares, Preferred Shares, New Securities or other
interests in the Parent REIT, (iii) the additional Partnership Units are issued
upon the conversion, redemption or exchange of Debt, Partnership Units or other
securities issued by the Partnership, or (iv) the additional Partnership Units
are issued pursuant to Sections 4.3B, 4.4, 4.6 or Section 4.7.

                  C.       No Preemptive Rights. No Person, including, without
limitation, any Partner or Assignee, shall have any preemptive, preferential,
participation or similar right or rights to subscribe for or acquire any
Partnership Interest.

                  Section 4.3 Additional Funds and Capital Contributions.

                  A.       General. The General Partner may, at any time and
from time to time, determine that the Partnership requires additional funds
("Additional Funds") for the acquisition or development of additional
Properties, for the redemption of Partnership Units or for such other purposes
as the General Partner may determine in its sole and absolute discretion.
Additional Funds may be obtained by the Partnership, at the election of the
General Partner, in any manner provided in, and in accordance with, the terms of
this Section 4.3 without the approval of any Limited Partners.

                  B.       Additional Capital Contributions. The General
Partner, on behalf of the Partnership, may obtain any Additional Funds by
accepting Capital Contributions from any Partners or other Persons. In
connection with any such Capital Contribution (of cash or property), the General
Partner is hereby authorized to cause the Partnership from time to time to issue
additional Partnership Units (as set forth in Section 4.2 above) in
consideration therefor and the Percentage Interests of the General Partner and
the Limited Partners shall be adjusted to reflect the issuance of such
additional Partnership Units.

                  C.       Loans by Third Parties. The General Partner, on
behalf of the Partnership, may obtain any Additional Funds by causing the
Partnership to incur Debt to any Person upon such terms as the General Partner
determines appropriate, including making such Debt convertible, redeemable or
exchangeable for Partnership Units; provided, however, that the Partnership
shall not incur any such Debt if (i) a breach, violation or default of such Debt
would be deemed to occur by virtue of the Transfer by any Limited Partner of any
Partnership Interest, or (ii) such Debt is recourse to any Partner (unless the
Partner otherwise agrees).

                  D.       General Partner Loans. The General Partner, on behalf
of the Partnership, may obtain any Additional Funds by causing the Partnership
to incur Debt with the General Partner or the Parent REIT (each, a "General
Partner Loan") if (i) such Debt is, to the extent permitted by law, on
substantially the same terms and conditions (including interest rate, repayment
schedule, and conversion, redemption, repurchase and exchange rights) as Funding
Debt incurred by the General Partner or the Parent REIT, the net proceeds of
which are lent to the Partnership to provide such Additional Funds, or (ii) such
Debt is on terms and conditions no less favorable to the Partnership than would
be available to the Partnership from any third party; provided, however, that
the Partnership shall not incur any such Debt if (a) a breach, violation or
default of such Debt would be deemed to occur by virtue of the Transfer by any
Limited Partner of any Partnership Interest, or (b) such Debt is recourse to any
Partner (unless the Partner otherwise agrees).

                  E.       Issuance of Securities by the Parent REIT.

                                             (1) The Parent REIT shall
         contribute the cash proceeds or other consideration received from any
         issuances, since the formation of the Partnership, of REIT Shares,
         Preferred Shares, Junior Shares or New Securities, as the case may be,
         and from the exercise of the rights contained in any such additional
         New Securities, to the General Partner or the Initial Limited Partner
         and the General Partner or the Initial Limited Partner, as the case may
         be, shall contribute such proceeds to the Partnership in exchange for
         (x) in the case of an issuance of REIT Shares, Partnership Common
         Units, or (y) in the case of an issuance of Preferred Shares, Junior
         Shares or

                                       20
<PAGE>

         New Securities, Partnership Units with designations, preferences and
         other rights, terms and provisions that are substantially the same as
         the designations, preferences and other rights, terms and provisions of
         such Preferred Shares, Junior Shares or New Securities.

                                             (2) The General Partner and the
         Initial Limited Partner shall contribute any cash or other
         consideration that each have received from the Parent REIT, since the
         formation of the Partnership, to the Partnership in exchange for
         Partnership Common Units.

                                             (3) The Parent REIT shall not issue
         any additional REIT Shares, Preferred Shares, Junior Shares or New
         Securities unless the Parent REIT contributes the cash proceeds or
         other consideration received from the issuance of such additional REIT
         Shares, Preferred Shares, Junior Shares or New Securities, as the case
         may be, and from the exercise of the rights contained in any such
         additional New Securities, to the General Partner or the Initial
         Limited Partner and the General Partner or the Initial Limited Partner,
         as the case may be, shall contribute such proceeds to the Partnership
         in exchange for (x) in the case of an issuance of REIT Shares,
         Partnership Common Units, or (y) in the case of an issuance of
         Preferred Shares, Junior Shares or New Securities, Partnership Units
         with designations, preferences and other rights, terms and provisions
         that are substantially the same as the designations, preferences and
         other rights, terms and provisions of such Preferred Shares, Junior
         Shares or New Securities; provided, however, that notwithstanding the
         foregoing, the General Partner may issue REIT Shares, Preferred Shares,
         Junior Shares or New Securities (a) pursuant to Section 4.4 or Section
         8.6.B hereof, (b) pursuant to a dividend or distribution (including any
         stock split) of REIT Shares, Preferred Shares, Junior Shares or New
         Securities to all of the holders of REIT Shares, Preferred Shares,
         Junior Shares or New Securities, as the case may be, (c) upon a
         conversion, redemption or exchange of Preferred Shares, (d) upon a
         conversion of Junior Shares into REIT Shares, (e) upon a conversion,
         redemption, exchange or exercise of New Securities, or (f) in
         connection with an acquisition of a property or other asset to be
         owned, directly or indirectly, by the General Partner if the General
         Partner determines that such acquisition is in the best interests of
         the Partnership. In the event of any issuance of additional REIT
         Shares, Preferred Shares, Junior Shares or New Securities by the Parent
         REIT, and the contribution to the General Partner or the Initial
         Limited Partner of the cash proceeds or other consideration received
         from such issuance, and the contribution to the Partnership, by the
         General Partner or the Initial Limited Partner, as the case may be, of
         such proceeds, the Partnership shall pay the Parent REIT's expenses
         associated with such issuance, including any underwriting discounts or
         commissions (it being understood that payment of some or all of such
         expenses may be made by the Parent REIT on behalf of the Partnership
         out of the gross proceeds of such issuance prior to the contribution of
         such proceeds by the Parent REIT to the General Partner or the Initial
         Limited Partner, as the case may be).

                  Section 4.4 Stock Option Plan.

                  A.       Options Granted to Company Employees and Independent
Directors. If at any time or from time to time, in connection with a Stock
Option Plan, a stock option granted to a Company Employee or an Independent
Director is duly exercised:

                                             (1) the General Partner shall, as
         soon as practicable after such exercise, make a Capital Contribution to
         the Partnership in an amount equal to the exercise price paid to the
         General Partner (or the Parent REIT) by such exercising party in
         connection with the exercise of such stock option.

                                             (2) on the date that the General
         Partner makes a capital contribution pursuant to 4.4.A(1) hereof, the
         General Partner shall be deemed to have contributed to the Partnership
         as a Capital Contribution, in consideration of an additional

                                       21
<PAGE>

         Limited Partner Interest (expressed in and as additional Partnership
         Common Units), an amount equal to the Value of a REIT Share as of the
         date of exercise multiplied by the number of REIT Shares then being
         issued in connection with the exercise of such stock option.

                                             (3) An equitable Percentage
         Interest adjustment shall be made in which the General Partner shall be
         treated as having made a cash contribution equal to the amount
         described in Section 4.4.A(2) hereof.

                  B.       Special Valuation Rule. For purposes of this Section
4.4, in determining the Value of a REIT Share, only the trading date immediately
preceding the exercise of the relevant stock option under the Stock Option Plan
shall be considered.

                  C.       Future Stock Incentive Plans. Nothing in this
Agreement shall be construed or applied to preclude or restrain the General
Partner or the Parent REIT from adopting, modifying or terminating stock
incentive plans, including any Stock Option Plan, for the benefit of employees,
directors or other business associates of the General Partner, the Parent REIT,
the Partnership or any of their Affiliates. The Limited Partners acknowledge and
agree that, in the event that any such plan is adopted, modified or terminated
by the General Partner or Parent REIT amendments to this Section 4.4 may become
necessary or advisable and that any approval or consent of the Limited Partners
required pursuant to the terms of this Agreement in order to effect any such
amendments requested by the General Partner shall not be unreasonably withheld
or delayed.

                  Section 4.5 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
demand or receive the return of its Capital Contribution from the Partnership.

                  Section 4.6 Conversion or Redemption of Preferred Shares.

                  A.       Conversion of Preferred Shares. If, at any time, any
of the Preferred Shares are converted into REIT Shares, in whole or in part,
then a number of Partnership Preferred Units equal to the number of Preferred
Shares so converted shall automatically be converted into a number of
Partnership Common Units equal to (i) the number of REIT Shares issued upon such
conversion divided by (ii) the Adjustment Factor then in effect, and the
Percentage Interests of the General Partner and the Limited Partners shall be
adjusted to reflect such conversion.

                  B.       Redemption of Preferred Shares. If, at any time, any
Preferred Shares are redeemed (whether by exercise of a put or call,
automatically or by means of another arrangement) by the General Partner for
cash, the Partnership shall, immediately prior to such redemption of Preferred
Shares, redeem an equal number of Partnership Preferred Units held by the
General Partner, upon the same terms and for the same price per Partnership
Preferred Unit, as such Preferred Shares are redeemed.

                  Section 4.7 Conversion or Redemption of Junior Shares.

                  A.       Conversion of Junior Shares. If, at any time, any of
the Junior Shares are converted into REIT Shares, in whole or in part, then a
number of Partnership Common Units equal to (i) the number of REIT Shares issued
upon such conversion divided by (ii) the Adjustment Factor then in effect shall
be issued to the General Partner, and the Percentage Interests of the General
Partner and the Limited Partners shall be adjusted to reflect such conversion.

                  B.       Redemption of Junior Shares. If, at any time, any
Junior Shares are redeemed (whether by exercise of a put or call, automatically
or by means of another arrangement) by the General Partner for cash, the
Partnership shall, immediately prior to such redemption of Junior Shares, redeem
an equal number of Partnership Junior Units held by the General Partner, upon
the same terms and for the same price per Partnership Junior Unit, as such
Junior Shares are redeemed.

                                       22
<PAGE>

                  Section 4.8 Other Contribution Provisions. In the event that
any Partner is admitted to the Partnership and is given a Capital Account in
exchange for services rendered to the Partnership, unless otherwise determined
by the General Partner in its sole and absolute discretion, such transaction
shall be treated by the Partnership and the affected Partner as if the
Partnership had compensated such partner in cash and such Partner had
contributed the cash to the capital of the Partnership. In addition, with the
consent of the General Partner, one or more Limited Partners may enter into
contribution agreements with the Partnership which have the effect of providing
a guarantee of certain obligations of the Partnership.

                  Section 4.9 Not Publicly Traded. The General Partner, on
behalf of the Partnership, shall use its best efforts not to take any action
which would result in the Partnership being a "publicly traded partnership"
under and as such term is defined in Section 7704(b) of the Code.

                  Section 4.10 Warrants. Warrants to purchase additional
Partnership Common Units shall be issued in the amounts and pursuant to the
terms of the Warrant Agreement. Partnership Common Units shall be issued upon
the exercise of the Warrants in accordance with the Warrant Agreement.

                  Section 4.11 Class A Preferred Units. In accordance with
Section 4.3E, the Parent REIT shall contribute the proceeds of the issuance of
shares of Special Voting Preferred Stock to the Initial Limited Partner. The
Initial Limited Partner shall contribute such proceeds to the Partnership in
exchange for a number of Class A Preferred Units equal to the number of shares
of Special Voting Preferred Stock issued by the Parent REIT. The holder of each
Class A Preferred Unit shall receive a Capital Account, and be entitled to a
preferential distribution in liquidation, of $.01 per Class A Preferred Unit.
Ownership of a Class A Preferred Unit shall not entitle the holder thereof to
any allocation of profits or losses of the Partnership. To the extent that
shares of Special Voting Preferred Stock are redeemed by the Parent REIT, a like
number of Class A Preferred Units shall have been first redeemed by the
Partnership for the same price per Class A Preferred Unit and in accordance with
the terms of the Pairing Agreement. Except as otherwise provided herein or
required by law, the ownership of a Class A Preferred Unit shall not entitle the
holder thereof to any voting rights hereunder. The Class A Preferred Units shall
be owned and held solely by the Initial Limited Partner.

                  Section 4.12 Restricted Units.In accordance with Section 4.3E,
to the extent the Parent REIT issues shares of restricted common stock pursuant
to a stock incentive plan, the Partnership shall issue to the Initial Limited
Partner an equal number of Partnership Common Units that are subject to a
similar vesting schedule, forfeiture provisions and other terms and conditions
that correspond to those of the restricted common stock ("Restricted Partnership
Common Units").

                                   ARTICLE V
                                 DISTRIBUTIONS

                  Section 5.1 Requirement and Characterization of Distributions.
Subject to the terms of any Partnership Unit Designation, the General Partner
shall cause the Partnership to distribute quarterly all, or such portion as the
General Partner may in its sole and absolute discretion determine, of Available
Cash generated by the Partnership during such quarter to the Holders of
Partnership Units on such Partnership Record Date with respect to such quarter:
(i) first, with respect to any Partnership Interests that are entitled to any
preference in distribution, in accordance with the rights of such class(es) of
Partnership Interests (and, within such class(es), pro rata in proportion to the
respective Percentage Interests on such Partnership Record Date), and (ii)
second, with respect to any Partnership Interests that are not entitled to any
preference in distribution, in accordance with the rights of such class of
Partnership Interests (and, within such class, pro rata in proportion to the
respective Percentage Interests on such Partnership Record Date).
Notwithstanding the preceding sentence, in the event that items of Partnership
income are specially allocated pursuant to Section 6.3E hereof (relating to the
absence of an effective registration statement for the sale of shares of common
stock of the Parent REIT), distributions with respect to Partnership Common
Units shall first be made in accordance with such allocations, with any excess
distributed pro rata in accordance with the preceding sentence. Distributions
payable with respect to any Partnership Units that were not outstanding during
the entire quarterly period in respect of which any distribution is made shall
be prorated based on the portion of the period that such units were outstanding.
The General Partner in its sole and absolute discretion may distribute to the
Unitholders Available Cash on a

                                       23
<PAGE>

more frequent basis and provide for an appropriate Partnership Record Date.
Notwithstanding anything herein to the contrary, the General Partner shall make
such reasonable efforts, as determined by it in its sole and absolute discretion
and consistent with the Parent REIT's qualification as a REIT, to cause the
Partnership to distribute sufficient amounts to enable the Parent REIT to pay
shareholder dividends that will (a) satisfy the REIT Requirements, and (b)
except to the extent otherwise determined by the General Partner, avoid any
federal income or excise tax liability of the Parent REIT.

                  Section 5.2 Distributions in Kind. No right is given to any
Unitholder to demand and receive property other than cash as provided in this
Agreement. The General Partner may determine, in its sole and absolute
discretion, to make a distribution in kind of Partnership assets to the
Unitholders, and such assets shall be distributed in such a fashion as to ensure
that the fair market value is distributed and allocated in accordance with
Articles 5, 6 and 10 hereof.

                  Section 5.3 Amounts Withheld. All amounts withheld pursuant to
the Code or any provisions of any state or local tax law and Section 10.4 hereof
with respect to any allocation, payment or distribution to any Unitholder shall
be treated as amounts paid or distributed to such Unitholder pursuant to Section
5.1 hereof for all purposes under this Agreement.

                  Section 5.4 Distributions Upon Liquidation. Notwithstanding
the other provisions of this Article 5, net proceeds from a Terminating Capital
Transaction, and any other cash received or reductions in reserves made after
commencement of the liquidation of the Partnership, shall be distributed to the
Unitholders in accordance with Section 13.2 hereof.

                  Section 5.5 Distributions to Reflect Issuance of Additional
Partnership Units. In the event that the Partnership issues additional
Partnership Units pursuant to the provisions of Article 4 hereof, subject to
Section 7.3.D, the General Partner is hereby authorized to make such revisions
to this Article 5 as it determines are necessary or desirable to reflect the
issuance of such additional Partnership Units, including, without limitation,
making preferential distributions to certain classes of Partnership Units.

                  Section 5.6 Restricted Distributions. Notwithstanding any
provision to the contrary contained in this Agreement, neither the Partnership
nor the General Partner, on behalf of the Partnership, shall make a distribution
to any Unitholder on account of its Partnership Interest or interest in
Partnership Units if such distribution would violate Section 17-607 of the Act
or other applicable law.

                                   ARTICLE VI
                                   ALLOCATIONS

                  Section 6.1 Timing and Amount of Allocations of Net Income and
Net Loss. Net Income and Net Loss of the Partnership shall be determined and
allocated with respect to each Partnership Year of the Partnership as of the end
of each such year. Except as otherwise provided in this Article 6, and subject
to Section 11.6.C hereof, an allocation to a Unitholder of a share of Net Income
or Net Loss shall be treated as an allocation of the same share of each item of
income, gain, loss or deduction that is taken into account in computing Net
Income or Net Loss.

                  Section 6.2 General Allocations.

                  A.       In General. Subject to the terms of any Partnership
Unit Designation and Section 4.11, except as otherwise provided in this Article
6 and subject to Section 11.6.C hereof, Net Income and Net Loss shall be
allocated to each of the Holders of Partnership Common Units in accordance with
their respective Percentage Interests at the end of each Partnership Year.

                  B.       Allocations to Reflect Issuance of Additional
Partnership Units. In the event that the Partnership issues additional
Partnership Units pursuant to the provisions of Article 4 hereof, the General

                                       24
<PAGE>

Partner is hereby authorized to make such revisions to this Section 6.2 as it
determines are necessary or desirable to reflect the terms of the issuance of
such additional Partnership Units, including, without limitation, making
preferential allocations to certain classes of Partnership Units.

                  Section 6.3 Additional Allocation Provisions. Notwithstanding
the foregoing provisions of this Article 6:

                  A.       Special Allocations Regarding Partnership Preferred
Units. If any Partnership Preferred Units are redeemed pursuant to Section 4.6.B
hereof (treating a full liquidation of the General Partner Interest for purposes
of this Section 6.3.A as including a redemption of any then outstanding
Partnership Preferred Units pursuant to Section 4.6.B hereof), for the
Partnership Year that includes such redemption (and, if necessary, for
subsequent Partnership Years) (a) gross income and gain shall be allocated to
the General Partner to the extent that the amounts paid or payable with respect
to the Partnership Preferred Units so redeemed (or treated as redeemed) exceed
the aggregate Capital Contributions (net of liabilities assumed or taken subject
to by the Partnership) per Partnership Preferred Unit allocable to the
Partnership Preferred Units so redeemed (or treated as redeemed) and (b)
deductions and losses shall be allocated to the General Partner to the extent
that the aggregate Capital Contributions (net of liabilities assumed or taken
subject to by the Partnership) per Partnership Preferred Unit allocable to the
Partnership Preferred Units so redeemed (or treated as redeemed) exceed the
amount paid or payable with respect to the Partnership Preferred Units so
redeemed (or treated as redeemed).

                  B.       Regulatory Allocations.

                                             (i)      Minimum Gain Chargeback.
         Except as otherwise provided in Regulations Section 1.704-2(f),
         notwithstanding the provisions of Section 6.2 hereof, or any other
         provision of this Article 6, if there is a net decrease in Partnership
         Minimum Gain during any Partnership Year, each Holder of Partnership
         Units shall be specially allocated items of Partnership income and gain
         for such year (and, if necessary, subsequent years) in an amount equal
         to such Holder's share of the net decrease in Partnership Minimum Gain,
         as determined under Regulations Section 1.704-2(g). Allocations
         pursuant to the previous sentence shall be made in proportion to the
         respective amounts required to be allocated to each Holder pursuant
         thereto. The items to be allocated shall be determined in accordance
         with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section
         6.3.B(i) is intended to qualify as a "minimum gain chargeback" within
         the meaning of Regulations Section 1.704-2(f) and shall be interpreted
         consistently therewith.

                                             (ii)     Partner Minimum Gain
         Chargeback. Except as otherwise provided in Regulations Section
         1.704-2(i)(4) or in Section 6.3.B(i) hereof, if there is a net decrease
         in Partner Minimum Gain attributable to a Partner Nonrecourse Debt
         during any Partnership Year, each Holder of Partnership Units who has a
         share of the Partner Minimum Gain attributable to such Partner
         Nonrecourse Debt, determined in accordance with Regulations Section
         1.704-2(i)(5), shall be specially allocated items of Partnership income
         and gain for such year (and, if necessary, subsequent years) in an
         amount equal to such Holder's share of the net decrease in Partner
         Minimum Gain attributable to such Partner Nonrecourse Debt, determined
         in accordance with Regulations Section 1.704-2(i)(4). Allocations
         pursuant to the previous sentence shall be made in proportion to the
         respective amounts required to be allocated to each General Partner,
         Limited Partner and other Holder pursuant thereto. The items to be so
         allocated shall be determined in accordance with Regulations Sections
         1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.3.B(ii) is intended to
         qualify as a "chargeback of partner nonrecourse debt minimum gain"
         within the meaning of Regulations Section 1.704-2(i) and shall be
         interpreted consistently therewith.

                                             (iii)    Nonrecourse Deductions and
         Partner Nonrecourse Deductions. Any Nonrecourse Deductions for any
         Partnership Year shall be specially allocated to the Holders of
         Partnership Units in accordance with their Partnership Units. Any
         Partner Nonrecourse Deductions for any Partnership Year shall be
         specially allocated to the

                                       25
<PAGE>

         Holder(s) who bears the economic risk of loss with respect to the
         Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions
         are attributable, in accordance with Regulations Section 1.704-2(i).

                                             (iv)     Qualified Income Offset.
         If any Holder of Partnership Units unexpectedly receives an adjustment,
         allocation or distribution described in Regulations Section
         1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and
         gain shall be allocated, in accordance with Regulations Section
         1.704-1(b)(2)(ii)(d), to such Holder in an amount and manner sufficient
         to eliminate, to the extent required by such Regulations, the Adjusted
         Capital Account Deficit of such Holder as quickly as possible, provided
         that an allocation pursuant to this Section 6.3.B(iv) shall be made if
         and only to the extent that such Holder would have an Adjusted Capital
         Account Deficit after all other allocations provided in this Article 6
         have been tentatively made as if this Section 6.3.B(iv) were not in the
         Agreement. It is intended that this Section 6.3.B(iv) qualify and be
         construed as a "qualified income offset" within the meaning of
         Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
         consistently therewith.

                                             (v)      Gross Income Allocation.
         In the event that any Holder of Partnership Units has a deficit Capital
         Account at the end of any Partnership Year that is in excess of the sum
         of (1) the amount (if any) that such Holder is obligated to restore to
         the Partnership upon complete liquidation of such Holder's Partnership
         Interest (including, the Holder's interest in outstanding Partnership
         Preferred Units and other Partnership Units) and (2) the amount that
         such Holder is deemed to be obligated to restore pursuant to the
         penultimate sentences of Regulations Sections 1.704-2(g)(1) and
         1.704-2(i)(5), each such Holder shall be specially allocated items of
         Partnership income and gain in the amount of such excess to eliminate
         such deficit as quickly as possible, provided that an allocation
         pursuant to this Section 6.3.B(v) shall be made if and only to the
         extent that such Holder would have a deficit Capital Account in excess
         of such sum after all other allocations provided in this Article 6 have
         been tentatively made as if this Section 6.3.B(v) and Section 6.3.B(iv)
         hereof were not in the Agreement.

                                             (vi)     Limitation on Allocation
         of Net Loss. To the extent that any allocation of Net Loss would cause
         or increase an Adjusted Capital Account Deficit as to any Holder of
         Partnership Units, such allocation of Net Loss shall be reallocated
         among the other Holders of Partnership Units in accordance with their
         respective Partnership Units, subject to the limitations of this
         Section 6.3.B(vi).

                                             (vii)    Section 754 Adjustment. To
         the extent that an adjustment to the adjusted tax basis of any
         Partnership asset pursuant to Code Section 734(b) or Code Section
         743(b) is required, pursuant to Regulations Section
         1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4),
         to be taken into account in determining Capital Accounts as the result
         of a distribution to a Holder of Partnership Units in complete
         liquidation of its interest in the Partnership, the amount of such
         adjustment to the Capital Accounts shall be treated as an item of gain
         (if the adjustment increases the basis of the asset) or loss (if the
         adjustment decreases such basis), and such gain or loss shall be
         specially allocated to the Holders in accordance with their Partnership
         Common Units in the event that Regulations Section
         1.704-1(b)(2)(iv)(m)(2) applies, or to the Holders to whom such
         distribution was made in the event that Regulations Section
         1.704-1(b)(2)(iv)(m)(4) applies.

                                             (viii)   Curative Allocations. The
         allocations set forth in Sections 6.3.B(i), (ii), (iii), (iv), (v),
         (vi) and (vii) hereof (the "Regulatory Allocations") are intended to
         comply with certain regulatory requirements, including the requirements
         of Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding the
         provisions of Section 6.1 hereof, the Regulatory Allocations shall be
         taken into account in allocating other items of income, gain, loss and
         deduction among the Holders of Partnership Units so that to the extent
         possible without violating the requirements giving rise to the
         Regulatory Allocations, the net amount

                                       26
<PAGE>

         of such allocations of other items and the Regulatory Allocations to
         each Holder of a Partnership Unit shall be equal to the net amount that
         would have been allocated to each such Holder if the Regulatory
         Allocations had not occurred.

                  C.       Special Allocations Upon Liquidation. Notwithstanding
any provision in this Article VI to the contrary, in the event that the
Partnership disposes of all or substantially all of its assets in a transaction
that will lead to a liquidation of the Partnership pursuant to Article 13
hereof, then any Net Income or Net Loss realized in connection with such
transaction and thereafter (and, if necessary, constituent items of income,
gain, loss and deduction) shall be specially allocated among the Partners as
required so as to cause liquidating distributions pursuant to Section 13.2.A(4)
hereof to be made in the same amounts and proportions as would have resulted had
such distributions instead been made pursuant to Article 5 hereof (other than
Section 5.4 hereof).

                  D.       Allocation of Excess Nonrecourse Liabilities. The
Partnership shall allocate "nonrecourse liabilities" (within the meaning of
Regulations Section 1.752-1(a)(2)) of the Partnership that are secured by
multiple Properties under any reasonable method chosen by the General Partner in
accordance with Regulations Section 1.752-3(a)(3)(b). The Partnership shall
allocate "excess nonrecourse liabilities" of the Partnership under any method
approved under Regulations Section 1.752-3(a)(3) as chosen by the General
Partner. For purposes of determining a Holder's proportional share of the
"excess nonrecourse liabilities" of the Partnership within the meaning of
Regulations Section 1.752-3(a)(3), each Holder's interest in Partnership profits
shall be equal to such Holder's share of Partnership Units.

                  E.       Failure to Register REIT Shares. In the event that a
registration statement with respect to REIT Shares is not filed with the SEC by
December 31, 2003, or is not declared effective by June 30, 2004, or upon the
occurrence of another event as described in Section 5(d) of the Registration
Rights Agreement, items of Partnership income that are otherwise allocable to
Partnership Common Units shall thereafter first be allocated to those
Partnership Common Units that are held by the General Partner and the Initial
Limited Partner, in the amount of $0.0625 per Partnership Common Unit per
quarter, thereafter increasing by an additional $0.0625 per Partnership Common
Unit per quarter, up to a maximum allocation of $0.25 per Partnership Common
Unit per quarter, for so long as such situation as described in Section 5(d) of
the Registration Rights Agreement persists, provided, however, that if an event
described in subparagraph (i) of the definition of Adjustment Factor occurs, the
number of Partnership Common Units held by the General Partner and the Initial
Limited Partner shall for purposes of this Section 6.3 be multiplied by the
Adjustment Factor determined by taking into account adjustments under
subparagraph (i) of the definition of Adjustment Factor but without taking into
account any adjustments under subparagraphs (ii) and (iii) of the definition of
Adjustment Factor.

                  F.       Exercise of Warrants. To the extent that a
Partnership Unit is issued upon exercise of a Warrant described in Section 4.10,
and the value of such Partnership Unit differs from the amount paid therefor
(including the amount, if any, paid in connection with the issuance of such
Warrant), such difference shall be allocated among the Partners in the manner
prescribed by Proposed Treasury Regulation Section 1.704-1(b)(2)(iv)(s), or any
successor provision thereto.

                  Section 6.4 Tax Allocations.

                  A.       In General. Except as otherwise provided in this
Section 6.4, for income tax purposes under the Code and the Regulations each
Partnership item of income, gain, loss and deduction (collectively, "Tax Items")
shall be allocated among the Holders of Partnership Common Units in the same
manner as its correlative item of "book" income, gain, loss or deduction is
allocated pursuant to Sections 6.2 and 6.3 hereof.

                  B.       Allocations Respecting Section 704(c) Revaluations.
Notwithstanding Section 6.4.A hereof, Tax Items with respect to Property that is
contributed to the Partnership with a Gross Asset Value that varies from its
basis in the hands of the contributing Partner immediately preceding the date of
contribution shall be allocated among the Holders of Partnership Common Units
for income tax purposes pursuant to Regulations promulgated under Code Section
704(c) so as to take into account such variation. The Partnership

                                       27
<PAGE>

shall account for such variation under any method approved under Code Section
704(c) and the applicable Regulations as chosen by the General Partner,
including, without limitation, the "remedial allocation method" as described in
Regulations Section 1.704-3(d). In the event that the Gross Asset Value of any
partnership asset is adjusted pursuant to subsection (b) of the definition of
"Gross Asset Value" (provided in Article 1 hereof), subsequent allocations of
Tax Items with respect to such asset shall take account of the variation, if
any, between the adjusted basis of such asset and its Gross Asset Value in the
same manner as under Code Section 704(c) and the applicable Regulations.

                                   ARTICLE VII
                      MANAGEMENT AND OPERATIONS OF BUSINESS

                  Section 7.1 Management.

                  A.       Except as otherwise expressly provided in this
Agreement, all management powers over the business and affairs of the
Partnership are and shall be exclusively vested in the General Partner, and no
Limited Partner shall have any right to participate in or exercise control or
management power over the business and affairs of the Partnership. The General
Partner may not be removed by the Partners with or without cause, except with
the consent of the General Partner. In addition to the powers now or hereafter
granted to a general partner of a limited partnership under applicable law or
that are granted to the General Partner under any other provision of this
Agreement, the General Partner, subject to the other provisions hereof including
Section 7.3, shall have full power and authority to do all things deemed
necessary or desirable by it to conduct the business of the Partnership, to
exercise all powers set forth in Section 3.2 hereof and to effectuate the
purposes set forth in Section 3.1 hereof, including, without limitation:

                                             (1)      the making of any
         expenditures, the lending or borrowing of money (including, without
         limitation, making prepayments on loans and borrowing money or selling
         assets to permit the Partnership to make distributions to its Partners
         in such amounts as will permit the Parent REIT (so long as the Parent
         REIT desires to maintain or restore its status as a REIT) to avoid the
         payment of any federal income tax (including, for this purpose, any
         excise tax pursuant to Code Section 4981) and to make distributions
         sufficient to permit the Parent REIT to maintain or restore REIT status
         or otherwise to satisfy the REIT Requirements), the assumption or
         guarantee of, or other contracting for, indebtedness and other
         liabilities, the issuance of evidences of indebtedness (including the
         securing of same by deed to secure debt, mortgage, deed of trust or
         other lien or encumbrance on the Partnership's assets) and the
         incurring of any obligations that it deems necessary for the conduct of
         the activities of the Partnership;

                                             (2)      the making of tax,
         regulatory and other filings, or rendering of periodic or other reports
         to governmental or other agencies having jurisdiction over the business
         or assets of the Partnership;

                                             (3)      the acquisition, sale,
         lease, transfer, exchange or other disposition of any, all or
         substantially all of the assets of the Partnership (including, but not
         limited to, the exercise or grant of any conversion, option, privilege
         or subscription right or any other right available in connection with
         any assets at any time held by the Partnership) or the merger,
         consolidation, reorganization or other combination of the Partnership
         with or into another entity;

                                             (4)      the mortgage, pledge,
         encumbrance or hypothecation of any assets of the Partnership, the use
         of the assets of the Partnership (including, without limitation, cash
         on hand) for any purpose consistent with the terms of this Agreement
         and on any terms that it sees fit, including, without limitation, the
         financing of the operations and activities of the Parent REIT, the
         General Partner, the Partnership or any of the Partnership's
         Subsidiaries, the lending of funds to other Persons (including, without
         limitation, the Partnership's Subsidiaries) and the repayment of
         obligations of the Partnership, its

                                       28
<PAGE>

         Subsidiaries and any other Person in which the Partnership has an
         equity investment, and the making of capital contributions to and
         equity investments in the Partnership's Subsidiaries;

                                             (5)      the management, operation,
         leasing, landscaping, repair, alteration, demolition, replacement or
         improvement of any Property, including, without limitation, any
         Contributed Property, or other asset of the Partnership or any
         Subsidiary, whether pursuant to a Services Agreement or otherwise;

                                             (6)      the negotiation, execution
         and performance of any contracts, leases, conveyances or other
         instruments that the General Partner considers useful or necessary to
         the conduct of the Partnership's operations or the implementation of
         the General Partner's powers under this Agreement, including
         contracting with contractors, developers, consultants, accountants,
         legal counsel, other professional advisors and other agents and the
         payment of their expenses and compensation out of the Partnership's
         assets;

                                             (7)      the distribution of
         Partnership cash or other Partnership assets in accordance with this
         Agreement, the holding, management, investment and reinvestment of cash
         and other assets of the Partnership, and the collection and receipt of
         revenues, rents and income of the Partnership;

                                             (8)      the maintenance of such
         insurance for the benefit of the Partnership and the Partners as it
         deems necessary or appropriate, including, without limitation, (i)
         casualty, liability and other insurance on the Properties and (ii)
         liability insurance for the Indemnitees hereunder;

                                             (9)      the formation of, or
         acquisition of an interest in, and the contribution of property to, any
         further limited or general partnerships, limited liability companies,
         joint ventures or other relationships that it deems desirable
         (including, without limitation, the acquisition of interests in, and
         the contributions of property to, any Subsidiary and any other Person
         in which it has an equity investment from time to time); provided,
         however, that, as long as the Parent REIT has determined to continue to
         qualify as a REIT, the General Partner may not engage in any such
         formation, acquisition or contribution that would cause the Parent REIT
         to fail to qualify as a REIT within the meaning of Code Section 856(a);

                                             (10)     the control of any matters
         affecting the rights and obligations of the Partnership, including the
         settlement, compromise, submission to arbitration or any other form of
         dispute resolution, or abandonment, of any claim, cause of action,
         liability, debt or damages, due or owing to or from the Partnership,
         the commencement or defense of suits, legal proceedings, administrative
         proceedings, arbitrations or other forms of dispute resolution, and the
         representation of the Partnership in all suits or legal proceedings,
         administrative proceedings, arbitrations or other forms of dispute
         resolution, the incurring of legal expense, and the indemnification of
         any Person against liabilities and contingencies to the extent
         permitted by law;

                                             (11)     the undertaking of any
         action in connection with the Partnership's direct or indirect
         investment in any Subsidiary or any other Person (including, without
         limitation, the contribution or loan of funds by the Partnership to
         such Persons);

                                             (12)     except as otherwise
         specifically set forth in this Agreement, the determination of the fair
         market value of any Partnership property distributed in kind using such
         reasonable method of valuation as it may adopt; provided that such
         methods are otherwise consistent with the requirements of this
         Agreement;

                                       29
<PAGE>

                                             (13)     the enforcement of any
         rights against any Partner pursuant to representations, warranties,
         covenants and indemnities relating to such Partner's contribution of
         property or assets to the Partnership;

                                             (14)     the exercise, directly or
         indirectly, through any attorney-in-fact acting under a general or
         limited power of attorney, of any right, including the right to vote,
         appurtenant to any asset or investment held by the Partnership;

                                             (15)     the exercise of any of the
         powers of the General Partner enumerated in this Agreement on behalf of
         or in connection with any Subsidiary of the Partnership or any other
         Person in which the Partnership has a direct or indirect interest, or
         jointly with any such Subsidiary or other Person;

                                             (16)     the exercise of any of the
         powers of the General Partner enumerated in this Agreement on behalf of
         any Person in which the Partnership does not have an interest, pursuant
         to contractual or other arrangements with such Person;

                                             (17)     the making, execution and
         delivery of any and all deeds, leases, notes, deeds to secure debt,
         mortgages, deeds of trust, security agreements, conveyances, contracts,
         guarantees, warranties, indemnities, waivers, releases or legal
         instruments or agreements in writing necessary or appropriate in the
         judgment of the General Partner for the accomplishment of any of the
         powers of the General Partner enumerated in this Agreement;

                                             (18)     the issuance of additional
         Partnership Units, as appropriate and in the General Partner's sole and
         absolute discretion, in connection with Capital Contributions by
         Additional Limited Partners and additional Capital Contributions by
         Partners pursuant to Article 4 hereof;

                                             (19)     the selection and
         dismissal of Company Employees (including, without limitation,
         employees having titles or offices such as president, vice president,
         secretary and treasurer), and agents, outside attorneys, accountants,
         consultants and contractors of the Partnership or the General Partner,
         the determination of their compensation and other terms of employment
         or hiring and the delegation to any such Company Employee the authority
         to conduct the business of the Partnership in accordance with the terms
         of this Agreement; and

                                             (20)     an election to dissolve
         the Partnership pursuant to Section 13.1.C hereof.

                  B.       Each of the Limited Partners agrees that, except as
provided in Section 7.3 hereof, the General Partner is authorized to execute,
deliver and perform the above-mentioned agreements and transactions on behalf of
the Partnership without any further act, approval or vote of the Partners,
notwithstanding any other provision of this Agreement, the Act or any applicable
law, rule or regulation. The execution, delivery or performance by the General
Partner or the Partnership of any agreement authorized or permitted under this
Agreement shall not constitute a breach by the General Partner of any duty that
the General Partner may owe the Partnership or the Limited Partners or any other
Persons under this Agreement or of any duty stated or implied by law or equity.

                  C.       At all times from and after the date hereof, the
General Partner may cause the Partnership to establish and maintain working
capital and other reserves in such amounts as the General Partner, in its sole
and absolute discretion, deems appropriate and reasonable from time to time.

                  D.       In exercising its authority under this Agreement, the
General Partner may, but shall be under no obligation to, take into account the
tax consequences to any Partner (including the General Partner) of any action
taken by it. The General Partner and the Partnership shall not have liability to
a Limited Partner

                                       30
<PAGE>

under any circumstances as a result of an income tax liability incurred by such
Limited Partner as a result of an action (or inaction) by the General Partner
pursuant to its authority under this Agreement.

                  Section 7.2 Certificate of Limited Partnership. To the extent
that such action is determined by the General Partner to be reasonable and
necessary or appropriate, the General Partner shall file amendments to and
restatements of the Certificate and do all the things to maintain the
Partnership as a limited partnership (or a partnership in which the limited
partners have limited liability) under the laws of the State of Delaware and
each other state, the District of Columbia or any other jurisdiction, in which
the Partnership may elect to do business or own property. Except as otherwise
required under the Act, the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate or any amendment
thereto to any Limited Partner. The General Partner shall use all reasonable
efforts to cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability to the extent provided by applicable
law) in the State of Delaware and any other state, or the District of Columbia
or other jurisdiction, in which the Partnership may elect to do business or own
property.

                  Section 7.3 Restrictions on General Partner's Authority.

                  A.       The General Partner may not take any action in
contravention of this Agreement, including, without limitation:

                                             (1)      taking any action that
         would make it impossible to carry on the ordinary business of the
         Partnership, except as otherwise provided in this Agreement;

                                             (2)      possessing Property, or
         assigning any rights in specific Property, for other than a Partnership
         purpose except as otherwise provided in this Agreement, including,
         without limitation, Section 7.10;

                                             (3)      admitting a Person as a
         Partner, except as otherwise provided in this Agreement;

                                             (4)      performing any act that
         would subject a Limited Partner to liability as a general partner in
         any jurisdiction or any other liability except as provided Section 10.4
         hereof or under the Act; or

                                             (5)      entering into any
         contract, mortgage, loan or other agreement that prohibits or restricts
         the ability of (a) the General Partner, the Parent REIT or the
         Partnership from satisfying its obligations under Section 8.6 hereof in
         full or (b) a Limited Partner from exercising its rights under Section
         8.6 hereof to effect a Redemption in full, except, in either case, with
         the written consent of such Limited Partner affected by the prohibition
         or restriction.

                  B.       The General Partner shall not, without the prior
Consent of the Limited Partners, except as provided in Sections 4.2.A, 5.5,
6.2.B and 7.3.C hereof, amend, modify or terminate this Agreement.

                  C.       Notwithstanding Section 7.3.B hereof, the General
Partner shall have the power, without the Consent of the Limited Partners, to
amend this Agreement as may be required to facilitate or implement any of the
following purposes:

                                             (1)      to add to the obligations
         of the General Partner or surrender any right or power granted to the
         General Partner or any Affiliate of the General Partner for the benefit
         of the Limited Partners;

                                       31
<PAGE>

                                             (2)      to reflect the admission,
         substitution or withdrawal of Partners or the termination of the
         Partnership in accordance with this Agreement, and to amend Exhibit A
         in connection with such admission, substitution or withdrawal;

                                             (3)      to reflect a change that
         is of an inconsequential nature and does not adversely affect the
         Limited Partners in any material respect, or to cure any ambiguity,
         correct or supplement any provision in this Agreement not inconsistent
         with law or with other provisions, or make other changes with respect
         to matters arising under this Agreement that will not be inconsistent
         with law or with the provisions of this Agreement;

                                             (4)      to satisfy any
         requirements, conditions or guidelines contained in any order,
         directive, opinion, ruling or regulation of a federal or state agency
         or contained in federal or state law;

                                             (5)      (a) to reflect such
         changes as are reasonably necessary for the Parent REIT to maintain or
         restore its status as a REIT or to satisfy the REIT Requirements; or
         (b) to reflect the Transfer of all or any part of a Partnership
         Interest between the General Partner or Initial Limited Partner and any
         Qualified REIT Subsidiary;

                                             (6)      to modify the manner in
         which Capital Accounts are computed (but only to the extent set forth
         in the definition of "Capital Account" or contemplated by the Code or
         the Regulations); and

                                             (7)      to issue additional
         Partnership Interests in accordance with Section 4.2.

                  D.       Notwithstanding Sections 7.3.B and 7.3.C hereof, this
Agreement shall not be amended, and no action may be taken by the General
Partner, without the Consent of each Partner adversely affected thereby, if such
amendment or action would (i) convert a Limited Partner Interest in the
Partnership into a General Partner Interest (except as a result of the General
Partner acquiring such Partnership Interest), (ii) modify the limited liability
of a Limited Partner, (iii) alter the rights of any Partner to receive the
distributions to which such Partner is entitled, pursuant to Article 5 or
Section 13.2.A hereof, or alter the allocations specified in Article 6 hereof
(except, in any case, as permitted pursuant to Sections 4.2, 5.5, 6.2.B and
7.3.C hereof), (iv) alter or modify the Redemption rights, Cash Amount, REIT
Consideration, or REIT Shares Amount as set forth in Sections 8.6 and 11.2
hereof, or amend or modify any related definitions, or (v) amend this Section
7.3.D; provided, however, that the Consent of each Partner adversely affected
shall not be required for any amendment or action that affects all Partners
holding the same class or series of Partnership Units on a uniform or pro rata
basis. Further, no amendment may alter the restrictions on the General Partner's
authority set forth elsewhere in this Section 7.3 without the Consent specified
therein. Any such amendment or action consented to by any Partner shall be
effective as to that Partner, notwithstanding the absence of such consent by any
other Partner.

                  Section 7.4 Reimbursement of the General Partner.

                  A.       The General Partner shall not be compensated for its
services as general partner of the Partnership except as provided in this
Agreement (including the provisions of Articles 5 and 6 hereof regarding
distributions, payments and allocations to which it may be entitled in its
capacity as the General Partner).

                  B.       Subject to Sections 7.4.C and 15.11 hereof, the
Partnership shall be liable for, and shall reimburse the General Partner and the
Parent REIT on a monthly basis, or such other basis as the General Partner may
determine in its sole and absolute discretion, for all sums expended in
connection with the Partnership's business, including, without limitation, (i)
expenses relating to the ownership of interests in and management and operation
of, or for the benefit of, the Partnership, (ii) compensation of officers and
employees, including, without limitation, payments under future compensation
plans of the Parent REIT that may provide for stock units, or phantom stock,
pursuant to which employees of the Parent REIT will receive payments based upon
dividends on or the value of REIT Shares, (iii) director fees and expenses and
(iv) if the

                                       32
<PAGE>

Parent REIT becomes a public company, all costs and expenses of the Parent REIT
being a public company, including costs of filings with the SEC, reports and
other distributions to its shareholders; provided, however, that the amount of
any reimbursement shall be reduced by any interest earned by the Parent REIT
with respect to bank accounts or other instruments or accounts held by it on
behalf of the Partnership as permitted pursuant to Section 7.5 hereof. Such
reimbursements shall be in addition to any reimbursement of the General Partner
as a result of indemnification pursuant to Section 7.7 hereof.

                  C.       To the extent practicable, Partnership expenses shall
be billed directly to and paid by the Partnership and, subject to Section 15.11
hereof, reimbursements to the General Partner or any of its Affiliates by the
Partnership pursuant to this Section 7.4 shall be treated as non-income
reimbursements, and not as "guaranteed payments" within the meaning of Code
Section 707(c) or other form of gross income.

                  Section 7.5 Outside Activities of the General Partner. The
General Partner and the Parent REIT shall not directly or indirectly enter into
or conduct any business, other than in connection with (a) the ownership,
acquisition and disposition of Partnership Interests as General Partner, (b) the
management of the business of the Partnership, (c) if the Parent REIT becomes a
reporting company with a class (or classes) of securities registered under the
Exchange Act, the operation of the Parent REIT as such, (d) the Parent REIT's
operations as a REIT, (e) the offering, sale, syndication, private placement or
public offering of stock, bonds, securities or other interests, (f) financing or
refinancing of any type related to the Partnership or its assets or activities,
(g) any of the foregoing activities as they relate to a Subsidiary of the
Partnership or of the General Partner and (h) such activities as are incidental
thereto. Nothing contained herein shall be deemed to prohibit the General
Partner from executing guarantees of Partnership debt for which it would
otherwise be liable in its capacity as General Partner. Subject to Section 7.3.B
hereof, the Parent REIT shall not own any assets or take title to assets (other
than temporarily in connection with an acquisition prior to contributing such
assets to the Partnership) other than interests in the General Partner, The
Initial Limited Partner, Subsidiaries of the Partnership and other than such
cash and cash equivalents, bank accounts or similar instruments or accounts as
the Parent REIT deems reasonably necessary, taking into account Section 7.1.D
hereof and the requirements necessary for the Parent REIT to carry out its
responsibilities contemplated under this Agreement and the Charter and to
qualify as a REIT. Notwithstanding the foregoing, if the Parent REIT acquires
assets in its own name and owns Property other than through the Partnership, the
Partners agree to negotiate in good faith to amend this Agreement, including,
without limitation, the definition of "Adjustment Factor," to reflect such
activities and the direct ownership of assets by the Parent REIT. The Parent
REIT and any Affiliates of the Parent REIT may acquire Limited Partner Interests
and shall be entitled to exercise all rights of a Limited Partner relating to
such Limited Partner Interests.

                  Section 7.6 Contracts with Affiliates.

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

                  B.       Except as provided in Section 7.5 hereof and subject
to Section 3.1 hereof, the Partnership may transfer assets to joint ventures,
limited liability companies, partnerships, corporations, business trusts or
other business entities in which it is or thereby becomes a participant upon
such terms and subject to such conditions consistent with this Agreement and
applicable law as the General Partner, in its sole and absolute discretion,
believes to be advisable.

                  C.       Except as expressly permitted by this Agreement,
neither the General Partner nor any of its Affiliates shall sell, transfer or
convey any property to the Partnership, directly or indirectly, except pursuant
to transactions that are determined by the General Partner in good faith to be
fair and reasonable.

                  D.       The General Partner, in its sole and absolute
discretion and without the approval of the Limited Partners, may propose and
adopt on behalf of the Partnership employee benefit plans funded by the
Partnership for the benefit of employees of the Parent REIT, the Partnership,
Subsidiaries of the Partnership or

                                       33
<PAGE>

any Affiliate of any of them in respect of services performed, directly or
indirectly, for the benefit of the Partnership or any of the Partnership's
Subsidiaries.

                  E.       The General Partner is expressly authorized to enter
into, in the name and on behalf of the Partnership, any Services Agreement with
Affiliates of any of the Partnership or the General Partner, on such terms as
the General Partner, in its sole and absolute discretion, believes are
advisable.

                  Section 7.7 Indemnification.

                  A.       To the fullest extent permitted by applicable law,
the Partnership shall indemnify each Indemnitee from and against any and all
losses, claims, damages, liabilities (whether joint or several), expenses
(including, without limitation, attorney's fees and other legal fees and
expenses), judgments, fines, settlements and other amounts arising from any and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that relate to the operations of the
Partnership ("Actions") as set forth in this Agreement in which such Indemnitee
may be involved, or is threatened to be involved, as a party or otherwise;
provided, however, that the Partnership shall not indemnify an Indemnitee (i)
for the act or omission of the Indemnitee material to the matter giving rise to
the proceeding which was committed in bad faith or was the result of active and
deliberate dishonesty; (ii) for any transaction for which such Indemnitee
received an improper personal benefit (in money, property or services) in
violation or breach of any provision of this Agreement; or (iii) in the case of
a criminal proceeding, for an unlawful act or omission by the Indemnitee for
which the Indemnitee had reasonable cause to believe was unlawful. Without
limitation, the foregoing indemnity shall extend to any liability of any
Indemnitee, pursuant to a loan guaranty or otherwise, for any indebtedness of
the Partnership or any Subsidiary of the Partnership (including, without
limitation, any indebtedness which the Partnership or any Subsidiary of the
Partnership has assumed or taken subject to), and the General Partner is hereby
authorized and empowered, on behalf of the Partnership, to enter into one or
more indemnity agreements consistent with the provisions of this Section 7.7 in
favor of any Indemnitee having or potentially having liability for any such
indebtedness. It is the intention of this Section 7.7.A that the Partnership
indemnify each Indemnitee to the fullest extent permitted by law. The
termination of any proceeding by judgment, order or settlement does not create a
presumption that the Indemnitee did not meet the requisite standard of conduct
set forth in this Section 7.7.A. The termination of any proceeding by conviction
of an Indemnitee or upon a plea of nolo contendere or its equivalent by an
Indemnitee, or an entry of an order of probation against an Indemnitee prior to
judgment, does not create a presumption that such Indemnitee acted in a manner
contrary to that specified in this Section 7.7.A with respect to the subject
matter of such proceeding. Any indemnification pursuant to this Section 7.7
shall be made only out of the assets of the Partnership, and neither the General
Partner nor any Limited Partner shall have any obligation to contribute to the
capital of the Partnership or otherwise provide funds to enable the Partnership
to fund its obligations under this Section 7.7.

                  B.       To the fullest extent permitted by law, expenses
incurred by an Indemnitee who is a party to a proceeding or otherwise subject to
or the focus of or is involved in any Action shall be paid or reimbursed by the
Partnership as incurred by the Indemnitee in advance of the final disposition of
the Action upon receipt by the Partnership of (i) a written affirmation by the
Indemnitee of the Indemnitee's good faith belief that the standard of conduct
necessary for indemnification by the Partnership as authorized in this Section
7.7.A has been met, and (ii) a written undertaking by or on behalf of the
Indemnitee to repay the amount if it shall ultimately be determined that the
standard of conduct has not been met.

                  C.       The indemnification provided by this Section 7.7
shall be in addition to any other rights to which an Indemnitee or any other
Person may be entitled under any agreement, pursuant to any vote of the
Partners, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnitee
unless otherwise provided in a written agreement with such Indemnitee or in the
writing pursuant to which such Indemnitee is indemnified.

                  D.       The Partnership may, but shall not be obligated to,
purchase and maintain insurance, on behalf of any of the Indemnitees and such
other Persons as the General Partner shall determine, against any liability that
may be asserted against or expenses that may be incurred by such Person in
connection with the

                                       34
<PAGE>

Partnership's activities, regardless of whether the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Agreement.

                  E.       Any liabilities which an Indemnitee incurs as a
result of acting on behalf of the Partnership, the Parent REIT or the General
Partner (whether as a fiduciary or otherwise) in connection with the operation,
administration or maintenance of an employee benefit plan or any related trust
or funding mechanism (whether such liabilities are in the form of excise taxes
assessed by the IRS, penalties assessed by the Department of Labor, restitutions
to such a plan or trust or other funding mechanism or to a participant or
beneficiary of such plan, trust or other funding mechanism, or otherwise) shall
be treated as liabilities or judgments or fines under this Section 7.7, unless
such liabilities arise as a result of (i) the act or omission of the Indemnitee
material to the matter giving rise to the proceeding which was committed in bad
faith or was the result of active and deliberate dishonesty; (ii) any
transaction for which such Indemnitee received an improper personal benefit (in
money, property or services) in violation or breach of any provision of this
Agreement; or (iii) in the case of a criminal proceeding, an unlawful act or
omission by the Indemnitee for which the Indemnitee had reasonable cause to
believe was unlawful.

                  F.       In no event may an Indemnitee subject any of the
Partners to personal liability by reason of the indemnification provisions set
forth in this Agreement.

                  G.       An Indemnitee shall not be denied indemnification in
whole or in part under this Section 7.7 because the Indemnitee had an interest
in the transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.

                  H.       The provisions of this Section 7.7 are for the
benefit of the Indemnitees, their heirs, successors, assigns and administrators
and shall not be deemed to create any rights for the benefit of any other
Persons. Any amendment, modification or repeal of this Section 7.7 or any
provision hereof shall be prospective only and shall not in any way affect the
obligations of the Partnership or the limitations on the Partnership's liability
to any Indemnitee under this Section 7.7 as in effect immediately prior to such
amendment, modification or repeal with respect to claims arising from or
relating to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be asserted.

                  I.       It is the intent of the Partners that any amounts
paid by the Partnership to the General Partner pursuant to this Section 7.7
shall be treated as "guaranteed payments" within the meaning of Code Section
707(c).

                  Section 7.8 Liability of the General Partner.

                  A.       Notwithstanding anything to the contrary set forth in
this Agreement, neither the General Partner nor any of its directors or officers
shall be liable or accountable in damages or otherwise to the Partnership, any
Partners or any Assignees for losses sustained, liabilities incurred or benefits
not derived as a result of errors in judgment or mistakes of fact or law or of
any act or omission if the General Partner or such director or officer acted in
good faith.

                  B.       The Limited Partners expressly acknowledge that the
General Partner is acting for the benefit of the Partnership, the Limited
Partners and the General Partner's shareholders collectively and that the
General Partner is under no obligation to give priority to the separate
interests of the Limited Partners or the General Partner's shareholders
(including, without limitation, the tax consequences to Limited Partners,
Assignees or the General Partner's shareholders) in deciding whether to cause
the Partnership to take (or decline to take) any actions.

                  C.       Subject to its obligations and duties as General
Partner set forth in Section 7.1.A hereof, the General Partner may exercise any
of the powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its employees or
agents (subject to the supervision and control of the General Partner). The
General Partner shall not be responsible for any misconduct or negligence on the
part of any such agent appointed by it in good faith.

                                       35
<PAGE>

                  D.       To the extent that, at law or in equity, the General
Partner has duties (including fiduciary duties) and liabilities relating thereto
to the Partnership or the Limited Partners, the General Partner shall not be
liable to the Partnership or to any other Partner for its good faith reliance on
the provisions of this Agreement. The provisions of this Agreement, to the
extent that they restrict the duties and liabilities of the General Partner
otherwise existing at law or in equity, are agreed by the Partners to replace
such other duties and liabilities of such General Partner.

                  E.       Notwithstanding anything herein to the contrary,
except for fraud, willful misconduct or gross negligence, or pursuant to any
express indemnities given to the Partnership by any Partner pursuant to any
other written instrument, no Partner shall have any personal liability
whatsoever, to the Partnership or to the other Partner(s), for the debts or
liabilities of the Partnership or the Partnership's obligations hereunder, and
the full recourse of the other Partner(s) shall be limited to the interest of
that Partner in the Partnership. To the fullest extent permitted by law, no
officer, director or shareholder of the General Partner or Parent REIT shall be
liable to the Partnership for money damages except for (i) active and deliberate
dishonesty established by a non-appealable final judgment or (ii) actual receipt
of an improper benefit or profit in money, property or services. Without
limitation of the foregoing, and except for fraud, willful misconduct or gross
negligence, or pursuant to any such express indemnity, no property or assets of
any Partner, other than its interest in the Partnership, shall be subject to
levy, execution or other enforcement procedures for the satisfaction of any
judgment (or other judicial process) in favor of any other Partner(s) and
arising out of, or in connection with, this Agreement. This Agreement is
executed by the officers of the General Partner solely as officers of the same
and not in their own individual capacities.

                  F.       Any amendment, modification or repeal of this Section
7.8 or any provision hereof shall be prospective only and shall not in any way
affect the limitations on the General Partner's, and its officers' and
directors', liability to the Partnership and the Limited Partners under this
Section 7.8 as in effect immediately prior to such amendment, modification or
repeal with respect to claims arising from or relating to matters occurring, in
whole or in part, prior to such amendment, modification or repeal, regardless of
when such claims may arise or be asserted.

                  Section 7.9 Other Matters Concerning the General Partner.

                  A.       The General Partner may rely and shall be protected
in acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture or
other paper or document believed by it in good faith to be genuine and to have
been signed or presented by the proper party or parties.

                  B.       The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers, architects,
engineers, environmental consultants and other consultants and advisers selected
by it, and any act taken or omitted to be taken in reliance upon the opinion of
such Persons as to matters that the General Partner reasonably believes to be
within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.

                  C.       The General Partner shall have the right, in respect
of any of its powers or obligations hereunder, to act through any of its duly
authorized officers and a duly appointed attorney or attorneys-in-fact. Each
such attorney shall, to the extent provided by the General Partner in the power
of attorney, have full power and authority to do and perform all and every act
and duty that is permitted or required to be done by the General Partner
hereunder.

                  D.       Notwithstanding any other provision of this Agreement
or the Act, any action of the General Partner on behalf of the Partnership or
any decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of the Parent REIT to
continue to qualify as a REIT, (ii) for the Parent REIT otherwise to satisfy the
REIT Requirements, (iii) to avoid the Parent REIT incurring any taxes

                                       36
<PAGE>

under Code Section 857 or Code Section 4981, is expressly authorized under this
Agreement and is deemed approved by all of the Limited Partners.

                  Section 7.10 Title to Partnership Assets. Title to Partnership
assets, whether real, personal or mixed and whether tangible or intangible,
shall be deemed to be owned by the Partnership as an entity, and no Partner,
individually or collectively with other Partners or Persons, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement. All
Partnership assets shall be recorded as the property of the Partnership in its
books and records, irrespective of the name in which legal title to such
Partnership assets is held.

                  Section 7.11 Reliance by Third Parties. Notwithstanding
anything to the contrary in this Agreement, any Person dealing with the
Partnership shall be entitled to assume that the General Partner has full power
and authority, without the consent or approval of any other Partner or Person,
to encumber, sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any contracts on behalf of the Partnership, and
take any and all actions on behalf of the Partnership, and such Person shall be
entitled to deal with the General Partner as if it were the Partnership's sole
party in interest, both legally and beneficially. Each Limited Partner hereby
waives any and all defenses or other remedies that may be available against such
Person to contest, negate or disaffirm any action of the General Partner in
connection with any such dealing. In no event shall any Person dealing with the
General Partner or its representatives be obligated to ascertain that the terms
of this Agreement have been complied with or to inquire into the necessity or
expediency of any act or action of the General Partner or its representatives.
Each and every certificate, document or other instrument executed on behalf of
the Partnership by the General Partner or its representatives shall be
conclusive evidence in favor of any and every Person relying in good faith
thereon or claiming thereunder that (i) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (ii) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (iii) such certificate, document or instrument was
duly executed and delivered in accordance with the terms and provisions of this
Agreement and is binding upon the Partnership.

                                  ARTICLE VIII
                   RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

                  Section 8.1 Limitation of Liability. The Limited Partners
shall have no liability under this Agreement (other than for breach thereof)
except as expressly provided in Section 10.4 or under the Act.

                  Section 8.2 Management of Business. No Limited Partner or
Assignee (other than the General Partner, any of its Affiliates or any officer,
director, member, employee, partner, agent or trustee of the General Partner,
the Partnership or any of their Affiliates, in their capacity as such) shall
take part in the operations, management or control (within the meaning of the
Act) 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.
The transaction of any such business by the General Partner, any of its
Affiliates or any officer, director, member, employee, partner, agent,
representative, or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.

                  Section 8.3 Outside Activities of Limited Partners. Subject to
any agreements entered into pursuant to Section 7.6.E hereof and any other
agreements entered into by a Limited Partner or its Affiliates with the General
Partner, the Partnership or a Subsidiary (including, without limitation, any
employment agreement), any Limited Partner and any Assignee, officer, director,
employee, agent, trustee, Affiliate, member

                                       37
<PAGE>

or shareholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities that are in direct or
indirect competition with the Partnership or that are enhanced by the activities
of the Partnership. Neither the Partnership nor any Partner shall have any
rights by virtue of this Agreement in any business ventures of any Limited
Partner or Assignee. Subject to such agreements, none of the Limited Partners
nor any other Person shall have any rights by virtue of this Agreement or the
partnership relationship established hereby in any business ventures of any
other Person (other than the General Partner, to the extent expressly provided
herein), and such Person shall have no obligation pursuant to this Agreement,
subject to Section 7.6.E hereof and any other agreements entered into by a
Limited Partner or its Affiliates with the General Partner, the Partnership or a
Subsidiary, to offer any interest in any such business ventures to the
Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character that, if presented to the Partnership, any Limited
Partner or such other Person, could be taken by such Person.

                  Section 8.4 Return of Capital. Except pursuant to the rights
of Redemption set forth in Section 8.6 hereof, no Limited Partner shall be
entitled to the withdrawal or return of its Capital Contribution, except to the
extent of distributions made pursuant to this Agreement or upon termination of
the Partnership as provided herein. Except to the extent provided in Article 6
hereof or otherwise expressly provided in this Agreement, no Limited Partner or
Assignee shall have priority over any other Limited Partner or Assignee either
as to the return of Capital Contributions or as to profits, losses or
distributions.

                  Section 8.5 Adjustment Factor. The Partnership shall notify
any Limited Partner that is a Qualifying Party, on request, of the then current
Adjustment Factor or any change made to the Adjustment Factor.

                  Section 8.6 Redemption Rights of Qualifying Parties.

                  A.       Subject to Section 11.6.D, a Qualifying Party, but no
other Limited Partner or Assignee, shall have the right (subject to the terms
and conditions set forth herein) to require the Partnership to redeem (a
"Redemption") all or a portion of the Partnership Common Units held by such
Qualifying Party (such Partnership Common Units being hereafter "Tendered
Units") in exchange for the Cash Amount payable on the Specified Redemption
Date. Any Redemption shall be exercised pursuant to a Notice of Redemption
delivered to the General Partner by such Qualifying Party (the "Tendering
Party") when exercising the Redemption right. The Partnership's obligation to
effect a Redemption, however, shall not arise or be binding against the
Partnership (i) until and unless there has been a Declination and (ii) before
the Business Day following the Cut-Off Date. Regardless of the binding or
non-binding nature of a pending Redemption, a Tendering Party shall have no
right to receive distributions with respect to any Tendered Units (other than
the Cash Amount) paid after delivery of the Notice of Redemption, whether or not
the Partnership Record Date for such distribution precedes or coincides with
such delivery of the Notice of Redemption; provided, however, that in the event
that the General Partner on behalf of the Partnership elects to fund the Cash
Amount with the proceeds of an Offering Funding pursuant to Section 8.6.D
hereof, the Tendering Party's right to receive distributions shall not be
suspended as hereinbefore provided and such Tendering Party shall have the right
to receive distributions actually made hereunder prior to the date of the
closing of the Offering Funding the proceeds of which are used to pay the Cash
Amount. In the event of a Redemption, the Cash Amount shall be delivered as a
certified check payable to the Tendering Party or, in the General Partner's sole
and absolute discretion, in immediately available funds. Notwithstanding
anything to the contrary contained in this Section 8.6A, no right to require a
Redemption shall be exercisable by a Qualifying Party prior to the earlier of
(x) two years following the issuance of shares of common stock by the Parent
REIT in an offering pursuant to Rule 144A under the Securities Act, or (y) 180
days following the effectiveness of a registration statement covering the sale
of common stock of the Parent REIT sold in such offering pursuant to Rule 144A.

                  B.       Notwithstanding the provisions of Section 8.6.A
hereof, on or before the close of business on the Cut-Off Date, a REIT Party
may, in its sole and absolute discretion but subject to the Ownership Limit and
the transfer restrictions and other limitations of the Charter, elect to
acquire, some or all of the Tendered Units from the Tendering Party (such
percentage being referred to as the "Applicable Percentage") in exchange for the
REIT Consideration. In making such election, the REIT Party shall act in a fair,
equitable and reasonable manner that neither prefers one group or class of
Qualifying Parties over another nor discriminates

                                       38
<PAGE>

against a group or class of Qualifying Parties. If the REIT Party so elects, on
the Specified Redemption Date the Tendering Party shall sell the Applicable
Percentage of the Tendered Units to the REIT Party in exchange for the REIT
Consideration. The Tendering Party shall submit (i) such information,
certification or affidavit as the Parent REIT may reasonably require in
connection with the application of the Ownership Limit and other restrictions
and limitations of the Charter to any such acquisition and (ii) such written
representations, investment letters, legal opinions or other instruments
necessary, in the view of the REIT Party to effect compliance with the
Securities Act. In the event of a purchase of any Tendered Units by the REIT
Party pursuant to this Section 8.6.B, the Tendering Party shall no longer have
the right to cause the Partnership to effect a Redemption of such Tendered
Units, and, upon notice to the Tendering Party by the REIT Party given on or
before the close of business on the Cut-Off Date, that the REIT Party has
elected to acquire some or all of the Tendered Units pursuant to this Section
8.6.B, the obligation of the Partnership to effect a Redemption of the Tendered
Units as to which the notice by the REIT Party relates shall not accrue or
arise. The REIT Consideration shall be delivered by the REIT Party as duly
authorized, validly issued, fully paid and non-assessable REIT Shares and, if
applicable, Rights, free of any pledge, lien, encumbrance or restriction, other
than the Ownership Limit and other restrictions provided in the Charter, the
Bylaws of the Parent REIT, the Securities Act and relevant state securities or
"blue sky" laws. Neither any Tendering Party whose Tendered Units are acquired
by the REIT Party pursuant to this Section 8.6.B, any Partner, any Assignee nor
any other interested Person shall have any right to require or cause the Parent
REIT to register, qualify or list any REIT Shares owned or held by such Person,
whether or not such REIT Shares are issued pursuant to this Section 8.6.B, with
the SEC, with any state securities commissioner, department or agency, under the
Securities Act or the Exchange Act or with any stock exchange; provided,
however, that this limitation shall not be in derogation of any registration or
similar rights granted pursuant to any other written agreement between the
Parent REIT and any such Person. Notwithstanding any delay in such delivery, the
Tendering Party shall be deemed the owner of such REIT Shares and Rights for all
purposes, including, without limitation, rights to vote or consent, receive
dividends, and exercise rights, as of the Specified Redemption Date. REIT Shares
issued upon an acquisition of the Tendered Units by the Parent REIT pursuant to
this Section 8.6.B may contain such legends regarding restrictions under the
Securities Act and applicable state securities laws as the Parent REIT in good
faith determines to be necessary or advisable in order to ensure compliance with
such laws.

                  C.       Notwithstanding the provisions of Section 8.6.A and
8.6.B hereof, no Tendering Party shall have any rights (including any right to a
Redemption pursuant to Section 8.6A) under this Agreement that would otherwise
be prohibited under the Charter with respect to the Ownership Limit. To the
extent that any attempted Redemption or acquisition of the Tendered Units by the
REIT Party pursuant to Section 8.6.B hereof would be in violation of this
Section 8.6.C, it shall be null and void ab initio, and the Tendering Party
shall not acquire any rights or economic interests in REIT Shares otherwise
issuable by the Parent REIT under Section 8.6.B hereof.

                  D.       To the extent that the REIT Party declines or fails
to exercise its purchase rights for all Tendered Units pursuant to Section 8.6.B
hereof following receipt of a Notice of Redemption (a "Declination"):

                                             (1)      The General Partner shall
         give notice of such Declination to the Tendering Party on or before the
         close of business on the Cut-Off Date. The failure of the General
         Partner to give notice of such Declination by the close of business on
         the Cut-Off Date shall itself constitute a Declination.

                                             (2)      Subject to Section 11.6.D,
         the Parent REIT on behalf of the Partnership may elect to raise funds
         for the payment of all or any percentage of the Cash Amount either (a)
         by contribution by a REIT Party of funds from the proceeds of a private
         placement or registered public offering (each, an "Offering Funding")
         by the Parent REIT of a number of REIT Shares or other securities of
         the Parent REIT ("Offering Funding Shares") or (b) from any other
         sources (including, but not limited to, the sale of any Property and
         the incurrence of additional Debt) available to the Partnership.

                                             (3)      If an Offering Funding has
         been elected by the General Partner, promptly upon the General
         Partner's receipt of the Notice of Redemption

                                       39
<PAGE>

         and the General Partner giving notice of its Declination, the General
         Partner shall give notice (a "Single Funding Notice") to all Qualifying
         Parties then holding a Partnership Interest (or an interest therein)
         and having Redemption rights pursuant to this Section 8.6 and require
         that all such Qualifying Parties elect whether or not to effect a
         Redemption of their Partnership Common Units to be funded through an
         Offering Funding. In the event that any such Qualifying Party elects to
         effect such a Redemption, it shall give notice thereof and of the
         number of Partnership Common Units to be made subject thereto in
         writing to the General Partner within ten (10) Business Days after
         receipt of the Single Funding Notice, and such Qualifying Party shall
         be treated as a Tendering Party for all purposes of this Section 8.6.
         In the event that a Qualifying Party does not so elect, it shall be
         deemed to have waived its right to effect a Redemption; provided,
         however, that the General Partner shall not be required to acquire
         Partnership Common Units pursuant to this Section 8.6.D more than twice
         within a calendar year from a particular Qualifying Party.

Any proceeds from an Offering Funding that are in excess of the aggregate Cash
Amount paid to all Tendering Parties pursuant to this Section 8.6.D shall be for
the sole benefit of the Parent REIT. The Parent REIT shall make a Capital
Contribution of such amounts to the Partnership for an additional General
Partner Interest. Any such contribution shall entitle the General Partner to an
equitable Percentage Interest adjustment.

                  E.       Notwithstanding the provisions of Section 8.6.B
hereof, the REIT Party shall not, under any circumstances, elect to acquire
Tendered Units in exchange for the REIT Consideration if such exchange would be
prohibited under the Charter.

                  F.       Notwithstanding anything herein to the contrary (but
subject to Section 8.6.C hereof), with respect to any Redemption (or any tender
of Partnership Common Units for Redemption if the Tendered Units are acquired by
a REIT Party pursuant to Section 8.6.B hereof) pursuant to this Section 8.6:

                                             (1)      All Partnership Common
         Units acquired by a REIT Party pursuant to Section 8.6.B hereof may, at
         the election of the REIT Party, be converted into and deemed to be a
         General Partner Interest comprised of the same number of Partnership
         Common Units.

                                             (2)      Subject to the Ownership
         Limit, no Tendering Party may effect a Redemption for less than five
         hundred (500) Partnership Common Units or, if such Tendering Party
         holds (as a Limited Partner or, economically, as an Assignee) less than
         five hundred (500) Partnership Common Units, all of the Partnership
         Common Units held by such Tendering Party.

                                             (3)      Each Tendering Party (a)
         may effect a Redemption only once in each fiscal quarter of a
         twelve-month period, unless otherwise permitted by the General Partner,
         in its sole and absolute discretion and (b) may not effect a Redemption
         during the period after the Partnership Record Date with respect to a
         distribution and before the record date established by the Parent REIT
         for a distribution to its shareholders of some or all of its portion of
         such Partnership distribution.

                                             (4)      Notwithstanding anything
         herein to the contrary, with respect to any Redemption or acquisition
         of Tendered Units by a REIT Party pursuant to Section 8.6.B hereof, in
         the event that the General Partner gives notice to all Limited Partners
         (but excluding any Assignees) then owning Partnership Interests (a
         "Primary Offering Notice") that the Parent REIT desires to effect a
         primary offering of its equity securities, then, unless the General
         Partner otherwise consents, commencement of the actions denoted in
         Section 8.6.D hereof as to an Offering Funding, if any, with respect to
         any Notice of Redemption thereafter received, whether or not the
         Tendering Party is a Limited Partner, may be delayed until the earlier
         of (a) the completion of the primary offering or (b) ninety (90) days
         following the giving of the Primary Offering Notice.

                                       40
<PAGE>

                                             (5)      Without the consent of the
         General Partner, no Tendering Party may effect a Redemption within
         ninety (90) days following the closing of any prior Offering Funding.

                                             (6)      The consummation of such
         Redemption (or an acquisition of Tendered Units by a REIT Party
         pursuant to Section 8.6.B hereof, as the case may be) shall be subject
         to the expiration or termination of the applicable waiting period, if
         any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
         amended.

                                             (7)      Subject to Section 8.6.A,
         the Tendering Party shall continue to own (subject, in the case of an
         Assignee, to the provision of Section 11.5 hereof) all Partnership
         Common Units subject to any Redemption, and be treated as a Limited
         Partner or an Assignee, as applicable, with respect to such Partnership
         Common Units for all purposes of this Agreement, until such Partnership
         Common Units are either paid for by the Partnership pursuant to Section
         8.6.A hereof or transferred to a REIT Party and paid for, by the
         issuance of the REIT Shares, pursuant to Section 8.6.B hereof on the
         Specified Redemption Date. Until a Specified Redemption Date and an
         acquisition of the Tendered Units by a REIT Party pursuant to Section
         8.6.B hereof, the Tendering Party shall have no rights as a shareholder
         of the Parent REIT with respect to the REIT Shares issuable in
         connection with such acquisition.

                                             (8)      Each Limited Partner
         covenants and agrees with the REIT Party that all Tendered Units shall
         be delivered to the appropriate REIT Party free and clear of all liens,
         claims and encumbrances whatsoever and should any such liens, claims
         and/or encumbrances exist or arise with respect to such Tendered Units,
         the REIT Party shall be under no obligation to acquire the same. Each
         Limited Partner further agrees that, in the event any state or local
         property transfer tax is payable as a result of the transfer of its
         Tendered Units to a REIT Party (or its designee), such Limited Partner
         shall assume and pay such transfer tax.

                                             (9)      No Limited Partner may
         require a Redemption hereunder to the extent that the issuance of REIT
         Consideration pursuant to Section 8.6.B hereof would violate ownership
         limitations contained in the Charter or would violate any REIT
         Requirement (notwithstanding that any such Tendered Units could
         otherwise be acquired for cash pursuant to Section 8.6.A hereof).

                                             (10)     No Tendering Party may
         require a Redemption hereunder if the issuance of REIT Consideration
         would be likely to cause the acquisition of such REIT Consideration by
         such Tendering Party to be "integrated" with any other distribution of
         common stock of the Parent REIT or of Limited Partnership Interests for
         purposes of complying with the Securities Act.

For purposes of determining compliance with the restrictions set forth in this
Section 8.6.F, all Partnership Common Units beneficially owned by a Related
Party of a Tendering Party shall be considered to be owned or held by such
Tendering Party.

                  G.       In connection with an exercise of Redemption rights
pursuant to this Section 8.6, the Tendering Party shall submit the following to
the General Partner, in addition to the Notice of Redemption:

                                             (1)      A written affidavit, dated
         the same date as the Notice of Redemption, (a) disclosing the actual
         and constructive ownership, as determined for purposes of Code Sections
         856(a)(6) and 856(h), of REIT Shares by (i) such Tendering Party and
         (ii) any Related Party and (b) representing that, after giving effect
         to the Redemption or an acquisition of the Tendered Units by the
         General Partner pursuant to Section 8.6.B hereof, neither the Tendering
         Party nor any Related Party will own REIT Shares in excess of the
         Ownership Limit;

                                       41
<PAGE>

                                             (2)      A written representation
         that neither the Tendering Party nor any Related Party has any
         intention to acquire any additional REIT Shares prior to the closing of
         the Redemption or an acquisition of the Tendered Units by a REIT Party
         pursuant to Section 8.6.B hereof on the Specified Redemption Date; and

                                             (3)      An undertaking to certify,
         at and as a condition to the closing of (i) the Redemption or (ii) the
         acquisition of the Tendered Units by a REIT Party pursuant to Section
         8.6.B hereof on the Specified Redemption Date, that either (a) the
         actual and constructive ownership of REIT Shares by the Tendering Party
         and any Related Party remain unchanged from that disclosed in the
         affidavit required by Section 8.6.G(1) or (b) after giving effect to
         the Redemption or an acquisition of the Tendered Units by a REIT Party
         pursuant to Section 8.6.B hereof, neither the Tendering Party nor any
         Related Party shall own REIT Shares in violation of the Ownership
         Limit.

                  Section 8.7 Partnership Right to Call Limited Partner
Interests. Notwithstanding any other provision of this Agreement, on and after
the date on which the aggregate Percentage Interests of the Limited Partners are
less than one percent (1%), the Partnership shall have the right, but not the
obligation, from time to time and at any time to redeem any and all outstanding
Limited Partner Interests by treating any Limited Partner as a Tendering Party
who has delivered a Notice of Redemption pursuant to Section 8.6 hereof for the
amount of Partnership Common Units to be specified by the General Partner, in
its sole and absolute discretion, by notice to such Limited Partner that the
Partnership has elected to exercise its rights under this Section 8.7. Such
notice given by the General Partner to a Limited Partner pursuant to this
Section 8.7 shall be treated as if it were a Notice of Redemption delivered to
the General Partner by such Limited Partner. For purposes of this Section 8.7,
(a) any Limited Partner (whether or not otherwise a Qualifying Party) may, in
the General Partner's sole and absolute discretion, be treated as a Qualifying
Party that is a Tendering Party and (b) the provisions of Sections 8.6.F(2),
8.6.F(3) and 8.6.F(5) hereof shall not apply, but the remainder of Section 8.6
hereof shall apply, mutatis mutandis.

                  Section 8.8 Mergers.

                  The General Partner shall not permit the Partnership to be a
party to any consolidation, merger, combination or other transaction pursuant to
which the Partnership Common Units are converted or changed into or exchanged
for partnership interests and/or other securities of another operating
partnership in an UPREIT or similar structure, in each case without the
affirmative vote of the holders of at least a majority of the outstanding Paired
Common Units, voting separately as a class, unless upon consummation of any such
consolidation, merger, combination or other transaction, the holders of Paired
Common Units shall receive shares of stock or beneficial interest or other
equity securities with preferences, rights and privileges not materially
inferior to the preferences, rights and privileges of the Special Voting
Preferred Stock (which shares of stock or beneficial interest or other equity
securities shall be issued by the parent REIT of such operating partnership).
This Section 8.8 shall not be amended or modified without the prior consent of
the holders of at least a majority of the Paired Common Units.

                                   ARTICLE IX
                     BOOKS, RECORDS, ACCOUNTING AND REPORTS

                  Section 9.1 Records and Accounting.

                  A.       The General Partner shall keep or cause to be kept at
the principal office of the Partnership those records and documents required to
be maintained by the Act and other books and records deemed by the General
Partner to be appropriate with respect to the Partnership's business, including,
without limitation, all books and records necessary to provide to the Limited
Partners any information, lists and copies of documents required to be provided
pursuant to Section 8.5.A or Section 9.3 hereof. Any records maintained by or on
behalf of the Partnership in the regular course of its business may be kept on,
or be in the form for,

                                       42
<PAGE>

magnetic tape, photographs, micrographics or any other information storage
device, provided that the records so maintained are convertible into clearly
legible written form within a reasonable period of time.

                  B.       The books of the Partnership shall be maintained, for
financial and tax reporting purposes, on an accrual basis in accordance with
generally accepted accounting principles, or on such other basis as the General
Partner determines to be necessary or appropriate. To the extent permitted by
sound accounting practices and principles, the Partnership and the General
Partner may operate with integrated or consolidated accounting records,
operations and principles.

                  Section 9.2 Partnership Year. The Partnership Year of the
Partnership shall be the calendar year.

                  Section 9.3 Reports.

                  A.       As soon as practicable, but in no event later than
one hundred five (105) days after the close of each Partnership Year, the
General Partner shall cause to be mailed to each Limited Partner of record as of
the close of the Partnership Year an annual report containing financial
statements of the Partnership, or of the General Partner if such statements are
prepared solely on a consolidated basis with the General Partner, for such
Partnership Year, presented in accordance with generally accepted accounting
principles, such statements to be audited by a nationally recognized firm of
independent public accountants selected by the General Partner.

                  B.       As soon as practicable, but in no event later than
one hundred five (105) days after the close of each calendar quarter (except the
last calendar quarter of each year), the General Partner shall cause to be
mailed to each Limited Partner of record as of the last day of the calendar
quarter a report containing unaudited financial statements of the Partnership,
or of the General Partner if such statements are prepared solely on a
consolidated basis with the General Partner, and such other information as may
be required by applicable law or regulation or as the General Partner determines
to be appropriate.

                  C.       At the request of any Limited Partner, the General
Partner shall provide access to the books, records and workpapers upon which the
reports required by this Section 9.3 are based, to the extent required by the
Act.

                                    ARTICLE X
                                   TAX MATTERS

                  Section 10.1 Preparation of Tax Returns. The General Partner
shall arrange for the preparation and timely filing of all returns with respect
to Partnership income, gains, deductions, losses and other items required of the
Partnership for federal and state income tax purposes and shall use all
reasonable effort to furnish, within ninety (90) days of the close of each
taxable year, the tax information reasonably required by Limited Partners for
federal and state income tax reporting purposes. The Limited Partners shall
promptly provide the General Partner with such information relating to the
Contributed Properties, including tax basis and other relevant information, as
may be reasonably requested by the General Partner from time to time.

                  Section 10.2 Tax Elections. Except as otherwise provided
herein, the General Partner shall, in its sole and absolute discretion,
determine whether to make or revoke any available election pursuant to the Code,
including, but not limited to, the election under Code Section 754.

                  Section 10.3 Tax Matters Partner.

                  A.       The General Partner shall be the "tax matters
partner" of the Partnership for federal income tax purposes. The tax matters
partner shall receive no compensation for its services. All third-party costs
and expenses incurred by the tax matters partner in performing its duties as
such (including legal and accounting fees and expenses) shall be borne by the
Partnership in addition to any reimbursement pursuant to Section 7.4 hereof.
Nothing herein shall be construed to restrict the Partnership from engaging an
accounting

                                       43
<PAGE>

         firm to assist the tax matters partner in discharging its duties
         hereunder, so long as the compensation paid by the Partnership for such
         services is reasonable. At the request of any Limited Partner, the
         General Partner agrees to consult with such Limited Partner with
         respect to the preparation and filing of any returns and with respect
         to any subsequent audit or litigation relating to such returns;
         provided, however, that the filing of such returns shall be in the sole
         and absolute discretion of the General Partner.

                  B.       The tax matters partner is authorized, but not
required:

                                             (1)      to enter into any
         settlement with the IRS with respect to any administrative or judicial
         proceedings for the adjustment of Partnership items required to be
         taken into account by a Partner for income tax purposes (such
         administrative proceedings being referred to as a "tax audit" and such
         judicial proceedings being referred to as "judicial review"), and in
         the settlement agreement the tax matters partner may expressly state
         that such agreement shall bind all Partners, except that such
         settlement agreement shall not bind any Partner (i) who (within the
         time prescribed pursuant to the Code and Regulations) files a statement
         with the IRS providing that the tax matters partner shall not have the
         authority to enter into a settlement agreement on behalf of such
         Partner or (ii) who is a "notice partner" (as defined in Code Section
         6231) or a member of a "notice group" (as defined in Code Section
         6223(b)(2));

                                             (2)      in the event that a notice
         of a final administrative adjustment at the Partnership level of any
         item required to be taken into account by a Partner for tax purposes (a
         "final adjustment") is mailed to the tax matters partner, to seek
         judicial review of such final adjustment, including the filing of a
         petition for readjustment with the United States Tax Court or the
         United States Claims Court, or the filing of a complaint for refund
         with the District Court of the United States for the district in which
         the Partnership's principal place of business is located;

                                             (3)      to intervene in any action
         brought by any other Partner for judicial review of a final adjustment;

                                             (4)      to file a request for an
         administrative adjustment with the IRS at any time and, if any part of
         such request is not allowed by the IRS, to file an appropriate pleading
         (petition or complaint) for judicial review with respect to such
         request;

                                             (5)      to enter into an agreement
         with the IRS to extend the period for assessing any tax that is
         attributable to any item required to be taken into account by a Partner
         for tax purposes, or an item affected by such item; and

                                             (6)      to take any other action
         on behalf of the Partners in connection with any tax audit or judicial
         review proceeding to the extent permitted by applicable law or
         regulations.

The taking of any action and the incurring of any expense by the tax matters
partner in connection with any such proceeding, except to the extent required by
law, is a matter in the sole and absolute discretion of the tax matters partner
and the provisions relating to indemnification of the General Partner set forth
in Section 7.7 hereof shall be fully applicable to the tax matters partner in
its capacity as such.

                  Section 10.4 Withholding. Each Limited Partner hereby
authorizes the Partnership to withhold from or pay on behalf of or with respect
to such Limited Partner any amount of federal, state, local or foreign taxes
that the General Partner determines that the Partnership is required to withhold
or pay with respect to any amount distributable or allocable to such Limited
Partner pursuant to this Agreement, including, without limitation, any taxes
required to be withheld or paid by the Partnership pursuant to Code Section
1441, Code Section 1442, Code Section 1445 or Code Section 1446. Any amount paid
on behalf of or with respect to a Limited Partner shall constitute a loan by the
Partnership to such Limited Partner, which loan shall be repaid by such Limited
Partner within fifteen (15) days after notice from the General Partner that such
payment must be

                                       44
<PAGE>

made unless (i) the Partnership withholds such payment from a distribution that
would otherwise be made to the Limited Partner or (ii) the General Partner
determines, in its sole and absolute discretion, that such payment may be
satisfied out of the Available Funds of the Partnership that would, but for such
payment, be distributed to the Limited Partner. Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest in
such Limited Partner's Partnership Interest to secure such Limited Partner's
obligation to pay to the Partnership any amounts required to be paid pursuant to
this Section 10.4. In the event that a Limited Partner fails to pay any amounts
owed to the Partnership pursuant to this Section 10.4 when due, the General
Partner may, in its sole and absolute discretion, elect to make the payment to
the Partnership on behalf of such defaulting Limited Partner, and in such event
shall be deemed to have lent such amount to such defaulting Limited Partner and
shall succeed to all rights and remedies of the Partnership as against such
defaulting Limited Partner (including, without limitation, the right to receive
distributions). Any amounts payable by a Limited Partner hereunder shall bear
interest at 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,
plus four (4) percentage points (but not higher than the maximum lawful rate)
from the date such amount is due (i.e., fifteen (15) days after demand) until
such amount is paid in full. Each Limited Partner shall take such actions as the
Partnership or the General Partner shall request in order to perfect or enforce
the security interest created hereunder.

                  Section 10.5 Organizational Expenses. The Partnership shall
elect to deduct expenses, if any, incurred by it in organizing the Partnership
ratably over a 60 month period as provided in Section 709 of the Code.

                                   ARTICLE XI
                            TRANSFERS AND WITHDRAWALS

                  Section 11.1 Transfer.

                  A.       No part of the interest of a Partner shall be subject
to the claims of any creditor, to any spouse for alimony or support, or to legal
process, and may not be voluntarily or involuntarily alienated or encumbered
except as may be specifically provided for in this Agreement.

                  B.       No Partnership Interest shall be Transferred, in
whole or in part, except in accordance with the terms and conditions set forth
in this Article 11. Any Transfer or purported Transfer of a Partnership Interest
not made in accordance with this Article 11 shall be null and void ab initio.

                  C.       Notwithstanding the other provisions of this Article
11 (other than Section 11.6.D hereof), the Partnership Interests of the General
Partner may be Transferred, in whole or in part, at any time or from time to
time, to any Person that is, at the time of such Transfer, a Qualified REIT
Subsidiary. Any transferee of the entire General Partner Interest pursuant to
this Section 11.1.C shall automatically become, without further action or
Consent of any Limited Partners, the sole general partner of the Partnership,
subject to all the rights, privileges, duties and obligations under this
Agreement and the Act relating to a general partner. Upon any Transfer permitted
by this Section 11.1.C, the transferor Partner shall be relieved of all its
obligations under this Agreement. The provisions of Section 11.2.B (other than
the last sentence thereof), 11.3, 11.4.A and 11.5 hereof shall not apply to any
Transfer permitted by this Section 11.1.C.

                  D.       No Transfer of any Partnership Interest may be made
to a lender to the Partnership or any Person who is related (within the meaning
of Section 1.752-4(b) of the Regulations) to any lender to the Partnership whose
loan constitutes a Nonrecourse Liability, without the consent of the General
Partner in its sole and absolute discretion; provided that as a condition to
such consent, the lender will be required to enter into an arrangement with the
Partnership and the General Partner to redeem or exchange for the REIT
Consideration any Partnership Units in which a security interest is held by such
lender concurrently with such time as such lender would be deemed to be a
partner in the Partnership for purposes of allocating liabilities to such lender
under Section 752 of the Code.

                  Section 11.2 Transfer of General Partner's Partnership
Interest.

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<PAGE>

                  A.       The General Partner may not Transfer any of its
General Partner Interest or withdraw from the Partnership except as provided in
Sections 11.1.C, 11.2.B and 11.2.C hereof. In every instance where the General
Partner's ability to merge, transfer its General Partner Interest, or withdraw
from the Partnership is limited pursuant to this Section 11.2, the Parent REIT's
ability to merge or transfer its stock of the General Partner shall be similarly
limited.

                  B.       Except as set forth in Section 11.1.C above and
Section 11.2.C below, the General Partner shall not withdraw from the
Partnership and shall not Transfer all or any portion of its interest in the
Partnership (whether by sale, disposition, statutory merger or consolidation,
liquidation or otherwise) without the Consent of the Limited Partners, which
Consent may be given or withheld in the sole and absolute discretion of the
Limited Partners. Upon any Transfer of such a Partnership Interest pursuant to
the Consent of the Limited Partners and otherwise in accordance with the
provisions of this Section 11.2.B, the transferee shall become a successor
General Partner for all purposes herein, and shall be vested with the powers and
rights of the transferor General Partner, and shall be liable for all
obligations 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 Interest
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 such Transferred Partnership Interest, and such Transfer shall
relieve the transferor General Partner of its obligations under this Agreement
without the Consent of the Limited Partners. In the event that the General
Partner withdraws from the Partnership, in violation of this Agreement or
otherwise, or otherwise dissolves or terminates, or upon the bankruptcy of the
General Partner, a Majority in Interest of the Limited Partners may elect to
continue the Partnership business by selecting a successor General Partner in
accordance with the Act.

                  C.       Notwithstanding Section 11.2.B, the General Partner
may merge with another entity if immediately after such merger substantially all
of the assets of the surviving entity, other than the General Partner Interest
held by the General Partner, are contributed to the Partnership as a Capital
Contribution in exchange for Partnership Units.

                  Section 11.3 Transfer of Limited Partners' Partnership
Interests.

                  A.       General. No Limited Partner shall Transfer all or any
portion of its Partnership Interest to any transferee without the consent of the
General Partner, which consent may be withheld in its sole and absolute
discretion, provided, however, that subject to Section 11.3E hereof, Arbor
Commercial Mortgage, LLC may distribute some or all of its Partnership Interests
to its owners, and any Limited Partner that is an individual may transfer all or
any portion of his Partnership Interest to his immediate family or a trust for
his immediate family without the consent of the General Partner, provided,
further, that the General Partner has the right not to admit such transferee as
a Limited Partner in the Partnership.

                  B.       Conditions to Transfer Consent. Without limiting the
generality of Section 11.3.A hereof, it is expressly understood and agreed that
the General Partner will not consent to any Transfer of all or any portion of
any Partnership Interest pursuant to Section 11.3.A above unless such Transfer
meets each of the following conditions:

                                             (1)      Qualified Transferee. Such
         Transfer is made only to a single Qualified Transferee; provided,
         however, that, for such purposes, all Qualified Transferees that are
         Affiliates, or that comprise investment accounts or funds managed by a
         single Qualified Transferee and its Affiliates, shall be considered
         together to be a single Qualified Transferee.

                                             (2)      Assumption of Obligations.
         The transferee in such Transfer 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
         Interest; provided, that no such Transfer (unless made pursuant to a
         statutory merger or consolidation wherein all obligations and
         liabilities of the transferor Partner are assumed by a successor
         corporation by operation of law) shall relieve the transferor Partner
         of its

                                       46
<PAGE>

         obligations under this Agreement without the approval of the General
         Partner, in its sole and absolute discretion. Notwithstanding the
         foregoing, any transferee of any Transferred Partnership Interest shall
         be subject to any and all ownership limitations contained in the
         Charter that may limit or restrict such transferee's ability to
         exercise its Redemption rights, including, without limitation, the
         Ownership Limit. Any transferee, whether or not admitted as a
         Substituted Limited Partner, shall take subject to the obligations of
         the transferor hereunder. Unless admitted as a Substituted Limited
         Partner, no transferee, whether by a voluntary Transfer, by operation
         of law or otherwise, shall have any rights hereunder, other than the
         rights of an Assignee as provided in Section 11.5 hereof.

                                             (3)      Effective Date. Such
         Transfer is effective as of the first day of a fiscal quarter of the
         Partnership.

                  C.       Incapacity. If a Limited Partner is subject to
Incapacity, the executor, administrator, trustee, committee, guardian,
conservator or receiver of such Limited Partner's estate shall have all the
rights of a Limited Partner, but not more rights than those enjoyed by other
Limited Partners, for the purpose of settling or managing the estate, and such
power as the Incapacitated Limited Partner possessed to Transfer all or any part
of its interest in the Partnership. The Incapacity of a Limited Partner, in and
of itself, shall not dissolve or terminate the Partnership.

                  D.       Opinion of Counsel. In connection with any proposed
Transfer of a Limited Partner Interest, the General Partner shall have the right
to receive an opinion of counsel reasonably satisfactory to it to the effect
that the proposed Transfer may be effected without registration under the
Securities Act and will not otherwise violate any federal or state securities
laws or regulations applicable to the Partnership or the Partnership Interests
Transferred.

                  E.       Adverse Tax Consequences. No Transfer by a Limited
Partner of its Partnership Interests (including any Redemption, any other
acquisition of Partnership Units by the Partnership or a REIT Party) may be made
to or by any person if (i) in the opinion of legal counsel for the Partnership,
it would result in the Partnership being treated as an association taxable as a
corporation or would result in a termination of the Partnership under Code
Section 708, or (ii) such Transfer would be effectuated through an "established
securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Code Section 7704.

                  Section 11.4 Substituted Limited Partners.

                  A.       A transferee of the interest of a Limited Partner
pursuant to a Transfer consented to by the General Partner pursuant to Section
11.3.A may be admitted as a Substituted Limited Partner only with the consent of
the General Partner, which consent may be given or withheld by the General
Partner in its sole and absolute discretion. The failure or refusal by the
General Partner to permit a transferee of any such interests to become a
Substituted Limited Partner shall not give rise to any cause of action against
the Partnership or the General Partner. Subject to the foregoing, an Assignee
shall not be admitted as a Substituted Limited Partner until and unless it
furnishes to the General Partner (i) evidence of acceptance, in form and
substance satisfactory to the General Partner, of all the terms, conditions and
applicable obligations of this Agreement, (ii) a counterpart signature page to
this Agreement executed by such Assignee and (iii) such other documents and
instruments as may be required or advisable, in the sole and absolute discretion
of the General Partner, to effect such Assignee's admission as a Substituted
Limited Partner.

                  B.       A transferee who has been admitted as a Substituted
Limited Partner in accordance with this Article 11 shall have all the rights and
powers and be subject to all the restrictions and liabilities of a Limited
Partner under this Agreement.

                  C.       Upon the admission of a Substituted Limited Partner,
the General Partner shall amend Exhibit A to reflect the name, address and
number of Partnership Units of such Substituted Limited Partner and to eliminate
or adjust, if necessary, the name, address and number of Partnership Units of
the predecessor of such Substituted Limited Partner.

                                       47
<PAGE>

                  Section 11.5 Assignees. If the General Partner, in its sole
and absolute discretion, does not consent to the admission of any transferee of
any Partnership Interest as a Substituted Limited Partner in connection with a
transfer permitted by the General Partner pursuant to Section 11.3.A, such
transferee shall be considered an Assignee for purposes of this Agreement. An
Assignee shall be entitled to all the rights of an assignee of a limited
partnership interest under the Act, including the right to receive distributions
from the Partnership and the share of Net Income, Net Losses and other items of
income, gain, loss, deduction and credit of the Partnership attributable to the
Partnership Units assigned to such transferee and the rights to Transfer the
Partnership Units only in accordance with the provisions of this Article 11, but
shall not be deemed to be a holder of Partnership Units for any other purpose
under this Agreement, and shall not be entitled to effect a Consent or vote or
effect a Redemption with respect to such Partnership Units on any matter
presented to the Limited Partners for approval (such right to Consent or vote or
effect a Redemption, to the extent provided in this Agreement or under the Act,
fully remaining with the transferor Limited Partner). In the event that any such
transferee desires to make a further assignment of any such Partnership Units,
such transferee shall be subject to all the provisions of this Article 11 to the
same extent and in the same manner as any Limited Partner desiring to make an
assignment of Partnership Units.

                  Section 11.6 General Provisions.

                  A.       No Limited Partner may withdraw from the Partnership
other than as a result of a permitted Transfer of all of such Limited Partner's
Partnership Units in accordance with this Article 11, with respect to which the
transferee becomes a Substituted Limited Partner, or pursuant to a redemption
(or acquisition by the General Partner) of all of its Partnership Units pursuant
to a Redemption under Section 8.6 hereof and/or pursuant to any Partnership Unit
Designation.

                  B.       Any Limited Partner who shall Transfer all of its
Partnership Units in a Transfer (i) consented to by the General Partner pursuant
to this Article 11 where such transferee was admitted as a Substituted Limited
Partner, (ii) pursuant to the exercise of its rights to effect a redemption of
all of its Partnership Units pursuant to a Redemption under Section 8.6 hereof
and/or pursuant to any Partnership Unit Designation or (iii) to the General
Partner, whether or not pursuant to Section 8.6.B hereof, shall cease to be a
Limited Partner.

                  C.       If any Partnership Unit is Transferred in compliance
with the provisions of this Article 11, or is redeemed by the Partnership, or
acquired by the General Partner pursuant to Section 8.6 hereof, on any day other
than the first day of a Partnership Year, then Net Income, Net Losses, each item
thereof and all other items of income, gain, loss, deduction and credit
attributable to such Partnership Unit for such Partnership Year shall be
allocated to the transferor Partner or the Tendering Party, as the case may be,
and, in the case of a Transfer or assignment other than a Redemption, to the
transferee Partner, by taking into account their varying interests during the
Partnership Year in accordance with Code Section 706(d), using the "interim
closing of the books" method or another permissible method selected by the
General Partner. Solely for purposes of making such allocations, each of such
items for the calendar month in which a Transfer occurs shall be allocated to
the transferee Partner and none of such items for the calendar month in which a
Transfer or a Redemption occurs shall be allocated to the transferor Partner or
the Tendering Party, as the case may be, if such Transfer occurs on or before
the fifteenth (15th) day of the month, otherwise such items shall be allocated
to the transferor. All distributions of Available Cash attributable to such
Partnership Unit with respect to which the Partnership Record Date is before the
date of such Transfer, assignment or Redemption shall be made to the transferor
Partner or the Tendering Party, as the case may be, and, in the case of a
Transfer other than a Redemption, all distributions of Available Cash thereafter
attributable to such Partnership Unit shall be made to the transferee Partner.

                  D.       In no event may any Transfer or assignment of a
Partnership Interest by any Partner (including any Redemption, any acquisition
of Partnership Units by the General Partner or any other acquisition of
Partnership Units by the Partnership) be made (i) to any person or entity who
lacks the legal right, power or capacity to own a Partnership Interest; (ii) in
violation of applicable law; (iii) of any component portion of a Partnership
Interest, such as the Capital Account, or rights to distributions, separate and
apart from all other components of a Partnership Interest; (iv) in the event
that such Transfer would cause the Parent REIT to cease

                                       48
<PAGE>

to comply with the REIT Requirements; (v) if such Transfer would, in the opinion
of counsel to the Partnership, Parent REIT or the General Partner, cause a
termination of the Partnership for federal or state income tax purposes (except
as a result of the Redemption (or acquisition by a REIT Party) of all
Partnership Common Units held by all Limited Partners); (vi) if such Transfer
would, in the opinion of legal counsel to the Partnership, cause the Partnership
to cease to be classified as a partnership for federal income tax purposes
(except as a result of the Redemption (or acquisition by a REIT Party) of all
Partnership Common Units held by all Limited Partners); (vii) if such Transfer
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 ERISA Section
3(14)) or a "disqualified person" (as defined in Code Section 4975(c)); (viii)
if such Transfer would, in the opinion of legal counsel to the Partnership,
cause any portion of the assets of the Partnership to constitute assets of any
employee benefit plan pursuant to Department of Labor Regulations Section
2510.2-101; (ix) if such Transfer requires the registration of such Partnership
Interest pursuant to any applicable federal or state securities laws; (x) if
such Transfer causes the Partnership to become a "publicly traded partnership,"
as such term is defined in Code Section 469(k)(2) or Code 7704(b); (xi) if such
Transfer causes the Partnership (as opposed to the General Partner) to become a
reporting company under the Exchange Act; or (xii) if such Transfer subjects the
Partnership to regulation under the Investment Company Act of 1940, the
Investment Advisors Act of 1940 or ERISA, each as amended.

                                   ARTICLE XII
                              ADMISSION OF PARTNERS

                  Section 12.1 Admission of Successor General Partner. A
successor to all of the General Partner's General Partner Interest pursuant to
Section 11.2 hereof who is proposed to be admitted as a successor General
Partner shall be admitted to the Partnership as the General Partner, effective
immediately prior to such Transfer. Any such successor shall carry on the
business of the Partnership without dissolution. In each case, the admission
shall be subject to the successor General Partner executing and delivering to
the Partnership an acceptance of all of the terms and conditions of this
Agreement and such other documents or instruments as may be required to effect
the admission.

                  Section 12.2 Admission of Additional Limited Partners.

                  A.       After the date hereof, a Person (other than an
existing Partner) who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance, in form and substance satisfactory to the General
Partner, of all of the terms and conditions of this Agreement, including,
without limitation, the power of attorney granted in Section 2.4 hereof, (ii) a
counterpart signature page to this Agreement executed by such Person and (iii)
such other documents or instruments as may be required in the sole and absolute
discretion of the General Partner in order to effect such Person's admission as
an Additional Limited Partner.

                  B.       Notwithstanding anything to the contrary in this
Section 12.2, no Person shall be admitted as an Additional Limited Partner
without the consent of the General Partner, which consent may be given or
withheld in the General Partner's sole and absolute discretion. The admission of
any Person as an Additional Limited Partner shall become effective on the date
upon which the name of such Person is recorded on the books and records of the
Partnership, following the consent of the General Partner to such admission.

                  C.       If any Additional Limited Partner is admitted to the
Partnership on any day other than the first day of a Partnership Year, then Net
Income, Net Losses, each item thereof and all other items of income, gain, loss,
deduction and credit allocable among Partners and Assignees for such Partnership
Year shall be allocated pro rata among such Additional Limited Partner and all
other Partners and Assignees by taking into account their varying interests
during the Partnership Year in accordance with Code Section 706(d), using the
"interim closing of the books" method or another permissible method selected by
the General Partner. Solely for purposes of making such allocations, each of
such items for the calendar month in which an admission of any Additional
Limited Partner occurs shall be allocated among all the Partners and Assignees
including such Additional Limited Partner, in accordance with the principles
described in Section 11.6.C hereof. All distributions of Available Cash with
respect to which the Partnership Record Date is before the date of such

                                       49
<PAGE>

admission shall be made solely to Partners and Assignees other than the
Additional Limited Partner, and all distributions of Available Cash thereafter
shall be made to all the Partners and Assignees including such Additional
Limited Partner.

                  Section 12.3 Amendment of Agreement and Certificate of Limited
Partnership. For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4 hereof.

                  Section 12.4 Limit on Number of Partners. Unless otherwise
permitted by the General Partner, no Person shall be admitted to the Partnership
as an Additional Limited Partner if the effect of such admission would be to
cause the Partnership to have a number of Partners (including as Partners for
this purpose those Persons indirectly owning an interest in the Partnership
through another partnership, a limited liability company, a subchapter S
corporation or a grantor trust) that would cause the Partnership to become a
reporting company under the Exchange Act.

                                  ARTICLE XIII
                    DISSOLUTION, LIQUIDATION AND TERMINATION

                  Section 13.1 Dissolution. The Partnership shall not be
dissolved by the admission of Additional Limited Partners or by the admission of
a successor General Partner in accordance with the terms of this Agreement. Upon
the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership without dissolution. However, the
Partnership shall dissolve, and its affairs shall be wound up, upon the first to
occur of any of the following (each a "Liquidating Event"):

                  A.       an event of withdrawal, as defined in the Act
(including, without limitation, bankruptcy), of the sole General Partner unless,
within ninety (90) days after the withdrawal, a Majority in Interest of the
remaining Limited Partners agree in writing, in their sole and absolute
discretion, to continue the business of the Partnership and to the appointment,
effective as of the date of withdrawal, of a successor General Partner;

                  B.       an election to dissolve the Partnership made by the
General Partner in its sole and absolute discretion, with or without the Consent
of the Limited Partners;

                  C.       entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;

                  D.       the occurrence of a Terminating Capital Transaction;
or

                  E.       the Redemption (or acquisition by the General
Partner) of all Partnership Units other than Partnership Units held by the
General Partner.

                  Section 13.2 Winding Up.

                  A.       Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up its affairs in
an orderly manner, liquidating its assets and satisfying the claims of its
creditors and Partners. After the occurrence of a Liquidating Event, no Partner
shall take any action that is inconsistent with, or not necessary to or
appropriate for, the winding up of the Partnership's business and affairs. The
General Partner (or, in the event that there is no remaining General Partner or
the General Partner has dissolved, become bankrupt within the meaning of the Act
or ceased to operate, any Person elected by a Majority in Interest of the
Limited Partners (the General Partner or such other Person being referred to
herein as the "Liquidator")) shall be responsible for overseeing the winding up
and dissolution of the Partnership and

                                       50
<PAGE>

shall take full account of the Partnership's liabilities and property, and the
Partnership property shall be liquidated as promptly as is consistent with
obtaining the fair value thereof, and the proceeds therefrom (which may, to the
extent determined by the General Partner, include shares of stock in the General
Partner) shall be applied and distributed in the following order:

                                             (1)      First, to the satisfaction
         of all of the Partnership's debts and liabilities to creditors other
         than the Partners and their Assignees (whether by payment or the making
         of reasonable provision for payment thereof);

                                             (2)      Second, to the
         satisfaction of all of the Partnership's debts and liabilities to the
         General Partner (whether by payment or the making of reasonable
         provision for payment thereof), including, but not limited to, amounts
         due as reimbursements under Section 7.4 hereof;

                                             (3)      Third, to the satisfaction
         of all of the Partnership's debts and liabilities to the other Partners
         and any Assignees (whether by payment or the making of reasonable
         provision for payment thereof); and

                                             (4)      Subject to the terms of
         any Partnership Unit Designation, the balance, if any, to the General
         Partner, the Limited Partners and any Assignees in accordance with and
         in proportion to their positive Capital Account balances, after giving
         effect to all contributions, distributions and allocations for all
         periods.

The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13.

                  B.       Notwithstanding the provisions of Section 13.2.A
hereof that require liquidation of the assets of the Partnership, but subject to
the order of priorities set forth therein, if prior to or upon dissolution of
the Partnership the Liquidator determines that an immediate sale of part or all
of the Partnership's assets would be impractical or would cause undue loss to
the Partners, the Liquidator may, in its sole and absolute discretion, defer for
a reasonable time the liquidation of any assets except those necessary to
satisfy liabilities of the Partnership (including to those Partners as
creditors) and/or distribute to the Partners, in lieu of cash, as tenants in
common and in accordance with the provisions of Section 13.2.A hereof, undivided
interests in such Partnership assets as the Liquidator deems not suitable for
liquidation. Any such distributions in kind shall be made only if, in the good
faith judgment of the Liquidator, such distributions in kind are in the best
interest of the Partners, and shall be subject to such conditions relating to
the disposition and management of such properties as the Liquidator deems
reasonable and equitable and to any agreements governing the operation of such
properties at such time. The Liquidator shall determine the fair market value of
any property distributed in kind using such reasonable method of valuation as it
may adopt.

                  C.       In the event that the Partnership is "liquidated"
within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), distributions
shall be made pursuant to this Article 13 to the Partners and Assignees that
have positive Capital Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(2) to the extent of, and in proportion to, positive Capital
Account balances. If the General Partner has a deficit balance in its Capital
Account (after giving effect to all contributions, distributions and allocations
for all taxable years, including the year during which such liquidation occurs)
(a "Capital Account Deficit"), the General Partner shall make a contribution to
the capital of the Partnership equal to the amount of such deficit. No Partner
other than the General Partner shall be required to make any contribution to the
capital of the Partnership with respect to a Capital Account Deficit, if any, of
such Partner, and such Capital Account Deficit shall not be considered a debt
owed to the Partnership or any other person for any purpose whatsoever. In the
sole and absolute discretion of the General Partner or the Liquidator, a pro
rata portion of the distributions that would otherwise be made to the Partners
pursuant to this Article 13 may be:

                           1.       distributed to a trust established for the
benefit of the General Partner and the Limited Partners for the purpose of
liquidating Partnership assets, collecting amounts owed to the Partnership, and
paying any contingent or unforeseen liabilities or obligations of the
Partnership or of the

                                       51
<PAGE>

General Partner arising out of or in connection with the Partnership and/or
Partnership activities. The assets of any such trust shall be distributed to the
General Partner and the Limited Partners, from time to time, in the reasonable
discretion of the General Partner, in the same proportions and amounts as would
otherwise have been distributed to the General Partner and the Limited Partners
pursuant to this Agreement; or

                           2.       withheld or escrowed to provide a reasonable
reserve for Partnership liabilities (contingent or otherwise) and to reflect the
unrealized portion of any installment obligations owed to the Partnership,
provided that such withheld or escrowed amounts shall be distributed to the
General Partner and Limited Partners in the manner and order of priority set
forth in Section 13.2.A hereof as soon as practicable.

                  Section 13.3 Deemed Distribution and Recontribution.
Notwithstanding any other provision of this Article 13, in the event that the
Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g), but no Liquidating Event has occurred, the Partnership's
Property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged and the Partnership's affairs shall not be wound up. Instead,
for federal income tax purposes the Partnership shall be deemed to have
contributed all of its assets and liabilities to a new partnership in exchange
for an interest in the new partnership; and, immediately thereafter, distributed
interests in the new partnership to the Partners in accordance with their
respective Capital Accounts in liquidation of the Partnership, and the new
partnership is deemed to continue the business of the Partnership. Nothing in
this Section 13.3 shall be deemed to have constituted any Assignee as a
Substituted Limited Partner without compliance with the provisions of Section
11.4 hereof.

                  Section 13.4 Rights of Limited Partners. Except as otherwise
provided in this Agreement, (a) each Limited Partner shall look solely to the
assets of the Partnership for the return of its Capital Contribution, (b) no
Limited Partner shall have the right or power to demand or receive property
other than cash from the Partnership and (c) no Limited Partner (other than any
Limited Partner who holds Partnership Preferred Units, to the extent
specifically set forth herein and in the applicable Partnership Unit
Designation) shall have priority over any other Limited Partner as to the return
of its Capital Contributions, distributions or allocations.

                  Section 13.5 Notice of Dissolution. In the event that a
Liquidating Event occurs or an event occurs that would, but for an election or
objection by one or more Partners pursuant to Section 13.1 hereof, result in a
dissolution of the Partnership, the General Partner shall, within thirty (30)
days thereafter, provide written notice thereof to each of the Partners and, in
the General Partner's sole and absolute discretion or as required by the Act, to
all other parties with whom the Partnership regularly conducts business (as
determined in the sole and absolute discretion of the General Partner), and the
General Partner may, or, if required by the Act, shall, publish notice thereof
in a newspaper of general circulation in each place in which the Partnership
regularly conducts business (as determined in the sole and absolute discretion
of the General Partner).

                  Section 13.6 Cancellation of Certificate of Limited
Partnership. Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 hereof, the Partnership shall be
terminated, a certificate of cancellation shall be filed with the State of
Delaware, all qualifications of the Partnership as a foreign limited partnership
or association in jurisdictions other than the State of Delaware shall be
cancelled, and such other actions as may be necessary to terminate the
Partnership shall be taken.

                  Section 13.7 Reasonable Time for Winding-Up. A reasonable time
shall be allowed for the orderly winding-up of the business and affairs of the
Partnership and the liquidation of its assets pursuant to Section 13.2 hereof,
in order to minimize any losses otherwise attendant upon such winding-up, and
the provisions of this Agreement shall remain in effect between the Partners
during the period of liquidation.

                                   ARTICLE XIV
      PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENTS; MEETINGS

                                       52
<PAGE>

                  Section 14.1 Procedures for Actions and Consents of Partners.
The actions requiring consent or approval of Limited Partners pursuant to this
Agreement, including Section 7.3 hereof, or otherwise pursuant to applicable
law, are subject to the procedures set forth in this Article 14.

                  Section 14.2 Amendments. Amendments to this Agreement may be
proposed by the General Partner or by a Majority in Interest of the Limited
Partners. Following such proposal, the General Partner shall submit any proposed
amendment to the Limited Partners. The General Partner shall seek the written
consent of the Limited Partners on the proposed amendment or shall call a
meeting to vote thereon and to transact any other business that the General
Partner may deem appropriate. For purposes of obtaining a written consent, the
General Partner may require a response within a reasonable specified time, but
not less than fifteen (15) days, and failure to respond in such time period
shall constitute a consent that is consistent with the General Partner's
recommendation with respect to the proposal; provided, however, that an action
shall become effective at such time as requisite consents are received even if
prior to such specified time.

                  Section 14.3 Meetings of the Partners.

                  A.       Meetings of the Partners may be called by the General
Partner and shall be called upon the receipt by the General Partner of a written
request by a Majority in Interest of the Limited Partners. The call shall state
the nature of the business to be transacted. Notice of any such meeting shall be
given to all Partners not less than seven (7) days nor more than thirty (30)
days prior to the date of such meeting. Partners may vote in person or by proxy
at such meeting. Whenever the vote or Consent of Partners is permitted or
required under this Agreement, such vote or Consent may be given at a meeting of
Partners or may be given in accordance with the procedure prescribed in Section
14.3.B hereof.

                  B.       Any action required or permitted to be taken at a
meeting of the Partners may be taken without a meeting if a written consent
setting forth the action so taken is signed by a majority of the Percentage
Interests of the Partners (or such other percentage as is expressly required by
this Agreement for the action in question). Such consent may be in one
instrument or in several instruments, and shall have the same force and effect
as a vote of a majority of the Percentage Interests of the Partners (or such
other percentage as is expressly required by this Agreement). Such consent shall
be filed with the General Partner. An action so taken shall be deemed to have
been taken at a meeting held on the effective date so certified.

                  C.       Each Limited Partner may authorize any Person or
Persons to act for it by proxy on all matters in which a Limited Partner is
entitled to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited Partner or
its attorney-in-fact. No proxy shall be valid after the expiration of eleven
(11) months from the date thereof unless otherwise provided in the proxy (or
there is receipt of a proxy authorizing a later date). Every proxy shall be
revocable at the pleasure of the Limited Partner executing it, such revocation
to be effective upon the Partnership's receipt of written notice of such
revocation from the Limited Partner executing such proxy. The use of proxies
will be governed in the same manner as in the case of corporations organized
under the General Corporation Law of Delaware (including Section 212 thereof).

                  D.       Each meeting of Partners shall be conducted by the
General Partner or such other Person as the General Partner may appoint pursuant
to such rules for the conduct of the meeting as the General Partner or such
other Person deems appropriate in its sole and absolute discretion. Without
limitation, meetings of Partners may be conducted in the same manner as meetings
of the General Partner's shareholders and may be held at the same time as, and
as part of, the meetings of the General Partner's shareholders.

                                   ARTICLE XV
                               GENERAL PROVISIONS

                  Section 15.1 Addresses and Notice. Any notice, demand, request
or report required or permitted to be given or made to a Partner or Assignee
under this Agreement shall be in writing and shall be deemed given or made when
delivered in person or when sent by first class United States mail or by other
means of written communication (including by telecopy, facsimile, or commercial
courier service) to the

                                       53
<PAGE>

Partner or Assignee at the address set forth in Exhibit A or such other address
of which the Partner shall notify the General Partner in writing.

                  Section 15.2 Titles and Captions. All article or section
titles or captions in this Agreement are for convenience only. They shall not be
deemed part of this Agreement and in no way define, limit, extend or describe
the scope or intent of any provisions hereof. Except as specifically provided
otherwise, references to "Articles" or "Sections" are to Articles and Sections
of this Agreement.

                  Section 15.3 Pronouns and Plurals. Whenever the context may
require, any pronouns used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns, pronouns
and verbs shall include the plural and vice versa.

                  Section 15.4 Further Action. The parties shall execute and
deliver all documents, provide all information and take or refrain from taking
action as may be necessary or appropriate to achieve the purposes of this
Agreement.

                  Section 15.5 Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their heirs, executors,
administrators, successors, legal representatives and permitted assigns.

                  Section 15.6 Waiver.

                  A.       No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.

                  B.       The restrictions, conditions and other limitations on
the rights and benefits of the Limited Partners contained in this Agreement, and
the duties, covenants and other requirements of performance or notice by the
Limited Partners, are for the benefit of the Partnership and, except for an
obligation to pay money to the Partnership, may be waived or relinquished by the
General Partner, in its sole and absolute discretion, on behalf of the
Partnership in one or more instances from time to time and at any time;
provided, however, that any such waiver or relinquishment may not be made if it
would have the effect of (i) creating liability for any other Limited Partner,
(ii) causing the Partnership to cease to qualify as a limited partnership, (iii)
reducing the amount of cash otherwise distributable to the Limited Partners,
(iv) resulting in the classification of the Partnership as an association or
publicly traded partnership taxable as a corporation or (v) violating the
Securities Act, the Exchange Act or any state "blue sky" or other securities
laws; provided, further, that any waiver relating to compliance with the
Ownership Limit or other restrictions in the Charter shall be made and shall be
effective only as provided in the Charter.

                  Section 15.7 Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute one agreement binding on
all the parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart. Each party shall become
bound by this Agreement immediately upon affixing its signature hereto.

                  Section 15.8 Applicable Law. This Agreement shall be construed
and enforced in accordance with and governed by the laws of the State of
Delaware, without regard to the principles of conflicts of law. In the event of
a conflict between any provision of this Agreement and any non-mandatory
provision of the Act, the provisions of this Agreement shall control and take
precedence.

                  Section 15.9 Entire Agreement. This Agreement contains all of
the understandings and agreements between and among the Partners with respect to
the subject matter of this Agreement and the rights, interests and obligations
of the Partners with respect to the Partnership.

                                       54
<PAGE>

                  Section 15.10 Invalidity of Provisions. If any provision of
this Agreement is or becomes invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not be affected thereby.

                  Section 15.11 Limitation to Preserve REIT Status.
Notwithstanding anything else in this Agreement, to the extent that the amount
paid, credited, distributed or reimbursed by the Partnership to any REIT Partner
or its officers, directors, employees or agents, whether as a reimbursement,
fee, expense or indemnity (a "REIT Payment"), would constitute gross income to
the REIT Partner for purposes of Code Section 856(c)(2) or Code Section
856(c)(3), then, notwithstanding any other provision of this Agreement, the
amount of such REIT Payments, as selected by the General Partner in its
discretion from among items of potential distribution, reimbursement, fees,
expenses and indemnities, shall be reduced for any Partnership Year so that the
REIT Payments, as so reduced, for or with respect to such REIT Partner shall not
exceed the lesser of:

                                    (i)      an amount equal to the excess, if
         any, of (a) four and nine-tenths percent (4.9%) of the REIT Partner's
         total gross income (but excluding the amount of any REIT Payments) for
         the Partnership Year that is described in subsections (A) through (H)
         of Code Section 856(c)(2) over (b) the amount of gross income (within
         the meaning of Code Section 856(c)(2)) derived by the REIT Partner from
         sources other than those described in subsections (A) through (H) of
         Code Section 856(c)(2) (but not including the amount of any REIT
         Payments); or

                                    (ii)     an amount equal to the excess, if
         any, of (a) twenty-four percent (24%) of the REIT Partner's total gross
         income (but excluding the amount of any REIT Payments) for the
         Partnership Year that is described in subsections (A) through (I) of
         Code Section 856(c)(3) over (b) the amount of gross income (within the
         meaning of Code Section 856(c)(3)) derived by the REIT Partner from
         sources other than those described in subsections (A) through (I) of
         Code Section 856(c)(3) (but not including the amount of any REIT
         Payments);

provided, however, that REIT Payments in excess of the amounts set forth in
clauses (i) and (ii) above may be made if the General Partner, as a condition
precedent, obtains an opinion of tax counsel that the receipt of such excess
amounts shall not adversely affect the REIT Partner's ability to qualify as a
REIT. To the extent that REIT Payments may not be made in a Partnership Year as
a consequence of the limitations set forth in this Section 15.11, such REIT
Payments shall carry over and shall be treated as arising in the following
Partnership Year. The purpose of the limitations contained in this Section 15.11
is to prevent any REIT Partner from failing to qualify as a REIT under the Code
by reason of such REIT Partner's share of items, including distributions,
reimbursements, fees, expenses or indemnities, receivable directly or indirectly
from the Partnership, and this Section 15.11 shall be interpreted and applied to
effectuate such purpose.

                  Section 15.12 No Partition. No Partner nor any
successor-in-interest to a Partner shall have the right while this Agreement
remains in effect to have any property of the Partnership partitioned, or to
file a complaint or institute any proceeding at law or in equity to have such
property of the Partnership partitioned, and each Partner, on behalf of itself
and its successors and assigns hereby waives any such right. It is the intention
of the Partners that the rights of the parties hereto and their
successors-in-interest to Partnership property, as among themselves, shall be
governed by the terms of this Agreement, and that the rights of the Partners and
their successors-in-interest shall be subject to the limitations and
restrictions as set forth in this Agreement.

                  Section 15.13 No Third-Party Rights Created Hereby. The
provisions of this Agreement are solely for the purpose of defining the
interests of the Partners, inter se; and no other person, firm or entity (i.e.,
a party who is not a signatory hereto or a permitted successor to such signatory
hereto) shall have any right, power, title or interest by way of subrogation or
otherwise, in and to the rights, powers, title and provisions of this Agreement.
No creditor or other third party having dealings with the Partnership (other
than as expressly set forth herein with respect to Indemnitees) shall have the
right to enforce the right or obligation of any Partner to make Capital
Contributions or loans to the Partnership or to pursue any other right or remedy

                                       55
<PAGE>

hereunder or at law or in equity. None of the rights or obligations of the
Partners herein set forth to make Capital Contributions or loans to the
Partnership shall be deemed an asset of the Partnership for any purpose by any
creditor or other third party, nor may any 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 any of
the Partners.

                  Section 15.14 No Rights as Stockholders. Nothing contained in
this Agreement shall be construed as conferring upon the Holders of Partnership
Units any rights whatsoever as stockholders of the General Partner, including
without limitation any right to receive dividends or other distributions made to
stockholders of the General Partner or to vote or to consent or receive notice
as stockholders in respect of any meeting of stockholders for the election of
directors of the General Partner or any other matter.

                  Section 15.15 Parent REIT.Parent REIT is the corporate parent
of the General Partner and the Initial Limited Partner, and derives certain
benefits from the structure established by this Agreement and is a party hereto.
Parent REIT shall not, however, have any Capital Account or other direct right
to any allocations or distributions by the Partnership hereunder.

         [the next page is the signature page]

                                       56
<PAGE>

                  IN WITNESS WHEREOF, this Agreement has been executed as of the
date first written above.

                                    GENERAL PARTNER:

                                    ARBOR REALTY GPOP, INC.

                                    By: /s/ Frederick C. Herbst
                                        ----------------------------------------
                                        Name: Frederick C. Herbst
                                        Title: Secretary and Treasurer

                                    INITIAL LIMITED PARTNER:

                                    ARBOR REALTY LPOP, INC.

                                    By: /s/ Frederick C. Herbst
                                        ----------------------------------------
                                        Name: Frederick C. Herbst
                                        Title: Secretary and Treasurer

                                    LIMITED PARTNER:

                                    ARBOR COMMERCIAL MORTGAGE, LLC

                                    By: /s/ Frederick C. Herbst
                                        ----------------------------------------
                                        Name: Frederick C. Herbst
                                        Title: Chief Financial Officer

                                    PARENT REIT:

                                    ARBOR REALTY TRUST, INC.

                                    By: /s/ Frederick C. Herbst
                                       -----------------------------------------
                                       Name: Frederick C. Herbst
                                       Title: Chief Financial Officer, Secretary
                                              and Treasurer

<PAGE>

                                                  As of July 1, 2003

                                    EXHIBIT A
                         PARTNERS AND PARTNERSHIP UNITS

<TABLE>
<CAPTION>
NAME AND ADDRESS OF PARTNERS        PARTNERSHIP UNITS (TYPE AND AMOUNT)         PERCENTAGE INTERESTS
----------------------------------------------------------------------------------------------------
<S>                                 <C>                                         <C>
General Partner:
----------------------------------------------------------------------------------------------------
     ARBOR REALTY GPOP, INC.        11,295 Common Units                             .1%
----------------------------------------------------------------------------------------------------
Limited Partners:
----------------------------------------------------------------------------------------------------
     ARBOR REALTY LPOP, INC.        8,137,105 Common Units                          72.041%
                                    49,167 Restricted Common Units                  N/A
                                    3,146,724 Class A Preferred Units               N/A
----------------------------------------------------------------------------------------------------
     ARBOR COMMERCIAL               3,146,724 Common Units                          27.859%
     MORTGAGE LLC
----------------------------------------------------------------------------------------------------
</TABLE>

                                       A-1
<PAGE>

                                    EXHIBIT B
                      EXAMPLES REGARDING ADJUSTMENT FACTOR

                  For purposes of the following examples, it is assumed that (a)
the Adjustment Factor in effect on December 30, 2002 is 1.0 and (b) on January
1, 2003 (the "Partnership Record Date" for purposes of these examples), prior to
the events described in the examples, there are 100 REIT Shares issued and
outstanding.

                  Example 1

                  On the Partnership Record Date, the Parent REIT declares a
dividend on its outstanding REIT Shares in REIT Shares. The amount of the
dividend is one REIT Share paid in respect of each REIT Share owned. Pursuant to
Paragraph (i) of the definition of "Adjustment Factor," the Adjustment Factor
shall be adjusted on the Partnership Record Date, effective immediately after
the stock dividend is declared, as follows:

                                 1.0 * 200 = 2.0
                                       ---
                                       100

                  Accordingly, the Adjustment Factor after the stock dividend is
declared is 2.0.

                  Example 2

                  On the Partnership Record Date, the Parent REIT distributes
options to purchase REIT Shares to all holders of its REIT Shares. The amount of
the distribution is one option to acquire one REIT Share in respect of each REIT
Share owned. The strike price is $4.00 a share. The Value of a REIT Share on the
Partnership Record Date is $5.00 per share. Pursuant to Paragraph (ii) of the
definition of "Adjustment Factor," the Adjustment Factor shall be adjusted on
the Partnership Record Date, effective immediately after the options are
distributed, as follows:

                       1.0 *       {(100+100)}        = 1.1111
                            -------------------------
                             100+ {(100+{100*$4.00}
                                 ------------------
                                    {$5.00})}

                  Accordingly, the Adjustment Factor after the options are
distributed is 1.1111. If the options expire or become no longer exercisable,
then the retroactive adjustment specified in Paragraph (ii) of the definition of
"Adjustment Factor" shall apply.

                  Example 3

                  On the Partnership Record Date, the Parent REIT distributes
assets to all holders of its REIT Shares. The amount of the distribution is one
asset with a fair market value (as determined by the Parent REIT) of $1.00 in
respect of each REIT Share owned. It is also assumed that the assets do not
relate to assets received by the General Partner pursuant to a pro rata
distribution by the Partnership. The Value of a REIT Share on the Partnership
Record Date is $5.00 a share. Pursuant to Paragraph (iii) of the definition of
"Adjustment Factor," the Adjustment Factor shall be adjusted on the Partnership
Record Date, effective immediately after the assets are distributed, as follows:

                         1.0*        {$5.00}        = 1.25
                             ----------------------
                                 {$5.00 - $1.00}

                  Accordingly, the Adjustment Factor after the assets are
distributed is 1.25.

                                       B-1
<PAGE>

                                    EXHIBIT C
                              NOTICE OF REDEMPTION

To:      Arbor Realty GPOP, Inc.
         333 Earle Ovington Boulevard
         Suite 900
         Uniondale, New York 11553

                  The undersigned Limited Partner or Assignee hereby irrevocably
tenders for Redemption _______ Partnership Common Units in Arbor Realty Limited
Partnership in accordance with the terms of the Amended and Restated Agreement
of Limited Partnership of Arbor Realty Limited Partnership, dated as of July 1,
2003 (the "Agreement"), and the Redemption rights referred to therein. The
undersigned Limited Partner or Assignee:

                           (a)      undertakes (i) to surrender such Partnership
Common Units and any certificate therefor at the closing of the Redemption and
(ii) to furnish to the General Partner, prior to the Specified Redemption Date,
the documentation, instruments and information required under Section 8.6.G of
the Agreement;

                           (b)      directs that the certified check
representing the Cash Amount, or the REIT Shares Amount, as applicable,
deliverable upon the closing of such Redemption be delivered to the address
specified below;

                           (c)      represents, warrants, certifies and agrees
that:

                                             (i)      the undersigned Limited
         Partner or Assignee is a Qualifying Party,

                                             (ii)     the undersigned Limited
         Partner or Assignee has, and at the closing of the Redemption will
         have, good, marketable and unencumbered title to such Partnership
         Common Units, free and clear of the rights or interests of any other
         person or entity,

                                             (iii)    the undersigned Limited
         Partner or Assignee has, and at the closing of the Redemption will
         have, the full right, power and authority to tender and surrender such
         Partnership Common Units as provided herein, and

                                             (iv)     the undersigned Limited
         Partner or Assignee has obtained the consent or approval of all persons
         and entities, if any, having the right to consent to or approve such
         tender and surrender; and

                           (d)      acknowledges that he will continue to own
such Partnership Common Units until and unless either (1) such Partnership
Common Units are acquired by a REIT Party pursuant to Section 8.6.B of the
Agreement or (2) such redemption transaction closes.

                                       C-1
<PAGE>

                  All capitalized terms used herein and not otherwise defined
shall have the same meaning ascribed to them respectively in the Agreement.

Dated:  __________________
                                    Name of Limited Partner or Assignee:

                                    ____________________________________________

                                    ____________________________________________
                                    (Signature of Limited Partner or Assignee)

                                    ____________________________________________
                                    (Street Address)

                                    ____________________________________________
                                    (City)            (State)         (Zip Code)

                                    Signature Guaranteed by:

                                    ____________________________________________

Issue Check Payable to:             ____________________________________________

Please insert social security
or identifying number:              ____________________________________________

                                       C-2
<PAGE>

                                    EXHIBIT D
                            FORM OF UNIT CERTIFICATE

THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP AN OPINION OF
COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM AND SUBSTANCE SATISFACTORY TO
THE PARTNERSHIP, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER
DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS. IN ADDITION, THE LIMITED
PARTNERSHIP INTEREST EVIDENCED BY THIS CERTIFICATE MAY BE SOLD OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN
THE AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF ARBOR REALTY
LIMITED PARTNERSHIP, DATED AS OF JULY 1, 2003 A COPY OF WHICH MAY BE OBTAINED
FROM ARBOR REALTY TRUST, INC. AT ITS PRINCIPAL EXECUTIVE OFFICE.

                                                     Certificate Number ________

                        ARBOR REALTY LIMITED PARTNERSHIP
                 FORMED UNDER THE LAWS OF THE STATE OF DELAWARE

This certifies that ____________________________________________________________
is the owner of ________________________________________________________________

                     FULLY PAID PARTNERSHIP COMMON UNITS OF
                        ARBOR REALTY LIMITED PARTNERSHIP

transferable on the books of the Partnership in person or by duly authorized
attorney on the surrender of this Certificate properly endorsed. This
Certificate and the Partnership Common Units represented hereby are issued and
shall be held subject to all of the provisions of the Amended and Restated
Agreement of Limited Partnership, as the same may be amended and/or supplemented
from time to time.

IN WITNESS WHEREOF, the undersigned has signed this Certificate.

Dated:

                                             By ________________________________

                                       D-1