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                                    EXHIBIT A
                          LIMITED PARTNERSHIP AGREEMENT
         MERIDIAN HEALTH CARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP

                                TABLE OF CONTENTS
                                                                                                                            Page
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                             Preliminary Statement               ........................................................... A-3
                             Article I - Defined Terms                   ................................................... A-3
                             Article II -Name; Purpose; Term and Certificate                                ................ A-10
                                 Section 2.1 Name; Formation                    ............................................ A-10
                                 Section 2.2 Place of Registered Office                     ................................ A.10
                                 Section 2.3 Purpose             ........................................................... A-10
                                 Section 2.4 Term           ................................................................ A-10
                                 Section 2.5 Recording of Certificate                    ................................... A-10
                             Article III - Partners; Capital                 ............................................... A-10
                                 Section 3.1 General Partners; Assignor Limited Partner;
                                    Subordinated Limited Partners                    ....................................... A-10
                                 Section 3.2 Investors            .......................................................... A-11
                                 Section 3.3 Partnership Capital                  .......................................... A-11
                                 Section 3.4 Liability of Partners and Investors                        .................... A-12
                             Article IV - Allocations, Distributions and Applicable Rules                     .............  A-12
                                 Section 4.1 Allocation of Profit or Loss from a Sale                             .......... A-12
                                 Section 4.2 Distribution of Net Proceeds from a Refinancing or Sale        ...............  A-13
                                 Section 4.3 Distribution of Net Cash Flow and Allocation of Profit and Loss from
                                    Operations         ..................................................................... A-13
                                 Section 4.4 Liquidation or Dissolution                      ............................... A-14
                                 Section 4.5 General and Special Rules                       ............................... A-14
                             Article V - Rights, Powers and Duties of Partners                               ............... A-18
                                 Section 5.1 Management and Control of the Partnership; Tax Matters Partner     ............ A-18
                                 Section 5.2 Authority of General Partners                         ......................... A-18
                                 Section 5.3 Authority of Investors                   ...................................... A-21
                                 Section 5.4 Restrictions on Authority                     ................................. A-21
                                 Section 5.5 Authority of Partners and Affiliated Persons to Deal with Partnership ..........A-22
                                 Section 5.6 Duties and Obligations of the General Partners         .......................  A-23
                                 Section 5.7 Compensation of General Partners                           .................... A-25
                                 Section 5.8 Other Businesses of Partners                       ..................... ...... A-25
                                 Section 5.9 Liability of General Partners and Assignor Limited Partner to Limited
                                    Partners or Investors            ....................................................... A-25
                                 Section 5.10 Indemnification                ............................................... A-25
                             Article VI - Transferability of a General Partner's Interest    ............................... A-26
                                 Section 6.1 Removal, Voluntary Retirement or Withdrawal of a General Partner;
                                    Transfer of Interests           ........................................................ A-26
                                 Section 6.2 Election and Admission of Successor or Additional General Partners  ............A-26
                                 Section 6.3 Events of Withdrawal of A General Partner         ............................. A-26
                                 Section 6.4 Liability of a Withdrawn General Partner                         .............. A-27
                                 Section 6.5 Valuation of Partnership Interest of General Partner             .............  A-27
                             Article VII - Assignment of Assignee Units to Investors; Transferability of Limited
                                    Partner Interests and Units                ............................................. A-28
                                 Section 7.1 Assignments of the Assignee Units to Investors   .............................  A-28
                                 Section 7.2 Transferability of Units                   .................................... A-29
                                 Section 7.3 Death, Bankruptcy or Adjudication of Incompetence of an Investor or a
                                    Limited Partner           .............................................................. A-30
                                 Section 7.4 Effective Date               ........................................ ......... A-30

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                                      Section 7.5 Substitute Limited Partners                  ...............................A-30
                                      Section 7.6 Retirement or Withdrawal of a Limited Partner                            .. A-30
                                   Article VIII - Dissolution, Liquidation and Termination of the Partnership                 A-31
                                      Section 8.1 Events Causing Dissolution                   ...............................A-31
                                      Section 8.2 Liquidation            .................................................... A-31
                                      Section 8.3 Capital Contribution Upon Dissolution                        .............. A-32
                                   Article IX - Certain Payments to the General Partners and Affiliates                   ... A-32
                                      Section 9.1 Reimbursement of Certain Costs and Expenses of the General Partners and
                                         Affiliates    ................................................................... .. A-32
                                      Section 9.2 Fees        ............................................................... A-33
                                   Article X - Books and Records; Bank Accounts; Reports                    ................. A-34
                                      Section 10.1 Books and Records                 ........................................ A-34
                                      Section 10.2 Bank Accounts               .............................................. A-34
                                      Section 10.3 Reports          ......................................................... A-34
                                      Section 10.4 Federal Tax Elections                ................................... . A-35
                                   Article XI - Meetings of Investors                .......................................  A-36
                                      Section 11.1 Calling Meetings            .............................................. A-36
                                      Section 11.2 Notice; Procedure               .......................................... A-36
                                      Section 11.3 Right to Vote             ................................................ A-36
                                      Section 11.4 Proxies; Rules             ............................................... A-36
                                   Article XII - General Provisions                .......................................... A-37
                                      Section 12.1 Appointment of Administrative General Partner as Attorney-in-Fact          A-37
                                      Section 12.2 Waiver of Partition               ........................................ A-37
                                      Section 12.3 Notification        ...................................................... A-37
                                      Section 12.4 Word Meanings             ................................................ A-37
                                      Section 12.5 Binding Provisions            ............................................ A-37
                                      Sectio   12.6 Applicable Law           ................................................ A-37
                                      Section 12.7 Counterparts             ................................................. A-38
                                      Section 12.8 Separability of Provisions                ................................ A-38
                                      Sectio   12.9 Paragraph Titles          ............................................... A-38
                                      Section 12.10 Entire Agreement               .......................................... A-38
                                      Section 12.11 Amendments               ................................................ A-38
                                   Signatures    ............................................................................ A-39
                                   Schedule A       ..........................................................................A-41

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                   MERIDIAN HEALTH CARE GROWTH AND INCOME FUND
                               LIMITED PARTNERSHIP
                        AGREEMENT OF LIMITED PARTNERSHIP
                         THIS  AGREEMENT  OF  LIMITED  PARTNERSHIP,  dated as of
                    December 8, 1987, is by and among Brown Healthcare,  Inc., a
                    Maryland corporation, as the Administrative General Partner,
                    Meridian   Healthcare   Investments,    Inc.,   a   Maryland
                    corporation,  as the  Development  General  Partner,  Realty
                    Associates  1988  Limited  Partnership,  a Maryland  limited
                    partnership,  and Meridian Healthcare  Investments,  Inc., a
                    Maryland corporation,  as Subordinated Limited Partners, and
                    Brown Healthcare Holding Co., Inc., a Maryland  corporation,
                    as the Assignor Limited Partner.

                                           Preliminary Statement
                         The  General   Partners,   the   Subordinated   Limited
                    Partners,  and the Assignor  Limited  Partner desire to form
                    Meridian   Healthcare   Growth  and  Income   Fund   Limited
                    Partnership  (the "Fund"),  pursuant to the Delaware Revised
                    Uniform Limited Partnership Act.
                         NOW, THEREFORE, in consideration of the mutual promises
                    made  herein,  the parties  hereto,  intending to be legally
                    bound, hereby agree as follows:
                                    ARTICLE I
                                  DEFINED TERMS
                         The defined terms used in this Agreement shall,  unless
                    the context otherwise expressly requires,  have the meanings
                    specified in this Article I.
                         "Accountants" means such nationally  recognized firm of
                    independent certified public accountants as shall be engaged
                    from time to time by the  General  Partners on behalf of the
                    Fund.
                         "Acquisition Expenses" means expenses,  including,  but
                    not  limited  to,  legal  fees  and  expenses,   travel  and
                    communications expenses, costs of appraisals, non-refundable
                    option  payments on property not acquired,  accounting  fees
                    and expenses,  title insurance,  and miscellaneous  expenses
                    related  to  selection  and  acquisition  of  Facilities  or
                    Operating Partnership Interests, whether or not acquired.
                         "Acquisition  Fees"  means  the  total  of all fees and
                    commissions  paid by any  party on  behalf of the Fund or an
                    Operating  Partnership  in  connection  with the  selection,
                    purchase or  development  of, or investment in, any Facility
                    by the Fund or an Operating Partnership,  including, without
                    limitation,  any  real  estate  commission,  selection  fee,
                    non-recurring management fee, development fee, or any fee of
                    a similar nature, however designated.
     "Act" means the Delaware  Revised  Uniform Limited Fund Act (6 DEL.C 17-101
et. seq.) as amended or modified from time to time. "Additional General Partner"
means any Person who is
                    admitted as an Additional General Partner of the Fund, under
                    the  provisions  of  Article  VI,  after  the  date  of this
                    Agreement.
                         "Adjusted  Capital Balance" of a Partner or an Investor
                    means  the  Capital  Contribution  of  the  Partner  or  the
                    Assignor Limited Partner made on behalf of an Investor, less
                    any Net Proceeds of Sale or Refinancing actually distributed
                    to the Partner or Investor (other than that portion, if any,
                    which is payment of an unpaid Preferred Return), as provided
                    in Article IV herein, at the time of reference thereto.
                         "Administrative    General    Partner"    means   Brown
                    Healthcare,  Inc., a Maryland corporation, or any Person who
                    is designated as the  Administrative  General Partner in the
                    Schedule at the time in question.
                         "Affiliate" means (i) any Person directly or indirectly
                    controlling,  controlled  by or under  common  control  with
                    another Person, (ii) any Person owning or controlling 10% or
                    more of the  outstanding  voting  securities  of such  other
                    Person,  (iii) any  officer,  director  or  partner  of such
                    Person, and (iv) if

                                       A-3
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                           such other Person is an officer, director or partner,
                           any  company  for which such  Person acts in any such
                           capacity.
                                "Agreement"   means  this  Limited   Partnership
                           Agreement as originally  executed and as amended from
                           time to time, as the context requires.  Words such as
                           "herein", "hereinafter," "hereof," "hereto," "hereby"
                           and  "hereunder,"  when used with  reference  to this
                           Agreement,  refer to this Agreement as a whole unless
                           the context otherwise requires.
                                "Assigned Limited Partnership  Interest" means a
                           Partnership   Interest   which  is  credited  to  the
                           Assignor  Limited Partner on the books and records of
                           the Fund in respect  of a purchase  of one Unit by an
                           Investor.  Each Assigned Limited Partnership Interest
                           represents a contribution  to the capital of the Fund
                           equal to $25,  regardless of any reduction in Selling
                           Commissions.
                                "Assignee  Units" means the ownership  interests
                           of an  Investor in the Fund at any  particular  time,
                           including  the right of such  Investor to any and all
                           benefits  to which an  Investor  may be  entitled  as
                           provided in this Agreement.  The ownership  interests
                           of the Investors in the Fund are  sometimes  referred
                           to herein as "Units".
                                "Assignor    Limited    Partner"   means   Brown
                           Healthcare  Holding Co., Inc.  which will (i) own any
                           Assigned   Limited   Partnership   Interests   issued
                           pursuant  to Sections  3.2 and 7.1  hereof,  and (ii)
                           transfer  and  assign to those  Persons  who  acquire
                           Units all of its  rights  and  interest  in  Assigned
                           Limited  Partnership  Interests  in  accordance  with
                           Sections 3.2 and 7.1 hereof.
                                "Capital Account" means (i) the separate account
                           maintained  and  adjusted on the books and records of
                           the  Fund  for each  Partner  and  (ii) the  separate
                           subaccount  of the  Capital  Account of the  Assignor
                           Limited  Partner  maintained  and  adjusted  for each
                           Investor.   Each  Partner's  and  Investor's  Capital
                           Account is credited  with his  Capital  Contributions
                           and his  distributive  share of Fund  Profit (or item
                           thereof).   Each  Partner's  or  Investor's   Capital
                           Account is debited  with the cash and the fair market
                           value  of any  property  distributed  to him  (net of
                           liabilities  assumed by such  Partner or Investor and
                           liabilities  to which such  distributed  property  is
                           subject),  his  distributive  share of Fund Loss (and
                           deduction (or item  thereof)),  and his  distributive
                           share  of  Fund  expenditures  described  in  Section
                           705(a)(2)(B) of the Code (including losses disallowed
                           under  Section  267(a)(1) or 707(b) of the Code,  and
                           Section 709(a)  syndication  expenditures  applied to
                           reduce  the  Capital  Accounts  of  the  Partners  or
                           Investor's to whom such expenditures are allocable at
                           the time  such  expenditures  are paid or  incurred).
                           Each Partner's and Investor's  Capital  Account shall
                           also be adjusted  pursuant  to  Sections  4.4 and 4.5
                           hereof and as required by the Income Tax  Regulations
                           promulgated  under  Section  704  of  the  Code.  Any
                           questions   concerning  a  Partner's  or   Investor's
                           Capital  Account  shall be  resolved  by the  General
                           Partners in their  reasonably  exercised  discretion,
                           applying  principles  consistent  with this Agreement
                           and the regulations  promulgated under Section 704 of
                           the  Code in  order to  assure  that all  allocations
                           herein will have substantial  economic effect or will
                           otherwise be respected for income tax  purposes.  For
                           purposes of this paragraph, a Partner or Investor who
                           has more than one  Partnership  Interest or Unit,  as
                           the case may be, shall have a single Capital  Account
                           that  reflects all of his  Partnership  Interests and
                           Units,  regardless  of the class of  Interests  owned
                           (e.g., general or limited) and regardless of the time
                           or  manner  in which the  Partnership  Interests  and
                           Units were acquired.
                                "Capital Contribution" means the total amount of
                           cash and the fair  market  value of any other  assets
                           contributed   to  the  Fund  by  a  Partner  (net  of
                           liabilities  assumed by the Fund and  liabilities  to
                           which any such  contributed  assets are subject) and,
                           with respect to an Investor, the Capital Contribution
                           of the  Assignor  Limited  Partner  made on behalf of
                           such  Investor  (without  regard to any  reduction of
                           Selling Commissions). Any reference in this Agreement
                           to the  Capital  Contribution  of a  then-Partner  or
                           Investor   shall   include  a  Capital   Contribution
                           previously made by any prior Partner or Investor with
                           respect to the Interest or Unit of such  then-Partner
                           or then-Investor,  except to the extent that all or a
                           portion of the Interest or Unit of any prior  Partner
                           or  Investor  shall  have  been  terminated  and  the
                           portion so terminated not  transferred to a successor
                           Partner or Investor.
                                "Cash Flow  Deficit  Guaranty  Agreement"  means
                           that certain agreement to be entered into by the Fund
                           pursuant  to which the  Development  General  Partner
                           will  agree  to  fund,  on a  monthly  basis,  up  to
                           $570,000 of the operating  deficits  generated by the
                           Development Facilities (on a combined basis)
                                                                             A-4
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                  in excess of  $570,000  of the  aggregate  operating  deficits
                   generated in respect of such Facilities  during the first two
                   years of operations of the Development  Facilities.  Payments
                   made by the  Development  General Partner under the Cash Flow
                   Deficit Guaranty Agreement will be non-interest bearing until
                   the first quarter after the Commencement  Date that Investors
                   receive  distributions equal to the Preferred Return and will
                   be repaid as provided in Article IV.
                        "Certificate"   means   the   Certificate   of   Limited
                   Partnership  establishing  the Fund, as filed with the office
                   of the  Secretary  of State of the  State of  Delaware  on or
                   about the date of this  Agreement,  as it may be amended from
                   time to time in accordance  with the terms of this  Agreement
                   and the Act.
                        "Code"  means  the  Internal  Revenue  Code of 1986,  as
                   amended (or any corresponding provision of succeeding law).
                        "Commencement  Date" means the date Facility V commences
                   operations  and the Fund  effectively  acquires the Operating
                   Partnership   Interest  relating  to  Facility  V  under  the
                   applicable Development Partnership Interest Acquisition
                   Agreement.
                        "Consent of the  Investors"  shall mean the  affirmative
                   vote of  Investors  owning  more than 50% of the  outstanding
                   Units.
                        "Controlling Person" of any General Partner or Affiliate
                   thereof  means any person who (a)  performs  functions  for a
                   General  Partner  or  Affiliate  similar  to  those  of (i) a
                   Chairman or member of the Board of Directors,  (ii) executive
                   management,   such  as  a  President,  or  a  Vice-President,
                   Secretary or Treasurer,  or (iii) senior  management;  or (b)
                   holds a 5% or more equity  interest in the General Partner or
                   Affiliate,  or has the power to direct or cause the direction
                   of the General  Partner,  or Affiliate,  whether  through the
                   ownership of voting securities, by contract or otherwise.
                        "Development  General Partner" means Meridian Healthcare
                   Investments,  Inc.,  or any Person who is  designated  as the
                   Development  General  Partner in the  Schedule at the time of
                   reference thereto.
                        "Development     Partnership     Interest    Acquisition
                   Agreements" means those agreements pursuant to which the Fund
                   will acquire,  subject to raising sufficient  proceeds of the
                   Offering,  Operating  Partnership  Interests of the Operating
                   Partnerships that own Facility V, Facility VI and Facility
                   VII.
                        "Due Diligence Expense  Reimbursement Fee" means the fee
                   equal to 2% of the Gross Proceeds of the Offering  allowed to
                   the Selling  Agent,  which may be  re-allowed  to  Soliciting
                   Dealers, for advisory services,  due diligence activities and
                   the reimbursement of expenses.
                        "Entity"   means  any   general   partnership,   limited
                   partnership,   corporation,  joint  venture,  trust,  estate,
                   business trust, cooperative,  association or other legal form
                   of organization.
                        "Escrow  Agent"  means  Mercantile-Safe  Deposit & Trust
                   Company,  or such other  escrow  agent  chosen by the General
                   Partners to hold funds from  Persons who have  subscribed  to
                   become Investors  pending the assignment of Assignee Units to
                   them.
                        "Existing  Partnership Interest Acquisition  Agreements"
                   means  those  agreements  pursuant  to which  the  Fund  will
                   acquire,  subject  to  raising  sufficient  proceeds  of  the
                   Offering, Operating Partnership Interests relating to
                   Facility III and Facility IV.
                        "Facilities"  mean the nursing centers  described in the
                   Prospectus  which are to be  acquired,  developed,  owned and
                   operated  by  the  Operating   Partnerships,   including  all
                   replacements  thereto and all personal property which is used
                   in connection therewith. Any one of the Facilities may herein
                   be  referred  to as a  "Facility".  The  terms  "Facility  I"
                   through  "Facility  VII" shall be defined by reference to the
                   use of such terms in the Prospectus.
                        "Front-End  Fees"  means fees and  expenses  paid by any
                   Person for any services  rendered during the  organization or
                   acquisition  phase of the Fund,  including  the  Offering and
                   Organization   Expense   Fee,  the  Due   Diligence   Expense
                   Reimbursement Fee, the Selling  Commissions,  the Acquisition
                   Expenses, the Acquisition Fees, mortgage placement, financing
                   or refinancing fees and any other similar fees.

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                              "Fund"  means the  limited  partnership  formed in
                           accordance with this Agreement by the parties hereto,
                           as said limited  partnership may from time to time be
                           constituted.
                               "Fund  Property"  means all or any portion of the
                           assets  owned or to be owned by the  Fund,  including
                           the   Operating   Partnership   Interests   and   all
                           incidental personal property.
                               "General  Partner" means any Person designated as
                           a General  Partner in the Schedule and any Person who
                           becomes a Successor or Additional  General Partner as
                           provided herein,  in each such Person's capacity as a
                           General Partner of the Fund.
                               "Gross   Proceeds  of  the  Offering"  means  the
                           aggregate of the  proceeds  from the sale of Units in
                           the  Offering,  which amount is equal to the total of
                           all Capital Contributions of the Investors.
                               "Increased  Maximum  Offering  Amount"  means the
                           total amount of  $38,500,000 in Gross Proceeds of the
                           Offering.
                               "Interest" or  "Partnership  Interest"  means the
                           entire ownership interest (which maybe segmented into
                           and/or  expressed as a percentage  of various  rights
                           and/or  liabilities)  of a Partner in the Fund at any
                           particular time,  including the right of such Partner
                           to any and all  benefits  to which a  Partner  may be
                           entitled as provided in the Agreement and in the Act,
                           together  with the  obligations  of such  Partner  to
                           comply  with all the  terms  and  provisions  of this
                           Agreement and of the Act.
                               "Interest Income" means interest income under the
                           Purchase   Money   Financing   with   respect  to  an
                           installment or other deferred Sale.
                               "Interest  Income Cash" means Net Proceeds from a
                           Sale attributable to an installment or other deferred
                           Sale.
                               "Interim   Investments"   means  the   short-term
                           investments   made  with  the  Net  Proceeds  of  the
                           Offering  until such Net Proceeds of the Offering are
                           disbursed   for    acquisition   of   the   Operating
                           Partnership Interests.
                               "Investor"  means  (i) any  Person  who  holds an
                           Assignee  Unit and is reflected as an Investor on the
                           books and records of the Fund,  and (ii) any Investor
                           who has been  admitted  to the  Fund as a  Substitute
                           Limited Partner pursuant to Section 7.5 hereof.
                               "Investment  in  Properties"  means the amount of
                           Capital  Contributions  used  to make  or  invest  in
                           mortgage  loans  or  the  amount   actually  paid  or
                           allocated  to the  purchase  and  development  of the
                           Facilities  or the  Operating  Partnership  Interests
                           (including  the  purchase  of   properties,   working
                           capital  reserves   allocable  thereto  (except  that
                           working capital reserves in excess of 5% shall not be
                           included),  and other cash  payments such as interest
                           and taxes but excluding Front-End Fees).
                               "Limited   Partner"   means  any  Person  who  is
                           designated  as a  Limited  Partner  on the  books and
                           records of the Fund at the time of reference thereto,
                           in each such Person's  capacity as a Limited  Partner
                           of the Fund.
                               "Limited   Partnership    Interest"   means   the
                           ownership  interest of the Assignor  Limited  Partner
                           and all other Limited Partners in the Fund.
                               "Limited   Partnership  Interest  Percentage"  in
                           respect of any Investor means the percentage obtained
                           by converting to a percentage the fraction having the
                           number of Assignee  Units  owned by such  Investor as
                           its numerator and having the number of Assignee Units
                           owned  by all  Investors  at the  time  of  reference
                           thereto as its denominator.
                               "Majority Vote of the  Investors"  shall mean the
                           affirmative vote of Investors owning more than 50% of
                           the outstanding Units.
                               "Management   Agreements"   means  those  certain
                           agreements  to  be  entered  into  by  the  Operating
                           Partnerships  and the Nursing Center Manager pursuant
                           to which the Nursing Center Manager shall manage each
                           of  the  Facilities  for a fee  of  6% of  the  total
                           revenues of the Facilities,  provided  however,  that
                           one-half of the management fee (3% of total revenues)
                           payable in respect of a Development
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                    Facility will be deferred to the extent necessary to support
                    the  Investors'  Preferred  Return  for the  first two years
                    after the Commencement Date.
                         "Maximum  Offering  Amount"  means the total  amount of
                    $24,500,000 in Gross Proceeds of the Offering.
                         "Minimum Gain" means with respect to each  non-recourse
                    liability  of the Fund  (including  the Fund's  share of the
                    non-recourse  liabilities of the Operating Partnerships) and
                    subject to certain  adjustments  pursuant to Income Tax Reg.
                    ss.1.704-1(b)(4)(iv)(c),  the  amount  of gain (of  whatever
                    character),  if any,  that would be realized by the Fund, if
                    the Fund disposed of (in a taxable  transaction)  any of the
                    assets subject to such liability in full satisfaction of the
                    liability. For this purpose, only the portion of the assets'
                    adjusted basis allocated to non-recourse  liabilities of the
                    Fund shall be taken into account.
                         "Minimum Offering Amount" means the amount of
                    $2,830,000 in Gross Proceeds of the Offering.
                         "Net Cash  Flow"  means,  with  respect  to any  fiscal
                    period,  the excess,  if any, of (i) all cash funds  derived
                    from  the   operations  of  the  Fund  during  such  period,
                    including the yield from the Interim  Investments and excess
                    cash reserves deemed  distributable  by the General Partners
                    pursuant  to  Section  3.3E  hereof,   over  (ii)  all  cash
                    disbursed in the  operations of the Fund during such period,
                    including cash used to pay, or establish reasonable reserves
                    for, operating expenses, fees, commissions, debt service and
                    loan repayments  (except for repayment of advances under the
                    Cash  Flow  Deficit   Guaranty   Agreement),   improvements,
                    repairs,   replacements,   contingencies   and   anticipated
                    obligations,  except to the extent any such  payment is made
                    out of reserves  set aside for such  purpose.  Net Cash Flow
                    shall not include  amounts  distributed or to be distributed
                    under Section 4.2 hereof.
     "Net  Proceeds of the  Offering"  means the Gross  Proceeds of the Offering
less the Selling Commis- sions, the Due Diligence Expense Reimbursement Fee, and
the Offering and Organization Expense Fee.
                         "Net  Proceeds  from a  Refinancing"  means  the  gross
                    proceeds  to the Fund of any  Refinancing,  less any amounts
                    deemed  necessary by the General Partners to be allocated to
                    the establishment of reserves,  the payment of any debts and
                    liabilities  of the Fund to creditors  (except for repayment
                    of the  Operating  Deficit Loan and the Deferred  Management
                    Fee Loans),  and the payment of any  reasonable  expenses or
                    costs  associated  with the  Refinancing,  including but not
                    limited  to,  fees,  points,  or  commissions  paid  to  any
                    unaffiliated Persons.
                         "Net Proceeds from a Sale" means the gross  proceeds to
                    the Fund of any Sale,  less any amounts deemed  necessary by
                    the General Partners to be allocated to the establishment of
                    reserves,  the payment of any debts and  liabilities  of the
                    Fund to creditors  (except for  repayment  of the  Operating
                    Deficit Loan and the Deferred Management Fee Loans), and the
                    payment of any reasonable  expenses or costs associated with
                    the Sale,  including but not limited to, fees or real estate
                    brokerage  commissions paid to any unaffiliated Persons and,
                    subject to Sections 5.2.A(viii) and 9.2.A(vi),  fees or real
                    estate brokerage commissions paid to the General Partners or
                    Affiliates.
                         "Net  Proceeds  of sale or  Refinancing"  means the Net
                    Proceeds from a Sale or Net Proceeds from a Refinancing,  as
                    the case may be.
                         "Notification"   means  a   writing,   containing   the
                    information required by this Agreement to be communicated to
                    any Person,  sent or delivered to such Person in  accordance
                    with the provisions of Section 12.3 of this Agreement.
                  "Nursing Center Manager" means Meridian Nursing Centers, Inc.
                         "Offering"means  the  offering  and sale of Units for a
                    minimum of $2,830,000 and a maximum of $38,500,000,  as more
                    fully described in the Prospectus.
                         "Offering and  Organization  Expense Fee" means the fee
                    paid to the Administrative General Partner equal to 4.35% of
                    the Gross Proceeds of the Offering, payable at such times as
                    the Investors
                                                                         A-7
<PAGE>
                            are recognized as such on the books of the Fund, for
                             services  rendered and costs incurred in connection
                             with the  Organization of the Fund and the offering
                             of Units.
                                   "Operating  Deficit  Loan"  means  the  funds
                             advanced  to the  Fund by the  Development  General
                             Partner  under the  terms of the Cash Flow  Deficit
                             Guaranty Agreement.
                                   "Operating  Partnerships"  means the  limited
                             partnerships,  each of which will own and operate a
                             Facility.
                                   "Operating  Partnership  Interest"  means the
                             98.99%  partnership  interest  of  the  Fund  in an
                             Operating Partnership.
                        "Partner" means any General Partner or Limited Partner.
                                   "Partnership  Interest  Options"  means those
                             agreements pursuant to which the Fund will acquire,
                             subject  to  raising  sufficient  proceeds  of this
                             Offering,   Operating   Partnership   Interests  in
                             respect of Facility I and Facility II.
                                   "Person" means any individual or Entity.
                                   "Preferred   Return"  means  the  cumulative,
                             non-compounded  annual  return equal to 10. 125% of
                             the  Adjusted  Capital  Balance  of  each  Investor
                             commencing  on the earlier of (i) the final closing
                             for the sale of Units or (ii) June 30, 1988. At the
                             time of a Sale or  Refinancing,  if any  portion of
                             the  Preferred  Return of an Investor  has not been
                             paid from Net Cash Flow,  such unpaid  portion will
                             be added to the  Investor's  priority  distribution
                             from the Net Proceeds of Sale or  Refinancing,  all
                             as more fully set forth in Article IV.
                                   "Profit"  or "Loss"  means,  for each  fiscal
                             year or other period, an amount equal to the Fund's
                             taxable  income  or loss for such  year or  period,
                             with the following adjustments:
                                       (i) Any income of the Fund that is exempt
                                   from  federal  income  tax  shall be added to
                                   such taxable income or loss;
                                       (ii)   Any   expenditures   of  the  Fund
                                   described  in  Section  705(a)(2)(B)  of  the
                                   Code, or treated as Section  705(a)(2)(B)  of
                                   the Code expenditures  pursuant to Income Tax
                                   Reg.   ss.1.704-1(b)(2)(iv)(i),    shall   be
                                   subtracted  from such taxable income or loss;
                                   and
                                       (iii)   In  lieu  of  the   depreciation,
                                   amortization    and   other   cost   recovery
                                   deductions  taken into  account in  computing
                                   such taxable  income or loss, an amount equal
                                   to the depreciation,  amortization,  or other
                                   cost  recovery   deduction   allowable   with
                                   respect  to an asset  for such  year or other
                                   period for federal  income tax purposes shall
                                   be taken  into  account,  except  that if the
                                   fair market  value on the date that the asset
                                   is  contributed  to the Fund (or if the basis
                                   of such asset for book  purposes  is adjusted
                                   under  the  Income  Tax   Regulations,   such
                                   adjusted   book  basis)   differs   from  its
                                   adjusted   basis  for   federal   income  tax
                                   purposes  at the  beginning  of such  year or
                                   other period, the depreciation,  amortization
                                   and other cost recovery deductions taken into
                                   account  shall be equal  to an  amount  which
                                   bears the same ratio to such  beginning  fair
                                   market value (or adjusted  book basis) 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.  Except
                                   as otherwise  provided  herein,  each item of
                                   income, gain, loss, deduction, preference or
                             recapture  entering into the  computation of Profit
                             or  Loss  hereunder  shall  be  allocated  to  each
                             Partner in the same  proportion  as Profit and Loss
                             are allocated.
                                   "Prospectus"   means  the  Fund's  Prospectus
                             contained in the  Registration  Statement  filed on
                             Form   S-1  with  the   Securities   and   Exchange
                             Commission for the  registration of the Units under
                             the  Securities  Act of 1933,  in the final form in
                             which it is filed with the  Securities and Exchange
                             Commission and as thereafter  supplemented pursuant
                             to Rule 424 under the  Securities  Act of 1933. Any
                             reference herein to "date of the Prospectus"  shall
                             be deemed to refer to the date of the Prospectus in
                             the  form  filed  pursuant  to Rule  424(b)  of the
                             Securities Act of 1933.
                                   "Purchase Money  Financing"  means a purchase
                             money  note  or  other  form  of  installment  sale
                             obligation received by the Fund pursuant to a Sale.

                                       A-8
<PAGE>
                         "Refinancing"   means   the   replacement,    increase,
                    consolidation,   modification,   extension  of  all  or  any
                    component of any loan, debt,  obligation or financing of the
                    Fund or any Operating Partnership.
                         "Sale" means any  transaction  entered into by the Fund
                    or an Operating Partnership resulting in the receipt of cash
                    or other  consideration  (other  than the receipt of Capital
                    Contributions)  not in the ordinary  course of its business,
                    including,  without limitation,  sales or exchanges or other
                    dispositions of Facilities,  Operating Partnership Interests
                    and real or personal  property  of the Fund,  condemnations,
                    recoveries of damage awards and  insurance  proceeds  (other
                    than business or rental  interruption  insurance  proceeds),
                    but  excepting  any   borrowing,   mortgage   financings  or
                    Refinancings.
                         "Schedule"  means  Schedule A annexed hereto as amended
                    from time to time and as so amended at the time of reference
                    thereto.
                         "Selling  Agent" means Alex.  Brown Realty  Securities,
                    Inc., an Affiliate of the  Administrative  General  Partner,
                    which will offer the Units on a best efforts basis  pursuant
                    to the Selling Agent Agreement.
     "Selling Agent Agreement"  means that certain  agreement to be entered into
by the Fund, Alex. Brown Realty  Securities,  Inc., the  Administrative  General
Partner,  and the Development  General  Partner,  pursuant to which Alex.  Brown
Realty Securities, Inc. will offer and sell the Units on a best efforts basis.
                         "Selling  Commissions"  means the maximum total (or any
                    portion  thereof)  of  7.0%  of the  Gross  Proceeds  of the
                    Offering  paid to the  Selling  Agent  or  other  soliciting
                    dealers for their  efforts in offering  the Units.  The 7.0%
                    maximum  Selling  Commissions  will be  reduced  for  volume
                    purchases and  purchases by certain  Affiliates as specified
                    in the Prospectus.
                         "Sponsor"  means  any  Person  directly  or  indirectly
                    instrumental  in organizing,  wholly or in part, the Fund or
                    who will  manage or  participate  in the  management  of the
                    Fund, and any Affiliate of such Person, but does not include
                    (a) any Person whose only  relationship with the Fund or the
                    General Partner is that of an independent  property  manager
                    if such person's only  compensation  from the Fund is in the
                    form of fees  for the  performance  of  property  management
                    services,  or (b) wholly-  independent third parties such as
                    attorneys,   accountants  and   broker-dealers   whose  only
                    compensation  from  the  Fund is for  professional  services
                    rendered in connection  with the Offering or the  operations
                    of the Fund.
                         "Subordinated  Limited Partner" means any Person who is
                    designated as a  Subordinated  Limited  Partner on the books
                    and records of the Fund.
                         "Substitute Limited Partner" means any Investor who has
                    elected to convert  from an  Investor  to a Limited  Partner
                    pursuant to Section 7.5 of this Agreement.
                         "Successor  General  Partner"  means any  Person who is
                    admitted  as a Successor  General  Partner to the Fund under
                    the  provisions  of  Article  VI  after  the  date  of  this
                    Agreement.
                         "Tax Matters Partner" means the Administrative  General
                    Partner  designated  in  Section  5.1  as  the  tax  matters
                    partner, as defined in Section 6231(a)(7) of the Code.
                         "Termination  Date of the Offering" means the date upon
                    which the  Offering  will  terminate,  which,  if not sooner
                    terminated  by the General  Partners,  will be one year from
                    the date of the Prospectus.
                         "Unit"  means (i) an  Assignee  Unit  representing  the
                    assignment by the Assignor  Limited  Partner of one Assigned
                    Limited  Partnership  Interest,  and  (ii)  the  Partnership
                    Interest  attributable  to one Unit of any  Investor who has
                    become a Substitute  Limited Partner pursuant to Section 7.5
                    hereof.
                         "U.S.  Person"  means a Person who is (i) an individual
                    who is either a United  States  citizen or a resident of the
                    United  States  for  federal  income  tax  purposes,  (ii) a
                    corporation,  partnership,  or other legal entity created or
                    organized  in or under the laws of the United  States or any
                    political  subdivision thereof,  (iii) a corporation that is
                    not created or  organized in or under the laws of the United
                    States or any  political  subdivision  thereof but which has
                    made an election under Section 897(i) of the Code to

                                                                       A-9
<PAGE>
                            be  treated as a domestic  corporation  for  certain
                            purposes  of  federal  income  taxation,  or (iv) an
                            estate or trust whose  income from  sources  without
                            the United  States is includable in its gross income
                            for federal  income tax purposes  regardless  of its
                            connection  with a trade or  business  carried on in
                            the United States.
                                "Working Capital Reserves" means, initially, the
                            portion  of the Net  Proceeds  of the  Offering  set
                            aside  as  working  capital  reserves   pursuant  to
                            Section 3.3E, as increased or decreased from time to
                            time at the discretion of the General Partners.

                                   ARTICLE II
                       NAME; PURPOSE; TERM AND CERTIFICATE

                            Section 2.1 Name; Formation
                                The Partners hereby form the limited partnership
                            to be  known  as  "Meridian  Healthcare  Growth  and
                            Income  Fund  Limited  Partnership",  and such  name
                            shall be used at all  times in  connection  with the
                            Fund's business and affairs; provided, however, that
                            the  Fund  may  use  trade  names  in  its  business
                            operations. The Fund shall be governed by the Act.

                            Section 2.2 Place of Registered Office
                                The  address  of the  registered  office  in the
                            State of Delaware of the Fund is  Corporation  Trust
                            Center,  1209 Orange  Street,  Wilmington,  Delaware
                            19801;  the name of the registered agent for service
                            of process on the Fund in the State of  Delaware  at
                            that address is The Corporation  Trust Company.  The
                            Fund's  principal place of business is 555 Fairmount
                            Avenue,  Suite 301, Towson,  Maryland 21204, or such
                            other place(s) as the General Partners may hereafter
                            determine.   Notification   of  any  change  in  the
                            location of the  principal  office shall be given to
                            the Partners and  Investors on or before the date of
                            any such change.

                            Section 2.3 Purpose
                                The  purpose  of the  Fund is to  acquire,  own,
                            develop,  maintain,  finance, encumber, operate as a
                            business, lease, sell, dispose of and otherwise deal
                            with the Operating Partnership Interests,  and to do
                            all things  necessary,  convenient  or incidental to
                            the achievement of the foregoing.

                            Section 2.4 Term
                                The Fund shall continue until December 31, 2037,
                            unless the Fund is sooner  dissolved  in  accordance
                            with the provisions of this Agreement.

                            Section 2.5 Recording of Certificate
                                The General  Partners  shall take all  necessary
                            action to  maintain  the Fund in good  standing as a
                            limited   partnership  under  the  Act,   including,
                            without  limitation,  the filing of the  Certificate
                            and such amendments and further  certificates as may
                            be necessary  under the Act and necessary to qualify
                            the Fund to do  business  in such states as the Fund
                            owns  property.  The General  Partners  shall not be
                            required  to  send  a  copy  of  the  Fund's   filed
                            Certificate to each Partner and Investor.

                                   ARTICLE III
                                PARTNERS; CAPITAL

                            Section 3.1 General Partners; Assignor Limited
                              Partner; Subordinated Limited Partners
                                The name,  address and Capital  Contribution  of
                            each General  Partner,  the Assignor Limited Partner
                            and the Subordinated  Limited Partners are set forth
                            on  the   Schedule.   Upon   the   dissolution   and
                            termination  of  the  Fund,  each  General  Partner,
                            within 90 days  after the  fiscal  year in which the
                            dissolution of the Fund occurs, shall make a Capital
                            Contribution  to the Fund in an amount  equal to the
                            lesser of (i) the  deficit  balance,  if any, in its
                            Capital Account or (ii) its  proportionate  share of
                            the

                                                                          A-10
<PAGE>
                    excess  of  1.01  % of  the  Capital  Contributions  of  the
                    Investors   and   Limited   Partners    (excluding   capital
                    contributions  of the Assignor  Limited Partner on behalf of
                    Investors)   over  the  Capital   Contributions   previously
                    contributed by the General Partners.

                    Section 3.2 Investors
                         A. The General Partners are authorized to accept orders
                    for Units  pursuant  to the  Offering.  All orders for Units
                    shall be held in trust and  deposited  in an escrow  account
                    with the Escrow Agent. Orders for Units shall be accepted or
                    rejected by the General  Partners within 30 days after their
                    receipt by the Escrow Agent.
                         B. Upon the  receipt by the Escrow  Agent of orders for
                    an amount equal to the Minimum Offering  Amount,  the Escrow
                    Agent shall  release the funds in the escrow  account to the
                    Assignor  Limited Partner which shall  immediately  transmit
                    such funds to the Fund. Subsequent orders for Units that are
                    accepted by the General  Partners shall be released from the
                    escrow  account and  transmitted  to the Fund or returned to
                    subscribers in accordance with the Prospectus.  Upon release
                    of an Investor's  funds from the escrow account to the Fund,
                    an Assigned Limited  Partnership  Interest shall be credited
                    to the Assignor  Limited Partner on the books and records of
                    the Fund in  respect of such Unit and the  Assignor  Limited
                    Partner  shall assign all of its rights with respect to such
                    Assigned Limited Partnership Interest to the Investor to the
                    extent  permitted by, and in accordance  with, the Agreement
                    and  applicable  law. The Assignor  Limited  Partner  hereby
                    agrees to exercise  any and all rights with  respect to such
                    Assigned  Limited  Partnership  Interest  as directed by the
                    Investor.  At  such  times  as  the  General  Partners  deem
                    practicable  and as required by the Act, the Certificate and
                    this Agreement  shall be amended to reflect the ownership by
                    the Assignor Limited Partner of Assigned Limited Partnership
                    Interests in the amount of such purchased Units.
                         C. Any  interest  earned  on moneys  paid by  Investors
                    during  the  period  such  moneys  are held in escrow by the
                    Escrow Agent shall be paid to the Fund following the release
                    of  orders  and  shall be  distributed  in  accordance  with
                    Section  4.5A  hereof.  Persons  whose  orders for Units are
                    rejected by the  General  Partners  shall be returned  their
                    moneys (and  interest  earned  thereon)  within10 days after
                    such rejection.
                         D. No  order  for  Units  sold as part of the  Offering
                    shall  be  accepted  after  the  Termination   Date  of  the
                    Offering.  If the  General  Partners  do not  accept  orders
                    totalling an amount equal to the Minimum  Offering Amount on
                    or before the Termination  Date of the Offering,  the Escrow
                    Agent  shall  promptly   return  all  moneys   deposited  by
                    subscribers  together  with  any  interest  earned  on  such
                    moneys.
                         E. For  purposes of this  Agreement,  an  Investor  who
                    acquires  Units in the Offering  shall be  recognized  as an
                    Investor  with  respect  to such  Units on the date that the
                    General Partners accept the order for such Units.

                    Section 3.3 Partnership Capital
                         A. Each Partner's and Investor's  Capital  Contribution
                    shall  be  paid  in cash  on or  prior  to the  date of such
                    Partner's   admission  to  the  Fund  or  the  date  of  the
                    recognition  of the Investor on the books and records of the
                    Fund.
                         B. Except to the extent of any interest  income  earned
                    on an Investor's  Capital  Contribution  while it is held in
                    escrow,  and later  distributed to such Investor pursuant to
                    Section 4.5A, no Partner or Investor  shall be paid interest
                    on any Capital Contribution.
                         C. Except as otherwise  provided in this Agreement,  no
                    Partner or  Investor  shall have the right to  withdraw,  or
                    receive  any return of, his  Capital  Contribution  prior to
                    December 31, 2037.
                         D.  Under  circumstances  requiring  a  return  of  any
                    Capital  Contribution,  no  Partner  shall have the right to
                    receive property other than cash.
                         E. The Fund shall  initially set aside Working  Capital
                    Reserves  for  contingencies  related  to  ownership  of the
                    Operating  Partnership  Interests  in an amount  equal to at
                    least 3.0% of the Gross Proceeds of the Offering;  provided,
                    however,  that  if  only  the  Minimum  Offering  Amount  is
                    received

                                      A-11
<PAGE>
                            by the  Fund,  Working  Capital  Reserves  shall  be
                            approximately  1.5%  of the  Gross  Proceeds  of the
                            Offering.  If in any  fiscal  quarter,  the  General
                            Partners determine that the Working Capital Reserves
                            of the  Fund  are in  excess  of the  amount  deemed
                            sufficient in  connection  with the ownership of the
                            Operating   Partnership   Interests  and  that  such
                            Working Capital Reserves may be reduced,  the amount
                            of such reduction may be distributed to the Partners
                            and  Investors  as a portion  of the Fund's Net Cash
                            Flow. If in any fiscal quarter, the General Partners
                            determine  that the  Working  Capital  Reserves  are
                            insufficient   in   connection   with   the   Fund's
                            operations  and that such Working  Capital  Reserves
                            shall be  increased,  the  amount  of such  increase
                            shall  reduce  Net  Cash  Flow.  Upon  the  Sale  or
                            disposition of a Facility or Operating  Partnership,
                            any Working  Capital  Reserves  maintained  for such
                            Facility   or   Operating    Partnership    may   be
                            distributed, in the General Partners' discretion, to
                            Partners and Investors or applied as Working Capital
                            Reserves for other Facilities.

                            Section 3.4 Liability of Partners and Investors
                                A. Except as  provided  in the Act,  the Limited
                            Partners and  Investors  shall be liable only to pay
                            their Capital  Contributions  and no Limited Partner
                            or Investor will be personally liable for the debts,
                            liabilities,  contracts, or other obligations of the
                            Fund. In accordance  with Section 17-608 of the Act,
                            (i) if a Limited Partner or an Investor has received
                            the return of any part of his  Capital  Contribution
                            in violation  of the  Agreement or the Act, he shall
                            be  liable  to the Fund for a  period  of six  years
                            thereafter   for   the   amount   of   the   Capital
                            Contribution  wrongfully  returned,  (ii) if without
                            violating  this  Agreement  or the  Act,  a  Limited
                            Partner or an Investor receives a return of any part
                            of his Capital Contribution, then he shall be liable
                            to the Fund for a period of one year  thereafter for
                            the amount of the returned contribution, but only to
                            the extent  necessary  to discharge  liabilities  to
                            creditors who extended credit to the Fund during the
                            period the Capital Contribution was held by the Fund
                            and (iii) a Limited  Partner or Investor  receives a
                            return of his  Capital  Contribution  to the  extent
                            that a distribution  to him reduces his share of the
                            fair  market  value  of the net  assets  of the Fund
                            below the agreed  value of his Capital  Contribution
                            that has not been distributed to him.
                                B.  Except  as set  forth  in 3.4A,  no  Limited
                            Partner or  Investor  shall be  required to lend any
                            funds to the Fund or, after his Capital Contribution
                            has been fully  paid,  to make any  further  capital
                            contribution  to the Fund,  nor  shall  any  Limited
                            Partner  or  Investor  be  liable  for or  have  any
                            obligation  to restore any  negative  balance in his
                            Capital Account.
                                C. Subject to the provisions of Sections 3.1 and
                            5.9 of this Agreement, no General Partner shall have
                            any  personal  liability  for the  repayment  of the
                            Capital  Contribution or the Preferred Return of any
                            Limited  Partner or Investor or be required to repay
                            to  the  Fund  all or any  portion  of any  negative
                            balance  of the  Capital  Accounts  of  the  Limited
                            Partners or the Investors.
                                D. The funds advanced by the Development General
                            Partner   under  the  Cash  Flow  Deficit   Guaranty
                            Agreement    shall   not    constitute   a   Capital
                            Contribution of the  Development  General Partner or
                            be   credited   to  the   Capital   Account  of  the
                            Development General Partner.

                                   ARTICLE IV
                 ALLOCATIONS, DISTRIBUTIONS AND APPLICABLE RULES

                            Section 4.1 Allocation of Profit or Loss from a Sale
                                A.  Profit  from any Sale (and  Profit  from any
                            deemed Sale  pursuant to Sections  4.4 or 4.5) shall
                            be allocated in the following order of priority:
                                     (i)  First,  if one  or  more  Partners  or
                                Investors has a negative  balance in his Capital
                                Account,  to such  Partners  and  Investors,  in
                                proportion to their negative  Capital  Accounts,
                                until  all  such  Capital   Accounts  have  zero
                                balances.
                                     (ii)  Second,   any  Profit  not  allocated
                                pursuant to Section  4.IA(i)  shall be allocated
                                to the  Investors  until the Capital  Account of
                                each  Investor  is  equal  to  the  sum  of  his
                                Adjusted   Capital   Balance   plus  his  unpaid
                                Preferred Return, if any.

                                                                        A-12
<PAGE>
                                (iii)  Third,  any  remaining  Profit  shall  be
                           allocated  80.816% to the  Investors,  14.143% to the
                           Development   General   Partner,   4.041%  to  Realty
                           Associates  1988  Limited  Partnership,  .5%  to  the
                           Development   General   Partner   and   .5%   to  the
                           Administrative General Partner. B. Loss from any Sale
                           (and Loss from any deemed  Sale  pursuant to Sections
                           4.4 and 4.5) shall be
                      allocated in the following order of priority:
                                (i) First,  if one or more Partners or Investors
                           has a positive Capital  Account,  to such Partners or
                           Investors,  in proportion to their  positive  Capital
                           Accounts,  until all such positive  Capital  Accounts
                           have zero balances.
                                (ii) Any  remaining  Loss shall be  allocated as
                           follows:  80.816%  to the  Investors,  14.143% to the
                           Development   General   Partner,   4.041%  to  Realty
                           Associates  1988  Limited  Partnership,  .5%  to  the
                           Development   General   Partner   and   .5%   to  the
                           Administrative General Partner.

                Section 4.2 Distribution of Net Proceeds of Sale or Refinancing
                           A. Upon a  Refinancing  and upon a Sale that does not
                      constitute  a  Sale  of all  or  substantially  all of the
                      Facilities  or  Operating   Partnership   Interests,   Net
                      Proceeds from a  Refinancing  or Net Proceeds from a Sale,
                      as the case may be,  shall be  distributed,  credited  and
                      applied in the following order of priority:
                                (i) First,  to the Investors until each Investor
                           has received an amount equal to his unpaid  Preferred
                           Return,   if  any,  and  then  his  Adjusted  Capital
                           Balance.
                                (ii)  Second,   to  repay   accrued  and  unpaid
                           interest   under  the  Cash  Flow  Deficit   Guaranty
                           Agreement and the Deferred Management Fee Loans.
                                (iii) Third, to repay any outstanding  principal
                           under the Cash Flow Deficit  Guaranty  Agreement  and
                           the Deferred Management Fee Loans.
                                (iv) Fourth,  any remaining Net Proceeds of Sale
                           or Refinancing  shall be  distributed  80.816% to the
                           Investors 14.143% to the Development General Partner,
                           4.041% to Realty Associates 1988 Limited Partnership,
                           .5% to the Development General Partner and .5% to the
                           Administrative  General Partner.  B. Upon the Sale of
                           all  or  substantially   all  of  the  Facilities  or
                           Operating Partnership Interests, Net
                      Proceeds  from such Sale,  if any,  shall be  distributed,
                      credited and applied in the following order of priority:
                                (i) First,  to repay accrued and unpaid interest
                           under the Cash Flow Deficit  Guaranty  Agreement  and
                           the Deferred Management Fee Loans.
                                (ii) Second, to repay any outstanding  principal
                           under the Cash Flow Deficit  Guaranty  Agreement  and
                           the Deferred Management Fee Loans.
                                (iii) Third,  to the Partners and Investors,  in
                           proportion to their positive Capital Accounts,  after
                           the   allocation  of  Profit  and  Loss  pursuant  to
                           Sections  4.lA  and  4.1B,  until  all  such  Capital
                           Accounts have been reduced to zero.

                      Section 4.3  Distribution  of Net Cash Flow and Allocation
                           of Profit and Loss from  Operations A. Net Cash Flow,
                           if any,  for  each  year  shall  be  distributed  and
                           applied by the Fund in the
                      following order of priority:
                                (i)  First,  99%  to the  Investors,  .5% to the
                           Development   General   Partner,   and   .5%  to  the
                           Administrative  General Partner,  until each Investor
                           has received an amount equal to his unpaid Preferred
                           Return.
                                (ii)  Second,  to repay any  accrued  but unpaid
                           interest   under  the  Cash  Flow  Deficit   Guaranty
                           Agreement and the Deferred Management Fee Loans.

                                                                           A-l3
<PAGE>
                                   (iii)   Third,   to  repay  any   outstanding
                               principal  under the Cash Flow  Deficit  Guaranty
                               Agreement  (but, only (i) if less than four years
                               have elapsed  since the  Commencement  Date,  the
                               Development  Facilities are at least 95% occupied
                               and at least 27% of the income  therefrom is from
                               private  pay  sources,  or  (ii)  if four or more
                               years have elapsed since the  Commencement  Date,
                               the  Development  Facilities  are  at  least  90%
                               occupied and at least 20% of the income therefrom
                               is from  private  pay  sources,  or  (iii) if the
                               Development  Facilities  have  been  sold  by the
                               Fund), and the Deferred Management Fee Loans.
                                    (iv) Fourth,  99% to the  Investors,  .5% to
                               the  Development  General  Partner and .5% to the
                               Administrative   General   Partner,   until  each
                               Investor   has    received   a    non-compounded,
                               non-cumulative  return for the current year equal
                               to 12.5% of his Adjusted Capital Balance.
                                    (v) Fifth, 90.918% to the Investors,  8.582%
                               to the Development  General Partner and.5% to the
                               Administrative  General  Partner.  To the  extent
                               feasible,  the General  Partners will endeavor to
                               distribute any Net Cash Flow on a
                           quarterly basis.
                               B.  Profit  from  ordinary  operations  for  each
                              fiscal year shall be allocated as follows:
                                    (i) First, to the Partners and Investors who
                               have  received  a  distribution  of Net Cash Flow
                               during such fiscal year, an amount of Profit from
                               ordinary  operations  equal to the amount of such
                               Net Cash  Flow,  in  proportion  to the amount of
                               such distribution received by each of them.
                                    (ii)   Second,   if   there   has   been  no
                               distribution  of Net Cash Flow during such fiscal
                               year,  or to the  extent  that  the  Profit  from
                               ordinary  operations is in excess of the Net Cash
                               Flow  during  such  fiscal   year,   Profit  from
                               ordinary operations shall be allocated 99% to the
                               Investors, .5% to the Development General Partner
                               and .5% to the Administrative General Partner. C.
                               Loss from  ordinary  operations  for each  fiscal
                               year shall be allocated 99% to the Investors, .5%
                           to the Development General Partner and .5% to the
                           Administrative General Partner.

                           Section 4.4 Liquidation or Dissolution
                               A. If the Fund is liquidated  or  dissolved,  the
                           net proceeds  from such  liquidation,  as provided in
                           Article   VIII,   shall  be   distributed   first  to
                           creditors,  including Partners who are creditors,  to
                           the extent  otherwise  permitted  by law  (whether by
                           payment or by establishment of reserves),  other than
                           liabilities   for   distributions   to  Partners  and
                           Investors,  and any remaining  net proceeds  shall be
                           distributed in proportion to the Capital  Accounts of
                           the  Partners  and  Investors,  determined  after the
                           allocations  in  Sections  4.1 A and  4.1  B,  unless
                           applicable  law  shall  otherwise  require,  in which
                           event the  allocations set forth in Sections 4.1A and
                           4.1B shall be modified to the extent  necessary,  but
                           only to the  extent  necessary,  to comply  with such
                           applicable law.
                               B. All distributions under this Section 4.4 shall
                           be made by the end of the taxable year of liquidation
                           of the  Fund  or,  within  90  days  of the  date  of
                           liquidation, whichever is later.

                           Section 4.5 General and Special Rules
                               A.  Except  as  otherwise  provided  herein,  the
                           timing  and  amount  of all  distributions  shall  be
                           determined by the General Partners.  No Partner shall
                           have the right to demand and receive any distribution
                           of  property  other  than cash.  Notwithstanding  any
                           other  provision  of  this  Agreement,   the  General
                           Partners  shall have  authority to make the following
                           distributions to certain of the Investors:  First, if
                           the  Fund  has   realized   a  savings   on   Selling
                           Commissions  payable by the Fund with  respect to the
                           purchase  of Units  (as more  fully  set forth in the
                           Prospectus),   the  General  Partners  shall  make  a
                           distribution  to such Investor equal to the amount of
                           such  savings  realized by the Fund.  Second,  if any
                           interest   is   earned   on  an   Investors   Capital
                           Contribution  while  it is  held  in  escrow  pending
                           recognition  as an Investor  under  Article VII, such
                           interest  shall be paid by the Fund to such  Investor
                           and Profit  attributable  to such  interest  shall be
                           allocated in the same manner.
                                                                            A-14
<PAGE>
                         B. Subject to all of the special  rules of this Section
                    4.5, if any Fund Property is  distributed to the Partners in
                    kind,  such Fund Property first shall be valued on the basis
                    of the fair market value  thereof to determine the Profit or
                    Loss that would have resulted if such Fund Property had been
                    sold,  and then such  Profit or Loss shall be  allocated  as
                    provided  in Section  4.lA and  Section  4.1B,  and shall be
                    properly  credited  or charged to the  Capital  Accounts  in
                    accordance with Income Tax Reg. ss.1.704-  l(b)(2)(iv)(e) or
                    any successor provision thereto. Any Partner entitled to any
                    interest in such assets  shall  receive  such  interest as a
                    tenant-in-common  with all other  Partners so entitled.  The
                    fair market value of such assets shall be  determined  by an
                    independent  appraiser  who shall be selected by the General
                    Partners.
                         C.  Notwithstanding  Sections 4.1 and 4.3 hereof, if an
                    allocation  of Loss  (or item  thereof)  to an  Investor  or
                    Partner would cause or increase a deficit  balance in his or
                    its  Capital  Account  in excess  of:  (i) in the case of an
                    Investor  or  Partner  other  than a  General  Partner,  his
                    proportionate  share of Minimum Gain, or (ii) in the case of
                    a  General  Partner,  the  sum of  the  amount  which  it is
                    obligated  to restore to the Fund  pursuant  to Section  3.1
                    hereof and its proportionate  share of Minimum Gain (in each
                    case, such excess being referred to hereafter as the "Excess
                    Deficit Balance"),  then the allocation shall not be made to
                    such Investor or Partner.  Instead,  such Loss (or deduction
                    or item  thereof)  shall be allocated  first to the Partners
                    and  Investors   having  positive   Capital   Accounts,   in
                    proportion to such positive Capital Accounts, until all such
                    positive Capital Accounts have been reduced to zero, and any
                    additional  Loss (or  deduction  or item  thereof)  shall be
                    allocated to the General  Partners in accordance  with their
                    interests   in  the  Fund.   For   purposes  of  making  the
                    determination  set forth  above,  each  Investor's  and each
                    Partner's  Capital  Account  balance  shall  be  reduced  by
                    reasonably  expected  allocations or adjustments of loss (or
                    item  thereof)  including  Loss from a Sale under Income Tax
                    Reg.   ss.ss.1.704-l(b)(2)(ii)(a)(4)   and   (5),   and   by
                    reasonably  expected  distributions to the extent not offset
                    by reasonably  expected Capital Account increases  ("Account
                    Reduction  Items").  For purposes of calculating  reasonably
                    expected Capital Account increases,  the value of the Fund's
                    assets shall be presumed to be equal to their adjusted basis
                    for federal income tax purposes.
                         D.  Notwithstanding  Sections  4.1 and 4.3  hereof,  in
                    accordance with Income Tax Reg. ss.ss.1.704-  1(b)(2)(ii)(d)
                    and 1.704-1(b)(4)(iv)(e),  (i) if, in any fiscal year of the
                    Fund,  an  Account  Reduction  Item  unexpectedly  causes or
                    increases an Investor's or Partner's Excess Deficit Balance,
                    or (ii) if there is a net  decrease in Minimum Gain during a
                    taxable year,  then all Investors or Partners with an Excess
                    Deficit  Balance at the end of such year shall be  specially
                    allocated Profit and, to the extent necessary,  gross income
                    (as defined in Section 61 of the Code) to the extent of such
                    Excess Deficit Balances, in proportion to the Excess Deficit
                    Balance of each Investor or Partner. Any remaining Profit or
                    Loss,  after  adjustment  has been  made for  allocation  of
                    income  or gain  pursuant  to this  Section  4.5D,  shall be
                    allocated in  accordance  with  Sections 4.1 and 4.3 hereof.
                    The General  Partners  shall be  authorized to interpret and
                    apply this Section 4.5D so as to satisfy the requirements of
                    Income    Tax     Reg.ss.ss.1.704-     l(b)(2)(ii)(d)    and
                    1.704-1(b)(4)(iv)(e) and any successor provisions.
                         E. Any  special  allocations  of Profit,  Loss or gross
                    income  under  Section  4.5D shall be taken into  account in
                    computing subsequent  allocations of Profit or Loss, so that
                    to the extent possible,  the aggregate  amounts of Profit or
                    Loss  allocated to each Partner or Investor will be equal to
                    the aggregate amounts that would have been allocated to them
                    in the absence of the unexpected Account Reduction Items.
                         F. For each fiscal year,  all Profit and Loss allocated
                    pursuant  to Section  4.3 hereof to the  Investors  shall be
                    allocated among the Persons that are recognized as Investors
                    during  such  year  by  determining   the  Profit  and  Loss
                    attributable   to  each  month   during  such  year  and  by
                    allocating  the amount of such Profit and Loss among Persons
                    who are  recognized as Investors on the books of the Fund on
                    the first  business  day of such  month.  The Profit or Loss
                    attributable  to each  month  of the  fiscal  year  shall be
                    determined  by dividing  the Profit or Loss for such year by
                    the number of days in such year, and then  multiplying  such
                    per diem amount by the number of days in each month.
     G. All Net Cash Flow  distributable  to the Investors  attributable to each
month of a fiscal  quarter,  if any,  pursuant to Section  4.3 hereof,  shall be
distributed  among the Persons  recognized as Investors on the books of the Fund
on the first business day of such month during the fiscal quarter.  The Net A-15
<PAGE>
                           Cash Flow  attributable  to each  month of the fiscal
                           quarter shall be determined by dividing the amount of
                           Net Cash Flow for such  quarter by the number of days
                           in the quarter,  and then  multiplying  such per diem
                           amount by the number of days in each month.
                               H.  Notwithstanding  Sections 4.5F and 4.5G,  the
                           Fund shall adopt the  "interim  closing of the books"
                           method  of  allocating   Fund  Profit  and  Loss,  in
                           accordance  with a "semi-monthly  convention",  among
                           persons who become Investors pursuant to a closing of
                           the sale of the  Units on or before  the  Termination
                           Date of the Offering.  Accordingly,  if there is more
                           than one closing of the sale of the Units,  Investors
                           who are recognized on the books of the Fund (i) prior
                           to the  sixteenth day of a calendar  month,  shall be
                           treated  as an  Investor  on the books of the Fund on
                           the first  business day of the month of  recognition,
                           and (ii) on or after the  sixteenth day of a calendar
                           month shall be treated as an Investor on the books of
                           the Fund on the first day of the month  following the
                           month of recognition.
                               I. Except as provided in Section  4.5M,  for each
                           taxable year, all Profit or Loss  allocated  pursuant
                           to Section 4.1 hereof and all Net Proceeds of Sale or
                           Refinancing,  allocable or distributable with respect
                           to any Unit  which is  transferred  during a  taxable
                           year of the Fund,  shall be allocated or distributed,
                           as the case may be,  to the  Persons  recognized  (in
                           accordance  with  Section 7.4 hereof) as Investors as
                           of the first  business day of the month that includes
                           the date on which  the  Sale or  Refinancing  occurs;
                           provided, however, that all such Profit or Loss which
                           is attributable  to, and all Net Proceeds from a Sale
                           which represent, Net Proceeds from a Sale received by
                           the  Fund as a  result  of an  installment  or  other
                           deferred Sale, shall be allocated or distributed,  as
                           the  case  may  be,  to the  Persons  recognized  (in
                           accordance  with  Section 7.4 hereof) as Investors as
                           of the first  business day of the month that includes
                           the date on which the deferred  Net  Proceeds  from a
                           Sale are received by the Fund, and the allocable cash
                           basis items  shall be  allocated  as  required  under
                           Section  706(d)  of  the  Code  and  the  Income  Tax
                           Regulations thereunder.
                               J.  In the  event  that  any  Investor  fails  to
                           furnish to the General Partners evidence, in form and
                           substance   satisfactory  to  the  General  Partners,
                           establishing   that  the  General  Partners  have  no
                           obligation  under  Section  1445  of  the  Code  with
                           respect to such  Investor to withhold and pay over an
                           amount to the Internal Revenue  Service,  the General
                           Partners may, in their sole discretion, withhold with
                           respect to such  Investor  the  amount  they would be
                           required to withhold  pursuant to Section 1445 of the
                           Code if such Investor were not a U.S. Person, and any
                           amount so withheld shall be treated as a distribution
                           under Sections 4.2 or 4.3 of this  Agreement,  as the
                           case may be, and shall  reduce  the amount  otherwise
                           distributable    to   such    Investor    thereunder.
                           Alternatively,  the  General  Partners  may at  their
                           option loan the  Investor an amount  equal to the tax
                           to be  withheld  (at an  interest  rate  equal to the
                           Escrow  Agent's   announced  "prime  rate"  plus  two
                           percentage  points),   such  loan  to  be  repaid  by
                           retaining such investor's distributions.
                               K.  Nowithstanding  anything to the contrary that
                           may be expressed or implied in this Agreement,  if at
                           any time the allocation provisions of this Article IV
                           do not  result  in  the  allocation  to  the  General
                           Partners of an aggregate of at least 1% of the Profit
                           or Loss being allocated,  the General Partners in the
                           aggregate, shall be allocated 1% thereof.
                               L. It is the intent of the General  Partners that
                           each Investor's and Partner's  distributive  share of
                           Profit and Loss shall be determined  and allocated in
                           accordance with this Article IV to the fullest extent
                           permitted  by  Sections  704(b)  and 706 of the Code.
                           Therefore,  if the Fund is advised by the Accountants
                           or the Fund's  legal  counsel,  that the  allocations
                           provided in Article IV of this Agreement are unlikely
                           to be respected for federal income tax purposes,  the
                           General  Partners  have  been  granted  the  power in
                           Section   12.2.B  hereof  to  amend  the   allocation
                           provisions  of  this  Agreement,  on  advice  of  the
                           Accountants  or  the  Fund's  legal  counsel,  to the
                           minimum  extent  necessary  to  conform  to  Sections
                           704(b)  and 706 of the Code  the plan of  allocations
                           and  distributions  of Profit and Loss, Net Cash Flow
                           and Net Proceeds of Sale or  Refinancing  provided in
                           this Agreement.
                                                                        A-16
<PAGE>
                          M.   Notwithstanding  any  other  provisions  of  this
                     Agreement   other  than  Section  4.5K  to  the   contrary,
                     "Interest Income" shall be allocated for federal income tax
                     purposes,  and "Interest Income Cash" shall be distributed,
                     among the Investors and Partners as follows:
                              (1)  Profit  or Loss  from the  Sale to which  the
                          Interest  Income relates shall be calculated as if the
                          Fund  had made an  election  out of  installment  sale
                          treatment  under  Section  453 of the  Code,  and such
                          Profit or Loss shall be hypothetically allocated among
                          the  Investors  and the  Partners  and  hypothetically
                          credited  or  charged  to their  Capital  Accounts  as
                          provided in Section 4.1.  The Capital  Accounts of the
                          Investors   and  the   Partners,   as   hypothetically
                          adjusted,  shall be referred  to as the  "Hypothetical
                          Capital  Accounts." The Hypothetical  Capital Accounts
                          shall be decreased from time to time by  distributions
                          to  the  Investors  and  the  Partners  and  shall  be
                          adjusted  from  time  to  time  as  a  result  of  any
                          adjustment  in the  principal  amount of the  Purchase
                          Money  Financing  (e.g., as a result of purchase price
                          adjustments) to which the Interest Income relates. The
                          Hypothetical  Capital Accounts as so adjusted shall be
                          referred  to as  the  "Adjusted  Hypothetical  Capital
                          Accounts."
                              (2) Interest  Income shall be allocated  among the
                          Investors  and the  Partners  for  federal  income tax
                          purposes in proportion to their Adjusted  Hypothetical
                          Capital  Accounts  and  the  Capital  Accounts  of the
                          Investors   and  the   Partners   shall  be  increased
                          accordingly.
                              (3)  Interest  Income  Cash  shall be  distributed
                          among  the  Investors  and the  Partners  in the  same
                          proportion  that Interest  Income was allocated  above
                          for federal  income tax purposes.  Such  distributions
                          shall decrease the Capital Accounts accordingly.
                              (4) The foregoing  allocations  and  distributions
                          shall be made as of the last day of each  taxable year
                          of the Fund during which the Fund has  Purchase  Money
                          Financing,  based upon the per diem  weighted  average
                          Adjusted   Hypothetical   Capital   Accounts   of  the
                          Investors  and the  Partners  during each such taxable
                          year. N.  Notwithstanding  any other provision of this
                          Agreement, the General Partners may, after
                     giving 90 days' prior  Notification  to the Investors,  (i)
                     adopt any other  method  for  determining,  in the event of
                     transfers of Units, the Investors entitled to distributions
                     of Net Cash  Flow or Net  Proceeds  of Sale or  Refinancing
                     that  the  General  Partners,  subject  to the  review  and
                     approval of the Accountants,  determine is reasonable,  and
                     (ii) allocate Profit or Loss among the Investors during the
                     taxable year in any other manner that the General Partners,
                     determine  satisfies the requirements of Section 706 of the
                     Code, but only to the extent such  allocation of Profit and
                     Loss  incorporates  the minimum changes  required to comply
                     with such section and is supported by an opinion of counsel
                     to the Partnership.
                          0.  Allocations  and  distributions  to Investors as a
                     class  shall  be  made to each  Investor  entitled  to such
                     allocation  or  distribution  based  upon the  ratio of the
                     number of Units  owned by each such  Investor to the number
                     of Units owned by all Investors entitled to such allocation
                     or distribution.
                          P. In accordance  with Section  704(c) of the Code and
                     the Income Tax Regulations thereunder,  income, gain, loss,
                     and deduction (including  depreciation) with respect to any
                     property  contributed  to the  capital of the Fund shall be
                     allocated  among the  Investors  and Partners so as to take
                     account of any variation between the adjusted basis of such
                     property to the Fund for federal  income tax  purposes  and
                     its fair market value on the date of  contribution.  In the
                     event the value at which  Fund  assets  are  carried on its
                     balance sheet  maintained under the terms of this Agreement
                     are    adjusted     pursuant    to    Income    Tax    Reg.
                     ss.1.704-1(b)(2)(iv)(f),  subsequent allocations of income,
                     gain,  loss and deduction with respect to such assets shall
                     take account of any variation between the adjusted basis of
                     such asset for federal  income tax  purposes  and the value
                     carried on such  balance  sheet in the same manner as under
                     Section  704(c) of the Code and the Income Tax  Regulations
                     thereunder.  Any elections or other  decisions  relating to
                     such  allocations  shall be made by the General Partners in
                     any  manner  that  reasonably   reflects  the  purpose  and
                     intention of this Agreement.  Allocations  pursuant to this
                     Section are solely for purposes of federal, state and local
                     taxes  and shall not  affect,  or in any way be taken  into
                     account in computing,  any Investor's or Partner's  Capital
                     Account  or share of  Profit,  Loss,  Net  Cash  Flow,  Net
                     Proceeds from a Sale, Net Proceeds from a  Refinancing,  or
                     other  distributions  pursuant  to any  provision  of  this
                     Agreement.
                                                                        A- 17
<PAGE>
                                    ARTICLE V
                      RIGHTS, POWERS AND DUTIES OF PARTNERS

                           Section 5.1 Management and Control of the
                      Partnership; Tax Matters Partner
                               A. Subject to the Consent of the  Investors  when
                           required  by this  Agreement,  the  General  Partners
                           shall have the exclusive  right to manage and control
                           the  business  of  the  Fund.   Except  as  otherwise
                           provided herein,  decisions to be made by the General
                           Partners shall be made by the joint  agreement of the
                           Administrative  General  Partner and the  Development
                           General Partner.
                               B. Except as otherwise  provided herein, the Fund
                           shall  be  bound  by the  signature  of  any  General
                           Partner.
                               C. No Limited Partner or Investor (except one who
                           may also be a General  Partner,  and then only in his
                           capacity as General  Partner) shall have the right to
                           participate  in the  control of the  business  of the
                           Fund,  or have any  authority  or right to act for or
                           bind the Fund.
                               D. The  Administrative  General Partner is hereby
                           designated to serve as the Fund's Tax Matters Partner
                           and shall have all of the powers and responsibilities
                           of such position as provided in Sections 6221 et seq.
                           of the Code.  No  income  tax  returns  will be filed
                           until the  Development  General  Partner  has had the
                           opportunity  to review such returns.  All third party
                           costs and  expenses  incurred  by the  Administrative
                           General  Partner  in  performing  its  duties  as Tax
                           Matters  Partner shall be borne by the Fund, as shall
                           all  expenses  incurred  by the Fund  and/or  the Tax
                           Matters  Partner in connection  with any tax audit or
                           tax-related  administrative  or judicial  proceeding.
                           Each Partner and Investor  shall be  responsible  for
                           all costs  incurred by such Partner or Investor  with
                           respect   to   any   tax   audit   or   tax   related
                           administrative  or judicial  proceeding in connection
                           with such Partner's or Investor's tax returns and all
                           costs  incurred by any such  Partner or Investor  who
                           participates   in  any  tax  audit  or  tax-  related
                           administrative  or judicial  proceeding of or against
                           the Fund or any  Partner.  Each  Partner and Investor
                           hereby  (i)  expressly  authorizes  the  Tax  Matters
                           Partner  to  enter  into  any  settlement   with  the
                           Internal  Revenue  Service  with  respect  to any tax
                           matter,  tax item, tax issue,  tax audit, or judicial
                           proceeding,  which settlement shall be binding on all
                           Partners  and  Investors;  (ii)  waives  the right to
                           participate   in  any   administrative   or  judicial
                           proceeding  in which  the tax  treatment  of any Fund
                           item is to be determined; and (iii) agrees to execute
                           such consents,  waivers or other documents as the Tax
                           Matters   Partner  may  determine  are  necessary  to
                           accomplish  the  provisions of this Section 5.1D. The
                           Tax Matters  Partner  shall have no  liability to any
                           Partner  or  Investor  or  the  Fund,  and  shall  be
                           indemnified  by the Fund to the full extent  provided
                           by law, for any act or omission  performed or omitted
                           by it within the scope of the authority  conferred on
                           it by this  Agreement,  except for acts of negligence
                           or for damages arising from any  misrepresentation or
                           breach of any  other  agreement  with the  Fund.  The
                           liability  and  indemnification  of the  Tax  Matters
                           Partner  shall be determined in the same manner as is
                           provided in Sections 5.9 and 5.10 hereof.
                               E.    Anything    herein    to    the    contrary
                           notwithstanding,  if the Development  General Partner
                           or its  Affiliates  shall be in Default (as  defined)
                           under an  agreement  with the Fund at any time during
                           the term hereof, then all decisions to be made by the
                           General   Partners   shall  be  made  solely  by  the
                           Administrative  General  Partner,  provided that such
                           Default   shall  not  have  been  caused   solely  or
                           primarily   by   any   act   or   omission   of   the
                           Administrative  General  Partner.  If a Default shall
                           not have been cured  within the cure  period (if any)
                           applicable thereto,  then for a period of 45 days the
                           Administrative  General Partner shall have the option
                           to purchase the Interests of the Development  General
                           Partner in the Fund at a price determined and payable
                           in accordance with Section 6.5 hereunder, and if such
                           Interests  are  purchased,   it  shall  constitute  a
                           voluntary   withdrawal  of  the  Development  General
                           Partner.

                           Section 5.2 Authority of General Partners
                               A.  Except  to  the  extent  otherwise   provided
                           herein, including, without limitation, Sections 5.3A,
                           5.4 and 5.5,  the General  Partners  for,  and in the
                           name of,  and on  behalf  of,  the  Fund  are  hereby
                           authorized:
                                                                          A-18
<PAGE>
                              (i) to  enter  into any  kind of  activity  and to
                          perform and carry out contracts of any kind  necessary
                          to,  or in  connection  with,  or  incidental  to  the
                          accomplishment of the purposes of the Fund, so long as
                          said activities and contracts may be lawfully  carried
                          on  or  performed  by  a  limited   partnership  under
                          applicable laws and regulations;
                              (ii) to engage Persons,  including the Sponsors as
                          provided in Article  IX, to provide  services or goods
                          to the Fund and the Operating Partnerships,  upon such
                          terms as the General Partners deem fair and reasonable
                          and in  the  best  interest  of  the  Fund,  provided,
                          however,  that, as to services or goods  provided by a
                          Sponsor,  (a) the  compensation  for such  services or
                          goods must be comparable and competitive  with that of
                          any other Person who provides  comparable  services or
                          goods and shall be on competitive  terms, and will not
                          exceed  90% of the  competitive  price  that  would be
                          charged  by   non-affiliated   persons   or   entities
                          rendering similar types and quality of services in the
                          same  or  comparable  geographic  locations;  (b)  the
                          compensation  and other terms of such contracts  shall
                          be fully  disclosed to the Investors in the reports of
                          the Fund,  (c) the Sponsor  must have been  previously
                          engaged in the business of providing  such services or
                          goods,  independent  of the  Fund  and  as an  ongoing
                          business,  (d) all such transactions shall be embodied
                          in a written  contract that  describes the services or
                          goods to be provided and the  compensation to be paid,
                          which  contract  may only be modified by the  Majority
                          Vote of the Investors, and which contract shall permit
                          termination without penalty on sixty (60) days notice,
                          and (e) except for those services to be provided under
                          agreements  referred  to  in  this  Agreement  or  the
                          Prospectus, any services provided by a Sponsor will be
                          provided only under extraordinary  circumstances where
                          services are not available elsewhere;
                              (iii) to  acquire by lease or  purchase,  develop,
                          own, sell, convey, finance, improve, assign, mortgage,
                          lease or exchange incident to a tax-free swap any real
                          estate and any personal property necessary, convenient
                          or incidental to the accomplishment of the purposes of
                          the Fund;
                              (iv) to  develop,  construct,  maintain,  finance,
                          improve,  own,  grant  options  with respect to, sell,
                          convey, assign, mortgage or lease any Fund Property or
                          any other real estate or personal property  necessary,
                          convenient or incidental to the  accomplishment of the
                          purposes of the Fund;
                              (v) to execute any and all agreements,  contracts,
                          documents, certifications and instruments necessary or
                          convenient   in  connection   with  the   development,
                          construction, management, maintenance and operation of
                          any  Fund  Property,   including  without  limitation,
                          necessary  easements to public or quasi-public  bodies
                          or public utilities;
                              (vi)  to  borrow  money  and  issue  evidences  of
                          indebtedness  in  furtherance  of  any  or  all of the
                          purposes  of the Fund,  and to secure the same by deed
                          of trust, mortgage, security interest, pledge or other
                          lien  or  encumbrance  on any  Property  or any  other
                          assets of the Fund and to borrow  money on the general
                          credit of the Fund for use in the business of the Fund
                          and to take any action  and enter  into any  agreement
                          necessary  or  advisable  in   connection   with  such
                          borrowing;
                              (vii) to  repay  in  whole or in part,  negotiate,
                          refinance,  recast, increase,  renew, modify or extend
                          any secured, or other indebtedness  affecting any Fund
                          Property  and in  connection  therewith to execute any
                          extensions, renewals or modifications of any evidences
                          of indebtedness secured by deeds of trust,  mortgages,
                          security  interests,  pledges  or  other  encumbrances
                          covering any Fund Property;
                              (viii) to engage a real estate agent  (including a
                          Sponsor) to sell any Fund Property or portions thereof
                          upon such terms and  conditions as are deemed fair and
                          reasonable  by the General  Partners  and to be in the
                          best  interest  of the  Fund,  and  to pay  reasonable
                          compensation  for such  services;  provided,  however,
                          that any real estate  commission paid shall not exceed
                          the lesser of the competitive  real estate  commission
                          for like  properties  located  in the same  geographic
                          area or six percent (6%) of the contract price for the
                          Sale of any Fund  Property,  and,  in  addition,  if a
                          Sponsor provides  substantial services in such regard,
                          to pay the  Sponsor up to one-half of such real estate
                          commission,  provided,  however,  that the  payment of
                          such real estate  commission  to the Sponsor  shall be
                          subordinated  to the  payment  to  Investors  of their
                          Adjusted  Capital Balance plus the unpaid portion,  if
                          any, of their Preferred Return.
                                                                       A-19
<PAGE>
                                    (ix) to  recognize  transferees  of Units as
                                Investors  and  to  admit   substitute   Limited
                                Partners in accordance  with the terms described
                                in  the  Prospectus  and  Article  VII  of  this
                                Agreement;
                                    (x) to invest Working Capital  Reserves and,
                                pending the  investment  of the Fund's assets in
                                the Operating Partnerships, to invest the Fund's
                                assets (excluding Working Capital Reserves),  in
                                interest-bearing    accounts   and    short-term
                                investments,  including  obligations of federal,
                                state and local  governments and their agencies,
                                mutual funds,  regulated  investment  companies,
                                commercial  paper and certificates of deposit of
                                federally-insured   commercial  banks,   savings
                                banks  or   savings   and   loan   associations;
                                provided,  however,  that such  investments  are
                                short-term,     highly-liquid     and    provide
                                appropriate safety of principal;
                                    (xi) to purchase, cancel or otherwise retire
                                or dispose of the Partnership Interests of Units
                                of any  Partner  or  Investor  according  to the
                                provisions of this Agreement;
                                    (xii) to execute and  deliver all  documents
                                necessary or appropriate  for the sale of Units,
                                including the  Prospectus  and filings under the
                                Securities Act of 1933 and any other federal and
                                state laws relating to the sale of securities;
                                    (xiii)  to  require   Investors   to  become
                                Limited  Partners  (in  which  case the  General
                                Partners  shall  have the  power  to amend  this
                                Agreement  without the Consent of the Investors)
                                and to take such other  action  with  respect to
                                the  manner  in which  Units are being or may be
                                transferred  or  traded as may be  necessary  or
                                appropriate  to  preserve  the tax status of the
                                Fund as a  partnership  for  federal  income tax
                                purposes and the tax  treatment of the Investors
                                as Partners (but such action shall be taken only
                                to the minimum extent  required by an opinion of
                                Counsel and only with the  Consent of  Investors
                                if  the  changes  would  adversely   affect  the
                                Investors);
                                    (xiv)   to  take   such   steps   (including
                                amendment  of  this  Agreement)  as the  General
                                Partners  determine  are  advisable or necessary
                                and  will not  result  in any  material  adverse
                                effect on the economic position of a majority in
                                interest of the  Investors  with  respect to the
                                Fund in order to preserve  the tax status of the
                                Fund as a  partnership  for  federal  income tax
                                purposes and the tax  treatment of the Investors
                                as  Partners,   including,  without  limitation,
                                removing the Units from public  trading  markets
                                and imposing  restrictions on transfers of Units
                                or  Interests  (provided  such  restrictions  on
                                transfers  do not cause the Fund's  assets to be
                                deemed  "plan  assets"  within  the  meaning  of
                                ERISA) (but such  action  shall be taken only to
                                the  minimum  extent  required  by an opinion of
                                Counsel and only with the  Consent of  Investors
                                if  the  changes  would  adversely   affect  the
                                Investors);
                                    (xv) to  establish  and maintain the Working
                                    Capital Reserves  described in Section 3.3E;
                                    (xvi)  to pay or  reimburse  any  reasonable
                                    out-of-pocket   expenses   incurred  by  any
                                    Affiliate of
                                the  General  Partners  in  connection  with any
                                report  pursuant to Section 10.3,  provided that
                                no  fee  shall  be  paid  to  any  Affiliate  in
                                connection with any such report; and
                                    (xvii)  after  obtaining  the Consent of the
                                Investors  to the  matters set forth in Sections
                                5.4A(xvii),  5.4A(xviii)  or 5.4A(xix),  to take
                                any actions which they deem  appropriate  to the
                                extent authorized by the Investors to facilitate
                                the  purposes   described   in  such   sections,
                                including,  without  limitation,  amendments  to
                                this  Agreement  to change  the dates upon which
                                transfers of Units will be  recognized,  and the
                                General Partners shall give prior written notice
                                to the Investors of any such  amendment.  B. Any
                                person  dealing  with  the  Fund or the  General
                                Partners may rely upon a certificate signed
                           by any General Partner, as to:
                                    (i) the identity of any General Partner or
                          any Limited Partner;
                                    (ii) the existence or  non-existence  of any
                                fact  or  facts   that   constitute   conditions
                                precedent to acts by the General  Partners or in
                                any other  manner are  germane to the affairs of
                                the Fund;
                                    (iii) the Persons who are authorized to
                              execute and deliver any instrument or document of
                                the Fund; or
                                                                        A-20
<PAGE>
                              (iv) any act or  failure  to act by the Fund or as
                              to any other matter whatsoever  involving the Fund
                              or any Partner.

                    Section 5.3  Authority of Investors A. By the Majority  Vote
                         of the Investors, the Investors, without the consent of
                         the General Partners, may:
                              (i)  amend  this  Agreement;  provided  that  such
                         amendment  (a)  shall  not  in  any  manner  allow  the
                         Investors  to take part in the  control  of the  Fund's
                         business  in a  manner  which  would  subject  them  to
                         liability  as  general  partners  under  the Act or any
                         other  applicable  law, and (b) shall not,  without the
                         consent  of any  General  Partner  affected,  alter the
                         rights,  powers,  or  duties  of the  affected  General
                         Partner or its  interest  in Profit and Loss,  Net Cash
                         Flow, Net Proceeds of Sale or Refinancing, or alter any
                         of the provisions of Section 8.2 hereof;
                              (ii)  dissolve or terminate  the Fund prior to the
                              expiration  of its  term;  (iii)  remove a General
                              Partner and elect a new General  Partner;  or (iv)
                              approve  or  disapprove  of  the  Sale  of  all or
                              substantially all of the Fund Property.
                    If  a  General  Partner  is  removed   pursuant  to  Section
                    5.3A(iii)  hereof,  such General  Partner shall  voluntarily
                    withdraw as a general partner of the Operating Partnerships.
                         B. Any action  taken  pursuant  to Section  5.3A hereof
                    shall be void ab initio, if prior to or within 15 days after
                    such vote either (i) the Fund shall have received an opinion
                    of  counsel,  which  counsel is  approved  by the Consent of
                    Investors,  that such  action  may not be  effected  without
                    subjecting  the  Investors to liability as general  partners
                    under the Act or under the laws of such  other  jurisdiction
                    in which the Fund owns properties or is doing  business,  or
                    (ii) a court of competent  jurisdiction shall have entered a
                    final judgment to the foregoing effect. For purposes of this
                    paragraph, counsel will be deemed approved by the Consent of
                    the  Investors  if  proposed  by the  General  Partners  and
                    affirmatively  approved in writing within 45 days;  provided
                    that if the holders of 10% or more of the outstanding  Units
                    propose counsel for this purpose, such proposed counsel, and
                    not  counsel  proposed  by the  General  Partners,  shall be
                    submitted for such approval by the Investors.  The existence
                    of such an opinion of counsel or court judgment with respect
                    to a  particular  contemplated  Fund action shall not affect
                    the rights of the Investors to vote on other future  actions
                    or the  existence of such rights.  If the opinion of counsel
                    or court  judgment  referred to above has not been  obtained
                    the vote  shall  proceed  as  scheduled  and it shall not be
                    delayed  or  postponed  for any reason  except as  otherwise
                    permitted by the Act.

                    Section 5.4 Restrictions on Authority
                         A.  With  respect  to the Fund and Fund  Property,  the
                    General   Partners  and  their   Affiliates  shall  have  no
                    authority to perform any act in violation of any  applicable
                    laws  or  regulations  thereunder,  nor  shall  the  General
                    Partners as such have any authority:
                              (i)  without  the  Consent  of the  Investors,  to
                         voluntarily dissolve or terminate the Fund prior to the
                         expiration of its term;
                              (ii) to purchase or acquire property other than as
                              described  in  the  Prospectus;  (iii)  except  as
                              permitted  in  this  Agreement,   to  do  any  act
                              required to be approved by the
                         Investors under the Act;
                              (iv)  to  reinvest  any  Net  Proceeds  of Sale or
                         Refinancing,  except in short-term  securities pursuant
                         to Section 10.2B;
                              (v)   except   with   respect   to   the   Interim
                         Investments,  to invest in or underwrite  securities of
                         any type or kind for any purpose,  or make  investments
                         other than in the Properties and the operations related
                         and  incidental   thereto;   (vi)  to  do  any  act  in
                         contravention of this Agreement;

                                      A-21
<PAGE>
                                    (vii) to do any act that would make it
                                   impossible to carry on the ordinary business
                                    of the Fund;
                                 (viii) to confess a judgment  against the Fund;
                                    (ix) to offer Interests or Units in exchange
                                    for  property;   (x)  to  possess  the  Fund
                                    Property, or assign
                                the Fund's rights in same, for other than the
                                exclusive use of the Fund;
                                    (xi) to  operate  in such a manner  as to be
                                classified as an "investment  company" under the
                                meaning of the Investment Company Act of 1940;
                                    (xii) to purchase or lease any property from
                                or  sell  or  lease   property  to  the  General
                                Partners or their Affiliates (with the exception
                                of the  purchase  of the  Operating  Partnership
                                Interests in the Operating Partnerships that own
                                the  Facilities  or sales  under the  Management
                                Agreement as described in the  Prospectus at the
                                time  the  Registration  Statement  is  declared
                                effective   by  the   Securities   and  Exchange
                                Commission);
                                    (xiii)  to  admit  a  Person  as  a  General
                                    Partner,   except   as   provided   in  this
                                    Agreement;  (xiv) to  admit a  Person  as an
                                    Investor  or  Limited  Partner,   except  as
                                    provided in this
                                Agreement;
                                    (xv)  without the Consent of the  Investors,
                                    to sell all or substantially all of the Fund
                                    Property; (xvi) to create or suffer to exist
                                    any lien,  security interest or other charge
                                    or encumbrance
                                upon  or  with  respect  to any  portion  of the
                                Operating Partnership Interests or Facilities if
                                the sum of the principal amount of such debt and
                                the  principal  amount of all other debts of the
                                Fund  which  are  secured  by all or part of the
                                Fund Property, would exceed approximately 60% of
                                the  fair  market  value  of  all  of  the  Fund
                                Property,   as  determined  by  an   independent
                                appraisal;  provided,  however, that the General
                                Partners  shall have the  authority to create or
                                suffer to exist any lien,  security  interest or
                                other charge or encumbrance upon or with respect
                                to an Operating Partnership Interest or Facility
                                with a debt in  excess of such  limitation,  but
                                not in excess of  approximately  75% of the then
                                fair market value of such asset,  as  determined
                                by an independent appraiser;
                                    (xvii) without the Consent of the Investors,
                                to   cause   or   facilitate   the   merger   or
                                consolidation    of   the   Fund   with    other
                                partnerships,  including,  but not  limited  to,
                                mergers or consolidations in which the Investors
                                receive in exchange for their Units interests in
                                the  surviving  entity,  with the  objective  of
                                listing the interests of the surviving entity on
                                a national  or regional  securities  exchange or
                                NASDAQ;
                                    (xviii)  subject to Section  7.2.B,  without
                                the Consent of the Investors,  to list the Units
                                on a securities  exchange or enable the Units to
                                be traded  in the  over-the-counter  market,  or
                                otherwise  facilitate  the  establishment  of  a
                                market for the  trading of Units,  or (except as
                                set forth in Section  5.2A(xiv)) to withdraw the
                                Units from such listing; or
                                    (xix) without the Consent of the Investors,
                                to restructure the Fund as a real estate
                               investment trust for federal income tax purposes.
                                B. The General Partners shall not take any
                              action  which,  for  federal tax  purposes,  shall
                              cause the Fund to terminate or to be treated as an
                              association taxable as a corporation.

                           Section 5.5 Authority of Partners and Affiliated
                              Persons to Deal with Partnership
                               A. The General Partners may, for, in the name of,
                           and on behalf of, the Fund,  acquire  property  from,
                           borrow money from, enter into  agreements,  contracts
                           or the like (in  addition to those set forth  herein)
                           with,  or  reimburse  for  reasonable   out-of-pocket
                           expenses  incurred in connection with the preparation
                           of  reports  by,  any   Sponsor  in  an   independent
                           capacity,  as  distinguished  from such  capacity (if
                           any)  as a  Sponsor,  as  if  such  Sponsor  were  an
                           independent contractor;  provided,  however, that any
                           such agreement shall be subject to the conditions set
                           forth in Section 5.2A(ii) herein.

                                                                          A-22
<PAGE>
                         B. Neither the General Partners nor any Affiliate
                              thereof shall have the authority:
                             (i) to cause  the Fund to  invest  in any  program,
                         partnership  or other venture  (other than the purchase
                         of the Operating Partnership Interests in the Operating
                         Partnerships that own or will own the Facilities as set
                         forth in the  Prospectus  at the time the  Registration
                         Statement is declared  effective by the  Securities and
                         Exchange Commission);
                             (ii) to receive  any  compensation,  fee or expense
                         not  otherwise  permitted  to be paid to it  under  the
                         terms of this Agreement or the Prospectus;
                             (iii) to cause  the Fund to  acquire  an  Operating
                         Partnership  Interest in an Operating  Partnership that
                         owns  a  Facility  without  first  having  obtained  an
                         appraisal  with  respect to the value of the  Facility,
                         rendered by an independent appraiser who is a member of
                         a nationally recognized society of appraisers, in which
                         the  appraised  value  equals or exceeds  the  purchase
                         price paid by the Fund;
                             (iv) to  commingle  the Fund's  funds with those of
                         any other person or entity, or to invest any of the Net
                         Proceeds of the  Offering in junior  mortgages,  junior
                         deeds of trust or  other  similar  obligations,  except
                         that funds of the Fund may be  temporarily  retained by
                         agents  of the  Fund  pursuant  to  contracts  for  the
                         rendering  of  services  to the Fund by such  agents or
                         held in accounts  established  and  maintained  for the
                         purpose  of  making  the  Interim   Investments  and/or
                         computerized disbursements;
                             (v) to cause the Fund to lend money or other assets
                         to the General Partners or any Affiliates thereof;
                             (vi)  to  grant  to  the  General  Partners  or any
                         Affiliates thereof an exclusive listing for the Sale of
                         Fund Property;
                             (vii) to  receive  any  rebate  or  give-up,  or to
                         participate in any reciprocal business arrangement with
                         any General Partner or an Affiliate thereof;
                             (viii) to cause the Fund to acquire a Facility that
                         is under  construction  without completion bonds, fixed
                         price guarantees or other satisfactory arrangements; or
                             (ix) to cause the Fund to acquire a  Facility  that
                         is  owned  or  under  development  by  a  Sponsor  or a
                         program,  partnership  or other  venture  in which  the
                         Sponsor   has  an   interest,   other  than  the  seven
                         Facilities specifically identified in the Prospectus.

                    Section 5.6 Duties and Obligations of the General Partners
                         A. The General  Partners shall take all action that may
                    be necessary or appropriate (i) for the  continuation of the
                    Fund's existence as a limited partnership under the Act (and
                    under  the laws of each  other  jurisdiction  in which  such
                    existence is  necessary to protect the limited  liability of
                    the Investors and the Limited Partners or to enable the Fund
                    to conduct the  business in which it is  engaged),  and (ii)
                    for the acquisition, maintenance, preservation and operation
                    of  the  Operating   Partnerships   and  the  Facilities  in
                    accordance   with  the  provisions  of  this  Agreement  and
                    applicable laws and regulations.  The General Partners shall
                    devote  to the Fund such  time as may be  necessary  for the
                    proper  performance of their duties  hereunder,  but neither
                    the General  Partners nor any of their  Affiliates  shall be
                    expected  to devote  their full time to the  performance  of
                    such duties.  The General  Partners or their  Affiliates may
                    act as general or managing  partners for other  partnerships
                    engaged in businesses similar to that conducted by the Fund.
                    Nothing  herein  shall limit the  General  Partners or their
                    Affiliates from engaging in any such business activities, or
                    any other activities which may be competitive with the Fund,
                    and the General Partners or their Affiliates shall not incur
                    any obligation, fiduciary or otherwise, to disclose or offer
                    any interest in such activities to any party hereto.
                       B. The General  Partners shall at all times conduct their
                    affairs, the affairs of all their Affiliates and the affairs
                    of the  Fund in such a manner  that no  Limited  Partner  or
                    Investor (except a Limited

                                      A-23
<PAGE>
                          Partner  or  Investor  who is also a General  Partner)
                          will have any personal liability for Fund debts except
                          as otherwise set forth herein and in the Prospectus.
                               C. The General  Partners  from time to time shall
                          prepare  and file  such  certificates  (or  amendments
                          thereto) and other  similar  documents as are required
                          by the Act,  and in the  proper  office or  offices in
                          each other jurisdiction in which the Fund is formed or
                          qualified,   any   certificates  and  other  documents
                          required  by  the   applicable   statutes,   rules  or
                          regulations of any such jurisdiction.
                               D. The General Partners shall prepare or cause to
                          be prepared, and shall file, on or before the due date
                          (or any  extension  thereof),  any  federal,  state or
                          local tax  returns  required  to be filed by the Fund.
                          The General  Partners  shall cause the Fund to pay any
                          taxes  payable by the Fund to the extent  same are not
                          payable by any other party.
                               E. The General  Partners shall obtain and keep in
                          force,  or  cause  to be  obtained  and  kept in force
                          during the term hereof,  fire and  extended  coverage,
                          workmen's compensation, and public liability insurance
                          in favor of the  Fund and the  Operating  Partnerships
                          with such  insurers and in such amounts as the General
                          Partners deem advisable,  but in amounts not less (and
                          with  deductible   amounts  not  greater)  than  those
                          customarily maintained with respect to nursing centers
                          comparable to the Facilities.
                               F.  The  General   Partners   shall  be  under  a
                          fiduciary  duty to conduct  the affairs of the Fund in
                          the  best   interests  of  the  Fund,   including  the
                          safekeeping  and use of all  Fund  funds  and  assets,
                          whether or not in the General Partners'  possession or
                          control,  and the use  thereof  for the benefit of the
                          Fund.  The General  Partners  shall not enter into any
                          contract or agreement  relieving  them of their common
                          law fiduciary duty. The General  Partners shall at all
                          times act in good faith and exercise due  diligence in
                          all activities relating to the conduct of the business
                          of the Fund.  The  General  Partners  shall  treat the
                          Investors as a group and shall not favor the interests
                          of any particular Investor.
                               G. The General  Partners  shall cause the Fund to
                          commit  a  percentage  of the  Gross  Proceeds  of the
                          Offering  to  investment  in the  Facilities  which is
                          equal  to the  greater  of.  (i)  86.5%  of the  Gross
                          Proceeds of the Offering  reduced by.1625% for each 1%
                          of financing  of the Fund;  or (ii) 73.5% of the Gross
                          Proceeds  of the  Offering.  For the  purpose  of this
                          Section  5.6G,  the percent of financing of Facilities
                          owned by the Fund shall be  determined by dividing the
                          amount of financing of the  Facilities by the purchase
                          price of the Facilities, excluding Front-End Fees. The
                          proceeds   of  the   Offering   will  be  invested  in
                          Facilities  within  two  years  of  the  date  of  the
                          Prospectus.
                               H. Except for payment of the Selling  Commissions
                          and  the  re-allowance  of the Due  Diligence  Expense
                          Reimbursement  Fee,  the  General  Partners  shall not
                          directly or indirectly  pay or award any commission or
                          other   compensation   to  any  Person  engaged  by  a
                          potential   Investor  for  investment   advice  as  an
                          inducement  to such  advisor to advise the purchase of
                          Units.
                               I.  On  loans  made  available  to the  Fund by a
                          General  Partner,  the General Partner may not receive
                          interest  or similar  charges or fees in excess of the
                          amount  which  would be charged by  unrelated  lending
                          institutions on comparable loans for the same purpose,
                          in the same  locality  of the  property if the loan is
                          made in  connection  with a  particular  property.  No
                          prepayment  charge or penalty shall be required by the
                          General  Partner  on a loan  to the  Fund  secured  by
                          either  a first  or a junior  or  all-inclusive  trust
                          deed, mortgage or encumbrance on the property,  except
                          to the extent that such  prepayment  charge or penalty
                          is attributable to the underlying  encumbrance.  In no
                          event shall any loans provided by a General Partner to
                          the Fund provide for scheduled principal payments over
                          a period  of 48 or more  months or  provide  that less
                          than  50% of the  principal  amounts  of such  loan is
                          scheduled to be paid during the first 24 months.
                               J. The General Partners shall not reinvest Net
                          Cash Flow or Net Proceeds of Sale or Refinancing.
                               K The General  Partners in their capacity as such
                          or in  their  capacity  as  general  partners  of  the
                          Operating  Partnerships  which  may  hold  title  to a
                          Facility   shall  not  do  or  cause  such   Operating
                          Partnership to do any act which would not be permitted
                          under this  Partnership  Agreement to be done by it as
                          the General Partner if title to the Facility were held
                          directly by the Fund and shall in general

                                                                            A-24
<PAGE>
                    act  and  cause  the  Operating  Partnership  to act in such
                    capacity in the same manner as if title to the Facility were
                    held directly by the Fund.

                    Section 5.7 Compensation of General Partners
                         Except as  expressly  provided  in  Articles  IV and IX
                    herein,   the  General   Partners  shall  receive  no  fees,
                    salaries,  profits,  distributions,  reimbursement  or other
                    compensation for serving as General Partners.

                    Section 5.8 Other Businesses of Partners
                         Neither the Fund nor any Partner or Investor shall have
                    any rights or obligations,  by virtue of this Agreement,  in
                    or to any independent ventures of any nature or description,
                    or the  income  or  profits  derived  therefrom,  in which a
                    Partner  or   Investor   may  engage,   including,   without
                    limitation,    the   ownership,    operation,    management,
                    syndication and  development of other real estate  projects,
                    even if in competition with the Facilities.

                    Section 5.9 Liability of General Partners and Affiliates to
                    Limited Partners or Investors
                         The General  Partners and the Affiliates of the General
                    Partners  performing  certain services on behalf of the Fund
                    shall  not  be  liable,   responsible,  or  accountable,  in
                    liabilities,  damages or otherwise, to any Investor, Limited
                    Partner  or the  Fund  for any  loss,  judgment,  liability,
                    expense or amount paid in settlement of any claims sustained
                    which arise out of any act or omission  performed or omitted
                    by them within the scope of the authority  conferred on them
                    by  this  Agreement,  provided  that  the  General  Partners
                    determine,  in good faith,  that such act or omission was in
                    the  best  interests  of  the  Fund,   except  for  acts  of
                    negligence  or  misconduct  or for damages  arising from any
                    misrepresentation  or breach of an agreement  with the Fund.
                    The Fund  shall not incur  the cost of that  portion  of any
                    liability  insurance  which insures a General Partner or the
                    Affiliates  of  the  General  Partners   performing  certain
                    services on behalf of the Fund  against any  liability as to
                    which a General  Partner or Affiliate may not be indemnified
                    under Section 5.10 herein.

                    Section 5.10 Indemnification
                         A.  The  General  Partners  and the  Affiliates  of the
                    General  Partners  performing  certain services on behalf of
                    the Fund shall be indemnified to the full extent provided by
                    law for any loss,  judgment,  liability,  expense  or amount
                    paid in  settlement  of any claims  sustained  by them which
                    arise out of any act or omission performed or omitted by any
                    or all of them within the scope of the  authority  conferred
                    on  them  by  this  Agreement,   if  the  General   Partners
                    determine,  in good faith,  that such act or omission was in
                    the best interests of the Fund and that such act or omission
                    did not constitute negligence or misconduct or breach of any
                    other  agreement with the Fund,  provided that any indemnity
                    under  this  Section  shall  be  provided  out of and to the
                    extent of Fund  assets  only,  and no  Investor  or  Limited
                    Partner  shall  have  any  personal   liability  on  account
                    thereof.
                         B. Notwithstanding Section 5. 10A, the General Partners
                    and  the  Affiliates  of  the  General  Partners  performing
                    certain services on behalf of the Fund and any person acting
                    as a Broker-Dealer shall not be 'indemnified by the Fund for
                    any liability, loss or damage incurred by any or all of them
                    in connection with (i) any claim or settlement arising under
                    federal or state securities laws unless (a) there has been a
                    successful   adjudication   on  the  merits  of  each  count
                    involving  such   securities   laws  violations  as  to  the
                    particular    indemnities    and    the    court    approves
                    indemnification  of the  litigation  costs,  (b) such claims
                    have been  dismissed with prejudice on the merits by a court
                    of competent  jurisdiction as to the particular  indemnities
                    and the court  approves  indemnification  of the  litigation
                    costs, or (c) a court of competent  jurisdiction  approves a
                    settlement of the claims and finds that  indemnification  of
                    the settlement and related costs should be made, after being
                    advised as to the  current  position of the  Securities  and
                    Exchange Commission,  the Massachusetts Securities Division,
                    the   California    Commissioner   of   Corporations,    the
                    Pennsylvania   Securities   Commission,   the   Tennes-  see
                    Securities   Commission  and  such  other  state  securities
                    administrators,   as  shall  be   required  by  such  court,
                    regarding  indemnification for violations of securities law;
                    or (ii) any liability  imposed by law,  including  liability
                    for negligence or misconduct.

                                      A-25
<PAGE>
                                   ARTICLE VI
                 TRANSFERABILITY OF A GENERAL PARTNER'S INTEREST

                           Section 6.1 Removal, Voluntary Retirement or
                           Withdrawal of a General Partner; Transfer of
                           Interests
                               A. A General Partner may be removed in the manner
                           specified in Section 5.3A herein.
                               B. No General Partner may voluntarily withdraw or
                           retire from its position as a General  Partner of the
                           Fund unless another  General  Partner  (including any
                           Additional  or  Successor  General  Partner  admitted
                           pursuant  to  Section  6.2)  remains,  and unless (i)
                           counsel  for the  Fund is of the  opinion  that  such
                           voluntary  retirement or withdrawal from the Fund win
                           not  cause the Fund:  (a) to be  dissolved  under the
                           Act; (b) to be classified other than as a partnership
                           for federal income tax purposes;  or (c) to terminate
                           for  federal  income  tax  purposes;   and  (ii)  the
                           approval of the remaining General  Partner(s) and the
                           Consent of the Investors to such voluntary retirement
                           or withdrawal is obtained.
                               C. A General Partner who  voluntarily  retires or
                           withdraws  from the Fund in violation of this Section
                           6.1  shall be and  remain  liable to the Fund and the
                           Partners  for  damages  resulting  from  the  General
                           Partner's  breach  of this  Agreement,  and,  without
                           limitation  of  remedies,  the Fund may  offset  such
                           damages against the amounts  otherwise  distributable
                           to the retiring or withdrawing General Partner.
                               D. No  General  Partner  shall  have the right to
                           sell,  exchange,  or otherwise  dispose of all or any
                           portion of its Interest unless the proposed  assignee
                           or  transferee of all or a portion of the Interest of
                           such  General  Partner is admitted as a Successor  or
                           Additional  General  Partner to the Fund  pursuant to
                           the provisions of Section 6.2 prior to any such sale,
                           exchange or other disposition.
                               E. The  voluntary  retirement  or withdrawal of a
                           General Partner shall become  effective only upon (i)
                           receipt  by the  Fund  of  the  opinions  of  counsel
                           referred to in Section 6.1(B)(i); (ii) receipt by the
                           Fund  of the  approval  and  consent  referred  to in
                           Section  6.1B(ii);  and  (iii) the  amendment  of the
                           Fund's  Certificate  to reflect  such  withdrawal  or
                           retirement and its filing for recordation.

                           Section 6.2 Election and Admission of Successor or
                              Additional General Partners
                               A.  By the  Majority  Vote  of the  Investors,  a
                           Successor General Partner may be elected to replace a
                           General  Partner  removed in the manner  described in
                           Section 5.3A herein.
                               B. Except as otherwise expressly provided herein,
                           no  Person  shall  be  admitted  as  a  Successor  or
                           Additional General Partner unless (i) counsel for the
                           Fund is of the  opinion  that the  admission  of such
                           Successor  or  Additional  General  Partner  will not
                           cause  the  Fund  to be  classified  other  than as a
                           partnership  for federal income tax purposes or cause
                           the  Fund  to  terminate   for  federal   income  tax
                           purposes;  (ii)  the  consent  of the  then  existing
                           General Partner(s) is obtained; and (iii) the Consent
                           of the Investors to such admission has been obtained.
                               C. The admission of such  Successor or Additional
                           General  Partner  shall  become  effective  upon  (i)
                           receipt  by the Fund of the  opinion  referred  to in
                           Section  6.2B(i);  (ii)  receipt  by the  Fund of the
                           consents  referred to in Section  6.2B(ii) and (iii),
                           if  applicable;   and  (iii)  the  amendment  of  the
                           Certificate to reflect the admission of the Successor
                           or  Additional  General  Partner  and its  filing for
                           recordation.

                           Section 6.3 Events of Withdrawal of a General Partner
                               A. In  addition to a  voluntary  withdrawal  of a
                           General  Partner  pursuant to Section 6.lE or Section
                           5. 1E, a General  Partner shall be deemed to withdraw
                           (i)  if  the  General  Partner  assigns  all  of  his
                           Interest in the Fund,  (ii) if the General Partner is
                           removed  pursuant to Section 5.3A; and (iii) upon the
                           following  acts or events:  (a) if a natural  person,
                           upon his death or the  entry by a court of  competent
                           jurisdiction that such General Partner is incompetent
                           to  manage  his  person  or  his  property;  (b) if a
                           corporation,   the   filing  of  a   certificate   of
                           dissolution,  or its equivalent,  for the corporation
                           or  the  revocation  of  its  charter;  and  (c) if a
                           partnership,  the  dissolution  and  commencement  of
                           winding up of the  General  Partner.  To the  maximum
                           extent permitted by the Act, no other act or
                                                                          A-26
<PAGE>
                    event  shall be deemed an event of  withdrawal  of a General
                    Partner or serve to  convert a General  Partner to a Limited
                    Partner.
                         B. In the event of the withdrawal of a General  Partner
                    who is not then  the sole  General  Partner,  the  remaining
                    General  Partner or General  Partners  may elect to continue
                    the Fund, and if such election is made,  shall promptly give
                    Notification  of such  event  and  shall  make and file such
                    amendments to the  Certificate as are required by the Act to
                    reflect  the fact that the  withdrawn  General  Partner  has
                    ceased to be a General Partner of the Fund.
                         C. In the event of the withdrawal of a General  Partner
                    and the remaining General Partner does not elect to continue
                    the Fund or in the event of the withdrawal of a sole General
                    Partner,  the withdrawn General Partner,  or its successors,
                    representatives,   heirs  or  assigns  shall  promptly  give
                    Notification  of such  withdrawal to all remaining  Partners
                    and  Investors.  In such event,  the Fund shall be dissolved
                    unless,  within 90 days after the  withdrawal of the General
                    Partner,  the  Investors,   by  the  Majority  Vote  of  the
                    Investors,  agree in writing to continue the business of the
                    Fund  and to the  appointment,  effective  as of the date of
                    withdrawal  of the  sole  General  Partner,  of one or  more
                    Additional  General  Partners.  If the  Investors  elect  to
                    reconstitute  the  Fund  and  agree  to  admit a  substitute
                    General  Partner,  the  relationship of the Investors and of
                    substitute  General Partner in the Fund shall be governed by
                    this Agreement.

                    Section 6.4 Liability of a Withdrawn General Partner
                         A. Any  General  Partner  who  withdraws  from the Fund
                    shall  be,  and  remain,  liable  for  all  obligations  and
                    liabilities  incurred by it as General Partner' prior to the
                    time such  withdrawal  becomes  effective.  In  addition,  a
                    General  Partner who  voluntarily  withdraws in violation of
                    this Agreement  shall be subject to the liability  described
                    in Section 6.l C.
                         B.  Upon the  withdrawal  of a  General  Partner,  such
                    General  Partner  shall  immediately  cease to be a  General
                    Partner,   and,  unless  a  Successor  General  Partner  has
                    acquired the  Interest of the  withdrawing  General  Partner
                    pursuant to Section 6.5,  the  withdrawn  General  Partner's
                    Interest shall be converted to a limited partner Interest of
                    a new class.  Such conversion shall not affect any rights or
                    liabilities of the withdrawn  General  Partner,  except that
                    such  General  Partner  shall no longer  participate  in the
                    management of the Fund.
     C. The  personal  representatives,  heirs,  successors  or  assigns  of any
General  Partner who with- draws from the Fund shall be, and remain,  liable for
all obligations and liabilities  incurred by the General Partner prior to, or in
connection with, its withdrawal.  Section 6.5 Valuation of Partnership  Interest
of General Partner Upon the voluntary or involuntary withdrawal of a
                    General Partner, the Fund or a Successor General Partner may
                    purchase the Fund Interest of the withdrawn  General Partner
                    at any  time  subsequent  to  withdrawal.  The  price of the
                    withdrawn General Partner's  Interest shall be determined by
                    two  (2)  independent   appraisers,   one  selected  by  the
                    withdrawn  General Partner and one selected by the remaining
                    General Partner, or if none is remaining,  by the Investors.
                    If the two  appraisers  are  unable to agree on the value of
                    the General Partner's Interest, they shall jointly appoint a
                    third  independent  appraiser whose  determination  shall be
                    final and  binding.  The Fund shall  then pay the  withdrawn
                    General  Partner  the  price of its  Interest  as a  General
                    Partner as so  determined.  The  expense  of the  appraisals
                    shall be borne equally by the terminated General Partner and
                    the Fund. If the withdrawal is involuntary, payment shall be
                    made by  delivery  of a  promissory  note  bearing  interest
                    payable semiannually at a floating rate of interest equal to
                    the  lowest  rate  permitted  under  the Code to  avoid  the
                    imputation  of  interest  income  to the  withdrawn  General
                    Partner,  payable in five  equal  annual  installments,  the
                    first  installment to be paid as soon as  practicable  after
                    the appraisal, and prepayable at any time. If the withdrawal
                    is  voluntary,  payment  shall  be  made  by  delivery  of a
                    promissory note bearing no interest,  with principal payable
                    only from distributions  which the withdrawn General Partner
                    would have  received  under this  Agreement  had the General
                    Partner not withdrawn.  Immediately upon receiving the note,
                    the withdrawn General Partner shall cease to be a Partner of
                    the Fund for all purposes, except that the withdrawn General
                    Partner shall continue to be
                                      A-27
<PAGE>
                           subject  to  Section  6.4   hereunder.   All  amounts
                           received   pursuant   to  this   Section   6.5  shall
                           constitute   complete  and  full  discharge  for  all
                           amounts  owing to the  withdrawn  General  Partner on
                           account of its  Interest  in the Fund.  Any  disputes
                           regarding  valuation  or  payment  pursuant  to  this
                           Section which are not resolved in a binding manner by
                           the  provisions  of this Section shall be resolved by
                           arbitration in accordance with the then current rules
                           of the American Arbitration Association.  The expense
                           of   arbitration   shall  be  borne  equally  by  the
                           terminated General Partner and the Fund.

                                   ARTICLE VII
                   ASSIGNMENT OF ASSIGNEE UNITS TO INVESTORS;
             TRANSFERABILITY OF LIMITED PARTNER INTERESTS AND UNITS

                      Section 7.1 Assignment of the Assignee Units to Investors
                                A. Pursuant to Sections 3.2 and 7.1C hereof, the
                           Assignor   Limited   Partner  shall  assign  to  each
                           Investor  Assignee Units equal to the number of Units
                           purchased by each Investor in the Offering.
                                B. Except as provided  in Section  7.1.A  above,
                           the  Assignor  Limited  Partner  may not  transfer  a
                           Limited   Partnership   Interest  without  the  prior
                           written consent of the General Partners. The Assignor
                           Limited  Partner  shall  have  no  right  to  vote or
                           consent  with  respect to Units owned by the Assignor
                           Limited  Partner  for its own  account and such Units
                           shall  not  be  considered   outstanding   Units  for
                           purposes of determining  whether the Majority Vote of
                           the  Investors  or the Consent of the  Investors  has
                           occurred.   The  Assignor  Limited  Partner,  by  the
                           execution of this Agreement,  acknowledges and agrees
                           that the Assignor  Limited  Partners  management will
                           have fiduciary responsibility for the safekeeping and
                           use of all funds and assets of the Investors, whether
                           or not in the Assignor Limited Partners  management's
                           possession or control, and that the management of the
                           Assignor  Limited Partner will not employ,  or permit
                           another to employ, such funds or assets in any manner
                           except for the exclusive benefit of the Investor. The
                           Assignor  Limited Partner agrees not to contract away
                           the  fiduciary  duty  owed  to the  Investors  by the
                           Assignor  Limited  Partner's   management  under  the
                           common law of agency.
                                C.  Except as set  forth in  Section  7.1G,  the
                           Assignor  Limited  Partner,  by the execution of this
                           Agreement,  irrevocably  transfers and assigns to the
                           Investors  all  of  the  Assignor  Limited  Partner's
                           rights and  interest in and to the  Assigned  Limited
                           Partnership  Interests,  as of the time that  payment
                           for such Assigned  Limited  Partnership  Interests is
                           received  by  the  Fund  and  such  Assigned  Limited
                           Partnership  Interests  are  credited to the Assignor
                           Limited Partner on the books and records of the Fund.
                           The rights and interest so  transferred  and assigned
                           shall include, without limitation, the following:
                                    (i) all rights to receive distributions of
                              uninvested Capital Contributions pursuant to Sec-
                                tions 3.2 and 3.3;
                                    (ii)   all    rights   to    receive    cash
                                    distributions  pursuant to Article IV; (iii)
                                    all  rights in  respect  to  allocations  of
                                    Profit and Loss pursuant to Article IV; (iv)
                                    all    other    rights   in    respect    of
                                    determinations     of    allocations     and
                                    distributions pursuant to
                                Article IV;
                                    (v) all rights to consent to the admission
                              of successor or additional General Partners pursu-
                                ant to Sections 6.1 and 6.2;  (vi) all rights to
                                    receive any proceeds of  liquidation  of the
                                    Fund  pursuant  to  Section  8.2;  (vii) all
                                    rights to inspect  books and  records and to
                                    receive  reports   pursuant  to  Article  X;
                                    (viii) all voting  rights,  rights to attend
                                    or call meetings and other such rights;  and
                                    (ix) all rights  which the Limited  Partners
                                    have,  or may have in the future,  under the
                                    Act.
     D. The General  Partners,  by the execution of this Agreement,  irrevocably
consent  to and  acknowledge  that (i) the  foregoing  transfer  and  assignment
pursuant to Section 7.1 by the Assignor
                                                                          A-28
<PAGE>
                   Limited  Partner to the  Investors  of the  Assignor  Limited
                   Partner's   rights  and  interest  in  the  Assigned  Limited
                   Partnership  Interests is  effective,  and (ii) the Investors
                   are intended to be and shall be third party  beneficiaries of
                   all rights and privileges of the Assignor  Limited Partner in
                   respect of the Assigned Limited  Partnership  Interests.  The
                   General Partners  covenant and agree that, in accordance with
                   the  foregoing  transfer  and  assignment,  all the  Assignor
                   Limited   Partner's  rights  and  privileges  in  respect  of
                   Assigned  Limited  Partnership  Interests may be exercised by
                   the Investors including,  without limitation,  those cited in
                   Section 7.l.
                        E.  In  accordance  with  the  transfer  and  assignment
                   described  in  Section  7.1,  Investors  shall  have the same
                   rights that the Limited  Partners  have under this  Agreement
                   and under the Act.
                        F. The General  Partners shall amend the  Certificate to
                   reflect the  crediting of the Assignor  Limited  Partner with
                   the  Capital  Contributions  made by  Investors  on a monthly
                   basis or at such other  intervals  as may be  required by the
                   Act.
                        G.   Notwithstanding  the  assignment  of  the  Assigned
                   Limited  Partnership  Interests  referred to in this  Section
                   7.1, the Assignor Limited Partner shall retain legal title to
                   and be and remain a Limited Partner of the Fund.

                   Section 7.2 Transferability of Units
                        A. Transfers or assignments of Units are subject to the
                    consent of the General Partners.
                        B. The General Partners shall consent to a transfer of a
                    Unit except the General Partners shall not consent if one or
                    more of the following transfer restrictions applies:
                            (i) No sale or  exchange  of any Units shall be made
                        if the Units sought to be sold or exchanged,  when added
                        to the total of all other Units sold or exchanged within
                        a period of 12 consecutive months prior thereto,  would,
                        in the  opinion of counsel  for the Fund,  result in the
                        Fund  being  considered  to have  terminated  within the
                        meaning of Section 708 of the Code. The General Partners
                        shall give  Notification  to all  Investors in the event
                        that sales or  exchanges  should be  suspended  for this
                        reason.  All deferred  sales or exchanges  shall be made
                        (in chronological order to the extent practicable) as of
                        the first day of the fiscal year beginning after the end
                        of any such 12-month  period,  subject to the provisions
                        of this Article VII.
                            (ii) No transfer or  assignment of any Unit shall be
                        made if a counsel  for the Fund is of the  opinion  that
                        the  particular  transfer  or  assignment  would  be  in
                        violation  of  any  federal  or  state  securities  laws
                        (including   any   investment   suitability   standards)
                        applicable  to the  Fund or would  cause  the Fund to be
                        classified  other  than  as a  partnership  for  federal
                        income tax purposes.
                            (iii) No transfer or assignment of any Unit shall be
                        made if, in the  opinion of  counsel  to the Fund,  such
                        transfer  would  cause  the  Fund  to  be  treated  as a
                        "publicly  traded  partnership"  under Sections 7704 and
                        469(k) of the Code.
                            (iv) No  transfer  or  assignment  of Units shall be
                        made after which any transferor or transferee would hold
                        (a) less than 200 Units,  unless such  transferor  would
                        own  zero  Units or (b) a number  of  Units  not  evenly
                        divisible by four.
                            (v) No transfer or  assignment  of any Unit shall be
                        made if it would  result in the assets of the Fund being
                        treated   as   "plan   assets"   or   the   transactions
                        contemplated  hereunder  to be  prohibited  transactions
                        under ERISA or the Code.
                            (vi) No  transfer or  assignment  of a Unit shall be
                        made to a  foreign  person  under the Code or a minor or
                        incompetent (unless such transfer or assignment shall be
                        made to a legal guardian on such person's behalf).
                            (vii) No  transfer  or  assignment  shall be made if
                        such  transfer or  assignment  would  result in the Fund
                        being  disqualified  to  participate  in any  government
                        program  involving  the  business  of the Fund or in the
                        opinion  of  the  General   Partners   would   otherwise
                        adversely  impact upon the business or operations of the
                        Fund.
                                      A-29
<PAGE>
                              C. In order to  record  a trade on its  books  and
                           records,  the  Fund  may  require  such  evidence  of
                           transfer  or   assignment   and   authority   of  the
                           transferor   or   assignor    (including    signature
                           guarantees), an opinion of counsel to the effect that
                           there  has  been no  violation  of  federal  or state
                           securities   laws  in  the  assignment  or  transfer,
                           evidence of the transferee's  suitability under state
                           securities  laws,  and  the  written  acceptance  and
                           adoption by the  transferee of the provisions of this
                           Agreement, as the General Partners may determine. The
                           Administrative  General Partner may charge a transfer
                           fee (not to  exceed  $100)  sufficient  to cover  all
                           reasonable expenses connected with such transfer.
                               D. In no event shall an Investor be permitted to
                           transfer a fraction of a Unit.

                           Section 7.3  Death,  Bankruptcy  or  Adjudication  of
                               Incompetence  of an Investor or a Limited Partner
                               Upon  the  death  of  an  Investor  or a  Limited
                               Partner, his executor, administrator, or trustee,
                               or, if
                           he  is  adjudicated   incompetent   or  insane,   his
                           committee,   guardian,  or  conservator,  or,  if  he
                           becomes  bankrupt,  the  trustee or  receiver  of his
                           estate, shall have all the rights of an Investor or a
                           Limited  Partner  for  the  purpose  of  settling  or
                           managing his estate and shall have whatever power the
                           deceased or incompetent  Investor or Limited  Partner
                           possessed  to assign  all or any part of his Units or
                           Interest.  The death,  dissolution,  adjudication  of
                           incompetence,  or  bankruptcy  of  an  Investor  or a
                           Limited Partner shall not dissolve the Fund.

                           Section 7.4 Effective Date
                               The Fund shall recognize the transferee of a Unit
                           as an Investor on the Fund's books and records on the
                           first  business day of the next calendar  month after
                           the month in which the Fund  receives  all  necessary
                           documentation  and  consents  required  to effect the
                           transfer of his Units.

                           Section 7.5 Substitute Limited Partners
                               Any  Investor  may elect to  become a  Substitute
                           Limited  Partner  upon (i) signing a  counterpart  of
                           this   Agreement   and  any   other   instrument   or
                           instruments  deemed  necessary  by General  Partners,
                           including a Power of Attorney in favor of the General
                           Partners as described in Section 12.l.A  hereof,  and
                           (ii)  paying a fee  equal  to the  actual  costs  and
                           expenses  incurred  by  the  Administrative   General
                           Partner  for  legal  and  administrative   costs  and
                           recording   fees.   Investors  who  elect  to  become
                           Substitute  Limited Partners will receive one Limited
                           Partnership  Interest  for each Unit they convert and
                           will  not  be  able  to  re-exchange   their  Limited
                           Partnership  Interests for Units. The Capital Account
                           of the former  Investor  attributable  to transferred
                           Units shall be credited to the Capital Account of the
                           Substitute  Limited Partner.  The Fund's  Certificate
                           will be  amended no less  often  than  quarterly,  if
                           required   by   applicable   law,   to  reflect   the
                           Substitution of Limited Partners.

                           Section 7.6 Retirement or Withdrawal of an Investor

                               A.  No   Investor   shall   have  the   right  to
                           voluntarily  retire or withdraw  from the Fund unless
                           the General  Partners  shall have  consented  to such
                           voluntary  retirement  or  withdrawal by an Investor.
                           Upon the retirement or withdrawal of an Investor: (i)
                           the Interest of such retiring or withdrawing Investor
                           shall  thereafter  belong  to  the  Fund;  (ii)  such
                           retiring  or   withdrawing   Investor  shall  not  be
                           entitled to receive distributions with respect to any
                           periods   after  the  time  of  such   retirement  of
                           withdrawal;  and (iii) such  retiring or  withdrawing
                           Investor  shall not be entitled to receive any amount
                           for the fair value of his Units as of the date of his
                           retirement or withdrawal,  other than as agreed to by
                           the General  Partners and the  withdrawing  Investor.
                           The  General   Partners  shall  not  consent  to  the
                           voluntary  retirement or withdrawal of an Investor if
                           the General Partners receive an opinion of counsel to
                           the Fund that such  retirement  or  withdrawal  would
                           cause  the  Fund  to be  classified  other  than as a
                           partnership for federal income tax purposes, or cause
                           the  Fund  to  terminate   for  federal   income  tax
                           purposes.
                               B. At any time after the Termination  Date of the
                           Offering,  the Fund may, in its sole  discretion,  in
                           response  to the request of an  Investor,  repurchase
                           any or  all  of  the  Units  of  such  Investor  upon
                           mutually   agreeable   terms,   provided   that  such
                           repurchase does not materially  impair the capital or
                           operation   of  the  Fund.   The   determination   to
                           repurchase  Units will be made in the sole discretion
                           of
                                                                            A-30
<PAGE>
                   the General  Partners.  The determination of the value of the
                   repurchased  Units will be based upon,  among other  factors,
                   the current fair market value of the  Facilities and the Fund
                   Property, less all Fund debts and obligations.  The Fund will
                   not  repurchase  Units prior to the  Termination  Date of the
                   Offering  and is not  obligated  to  repurchase  Units at any
                   time.  Units  acquired  by the  General  Partners  and  their
                   Affiliates  or by the  Assignor  Limited  Partner will not be
                   eligible for repurchase by the Fund.  Units  purchased by the
                   Fund during any month shall be deemed  canceled  effective as
                   of the first day of the month following the effective date of
                   such purchase.

                                  ARTICLE VIII
              DISSOLUTION, LIQUIDATION AND TERMINATION OF THE FUND

                   Section 8.1 Events Causing Dissolution
                       A. The Fund shall dissolve and its affairs shall be wound
                     up upon the first to occur of the following events:
                            (i) the expiration of its term;
                            (ii) the withdrawal of a General Partner, unless the
                     Fund is continued pursuant to Sections 6.3B or 6.3C;
                            (iii)  the  Sale of all or  substantially  all  Fund
                       Property  (excepting (a) a disposition  thereof which, in
                       the opinion of counsel to the Fund,  qualifies,  in whole
                       or in part,  under  Section  1031 or Section  1033 of the
                       Code or (b) a Sale in which  the Fund  receives  Purchase
                       Money  Financing,  in which case the Fund shall  dissolve
                       upon receipt of the final payment thereunder);
                            (iv) the election by the General Partners, with the
                       Consent of the Investors, to dissolve the Fund;
                            (v) by the Majority Vote of the  Investors  pursuant
                            to Section  5.3A to dissolve  the Fund;  or (vi) the
                            happening of any other event causing the dissolution
                            of the Fund under applicable
                       law.
                       B.  Dissolution of the Fund shall be effective on the day
                   on which the event occurs giving rise to the  dissolution.  A
                   certificate of cancellation shall be filed under the Act upon
                   the  dissolution  and the  commencement  of winding up of the
                   Fund;  provided,  however,  that the Fund shall not terminate
                   until the Fund Property has been  distributed  as provided in
                   Section 8.2.  Notwithstanding  the  dissolution  of the Fund,
                   prior to the  termination  of the Fund,  the  business of the
                   Fund and the affairs of the Partners, as such, shall continue
                   to be governed by this Agreement.

                   Section 8.2 Liquidation
                       A. As soon as  practical  after  the  dissolution  of the
                   Fund,  the  General  Partners,  or if  there  are no  General
                   Partners,  any  Limited  Partner or the  liquidating  trustee
                   under the Act, as the case may be, shall give Notification to
                   all the Limited Partners and Investors of such fact and shall
                   prepare  a plan as to  whether  and in what  manner  the Fund
                   Property  shall be  liquidated.  By the Majority  Vote of the
                   Investors, the assets of the Fund, subject to its liabilities
                   (and the  establishment of reserves,  if necessary,  for such
                   liabilities),  may be transferred to a successor Entity, upon
                   such terms and conditions as are then agreed upon.
                       B. Unless the  Investors  agree to transfer the assets of
                   the Fund,  subject to its liabilities,  to a successor Entity
                   pursuant to Section 8.2A,  upon  dissolution of the Fund, the
                   General  Partners,  any  Limited  Partner or the  liquidating
                   trustee  under the Act, as the case may be,  shall  liquidate
                   the Fund  Property,  and apply and  distribute  the  proceeds
                   thereof  in  accordance  with  Section  4.4.  A Partner or an
                   Affiliate  of a Partner  may  purchase  such  assets with the
                   Consent of the Investors.
                       C. Notwithstanding the provisions of Section 8.2B, in the
                   event the  General  Partners,  any  Limited  Partner,  or the
                   liquidating  trustee under the Act, as the case may be, shall
                   determine  that an immediate  sale of all or a portion of the
                   Fund Property would cause undue loss to the Partners and

                                      A-31
<PAGE>
                           Investors, the General Partners, any Limited Partner,
                           or the liquidating trustee under the Act, as the case
                           may be,  in order  to avoid  such  loss,  may,  after
                           having given  Notification  to all the  Investors and
                           Limited  Partners,  either defer  liquidation of, and
                           withhold from distribution for a reasonable time, any
                           assets of the Fund, or distribute  the assets in kind
                           to a liquidating  trust to be held for the benefit of
                           the Investors and Partners.

                           Section 8.3 Capital Contribution Upon Dissolution
                                Subject to the provisions of Section 5.9 of this
                           Agreement,  each  Investor  and  Partner  shall  look
                           solely   to  the   assets   of  the   Fund   for  all
                           distributions  with  respect  to  the  Fund  and  his
                           Capital Contribution and shall have no recourse (upon
                           dissolution  or  otherwise)  against  any  Partner or
                           Investor;    provided,   however,   that   upon   the
                           dissolution  and termination of the Fund, the General
                           Partners will make the Capital Contributions referred
                           to in Section 3.1. All amounts so  contributed by the
                           General  Partners shall be  distributed  first to the
                           Fund's creditors entitled thereto, and the balance to
                           the  Investors  and  Partners  in  proportion  to the
                           positive  balances in their  Capital  Accounts at the
                           time of dissolution and termination of the Fund.

                                   ARTICLE IX
             CERTAIN PAYMENTS TO THE GENERAL PARTNERS AND AFFILIATES

                           Section 9.1 Reimbursement of Certain Costs and
                         Expenses of the General Partners and Affiliates
                               A. Subject to the provisions of Article V hereof,
                         the Fund shall be permitted to reimburse the
                           General  Partners  for the actual cost to the General
                           Partners  or any of their  Affiliates  of the  Fund's
                           operating expenses. In determining the actual cost to
                           a  General  Partner  or  an  Affiliate  of a  General
                           Partner  of goods and  materials  and  administrative
                           services,  actual  cost  means the  actual  cost to a
                           General  Partner or an Affiliate of a General Partner
                           of goods  and  materials  used for or by the Fund and
                           obtained from entities not affiliated  with a General
                           Partner,  and actual cost of administrative  services
                           means  the  pro  rata  cost of  personnel  as if such
                           persons  were  employees  of the  Fund.  The cost for
                           administrative services to be reimbursed to a General
                           Partner or an Affiliate  shall be at the lower of the
                           General  Partner's or Affiliate's  actual cost or the
                           amount  the  Fund  would  be   required   to  pay  to
                           independent  parties  for  comparable  administrative
                           services in the same geographic location. The General
                           Partners shall use their best efforts to cause all of
                           the Fund's expenses to be billed directly to and paid
                           by the Fund to the extent practicable.
                               B. Subject to the  foregoing,  the Fund shall pay
                           all expenses (which expenses shall be billed directly
                           to the Fund) of the Fund  which may  include  but are
                           not limited to: (a) all costs of personnel (excluding
                           rent or depreciation,  utilities,  capital equipment,
                           and other  administrative  items)  employed  full- or
                           part-time by the Fund and involved in the business of
                           the   Fund   and   allocated   pro   rata  to   their
                           administrative  services  performed  on behalf of the
                           Fund,  including  Persons who may also be officers or
                           employees of the General Partners or their Affiliates
                           (other than  Controlling  Persons);  (b) all costs of
                           borrowed  money,  taxes and assessments on Facilities
                           and other taxes  applicable  to the Fund;  (c) legal,
                           audit,  accounting,  brokerage  and other  fees;  (d)
                           printing,  engraving  and  other  expenses  and taxes
                           incurred   in    connection    with   the   issuance,
                           distribution, transfer, registration and recording of
                           documents evidencing ownership of an Interest or Unit
                           or in connection  with the business of the Fund;  (e)
                           fees and expenses  paid to  independent  contractors,
                           mortgage  bankers,  brokers  and  servicers,  leasing
                           agents,  consultants,  on-site property  managers and
                           other  property  management   personnel  (other  than
                           Controlling Persons and other officers of the General
                           Partners or their  Affiliates),  real estate brokers,
                           insurance  brokers and other agents;  (f) expenses in
                           connection   with   the   disposition,   replacement,
                           alteration,   repair,   remodeling,    refurbishment,
                           leasing,  refinancing and operating of the Facilities
                           (including  the costs and  expenses of  foreclosures,
                           insurance premiums, real estate brokerage and leasing
                           commissions  and of maintenance of such  Facilities);
                           (g)  expenses  of  organizing,   revising,  amending,
                           converting,  modifying or  terminating  the Fund; and
                           (h) the cost of preparation and  dissemination of the
                           informational  material and documentation relating to
                           potential sale, or other disposition of Facilities or
                           in  connection  with  any  meetings  or  votes if the
                           Investors.
                                                                         A-32
<PAGE>
     C. Notwithstanding any other provision of this Agreement,  no reimbursement
shall be permitted  for services for which the General  Partners are entitled to
compensation by way of a separate fee.

                    Section 9.2 Fees and Other Payments
                          A.  The Fund shall cause the  following  payments  and
                              fees to be paid to the  General  Partners or their
                              Affiliates:  (i) to the Selling Agent, the Selling
                              Commissions   and   the  Due   Diligence   Expense
                              Reimbursement  Fee.  (ii)  to  the  Administrative
                              General  Partner,  the Offering  and  Organization
                              Expense Fee., (iii) to the Administrative  General
                              Partner,  the  Acquisition  Fees  and the  prepaid
                              terms and fees related to the  acquisition  of the
                              Facilities and paid by the Administrative  General
                              Partner.   (iv)  to  certain   Affiliates  of  the
                              Development
                          General Partner and the Administrative Part-
                          ner,  payments  pursuant to the  Partnership  Interest
                          Options, the Existing Partnership Interest Acquisition
                          Agreements and the  Development  Partnership  Interest
                          Acquisition Agreements.
                              (v) to the Nursing Center Manager on behalf of the
                          Operating  Partnerships,   payments  pursuant  to  the
                          Management Agreements,  provided that such payments do
                          not  exceed  the  lesser  of (a) the  fees  which  are
                          competitive  for similar types and quality of services
                          in the  geographic  area of the  Facility or (b) 6% of
                          the  gross  revenues  from the  Facility  to which the
                          Management   Agreement   relates.   Included  in  such
                          management fee shall be bookkeeping  services and fees
                          paid to any party.
                              (vi) to the  Administrative  General Partner,  the
                          Development General Partner or their Affiliates,  real
                          estate brokerage commissions, payable upon the Sale of
                          any Facility,  provided  that the General  Partners or
                          their Affiliates actually render real estate brokerage
                          services in connection with such Sale. Any commissions
                          paid to the General Partners and their Affiliates will
                          be limited to one-half of the competitive  real estate
                          commission  for like  properties  located  in the same
                          geographic area not to exceed 3% of the contract price
                          for the Sale of the Facility, and will be subordinated
                          to the payment to Investors of their Adjusted  Capital
                          Balance  plus the  unpaid  portion,  if any,  of their
                          Preferred  Return.  If more  than  one of the  General
                          Partners or their  Affiliates is involved in rendering
                          real  estate  brokerage  services  to  the  Fund,  the
                          commission will be divided  between them  commensurate
                          with actual services rendered.
                              (vii) to First  Meridian  Mortgage  Corporation  a
                          Mortgage  Placement  Fee equal to .5% of the financing
                          obtained to facilitate  the  acquisition  of Operating
                          Partnership Interests.
                              (viii) to the Administrative General Partner a fee
                          for  1988  equal  to  (i)  $12,500  if  the  Operating
                          Partnership   Interest   relating  to  Facility  I  is
                          acquired,  (ii) $25,000 if the  Operating  Partnership
                          Interests   relating  to   Facilities  I  and  II  are
                          acquired,  (iii) $37,500 if the Operating  Partnership
                          Interest  relating  to  Facilities  I,  II and III are
                          acquired or (iv) $50,000 if the Operating  Partnership
                          Interests  relating to all of the Existing  Facilities
                          are  acquired;  and  after  1988,  a fee  equal to the
                          greater  of  $75,000  per  year  or .5% of the  Fund's
                          annual  revenues for routine and recurring  accounting
                          and clerical  services,  communications,  services and
                          reports  to  Investors,   and  routine  and  recurring
                          reports made to regulatory  authorities.  B. The total
                          of the fees  owed to the  General  Partners  and their
                          Affiliates,  as set forth in  subsection  A. (i), (ii)
                          and (iii) above, shall in no event exceed 16.6% of the
                          Gross Proceeds of the Offering.

                                                                        A-33

<PAGE>

                                    ARTICLE X
                    BOOKS AND RECORDS; BANK ACCOUNTS; REPORTS

                          Section 10.1 Books and Records
                               A.    Unless    otherwise    directed    by   the
                          Administrative  General Partner, the books and records
                          of  the  Fund  shall  be  maintained  by  the  General
                          Partners at the Fund's principal place of business. In
                          all cases,  said books and records  shall be available
                          for  examination  and copying by any Limited  Partner,
                          Investor or his duly authorized  representatives,  for
                          any  purpose  related  to  the  Limited  Partner's  or
                          Investor's  interest as a Limited Partner or Investor,
                          at the expense of such Limited Partner or Investor, at
                          any and all reasonable  times.  The Fund shall keep at
                          its principal place of business,  without  limitation,
                          the  following  records:  true  and  full  information
                          regarding  the status of the  business  and  financial
                          condition  of  the  Fund;   -promptly  after  becoming
                          available,  a copy of the  Fund's  federal,  state and
                          local income tax returns for each year; a current list
                          of the names and last  known  business,  residence  or
                          mailing addresses of each Partner and Investor; a copy
                          of  this  Agreement  and  the   Certificate   and  all
                          amendments  thereto;  and other information  regarding
                          the affairs of the Fund as is just and reasonable. The
                          current  list of the  names and last  known  business,
                          residence  or mailing  addresses  of each  Partner and
                          Investor  shall be mailed to any Investor upon payment
                          of a reasonable charge for copy work.
                               B. The Fund shall  keep its books and  records in
                          accordance  with the accounting  methods  followed for
                          federal  income tax purposes,  which shall reflect all
                          Fund   transactions   and  shall  be  appropriate  and
                          adequate for the Fund's  business.  The Fund's taxable
                          year shall be a calendar year.

                          Section 10.2 Bank Accounts
                               A. The  General  Partners  shall  have  fiduciary
                          responsibility for the safekeeping and use of an funds
                          and  assets  of the  Fund,  whether  or  not in  their
                          immediate  possession or control. The General Partners
                          shall  not  employ,  or  permit  any  other  Person to
                          employ,  such  funds  in any  manner  except  for  the
                          benefit of the Fund.
                               B.  The  bank  accounts  of  the  Fund  shall  be
                          maintained in such banking institutions as the General
                          Partners shall  determine,  and  withdrawals  shall be
                          made only in the  regular  course of Fund  business on
                          the  signature  of a  General  Partner  or such  other
                          signature or  signatures  as the General  Partners may
                          determine.   All  deposits  and  other  funds  may  be
                          deposited in interest bearing or non-interest  bearing
                          accounts guaranteed by federal  authorities,  invested
                          in short-term  United  States  Government or municipal
                          obligations,  or deposited with a banking  institution
                          selected by the General Partners.

                          Section 10.3 Reports
                               A. No later  than 75 days  after  the end of each
                          calendar year, the General  Partners will furnish each
                          Person who was an Investor  or Limited  Partner at any
                          time during the fiscal  year with all tax  information
                          relating to the Fund's  performance  for the preceding
                          calendar  year that is required to be set forth in the
                          Investors  and  Limited  Partner's  federal  and state
                          income tax return.
                               B.  Within  60 days  after the end of each of the
                          first three fiscal quarters of each fiscal year of the
                          Fund, the General Partners will furnish to each Person
                          who was an  Investor  or  Limited  Partner at any time
                          during the fiscal quarter then ended, a report setting
                          forth  information with respect to the progress of the
                          Fund's business, which report shall include:
                                    (i) an unaudited  balance sheet of the Fund;
                                    (ii) an  unaudited  statement  of income for
                                    the quarter;  (iii) an  unaudited  cash flow
                                    statement for the quarter; (iv) an unaudited
                                    statement setting forth
                              the services rendered to, and fees received from,
                               the Fund by any Sponsor; and
                                    (v) other pertinent  information  concerning
                              the Fund and its activities during the quarter.

                                                                            A-34
<PAGE>
                          The various reports required  pursuant to this Section
                     10.3.B may be sent earlier than or  separately  from any of
                     the other reports required pursuant to this Section 10.3.B,
                     and the information  required to be contained in any of the
                     reports  required  pursuant to this  Section  10.3.B may be
                     contained in more than one report.
                          C. Within 120 days after the end of each fiscal  year,
                     the General  Partners will furnish an annual report to each
                     Person who was a Limited  Partner or an  Investor as of the
                     last  business  day of the  fiscal  year then  ended.  Such
                     annual report will include:
                              (i) a  balance  sheet as of the end of the  Fund's
                          fiscal year,  statements of income,  Partners'  equity
                          and  changes in  financial  position,  which  shall be
                          prepared  in  accordance   with   generally   accepted
                          accounting  principles and accompanied by an auditor's
                          report containing an opinion of the Accountants;
                              (ii) the breakdown of any Fund costs reimbursed to
                          a Sponsor and a statement  setting forth in detail the
                          services rendered to, and fees received from, the Fund
                          by any  Sponsor  as  verified  by a review of the time
                          records  of,  and  the  specific  nature  of the  work
                          performed by, individual employees,  the cost of whose
                          services were  reimbursed (and within the scope of the
                          annual   audit  by  the   Accountants   shall  be  the
                          obligation  to  verify  the  allocations  of the costs
                          reimbursed to a General Partner or Affiliate);
                              (iii) a cash flow statement; and
                              (iv) a report of the activities of the Fund during
                                         the fiscal year.
                          The annual  report shall also set forth  distributions
                     to the Investors for the period  covered  thereby and shall
                     separately  identify  distributions  from (a) Net Cash Flow
                     during the period,  (b) Net Cash Flow during a prior period
                     which had been held as  reserves,  (c) Net Proceeds of Sale
                     or Refinancing, and (d) Working Capital Reserves.
                          D. Within 45 days after the end of each fiscal quarter
                     in which a Sale or Refinancing occurs, the General Partners
                     shall  send to each  Person who was an  Investor  as of the
                     close of  business on the first  business  day of the month
                     that  includes  the  date  of  occurrence  of the  Sale  or
                     Refinancing,  a  report  as to the  nature  of the  Sale or
                     Refinancing  and as to the Profit or Loss  arising from the
                     Sale or Refinancing.
                          E. The General  Partners  will prepare and timely file
                     with appropriate  federal and state regulatory  authorities
                     all reports  required to be filed with such entities  under
                     then-applicable  laws, rules and regulations.  Such reports
                     shall be  prepared on the  accounting  or  reporting  basis
                     required  by such  regulatory  authorities.  Upon  request,
                     copies of such reports will be furnished to any Investor or
                     Limited Partner for any purpose  reasonably  related to the
                     Investor's or Limited Partner's  interest as an Investor or
                     a  Limited  Partner.  In  the  event  that  any  regulatory
                     authority  promulgates  rules or  amendments  thereto  that
                     would   permit  a  reduction   in  any  of  the   reporting
                     requirements  to  which  the  Fund is  subject  under  this
                     Agreement at the time of the execution hereof, the Fund may
                     cease to prepare  and file any such  reports in  accordance
                     with such rules or amendments.
                          F. The  Administrative  General Partner will maintain,
                     (i) for a period of at least  four (4)  years,  a record of
                     the  information  obtained to indicate that an Investor has
                     met the suitability  standards set forth in the Prospectus;
                     and (ii) for a period of at least five (5)  years,  records
                     of the appraisals made of the  Properties,  which appraisal
                     records  shall be available for  inspection  and copying by
                     any Investor or Limited Partner for any purpose  reasonably
                     related to the Investor's or Limited Partner's  interest as
                     an Investor or a Limited Partner.

                     Section 10.4 Federal Tax Elections
                          The  Fund,  in the  sole  discretion  of  the  General
                     Partners,  may make  elections  for federal tax purposes as
                     follows:
                              (i) In case of a transfer of a Unit,  the Fund, in
                          the  sole  discretion  of the  General  Partners,  may
                          timely  elect  pursuant to Section 754 of the Code (or
                          corresponding provisions of future law)

                                                                       A-35
<PAGE>
                                and pursuant to similar provisions of applicable
                                state or local  income  tax laws,  to adjust the
                                basis of the assets of the Fund.
                                    (ii)  The   General   Partners   may   elect
                                accelerated depreciation methods under the Code,
                                or may elect  straight-line  depreciation over a
                                period  as long as 40 years  if,  in their  sole
                                discretion,  the determination of the percentage
                                of tax-exempt Investors becomes too cumbersome.
                                    (iii)  All  other   elections   required  or
                                permitted  to be made by the Fund under the Code
                                shall be made by the  General  Partners  in such
                                manner as will, in their sole  opinion,  be most
                                advantageous to a Majority of the Investors. The
                                Fund   shall,   to  the  extent   permitted   by
                                applicable law and  regulations,  elect to treat
                                as an expense  for federal  income tax  purposes
                                all  amount's.  incurred  by it for real  estate
                                taxes,  interest and other charges which may, in
                                accordance with applicable law and  regulations,
                                be considered as expenses.

                                   ARTICLE XI
                              MEETINGS OF INVESTORS

                           Section I 1.1 Calling Meetings
                                Meetings of the Investors for any purpose may be
                           called by the General Partners and shall be called by
                           the  General  Partners  upon  receipt of a request in
                           writing  signed by Investors  having in the aggregate
                           more than 10% of the outstanding  Units. Upon receipt
                           of a written  request  stating the  purpose(s) of the
                           meeting,  the  General  Partners  shall  provide  all
                           Investors  within  IO  days  after  receipt  of  such
                           request with notice as described in Section 11.2. The
                           meeting shall be held at a time and place  convenient
                           to the Investors.

                           Section 11.2 Notice, Procedure
                                Notice  of any  meeting  shall be  given  either
                           personally  or by  certified  mail,  not less than 15
                           days nor  more  than 60 days  before  the date of the
                           meeting,  to  each  Investor  at his  record  mailing
                           address.  The notice  shall be in writing,  and shall
                           state the  place,  date,  hour,  and  purpose  of the
                           meeting,  and shall  indicate that it is being issued
                           at or by the  direction  of the Partners or Investors
                           calling the  meeting.  If a meeting is  adjourned  to
                           another time or place, and if any announcement of the
                           adjournment  of time or place is made at the meeting,
                           it  shall  not be  necessary  to give  notice  of the
                           adjourned meeting. The presence in person or by proxy
                           of the  holders  of more than 50% of the  outstanding
                           Units shall  constitute  a quorum at all  meetings of
                           the Investors; provided, however, that if there is no
                           quorum present,  holders of a majority in interest of
                           the Investors  present or represented may adjourn the
                           meeting  from  time to time  without  further  notice
                           until a quorum  is  obtained.  No notice of the time,
                           place or purpose of any meeting of Investors  need be
                           given to any  Investor  who  attends  in person or is
                           present by proxy  (except when an Investor  attends a
                           meeting for the express  purpose of  objecting at the
                           beginning  of the meeting to the  transaction  of any
                           business  on  the  ground  that  the  meeting  is not
                           lawfully  called  or  convened),  or to any  Investor
                           entitled  to notice who,  in a writing  executed  and
                           filed with the records of the meeting,  either before
                           or after the time of the  meeting,  waives the notice
                           requirement.

                           Section 11.3 Right to Vote
                                For the  purpose of  determining  the  Investors
                           entitled  to vote at any  meeting  of the  Fund,  the
                           General  Partner  or  the  Investors  requesting  the
                           meeting  may fix a date,  in  advance,  as the record
                           date for the  determination of Investors  entitled to
                           vote.  This  date  shall be not more than 50 days nor
                           less than 10 days before any meeting.

                           Section 11.4 Proxies, Rules
                                Each   Investor  may  authorize  any  person  or
                           persons  to act for him by  proxy in all  matters  in
                           which an Investor is entitled to participate, whether
                           by  waiving  notice  of any  meeting,  or  voting  or
                           participating  at a  meeting.  Every  proxy  must  be
                           signed by the  Investor or his  attorney-in-fact.  No
                           proxy  shall  be valid  after  the  expiration  of 11
                           months  from  the  date  thereof   unless   otherwise
                           provided
                                                                            A-36
<PAGE>
                     in  the  proxy.  Every  proxy  shall  be  revocable  at the
                     pleasure of the Investor  executing  it. At each meeting of
                     Investors the General  Partners shall appoint  officers and
                     adopt rules as they deem appropriate for the conduct of the
                     meeting.
                                   ARTICLE XII
                               GENERAL PROVISIONS

                     Section 12.1 Appointment of Administrative General Partner
                          as Attorney-in-Fact
                         A. Each Limited Partner and Investor  hereunder  hereby
                     irrevocably   appoints  and  empowers  the   Administrative
                     General  Partner  his  attorney-in-fact  to  consent  to or
                     ratify any act listed in Subsections  5.4A(i) through (xix)
                     of  this  Agreement  after  the  Consent  of the  Investors
                     thereto has been  obtained,  and to  execute,  acknowledge,
                     swear to and deliver all  agreements  and  instruments  and
                     file all documents requisite to carrying out the intentions
                     and purposes  contemplated  in this  Agreement,  including,
                     without  limitation,  the  execution  and  delivery of this
                     Agreement  and all  amendments  hereto,  the  filing of all
                     business certificates and necessary certificates of limited
                     partnership  and  amendments  thereto  from time to time in
                     accordance with all applicable laws and any certificates of
                     cancellation.  This  power  of  attorney  shall  be  deemed
                     coupled with an interest,  and shall not be affected by the
                     subsequent disability or incapacity of the principal.
                         B.  The   appointment  by  all  Limited   Partners  and
                     Investors  of  the   Administrative   General   Partner  as
                     attorney-in-fact shall be deemed to be a power coupled with
                     an interest and shall survive the assignment by any Limited
                     Partners or Investors of the whole or any part of his
                     Interests or Units in the Fund.
                         C. The power of attorney  granted by this  Section 12.1
                     shall be governed by the laws of the State of Delaware.

                     Section 12.2 Waiver of Partition
                         Each Partner and  Investor,  on behalf of himself,  his
                     successors,   representatives,  heirs  and  assigns  hereby
                     waives  any  right of  partition  or any  right to take any
                     other action which  otherwise might be available to him for
                     the purpose of severing his  relationship  with the Fund or
                     his  interest  in the  assets  held by the  Fund  from  the
                     interest of the other Partners or Investors.

                     Section 12.3 Notification
                         Any  Notification,  in order to be effective,  shall be
                     sent by registered or certified mail,  postage prepaid,  if
                     to a Partner or Investor,  to the address of the Partner or
                     Investor  set forth in the books and  records  of the Fund,
                     and if to the Fund, to the  principal  place of business of
                     the Fund set forth in Section 2.2 (unless Notification of a
                     change  of the  principal  office  is  given),  the date of
                     registry thereof or the date of the  certification  thereof
                     being deemed the date of receipt of Notification; provided,
                     however,  that any written  communication sent to a Partner
                     or  Investor or to the Fund and  actually  received by such
                     Person shall  constitute  Notification  for all purposes of
                     this Agreement.

                     Section 12.4 Word Meanings
                         In this  Agreement,  the  singular  shall  include  the
                     plural and the masculine  gender shall include the feminine
                     and neuter and vice  versa,  unless the  context  otherwise
                     requires.

                     Section 12.5 Binding Provisions
                         The covenants and agreements  contained herein shall be
                     binding  upon,  and inure to the  benefit  of,  the  heirs,
                     personal  representatives,  successors  and  assigns of the
                     respective parties hereto.

                     Section 12.6 Applicable Law
                         This  Agreement  shall be  construed  and  enforced  in
                     accordance with the laws of the State of Delaware,  without
                     regard to principles of conflict of laws.
                                                                       A-37
<PAGE>
                            Section 12.7 Counterparts
                                This  Agreement may be executed in any number of
                            counterparts, each of which shall be deemed to be an
                            original  as  against  any  party  whose   signature
                            appears  thereon,  and all of which  shall  together
                            constitute  one  and  the  same   instrument.   This
                            Agreement shall become binding upon the date hereof.
                            Each  Additional or Successor  General Partner shall
                            become a signatory  hereof by signing such number of
                            counterparts   of  this  Agreement  and  such  other
                            instrument or instruments, and in such manner as the
                            General Partners shall determine, and by so signing,
                            shall be deemed to have  adopted  and to have agreed
                            to be bound by all the provisions of this Agreement;
                            provided, however, that no such counterpart shall be
                            binding  until  it shall  have  been  signed  by the
                            Administrative General Partner.

                            Section 12.8 Separability of Provisions
                                Each  provision  of  this  Agreement   shall  be
                            considered  separable,  and if for  any  reason  any
                            provision or provisions  hereof are determined to be
                            invalid or contrary  to any  existing or future law,
                            such invalidly  shall not impair the operation of or
                            affect those  portions of this  Agreement  which are
                            valid.

                            Section 12.9 Paragraph Titles
                                Paragraph  titles are for  descriptive  purposes
                            only and shall not  control or alter the  meaning of
                            this Agreement as set forth in the text.

                            Section 12.10 Entire Agreement
                                This  Agreement  and the exhibits and  documents
                            referred   to   herein    constitute    the   entire
                            understanding and agreement among the parties hereto
                            with  respect  to the  subject  matter  hereof,  and
                            supersede all prior and  contemporaneous  agreements
                            and   understandings,   inducements  or  conditions,
                            express  or  implied,  oral or  written,  except  as
                            herein contained. This Agreement may not be modified
                            or amended other than by an agreement in writing.

                            Section 12.11 Amendments
                                A.  In  addition  to  the  amendments  otherwise
                            authorized  herein,  amendments  may be made to this
                            Agreement from time to time by the General  Partners
                            with  the  Consent  of  the   Investors;   provided,
                            however, that without the consent of the Partners or
                            Investors to be adversely affected by the amendment,
                            this  Agreement  may  not  be  amended  so as to (i)
                            convert  an  Investor's   interest  into  a  General
                            Partner's   interest;   (ii)   modify  the   limited
                            liability of an  Investor;  (iii) alter the interest
                            of a Partner or Investor in Net Cash Flow, Profit or
                            Loss, or Net Proceeds of Sale or  Refinancing;  (iv)
                            increase  the  amount of the  Capital  Contributions
                            required to be paid by the Investors;  or (v) extend
                            the  termination  date  specified  in  Section  2.4,
                            except as provided in Section 12.11B.
                                B.  In  addition  to  the  amendments  otherwise
                            authorized  herein,  amendments  may be made to this
                            Agreement from time to time by the General Partners,
                            without the consent of any of the Investors,  (i) to
                            add to the  duties  or  obligations  of the  General
                            Partners or surrender  any right or power granted to
                            the General Partners herein,  for the benefit of the
                            Investors; (ii) to cure any ambiguity, to correct or
                            supplement   any  provision   herein  which  may  be
                            inconsistent  with any other provision herein, or to
                            make any other provisions with respect to matters or
                            questions  arising under this  Agreement  which will
                            not be  inconsistent  with  the  provisions  of this
                            Agreement;  (iii) to delete or add any  provision of
                            this  Agreement  required  to be deleted or added by
                            the Staff of the Securities and Exchange  Commission
                            or other  federal  agency  or by a state  securities
                            commissioner  or similar  official and deemed by the
                            commission,  agency, commissioner, or official to be
                            for the benefit or protection of the Investors; (iv)
                            to take any actions necessary to cause the assets of
                            the  Fund to come  within  the  exclusions  from the
                            definition  of "plan  assets"  contained  in Section
                            2550.40lb-1  of  Title  29 of the  Code  of  Federal
                            Regulations;  and (v) to give  effect to any  action
                            permitted   pursuant  to  Section   5.2;   provided,
                            however, that no amendment shall be adopted pursuant
                            to this  Section  12.2.B  unless its adoption (1) is
                            for the benefit of or not adverse to the,  interests
                            of the  Investors;  (2) is  consistent  with Section
                            5.2;
                                      A-38
<PAGE>
                     (3) does not  affect the  distribution  of Net Cash Flow or
                     Net Proceeds of Sale or  Refinancing  or the  allocation of
                     Profit  or Loss  among  the  Investors  as a class  and the
                     General  Partners as a class,  except as provided in clause
                     (y) below; and (4) does not affect the limited liability of
                     the  Investors  or the status of the Fund as a  partnership
                     for  federal  income  tax  purposes.  In  addition  to  the
                     amendments otherwise  authorized herein,  amendments may be
                     made to this  Agreement (x) prior to or in connection  with
                     the  initial  closing of the sale of Units  pursuant to the
                     Offering,  so long as  purchasers  are given  notice of the
                     amendment prior to the closing, and (y) to amend provisions
                     of Article IV of this Agreement relating to the allocations
                     of Profit or Loss and to  distributions of Net Cash Flow or
                     Net Proceeds of Sale or Refinancing  among the Partners and
                     Investors  if the Fund is advised at any time by the Fund's
                     Accountants  and counsel that the  allocations  provided in
                     Article IV of this  Agreement  are unlikely to be respected
                     for federal income tax purposes.  The General  Partners are
                     empowered  to  amend  the   distribution   and   allocation
                     provisions  of Article IV pursuant to Section  12.11B(y) to
                     the minimum extent  necessary in accordance with the advice
                     of the Fund's Accountants and counsel to effect the plan of
                     distribution  of Net Cash Flow and Net  Proceeds of Sale or
                     Refinancing,  and, consistent therewith, the allocations of
                     Profit and Loss provided in this Agreement. New allocations
                     made by the General Partners in reliance upon the advice of
                     the Fund's  Accountants  and counsel  shall be deemed to be
                     made  pursuant to the  fiduciary  obligation of the General
                     Partners  to the  Fund and the  Investors,  and no such new
                     allocations shall give rise to any claim or cause of action
                     by any Investor. This Section 12.11 shall be subject to the
                     provisions of Section 5.9 of this Agreement.
                          C. If this  Agreement is amended as a result of adding
                     or   substituting  a  Limited  Partner  or  increasing  the
                     investment of a Limited  Partner,  the  amendment  shall be
                     signed  by the  General  Partners  and by the  Person to be
                     substituted or added, or the Limited Partner increasing his
                     investment in the Fund,  and, if a Limited Partner is to be
                     substituted,  by the  assigning  Limited  Partner.  If this
                     Agreement  is  amended  to reflect  the  designation  of an
                     additional  General Partner,  the amendment shall be signed
                     by the other General Partner or General Partners and by the
                     additional General Partner. If this Agreement is amended to
                     reflect  the  withdrawal  of a  General  Partner  when  the
                     business  of the Fund is  being  continued,  the  amendment
                     shall be signed by the  withdrawing  General Partner and by
                     the  remaining  or  successor  General  Partner  or General
                     Partners.
                          D. In making any  amendments,  there shall be prepared
                     and filed  for  recordation  by the  General  Partners  all
                     documents  and  certificates  required to be  prepared  and
                     filed  under  the  Act and  under  the  laws  of the  other
                     jurisdictions  under  the  laws of  which  the Fund is then
                     formed or qualified.
                          IN WITNESS  WHEREOF,  the parties hereto have executed
                     this Agreement as of the date first above written.

                                                   GENERAL PARTNERS:

                     ATTEST:                 MERIDIAN HEALTHCARE
                                INVESTMENTS, INC.
                                             (the Development General Partner)

                                             By:                        (SEAL)


                     ATTEST:                BROWN HEALTHCARE, INC.
                                            (the Administrative General Partner)

                                            By:                         (SEAL)


                                      A-39
<PAGE>
                         SUBORDINATED LIMITED PARTNERS:

                  ATTEST:                     MERIDIAN HEALTHCARE
                                INVESTMENTS, INC.


                                              By:                       (SEAL)

                                              REALTY ASSOCIATES 1988 LIMITED
                                   PARTNERSHIP

                                              By: RESIDUAL INVESTMENT
                             ASSOCIATES, A MARYLAND
                              LIMITED PARTNERSHIP,
                                              General Partner

                  ATTEST:                     By: A.B. RESIDUAL, INC.,
                                              General Partner


                                              By:                       (SEAL)


                            ASSIGNOR LIMITED PARTNER:

                  ATTEST:                     BROWN HEALTHCARE HOLDING
                                    CO., INC.


                                              By:                       (SEAL)






                                                     A-40