Exhibit 10.10


 




 





 


FIRST AMENDED AND RESTATED


 


AGREEMENT OF LIMITED PARTNERSHIP


 


OF


 


AFFORDABLE RESIDENTIAL COMMUNITIES LP


 


 


a Delaware limited partnership


 












 


THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED

UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”),

OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD,

TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH

REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP

AN OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM

AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO THE EFFECT

THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE

EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER

APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.


 


 


Amended and Restated as of February 11, 2004


 




 





 

















 


TABLE OF CONTENTS


 


	
  ARTICLE I

  DEFINED TERMS

  	
   

  
	
   

  	
   

  
	
  ARTICLE II

  ORGANIZATIONAL MATTERS

  	
   

  
	
   

  	
   

  
	
  Section 2.1  Organization

  	
   

  
	
  Section 2.2  Name

  	
   

  
	
  Section 2.3  Registered Office and Agent; Principal
  Office

  	
   

  
	
  Section 2.4  Power of Attorney

  	
   

  
	
  Section 2.5  Term

  	
   

  
	
   

  	
   

  
	
  ARTICLE III

  PURPOSE

  	
   

  
	
   

  	
   

  
	
  Section 3.1  Purpose and Business

  	
   

  
	
  Section 3.2  Powers.

  	
   

  
	
  Section 3.3  Partnership Only for Partnership Purposes

  	
   

  
	
  Section 3.4  Representations and Warranties by the
  Parties

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV

  CAPITAL CONTRIBUTIONS

  	
   

  
	
   

  	
   

  
	
  Section 4.1  Capital Contributions of the Partners

  	
   

  
	
  Section 4.2  Issuances of Additional Partnership
  Interests

  	
   

  
	
  Section 4.3  Additional Funds and Capital Contributions

  	
   

  
	
  Section 4.4  Stock Option Plan

  	
   

  
	
  Section 4.5  No Interest; No Return

  	
   

  
	
  Section 4.6  Conversion or Redemption of Preferred
  Shares

  	
   

  
	
  Section 4.7  Conversion or Redemption of Junior Shares

  	
   

  
	
  Section 4.8  Other Contribution Provisions.

  	
   

  
	
  Section 4.9  Not Publicly Traded.

  	
   

  
	
   

  	
   

  
	
  ARTICLE V

  DISTRIBUTIONS

  	
   

  
	
   

  	
   

  
	
  Section 5.1  Requirement and Characterization of
  Distributions

  	
   

  
	
  Section 5.2  Distributions In-Kind

  	
   

  
	
  Section 5.3  Amounts Withheld

  	
   

  
	
  Section 5.4  Distributions Upon Liquidation

  	
   

  
	
  Section 5.5  Distributions to Reflect Issuance of
  Additional Partnership Units.

  	
   

  
	
  Section 5.6  Restricted Distributions

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI

  ALLOCATIONS

  	
   

  
	
   

  	
   

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

  	
   

  
	
  Section 6.2  General Allocations

  	
   

  



 


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  Section 6.3  Additional Allocation Provisions

  	
   

  
	
  Section 6.4  Tax Allocations.

  	
   

  
	
   

  	
   

  
	
  ARTICLE VII

  MANAGEMENT AND OPERATIONS OF BUSINESS

  	
   

  
	
   

  	
   

  
	
  Section 7.1  Management.

  	
   

  
	
  Section 7.2  Certificate of Limited Partnership

  	
   

  
	
  Section 7.3  Restrictions on General Partner’s
  Authority

  	
   

  
	
  Section 7.4
   Reimbursement of the General Partner

  	
   

  
	
  Section 7.5  Outside Activities of the General Partner

  	
   

  
	
  Section 7.6  Contracts with Affiliates

  	
   

  
	
  Section 7.7  Indemnification

  	
   

  
	
  Section 7.8  Liability of the General Partner

  	
   

  
	
  Section 7.9  Other Matters Concerning the General
  Partner

  	
   

  
	
  Section 7.10  Title to Partnership Assets

  	
   

  
	
  Section 7.11  Reliance by Third Parties

  	
   

  
	
   

  	
   

  
	
  ARTICLE VIII

  RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

  	
   

  
	
   

  	
   

  
	
  Section 8.1  Limitation of Liability

  	
   

  
	
  Section 8.2  Management of Business

  	
   

  
	
  Section 8.3  Outside Activities of Limited Partners

  	
   

  
	
  Section 8.4  Return of Capital

  	
   

  
	
  Section 8.5
  Adjustment Factor

  	
   

  
	
  Section 8.6  Redemption Rights of Qualifying Parties

  	
   

  
	
  Section 8.7  Partnership Right to Call Limited Partner
  Interests

  	
   

  
	
  Section 8.8  Special Provisions Applicable to
  Reorganization Common Units

  	
   

  
	
  Section 8.9  Special Provisions Applicable to Paired
  Common Units

  	
   

  
	
   

  	
   

  
	
  ARTICLE IX

  BOOKS, RECORDS, ACCOUNTING AND REPORTS

  	
   

  
	
   

  	
   

  
	
  Section 9.1  Records and Accounting

  	
   

  
	
  Section 9.2  Partnership Year

  	
   

  
	
  Section 9.3  Reports

  	
   

  
	
   

  	
   

  
	
  ARTICLE X

  TAX MATTERS

  	
   

  
	
   

  	
   

  
	
  Section 10.1  Preparation of Tax Returns

  	
   

  
	
  Section 10.2  Tax Elections

  	
   

  
	
  Section 10.3  Tax Matters Partner

  	
   

  
	
  Section 10.4  Withholding

  	
   

  
	
  Section 10.5  Organizational Expenses

  	
   

  



 


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  ARTICLE XI

  TRANSFERS AND WITHDRAWALS

  	
   

  
	
   

  	
   

  
	
  Section 11.1  Transfer

  	
   

  
	
  Section 11.2  Transfer of General Partner’s Partnership
  Interest

  	
   

  
	
  Section 11.3  Transfer of Limited Partners’ Partnership
  Interests

  	
   

  
	
  Section 11.4  Substituted Limited Partners

  	
   

  
	
  Section 11.5  Assignees

  	
   

  
	
  Section 11.6  General Provisions

  	
   

  
	
   

  	
   

  
	
  ARTICLE XII

  ADMISSION OF PARTNERS

  	
   

  
	
   

  	
   

  
	
  Section 12.1  Admission of Successor General Partner

  	
   

  
	
  Section 12.2  Admission of Additional Limited Partners

  	
   

  
	
  Section 12.3  Amendment of Agreement and Certificate of
  Limited Partnership

  	
   

  
	
  Section 12.4
  Limit on Number of Partners

  	
   

  
	
   

  	
   

  
	
  ARTICLE XIII

  DISSOLUTION, LIQUIDATION AND TERMINATION

  	
   

  
	
   

  	
   

  
	
  Section 13.1  Dissolution

  	
   

  
	
  Section 13.2  Winding Up

  	
   

  
	
  Section 13.3  Deemed Distribution and Recontribution

  	
   

  
	
  Section 13.4  Rights of Limited Partners

  	
   

  
	
  Section 13.5  Notice of Dissolution

  	
   

  
	
  Section 13.6  Cancellation of Certificate of Limited
  Partnership

  	
   

  
	
  Section 13.7  Reasonable Time for Winding-Up

  	
   

  
	
   

  	
   

  
	
  ARTICLE XIV

  PROCEDURES FOR ACTIONS AND CONSENTS

  OF PARTNERS; AMENDMENTS; MEETINGS

  	
   

  
	
   

  	
   

  
	
  Section 14.1  Procedures for Actions and Consents of
  Partners

  	
   

  
	
  Section 14.2  Amendments

  	
   

  
	
  Section 14.3  Meetings of the Partners

  	
   

  
	
   

  	
   

  
	
  ARTICLE XV

  GENERAL PROVISIONS

  	
   

  
	
   

  	
   

  
	
  Section 15.1  Addresses and Notice

  	
   

  
	
  Section 15.2  Titles and Captions

  	
   

  
	
  Section 15.3  Pronouns and Plurals

  	
   

  
	
  Section 15.4  Further Action

  	
   

  
	
  Section 15.5  Binding Effect

  	
   

  
	
  Section 15.6  Waiver

  	
   

  
	
  Section 15.7  Counterparts

  	
   

  
	
  Section 15.8  Applicable Law

  	
   

  
	
  Section 15.9  Entire Agreement

  	
   

  



 


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  Section 15.10  Invalidity of Provisions

  	
   

  
	
  Section 15.11  Limitation to Preserve REIT Status

  	
   

  
	
  Section 15.12  No Partition

  	
   

  
	
  Section 15.13  No Third-Party Rights Created Hereby

  	
   

  
	
  Section 15.14  No Rights as Stockholders

  	
   

  



 


	
  Exhibit A

  	
  PARTNERS AND PARTNERSHIP
  UNITS

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit
  B

  	
  EXAMPLES
  REGARDING ADJUSTMENT FACTOR

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
  NOTICE OF REDEMPTION

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit D

  	
  FORM OF UNIT
  CERTIFICATE

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit
  E

  	
  FORM
  OF PAIRED COMMON UNIT CERTIFICATE

  	
   

  



 


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FIRST AMENDED AND RESTATED AGREEMENT OF

LIMITED PARTNERSHIP OF AFFORDABLE RESIDENTIAL COMMUNITIES LP


 


THIS
FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF AFFORDABLE
RESIDENTIAL COMMUNITIES LP, dated as of February 11, 2004 is entered into
by and among Affordable Residential Communities Inc. (formerly known as ARC IV
REIT, Inc.), a Maryland corporation (the “General Partner”) and the
limited partners listed on Exhibit A hereto (each a “Limited Partner”).


 


WHEREAS,
Affordable Residential Communities 
L.L.C., a Delaware limited liability company (the “Initial Limited
Partner”) and the General Partner formed a general partnership (the “General
Partnership”) under the Delaware Revised Uniform Partnership Act pursuant
to an Agreement of Partnership of Affordable Residential Communities, IV, dated
as of September 30, 1998;


 


WHEREAS,
the Initial Limited Partner and the General Partner amended and restated the
Agreement of Partnership of Affordable Residential Communities, IV on
August 9, 2000;


 


WHEREAS,
in connection with the completion of the transactions contemplated by the
Reorganization Agreement (as defined herein), the Initial Limited Partner and
the General Partner converted the General Partnership into a limited
partnership organized under the Act (as defined herein) by filing a certificate
of conversion and a certificate of limited partnership with the Secretary of
State of the State of Delaware in accordance with Section 17-217 of the
Act on May 2, 2002;


 


WHEREAS,
the General Partner proposes to effect a public offering of its common stock
(the “IPO”) and to contribute the net proceeds thereof to the Partnership in
exchange for Partnership Common Units (as defined herein); and


 


WHEREAS,
the General Partner deems it necessary and appropriate in connection with the
IPO to amend and restate this Agreement as set forth herein;


 


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


 


ARTICLE I

DEFINED TERMS


 


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


 


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


 


“Actions”
has the meaning set forth in Section 7.7 hereof.


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(iii)  the
General Partner shall, by dividend or otherwise, distribute to all holders of
its REIT Shares evidences of its indebtedness or assets (including securities,
but excluding any dividend or distribution referred to in subsection (i)
above), which evidences of


 


2

















 


indebtedness
or assets relate to assets not received by the General Partner pursuant to a
pro rata distribution by the Partnership, then the Adjustment Factor shall be
adjusted to equal the amount determined by multiplying the Adjustment Factor in
effect immediately prior to the close of business on the date fixed for
determination of shareholders entitled to receive such distribution by a
fraction (i) the numerator of which shall be such Value of a REIT Share on the
date fixed for such determination and (ii) the denominator of which shall be
the Value of a REIT Share on the dates fixed for such determination less the
then fair market value (as determined by the General Partner, whose
determination shall be conclusive) of the portion of the evidences of
indebtedness or assets so distributed applicable to one REIT Share.


 


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


 


Notwithstanding
the foregoing, or any other provision to the contrary set forth in this
Agreement, no change to the Adjustment Factor shall be made as a result of the
0.519-for-1 reverse stock split of the REIT Shares effected by the General Partner
on January 23, 2004, in connection with the IPO, it being understood that
in lieu thereof the Partnership has effected a 0.519-for-1 reverse split of its
Partnership Common Units, effective as of January 23, 2004, such that each
Partnership Common Unit issued and outstanding as of January 23, 2004
thereafter shall constitute 0.519 of a Partnership Common Unit, and each
Limited Partner shall thereafter own and be the holder of a number of
Partnership Common Units equal to the product of (x) the number of Partnership
Common Units then owned by such Limited Partner by (y) 0.519, provided, however
, that no Limited Partner shall retain any right or interest in or to any
fraction of a whole Partnership Common Unit resulting from such reverse split,
and in lieu thereof, the Partnership shall pay to such Limited Partner in cash
an amount equal to the product of (a) such fraction and (b) the public offering
price per share of the REIT Shares in the IPO, as reflected on the cover of the
final prospectus with respect to the IPO. 
The General Partner has amended Exhibit A hereto to reflect the
number of Partnership Common Units held by each Partner after the reverse
split.


 


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


 


“Agreement”
means this First Amendment and Restated Agreement of Limited Partnership of
Affordable Residential Communities  LP,
as it may be amended, supplemented or restated from time to time.


 


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


 


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


 


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


 


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


 


3

















 


(i)                                     the sum, without duplication, of:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


B.                                     From each Partner’s Capital Account, there
shall be subtracted the amount of cash and the Gross Asset Value of any
property distributed to such Partner pursuant to any provision of this
Agreement, such Partner’s distributive share of Net Losses and any items in the
nature of expenses or losses that are specially allocated pursuant to
Section 6.3 hereof, and the principal amount of any liabilities of such
Partner assumed by the Partnership or that are secured by any property
contributed by such Partner to the Partnership.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


5

















 


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


 


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


 


“Charter”
means the Amended and Restated Articles of Incorporation of the General Partner
as filed with the State Department of Assessments and Taxation of Maryland, as
amended, supplemented or restated from time to time.


 


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


 


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


 


“Company
Employees” means the employees of the Partnership, the General Partner and
any of their subsidiaries.


 


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


 


“Consent
of the Limited Partners” means the Consent of a Majority in Interest of the
Limited Partners, which Consent shall be obtained prior to the taking of any
action for which it is required by this Agreement and, except as otherwise
provided in this Agreement, may be given or withheld by a Majority in Interest
of the Limited Partners.


 


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


 


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


 


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


 


“Debt”
means, as to any Person, as of any date of determination, (i) all indebtedness
of such Person for borrowed money or for the deferred purchase price of
property or services; (ii) all amounts owed by such Person to banks or other
Persons in respect of reimbursement obligations under letters of credit, surety
bonds and other similar instruments guaranteeing payment or other performance
of obligations by such Person; (iii) all indebtedness for


 


6

















 


borrowed money or for the deferred purchase price of property or
services secured by any lien on any property owned by such Person, to the
extent attributable to such Person’s interest in such property, even though
such Person has not assumed or become liable for the payment thereof; and (iv)
lease obligations of such Person that, in accordance with generally accepted
accounting principles, should be capitalized.


 


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


 


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


 


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


 


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


 


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


 


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


 


“Funding
Debt” means any Debt incurred by or on behalf of the General Partner for
the purpose, in whole or in part, of providing funds to the Partnership.


 


“General
Partner” means Affordable Residential Communities Inc. (formerly known as
ARC IV REIT, Inc.), a Maryland corporation, and its successors and assigns, as
the general partner of the Partnership in their capacities as general partner
of the Partnership.


 


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


 


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


 


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


 


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


 


7

















 


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


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Incapacity”
or “Incapacitated” means, (i) as to any Partner who is an individual,
death, total physical disability or entry by a court of competent jurisdiction
adjudicating such Partner incompetent to manage his or her person or his or her
estate; (ii) as to any Partner that is a corporation or limited liability
company, the filing of a certificate of dissolution, or its equivalent, or the
revocation of the corporation’s charter; (iii) as to any Partner that is a
partnership, the dissolution and commencement of winding up of the partnership;
(iv) as to any Partner that is an estate, the


 


8

















 


distribution by the fiduciary of the estate’s entire interest in the
Partnership; (v) as to any trustee of a trust that is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi)
as to any Partner, the bankruptcy of such Partner.  For purposes of this definition, bankruptcy of a Partner shall be
deemed to have occurred when (a) the Partner commences a voluntary proceeding
seeking liquidation, reorganization or other relief of or against such Partner
under any bankruptcy, insolvency or other similar law now or hereafter in
effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and
nonappealable order for relief under any bankruptcy, insolvency or similar law
now or hereafter in effect has been entered against the Partner, (c) the
Partner executes and delivers a general assignment for the benefit of the
Partner’s creditors, (d) the Partner files an answer or other pleading
admitting or failing to contest the material allegations of a petition filed
against the Partner in any proceeding of the nature described in clause (b)
above, (e) the Partner seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator for the Partner or for all or any substantial
part of the Partner’s properties, (f) any proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or other
similar law now or hereafter in effect has not been dismissed within one
hundred twenty (120) days after the commencement thereof, (g) the appointment
without the Partner’s consent or acquiescence of a trustee, receiver or
liquidator has not been vacated or stayed within ninety (90) days of such
appointment, or (h) an appointment referred to in clause (g) above is not
vacated within ninety (90) days after the expiration of any such stay.


 


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


 


“Initial
Limited Partner” has the meaning set forth in the recitals hereof.


 


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


 


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


 


“Junior
Share”  means a share of capital
stock of the General Partner now or hereafter authorized or reclassified that
has dividend rights, or rights upon liquidation, winding up and dissolution,
that are inferior or junior to the REIT Shares; provided, however,
that the Special Voting Shares shall not constitute Junior Shares for purposes
of this Agreement.


 


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


 


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


 


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


 


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


 


“LP
I” means Affordable Residential Communities, L.P., I, a Delaware limited
partnership.


 


9

















 


“LP
II” means Affordable Residential Communities, L.P., II, a Delaware limited
partnership.


 


“LP
III” means Affordable Residential Communities, L.P., III, a Delaware
limited partnership.


 


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


 


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


 


“Merger
Agreement” means the Agreement and Plan of Merger, dated as of
April 6, 2002, by and among the Partnership, the General Partner, LPI,
LPII and LPIII, as amended by Amendment No. 1 thereto, dated as of
April 30, 2002.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


10

















 


“New
Securities” means (i) any rights, options, warrants or convertible or
exchangeable securities having the right to subscribe for or purchase REIT
Shares or Preferred Shares, except that “New Securities” shall not mean
any  Preferred Shares, Junior Shares,
Special Voting Shares or grants under the Stock Option Plans, or (ii) any Debt
issued by the General Partner that provides any of the rights described in
clause (i).


 


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


 


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


 


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


 


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


 


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


 


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


 


“Outside
Director” shall mean a director of the General Partner who is not also an
officer or employee of the General Partner.


 


“Ownership
Limit” means the applicable restriction or restrictions on ownership of
shares of the General Partner imposed under the Charter.


 


“Paired
Common Unit” means any Partnership Common Unit that is issued and paired with
one or more Special Voting Shares (or fractions thereof) in accordance with the
Pairing Agreement.


 


“Pairing
Agreement” means the Pairing Agreement, dated as of May 2, 2002, by and
between the Partnership and the General Partner, as the same may be amended
from time to time.


 


“Partner”
means the General Partner or a Limited Partner, and “Partners” means the
General Partner and the Limited Partners.


 


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


 


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


 


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


 


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


 


11

















 


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


 


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


 


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


 


“Partnership
Merger” means the merger of each of LP I, LP II and LP III with and into a
subsidiary of the Partnership pursuant to and in accordance with the Merger
Agreement.


 


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


 


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


 


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


 


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


 


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


 


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


 


“Percentage
Interest” means, as to each Partner, its interest in the Partnership Units
as determined by dividing the Partnership Units owned by such Partner by the
total number of Partnership Units then outstanding.


 


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


 


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


 


12

















 


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


 


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


 


“Qualified
REIT Subsidiary” means a qualified REIT subsidiary of the General Partner
within the meaning of Code Section 856(i)(2).


 


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


 


“Qualifying
Party” means (a) a Limited Partner set forth in Schedule A
hereto, (b) an Additional Limited Partner, or (c) a Substituted Limited Partner
succeeding to all or part of the Limited Partner Interest of (i) a Limited Partner
set forth in Schedule A hereto, or (ii) an Additional Limited
Partner.


 


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


 


“Registration
Rights Agreement” means the Third Amended and Restated Registration Rights
Agreement, dated as of February 18, 2004, by and among the General Partner
and the other parties thereto, as the same may be amended from time to time.


 


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


 


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


 


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


 


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


 


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


 


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


 


“REIT
Requirements” has the meaning set forth in Section 5.1 hereof.


 


“REIT
Share” means a share of the General Partner’s Common Stock, par value $.01
per share.  Where relevant in this
Agreement, “REIT Shares” includes shares of the General Partner’s Common
Stock, par value $.01 per share, issued upon conversion of Preferred Shares or
Junior Shares.


 


“REIT
Shares Amount” means a number of REIT Shares equal to the product of (a)
the number of Tendered Units and (b) the Adjustment Factor in effect on the
Specified Redemption Date with respect to such Tendered Units; provided,
however, that, in the event that the General Partner issues to all holders
of REIT Shares as of a certain record date rights, options, warrants or
convertible or exchangeable securities entitling the General Partner’s
stockholders to subscribe for or purchase REIT Shares, or any other securities
or property (collectively, the “Rights”), with the record


 


13

















 


date for such Rights issuance falling within the period starting on the
date of the Notice of Redemption and ending on the day immediately preceding
the Specified Redemption Date, which Rights will not be distributed before the
relevant Specified Redemption Date, then the REIT Shares Amount shall also
include such Rights that a holder of that number of REIT Shares would be
entitled to receive, expressed, where relevant hereunder, in a number of REIT
Shares determined by the General Partner in good faith.


 


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


 


“Reorganization
Agreement” means the Amended and Restated Agreement and Plan of
Reorganization, dated as of April 6, 2002, by and among the General
Partner, the Initial Limited Partner and certain parties affiliated with them.


 


“Reorganization
Common Unit” means any Paired Common Unit issued by the Partnership to a
Limited Partner pursuant to the Partnership Merger.


 


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


 


“SEC”
means the Securities and Exchange Commission.


 


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


 


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


 


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


 


“Special
Voting Share” means a share of the special voting stock, par value $.01 per
share, of the General Partner.


 


“Specified
Redemption Date” means the later of (a) the tenth (10th) Business Day after
the receipt by the General Partner of a Notice of Redemption or (b) in the case
of a Declination followed by an Offering Funding, the Business Day next
following the date of the closing of the Offering Funding; provided, however,
that no Specified Redemption Date shall occur during the first Twelve Month
Period; provided, further, that the Specified Redemption Date, as
well as the closing of a Redemption, or an acquisition of Tendered Units by the
General Partner pursuant to Section 8.6.B hereof, on any Specified
Redemption Date, may be deferred, in the General Partner’s sole and absolute
discretion, for such time (but in any event not more than one hundred fifty
(150) days in the aggregate) as may reasonably be required to effect, as
applicable, (i) an Offering Funding or other necessary funding arrangements,
(ii) compliance with the Securities Act or other law (including, but not
limited to, (a) state “blue sky” or other securities laws and (b) the
expiration or termination of the applicable waiting period, if any, under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and (iii)
satisfaction or waiver of other commercially reasonable and customary closing conditions
and requirements for a transaction of such nature.


 


“Stock
Option Plan” means any stock option plan hereafter adopted by the
Partnership or the General Partner, including the General Partner’s 2003 equity
incentive plan.


 


14

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Twelve-Month
Period” means as to any Qualifying Party, a twelve-month period ending on
the day before the first (1st) anniversary of such Qualifying Party’s becoming
a Holder of Partnership Common Units or on the day before any subsequent
anniversary thereof; provided, however, that the General Partner
may, in its sole and absolute discretion, by written agreement with a
Qualifying Party, shorten or lengthen the first Twelve-Month Period to a period
that is shorter or longer than twelve (12) months with respect to a Qualifying
Party.


 


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


 


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


 


15

















 


transaction reporting system with respect to securities listed on the
principal national securities exchange on which such REIT Shares are listed or
admitted to trading or, if such REIT Shares are not listed or admitted to
trading on any national securities exchange, the last quoted price, or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System or, if such system is no longer in
use, the principal other automated quotation system that may then be in use or,
if such REIT Shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in such REIT Shares selected by the Board of Directors of the General
Partner or, in the event that no trading price is available for such REIT
Shares, the fair market value of the REIT Shares, as determined in good faith
by the Board of Directors of the General Partner.


 


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


 


ARTICLE II

ORGANIZATIONAL MATTERS


 


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


 


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


 


Section 2.3             Registered Office and Agent; Principal Office.  The
address of the registered office of the Partnership in the State of Delaware is
located at Corporation Service Company, 1013 Centre Road, Wilmington, Delaware
19805, and the registered agent for service of process on the Partnership in
the State of Delaware at such registered office is Corporation Service
Company.  The principal office of the
Partnership is located at  600 Grant
Street, Suite 900, Denver, Colorado 80203 or such other place as the General
Partner may from time to time designate by notice to the Limited Partners.  The Partnership may maintain offices at such
other place or places within or outside the State of Delaware as the General
Partner deems advisable.


 


Section 2.4             Power of Attorney.


 


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


 


(1)                                  execute, swear to, seal, acknowledge,
deliver, file and record in the appropriate public offices (a) all
certificates, documents and other instruments (including, without limitation,
this Agreement and the Certificate and all amendments, supplements or
restatements thereof) that the General Partner or the Liquidator deems
appropriate or necessary to form, qualify or


 


16

















 


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


 


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


 


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


 


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


 


Section 2.5             Term.  Pursuant to Section 17-217(d) of the
Act, the term of the Partnership commenced on September 30, 1998 and shall
continue until the Partnership is dissolved pursuant to the provisions of
Article 13 hereof or as otherwise provided by law.


 


17

















 


ARTICLE III

PURPOSE


 


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


 


Section 3.2             Powers.


 


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


 


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


 


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


 


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


 


Section 3.4             Representations
and Warranties by the Parties.


 


A.                                   Each Partner (including, without limitation,
each Additional Limited Partner or Substituted Limited Partner as a condition
to becoming an Additional Limited Partner or a Substituted Limited Partner,
respectively)  that is an individual
represents and warrants to each other Partner that (i) the consummation of the
transactions contemplated by this Agreement to be performed by such Partner
will not result in a breach or violation of, or a default under, any material
agreement by which such Partner or any of such Partner’s property is bound, or
any statute, regulation, order or other law to which such Partner is subject,
(ii) subject to the last sentence of this Section 3.4.A, such Partner is
neither a “foreign person” within the meaning of Code Section 1445(f) nor
a “foreign partner” within the meaning of Code Section 1446(e), (iii) such
Partner does not own, directly or indirectly, (a) nine and eight tenths percent
(9.8%) or more of the total combined voting power of all classes of stock
entitled to vote, or nine and eight tenths percent (9.8%) or more of the total
number of shares of all classes of stock, of any corporation that is a tenant
of either (I) the General Partner or any Qualified REIT Subsidiary, (II) the
Partnership or (III) any partnership, venture or limited liability


 


18

















 


company of which the General Partner, any Qualified REIT Subsidiary or
the Partnership is a member or (b) an interest of nine and eight tenths percent
(9.8%) or more in the assets or net profits of any tenant of either (I) the
General Partner or any Qualified REIT Subsidiary, (II) the Partnership or (III)
any partnership, venture, or limited liability company of which the General
Partner, any Qualified REIT Subsidiary or the Partnership is a member and (iv)
this Agreement is binding upon, and enforceable against, such Partner in
accordance with its terms. 
Notwithstanding anything contained herein to the contrary, in the event
that the representation contained in the foregoing clause (ii) would be
inaccurate if given by a Partner, such Partner (w) shall not be required to
make and shall not be deemed to have made such representation, if it delivers
to the General Partner in connection with or prior to its execution of this
Agreement written notice that it may not truthfully make such representation,
(x) hereby agrees that it is subject to, and hereby authorizes the General
Partner to withhold, all withholdings to which such a “foreign person” or
“foreign partner,” as applicable, is subject under the Code and (y) hereby
agrees to cooperate fully with the General Partner with respect to such withholdings,
including by effecting the timely completion and delivery to the General
Partner of all governmental forms required in connection therewith.


 


B.                                     Each Partner (including, without limitation,
each Additional Limited Partner or Substituted Limited Partner as a condition
to becoming an Additional Limited Partner or a Substituted Limited Partner,
respectively) that is not an individual represents and warrants to each other
Partner(s) that (i) all transactions contemplated by this Agreement to be performed
by it have been duly authorized by all necessary action, including, without
limitation, that of its general partner(s), committee(s), trustee(s),
beneficiaries, directors and/or stockholder(s), as the case may be, as
required, (ii) the consummation of such transactions shall not result in a
breach or violation of, or a default under, its partnership or operating
agreement, trust agreement, articles, charter or bylaws, as the case may be,
any material agreement by which such Partner or any of such Partner’s
properties or any of its partners, members, beneficiaries, trustees or
stockholders, as the case may be, is or are bound, or any statute, regulation,
order or other law to which such Partner or any of its partners, members,
trustees, beneficiaries or stockholders, as the case may be, is or are subject,
(iii) subject to the last sentence of this Section 3.4.B, such Partner is
neither a “foreign person” within the meaning of Code Section 1445(f) nor
a “foreign partner” within the meaning of Code Section 1446(e), (iv) such
Partner does not own, directly or indirectly, (a) nine and eight tenths percent
(9.8%) or more of the total combined voting power of all classes of stock
entitled to vote, or nine and eight tenths percent (9.8%) or more of the total
number of shares of all classes of stock, of any corporation that is a tenant
of either (I) the General Partner or any Qualified REIT Subsidiary, (II) the
Partnership or (III) any partnership, venture or limited liability company of
which the General Partner, any Qualified REIT Subsidiary or the Partnership is
a member or (b) an interest of nine and eight tenths percent (9.8%) or more in
the assets or net profits of any tenant of either (I) the General Partner or
any Qualified REIT Subsidiary, (II) the Partnership or (III) any partnership,
venture or limited liability company for which the General Partner, any
Qualified REIT Subsidiary or the Partnership is a member and (v) this Agreement
is binding upon, and enforceable against, such Partner in accordance with its
terms.  Notwithstanding anything
contained herein to the contrary, in the event that the representation
contained in the foregoing clause (iii) would be inaccurate if given by a
Partner, such Partner (w) shall not be required to make and shall not be deemed
to have made such representation, if it delivers to the General Partner in
connection with or prior to its execution of this Agreement written notice that
it may not truthfully make such representation, (x) hereby agrees that it is
subject to, and hereby authorizes the General Partner to withhold, all
withholdings to which such a “foreign person” or “foreign partner”, as
applicable, is subject under the Code and (y) hereby agrees to cooperate fully
with the General Partner with respect to such withholdings, including by
effecting the timely completion and delivery to the General Partner of all
internal revenue forms required in connection therewith.


 


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


 


19

















 


anticipate a need for the funds that it has invested in the Partnership
in what it understands to be a highly speculative and illiquid investment.


 


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


 


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


 


ARTICLE IV

CAPITAL CONTRIBUTIONS


 


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


 


Section 4.2             Issuances
of Additional Partnership Interests.


 


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


 


20

















 


B.            Issuances to the
General Partner.  No additional
Partnership Units shall be issued to the General Partner unless (i) the
additional Partnership Units are issued to all Partners in proportion to their
respective Percentage Interests with respect to the class of Partnership Units
so issued, (ii) (a) the additional Partnership Units are (x) Partnership Common
Units issued in connection with an issuance of REIT Shares, or (y) Partnership
Units (other than Partnership Common Units) issued in connection with an issuance
of Preferred Shares, New Securities or other interests in the General Partner
(other than REIT Shares), which Preferred Shares, New Securities or other
interests have designations, preferences and other rights, terms and provisions
that are substantially the same as the designations, preferences and other
rights, terms and provisions of the additional Partnership Units issued to the
General Partner, and (b) the General Partner contributes or otherwise causes to
be transferred to the Partnership the cash proceeds or other consideration
received in connection with the issuance of such REIT Shares, Preferred Shares,
New Securities or other interests in the General Partner, (iii) the additional
Partnership Units are issued upon the conversion, redemption or exchange of
Debt, Partnership Units or other securities issued by the Partnership, or (iv)
the additional Partnership Units are issued pursuant to Section 4.6 or Section
4.7.   In the event that the Partnership
issues additional Partnership Units pursuant to this Section 4.2B, the
General Partner shall make such revisions to this Agreement (including but not
limited to the revisions described in Section 6.2.B and Section 8.6)
as it determines are necessary to reflect the issuance of such additional
Partnership Units.


 


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


 


Section 4.3             Additional
Funds and Capital Contributions.


 


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


 


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


 


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


 


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


 


21

















 


such
Debt would be deemed to occur by virtue of the Transfer by any Limited Partner
of any Partnership Interest, or (b) such Debt is recourse to any Partner
(unless the Partner otherwise agrees).


 


E.             Issuance of
Securities by the General Partner. 
The General Partner shall not issue any additional REIT Shares,
Preferred Shares, Junior Shares or New Securities unless the General Partner
contributes the cash proceeds or other consideration received from the issuance
of such additional REIT Shares, Preferred Shares, Junior Shares or New
Securities, as the case may be, and from the exercise of the rights contained
in any such additional New Securities, to the Partnership in exchange for (x)
in the case of an issuance of REIT Shares, Partnership Common Units, or (y) in
the case of an issuance of Preferred Shares, Junior Shares or New Securities,
Partnership Units with designations, preferences and other rights, terms and
provisions that are substantially the same as the designations, preferences and
other rights, terms and provisions of such Preferred Shares, Junior Shares or
New Securities; provided, however, that notwithstanding the
foregoing, the General Partner may issue REIT Shares, Preferred Shares, Junior
Shares or New Securities (a) pursuant to Section 4.4 or Section 8.6.B hereof,
(b) pursuant to a dividend or distribution (including any stock split) of REIT
Shares, Preferred Shares, Junior Shares or New Securities to all of the holders
of REIT Shares, Preferred Shares, Junior Shares or New Securities, as the case
may be, (c) upon a conversion, redemption or exchange of Preferred Shares, (d)
upon a conversion of Junior Shares into REIT Shares, (e) upon a conversion,
redemption, exchange or exercise of New Securities, (f) pursuant to share
grants or awards made pursuant to any equity incentive plan of the General
Partner (including the 2003 equity incentive plan), or (g) in connection with
an acquisition of a property or other asset to be owned, directly or
indirectly, by the General Partner if the General Partner determines that such
acquisition is in the best interests of the Partnership.  In the event of any issuance of additional
REIT Shares, Preferred Shares, Junior Shares or New Securities by the General
Partner, and the contribution to the Partnership, by the General Partner, of
the cash proceeds or other consideration received from such issuance, the
Partnership shall pay the General Partner’s expenses associated with such
issuance, including any underwriting discounts or commissions (it being
understood that payment of some or all of such expenses may be made by the
General Partner on behalf of the Partnership out of the gross proceeds of such
issuance prior to the contribution of such proceeds by the General Partner to
the Partnership).


 


Section 4.4             Stock
Option Plan.


 


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


 


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


 


(2)           Notwithstanding
the amount of the Capital Contribution actually made pursuant to Section
4.4.A(1) hereof, the General Partner shall be deemed to have contributed to the
Partnership as a Capital Contribution, in consideration of an additional
Limited Partner Interest (expressed in and as additional Partnership Common
Units), an amount equal to the Value of a REIT Share as of the date of exercise
multiplied  by the number of REIT Shares then being issued in
connection with the exercise of such stock option.


 


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


 


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


 


22

















 


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


 


Section 4.5             No
Interest; No Return.  No Partner
shall be entitled to interest on its Capital Contribution or on such Partner’s
Capital Account.  Except as provided
herein or by law, no Partner shall have any right to demand or receive the
return of its Capital Contribution from the Partnership.


 


Section 4.6             Conversion
or Redemption of Preferred Shares.


 


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


 


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


 


Section 4.7             Conversion
or Redemption of Junior Shares.


 


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


 


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


 


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


 


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


 


23

















 


ARTICLE V


DISTRIBUTIONS


 


Section 5.1             Requirement
and Characterization of Distributions. 
Subject to the terms of any Partnership Unit Designation, the General
Partner shall cause the Partnership to distribute quarterly all, or such
portion as the General Partner may in its sole and absolute discretion
determine, of Available Cash generated by the Partnership during such quarter
to the Holders of Partnership Units on such Partnership Record Date with
respect to such quarter: (i) first, with respect to any Partnership Interests
that are entitled to any preference in distribution, in accordance with the
rights of such class(es) of Partnership Interests (and, within such class(es), pro rata in proportion to the respective
Percentage Interests on such Partnership Record Date), and (ii) second, with
respect to any Partnership Interests that are not entitled to any preference in
distribution, in accordance with the rights of such class of Partnership
Interests (and, within such class, pro rata
in proportion to the respective Percentage Interests on such Partnership Record
Date).  Distributions payable with
respect to any Partnership Units that were not outstanding during the entire
quarterly period in respect of which any distribution is made shall be prorated
based on the portion of the period that such units were outstanding.  The General Partner in its sole and absolute
discretion may distribute to the Unitholders Available Cash on a more frequent
basis and provide for an appropriate Partnership Record Date.  Notwithstanding anything herein to the
contrary, the General Partner shall make such reasonable efforts, as determined
by it in its sole and absolute discretion and consistent with the General
Partner’s qualification as a REIT, to cause the Partnership to distribute
sufficient amounts to enable the General Partner to pay stockholder dividends
that will (a) satisfy the requirements for its qualification as a REIT under
the Code and Regulations (the “REIT Requirements”) and (b) except to the
extent otherwise determined by the General Partner, avoid any federal income or
excise tax liability of the General Partner.


 


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


 


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


 


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


 


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


 


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


 


24

















 


ARTICLE VI


ALLOCATIONS


 


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


 


Section 6.2             General
Allocations.


 


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


 


B.            Allocations to Reflect
Issuance of Additional Partnership Units. 
In the event that the Partnership issues additional Partnership Units
pursuant to the provisions of Article 4 hereof, the General Partner is hereby
authorized to make such revisions to this Section 6.2 as it determines are
necessary or desirable to reflect the terms of the issuance of such additional
Partnership Units, including, without limitation, making preferential
allocations to certain classes of Partnership Units.


 


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


 


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


 


B.            Regulatory
Allocations.


 


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


 


25

















 


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


 


(iii)          Nonrecourse
Deductions and Partner Nonrecourse Deductions.  Any Nonrecourse Deductions for any Partnership Year shall be
specially allocated to the Holders of Partnership Units in accordance with
their Partnership Units.  Any Partner
Nonrecourse Deductions for any Partnership Year shall be specially allocated to
the Holder(s) who bears the economic risk of loss with respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable,
in accordance with Regulations Section 1.704-2(i).


 


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


 


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


 


(vi)          Limitation
on Allocation of Net Loss.  To the
extent that any allocation of Net Loss would cause or increase an Adjusted
Capital Account Deficit as to any Holder of Partnership Units, such allocation
of Net Loss shall be reallocated among the other Holders of Partnership Units


 


26

















 


in accordance with their respective Partnership Units, subject to the
limitations of this Section 6.3.B(vi).


 


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


 


(viii)        Curative
Allocations.  The allocations set
forth in Sections 6.3.B(i), (ii), (iii), (iv), (v), (vi) and (vii) hereof (the
“Regulatory Allocations”) are intended to comply with certain regulatory
requirements, including the requirements of Regulations Sections 1.704-1(b) and
1.704-2. Notwithstanding the provisions of Section 6.1 hereof, the Regulatory
Allocations shall be taken into account in allocating other items of income,
gain, loss and deduction among the Holders of Partnership Units so that to the
extent possible without violating the requirements giving rise to the
Regulatory Allocations, the net amount of such allocations of other items and
the Regulatory Allocations to each Holder of a Partnership Unit shall be equal
to the net amount that would have been allocated to each such Holder if the
Regulatory Allocations had not occurred.


 


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


 


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


 


Section 6.4             Tax
Allocations.


 


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


 


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


 


27

















 


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


 


ARTICLE VII


MANAGEMENT
AND OPERATIONS OF BUSINESS


 


Section 7.1             Management.


 


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


 


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


 


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


 


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


 


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


 


28

















 


limitation, the Partnership’s Subsidiaries) and the repayment of
obligations of the Partnership, its Subsidiaries and any other Person in which
the Partnership has an equity investment, and the making of capital
contributions to and equity investments in the Partnership’s Subsidiaries;


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


29

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


D.            In exercising its
authority under this Agreement, the General Partner may, but shall be under no
obligation to, take into account the tax consequences to any Partner (including
the General Partner) of any action


 


30

















 


taken
by it.  The General Partner and the
Partnership shall not have liability to a Limited Partner under any
circumstances as a result of an income tax liability incurred by such Limited
Partner as a result of an action (or inaction) by the General Partner pursuant
to its authority under this Agreement.


 


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


 


Section 7.3             Restrictions
on General Partner’s Authority.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


31

















 


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


 


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


 


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


 


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


 


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


 


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


 


The General Partner will
provide notice to the Limited Partners whenever any action under this Section
7.3.C is taken.


 


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


 


Section 7.4             Reimbursement
of the General Partner.


 


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


 


B.            Subject to Sections
7.4.C and 15.11 hereof, the Partnership shall be liable for, and shall
reimburse the General Partner on a monthly basis, or such other basis as the
General Partner may determine in its sole and absolute discretion, for all sums
expended in connection with the Partnership’s business, including, without


 


32

















 


limitation,
(i) expenses relating to the ownership of interests in and management and
operation of, or for the benefit of, the Partnership, (ii) compensation of
officers and employees, including, without limitation, payments under future
compensation plans of the General Partner that may provide for stock units, or
phantom stock, pursuant to which employees of the General Partner will receive
payments based upon dividends on or the value of REIT Shares, (iii) director
fees and expenses and (iv) if the General Partner becomes a public company, all
costs and expenses of the General Partner being a public company, including
costs of filings with the SEC, reports and other distributions to its
stockholders; provided, however, that the amount of any
reimbursement shall be reduced by any interest earned by the General Partner
with respect to bank accounts or other instruments or accounts held by it on
behalf of the Partnership as permitted pursuant to Section 7.5.A hereof.  Such reimbursements shall be in addition to
any reimbursement of the General Partner as a result of indemnification
pursuant to Section 7.7 hereof.


 


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


 


Section 7.5             Outside
Activities of the General Partner.


 


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


 


B.            In the event the
General Partner exercises its rights under the Charter to purchase REIT Shares,
other capital stock of the General Partner or New Securities, as the case may
be, then the General Partner shall cause the Partnership to purchase from it an
appropriate number of Partnership Units on the same terms that the General
Partner purchased such REIT shares, other capital stock of the General Partner
or New Securities, as the case may be, based on the Adjustment Factor then in
effect.


 


Section 7.6             Contracts
with Affiliates.


 


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


 


33

















 


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


 


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


 


D.            The General Partner,
in its sole and absolute discretion and without the approval of the Limited
Partners, may propose and adopt on behalf of the Partnership employee benefit
plans funded by the Partnership for the benefit of employees of the General
Partner, the Partnership, Subsidiaries of the Partnership or any Affiliate of
any of them in respect of services performed, directly or indirectly, for the
benefit of the Partnership or any of the Partnership’s Subsidiaries.


 


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


 


Section 7.7             Indemnification.


 


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


 


B.            To the fullest
extent permitted by law, expenses incurred by an Indemnitee who is a party to a
proceeding or otherwise subject to or the focus of or is involved in any Action
shall be paid or reimbursed by the Partnership as incurred by the Indemnitee in
advance of the final disposition of the Action upon receipt by the Partnership
of (i) a written affirmation by the Indemnitee of the Indemnitee’s good faith
belief that the standard of


 


34

















 


conduct
necessary for indemnification by the Partnership as authorized in this Section
7.7.A has been met, and (ii) a written undertaking by or on behalf of the
Indemnitee to repay the amount if it shall ultimately be determined that the
standard of conduct has not been met.


 


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


 


D.            The Partnership may,
but shall not be obligated to, purchase and maintain insurance, on behalf of
any of the Indemnitees and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expenses that
may be incurred by such Person in connection with the Partnership’s activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.


 


E.             Any liabilities
which an Indemnitee incurs as a result of acting on behalf of the Partnership
or the General Partner (whether as a fiduciary or otherwise) in connection with
the operation, administration or maintenance of an employee benefit plan or any
related trust or funding mechanism (whether such liabilities are in the form of
excise taxes assessed by the IRS, penalties assessed by the Department of
Labor, restitutions to such a plan or trust or other funding mechanism or to a
participant or beneficiary of such plan, trust or other funding mechanism, or
otherwise) shall be treated as liabilities or judgments or fines under this
Section 7.7, unless such liabilities arise as a result of (i) such Indemnitee’s
intentional misconduct or knowing violation of the law, or (ii) any transaction
in which such Indemnitee received a personal benefit in violation or breach of
any provision of this Agreement or applicable law.


 


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


 


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


 


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


 


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


 


Section 7.8             Liability
of the General Partner.


 


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


 


35

















 


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


 


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


 


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


 


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


 


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


 


Section 7.9             Other
Matters Concerning the General Partner.


 


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


 


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


 


36

















 


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


 


D.            Notwithstanding any other provision of this Agreement or
the Act, any action of the General Partner on behalf of the Partnership or any
decision of the General Partner to refrain from acting on behalf of the
Partnership, undertaken in the good faith belief that such action or omission
is necessary or advisable in order (i) to protect the ability of the General
Partner to continue to qualify as a REIT, (ii) for the General Partner
otherwise to satisfy the REIT Requirements, (iii) to avoid the General Partner
incurring any taxes under Code Section 857 or Code Section 4981, is expressly
authorized under this Agreement and is deemed approved by all of the Limited
Partners.


 


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


 


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


 


ARTICLE VIII


RIGHTS
AND OBLIGATIONS OF LIMITED PARTNERS


 


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


 


Section 8.2             Management
of Business.  No Limited Partner or
Assignee (other than the General Partner, any of its Affiliates or any officer,
director, member, employee, partner, agent or trustee of the General Partner,
the Partnership or any of their Affiliates, in their capacity as such) shall
take part in the operations, management or control


 


37

















 


(within
the meaning of the Act) of the Partnership’s business, transact any business in
the Partnership’s name or have the power to sign documents for or otherwise
bind the Partnership.  The transaction
of any such business by the General Partner, any of its Affiliates or any
officer, director, member, employee, partner, agent, representative, or trustee
of the General Partner, the Partnership or any of their Affiliates, in their
capacity as such, shall not affect, impair or eliminate the limitations on the
liability of the Limited Partners or Assignees under this Agreement.


 


Section 8.3             Outside
Activities of Limited Partners. 
Subject to any agreements entered into pursuant to Section 7.6.E hereof
and any other agreements entered into by a Limited Partner or its Affiliates
with the General Partner, the Partnership or a Subsidiary (including, without
limitation, any employment agreement), any Limited Partner and any Assignee,
officer, director, employee, agent, trustee, Affiliate, member or stockholder
of any Limited Partner shall be entitled to and may have business interests and
engage in business activities in addition to those relating to the Partnership,
including business interests and activities that are in direct or indirect
competition with the Partnership or that are enhanced by the activities of the
Partnership.  Neither the Partnership
nor any Partner shall have any rights by virtue of this Agreement in any
business ventures of any Limited Partner or Assignee.  Subject to such agreements, none of the Limited Partners nor any
other Person shall have any rights by virtue of this Agreement or the
partnership relationship established hereby in any business ventures of any
other Person (other than the General Partner, to the extent expressly provided
herein), and such Person shall have no obligation pursuant to this Agreement,
subject to Section 7.6.E hereof and any other agreements entered into by a
Limited Partner or its Affiliates with the General Partner, the Partnership or
a Subsidiary, to offer any interest in any such business ventures to the
Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character that, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.


 


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


 


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


 


Section 8.6             Redemption
Rights of Qualifying Parties.


 


A.            After the applicable
Twelve-Month Period, a Qualifying Party, but no other Limited Partner or
Assignee, shall have the right (subject to the terms and conditions set forth
herein) to require the Partnership to redeem (a “Redemption”) all or a
portion of the Partnership Common Units held by such Qualifying Party (such
Partnership Common Units being hereafter “Tendered Units”) in exchange
for the Cash Amount payable on the Specified Redemption Date.  Any Redemption shall be exercised pursuant
to a Notice of Redemption delivered to the General Partner by such Qualifying
Party (the “Tendering Party”) when exercising the Redemption right.  The Partnership’s obligation to effect a
Redemption, however, shall not arise or be binding against the Partnership (i)
until and unless there has been a Declination and (ii) before the Business Day
following the Cut-Off Date.  Regardless
of the binding or non-binding nature of a pending Redemption, a Tendering Party
shall have no right to receive distributions with respect to any Tendered Units
(other than the Cash Amount) paid after delivery of the Notice of Redemption,
whether or not the Partnership Record Date for such distribution precedes or
coincides with such delivery of the Notice of Redemption; provided, however,
that in the event that the General Partner on behalf of the Partnership elects
to fund the Cash Amount with the proceeds of an Offering Funding pursuant to
Section 8.6.D hereof, the Tendering Party’s right to receive distributions
shall not be suspended as hereinbefore provided and such Tendering Party shall
have the right to receive distributions actually made hereunder prior to the
date of the closing of the Offering Funding the proceeds of which are used to
pay the Cash Amount.  In the event of a
Redemption, the Cash Amount shall be delivered as a certified check payable to
the Tendering Party or, in the General Partner’s sole and absolute discretion,
in immediately available funds.


 


38

















 


B.            Notwithstanding the
provisions of Section 8.6.A hereof, on or before the close of business on the
Cut-Off Date, the General Partner may, in its sole and absolute discretion but
subject to the Ownership Limit and the transfer restrictions and other
limitations of the Charter, elect to acquire some or all of the Tendered Units
from the Tendering Party (such percentage being referred to as the “Applicable
Percentage”) in exchange for the REIT Consideration.  In making such election, the General Partner
shall act in a fair, equitable and reasonable manner that neither prefers one
group or class of Qualifying Parties over another nor discriminates against a
group or class of Qualifying Parties. 
If the General Partner so elects, on the Specified Redemption Date the
Tendering Party shall sell the Applicable Percentage of the Tendered Units to the
General Partner in exchange for the REIT Consideration.  The Tendering Party shall submit (i) such
information, certification or affidavit as the General Partner may reasonably
require in connection with the application of the Ownership Limit and other
restrictions and limitations of the Charter to any such acquisition and (ii)
such written representations, investment letters, legal opinions or other
instruments necessary, in the General Partner’s view, to effect compliance with
the Securities Act.  In the event of a
purchase of any Tendered Units by the General Partner pursuant to this Section
8.6.B, the Tendering Party shall no longer have the right to cause the
Partnership to effect a Redemption of such Tendered Units, and, upon notice to
the Tendering Party by the General Partner, given on or before the close of
business on the Cut-Off Date, that the General Partner has elected to acquire
some or all of the Tendered Units pursuant to this Section 8.6.B, the
obligation of the Partnership to effect a Redemption of the Tendered Units as
to which the General Partner’s notice relates shall not accrue or arise.  The REIT Consideration shall be delivered by
the General Partner as duly authorized, validly issued, fully paid and
non-assessable REIT Shares and, if applicable, Rights, free of any pledge,
lien, encumbrance or restriction, other than the Ownership Limit and other
restrictions provided in the Charter, the Bylaws of the General Partner, the
Securities Act and relevant state securities or “blue sky” laws.  Except as set forth in Section 8.8 below,
neither any Tendering Party whose Tendered Units are acquired by the General
Partner pursuant to this Section 8.6.B, any Partner, any Assignee nor any other
interested Person shall have any right to require or cause the General Partner
to register, qualify or list any REIT Shares owned or held by such Person,
whether or not such REIT Shares are issued pursuant to this Section 8.6.B, with
the SEC, with any state securities commissioner, department or agency, under
the Securities Act or the Exchange Act or with any stock exchange; provided,
however, that this limitation shall not be in derogation of any
registration or similar rights granted pursuant to any other written agreement
between the General Partner and any such Person.  Notwithstanding any delay in such delivery, the Tendering Party
shall be deemed the owner of such REIT Shares and Rights for all purposes,
including, without limitation, rights to vote or consent, receive dividends,
and exercise rights, as of the Specified Redemption Date.  REIT Shares issued upon an acquisition of
the Tendered Units by the General Partner pursuant to this Section 8.6.B may
contain such legends regarding restrictions under the Securities Act and
applicable state securities laws as the General Partner in good faith
determines to be necessary or advisable in order to ensure compliance with such
laws.


 


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


 


D.            In the event that
the General Partner declines or fails to exercise its purchase rights for all
Tendered Units pursuant to Section 8.6.B hereof following receipt of a Notice
of Redemption (a “Declination”):


 


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


 


39

















 


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


 


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


 


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


 


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


 


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


 


(1)           All
Partnership Common Units acquired by the General Partner pursuant to Section
8.6.B hereof shall automatically, and without further action required, be
converted into and deemed to be a General Partner Interest comprised of the
same number of Partnership Common Units.


 


(2)           Subject
to the Ownership Limit, no Tendering Party may effect a Redemption for less
than two hundred fifty (250) Partnership Common Units or, if such Tendering
Party holds (as a Limited Partner or, economically, as an Assignee) less than
two hundred fifty (250) Partnership Common Units, all of the Partnership Common
Units held by such Tendering Party.


 


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


 


40

















 


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


 


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


 


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


 


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


 


(8)           Any
Partnership Common Units tendered for Redemption pursuant to this Section 8.6
that are Paired Common Units shall include for all purposes under this Section
8.6, the Special Voting Shares attached thereto as required by Section 8.9
below, Section 6.3.3 of the Charter and the applicable provisions of the
Pairing Agreement. All Special Voting Shares acquired by the Partnership in
connection with any Redemption of the attached Paired Common Units pursuant to
Section 8.6.A shall be cancelled and retired in accordance with Section 6.3.4
of the Charter.  All Special Voting
Shares acquired by the General Partner in connection with any acquisition of
the attached Paired Common Units pursuant to Section 8.6.B shall be cancelled
and retired in accordance with Section 6.3.4 of the Charter.


 


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


 


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


 


(1)           A
written affidavit, dated the same date as the Notice of Redemption, (a)
disclosing the actual and constructive ownership, as determined for purposes of
Code Sections 856(a)(6) and 856(h), of REIT Shares by (i) such Tendering Party
and (ii) any Related Party and (b) representing that, after giving effect to
the Redemption or an acquisition of the Tendered Units by the


 


41

















 


General Partner pursuant to Section 8.6.B hereof, neither the Tendering
Party nor any Related Party will own REIT Shares in excess of the Ownership
Limit;


 


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


 


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


 


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


 


Section 8.8             Special
Provisions Applicable to Reorganization Common Units.


 


A.            Filing.  No later than sixty (60) days following the
date when the General Partner first becomes eligible for use of a registration
statement on Form S-3 of the SEC (or any similar short form registration
statement which is a successor to Form S-3) the General Partner shall file with
the SEC a registration statement on Form S-3 (or any successor form) (together
with the prospectus included therein, the “Shelf Registration Statement”)
pursuant to Rule 415 of the Securities Act in order to register with the SEC
the resale, from time to time, by the Limited Partners holding Reorganization
Common Units (the “Reorganization Limited Partners”), of such Limited
Partners’ Registrable REIT Securities (as defined below), pursuant to
transactions (including brokers’ transactions and block transactions) on any
securities exchange and/or through any automated quotation system on which such
Registrable REIT Securities are then listed, transactions in the
over-the-counter market or negotiated transactions. The General Partner shall
use its reasonable best efforts to cause such Shelf Registration Statement to
be declared effective as soon thereafter as is practicable.  Notwithstanding the foregoing, it shall be a
condition to the obligation of the General Partner pursuant to this Section 8.8
to include any Reorganization Limited Partner as a selling stockholder in such
Shelf Registration Statement and to make the Shelf Registration Statement
available to such Reorganization Limited Partner for resale of its Registrable
REIT Securities that such Reorganization Limited Partner shall have complied
with its obligations under Section 8.8.D below. “Registrable REIT Securities”
shall mean the REIT Shares that have been or may be issued from time to time in
exchange for Paired Common Units tendered for redemption by any Reorganization
Limited Partner pursuant to Section 8.6 and any other securities issued by the
General Partner as a dividend or distribution in respect of such Registrable
REIT Securities or resulting from a subdivision of the outstanding Registrable
REIT Securities into a greater number of shares (by reclassification, stock
split or otherwise). Notwithstanding the foregoing, a security that was at one
time a Registrable REIT Security shall cease to be a Registrable REIT Security,
and the General Partner shall have no obligation to effect


 


42

















 


any
registration or keep any registration effective with respect to such security,
when (i) such security has been effectively registered under the Securities Act
and has been disposed of pursuant to such registration statement, (ii) such
security is or can be immediately sold to the public in reliance on Rule 144
(or any similar provision then in force) under the Securities Act, (iii) such
security has been otherwise transferred and the General Partner has delivered a
new certificate or other evidence of ownership not bearing a restrictive legend
set forth on such security upon the initial issuance thereof (or other legend
of similar import) or (iv) such security has ceased to be outstanding.


 


B.            Covenants of the
General Partner. The General Partner will use all reasonable efforts to:


 


(1)           keep
such Shelf Registration Statement effective until the third anniversary of the
date on which the Shelf Registration Statement first becomes effective;


 


(2)           prepare
and file with the SEC such amendments and supplements to the Shelf Registration
Statement and the prospectus used in connection therewith as may be necessary
to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by the Shelf Registration Statement
during the period specified in clause (1);


 


(3)           furnish
such number of prospectuses and other documents incident thereto, including any
amendment of or supplement to the prospectus, as any Reorganization Limited
Partner from time to time may reasonably request;


 


(4)           cause
all Registrable REIT Securities registered as described herein to be listed on
each securities exchange or quoted on each quotation service, if any, on which
the Registrable REIT Securities of the same class are then listed or quoted;


 


(5)           provide
a transfer agent and registrar for all Registrable REIT Securities registered
pursuant to the Shelf Registration Statement and a CUSIP number for all such
Registrable REIT Securities;


 


(6)           promptly
comply with all applicable rules and regulations of the SEC with respect to the
Shelf Registration Statement;


 


(7)           promptly
notify the Reorganization Limited Partners of the occurrence of any of the
following events:  (i) when the Shelf
Registration Statement or any post-effective amendment thereto filed with the
SEC has become effective; (ii) any request by the SEC for amendments or
post-effective amendments to the Shelf Registration Statement or supplements to
the related prospectus; (iii) the issuance by the SEC of any stop order
suspending the effectiveness of the Shelf Registration Statement; (iv) the
suspension by the General Partner of sales of Registrable REIT Securities
pursuant to the Shelf Registration Statement in accordance with
Section 8.8.C below; (v) the General Partner’s receipt of any
notification of the suspension of the qualification of any Registrable REIT
Securities covered by the Shelf Registration Statement for sale in any
jurisdiction or the initiation or threat of any proceeding for that purpose; or
(vi) subject to the General Partner’s rights under Section 8.8.C, the
existence of any event, fact or circumstance that results in the Shelf
Registration Statement or the related prospectus or any document incorporated
therein by reference containing an untrue statement of a material fact or
omitting to state a material fact required to be stated therein or necessary to
make the statements therein not misleading;


 


(8)           promptly
obtain the withdrawal of any order suspending the effectiveness of the Shelf
Registration Statement or the lifting of any suspension of the qualification
(or exemption from qualification) of any Registrable REIT Securities for sale
in any jurisdiction;


 


43

















 


(9)           file
a sufficient number of copies of the prospectus and any supplements thereto and
any post-effective amendments to the Shelf Registration Statement with any
securities exchange or market on which the Registrable REIT Securities are then
listed so as to provide the Reorganization Limited Partners with the benefits
of the prospectus delivery provisions of Rule 153 under the Securities Act; and


 


(10)         subject
to the General Partner’s rights under Section 8.8.C, if any event, fact or
circumstance requiring an amendment to the Shelf Registration Statement or a
supplement to the related prospectus shall exist, immediately upon becoming
aware thereof, notify the Reorganization Limited Partners and prepare and
furnish to the Reorganization Limited Partners a post-effective amendment to
the Shelf Registration Statement or a supplement to the prospectus or any
document incorporated therein by reference, or file any other required
document, so that, as thereafter delivered to the purchasers of the Registrable
REIT Securities, the prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.


 


C.            Blackout Periods.
The foregoing notwithstanding, the General Partner shall have the right in its
sole discretion, based on any valid business purpose (including, without
limitation, to avoid the disclosure of any material non-public information that
the General Partner is not otherwise obligated to disclose), to delay the
filing or amendment of the Shelf Registration Statement prior to its
effectiveness or, if effective, to suspend the use of the prospectus comprising
a part of the Shelf Registration Statement for a reasonable length of time (a “Delay
Period”) and from time to time; provided, that the aggregate number
of days in all Delay Periods occurring in any period of twelve consecutive
months shall not exceed 105 days.


 


D.            Covenants of the
Reorganization Limited Partners. 
(1) Each Reorganization Limited Partner shall promptly furnish in
writing to the General Partner such information as the General Partner may reasonably
request for inclusion in the Shelf Registration Statement, any amendment
thereto or any supplement to the related prospectus (which request shall be
submitted in writing a reasonable period of time in advance of the filing of
the Shelf Registration Statement or the amendment thereto or the prospectus
supplement with respect to which the requested information relates).  If any Reorganization Limited Partner fails
to provide the General Partner with such information within fifteen (15)
Business Days after the General Partner’s request for such information, the
General Partner shall not be obligated to include such Reorganization Limited
Partner’s Registrable REIT Securities in the Shelf Registration Statement, the
amendment thereto or the prospectus supplement, as the case may be.


 


(2)           Each Reorganization Limited Partner agrees that upon
receipt of any notice from the General Partner of the happening of any event of
the kind described in clause (ii), (iii), (iv), (v) or (vi) of Section 8.8.B(7)
hereof, (A) such Reorganization Limited Partner will forthwith discontinue
disposition of Registrable REIT Securities pursuant to the Shelf Registration
Statement until (x) in the case of a notice pursuant to clause (ii) or (vi) of
Section 8.8.B(7), such Reorganization Limited Partner’s receipt from the
General Partner of copies of the supplemented prospectus contemplated by
Section 8.8.B(10) hereof or notice from the General Partner that the prospectus
has been supplemented, (y) in the case of a notice pursuant to clause (iii) of
Section 8.8.B(7), the General Partner notifies such Reorganization Limited
Partner of the suspension of such stop order, and (z) in the case of a notice
pursuant to clause (iv) or (v) of Section 8.8.B(7), the General Partner
notifies such Reorganization Limited Partner of the cessation of such
suspension, (B) in the case of any notice with respect to an event described in
clause (iv) or (vi) of Section 8.8.B(7) such Reorganization Limited Partner
shall maintain in confidence the fact and substance of such notice and shall
refrain from taking any action with respect to any securities of the General
Partner or the Partnership until the General Partner shall have taken either of
the actions contemplated by clause (x) above, and (C) if so directed by the
General Partner, such Reorganization Limited Partner will deliver to the
General Partner all copies, other than permanent file copies, then in such
Reorganization Limited Partner’s possession of the most recent prospectus
covering such Registrable REIT Securities at the time of receipt of such
notice.  In the event the General
Partner shall give such notice, the General Partner shall extend the period
during which the Shelf Registration Statement shall be maintained effective
pursuant to Section 8.8.B(1) hereof by the number of days for which


 


44

















 


the Reorganization Limited
Partners were required to discontinue disposition of Registrable REIT
Securities pursuant to the preceding sentence.


 


E.             Registration
Expenses.   The General Partner
shall pay all expenses (“Registration Expenses”) incident to its
compliance with this Section 8.8 (including, without limitation, (i) all SEC,
stock exchange and National Association of Securities Dealers, Inc. registration,
filing and listing fees, (ii) all fees and expenses incurred in complying with
securities or “blue sky” laws (including reasonable fees and disbursements of
counsel in connection with real estate syndication and “blue sky”
qualifications of the Registrable REIT Securities), (iii) all printing,
messenger and delivery expenses, (iv) all fees and disbursements of the General
Partner’s independent public accountants and counsel, and (v) all fees and
expenses of any special experts retained by the General Partner in connection
with the Shelf Registration Statement) regardless of whether such Shelf
Registration Statement becomes effective; provided, however, that
the Registration Expenses shall not include, and the General Partner shall not
pay, bear or be responsible for, any costs and expenses incurred by any
Reorganization Limited Partner relating to brokerage or dealer fees or
commissions, any transfer taxes or any fees or expenses of any counsel,
accountants or other representatives retained by the Reorganization Limited
Partners, individually or in the aggregate.


 


Section 8.9             Special
Provisions Applicable to Paired Common Units. Notwithstanding anything to
the contrary contained herein and in addition to the restrictions on transfer
of Partnership Interests set forth in Article XI hereof, until the limitation
on transfer with respect to the Paired Common Units provided for in the Pairing
Agreement shall be terminated:


 


A.            No Paired Common
Unit shall be transferable, and no Paired Common Unit shall be transferred on
the books of the Partnership, except in accordance with the provisions of the
Pairing Agreement.


 


B.            A legend, in the
form set forth on Exhibit E hereto, shall be placed on the face of each
certificate evidencing ownership of Paired Common Units referring to the
restriction on transfer set forth in this Section 8.9.


 


C.            Notwithstanding the
foregoing, upon any acquisition by the Partnership or the General Partner of
any Paired Common Units (whether pursuant to Section 8.6 or Section 8.7 hereof
or otherwise), all restrictions on transfer set forth in this Section 8.9 and
in the Pairing Agreement with respect to such Paired Common Units so acquired
shall terminate, and the General Partner may transfer any Paired Common Units
acquired by it without regard to the restrictions set forth in this Section 8.9
or in the Pairing Agreement.


 


D.            In the event that
any Special Voting Shares paired with Paired Common Units are transferred to a
trust pursuant to the provisions of Section 7.2(b) of the Charter, the Paired
Common Units paired with such shares shall be automatically transferred to such
trust concurrently therewith and shall be subject to all the provisions of
Section 7.3 of the Charter to the same extent that the Special Voting Shares
paired therewith are so subject.


 


ARTICLE IX


BOOKS, RECORDS, ACCOUNTING AND REPORTS


 


Section 9.1             Records
and Accounting.


 


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


 


45

















 


course of its business may be
kept on, or be in the form for, magnetic tape, photographs, micrographics or
any other information storage device, provided that the records so maintained
are convertible into clearly legible written form within a reasonable period of
time.


 


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


 


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


 


Section 9.3             Reports.


 


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


 


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


 


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


 


ARTICLE X


TAX MATTERS


 


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


 


Section 10.2           Tax
Elections.  Except as otherwise
provided herein, the General Partner shall, in its sole and absolute
discretion, determine whether to make any available election pursuant to the
Code, including, but not limited to, the election under Code Section 754 and
the election to use the “recurring item” method of accounting provided under
Code Section 461(h) with respect to property taxes imposed on the Partnership’s
Properties; provided, however, that, if the “recurring item” method
of accounting is elected with respect to such property taxes, the Partnership
shall pay the applicable property taxes prior to the date provided in Code
Section 461(h) for purposes of determining economic performance.  The General Partner shall have the right to
seek to revoke any such election (including, without


 


46

















 


limitation, any election under
Code Sections 461(h) and 754) upon the General Partner’s determination in its
sole and absolute discretion that such revocation is in the best interests of
the Partners.


 


Section 10.3           Tax
Matters Partner.


 


A.            The General Partner
shall be the “tax matters partner” of the Partnership for federal income tax
purposes.  The tax matters partner shall
receive no compensation for its services. 
All third-party costs and expenses incurred by the tax matters partner
in performing its duties as such (including legal and accounting fees and
expenses) shall be borne by the Partnership in addition to any reimbursement
pursuant to Section 7.4 hereof.  Nothing
herein shall be construed to restrict the Partnership from engaging an
accounting firm to assist the tax matters partner in discharging its duties
hereunder, so long as the compensation paid by the Partnership for such services
is reasonable.  At the request of any
Limited Partner, the General Partner agrees to consult with such Limited
Partner with respect to the preparation and filing of any returns and with
respect to any subsequent audit or litigation relating to such returns; provided,
however, that the filing of such returns shall be in the sole and
absolute discretion of the General Partner.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


The taking of any action and the incurring of
any expense by the tax matters partner in connection with any such proceeding,
except to the extent required by law, is a matter in the sole and absolute
discretion of the tax matters partner


 


47

















 


and the provisions relating to
indemnification of the General Partner set forth in Section 7.7 hereof shall be
fully applicable to the tax matters partner in its capacity as such.


 


Section 10.4           Withholding.  Each Limited Partner hereby authorizes the
Partnership to withhold from or pay on behalf of or with respect to such
Limited Partner any amount of federal, state, local or foreign taxes that the
General Partner determines that the Partnership is required to withhold or pay
with respect to any amount distributable or allocable to such Limited Partner
pursuant to this Agreement, including, without limitation, any taxes required
to be withheld or paid by the Partnership pursuant to Code Section 1441, Code
Section 1442, Code Section 1445 or Code Section 1446.  Any amount paid on behalf of or with respect to a Limited Partner
shall constitute a loan by the Partnership to such Limited Partner, which loan
shall be repaid by such Limited Partner within fifteen (15) days after notice
from the General Partner that such payment must be made unless (i) the
Partnership withholds such payment from a distribution that would otherwise be
made to the Limited Partner or (ii) the General Partner determines, in its sole
and absolute discretion, that such payment may be satisfied out of the
Available Funds of the Partnership that would, but for such payment, be distributed
to the Limited Partner.  Each Limited
Partner hereby unconditionally and irrevocably grants to the Partnership a
security interest in such Limited Partner’s Partnership Interest to secure such
Limited Partner’s obligation to pay to the Partnership any amounts required to
be paid pursuant to this Section 10.4. 
In the event that a Limited Partner fails to pay any amounts owed to the
Partnership pursuant to this Section 10.4 when due, the General Partner may, in
its sole and absolute discretion, elect to make the payment to the Partnership
on behalf of such defaulting Limited Partner, and in such event shall be deemed
to have loaned such amount to such defaulting Limited Partner and shall succeed
to all rights and remedies of the Partnership as against such defaulting
Limited Partner (including, without limitation, the right to receive
distributions).  Any amounts payable by
a Limited Partner hereunder shall bear interest at the base rate on corporate
loans at large United States money center commercial banks, as published from
time to time in The Wall Street Journal, plus four (4) percentage points
(but not higher than the maximum lawful rate) from the date such amount is due
(i.e., fifteen (15) days after demand) until such amount is paid in
full.  Each Limited Partner shall take
such actions as the Partnership or the General Partner shall request in order
to perfect or enforce the security interest created hereunder.


 


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


 


ARTICLE XI


TRANSFERS AND WITHDRAWALS


 


Section 11.1           Transfer.


 


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


 


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


 


C.            Notwithstanding the
other provisions of this Article 11 (other than Section 11.6.D hereof), the
Partnership Interests of the General Partner may be Transferred, in whole or in
part, at any time or from time to time, to any Person that is, at the time of
such Transfer, a Qualified REIT Subsidiary. 
Any transferee of the entire General Partner Interest pursuant to this
Section 11.1.C shall automatically become, without further action or Consent of
any Limited Partners, the sole general partner of the Partnership, subject to
all the rights, privileges, duties and obligations under this Agreement and the
Act relating to a general partner. Upon any Transfer permitted by this Section
11.1.C, the transferor Partner shall be relieved of all its obligations under
this Agreement.  The provisions of
Section 11.2.B (other


 


48

















 


than the last sentence
thereof), 11.3, 11.4.A and 11.5 hereof shall not apply to any Transfer
permitted by this Section 11.1.C.


 


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


 


Section 11.2           Transfer
of General Partner’s Partnership Interest.


 


A.            The General Partner
may not Transfer any of its General Partner Interest or withdraw from the
Partnership except as provided in Sections 11.1.C, 11.2.B and 11.2.C hereof.


 


B.            Except as set forth
in Section 11.1.C above and Section 11.2.C below, the General Partner shall not
withdraw from the Partnership and shall not Transfer all or any portion of its
interest in the Partnership (whether by sale, disposition, statutory merger or
consolidation, liquidation or otherwise) without the Consent of the Limited
Partners, which Consent may be given or withheld in the sole and absolute
discretion of the Limited Partners. 
Upon any Transfer of such a Partnership Interest pursuant to the Consent
of the Limited Partners and otherwise in accordance with the provisions of this
Section 11.2.B, the transferee shall become a successor General Partner for all
purposes herein, and shall be vested with the powers and rights of the
transferor General Partner, and shall be liable for all obligations and
responsible for all duties of the General Partner, once such transferee has
executed such instruments as may be necessary to effectuate such admission and
to confirm the agreement of such transferee to be bound by all the terms and
provisions of this Agreement with respect to the Partnership Interest so
acquired.  It is a condition to any
Transfer otherwise permitted hereunder that the transferee assumes, by
operation of law or express agreement, all of the obligations of the transferor
General Partner under this Agreement with respect to such Transferred
Partnership Interest, and such Transfer shall relieve the transferor General
Partner of its obligations under this Agreement without the Consent of the
Limited Partners.  In the event that the
General Partner withdraws from the Partnership, in violation of this Agreement
or otherwise, or otherwise dissolves or terminates, or upon the bankruptcy of
the General Partner, a Majority in Interest of the Limited Partners may elect
to continue the Partnership business by selecting a successor General Partner
in accordance with the Act.


 


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


 


Section 11.3           Transfer
of Limited Partners’ Partnership Interests.


 


A.            General.  No Limited Partner shall Transfer all or any
portion of its Partnership Interest to any transferee without the consent of
the General Partner, which consent may be withheld in its sole and absolute
discretion.


 


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


 


(1)           Qualified
Transferee.  Such Transfer is made
only to a single Qualified Transferee; provided, however, that,
for such purposes, all Qualified Transferees that are Affiliates,


 


49

















 


or that comprise investment accounts or funds managed by a single
Qualified Transferee and its Affiliates, shall be considered together to be a
single Qualified Transferee.


 


(2)           Assumption
of Obligations.  The transferee in
such Transfer assumes by operation of law or express agreement all of the
obligations of the transferor Limited Partner under this Agreement with respect
to such Transferred Partnership Interest; provided, that no such
Transfer (unless made pursuant to a statutory merger or consolidation wherein
all obligations and liabilities of the transferor Partner are assumed by a
successor corporation by operation of law) shall relieve the transferor Partner
of its obligations under this Agreement without the approval of the General
Partner, in its sole and absolute discretion. 
Notwithstanding the foregoing, any transferee of any Transferred
Partnership Interest shall be subject to any and all ownership limitations
contained in the Charter that may limit or restrict such transferee’s ability
to exercise its Redemption rights, including, without limitation, the Ownership
Limit.  Any transferee, whether or not
admitted as a Substituted Limited Partner, shall take subject to the obligations
of the transferor hereunder.  Unless
admitted as a Substituted Limited Partner, no transferee, whether by a
voluntary Transfer, by operation of law or otherwise, shall have any rights
hereunder, other than the rights of an Assignee as provided in Section 11.5
hereof.


 


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


 


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


 


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


 


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


 


Section 11.4           Substituted
Limited Partners.


 


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


 


50

















 


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


 


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


 


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


 


Section 11.6           General
Provisions.


 


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


 


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


 


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


 


51

















 


which the Partnership Record
Date is before the date of such Transfer, assignment or Redemption shall be
made to the transferor Partner or the Tendering Party, as the case may be, and,
in the case of a Transfer other than a Redemption, all distributions of
Available Cash thereafter attributable to such Partnership Unit shall be made
to the transferee Partner.


 


D.            In no event may any
Transfer or assignment of a Partnership Interest by any Partner (including any
Redemption, any acquisition of Partnership Units by the General Partner or any
other acquisition of Partnership Units by the Partnership) be made (i) to any
person or entity who lacks the legal right, power or capacity to own a
Partnership Interest; (ii) in violation of applicable law; (iii) of any
component portion of a Partnership Interest, such as the Capital Account, or
rights to distributions, separate and apart from all other components of a
Partnership Interest; (iv) in the event that such Transfer would cause the
General Partner to cease to comply with the REIT Requirements; (v) if such
Transfer would, in the opinion of counsel to the Partnership or the General
Partner, cause a termination of the Partnership for federal or state income tax
purposes (except as a result of the Redemption (or acquisition by the General
Partner) of all Partnership Common Units held by all Limited Partners); (vi) if
such Transfer would, in the opinion of legal counsel to the Partnership, cause
the Partnership to cease to be classified as a partnership for federal income
tax purposes (except as a result of the Redemption (or acquisition by the
General Partner) of all Partnership Common Units held by all Limited Partners);
(vii) if such Transfer would cause the Partnership to become, with respect to
any employee benefit plan subject to Title I of ERISA, a “party-in-interest”
(as defined in ERISA Section 3(14)) or a “disqualified person” (as defined in
Code Section 4975(c)); (viii) if such Transfer would, in the opinion of legal
counsel to the Partnership, cause any portion of the assets of the Partnership
to constitute assets of any employee benefit plan pursuant to Department of
Labor Regulations Section 2510.2-101; (ix) if such Transfer requires the
registration of such Partnership Interest pursuant to any applicable federal or
state securities laws; (x) if such Transfer causes the Partnership to become a
“publicly traded partnership,” as such term is defined in Code Section
469(k)(2) or Code 7704(b); (xi) if such Transfer would cause the Partnership to
have more than five hundred (500) partners (including as partners those persons
indirectly owning an interest in the Partnership through a partnership, limited
liability company, subchapter S corporation or grantor trust); (xii) if such
Transfer causes the Partnership (as opposed to the General Partner) to become a
reporting company under the Exchange Act; or (xiii) if such Transfer subjects
the Partnership to regulation under the Investment Company Act of 1940, the
Investment Advisors Act of 1940 or ERISA, each as amended.


 


ARTICLE XII


ADMISSION OF PARTNERS


 


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


 


Section 12.2           Admission
of Additional Limited Partners.


 


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


 


B.            Notwithstanding
anything to the contrary in this Section 12.2, no Person shall be admitted as
an Additional Limited Partner without the consent of the General Partner, which
consent may be given or withheld


 


52

















 


in the General Partner’s sole
and absolute discretion.  The admission
of any Person as an Additional Limited Partner shall become effective on the
date upon which the name of such Person is recorded on the books and records of
the Partnership, following the consent of the General Partner to such
admission.


 


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


 


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


 


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


 


ARTICLE XIII


DISSOLUTION, LIQUIDATION AND TERMINATION


 


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


 


A.            a final and
non-appealable judgment is entered by a court of competent jurisdiction ruling
that the General Partner is bankrupt or insolvent, or a final and
non-appealable order for relief is entered by a court with appropriate
jurisdiction against the General Partner, in each case under any federal or
state bankruptcy or insolvency laws as now or hereafter in effect, unless,
prior to the entry of such order or judgment, a Majority in Interest of the
remaining Limited Partners agree in writing, in their sole and absolute
discretion, to continue the business of the Partnership and to the appointment,
effective as of a date prior to the date of such order or judgment, of a
successor General Partner;


 


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


 


53

















 


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


 


D.            the occurrence of a
Terminating Capital Transaction; or


 


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


 


Section 13.2           Winding
Up.


 


A.            Upon the occurrence
of a Liquidating Event, the Partnership shall continue solely for the purposes
of winding up its affairs in an orderly manner, liquidating its assets and
satisfying the claims of its creditors and Partners.  After the occurrence of a Liquidating Event, no Partner shall
take any action that is inconsistent with, or not necessary to or appropriate
for, the winding up of the Partnership’s business and affairs.  The General Partner or, in the event that
there is no remaining General Partner or the General Partner has dissolved,
become bankrupt within the meaning of the Act or ceased to operate, any Person
elected by a Majority in Interest of the Limited Partners (the General Partner
or such other Person being referred to herein as the “Liquidator”) shall
be responsible for overseeing the winding up and dissolution of the Partnership
and shall take full account of the Partnership’s liabilities and property, and
the Partnership property shall be liquidated as promptly as is consistent with
obtaining the fair value thereof, and the proceeds therefrom (which may, to the
extent determined by the General Partner, include shares of stock in the
General Partner) shall be applied and distributed in the following order:


 


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


 


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


 


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


 


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


 


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


 


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


 


54

















 


disposition and management of
such properties as the Liquidator deems reasonable and equitable and to any
agreements governing the operation of such properties at such time.  The Liquidator shall determine the fair
market value of any property distributed in kind using such reasonable method
of valuation as it may adopt.


 


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


 


1.             distributed to a trust established for the benefit of
the General Partner and the Limited Partners for the purpose of liquidating
Partnership assets, collecting amounts owed to the Partnership, and paying any
contingent or unforeseen liabilities or obligations of the Partnership or of
the General Partner arising out of or in connection with the Partnership and/or
Partnership activities.  The assets of
any such trust shall be distributed to the General Partner and the Limited
Partners, from time to time, in the reasonable discretion of the General
Partner or the Liquidator, in the same proportions and amounts as would
otherwise have been distributed to the General Partner and the Limited Partners
pursuant to this Agreement; or


 


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


 


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


 


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


 


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


 


55

















 


General Partner), and the
General Partner may, or, if required by the Act, shall, publish notice thereof
in a newspaper of general circulation in each place in which the Partnership
regularly conducts business (as determined in the sole and absolute discretion
of the General Partner).


 


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


 


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


 


ARTICLE XIV


PROCEDURES FOR ACTIONS AND CONSENTS

OF PARTNERS; AMENDMENTS; MEETINGS


 


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


 


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


 


Section 14.3           Meetings
of the Partners.


 


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


 


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


 


56

















 


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


 


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


 


ARTICLE XV


GENERAL PROVISIONS


 


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


 


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


 


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


 


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


 


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


 


Section 15.6           Waiver.


 


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


 


B.            The restrictions,
conditions and other limitations on the rights and benefits of the Limited
Partners contained in this Agreement, and the duties, covenants and other
requirements of performance or notice by the Limited Partners, are for the
benefit of the Partnership and, except for an obligation to pay money to the
Partnership, may


 


57

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


58

















 


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


 


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


 


Section 15.13         No
Third-Party Rights Created Hereby. 
The provisions of this Agreement are solely for the purpose of defining
the interests of the Partners, inter  se; and no other person,
firm or entity (i.e., a party who is not a signatory hereto or a
permitted successor to such signatory hereto) shall have any right, power,
title or interest by way of subrogation or otherwise, in and to the rights,
powers, title and provisions of this Agreement.  No creditor or other third party having dealings with the
Partnership (other than as expressly set forth herein with respect to
Indemnitees) shall have the right to enforce the right or obligation of any
Partner to make Capital Contributions or loans to the Partnership or to pursue
any other right or remedy hereunder or at law or in equity.  None of the rights or obligations of the
Partners herein set forth to make Capital Contributions or loans to the
Partnership shall be deemed an asset of the Partnership for any purpose by any
creditor or other third party, nor may any such rights or obligations be sold,
transferred or assigned by the Partnership or pledged or encumbered by the
Partnership to secure any debt or other obligation of the Partnership or any of
the Partners.


 


Section 15.14         No
Rights as Stockholders.  Nothing
contained in this Agreement shall be construed as conferring upon the Holders
of Partnership Units any rights whatsoever as stockholders of the General
Partner, including without limitation any right to receive dividends or other
distributions made to stockholders of the General Partner or to vote or to
consent or receive notice as stockholders in respect of any meeting of
stockholders for the election of directors of the General Partner or any other
matter; provided, however, that the Limited Partners owning
Paired Common Units shall have all rights as holders of Special Voting Shares
as shall be provided to such holders in the Charter.


 


Section 15.15         Creditors.  Other than as expressly set forth herein
with respect to Indemnitees, none of the provisions of this Agreement shall be
for the benefit of, or shall be enforceable by, any creditor of the
Partnership.


 


 


[the next page is the signature page]


 


59

















 


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


 


	
   

  	
  GENERAL PARTNER:

  
	
   

  	
   

  	
   

  
	
   

  	
  AFFORDABLE RESIDENTIAL
  COMMUNITIES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott L. Gesell

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Scott L. Gesell

  
	
   

  	
   

  	
  Title:

  	
  Vice President and
  Secretary

  
					



 


60

















 


	
   

  	
  PAIRED COMMON UNIT
  HOLDERS,

  
	
   

  	
   

  	
  Listed on Exhibit A hereto

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  AFFORDABLE RESIDENTIAL
  COMMUNITIES INC.,

  
	
   

  	
   

  	
  Attorney-in-fact

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott L. Gesell

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Scott L. Gesell

  
	
   

  	
   

  	
  Title: 

  	
  Vice President and
  Secretary

  
					



 

















 


As of February 11, 
2004


 


Exhibit A


PARTNERS AND PARTNERSHIP UNITS


 


	
  Name and
  Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  General Partner:

  	
   

  	
   

  
	
  ARC IV REIT, Inc.

  600 Grant Street, Suite 900
Denver, Colorado  80203
Attention: Scott L. Gesell
Facsimile No.:  (303) 294-0085

  	
   

  	
  17,120,837 Partnership
  Common Units

  
	
   

  	
   

  	
   

  
	
  Limited Partners:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  511 Equities Corporation

  c/o Rachel Kuluva
590 Fifth Avenue, 19th
  Floor
New York, NY  10036

  	
   

  	
  19,683 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Andrew and Elaine Pesky

  10 East 53rd Street
New York, NY  10022

  	
   

  	
  28,356 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  ARC II Investor

  Charles A. Davis
Marsh & McClennan Risk Capital
  Corp.
20 Horseneck Lane
Greenwich, CT  06830

  	
   

  	
  126,174 Paired Common
  Units

  



 


A-1

















 


	
  Name and
  Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  ARC Ventures

  c/o Greg Green
2911 Turtle Creek Blvd., Ste. 1240
Dallas, TX  75219-6252

  	
   

  	
  14,614 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Arno P. Niemand

  777 -15th Street
Boulder, CO  80302

  	
   

  	
  4,920 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Brittany Ridge Investment
  Partners, L.P

  c/o John J. Oros
280 Highland Avenue
Ridgewood, NJ  07450-4004

  	
   

  	
  8,025 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Bruce V. Rauner

  GTCR Golder Rauner L.L.C.
6100 Sears Tower
Chicago, IL  60606

  	
   

  	
  68,298 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Curtis S. Lane

  135 Central Park West
New York, NY  10023

  	
   

  	
  5,536 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Daniel J. Sullivan Jr.

  141 Forest Street
Wellesley, MA  02181

  	
   

  	
  6,888 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  David Lurie

  1050 Fifth Avenue
New York, NY  10028

  	
   

  	
  8,025 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  David N. Roberts

  Angelo Gordon & Co.
245 Park Avenue, 26th
  Floor
New York, NY  10167

  	
   

  	
  4,871 Paired Common Units

  



 


A-2

















 


	
  Name and
  Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  David S. Krivitsky

  220 East 72nd Street,
  #26F
New York, NY  10021

  	
   

  	
  984 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Dean R. O’Hare

  370 Lake Road
Far Hills, NJ  07931

  	
   

  	
  4,871 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Deborah Roberts

  515 West End Avenue
New York, NY  10024

  	
   

  	
  2,102 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Delaney Investment Partners
  Limited

  c/o Mike Delaney
BCRS Associates

  67 Wall Street
New York, NY  10005

  	
   

  	
  14,871 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Dennis and Cynthia Suskind

  136 E. 79th St.
  Apt. 9
New York, NY  10021

  	
   

  	
  9,294 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Donald R. Gant

  Youngs Road
New Vernon, NJ  07976

  	
   

  	
  65,821 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Edgell Street Partners

  c/o James Harasimowicz
210 Central Park South #24B
New York, NY  10019

  	
   

  	
  3,717 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Edward Dunay

  300 East 57th St.,
  Apt. 12D
New York, NY  10022

  	
   

  	
  17,435 Paired Common Units

  



 


A-3

















 


	
  Name and
  Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Eugene Atkinson

  Ripplewood Holdings Inc.
1 Rockefeller Center, 32nd
  Floor
New York, NY  10020

  	
   

  	
  4,920 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Eugene Mercy, Jr.

  1111 Park Avenue
New York, NY  10128
Phone:  (212) 407-3334

  	
   

  	
  128,059 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Farmer Family Trust

  John R. Farmer & Tawna B.
  Farmer
Trustees
2 Morrison Road
P.O. Box 1405
Ross, CA  94957

  	
   

  	
  27,737 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  FAWPEAS L.P.

   Alan D. & Wendy Pesky
59 East 54th Street, Suite
  42
New York, NY  10022

  	
   

  	
  47,016 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Fern K. Hurst

  1060 Fifth Avenue
New York, NY  10128

  	
   

  	
  2,435 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Frederick Garonzik

  Goldman Sachs
85 Broad Street
New York, NY  10004
Phone:  (212) 902-8717

  	
   

  	
  39,618 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Gamco Investors, Inc.

  Mario J. Gabelli
Gabelli Group Capital Partners, Inc.
One Corporate Center
Rye, NY  10580

  	
   

  	
  19,809 Paired Common Units

  



 


A-4

















 


	
  Name and
  Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Gary D. and Karen A. Rose

  Trustees for the benefit of Adam James Rose

  and Alexander Mark Rose

  24 Dryden Terrace

  Short Hills, NJ  07078

  	
   

  	
  9,841 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Granite Capital, L.P

  c/o Lloyd Moskowitz
126 E. 56th Street, 25th
  Floor
New York, NY  10022

  	
   

  	
  95,766 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Grantor Trust for Dana E.
  Tang

  c/o Oscar Tang
New England Investment Co.
600 Fifth Avenue, 8th
  Floor
New York, NY  10020

  	
   

  	
  3,153 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Grantor Trust for Kevin C.
  Tang

  c/o Oscar Tang
New England Investment Co.
600 Fifth Avenue, 8th
  Floor
New York, NY  10020

  	
   

  	
  3,153 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Grantor Trust for Kristin
  A. Tang

  c/o Oscar Tang
New England Investment Co.
600 Fifth Avenue, 8th
  Floor
New York, NY  10020

  	
   

  	
  3,153 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Grantor Trust for Tracy L.
  Tang

  c/o Oscar Tang
New England Investment Co.
600 Fifth Avenue, 8th
  Floor
New York, NY  10020

  	
   

  	
  3,153 Paired Common Units

  



 


A-5

















 


	
  Name and
  Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Gregory Stephen Pesky

  5344 James Avenue South
Minneapolis, MN  55419

  	
   

  	
  2,619 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Heidi Pesky Worcester

  40 Blood Street
Lyme, CT  06371

  	
   

  	
  2,619 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Henry Barkhorn

  1095 Park Avenue
New York, NY  10128

  	
   

  	
  19,809 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Howard Silverstein

  895 Park Avenue, Apt. 9C
New York, NY  10021

  	
   

  	
  15,757 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Howard P. Berkowitz

  65 East 55th
  Street, 30th Floor
New York, NY  10022

  	
   

  	
  79,237 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Indian Creek Partners, LP

  c/o David C. Clapp
Goldman Sachs & Co.
85 Broad Street, 29th
  Floor
New York, NY  10004

  	
   

  	
  37,061Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Indosuez ARC Partners

  c/o Michael Walsh, Esq.
666 Third Avenue
New York, NY  10017

  	
   

  	
  63,08 7 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Irving and Carol Yoskowitz

  11517 Highland Farm Road
Potomac, MD  20854

  	
   

  	
  7,671 Paired Common Units

  



 


A-6

















 


	
  Name and
  Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  J.  Russell Bellamy

  3504 Drexel Drive
Dallas, TX  75205

  	
   

  	
  9,576 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  James E. Hunt

  1111 Park Avenue
New York, NY 10128

  	
   

  	
  13,193 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Joanne D. Corzine

  25 Lenox Road
Summit, NJ 07901

  	
   

  	
  19,809 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Joel and Helen Portugal

  30 E. 72nd Street
New York, NY 10021

  	
   

  	
  3,827 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  John A. Roberds

  Odyssey Digital Printing
6935-A East 38th
Tulsa, OK 74 145

  	
   

  	
  4,871 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  John G. Duffy

  415 Crestwood Avenue
Crestwood, NY 10707

  	
   

  	
  42,335 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  John Markham Green

  15 East 91st Street, Apt. 10A
New York, NY 10028

  	
   

  	
  34,871 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Joseph E. Robert Jr.

  1288 Ballantrae Farm Drive
MacLean, VA 22101

  	
   

  	
  2,435 Paired Common Units

  



 


A-7

















 


	
  Name and
  Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Joseph Ellis

  Goldman Sachs
530 East 86th Street
New York, NY 10028

  	
   

  	
  7,873 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Joseph P. and Beatrice L.
  Riccardo

  311 Sweetbriar Court
Franklin Lakes, NJ 07417

  	
   

  	
  11,094 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Judith Berkowitz

  c/o HPB Associates, L.P.
65 East 55th Street, 30th Floor
New York, NY 10022

  	
   

  	
  15,721 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Kathryn Briger

  200 East 65th Street
New York, NY 10021

  	
   

  	
  11,885 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Kendrick R. Wilson III

  161 Cantitoe Road
Katonah, NY 10536

  	
   

  	
  11,094 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Laura T. Traphagen

  Ha’ Penny House
Van Beuren Road
Morristown, NJ 07960

  	
   

  	
  33,284 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Lawrence E. and Valerie C.
  Uhl

  1370 Old Mill Road
San Marino, CA 91 108 

  	
   

  	
  4,871 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Lewis M. Eisenberg

  Granite Capital International
  Group
126 E. 56th Street, 25th Floor
New York, NY 10022

  	
   

  	
  19,809 Paired Common Units

  



 


A-8

















 


	
  Name and
  Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Mary Kong

  375 S. End Ave #30E
New York, NY 10280

  	
   

  	
  4,647 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  McMahon Investment
  Partners, L.P.

  c/o T. Gordon McMahon
350 E. 79th Street, Apt. 37B
New York, NY 10021 -9209

  	
   

  	
  171,387 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Mercy Foundation

  c/o Eugene Mercy, Jr.
1111 Park Avenue
New York, NY 10128-1234

  	
   

  	
  26,202 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Michael Ainslie

  415 Sea Spray Avenue
Palm Beach, FL 33480

  	
   

  	
  35,812 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Michael J. Moss

  258 Soundview Avenue
White Plains, NY 10606

  	
   

  	
  4,647 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Mobilecourt Partners I

  c/o Irv Flinn, Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004

  	
   

  	
  48,859 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Mobilecourt Partners II

  c/o Irv Flinn, Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004

  	
   

  	
  37,835 Paired Common Units

  



 


A-9

















 


	
  Name and
  Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Mobilecourt Partners III

  c/o Irv Flinn, Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004

  	
   

  	
  18,883 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  NTP Partners

  Anthony Ittleson
c/o Hennan Holding Corp.
111 Great Neck Road
New York, NY 11021

  	
   

  	
  9,294 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Oscar L. Tang

  New England Investment Co.
600 Fifth Avenue, 8th Floor
New York, NY 10021

  	
   

  	
  12,087 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Park Partners II

  c/o Marc Wolinsky
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019

  	
   

  	
  75,031 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Peter Fahey

  Goldman, Sachs & Co.
85 Broad Street, 2nd Floor
New York, NY 10004

  	
   

  	
  9,841 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Peter L. Briger

  Fortress Investment Group
1301 Avenue of the Americas
42nd Floor
New York, NY 10019

  	
   

  	
  11,094 Paired Common Units

  



 


A-10

















 


	
  Name and
  Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Quidnet Investment
  Partners, L.P.

  c/o Alan A. Shuch
Managing General Partner
145 Forest Drive
Short Hills, NJ 07078

  	
   

  	
  4,920 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Richard D. Reiss Jr. and
  Bonnie Reiss, JTWROS

  100 1 Park Avenue
New York, NY 10028

  	
   

  	
  30,290 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Richard T. Pratt

  1694 South Mohawk Way
Salt Lake City, UT 84108

  	
   

  	
  4,871 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Richard W. & Catherine
  E. Herbst

  12 Gap View Road
Short Hills, NJ 07078

  	
   

  	
  14,999 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Robert Cenci

  45 Overlook Drive
Greenwich, CT 06830

  	
   

  	
  27,669 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Robert E. Mnuchin

  218 Nettleton Hollow Road
Washington, CT 06793

  	
   

  	
  27,737 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Robert J. Hurst

  Goldman Sachs & Co.
85 Broad Street, 30th Floor
New York, NY 10004

  	
   

  	
  7,507 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Robert L. Callender,
  Revocable Trust

  201 Somerset Avenue
Southampton, NY 11968

  	
   

  	
  984 Paired Common Units

  



 


A-11

















 


	
  Name and
  Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Robert N. Downey

  Goldman Sachs & Co.
85 Broad Street, 2nd Floor
New York, NY 10004

  	
   

  	
  47,882 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Robert Yedid

  Pelham Avenue
Sands Point, NY 11050

  	
   

  	
  3,654 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Ross E. Traphagen

  Van Beuren Road
Morristown, NJ 07960

  	
   

  	
  203,646 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Roy Anderes

  60 Culver Street
Southampton, NY 11968

  	
   

  	
  984 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Sally Gordon

  1080 Fifth Avenue, Apt. 14B
New York, NY 10128

  	
   

  	
  11,162 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Steven Malkenson

  17 West 67th Street, #9F
New York, NY 10023

  	
   

  	
  17,029 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Susan Mercy

  1111 Park Ave
New York, NY 10128

  	
   

  	
  23,182 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Tanavon Corporation

  c/o Oscar Tang
600 Fifth Avenue, 8th Floor
New Y ork, NY 10021

  	
   

  	
  149,769 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Thomas I. Unterberg

  C.E. Unterberg, Towbin
350 Madison Avenue, 10th Floor
New York, NY 10017

  	
   

  	
  39,618 Paired Common Units

  



 


A-12

















 


	
  Name and
  Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Thomas Mendell

  J.P. Morgan Partners
1221 Avenue of the Americas
New York, NY 10020-0180

  	
   

  	
  5,298 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Thomas Rhodes

  c/o National Review
215 Lexington Avenue, 4th
  Floor
New York, NY 10016

  	
   

  	
  6,888 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Todd and Gretchen Zelek

  2000 Ashbourne Drive
S. Pasadena, CA 91030

  	
   

  	
  8,057 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Todd J. Zelek

  2000 Ashbourne Drive
S. Pasadena, CA 91030

  	
   

  	
  10,787 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Trust for benefit of
  Gregory S. Pesky

  c/o A.D. Pesky Company
437 Madison Avenue, 36th Floor
New York, NY 10022

  	
   

  	
  4,028 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Trust for benefit of Heidi
  Pesky Worcester

  c/o A.D. Pesky Company
437 Madison Avenue, 36th Floor
New York, NY 10022

  	
   

  	
  4,028Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Victor Wright

  Goldman, Sachs & Co.
One New York Plaza, 45th Floor
New York, NY 10004

  	
   

  	
  19,809 Paired Common Units

  



 


A-13

















 


	
  Name and
  Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Walter Harrison III

  Granite Capital
126 E. 56th Street, 25th Floor
New York, NY 10022

  	
   

  	
  7,923 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Watchung Road Associates,
  L.P.

  Attn: Leon Cooperman
45 Watchung Road
Short Hills, NJ 07078

  	
   

  	
  274,746 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  William H. Ingram and
  Cathy M. Brienza

  c/o Sutton Capital Associates,
  Inc.
One Rockefeller Plaza, Suite 3300
New York, NY 10020

  	
   

  	
  4,744 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  William Ingram

  Sutton Capital Associates,
  Inc.
One Rockefeller Plaza, Suite 3300
New York, NY 10020-2102

  	
   

  	
  6,670 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  William Malkenson

  PMB #442
4132 S. Rainbow Blvd. `1
Las Vegas, NV 89103

  	
   

  	
  5,942 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  TOTALS

  	
   

  	
  2,717,673 Paired Common
  Units

  



 


A-14

















 


Exhibit
B

EXAMPLES REGARDING ADJUSTMENT FACTOR


 


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


 


Example 1


 


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


 





 


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


 


Example 2


 


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


 





 


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


 


Example 3


 


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


 


B-1

















 





 


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


 


B-2

















 


Exhibit
C

NOTICE OF REDEMPTION


 


	
  To:

  	
  Affordable
  Residential Communities Inc.

  
	
   

  	
  c/o

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


The
undersigned Limited Partner or Assignee hereby irrevocably tenders for
Redemption
                  
Partnership Common Units in Affordable Residential Communities LP (formerly
known as Affordable Residential Communities IV, LP) in accordance with the
terms of the First Amended and Restated Agreement of Limited Partnership of
Affordable Residential Communities LP (formerly known as Affordable Residential
Communities IV, LP), dated as of February 11, 2004  (the “Agreement”), and the Redemption
rights referred to therein.  The
undersigned Limited Partner or Assignee:


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


C-1

















 


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


 


	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name
  of Limited Partner or Assignee:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Signature
  of Limited Partner or Assignee)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Street
  Address)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (City)

  	
   

  	
  (State)

  	
   

  	
  (Zip
  Code)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature
  Guaranteed by:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Issue
  Check Payable to:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Please
  insert social security

  or identifying number:

  	
   

  	
   

  	
   

  
									



 


C-2

















 


Exhibit
D

FORM OF UNIT CERTIFICATE


 


THE
SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP AN OPINION OF
COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM AND SUBSTANCE SATISFACTORY TO
THE PARTNERSHIP, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER
DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.  IN ADDITION, THE LIMITED PARTNERSHIP INTEREST EVIDENCED BY THIS
CERTIFICATE MAY BE SOLD OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE
RESTRICTIONS ON TRANSFER SET FORTH IN THE FIRST AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF AFFORDABLE RESIDENTIAL COMMUNITIES LP (FORMERLY KNOWN
AS AFFORDABLE RESIDENTIAL COMMUNITIES IV, LP), DATED AS OF FEBRUARY 11,
2004, A COPY OF WHICH MAY BE OBTAINED FROM AFFORDABLE RESIDENTIAL COMMUNITIES
INC., THE GENERAL PARTNER, AT ITS PRINCIPAL EXECUTIVE OFFICE.


 


 


Certificate Number
            


 


AFFORDABLE RESIDENTIAL COMMUNITIES LP

FORMED UNDER THE LAWS OF THE STATE OF DELAWARE


 


This
certifies that 


is
the owner of 


 


FULLY PAID PARTNERSHIP COMMON UNITS

OF

AFFORDABLE RESIDENTIAL COMMUNITIES LP


 


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


 


IN
WITNESS WHEREOF, the undersigned has signed this Certificate.


 


	
  Dated:

  
	
   

  
	
   

  
	
   

  	
  By

  	
   

  	
   

  



 


D-1

















 


Exhibit
E

FORM OF PAIRED COMMON UNIT CERTIFICATE


 


THE
SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP AN OPINION OF
COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM AND SUBSTANCE SATISFACTORY TO
THE PARTNERSHIP, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER
DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.  IN ADDITION, THE LIMITED PARTNERSHIP INTEREST EVIDENCED BY THIS
CERTIFICATE MAY BE SOLD OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE
RESTRICTIONS ON TRANSFER SET FORTH IN THE FIRST AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF AFFORDABLE RESIDENTIAL COMMUNITIES LP (FORMERLY KNOWN
AS AFFORDABLE RESIDENTIAL COMMUNITIES IV, LP), DATED AS OF FEBRUARY 11,
2004, A COPY OF WHICH MAY BE OBTAINED FROM AFFORDABLE RESIDENTIAL
COMMUNITIES  INC., THE GENERAL PARTNER,
AT ITS PRINCIPAL EXECUTIVE OFFICE.


 


THIS
PAIRED COMMON UNIT SHALL NOT BE TRANSFERABLE, AND SHALL NOT BE TRANSFERRED ON
THE BOOKS OF THE PARTNERSHIP, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF
THE  PAIRING AGREEMENT, DATED AS OF MAY
2, 2002, BY AND BETWEEN THE PARTNERSHIP AND THE GENERAL PARTNER AS AMENDED FROM
TIME TO TIME (THE “PAIRING AGREEMENT”).


 


Certificate Number
            


 


AFFORDABLE RESIDENTIAL COMMUNITIES LP

FORMED UNDER THE LAWS OF THE STATE OF DELAWARE


 


This
certifies that 


is
the owner of 


 


FULLY PAID PARTNERSHIP COMMON UNITS

OF

AFFORDABLE RESIDENTIAL COMMUNITIES LP


 


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


 


IN
WITNESS WHEREOF, the undersigned has signed this Certificate.


 


	
  Dated:

  
	
   

  
	
   

  
	
   

  	
  By

  	
   

  	
   

  



 


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