<PAGE>

                                                                    EXHIBIT 10.5

                                                                  EXECUTION COPY

                        AGREEMENT OF LIMITED PARTNERSHIP

                                       FOR

                              CL ASHTON WOODS, L.P.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                         <C>
ARTICLE I   DEFINITIONS                                                                      1
            Section 1.1    Definitions                                                       1
            Section 1.2    Terms Generally                                                  10
            Section 1.3    Other Definitions                                                10
            Section 1.4    Exhibits and Schedules                                           10

ARTICLE II  GENERAL PROVISIONS                                                              11
            Section 2.1    Formation of Partnership                                         11
            Section 2.2    Certificates                                                     11
            Section 2.3    Name                                                             11
            Section 2.4    Place; Registered Agent                                          11
            Section 2.5    Term                                                             11
            Section 2.6    Purposes of Partnership                                          11
            Section 2.7    Nature of Partnership Interests                                  12
            Section 2.8    Form of Entity; Limited Authority                                12
            Section 2.9    Other Activities                                                 13

ARTICLE III CAPITAL CONTRIBUTIONS; PERCENTAGE INTERESTS                                     13
            Section 3.1    Initial Capital Contributions                                    13
            Section 3.2    Additional Capital Contributions                                 13
            Section 3.3    Optional Loans                                                   15
            Section 3.4    Capital Calls                                                    16
            Section 3.5    Capital Accounts                                                 18
            Section 3.6    Rights of Creditors                                              18
            Section 3.7    Percentage Interests and Residual Interests                      19
            Section 3.8    Additions to and Withdrawal of Capital                           19
            Section 3.9    Financing                                                        19
            Section 3.10   Power of Attorney                                                19

ARTICLE IV  DISTRIBUTIONS AND ALLOCATIONS                                                   19
            Section 4.1    Allocation of Net Profit                                         19
            Section 4.2    Allocation of Net Loss                                           20
            Section 4.3    Net Loss Limitation                                              21
            Section 4.4    Intentions and Construction of Allocations                       21
            Section 4.5    Special Allocations                                              21
            Section 4.6    Curative Allocations                                             22
            Section 4.7    Other Allocation Rules                                           22
            Section 4.8    Tax Allocations                                                  23
            Section 4.9    Distributions of Net Receipts                                    23
            Section 4.10   Manner of Distribution                                           24

ARTICLE V   BOOKS OF ACCOUNT, ACCOUNTING AND REPORTS                                        24
            Section 5.1    Books and Records; Fiscal Year                                   24
</TABLE>

                                      -i-

<PAGE>

<TABLE>
<S>                                                                                         <C>
             Section 5.2    Financial Statements and Reports                                 25
             Section 5.3    Tax Status and Returns                                           25
             Section 5.4    Bank Accounts                                                    25
             Section 5.5    Accounting, Bookkeeping, Personnel                               25
             Section 5.6    Designation of Tax Matters Partner                               25
             Section 5.7    Tax Elections                                                    26
             Section 5.8    Custody of Partnership Funds                                     26

ARTICLE VI   MANAGEMENT OF THE PARTNERSHIP                                                   26
             Section 6.1    Management                                                       26
             Section 6.2    Powers and Duties of the Managing Partner                        26
             Section 6.3    Insurance                                                        28
             Section 6.4    Employment of Others                                             28
             Section 6.5    Project Development Budget Updates                               29
             Section 6.6    Management Fee                                                   29
             Section 6.7    Licenses                                                         29
             Section 6.8    Indemnification                                                  29
             Section 6.9    Limitations on Power and Authority of the
                            Managing Partner                                                 30
             Section 6.10   Annual Business Plan                                             33
             Section 6.11   Management by Limited Partners Prohibited                        35
             Section 6.12   Inspection                                                       35
             Section 6.13   Consultations                                                    35
             Section 6.14   Compensation                                                     35
             Section 6.15   Removal of Managing Partner                                      36
             Section 6.16   Partner Meetings                                                 36

ARTICLE VII  REPRESENTATIONS, WARRANTIES AND COVENANTS                                       38
             Section 7.1    Representations, Warranties and Covenants                        38
             Section 7.2    Indemnity for Breach of Warranty                                 39
             Section 7.3    Scope of Authority                                               39

ARTICLE VIII CONTRACTS WITH RELATED PARTIES; ACQUISITION
             AND DEVELOPMENT OF THE PROPERTY                                                 40
             Section 8.1    Related Party Contracts                                          40
             Section 8.2    Acquisition of the Real Property                                 40

ARTICLE IX   BUY-SELL                                                                        40
             Section 9.1    Buy-Sell                                                         40

ARTICLE X    TRANSFER OF PARTNERSHIP INTEREST(S)                                             43
             Section 10.1   Transfer of Partnership Interest(s)s Held by the
                            General Partner                                                  43
             Section 10.2   Acquisition of Partnership hiterest(s) for
                            Investment                                                       43
             Section 10.3   Transfer of Partnership Interest(s) Held by any
                            Limited Partner                                                  44
</TABLE>

                                      -ii-

<PAGE>

<TABLE>
<S>                                                                                         <C>
             Section 10.4    Incapacity of a Partner                                         44
             Section 10.5    Assignees                                                       45
             Section 10.6    Substituted Partner                                             45
             Section 10.7    Indirect Transfers                                              45

ARTICLE XI   DEFAULT                                                                         46
             Section 11.1    Events of Default                                               46
             Section 11.2    Elections of Non-Defaulting Partner                             47

ARTICLE XII  TERM; LIQUIDATION AND DISSOLUTION                                               49
             Section 12.1    Term                                                            49
             Section 12.2    Dissolution                                                     49
             Section 12.3    Liquidation and Distribution Procedure                          49

ARTICLE XIII ARBITRATION                                                                     51
             Section 13.1    Initiation                                                      51
             Section 13.2    Court Enforcement of Arbitration Award                          52
             Section 13.3    Consolidation Proceedings                                       52

ARTICLE XIV  GENERAL PROVISIONS                                                              52
             Section 14.1    Independent Parties                                             52
             Section 14.2    Counterparts                                                    52
             Section 14.3    Notices                                                         53
             Section 14.4    Effect and Interpretation                                       54
             Section 14.5    Severability                                                    54
             Section 14.6    Binding Upon Successors                                         54
             Section 14.7    Gender                                                          54
             Section 14.8    Headings                                                        54
             Section 14.9    Entire Agreement                                                54
             Section 14.10   Force Majeure                                                   54
             Section 14.11   Time                                                            55
</TABLE>

Exhibits

Exhibit A  Property

Exhibit B  Development Budget

Exhibit C  Development Plan

Exhibit D  Lot Sale Contract

Exhibit E  Initial Annual Business Plan

Exhibit F  Initial Annual Budget

Exhibit G  Purchase Agreement

                                     -iii-

<PAGE>

Schedules

Schedule 3.1 - Initial Capital Contributions

Schedule 3.2(a) - Partners' Total Project Cost Commitments

Schedule 6.15   - Minimum Sales Requirements

                                      -iv-

<PAGE>

                      AGREEMENT OF LIMITED PARTNERSHIP FOR

                             CL ASHTON WOODS, L.P.

      THIS AGREEMENT OF LIMITED PARTNERSHIP FOR CL ASHTON WOODS, L.P. (the
"Agreement") is made and entered into to be effective as of March 10, 2005, by
and among CL TEXAS I, GP, LLC, a Georgia limited liability company, as a General
Partner ("CLGP"); CL TEXAS, L.P., a Texas limited partnership ("CL"), as a
Limited Partner; AW SOUTHERN TRAILS, INC., a Texas corporation ("Ashton Woods
GP"), as a General Partner; and ASHTON HOUSTON RESIDENTIAL L.L.C., a Texas
limited liability company ("Ashton Woods LP"), as a Limited Partner.

      The parties hereto desire to form a limited partnership under the laws of
the State of Texas, for the purposes and on the terms provided herein.

      NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, the General Partner and Limited Partners do hereby
agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

      SECTION 1.1 DEFINITIONS. The following terms, explanations and definitions
of words, phrases and clauses shall govern when the terms are used in this
Agreement unless the context thereof specifically indicates a different meaning:

      ACT means the Texas Revised Limited Partnership Act, as the same from time
to time has been or may be amended.

      ADDITIONAL CAPITAL CONTRIBUTIONS means the contributions to the capital of
the Partnership to be made by each of the Partners, as applicable, in accordance
with the provisions of Sections 3.2 and 3.4 of this Agreement.

      ADJUSTED CAPITAL ACCOUNT DEFICIT means, with respect to a Partner, the
deficit balance, if any, in that Partner's Capital Account as of the end of the
relevant Fiscal Year or other applicable period, after giving effect to the
following adjustments:

                  (a)The Capital Account will be increased by any amount that
  the Partner is obligated to restore, if any, including any amount such Partner
  is deemed to be obligated to restore under the penultimate sentence of
  Regulations Sections 1.704-2(g) (1) and 1.704-2(i)(5); and

                  (b)The Capital Account will be decreased by the items
  described in Regulations Sections 1.704-l(b)(2)(ii)(d)(4), (5) and (6).

This definition of Adjusted Capital Account Deficit is intended to comply with
the provisions of Regulations Section 1.704-l(b)(2)(ii)(d) and shall be
interpreted consistently with those provisions.

<PAGE>

      AFFILIATE means, with respect to any Person, (a) any officer, director,
trustee, partner, employee or current holder of ten percent (10%) or more of any
class of the voting securities of or equity or profits interest in such Person;
(b) any corporation, partnership, trust, estate or other entity controlling,
controlled by or under common control with such Person; (c) any officer,
director, trustee, partner, employee or current holder of ten percent (10%) or
more of the outstanding voting securities of or equity or profits interest in
any corporation, partnership, trust or other entity controlling, controlled by
or under common control with such Person; and (d) any relative (within the third
degree of consanguinity) or spouse (or any relative within the third degree of
consanguinity of any such spouse) of any natural person included in clauses (a),
(b) or (c) above, or any trusts for the benefit of or entities controlled by or
under common control with any such relative or spouse. With regard to CL, for
purposes of clause (b) of the immediately preceding sentence, "Affiliate" shall
include Cousins Real Estate Corporation, a Georgia corporation, and Lumbermen's
Investment Corporation, a Texas corporation, or an Affiliate of either
corporation.

      AGREEMENT means this Agreement of Limited Partnership, as the same may be
amended from time to time.

      ANNUAL BUDGET means the annual budget for the Partnership prepared and
approved as part of the Annual Business Plan pursuant to Section 6.10 herein
which shall be comprised of: (A) an estimate of all receipts from and
expenditures for the ownership, management, development and sale of Lots for
each Fiscal Year (that are not detailed in the Development Budget) and (B) an
estimate of all capital expenditures with respect to the Project for any Fiscal
Year (that are not detailed in the Development Budget).

      ANNUAL BUSINESS PLAN means the annual business plan prepared by the
Managing Partner and Approved by the Partners in accordance with the provisions
of Section 6.10 of this Agreement. Each Annual Business Plan shall include the
Minimum Sales Requirements for such period.

      APPROVED BY THE PARTNERS or APPROVAL OF THE PARTNERS shall mean approved
by or approval of the General Partners and the holders of at least two-thirds
(66.67%) of the Percentage Interests, provided, however, except for the specific
matters described in Section 6.9(a), a Defaulting Partner shall not have a right
to approve any matter hereunder.

      ASHTON WOODS shall mean Ashton Houston Residential L.L.C., a Texas limited
liability company.

      ASHTON WOODS GP shall mean AW Southern Trails, Inc., a Texas corporation.
Ashton Woods GP's principal place of business is located at 11375 West Sam
Houston Parkway South, Suite 100, Houston, Texas 77031.

      ASHTON WOODS LP shall mean Ashton Houston Residential L.L.C. Ashton Woods
LP's principal place of business is located at 11375 West Sam Houston Parkway
South, Suite 100, Houston, Texas 77031.

      BANKRUPTCY or BANKRUPT means and/or refers to bankruptcy or insolvency, or
a bankruptcy or insolvency, reorganization, arrangement, liquidation or similar
proceeding under

                                       2
<PAGE>

the laws of any jurisdiction, Federal or state, including, but not limited to, a
voluntary or involuntary petition under any bankruptcy or insolvency laws or
under the reorganization provisions of any law, the voluntary or involuntary
appointment of a receiver, the voluntary or involuntary assignment for the
benefit of creditors generally, or an admission in writing of the inability to
pay debts as they become due; provided, however, that, in the case of any
involuntary petition, appointment, assignment or similar involuntary proceeding,
such action shall not constitute a Bankruptcy and the party which is the object
of such action shall not be considered Bankrupt until ninety (90) days has
elapsed from the initiation of such action without the dismissal of such
involuntary proceeding.

      BUSINESS DAY shall mean any day except a Saturday, Sunday or any other day
in which commercial banks in Atlanta, Georgia are authorized or required by law
to close.

      CAPITAL ACCOUNT shall mean one of the individual capital accounts
maintained for each Partner in accordance with the terms of Section 3.5 of this
Agreement.

      CAPITAL CONTRIBUTION means, with respect to any Partner, the amount of
cash and the initial Gross Asset Value of any property (other than money)
contributed to the Partnership with respect to the interest in the Partnership
held by that Partner, net of liabilities encumbering such contributed property
that the Partnership is considered to assume or take subject to under Section
752 of the Code, including all Initial Capital Contributions and Additional
Capital Contributions. Any reference in this Agreement to the Capital
Contribution of a particular Partner will include a Capital Contribution made by
any prior Partner with respect to the Partnership Interest(s) of the applicable
Partner.

      CL shall mean CL Texas, L.P., a Texas limited partnership and a Limited
Partner in the Partnership. CL's principal office is located at 5495 Beltline
Road, Suite 225, Dallas, Texas 75254.

      CLGP shall mean CL Texas I GP, LLC, a Georgia limited liability company
and a General Partner in the Partnership. CLGP's principal office is located at
2500 Windy Ridge Parkway, Suite 1600, Atlanta, Georgia 30339

      CODE shall mean the Internal Revenue Code of 1986, as from time to time
amended, together with all regulations thereunder from time to time in effect.

      CONTRIBUTION LOAN shall have the meaning set forth in Section 3.4(c)
herein.

      DEFAULTING PARTNER shall have the meaning set forth in Section 11.1.

      DEPRECIATION means, for each Fiscal Year or other period, an amount equal
to the depreciation, amortization or other cost recovery deduction allowable
with respect to an asset for the 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 the year or other period Depreciation will be an
amount which bears the same ratio to the initial Gross Asset Value as the
federal income tax depreciation, amortization or other cost recovery deduction
for the year or other period bears to the beginning adjusted tax basis (except
as required by Regulations Section 1.704-3(d)), provided that if the federal
income tax depreciation, amortization, or other cost

                                       3
<PAGE>

recovery deduction for the year or other period is zero, Depreciation will be
determined with reference to the initial Gross Asset Value using any reasonable
method selected by the General Partners.

      DESIGNATED REPRESENTATIVE(s) shall mean Tom Krobot and Bob Salomon with
respect to Ashton Woods GP, and Bruce Smith, Michael Quinley and Craig Knight
with respect to CLGP. Any Designated Representative may be replaced or
additional Designated Representatives may be appointed by the applicable Partner
upon notice to the other Partners. In the event any Partner has more than one
(1) Designated Representative, the decision of any Designated Representative of
such Partner that is in writing signed by a Designated Representative of such
Partner or is reflected in the approved minutes of a meeting shall be binding on
the applicable Partner and the other Designated Representative(s) of such
Partner and may be relied on by the other Partners hereunder.

      DEVELOPER shall mean the "Development Manager" designated in the
Development Agreement.

      DEVELOPMENT AGREEMENT shall mean that certain Development Agreement made
and entered into by and between Aurous Development Services, Ltd., a Texas
limited partnership, and Ashton Southern Trails Joint Venture, a Texas joint
venture, as assigned by Ashton Southern Trails Joint Venture to the Partnership,
or otherwise as approved by the Partners.

      DEVELOPMENT BUDGET shall mean the budget of the anticipated Development
Costs for the Project attached hereto as Exhibit B and incorporated herein by
reference, as the same may be amended from time to time with the Approval of the
Partners.

      DEVELOPMENT COSTS shall mean all costs which have been or are estimated to
be incurred by the Partnership with respect to the acquisition, design,
development, construction, financing, and completion of the Project and the
marketing and sale of Lots, as set forth in the Development Budget.

      DEVELOPMENT PLAN shall mean Development Plan for the Project attached
hereto as Exhibit C and incorporated herein by reference, including the Plans
and Specifications and the Development Budget, as the same may be amended from
time to time with the Approval of the Partners.

      DUE DILIGENCE MATERIALS shall mean all studies, reports, tests, plans,
investigations, entitlements, surveys, permit and zoning applications and/or
approvals, and other due diligence and predevelopment documents, materials and
applications which relate to the Project.

      FINANCING(s) shall mean one or more, as the context shall so indicate, of
those certain loan(s) made by the respective Lender(s) to the Partnership to
finance and/or refinance the acquisition and/or development of the Project, as
Approved by the Partners.

      FINANCING ENHANCEMENTS shall have the meaning set forth in Section 3.2(a).

                                       4
<PAGE>

      FISCAL YEAR shall mean the fiscal year of the Partnership established
pursuant to Section 5.1, except that the first fiscal year of the Partnership
shall commence on the date hereof and shall terminate on the last day of 2005.

      FORCE MAJEURE EVENT shall mean strikes, embargoes, national emergencies,
acts of God, affirmative acts of governmental agencies relating to the
population in general (as opposed to acts of governmental agencies relating to
the Project or the Property) and other events beyond the reasonable control of
the parties (except for the inability of a party to pay money).

      GENERAL PARTNER(s) shall initially mean CL and Ashton Woods, and any
successors acting in such capacity.

      GROSS ASSET VALUE means, with respect to any asset, the adjusted basis
 of the asset for federal income tax purposes, except as follows:

            (a) The initial Gross Asset Value of any asset contributed (or
deemed contributed under Regulations Section 1.704-l(b)(l)(iv)) by a Partner to
the Partnership will be the fair market value of the asset on the date of the
contribution, as Approved by the Partners.

            (b) The General Partners may adjust the Gross Asset Values of all
Partnership assets to equal the respective fair market values of the assets as
of (i) the acquisition of an additional interest in the Partnership by any new
or existing Partner in exchange for more than a de minimus capital contribution;
(ii) the distribution by the Partnership to a Partner of more than a de minimus
amount of Partnership assets as consideration for an interest in the
Partnership; (iii) the grant of an interest in the Partnership (other than a de
minimums interest) as consideration for the provision of services to or for the
benefit of the Partnership by any new or existing Partner, and (iv) the
liquidation of the Partnership within the meaning of Regulations Section 1.704-
1(b)(2)(ii)(g); provided, however, that the adjustments pursuant to clauses (i),
(ii) and (iii) above shall be made only if the General Partners reasonably
determine an adjustment is necessary or appropriate to reflect the relative
economic interests of the Partners in the Partnership.

            (c) The Gross Asset Value of any Partnership asset distributed to
any Partner shall be adjusted to equal its then gross fair market value on the
date of distribution as reasonably determined by the General Partners.

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

            (e) If the Gross Asset Value of any asset has been determined or
adjusted under paragraphs (a), (b) or (d) above, the Gross Asset Value will
thereafter be adjusted by the Depreciation taken into account with respect to
the asset for purposes of computing Net Profit and Net Loss.

                                       5
<PAGE>

      GROSS RECEIPTS shall mean revenues and receipts (other than funds received
as Capital Contributions), calculated on an accrual basis, from the conduct of
the business of the Partnership from all sources, including but not limited to
(a) the gross cash proceeds from any sale, ground lease, exchange, condemnation
or other disposition of Lots or the Project or any portion thereof, including
but not limited to all principal and interest payments received with respect to
any note or other obligation received by the Partnership in connection with a
sale or other disposition of the Project or any portion thereof, plus (b) the
principal amount of all funds borrowed by the Partnership from time to time,
plus (c) the amount of any recovery of title, hazard or casualty insurance
proceeds from time to time (other than rental interruption insurance) in excess
of amounts expended in the restoration or repair of the Project, and the
recovery from any voluntary or involuntary condemnation of the Project or any
portion thereof in excess of amounts expended in the restoration of the Project,
plus (d) infrastructure reimbursements from third parties, including but not
limited to, utility reimbursements.

      IMPROVEMENTS shall mean any and all improvements developed or to be
developed upon or for the benefit of the Project in accordance with the
Development Plan.

      INITIAL CAPITAL CONTRIBUTIONS shall mean the contributions to the capital
of the Partnership to be made by each of the Partners, as applicable, in
accordance with the provisions of Section 3.1 of this Agreement.

      LENDER(s) shall mean the financial institution(s) making the Financing
available to the Partnership, as the context shall so indicate.

      LIMITED PARTNER(s) shall initially mean Ashton Woods and CL, and any
respective permitted successors thereto or assigns thereof.

      LOT shall mean any subdivided lot developed or to be developed as a single
family residential lot in the Project.

      LOT SALE CONTRACT(s) shall mean the contract(s) of sale, substantially in
the form attached hereto as Exhibit D, to be entered into by the Partnership and
[Ashton Woods] providing for the sale of Lots to Ashton Woods or an Affiliate of
Ashton Woods and such other contracts of sale Approved by the Partners for the
sale of Lots to third-party builders.

      MAJOR DECISIONS shall mean those actions which are not to be taken by
either Partner unless and until Approved by the Partners as set forth in Section
6.9 of this Agreement or as required elsewhere in this Agreement.

      MINIMUM SALES REQUIREMENTS shall be include in each Annual Business Plan.
The Minimum Sales Requirements for the period of the first Annual Business Plan
are shown on Schedule 6.15 to this Agreement. Schedule 6.15 also sets forth the
projected Minimum Sales Requirements for periods beyond the period covered by
the first Annual Business Plan, but such projected Minimum Sales Requirements
are not binding on the Managing Partner and are subject to change each time the
Managing Partner prepares an Annual Business Plan and submits such Annual
Business Plan to be Approved by the Partners in accordance with the provisions
of Section 6.10 of this Agreement; provided, however, in no event shall the
Minimum Sales Requirements for any annual period exceed the projected Minimum
Sales Requirements set forth

                                       6
<PAGE>

on Schedule 6.15 unless Approved by the Partners. The Minimum Sales Requirements
included within an Annual Business Plan Approved by the Partners shall become
the Minimum Sales Requirements for such period. In determining the Minimum Sales
Requirements to be included within an Annual Business Plan, for a particular
period as the Partners shall consider, among other things, (i) the general
economic conditions of the Houston Metropolitan Area and the specific economic
conditions of the City of Pearland, (iii) the performance or non-performance of
homebuilders (other than Ashton Woods or any Affiliate thereof) under lot sales
contract executed by the Partnership for the sale of lots in the Project, and
(iii) the extent that the lot sales and gross revenues in the periods covered by
previous Annual Business Plans exceed the lot sales or gross revenues set forth
in the Minimum Sales Requirements for such periods. In other words, should the
Managing Partner exceed the Minimum Sales Requirements for a particular period
or periods then the Minimum Sales Requirements included in the next Annual
Business Plan or Plans should reflect such fact and not penalize the Managing
Partner for executing the Minimum Sales Requirements for such period.

      MANAGING PARTNER shall mean Ashton Woods or any successor Managing
Partner.

      NET PROFIT or NET LOSS shall mean, for each Fiscal Year, the Partnership's
taxable income or taxable loss for such Fiscal Year, as determined under Section
703(a) of the Code (including all items required to be separately stated under
Section 703(a)(l) of the Code) and Regulations Section 1.703-1, but with the
following adjustments:

            (a)Any tax-exempt income, as described in Section 705(a)(l)(B) of
  the Code, realized by the Partnership during such Fiscal Year shall be added
  to such taxable income or taxable loss;

            (b)Any expenditures of the Partnership described in Section
  705(a)(2)(B) of the Code for such Fiscal Year or treated as being so described
  in Regulations Section 1.704-l(b)(2)(iv)(i) and not otherwise taken into
  account in this subsection shall be subtracted from such taxable income or
  taxable loss;

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

            (d)Any item of income, gain, loss or deduction that is required to
  be specially allocated to a Partner under this Agreement, including without
  limitation Sections 4.5, 4.6, 4.7 and 4.8(b) hereof, shall not be taken into
  account in computing such taxable income or taxable loss;

            (e) The amount of any gain or loss required to be recognized by the
  Partnership during such Fiscal Year by reason of a sale or other disposition
  of the Project, or any part thereof or any other asset of the Partnership,
  shall be computed as if the Partnership's adjusted basis in such property for
  income tax purposes were equal 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; and

                                       7
<PAGE>

            (f) In lieu of depreciation, amortization, and other cost recovery
  deductions taken into account in computing such taxable income or loss, there
  shall be taken into account Depreciation for the Fiscal Year or other
  applicable period.

If the Partnership's taxable income or taxable loss for such Fiscal Year, as
adjusted in the manner provided above in clauses (a) through (f) above, is (i) a
positive amount, such amount shall be the Partnership's Net Profit for such
Fiscal Year, and (ii) a negative amount, such amount shall be the Partnership's
Net Loss for such Fiscal Year.

      NET RECEIPTS shall mean for the applicable period the Gross Receipts of
the Partnership for such period plus any reserves not needed for operations as
reasonably determined by the General Partners, less Operating Expenses for such
period and less a reasonable reserve for the conduct of the business of the
Partnership reasonably established by the General Partners.

      NON-DEFAULTING PARTNER shall have the meaning set forth in Section 11.1.

      OPERATING DEFICIT means, for any particular period of time, the amount (if
any) by which Operating Expenses for such particular period of time exceed, or
are projected to exceed, Gross Receipts for such period of time.

      OPERATING EXPENSES shall mean, all expenses of any kind made with respect
to the operations of the Partnership in the normal course of business determined
on an accrual basis, including, but not limited to: (a) the actual, reasonable
and customary expenses and costs relating to any sale, financing or refinancing
of the Project, including any partial release payment made pursuant to the terms
of any applicable financing encumbering the Property or the portion thereof so
sold, any reserves for warranty items, and/or any prepayment charges or mortgage
broker fees (paid to third parties which are not an Affiliate of any Partners)
or incurred in connection with any financing or refinancing, (b) currently due
and payable principal, interest and extension fees, if any, payable pursuant to
any loans obtained by the Partnership, (c) expenditures for capital
improvements, (d) reasonable working capital reserves for payment of all
obligations of the Partnership for which loan proceeds are not available, as
reasonably established by the General Partners, (e) amounts paid from
condemnation and/or insurance proceeds for restoration and/or repair of the
Project or any portion thereof, (f) any amounts paid for taxes, assessments,
fees, governmental charges, insurance, maintenance costs, and utilities, (g) any
fees paid to consultants and other advisors hired by the Partnership in
conjunction with the Project, (h) any costs and expenses paid by the Partnership
to maintain any agricultural, open space use or other exemption or qualified use
for tax purposes, and (i) any other similar costs and expenses.

      OPTIONAL LOAN shall have the meaning set forth in Section 3.3 herein.

      PARTNER means any partner of the Partnership, including any General
Partner or any Limited Partner, and "Partners" means the General Partners and
the Limited Partners, collectively.

      PARTNERSHIP means CL ASHTON WOODS, L.P., a Texas limited partnership, as
such Partnership may from time to time be constituted.

                                       8
<PAGE>

      PARTNERSHIP INTEREST means, as to any Partner at any time, such Partner's
Capital Account, Percentage Interest, Residual Interest, and right to
distributions, profits and losses of the Partnership in accordance with the
provisions of this Agreement, and any other rights which such Partner has in the
Partnership in accordance with the provisions of this Agreement or under
applicable law.

      PERCENTAGE INTEREST(s) means the respective percentage interests of the
Partners and their respective permitted successors and assigns in the
Partnership, as set forth in Section 3.7(a) of this Agreement.

      PERSON means an individual or an entity such as, but not limited to, a
corporation, general partnership, joint venture, limited partnership, limited
liability partnership, trust or business association. When a Person is an
entity, the words "he," "him" and "his" and similar words shall include or refer
to "it" and "its" and similar words.

      PHASES means one or more sections, phases, portions, parcels or segments
of the Property as reflected or to be reflected in the Development Plan.

      PLANS AND SPECIFICATIONS means the plans, drawings and specifications for
development of the Improvements prepared at the direction of the Managing
Partner for the Partnership and Approved by the Partners.

      PREFERRED RETURN shall mean, with respect to a Partner (and any permitted
transferee), a return on the average daily balance of such partner's (and any
permitted transferee's) Unreturned Contribution Account, commencing on the date
such Partner (and any permitted transferee) first makes (or is deemed to have
made) a Capital Contribution pursuant to this Agreement, during the period to
which such return relates, at a rate equal to eighteen percent (18%) per annum.
The return shall be determined on the basis of the actual number of days in the
period for which the return is being determined, cumulative and compounded
annually to the extent not distributed pursuant to Section 4.9(b).

      PREFERRED RETURN ACCOUNT shall mean, with respect to a Partner (and any
permitted transferee), the excess, if any, of (i) aggregate Preferred Return of
such Partner (and any permitted transferee) over (ii) the aggregate
distributions to such Partner (and any permitted transferee) pursuant to Section
4.9(b), in each case since the inception of the Partnership. In the event of the
sale, transfer, assignment or other disposition of the Partnership Interest in
the Partnership initially issued to such Partner, the transferee of such
Partnership Interest shall succeed to the Preferred Return Account balance, if
any, attributable to the transferred Partnership Interest.

      PRIME RATE means the prime lending rate for large U.S. money center
commercial banks, as published in the Money Rates section of the Wall Street
Journal, as the same may vary from time to time during the applicable period;
provided, however, in the event such method of determining the Prime Rate is no
longer available, then a comparable rate shall be used in lieu thereof as
Approved by the Partners.

      PRO FORMA SALES BUDGET shall have the meaning set forth in Section
6.10(a).

                                       9
<PAGE>

      PROJECT shall mean, collectively, the Property and the Improvements to be
developed thereon as Approved by the Partners.

      PROJECT COST COMMITMENT shall have the meaning set forth in Section 3.2(a)
hereof.

      PROPERTY shall mean that certain tract of real property to be acquired by
the Partnership from Ashton Southern Trails Joint Venture, a Texas joint
venture, as of even date herewith and more particularly described on Exhibit A
attached hereto and incorporated herein by reference.

      PURCHASE AGREEMENT shall mean the Contract for the Sale of Real Estate
between the Partnership and Ashton Southern Trails Joint Venture, as approved by
CLGP on behalf of the Partnership and attached hereto as Exhibit G and
incorporated herein.

      REGULATIONS shall mean the Treasury Regulations promulgated under the
Code, as such regulations may be amended from time to time.

      RESIDUAL INTEREST(s) means the respective residual interests of the
Partners (and their respective permitted successors and assigns) in
distributions, if any, pursuant to Section 4.9(d) of this Agreement, as set
forth in Section 3.7(b).

      TOTAL PROJECT COST COMMITMENT shall have the meaning set forth in Section
3.2(a).

      TRANSFER shall mean any transfer, sale, pledge, hypothecation, encumbrance
or assignment of all or any portion of an interest in the Partnership, whether
voluntarily or by operation of law.

      UNRETURNED CONTRIBUTION ACCOUNT shall mean an account maintained for each
Partner equal to, as of any particular date, the excess, if any, of (i) the
aggregate amount of Capital Contributions of such Partner pursuant to this
Agreement, minus (ii) the aggregate amount of distributions to such Partner
pursuant to Section 4.9(c) herein, in each case since the inception of the
Partnership. In the event of the sale, transfer, assignment or other disposition
of the Partnership Interest in the Partnership initially issued to such Partner,
the transferee of such Partnership Interest shall succeed to the Unreturned
Contribution Account balance, if any, attributable to the transferred
Partnership Interest.

      SECTION 1.2 TERMS GENERALLY. The definitions in Section 1.1 above shall
apply equally to both the singular and plural forms of the terms defined herein.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The term "person" or "Party" includes
individuals, partnerships, corporations, trusts and other associations. The
words "include", "includes", and "including" shall be deemed to be followed by
the phrase "without limitation".

      SECTION 1.3 OTHER DEFINITIONS. In addition to the terms defined in Section
1.1, other terms will have the definitions provided elsewhere in this Agreement.

      SECTION 1.4 EXHIBITS AND SCHEDULES. The Exhibits and Schedules attached
hereto and listed in the Table of Contents are hereby incorporated into this
Agreement as if fully set forth herein.

                                       10
<PAGE>

                                   ARTICLE II
                               GENERAL PROVISIONS

      SECTION 2.1 FORMATION OF PARTNERSHIP. The parties hereto hereby create a
limited partnership pursuant to the Act. The rights and liabilities of the
Partners shall be as provided in the Act, except as otherwise set forth herein.
In the event that any provision in this Agreement conflicts with the Act, such
provision in this Agreement shall control and govern to the extent permitted by
applicable law.

      SECTION 2.2 CERTIFICATES. Immediately prior to or contemporaneously with
the execution of this Agreement, the Managing Partner shall cause an appropriate
certificate of limited partnership to be filed with the Secretary of State of
the State of Texas. The Managing Partner shall also forthwith execute all other
certificates required by law, and the Managing Partner shall cause the same to
be filed in accordance with applicable law.

      SECTION 2.3 NAME. The name of the Partnership shall be CL ASHTON WOODS,
L.P. The General Partners may from time to time change the name of the
Partnership if Approved by the Partners.

      SECTION 2.4 PLACE; REGISTERED AGENT. The location of the principal place
of business of the Partnership shall be c/o Ashton Woods GP, 11375 West Sam
Houston Parkway South, Suite 100, Houston, Texas 77031, and shall continue at
such address unless changed by the General Partners. The registered agent for
service of process on the Partnership shall be Tim Hagen, whose address is Hagen
& Parsons, P.C., 14643 Dallas Parkway, Suite 570, Dallas, Texas 75254, unless
and until a new registered agent is designated by the General Partners. The
registered agent shall promptly send copies of all notices, pleadings, and
reports served on or delivered to him to each of the General Partners.

      SECTION 2.5 TERM. The Partnership shall commence on the effective date
hereof and shall terminate upon the earlier of (a) December 31, 2025, (b) such
time as the Partners, by mutual agreement, shall elect to terminate the
Partnership, or (c) as otherwise provided in this Agreement; provided, however,
with respect to subparagraphs (a) and (b) above, if, as of either of such dates,
the Project is not substantially completed (i.e., substantially all the Lots
sold), then the Partnership shall not so terminate until the Project is
substantially completed.

      SECTION 2.6 PURPOSES OF PARTNERSHIP. The purposes of the Partnership are:

            (a) To acquire the Property from an affiliate of Ashton Woods in
accordance with the terms and conditions of the Purchase Agreement.

            (b) To arrange for, obtain, negotiate, and close the Financing(s) on
terms Approved by the Partners, and to utilize the proceeds thereof to acquire,
develop and/or refinance the acquisition and development of the Project, or, in
the alternative, to arrange for, obtain, negotiate, and close such other
financing as may be Approved by the Partners;

            (c) To develop the Project in accordance with the Development Plan,
Development Budget, the provisions of the Development Agreement and the Plans
and Specifications, each as Approved by the Partners;

                                       11
<PAGE>

            (d) To own, finance, develop, market, manage, sell and operate the
Project, and any other property acquired by the Partnership in accordance with
this Agreement, for investment and production of income and profit and, without
limiting the foregoing, to enter into the Lot Sale Contracts;

            (e) To subdivide, market and sell portions of the Project in
accordance with the Development Plan, the Lot Sale Contracts and this Agreement,
each as Approved by the Partners;

            (f) To negotiate and enter into such partnerships, ventures,
entities and other relationships relating to the acquisition, development, sale
and operation of the Property as may be Approved by the Partners from time to
time;

            (g) To engage in any one or more other business transactions
necessary or desirable to effect the purposes of this Agreement described in (a)
through (f) above, including, without limitation, to borrow funds in accordance
with the terms of this Agreement and to execute evidence of such indebtedness
and security instruments in connection therewith, subject to the Approval of the
Partners;

            (h) To take other actions necessary or appropriate in furtherance of
the foregoing purposes in accordance with the provisions of this Agreement; and

            (i) To act as principal, agent, joint venturer or in any other
capacity which may be authorized hereby or Approved by the Partners.

      SECTION 2.7 NATURE OF PARTNERSHIP INTERESTS. The Partnership Interests of
the Partners in the Partnership shall be personal property for all purposes.
Legal title to the Project and all other property and assets of the Partnership
shall be held in the name of the Partnership. Neither any Partner individually,
nor any partners or permitted successors or assigns of any Partner, shall have
any right, title or interest in or to the Project or any other property or
assets of the Partnership; rather the Project and all such property and assets
of the Partnership shall be subject to the terms of this Agreement. Further, the
Partners acknowledge and agree that the Project is not suitable for partition,
and thus all of the Partners hereby irrevocably waive any and all rights to
maintain any action for partition of the Project.

      SECTION 2.8 FORM OF ENTITY; LIMITED AUTHORITY. The entity created hereby
is a limited partnership formed under Texas law. Notwithstanding the foregoing,
except with respect to actions in furtherance of the business and purpose of the
Partnership in a manner consistent with and limited by specific agreements,
covenants, rights, privileges, duties and obligations arising under this
Agreement, neither the creation of the Partnership nor the execution and
delivery by the Partners of this Agreement inter se is intended to create a
general agency relationship or authority, nor shall the same be construed as to
authorize or entitle any Partner to act as a general agent for and on behalf of
the other Partners with respect to any business or activity other than in
furtherance of the specific purposes of the Partnership as described in this
Agreement. Without limiting the generality of the foregoing, neither the
Partnership nor any Partner shall be responsible or liable for any indebtedness
or obligation of a Partner incurred or arising before or after the formation of
the Partnership, except for those joint responsibilities,

                                       12
<PAGE>

liabilities, indebtedness or obligations incurred after the date of formation of
the Partnership pursuant to and in accordance with the terms of this Agreement
or for any such obligations expressly and intentionally assumed pursuant to this
Agreement or any other written agreement duly executed and delivered by all of
the Partners.

      SECTION 2.9 OTHER ACTIVITIES. Each Partner may engage or invest in any
other activity or venture or possess any interest therein independently or with
others, whether or not competitive with the business of the Partnership or the
Property, and whether existing as of the date of this Agreement or hereafter
coming into existence. None of the Partners, the Partnership or any other Person
employed by, related to or in any way affiliated with any Partner or the
Partnership shall have any duty or obligation to disclose to or offer to the
Partnership or the Partners, or obtain for the benefit of the Partnership or the
Partners, any other activity or venture or interest therein. None of the
Partnership, the Partners, the creditors of the Partnership or any other Person
having an interest in the Partnership shall have (i) any claim, right or cause
of action against any Partner or any other Person employed by, related to or in
any way affiliated with, any Partner by reason of any direct or indirect
investment or other participation, whether active or passive, in any such
activity or interest therein, or (ii) any right to any such activity or interest
therein or the income or profits derived therefrom.

                                   ARTICLE III
                   CAPITAL CONTRIBUTIONS; PERCENTAGE INTERESTS

      SECTION 3.1 INITIAL CAPITAL CONTRIBUTIONS. Upon execution hereof, the
Partners shall contribute in cash to the capital of the Partnership as their
Initial Capital Contributions the respective amounts set forth opposite their
names on Schedule 3.1 attached hereto and incorporated herein.

      SECTION 3.2 ADDITIONAL CAPITAL CONTRIBUTIONS.

            (a) The Partners hereby agree to provide Additional Capital
Contributions (in cash or immediately available funds) to the Partnership pro
rata in proportion to their respective Percentage Interests to pay Development
Costs in an aggregate amount for each Partner as set forth on Schedule 3.2(a)
attached hereto and incorporated herein (each Partner's share of the aggregate
Additional Capital Contributions required to pay Development Costs is referred
to herein as such Partner's "Project Cost Commitment"), plus any amounts
guaranteed by such Partner or secured by letters of credit provided by such
Partner (or an Affiliate thereof) ("Financing Enhancements") as set forth on
Schedule 3.2 and pursuant to Section 3.2(e) below. Project Cost Commitment plus
funded Financing Enhancements with respect to the Project shall be sometimes
referred to as the "Total Project Cost Commitment". Such Additional Capital
Contributions shall be made to the Partnership pursuant to the procedures set
forth in Section 3.4 below. Notwithstanding anything to the contrary herein
(except to the extent set forth in Section 3.2(e) hereof), no Partner shall be
required to make any further Additional Capital Contributions with respect to
the Project once such Partner's aggregate Capital Contributions since the
inception of the Partnership equals (i) such Partner's Project Cost Commitment
unless and except to the extent a Financing Enhancement with respect to the
Project has been demanded in writing or drawn upon by the Lender, or (ii) such
Partner's Total Project Cost Commitment if a

                                       13
<PAGE>

Financing Enhancement is reduced by the amount of a draw against or funding
under such Financing Enhancement.

            (b) As of the date of the funding of the Financing for the Project,
each Partner shall be reimbursed by the Partnership for all pre-development
expenses paid by such Partner with respect to the Project provided that such
expenses are set forth in the Development Budget.

            (c) Each Partner hereby transfers and conveys to the Partnership all
of such Partner's right, title and interest in and to the Project (including,
without limitation, all Due Diligence Materials in the possession of such
Partner). Such transfers of Due Diligence Materials shall not be treated as
having any value for purposes of determining the Partners' Capital Accounts.

            (d) If, at any time and from time to time, a General Partner
determines in its reasonable business judgment that additional funds are needed
with respect to the Project due to unforeseen circumstances regarding the
ownership, development, engineering and/or construction of the Project which are
not the obligation or responsibility of the Developer (for example, and not in
limitation, there shall occur events at force majeure, unexpected or unscheduled
price increases in materials, labor or equipment, or unexpected or unscheduled
increases in governmentally-imposed development fees which increase the costs of
any particular item in the Development Budget and/or Annual Budget beyond the
budgeted amount(s) plus contingency therefore), and such additional funds to
cover any increased costs are not on hand and available for use from available
funds of the Partnership after reasonable reserves and holdbacks required by the
Lender and/or Approved by the Partners or cannot be obtained through third party
financing Approved by the Partners, then (without limiting any provisions of
this Agreement regarding Approval by the Partners of amendments or modifications
to the Development Budget and/or Annual Budget), either such General Partner may
make a capital call in accordance with Section 3.4 hereof. However, except to
the extent set forth in Section 3.2(e) below, no Partner shall be required to
make an Additional Capital Contribution to the extent such Partner has already
made aggregate Capital Contributions equal to its Project Cost Commitment with
respect to the Project. If any Partner does not elect to make the voluntary
Additional Capital Contribution requested by a General Partner then such General
Partner may make an Additional Capital Contribution to cover any shortfall of
needed capital. Alternatively, the General Partner may make an Optional Loan,
subject to Section 3.3 below, to fund the needs of the Partnership described in
this Section 3.2(d).

            (e) Any amounts funded or drawn under any Financing Enhancements
provided by a Partner or its Affiliate securing or guaranteeing all or any
portion of any Financing(s) shall be deemed to be an Additional Capital
Contribution to the Partnership by such Partner (but only one Partner shall
receive credit for any Financing Enhancements from any of its Affiliates),
unless such Partner(s) elect(s) in writing to treat such funded amount as an
Optional Loan to the Partnership (with such election being made within five (5)
Business Days of making such funding or draw under such Financing Enhancement).
A General Partner shall make a Capital Call in accordance with Section 3.4 below
within ten (10) days after receipt by such General Partner of notice of the
funding, or a request or demand for funding under any Financing Enhancements,
and each of the Partners shall make an Additional Capital Contribution to the
Partnership in whatever proportions and amounts as are necessary so that, unless
otherwise

                                       14
<PAGE>

set forth on Schedule 3.2(a) or agreed by the Partners, the amounts funded or
drawn under the Financing Enhancements are shared by the Partners pro rata in
accordance with their respective Percentage Interests. Upon the Partnership's
receipt of any Additional Capital Contributions made pursuant to this Section
3.2(e), the Partner whose Financing Enhancement was funded or drawn upon shall
be repaid an amount sufficient to reduce such Partner's Additional Capital
Contribution pursuant to this Section 3.2(e) to the amount which would have been
paid by such Partner on a pro rata basis of the total Additional Capital
Contribution, as applicable, in accordance with its Percentage Interest.
Notwithstanding anything to the contrary herein, this Section 3.2(e) shall not
apply to any letter of credit or guaranty or other contractual obligation
provided by Ashton Woods or any Affiliate thereof as earnest money under any Lot
Sale Contracts.

            (f) It is expressly understood and agreed by the Partners that each
Partner and its respective Affiliates are not required to advance or re-advance
Additional Capital Contributions or make loans to the Partnership once the Total
Project Cost Commitment for such Partner has been made to the Partnership,
notwithstanding subsequent distributions and reductions in such Partner's
Unreturned Contribution Account

      SECTION 3.3 OPTIONAL LOANS. Notwithstanding the foregoing, in the event
either General Partner shall determine in good faith that the Partnership
requires any amounts described in Section 3.2(d) or to pay Operating Deficits,
then such General Partner shall have the right to advance to the Partnership a
loan (in lieu of an Additional Capital Contribution(s) or in combination with
such Additional Capital Contribution(s)) that does not carry personal liability
to the Partners (hereinafter referred to as an "Optional Loan"), in an amount
sufficient to provide the needed funds. Prior to making any Optional Loan, a
General Partner shall notify the other Partners of its intent to make such
advance at least ten (10) Business Days prior to the date of such advance (an
"Optional Loan Notice"), and at any time within such period, the other
Partner(s) may elect to participate in making the Optional Loan. Each Partner at
its sole option may elect to loan to the Partnership its pro rata share (based
on its then respective Percentage Interest) of the amount described in such
Optional Loan Notice by delivering such amount into the Partnership operating
account on the date specified in such Optional Loan Notice. If a Partner does
not wish to loan its share of a requested loan pursuant to an Optional Loan
Notice, it shall not be required to do so, but it shall give the other
Partner(s) written notice of its decision not to make such loan (a "Refusal
Notice") within five (5) Business Days after the delivery of such Optional Loan
Notice. If a Refusal Notice is delivered in connection with an Optional Loan
Notice or if a Partner otherwise fails for any reason to make its full pro rata
share of such loan on the date requested, then any other Partner may advance the
amount of such shortfall as an Optional Loan. Any Optional Loan shall bear
interest at a fixed rate determined as of the date of the Optional Loan equal to
eighteen percent (18%) per annum, but shall not exceed the maximum rate allowed
by law, and shall be payable only out of the Net Receipts of the Partnership as
provided in Section 4.9(a) below or out of the Partnership's assets upon
liquidation of the Partnership. In the event there is more than one Optional
Loan outstanding at any time in which there is a distribution made pursuant to
Sections 4.9(a) or 12.3(c) hereof, then amounts distributed under such Sections
shall first be applied to repay the most recent Optional Loan, and if more than
one Partner has made an Optional Loan at the same time (or otherwise pursuant to
the same Optional Loan Notice) then as between the Partners such Optional Loans

                                       15
<PAGE>

shall be repaid pro rata in proportion to the outstanding balance of such
Optional Loans (but still giving priority to the most recent Optional Loan(s)).

      SECTION 3.4 CAPITAL CALLS.

            (a) When the Partners are required to contribute Additional Capital
Contributions under this Agreement, the Partners shall make such Additional
Capital Contributions in accordance with the provisions herein ("Capital Call")
and in such amounts that are sufficient to provide such funds. Each Partner and
any permitted transferee(s) under Article X hereof shall be jointly and
severally liable for making any of their respective required contributions to
the Partnership under Section 3.2 or this Section 3.4. Notwithstanding anything
to the contrary herein, no Partner shall be required to make any Additional
Capital Contributions that would cause such Partner's (or its predecessors in
interest) aggregate Capital Contributions since inception of the Partnership
with respect to the Project to exceed such Partner's Total Project Cost
Commitment.

            (b) When Additional Capital Contributions are needed by the
Partnership, the Managing Partner (or if he fails to do so, any other General
Partner) shall give a notice (a "Capital Call Notice") to each Partner in the
manner provided in Section 14.3 hereof. Each Capital Call Notice shall specify
in reasonable detail the amount and purpose of any such Additional Capital
Contributions and that it is or is not pursuant to the Development Budget.
Capital Call Notices, other than pursuant to the Development Budget, shall also
include (A) a statement of the anticipated cash receipts and obligations for the
immediately following calendar quarter with the reasons, if ascertainable, that
the available funds of the Partnership will be insufficient to meet the
obligations for which the additional funds have been requested as they come due,
and (B) a representation from such General Partner that it has made a draw
request under the Financing for the Project to pay a portion of the expenditures
identified in the Capital Call Notice to the maximum extent permitted thereunder
or that the line item in the budget therefore has been exhausted, that no
uncured default under the Financing then exists, that the Lender under the
Financing has not declined to advance funds to pay all or any portion of any
costs identified in any Capital Call Notice to be paid pursuant to the draw
request. With respect to a Capital Call Notice, the following provisions shall
apply:

                  (i) Each Partner shall, within ten (10) Business Days (time
      being of the essence) after the receipt of such Capital Call Notice,
      deposit, by wire transfer of immediately available federal funds into the
      Partnership's bank account, the Additional Capital Contribution specified
      in the Capital Call Notice, to be credited to the contributing Partner's
      Capital Account.

                  (ii) If a Partner does not pay its share of any
      required Additional Capital Contribution (recognizing that no
      contributions are required once a Partner has made aggregate Capital
      Contributions to the Partnership with respect to the Project in the
      aggregate amount equal to its Total Project Cost Commitment) in accordance
      with any Capital Call Notice, the other Partner shall have the option, in
      addition to other rights and remedies set forth herein, (A) to make a
      Contribution Loan as provided in Section 3.4(c) hereof, or (B) to withdraw
      its Additional Capital Contribution, because the other Partner

                                       16
<PAGE>

      failed to pay its share of the Additional Capital Contribution, or (C)
      bring suit against the other Partner for a breach of this Agreement.

                  (iii) If a Partner disputes whether any Additional
      Capital Contributions are due hereunder, the dispute shall be resolved
      pursuant to arbitration in accordance with Article XIII herein.

            (c) In addition to the rights set forth in Section 3.4(b)(ii) and
Article XI hereof, if a Partner fails to make any Additional Capital
Contribution within the time specified in Section 3.4(b) hereof, (a
"Non-Contributing Partner"), the other Partner who makes the requested
contribution of additional capital (the "Contributing Partner") shall have the
right but not the obligation to advance directly to the Partnership the funds
required from the Non-Contributing Partner as a loan ("Contribution Loan") to
the Non-Contributing Partner. If and when a Contribution Loan is made, the
Non-Contributing Partner shall not become a Defaulting Partner (as provided in
Article XI) but the Non-Contributing Partner shall be deemed to have waived the
right to make the requested capital contribution as of the date of such
Contribution Loan. Such Contribution Loan shall bear interest at a rate equal to
eighteen percent (18%) per annum, compounded annually, but in no event more than
the maximum rate permitted by law. The Non-Contributing Partner may prepay the
Contribution Loan at any time, but in any event the Contribution Loan shall be
due and payable on demand at any time upon written notice to the
Non-Contributing Partner. Failure of the Non-Contributing Partner to pay the
Contribution Loan within three (3) Business Days following demand shall
constitute a default hereunder. If the Contributing Partner does not elect to
advance the full amount of the additional funds required from the
Non-Contributing Partner, the Contributing Partner may withdraw its Additional
Capital Contribution or treat the failure of the Non-Contributing Partner to
make the Additional Capital Contribution as an Event of Default under Article XI
hereof.

            (d) A Contribution Loan shall be repaid on a first priority basis
out of any subsequent distributions to which the Non-Contributing Partner for
whose account the Contribution Loan was made would otherwise be entitled in
accordance with this Agreement, which amounts shall be applied first to accrued
interest and then to principal, until the Contribution Loan is paid in full.
Each Non-Contributing Partner irrevocably assigns its rights to distributions
from the Partnership to the Contributing Partner for the purpose of effectuating
this repayment until the Contribution Loan is repaid. Repayment of any Partner's
Contribution Loan shall also be secured by the Non-Contributing Partner's
Interest in the Partnership, and the Non-Contributing Partner hereby grants a
security interest in such Partnership Interest to the Contributing Partner who
has advanced such Contribution Loan and hereby irrevocably appoints the
Contributing Partner, and any of its agents, officers or employees, as its
attorney-in-fact, such appointment being coupled with an interest, to execute,
acknowledge and deliver any documents, instruments and agreements including, but
not limited to, any note evidencing the Contribution Loan, and such Uniform
Commercial Code financing statements, continuation statements, and other
security instruments as may be appropriate to perfect and continue such security
interest in favor of the Contributing Partner.

                                       17
<PAGE>

      SECTION 3.5 CAPITAL ACCOUNTS. A Capital Account shall be established and
maintained for each Partner in accordance with the rules set forth in this
Section 3.5 and Regulations Section 1.704-1(b)(2)(iv).

                  (a) Each Partner's Capital Account shall be (i) increased by
   (A) the aggregate amount of cash contributed by or on behalf of such Partner
   to the Partnership, (B) the agreed upon Gross Asset Value (as of the date of
   contribution) of any property other than cash contributed by such Partner to
   the Partnership (net of liabilities encumbering such contributed property
   that the Partnership is considered to assume or take subject to under Section
   752 of the Code), (C) the aggregate amount of allocations of the
   Partnership's Net Profit to such Partner for income tax purposes in
   accordance with Section 4.1 hereof and the amount of items of income or gain
   which are specially allocated to such Partner, and (D) any other positive
   adjustments required by the Regulations which have not been previously taken
   into account in determining Capital Accounts, and shall be (ii) decreased by
   (A) the aggregate amount of cash distributed to or on behalf of such Partner
   by the Partnership, (B) the Gross Asset Value (as of the date of
   distribution) of all other property distributed to such Partner by the
   Partnership (net of liabilities encumbering such distributed property that
   such Partner is considered to assume or take subject to under Section 752 of
   the Code), (C) the aggregate amount of the Partnership's Net Loss that has
   been allocated to such Partner as of such date pursuant to Sections 4.2 and
   4.3 and the amount of any item of expense, deduction or loss which is
   specially allocated to such Partner, and (D) any other negative adjustments
   required by Regulations and which have not been previously taken into account
   in determining Capital Accounts, and (iii) otherwise adjusted in accordance
   with the rules of this Section 3.5 and Regulations Section 1.704-1(b)(2)(iv).

                  (b) Upon the permitted transfer of all or any portion of a
   Partner's Partnership Interest(s), the Capital Account of the transferor that
   is attributable to the transferred Partnership Interest(s) shall carry over
   to the transferee.

                  (c) The Capital Accounts shall be adjusted as and to the
   extent required by Regulations Section 1.704-1(b)(2)(iv)(m) in connection
   with the adjustment to the tax basis of any Partnership asset pursuant to
   Section 734(b) or Section 743(b) of the Code.

                  (d) The foregoing provisions and the other provisions of this
   Agreement relating to the maintenance of Capital Accounts are intended to
   comply with Regulations Section 1.704-1(b), and shall be interpreted and
   applied in a manner consistent with such Regulations. In the event the
   General Partners shall determine that it is prudent to modify the manner in
   which the Capital Accounts, or any debits or credits thereto are computed in
   order to comply with such Regulations, the General Partners may make such
   modification.

      SECTION 3.6 RIGHTS OF CREDITORS. The provisions of this Article III are
not intended to be for the benefit of any creditor or other Person (other than a
Partner in its capacity as a Partner herein) to whom any debts, liabilities or
obligations are owed or who otherwise has a claim against the Partnership or any
of the Partners, and no such creditor or other person shall obtain any right
under any of the foregoing provisions against the Partnership or any Partner by
reason of any such debt, liability or obligation, or otherwise.

                                       18
<PAGE>

      SECTION 3.7 PERCENTAGE INTERESTS AND RESIDUAL INTERESTS.

            (a)   The Partners shall have the following Percentage Interests:

                  (i)   Ashton Woods GP       --       0.5%
                        Ashton Woods LP       --      19.5%

                  (ii)  CLGP                  --       0.5%
                        CL                    --      79.5%

            (b)   The Partners shall have the following Residual Interests:

                  (i)   Ashton Woods GP       --       0.5%
                        Ashton Woods LP       --      29.5%

                  (ii)  CLGP                  --       0.5%
                        CL                    --      69.5%

      SECTION 3.8 ADDITIONS TO AND WITHDRAWAL OF CAPITAL. Other than as provided
in Sections 3.1, 3.2 and 3.4 above, no Partner shall be required or permitted to
contribute capital to the Partnership. In addition and except as provided in
Section 3.4 hereof, no Partner shall have the right to withdraw from the
Partnership, and no Partner shall be entitled to a return of, its contributions
to the capital of the Partnership hereunder, except by way of the distribution
to it under the terms of this Agreement or by way of the distribution to it of
assets of the Partnership upon the winding up of the Partnership pursuant to the
provisions of this Agreement.

      SECTION 3.9 FINANCING. The General Partners will proceed with reasonable
diligence and in good faith to obtain the Financing(s) in the name of the
Partnership for the Project in accordance with the Development Budget.
Notwithstanding anything to the contrary set forth herein, any Financing and the
terms and conditions thereof shall be subject to the Approval of the Partners.
The Partners shall execute such documents, instruments and agreements as may be
required to effectuate the Financing as Approved by the Partners.

      SECTION 3.10 POWER OF ATTORNEY. Each Defaulting Partner hereby irrevocably
appoints the Non-Defaulting General Partner as its attorney-in-fact following
default to execute all documents reasonably necessary to accomplish the remedies
specified in Section 3.4(d) hereof, such appointment being coupled with an
interest (and being intended to survive the dissolution or incapacitation of any
Defaulting Partner, to the fullest extent permitted by law), and including,
without limitation, the power to execute UCC-1 Financing Statements,
assignments, bills of sale and amendments to this Agreement to effect any of
such remedies.

                                   ARTICLE IV
                          DISTRIBUTIONS AND ALLOCATIONS

      SECTION 4.1 ALLOCATION OF NET PROFIT. After giving effect to the special
allocations as provided in Sections 4.5, 4.6 and 4.7 and subject to the overall
directions of Section 4.4 (and

                                       19
<PAGE>

giving effect to Section 4.7(c)), all Net Profit of the Partnership for each
Fiscal Year shall be allocated to the Partners as follows:

            (a) First, to the Partners, in proportion to and to the extent of
the negative balances, if any, in the Partners' respective Capital Accounts (as
of the last day of such Fiscal Year, but adjusted to reflect any allocations to
the Partners pursuant to Sections 4.5, 4.6 and 4.7);

            (b) Second, to the Partners, in proportion to and to the extent of
the amounts necessary to cause their respective Capital Accounts (as of the last
day of such Fiscal Year, but adjusted to reflect any allocations pursuant to
Sections 4.1 (a), 4.5, 4.6 and 4.7) to equal their respective Unreturned
Contribution Account balances (it being acknowledged that an allocation to a
Partner pursuant to this subparagraph may be zero because such Partner's Capital
Account balance already equals or exceeds the amount referred to in this
sentence);

            (c) Third, to the Partners in proportion to and to the extent of the
amounts necessary to cause their respective Capital Accounts (as of the last day
of such Fiscal Year, but adjusted to reflect any allocations pursuant to
Sections 4.1 (a), 4.1(b), 4.5, 4.6 and 4.7) to equal the sum of the balances in
their respective Unreturned Contribution Accounts and Preferred Return Accounts
(it being acknowledged that an allocation to a Partner pursuant to this
subparagraph may be zero because such Partner's Capital Account balance already
equals or exceeds the amount referred to in this sentence);

            (d) Fourth, to the Partners in proportion to and to the extent
necessary to cause the amounts by which their respective Capital Accounts (as of
the last day of such Fiscal Year, but adjusted to reflect allocations pursuant
to Sections 4.1(a)-(c), 4.5, 4.6 and 4.7) exceed the sum of the balances in
their respective Unreturned Contribution Accounts and Preferred Return Accounts
to be in the same proportions as their then respective Residual Interests (it
being acknowledged that an allocation to the Partners pursuant to this
subparagraph may be zero because the Partners' respective Capital Account
balances are already in such proportions); and

            (e) The balance of Net Profits, if any, shall be allocated among the
Partners pro rata in proportion to their then respective Residual Interests.

      SECTION 4.2 ALLOCATION OF NET LOSS. Except as provided in Section 4.3,
after giving effect to the special allocations as provided in Sections 4.5, 4.6
and 4.7 and subject to the overall directions of Section 4.4 (and giving effect
to Section 4.7(c)), all Net Loss of the Partnership for each Fiscal Year shall
be allocated to the Partners as follows:

            (a) First, to the Partners in proportion to and to the extent of the
amounts necessary to cause the amounts by which their respective Capital
Accounts (as of the last day of such Fiscal Year, but adjusted to reflect
allocations pursuant to Sections 4.5, 4.6 and 4.7) exceed the sum of the
balances in their respective Unreturned Contribution Accounts and Preferred
Return Accounts to be in the same proportion as their then respective Residual
Interests (it being acknowledged that an allocation to the Partners pursuant to
this subparagraph may be zero because the Partners' respective Capital Account
balances are already in such proportions);

            (b) Second, to the Partners in proportion to and to the extent of
the amounts necessary to cause their respective Capital Accounts (as of the last
day of such Fiscal Year, but

                                       20
<PAGE>

adjusted to reflect allocations pursuant to Sections 4.2(a), 4.5, 4.6 and 4.7)
to equal the sum of the balances in their respective Unreturned Contribution
Accounts and Preferred Return Accounts (it being acknowledged that an allocation
to a Partner pursuant to this subparagraph may be zero because such Partner's
Capital Account balance already equals or is less than the amount referred to in
this sentence);

            (c) Third, to the Partners in proportion to and to the extent of the
amounts necessary to cause their respective Capital Accounts (as of the last day
of such Fiscal Year, but adjusted to reflect allocations pursuant to Sections
4.2(a), 4.2(b), 4.5, 4.6 and 4.7) to equal their respective Unreturned
Contribution Account balances (it being acknowledged that an allocation to a
Partner pursuant to this subparagraph may be zero because such Partner's Capital
Account balance already equals or is less than the amount referred to in this
sentence);

            (d) Fourth, to the Partners in proportion to and to the extent of
the amounts necessary to cause their respective Capital Accounts (as of the last
day of such Fiscal Year, but adjusted to reflect allocations pursuant to
Sections 4.2(a)-(c), 4.5, 4.6 and 4.7) to equal zero (it being acknowledged that
an allocation to a Partner pursuant to this subparagraph may be zero because
such Partner's Capital Account balance already equals or is less than the amount
referred to in this sentence); and

            (e) The balance of Net Loss, if any, shall be allocated among the
Partners pro rata in proportion to their then respective Percentage Interests.

      SECTION 4.3 NET LOSS LIMITATION. Notwithstanding any provision of this
Agreement to the contrary, except as otherwise specifically provided in this
Section 4.3, in no event shall Net Loss be allocated to a Partner if such
allocation would result in such Partner's having an Adjusted Capital Account
Deficit at the end of any Fiscal Year. All Net Loss in excess of the limitation
set forth in this Section 4.3 shall be allocated to any remaining Partner
without an Adjusted Capital Account Deficit, and if all Partners have an
Adjusted Capital Account Deficit, then to the Partners pursuant to Section
4.2(e) above.

      SECTION 4.4 INTENTIONS AND CONSTRUCTION OF ALLOCATIONS. It is the
intention of the Partners to allocate Net Profit and Net Loss in such a manner
as to cause each Partner's Capital Account as of the last day of each Fiscal
Year to always equal the amount of cash such Partner would be entitled to
receive if the Partnership sold its assets for their adjusted Gross Asset Values
and, after satisfying all Partnership liabilities (limited to the Gross Asset
Value of any asset that the Lender's sole recourse with respect to such
liability is such asset), the proceeds from such sale, as well as all other
funds of the Partnership, were then distributed to the Partners pursuant to
Section 4.9. This Article 4 shall be interpreted as necessary to accomplish such
result.

      SECTION 4.5 SPECIAL ALLOCATIONS.

      The following special allocations shall be made in the following order:

            (a) Minimum Gain Chargeback. To the extent required by Section
1.704-2(f) of the Regulations, if there is a net decrease in "partnership
minimum gain" (within the meaning

                                       21
<PAGE>

of Section 1.704-2(b)(2) of the Regulations) in a Fiscal Year, then each Partner
will be allocated items of income and gain for that Fiscal Year, before any
other allocation of Net Profit or Net Loss, equal to that Partner's share of the
net decrease in partnership minimum gain.

            (b) Partner Minimum Gain Chargeback. If a Partner suffers a net
decrease in "partner nonrecourse debt minimum gain" (within the meaning of
Section 1.704-2(i)(4) of the Regulations) in any Fiscal Year, then that Partner
will be allocated items of income and gain to the extent required by Section
1.704-2(i)(4) of the Regulations.

            (c) Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations, or distributions described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), Sections 1.704-1(b)(2)(ii)(d)(5) or Sections
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be specially
allocated to each such Partner in an amount and manner sufficient to eliminate,
to the extent required by the Regulations, the Adjusted Capital Account Deficit
of such Partner as quickly as possible, provided that an allocation pursuant to
this Section 4.5(c) shall be made if and only to the extent that such Partner
would have an Adjusted Capital Account Deficit after all other allocations
provided for in this Article have been tentatively made as if this Section
4.5(c) were not in the Agreement.

            (d) Nonrecourse Deductions. If there are any "nonrecourse
deductions" (within the meaning of Sections 1.704-2(b)(l) and 1.704-2(c) of the
Regulations) in a Fiscal Year, then such deductions shall be allocated to the
Partners pro rata in proportion to their then respective Percentage Interests.

            (e) Partner Nonrecourse Deductions. If there are any "partner
nonrecourse deductions" (within the meaning of Section 1.704-2(i)(l) of the
Regulations) in a Fiscal Year, then such deductions will be allocated to the
Partner who bears the economic risk of loss for the "partner nonrecourse
liability" (within the meaning of Section 1.704-2(b)(4) of the Regulations) to
which the deductions are attributable.

      SECTION 4.6 CURATIVE ALLOCATIONS. The allocations set forth in Sections
4.5(a) through 4.5(e) (the "Regulatory Allocations") are intended to comply with
certain requirements of Regulations Sections 1.704-1(b) and 1.704-2(b).
Notwithstanding any other provisions of this Agreement, other than the
Regulatory Allocations, with the Approval of the Partners the Regulatory
Allocations shall be taken into account in allocating other items of income,
gain, loss and deduction among the Partners so that, to the extent possible, the
net amount of such allocations of other items and the Regulatory Allocations to
each Partner shall be equal to the net amount that would have been allocated to
such Partner if the Regulatory Allocations had not occurred.

      SECTION 4.7 OTHER ALLOCATION RULES. The following rules shall apply for
purposes of making tax allocations:

            (a) For purposes of determining the Net Profit, Net Loss, or any
other items allocable to any period, Net Profit, Net Loss, and any such other
items shall be determined on a daily, monthly, or other basis, using any
permissible method under Code Section 706 and the Regulations as reasonably
selected by the Managing Partner and Approved by the Partners.

                                       22
<PAGE>

            (b) If an amount paid or deemed paid by the Partnership to a Partner
(or any other Person) as interest, a guaranteed payment, or a payment for
property or services, is treated for federal income tax purposes as a
distribution to such Partner in its capacity as a partner for tax purposes and
is neither a guaranteed payment under Section 707(c) of the Code nor a payment
under Section 707(a) of the Code to a partner not acting in its capacity as a
partner, such Partner shall be allocated as soon as possible an amount of
Partnership's gross income or gain equal to the amount of such payment.

            (c) For purposes of determining the amount of Net Profit and Net
Loss to be allocated pursuant to Sections 4.1 and 4.2 for any Fiscal Year, the
Capital Account of each Partner shall be increased by such Partner's share of
"partnership minimum gain" as of the last day of such Fiscal Year, determined
pursuant to Regulations Section 1.704-2(g)(l), and by such Partner's share of
"partner non-recourse debt minimum gain" as of the last day of such Fiscal Year,
determined pursuant to Regulations Section 1.704-2(i)(5).

            (d) The Partners are aware of the income tax consequences of the
allocations made by this Article 4 and hereby agree to be bound by the
provisions of this Article 4 in reporting their shares of Partnership income and
loss for income tax purposes.

      SECTION 4.8 TAX ALLOCATIONS.

            (a) Except as provided in Section 4.8(b) herein, for income tax
purposes, Partnership income, gain, loss, deduction or credit (or any item
thereof) for each Fiscal Year shall be allocated to and among the Partners in
order to reflect the allocations made pursuant to the provisions of this Article
4 for such Fiscal Year (other than allocations of items which are not deductible
or are excluded from taxable income).

            (b) Notwithstanding any other provision of this Agreement to the
contrary, any gain or loss and any depreciation and cost recovery deductions
recognized by the Partnership for income tax purposes in any Fiscal Year with
respect to all or any part of the Partnership's property that is required or
permitted to be allocated among the Partners in accordance with Section 704(c)
of the Code and any Regulations promulgated thereunder so as to take into
account the variation, if any, between the adjusted tax basis of such property
and the initial Gross Asset Value of such property at the time of its
contribution, or following the adjustment to the Gross Asset Value of
Partnership property pursuant to this Agreement, shall be allocated to the
Partners for income tax purposes in the manner so required or permitted. Any
elections or other decisions relating to such allocations shall be Approved by
the Partners.

      SECTION 4.9 DISTRIBUTIONS OF NET RECEIPTS. Except as provided in Section
12.3(c) hereof, and giving effect to the Contribution Loan provisions of Section
3.4(c), Net Receipts shall be distributed to the Partners as follows:

            (a) First, Net Receipts shall be used to pay any accrued but unpaid
interest on, and then to pay the unpaid principal balance, if any, of any and
all Optional Loans made by the Partners to the Partnership in priorities set
forth in, and otherwise in accordance with, Section 3.3 hereof;

                                       23
<PAGE>

            (b) Next, Net Receipts shall be distributed to the Partners pro rata
in accordance with the respective balances in their Preferred Return Accounts,
until such account balances are reduced to zero;

            (c) Next, Net Receipts shall be distributed to the Partners pro rata
in accordance with the respective amounts of each Partner's Unreturned
Contribution Account until such account balances are reduced to zero; and.

            (d) Finally, Net Receipts shall be distributed to the Partners, pro
rata in accordance with their then respective Residual Interests.

      SECTION 4.10 MANNER OF DISTRIBUTION.

            (a) Prior to repayment and discharge of the Financing(s), the
Partnership shall not distribute any Net Receipts pursuant to Sections 4.9(b),
(c) or (d) hereof (but, for clarity, the Partnership may make distributions
pursuant to Section 4.9(a) hereof in repayment of Optional Loans) unless
Approved by the Partners and unless such distributions are not prohibited by the
Lender(s). Thereafter, Net Receipts shall be distributed within fifteen (15)
days after the end of each calendar month during the term of the Partnership.

            (b) All distributions of Net Receipts shall be subject to adjustment
by reference to the financial statements for such monthly period prepared as
required by Section 5.2 hereof. If any additional amount is to be distributed by
reason of such financial statements, such additional amount shall be deemed a
distribution for such monthly period, and if any excess amount was distributed
during such monthly period as reflected by such financial statements, the excess
amount shall be taken into account in reducing subsequent distributions.

                                    ARTICLE V
                    BOOKS OF ACCOUNT, ACCOUNTING AND REPORTS

      SECTION 5.1 BOOKS AND RECORDS; FISCAL YEAR. The Partnership's books and
records shall be maintained at the office of the Managing Partner, or at such
other place or places as Approved by the Partners from time to time. Upon
reasonable notice, each Partner and its authorized agents and representatives
shall have access to all of such books and records at all reasonable times for
purposes of examination, copying and/or audit, at the sole expense of the
Partner conducting or causing same. The books and records of the Partnership (a)
shall be kept in accordance with the accrual basis method of accounting in
accordance with generally accepted accounting principles ("GAAP") consistently
applied, (b) shall reflect all Partnership transactions, (c) shall be
appropriate and adequate for the Partnership's business, and (d) if requested by
any Partner, shall be audited annually by the independent certified public
accountants for the Partnership (the "Partnership's Accountants") Approved by
the Partners, at the expense of the Partnership. Notwithstanding the foregoing,
for federal income tax accounting purposes, (i) the Partnership shall maintain
any and all books and records required under the Regulatory Allocations (as
defined in Section 4.6), and (ii) the Managing Partner shall satisfy or cause to
be satisfied any financial reporting requirements of any Lender(s) and the
Partners and as otherwise required herein. The fiscal year and tax year of the
Partnership shall be the Fiscal Year, unless another period is required by the
Code or Regulations.

                                       24
<PAGE>

      SECTION 5.2 FINANCIAL STATEMENTS AND REPORTS.

            (a) Within ten (10) Business Days after the close of each calendar
month and within ten (10) Business Days after the end of each Fiscal Year of the
Partnership, the Managing Partner shall prepare or cause to be prepared, at the
cost of the Partnership, and shall furnish to the Partners a copy of (i) the
balance sheet of the Partnership for the month or Fiscal Year, as the case may
be, (ii) a statement of income or loss for the Partnership for such month or
Fiscal Year, as applicable, (iii) a statement of sources and uses of Net
Receipts, (iv) a budget-to-actual comparison for the Annual Business Plan and
Development Budget, and (v) a written status report on the development and sale
of Lots comprising the Project. All such statements and reports shall be
prepared in accordance with GAAP and shall be certified by the Managing Partner,
or its designee, as applicable, as being true and correct in all material
respects.

            (b) At the expense of the Partnership, the Managing Partner shall
also provide the Partners with such periodic reports (not more frequently than
monthly) as any Partner may reasonably request regarding the progress of
Partnership in pursuit of the current Annual Business Plan and the activities of
the Partnership.

      SECTION 5.3 TAX STATUS AND RETURNS. The Managing Partner shall, at the
Partnership's expense, on or before March 15 of each year, cause to be prepared
a statement of income or loss showing any item of income, deduction, credit or
loss allocable for federal income tax purposes pursuant to the terms of this
Agreement for the prior Fiscal Year, and all required tax returns and statements
for the prior Fiscal Year of the Partnership which must be prepared and/or filed
with any taxing authority on behalf of the Partnership, and shall submit such
returns and statements to the Partners for their approval by such date, and,
when Approved by the Partners, shall make timely filing thereof as required. In
addition, within thirty (30) days following the end of each calendar quarter,
the Managing Partner shall use reasonable efforts, at the expense of the
Partnership, to cause to be sent to each Partner an estimate of the
Partnership's taxable income for the current quarter and the year to date, and
such Partner's distributive share of such income. The Partnership shall furnish
to the Partners a projection of the Partnership's taxable income or loss for
each tax year of the Partnership by December 1 of each such year to assist in
year-end tax planning, all at the Partnership's expense.

      SECTION 5.4 BANK ACCOUNTS. Operating funds and monies of the Partnership
shall be deposited in special accounts to be maintained with such financial
institutions as are Approved by the Partners.

      SECTION 5.5 ACCOUNTING, BOOKKEEPING, PERSONNEL. Except as otherwise
provided herein, the Managing Partner (or its designee) shall perform the
accounting and bookkeeping functions of the Partnership until the General
Partners shall otherwise determine.

      SECTION 5.6 DESIGNATION OF TAX MATTERS PARTNER. CLGP shall act as the "tax
matters partner" of the Partnership as provided in the Regulations promulgated
under Section 6231 of the Code. The tax matters partner shall promptly take such
action as may be necessary to cause Ashton Woods GP to become a "notice partner"
within the meaning of Section 6223 of the Code. The tax matters partner shall
promptly inform the other Partners of all material matters that come to its
attention in its capacity as tax matters partner by giving written notice
thereof to the other

                                       25
<PAGE>

Partners and shall forward to the other Partners copies of all material written
communications it may receive in that capacity. The tax matters partner shall
not take any action permitted or contemplated by Section 6222 through 6231 of
the Code to be made by a tax matters partner without the Approval of the
Partners. 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) shall be
borne by the Partnership. Nothing herein shall be construed to restrict the
Partnership from engaging an accounting firm and/or a law firm to assist the tax
matters partner in discharging his duties hereunder.

      SECTION 5.7 TAX ELECTIONS. Except as expressly provided otherwise herein,
all tax elections and decisions, including without limitation, an election on
behalf of the Partnership under Section 754 of the Code in connection with a
sale of a Partnership Interest or part thereof shall be Approved by the
Partners.

      SECTION 5.8 CUSTODY OF PARTNERSHIP FUNDS. The Managing Partner shall have
fiduciary responsibility for the safekeeping and use of all funds and assets of
the Partnership, whether or not in its immediate possession or control. The
funds of the Partnership shall be used exclusively for the benefit of the
Partnership and the purposes set forth in this Agreement, and shall not be
commingled with the funds of any other Person. The Managing Partner shall not
employ, or permit any Developer or any other person to employ, such funds in any
manner except for the benefit of the Partnership.

                                   ARTICLE VI
                          MANAGEMENT OF THE PARTNERSHIP

      SECTION 6.1 MANAGEMENT. The powers of the Partnership shall be exercised
by or under the authority of, and the business and affairs of the Partnership
shall be managed by or under the direction of, the General Partners. Any Person
dealing with the Partnership, other than a Limited Partner, may rely on the
authority of the General Partners and their respective officers and agents in
taking any action in the name of the Partnership without inquiry into the
provisions hereof or compliance herewith, regardless of whether that action is
actually taken in accordance with the provisions of this Partnership Agreement.

      SECTION 6.2 POWERS AND DUTIES OF THE MANAGING PARTNER.

            (a) Except as provided in this Agreement, including without
limitation Section 6.9, herein, the Managing Partner, without the consent or
approval of any other Partner, shall have the authority and power in accordance
with its fiduciary duties to manage and administer the business and affairs of
the Partnership and to do all things necessary to carry on the business and
purposes of the Partnership, in pursuit of the Project in accordance with the
Annual Business Plans, Annual Budgets, and Development Plan, and otherwise in
accordance with this Agreement and applicable laws and permits. Except as
provided in Section 6.2(e) with respect to change orders, the Development Plan
(or any component thereof) may not be amended without the Approval of the
Partners.

                                       26
<PAGE>

            (b) Without limiting the generality of the foregoing and except as
provided in Section 6.9, the Managing Partner shall have the following rights
and powers, which it may exercise in a manner consistent with its fiduciary
duties and otherwise in accordance with, this Agreement, at the cost, expense
and risk of the Partnership:

                  (i) To perform all acts necessary to improve, develop,
operate, manage and maintain the Project and to sell Lots to third parties in
accordance with, and as limited by, the Annual Business Plans and the
Development Plan;

                  (ii) To protect and preserve the assets of the Partnership;

                  (iii) To acquire such tangible personal property and
intangible personal property necessary for the Project in accordance with, and
as limited by, the Annual Business Plans and the Development Plan, as may be
necessary or desirable to carry on the business of the Partnership and sell,
exchange or otherwise dispose of such personal properties in the ordinary course
of business;

                  (iv) To keep accurate books of account and other business
records of the Partnership;

                  (v) To negotiate and contract with all utility companies
servicing the Project and to grant utility easements in the ordinary course;

                  (vi) To pay all debts and other obligations of the
Partnership, including amounts due under the Financings and other loans to the
Partnership, the costs of formation of the Partnership and of ownership,
improvement, construction, operation and maintenance of the Project and the sale
of Lots, all subject to and in accordance with the Development Plan;

                  (vii) To do and perform all such other acts and things as are
reasonably necessary or appropriate to the conduct of the Partnership's
business.

            (c) The Managing Partner shall devote itself to the business and
purposes of the Partnership, as set forth above, to the extent reasonably
necessary for the efficient carrying on thereof, without compensation except as
otherwise provided herein. The acts of the Managing Partner shall bind the
Partners and the Partnership when within the scope of the Managing Partner's
authority expressly granted hereunder. The Managing Partner, at the expense of
and on behalf of the Partnership, shall make commercially reasonable efforts to
implement all decisions Approved by the Partners and shall conduct or cause to
be conducted the management of the business and affairs of the Partnership in
accordance with, and as limited by, this Agreement. The Partnership shall have
no employees.

            (d) The rights and obligations of the Managing Partner under this
Agreement shall not be assignable voluntarily or by operation of law by the
Managing Partner without the express prior written Approval of the Partners, and
any attempted assignment without such Approval shall be void.

            (e) The Managing Partner shall not amend, modify, alter or change
the Development Plan (or any component thereof) or enter into or approve any
change order relating

                                       27
<PAGE>

to the Improvements without the Approval of the Partners; provided, however,
that the Approval of the Partners shall not be required for non-material change
orders if (i) such change order is legally mandated or is required in order to
obtain necessary governmental permits or approvals, or (ii)(A) the increased
cost resulting from such change order does not exceed the greater of (1)
Twenty-Five Thousand Dollars ($25,000.00) and (2) three percent (3%) of the
applicable line item in the Development Budget or (B) the increased cost
resulting from such change orders, together with the increased cost resulting
from all prior change orders not Approved by the Partners, does not exceed Two
Hundred Thousand Dollars ($200,000.00). Without limiting the generality of the
foregoing, a change order shall be considered "material" if it results in any of
the following: (i) a material downgrading of the quality of the Improvements
from those specified in the Development Plan, (ii) a material change in the
Development Plan relating to the Lots or the phases of development, or any
change in Lot prices in a contract with Ashton Woods or any Affiliate of Ashton
Woods that has been Approved by the Partners, or any change of more than 5% in
Lot prices in any other contracts that have been Approved by the Partners, or
any change in tract prices that have been Approved by the Partners, (iii) a
change which materially affects the design or appearance of the Project or any
public area (interior or exterior) of the Project, or (iv) any material delay in
or extension of the development schedule. The Managing Partner shall deliver to
the Partners all change orders as part of the next monthly report following the
execution thereof together with a written explanation supporting the need for
such change order and copies of all contract modifications relating to such
change order required to be delivered by the Developer pursuant to the
Development Agreement

      SECTION 6.3 INSURANCE.

            (a) At the expense of the Partnership, the Managing Partner shall
cause the Partnership to maintain insurance covering the injury or death of
employees (if any) or others, as well as insurance against fire and other
standard risks, and to adjust all losses and claims pertaining to or arising out
of such insurance in such amounts are Approved by the Partners. All coverages
will be obtained under policy terms, scope of coverage and conditions and from
companies acceptable to and Approved by the Partners and will be non-cancelable
except upon thirty (30) days notice to the General Partners. The Managing
Partner shall provide or cause to be provided copies of the applicable
certificates of insurance to each Partner. Insurance carriers must be licensed
to conduct business in the State of Texas.

            (b) The Managing Partner will cause the Developer to require all
contractors and subcontractors to maintain in force insurance with coverages,
Approved by the Partners, at all times while engaged in activities relating to
the Project. All coverages will be obtained under policy terms and conditions
and from companies acceptable to the Managing Partner and Approved by the
Partners and will be non-cancelable except upon thirty (30) days notice to the
Partnership. The Managing Partner shall provide or cause to be provided copies
of the applicable certificates of insurance to each Partner. Insurance carriers
must be licensed to conduct business in the State of Texas.

      SECTION 6.4 EMPLOYMENT OF OTHERS. The Managing Partner shall be authorized
to appoint or contract with, any Person (other than an Affiliate) it may deem
necessary or desirable for the transaction of the business of the Partnership
for the Project; provided, however, the Partnership shall have no employees. The
cost and expense of such Person shall be borne by the

                                       28
<PAGE>

Managing Partner unless such expenditures are expressly set forth in the
Development Budget or an approved Annual Budget. In any case, the Partnership
shall not have any employees without the Approval of the Partners.

      SECTION 6.5 PROJECT DEVELOPMENT BUDGET UPDATES. The Managing Partner shall
periodically update or cause the Developer to update the Development Budget, as
Approved by the Partners, and provide copies thereof to the Partners (a) on not
less than a quarterly and annual basis, (b) at periodic times during the year
when and as circumstances warrant such updates and/or modifications, and (c) as
reasonably requested (not more frequently than monthly) by a Partner.

      SECTION 6.6 MANAGEMENT FEE. The Partnership shall pay a fee to the
Managing Partner while it serves in such capacity equal to One Thousand and
No/100 Dollars ($1,000.00) per developed Lot in the Project sold, to be paid at
or following the closing at which such Lot is actually sold and transferred. No
such fee shall be due or payable on any tract sales or on the sale of any Lots
from such tracts, except that a commission may be paid to an employee of an
Affiliate of Ashton Woods GP in connection with the sale of that certain tract
out of the Property containing approximately 116 acres known as the Briggs
parcel, in an amount equal to five percent (5%) of the portion (if any) of the
sales price, net of any sales or broker commissions paid or incurred to any
third party, for such tract that exceeds the projected net sales price of
$4,650,000 for such tract included as part of the Development Budget.

      SECTION 6.7 LICENSES. The Managing Partner shall, at its own expense,
qualify to do business and obtain and maintain such licenses as may be required
for the performance by such Managing Partner of its services hereunder. The
Managing Partner shall apply for and obtain in a timely manner on behalf of the
Partnership and at the Partnership' expense all necessary licenses and permits
for the development of the Project and the sale of the Lots.

      SECTION 6.8 INDEMNIFICATION.

            (a) The Partnership shall indemnify, save harmless and pay all
judgments arising against the General Partners (including the Managing Partner)
and their respective members, partners, employees and agents (each a "GP
Indemnified Party") from any cost, expense, claim, liability or damage incurred
by reason of such GP Indemnified Party's relationship to the Partnership or any
act performed or omitted to be performed by them in connection with this
Agreement or the business of the Partnership, including reasonable attorney's
fees and costs incurred by them in connection with the defense of any action
based on any such act or omission, which reasonable attorneys' fees and costs
may be paid as incurred, except that the Partnership shall have no
indemnification obligation hereunder with respect to any act or omission of any
GP Indemnified Party that constitutes willful misconduct or gross negligence or
was outside the scope of such GP Indemnified Party's authority under this
Article VI. All judgments against the Partnership with respect to which any GP
Indemnified Party is entitled to indemnification may only be satisfied from the
Partnership's assets. Any Person entitled to be indemnified hereunder shall also
be entitled to recover from the Partnership's assets its reasonable attorney's
fees and costs of enforcing this indemnity. Notwithstanding anything to the
contrary herein contained, if any Affiliate of a Partner has a contractual

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<PAGE>

agreement with the Partnership, such Affiliate will look solely to the terms and
provisions set forth in such contract for indemnification, if any, and shall
have no rights hereunder.

            (b)   Each General Partner shall indemnify, save harmless and pay
all judgments arising against the Partnership or the other Partners and their
respective members, partners, employees, agents and Affiliates from any cost,
expense, claim, liability or damage incurred by reason of any act performed or
omitted to be performed by such General Partner that constitutes willful
misconduct or gross negligence or was outside the scope of the General Partner's
authority under this Article VI, including reasonable attorney's fees and costs
incurred by them in connection with the defense of any action based on any such
act or omission, which reasonable attorneys' fees and costs may be paid as
incurred.

      SECTION 6.9 LIMITATIONS ON POWER AND AUTHORITY OF THE MANAGING PARTNER.
      Notwithstanding any other provision in this Agreement to the contrary, all
"Major Decisions" shall require the Approval of the Partners and, without such
Approval of the Partners, the Managing Partner shall not (and shall not have any
authority to) take any action with respect thereto unless and until so Approved
by the Partners. A "Major Decision" as used in the Agreement means any decision
or action by or on behalf of the Partnership described in this Section 6.9,
including Sections 6.9(a), 6.9(b) and 6.9(c). If the Designated Representatives
of the Partners are unable to agree unanimously on any Major Decision, and if
such failure continues for ten (10) days after either the Managing Partner or
any other Partner gives the other Partners written notice of such disagreement,
then the Partners shall be deemed to be deadlocked in the matter in question
("Deadlock"). Upon the occurrence of a Deadlock, the following provisions of
this Section 6.9 apply.

            (a)   If the Deadlock occurs with respect to any of the matters
described in this Section 6.9(a), then the Managing Partner shall not take any
further action with respect to such matter, unless and until it is Approved by
the Partners, and any such matter shall not be subject to dispute resolution
pursuant to Article XIII and shall not trigger the Buy/Sell provisions of
Article IX herein. With respect to any matter described in this Section 6.9(a),
a Partner may withhold its approval in its sole and absolute discretion (without
regard to whether the withholding of such approval is unreasonable or
arbitrary).

      Notwithstanding any provision of this Agreement to the contrary, a Partner
that is a Defaulting Partner will continue to have a right of approval over the
specific matters set forth in this Section 6.9(a)(i), (ii), (iii), (iv), (v),
(vi), (x) and (xiv), (but with respect to (xv), only to the extent of any
amendment to the Certificate of Limited Partnership or this Agreement that would
treat the Preferred Return Accounts or Unreturned Contribution Accounts of
Ashton Woods GP, Ashton Woods LP, CLGP and CL other than on a pari passu basis
among them), notwithstanding the uncured Default. The matters requiring Approval
of the Partners pursuant to this Section 6.9(a) are the following:

                  (i)   Lend funds belonging to the Partnership to a Partner or
      to any third party, or extend to any person, firm or corporation credit on
      behalf of the Partnership except in accordance with the terms of this
      Agreement.

                  (ii)  Take any action in contravention of this Agreement.

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<PAGE>

                  (iii)  Possess the Project or any other Partnership assets or
      assign its rights in the Project or any other Partnership assets for other
      than a Partnership purpose, or use the Project or any other Partnership
      assets except for the account and benefit of the Partnership.

                  (iv)   Require any Additional Capital Contributions, except as
      provided under Sections 3.2 and/or 3.4 hereof.

                  (v)    Take any act which would make it impossible to carry on
      the purpose and ordinary business of the Partnership except pursuant to
      Article XII hereof.

                  (vi)   Elect for the Partnership to be treated as other than a
      partnership for federal, state and local income tax purposes.

                  (vii)  Other than in connection with the development of the
      Property in accordance with the Development Plan, partition all or any
      portion of the Project or any other property of the Partnership, or file
      any complaint or institute any proceeding at law or in equity seeking such
      partition.

                  (viii) Cause the Partnership to enter into any profit
      participation or sharing agreement or arrangement with any other Person
      with respect to the Project, except for incentive compensation
      arrangements in the ordinary course with on site personnel or Persons
      engaged to market and sell Lots in the Project, but in any case only to
      the extent set forth in the Development Budget.

                  (ix)   The transfer by any Partner of its Partnership Interest
      in the Partnership or other rights or interests which are derived by it
      under this Agreement, or any part thereof or any interest therein, except
      as expressly permitted in Article X herein.

                  (x)    Except as otherwise specifically permitted herein,
      cause the Partnership to enter into any agreement or contract for goods,
      services or property, or any other transaction, with any Partner or any
      Affiliate of any Partner, or any modification of or amendment to any such
      agreement, contract or transaction Approved by the Partners.

                  (xi)   Admit, or cause the admission of, any additional
      Partners to the Partnership.

                  (xii)  Except as required by the Development Plan, cause the
      Partnership to enter into any business combination, joint venture,
      partnership, limited liability Partnership or other entity with any other
      Person for the ownership, development or financing of the Project.

                  (xiii) Institute a filing of Bankruptcy by the Partnership.

                  (xiv)  Amend this Agreement or the Certificate of Limited
      Partnership except as may be required by applicable law.

                                       31
<PAGE>

            (b)    If the Deadlock occurs with respect to any of the matters
described in this Section 6.9(b), then the Managing Partner shall not take any
further action with respect to such matter, unless and until it is Approved by
the Partners, and any such matter shall be subject to dispute resolution
pursuant to Article XIII and shall not trigger the Buy/Sell provisions of
Article IX herein. With respect to any matter described in this Section 6.9(b),
a Partner may withhold its approval in its sole and absolute discretion (without
regard to whether the withholding of such approval is unreasonable or
arbitrary). A Partner that is a Defaulting Partner shall not continue to have a
right of approval over the matters set forth in this Section 6.9(b) while such
Partner is a Defaulting Partner. The matters requiring Approval of the Partners
pursuant to this Section 6.9(b) are the following:

            (i)    Amend the Development Plan, Development Budget, any Annual
      Business Plan, any Annual Budget or the Minimum Sales Requirements
      contained in any Annual Business Plan, except to the extent such plan or
      change would require or permit any action, commitment or inaction of the
      Partnership that is described in either Section 6.9(a) or 6.9(c), which
      shall be subject to those sections.

            (ii)   Except as provided in the Development Plan, acquire any
      material real property.

            (iii)  Change the name of the Partnership.

            (iv)   Enter into any Lot Sale Contract except in accordance with
      the Development Plan and at a price not less than 95% of the price for
      such Lot(s) set forth in the Pro Forma Sales Budget; provided any Lot Sale
      Contract with Ashton Woods or any of its Affiliates shall be subject to
      prior written approval of CLGP.

            (v)    Cause the Partnership to commit to any activities or business
      unrelated to the Project.

            (vi)   Terminate, dissolve or wind up the Partnership except as
      provided in Section 12.1 or 11.2.(d) hereof.

            (vii)  Commence, settle, or cause the settlement of, any claims,
      suits, debts, demands or judgments against the Partnership if the amount
      involved exceeds $50,000.

            (viii) Except as required by the Development Plan, pledge, mortgage,
      hypothecate or otherwise encumber any of the Partnership's assets.

            (ix)   Except as required by the Development Plan and any Optional
      Loans, cause the Partnership to become liable with respect to any
      obligation for any Financings or other indebtedness (including guarantees
      of the indebtedness or other obligations of any person or of any
      subsidiary or affiliate of the Partnership), or to issue any notes or
      other evidences of indebtedness, in any transaction or series of
      transactions that result or will result in such obligations and
      indebtedness being outstanding at any time.

                                       32
<PAGE>

            (x)    Modify any loan to increase the amount of the loan or
      increase the rate of interest or change the terms of repayment outside of
      the parameters provided in the approved Development Plan.

            (xi)   Any determination of the Gross Asset Value of Partnership
      property.

            (xii)  Establishing cash reserves to be retained when determining
      Net Receipts for distribution.

            (xiii) Approve any other matter reserved to the Partners or
      requiring the Approval of the Partners under this Agreement.

            (xiv)  Change the Fiscal Year or the method of accounting of the
      Partnership.

            (xv)   Amend any agreement in any material manner the entering into
      of which was a Major Decision described in this Section 6.9(b).

               (c)    If the Deadlock occurs with respect to any of the matters
described in this Section 6.9(c), then any such matter shall not be subject to
dispute resolution pursuant to Article XIII hereto and any Partner may invoke
the Buy/Sell provisions set forth in Article IX herein. With respect to any
matter contained in this Section 6.9(c), no Partner may unreasonably withhold,
delay or condition its approval. A Partner that is a Defaulting Partner shall
not continue to have a right of approval over the matters set forth in this
Section 6.9(c) while such Partner is a Defaulting Partner. The matters requiring
Approval of the Partners pursuant to this Section 6.9(c) are the following:

                  (i)   Sell, or cause the sale by the Partnership of, any
      portion of the Project, or all or substantially all of the assets of the
      Partnership, other than the sale of single family Lots and budgeted tract
      sales in the ordinary course of business in accordance with the Annual
      Business Plan, the Development Budget, the Pro Forma Sales Budget, and the
      form Lot Sale Contract.

                  (ii)  Revise in a material manner the agreed upon scope of the
      Project or make any material change to the Development Plan.

                  (iii) Any determination of or adjustment to the Gross Asset
      Value of any Partnership property.

                  (iv)  Amend any agreement in any material manner the entering
      into of that was a Major Decision described in this Section 6.9(c).

      SECTION 6.10 ANNUAL BUSINESS PLAN.

            (a)   On or prior to October 1 of each year, the Managing Partner
shall prepare and deliver to each Designated Representative a description of the
proposed development activities of the Partnership planned for the following
Fiscal Year as provided in this Section 6.10(a) (the "Annual Business Plan").
The Annual Business Plan for each year shall

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<PAGE>

reflect the current expectations of the Managing Partner regarding the
development of the Property and, in particular, shall include a description of:

                  (i)    the planned development activities of the Partnership
            during the year pursuant to the Development Plan and the reasons for
            any deviations from the Development Plan or the Development Budget;

                  (ii)   the amount of the expected capital expenditures of the
            Partnership pursuant to the Development Budget and the anticipated
            amount of capital that may be called from the Partners in accordance
            with Sections 3.2 and 3.4 herein and the Development Budget;

                  (iii)  the Lots expected to be marketed and sold by the
            Partnership and the budgeted gross and net revenues from such sales;

                  (iv)   the amount of anticipated distributions to each
            Partner, if any;

                  (v)    the marketing activities of the Partnership;

                  (vi)   any change to the anticipated phasing of the
            development of the Property as reflected in the Development Plan;

                  (vii)  a proposed Annual Budget for the next Fiscal Year in
            accordance with the Development Plan and the proposed Annual
            Business Plan;

                  (viii) prior to the sale of the first Lot by the Partnership,
            a proposed sales budget for the initial phase of the development of
            the Property, and prior to the sale of the first lot in each
            subsequent phase another proposed sales budget shall be prepared
            (each a "Pro Forma Sales Budget"). Each Pro Forma Sales Budget will
            establish a targeted sales price for each lot to be sold in the
            applicable phase that is consistent with the then Annual Business
            Plan;

                  (ix)   the proposed Minimum Sales Requirements for the Fiscal
            year; and

                  (x)    any other matter relating to the development of the
            Property that the Managing Partner determines should be provided for
            in the Annual Business Plan.

      (b)   The Managing Partner shall be available to discuss the proposed
Annual Business Plan and answer any questions related thereto at the meeting of
the Designated Representatives scheduled for the fourth quarter of such year.
Within thirty (30) days of receipt of the Annual Business Plan, or within ten
(10) days after the fourth quarter meeting of the Designated Representatives,
which ever is later, the Designated Representatives shall either approve or
disapprove the proposed Annual Business Plan, in whole or in part. The Annual
Business Plan generally must be approved by all Designated Representatives. If
at the end of such thirty (30) day or ten (10) day period, as applicable, the
proposed Annual Business Plan in its entirety has not been approved in the
manner required, then it shall be deemed disapproved in its entirety.

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<PAGE>

      (c)   If a proposed Annual Business Plan, or any portion thereof, is not
approved in the time period specified in Section 6.10(b) above then the General
Partners shall cooperate with each other to resolve any questions with respect
to the proposed plan and any suggested revisions thereto and shall use their
good faith efforts to agree upon an Annual Business Plan for the Fiscal Year in
question prior to the beginning of such Fiscal Year. If an Annual Business Plan
for any Fiscal Year is not approved prior to the commencement thereof, then,
pending final resolution of any dispute, the Managing Partner shall continue to
manage, maintain, supervise, direct, and operate the activities of the
Partnership in accordance with the approved Annual Business Plan for the
previous Fiscal Year (or if no such plan exists, the Development Plan) until the
requisite approval of a new Annual Business Plan is obtained; except that the
Managing Partner shall be authorized during any interim period to reasonably
exceed the prior Fiscal Year's approved Annual Budget amounts for taxes, utility
charges and other items not within the reasonable control of the Partnership as
well as for increases in contract services and personnel costs to the extent
required to maintain the same level of service provided for during the previous
Fiscal Year. If after sixty (60) days following the end of the period described
in Section 6.10(b) above an Annual Business Plan has not been approved, then the
Partners shall be deemed to be in deadlock and any General Partner may initiate
the arbitration provisions of Article XIII herein; provided, however, no part of
any proposed Annual Business Plan shall be subject to arbitration if such matter
would require the Approval of the Partners under Section 6.9(a) or 6.9(c) of
this Agreement.

      (d)   Upon approval of an Annual Business Plan pursuant to Section 6.10(c)
above (whether by approval of the Partners or by arbitration), the Managing
Partner shall promptly take all action necessary to cause the Annual Business
Plan to be implemented by the Partnership.

      SECTION 6.11 MANAGEMENT BY LIMITED PARTNERS PROHIBITED. Except as
otherwise provided herein, the Limited Partners, as such, shall not participate
in or have control over the management of the Partnership's business and shall
not transact any business for the Partnership.

      SECTION 6.12 INSPECTION. Each Partner shall at all times have the right,
power and authority, at its sole cost and expense, to perform (or have its
agents or representatives perform) such tests, inspections, surveys and reviews
of the business and affairs of the Partnership as it shall, in its sole
discretion, deem necessary or advisable.

      SECTION 6.13 CONSULTATIONS. The Managing Partner shall, on a continuing
basis, use reasonable efforts to provide adequate opportunity for reasonable
consultations with the Partners (or their agents) prior to any recommendation
(preliminary or otherwise) with respect to any matter requiring the consent or
Approval of the Partners.

      SECTION 6.14 COMPENSATION.

            (a)   Except as otherwise set forth in Section 6.6, no Partner or
Affiliate thereof shall be paid compensation for serving as a Partner or in
connection with any services, directly or indirectly, rendered to or for the
Partnership.

            (b)   The General Partners will be reimbursed by the Partnership for
all reasonable costs and expenses incurred in connection with the management and
operation of the Partnership's assets and business, with the exception of
general overhead expenses, provided that

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<PAGE>

(i) all such costs and expenses are evidenced by reasonable substantiating
documentation such as receipts, invoices, canceled checks and statements, and
(ii) such amounts are set forth in the Development Budget and/or Annual Business
Plan.

      SECTION 6.15 REMOVAL OF MANAGING PARTNER. Upon (i) the occurrence of an
Event of Default with respect to Ashton Woods GP or Ashton Woods LP (or any
Affiliate or any permitted transferee thereof); (ii) any Transfer of an interest
in Ashton Woods GP or Ashton Woods LP not permitted by Article X; (iii) the
occurrence of an event of default under the Financing (after giving effect to
any applicable grace or cure periods) that is not caused by CLGP, CL, or any
Affiliate of CLGP or CL; or (iv) the Partnership shall for any reason within the
reasonable control of the Managing Partner fail to achieve any of the Minimum
Sales Requirements included within an Approved Business Plan for two (2)
consecutive quarterly periods, then in each case CLGP shall have the right (but
not the obligation) in it sole discretion to remove Ashton Woods GP as the
Managing Partner by giving written notice of such removal to Ashton Woods GP;
provided that the time period by which the Minimum Sales Requirements must be
achieved shall be subject to extensions for an aggregate period of up to six (6)
months on account of one (1) or more Force Majeure Events. Items not within the
reasonable control of the Managing Partner: shall include, but not be limited
to, (i) the default by a homebuilder (other than Ashton Woods) in its obligation
to acquire Lots in the Project from the Partnership pursuant to a Lot Sales
Contract executed by the Partnership, and (ii) the failure of a contractor to
perform its obligations in accordance with a contract or agreement executed by
the Partnership. Any such removal shall be effective immediately upon the giving
of such notice, and CLGP or an Affiliate thereof designated by CLGP shall be the
Managing Partner and the Partnership shall continue, subject to the terms of
Article XI. CLGP, or its designee, shall have all power necessary to amend the
Partnership's Certificate of Limited Partnership and this Agreement as necessary
to reflect any such removal and the designation of CLGP, or its designee, as the
Manager Partner. Following any such removal, Ashton Woods GP shall continue to
be a General Partner, except as otherwise provided in Article XI. The Managing
Partner shall have the right to submit proposed updates of the Minimum Sales
Requirements and the reasons for such proposed changes to CLGP on a semi-annual
basis. If CLGP shall approve such proposed changes in the Minimum Sales
Requirements in its sole discretion, such revised Minimum Sales Requirements
shall be substituted for the sale requirements set forth on Schedule 6.15. The
parties acknowledge that the failure to achieve the Minimum Sales Requirement
will not give rise to any claim or action for damages unless such failure is due
to the default or material breach by the Managing Partner of its obligations
under this Agreement.

      SECTION 6.16 PARTNER MEETINGS.

            (a)   It is expressly understood and agreed that the Partners shall
reasonably cooperate with each other to meet, review documents and/or make
decisions. Furthermore, the Partners may be contacted, and decisions made, by
telephone, facsimile or email in lieu of face-to-face meetings, subject,
however, to those matters requiring the Approval of the Partners.

            (b)   Quarterly meetings of the Partners shall be held at 10:00
a.m., Atlanta, Georgia time, unless another date, time is or place is Approved
by the Partners. Any action may be taken at the quarterly meetings which is
reserved to the Partners pursuant hereto or is otherwise presented to the
Partners at the meeting.

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<PAGE>

            (c)   Special meetings of the Partners may be called by any Partner
by delivering to the other Partners a written request stating that the
requesting Partner wishes to call a meeting and indicating the specific purpose
for which the meeting is to be held. Action at the meeting shall be limited to
those matters specified in the call of the meeting. This provision shall not be
construed to require the holding of any special meetings.

            (d)   Unless waived or otherwise not required pursuant hereto, a
notification of all meetings, stating the place, day and hour of the meeting and
the purpose or purposes for which the meeting is called, shall be delivered by
the Managing Partner or any Partner to each Partner. If the applicable party
fails to timely deliver such notices, then any Partner may deliver such notices,
provided that, in such event, the notices shall be delivered to each Partner no
less than two (2) nor more than sixty (60) days before the meeting.
Notwithstanding the foregoing, any Partner may request one postponement of the
meeting date for a period not to exceed five (5) Business Days by giving written
notice to the non-requesting Partners at least one (1) Business Day prior to the
scheduled date of such meeting.

            (e)   Attendance at a meeting shall constitute a waiver of
notification of the meeting, except where such Person attends for the express
purpose of objecting to the transaction of any business on the grounds that the
meeting is not lawfully called or convened. Notification of a meeting may also
be waived in writing. Attendance at a meeting is not a waiver of any right to
object to the consideration of matters required to be included in the
notification of the meeting but not so included, if the objection is expressly
made at the meeting.

            (f)   Any Partner may designate other parties to attend Partner
meetings in an ex-officio capacity, unless objected to by any other Partner.
Such parties may consult with and advise the Partners but may not vote at such
meetings.

            (g)   All Partners who are not in default hereunder may vote either
in person or by proxy at any meeting. Each Partner's percentage voting power at
a meeting shall be equal to its Percentage Interest. Notwithstanding anything
contained herein to the contrary, all references to approval or voting by the
Partners shall mean those Partners who are entitled to vote hereunder at the
time the vote is taken on such matter. All decisions reserved to the Partners
shall be made by the concurring majority vote of the Partners entitled to vote
at and attending such meeting; provided, however, any decisions which must be
Approved by the Partners or are subject to the Approval of the Partners shall be
made by the requisite percentage vote of the Percentage Interests of the
Partners entitled to vote at such meeting, whether attending the meeting or not,
and reduced to writing and signed by the Partners in order to be effective.

            (h)   Partners may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this subsection shall constitute presence in person at the meeting.

            (i)   Any action that may be taken at a meeting of the Partners may
be taken without a meeting if a consent in writing, setting forth the action to
be taken, shall be signed by all Partner(s) who are entitled to vote hereunder
and who are holding the percentage of Partner's Percentage Interests and/or are
required to approve such action under the Act or this Agreement.

                                       37
<PAGE>

Such consent shall have the same force and effect as a vote of the signing
Partners at a meeting duly called and held pursuant to this Section 6.16. No
prior notice from the signing Partner(s) to the other Partner(s) shall be
required in connection with the use of a written consent pursuant to this
Section 6.16. Notification of any action taken by means of a written consent of
Partners shall, however, be sent within a reasonable time after the date of the
consent to all Partners who did not sign the written consent. In this regard, if
a Partner is requested in writing to consent to or reject any actions specified
in such request, such Partner shall be deemed to have rejected such action if
such Partner fails to respond in writing within five (5) business days after
receipt of such request.

            (j)   A Partner may vote either in person or by proxy executed in
writing by the Partner. A photographic, photo static, facsimile, email or
similar reproduction of a writing executed by the Partner, shall be treated as
an execution in writing for purposes of this Section 6.16. Proxies for use at
any meeting of Partners or in connection with the taking of any action by
written consent shall be filed with the Managing Partner before or at the time
of the meeting or execution of the written consent, as the case may be. No proxy
shall be valid after eleven (11) months from the date of its execution unless
otherwise provided in the proxy. A proxy shall be revocable unless the proxy
form conspicuously states that the proxy is irrevocable and the proxy is coupled
with an interest. Such person's proxy shall be deemed automatically revoked upon
the death, resignation or removal from such office of a Partner as such person
previously held.

            (k)   In addition to the other rights specifically set forth in this
Agreement, each Partner is entitled to all information to which that Partner is
entitled to have access pursuant to the Act under the circumstances and subject
to the conditions therein stated.

                                   ARTICLE VII
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

      SECTION 7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS.

            (a)   Ashton Woods GP and Ashton Woods LP hereby represent and
warrant to and covenant with the other Partners the following:

                  (i)   Ashton Woods GP is corporation duly organized and
      validly existing in the State of Texas, and has full power to carry on its
      business and to own and operate its assets and to carry out the
      transactions contemplated in this Agreement. Ashton Woods LP is a limited
      liability company duly organized and validly existing in the State of
      Texas, and has full power to carry on its business and to own and operate
      its assets and to carry out the transactions contemplated in this
      Agreement.

                  (ii)  Each of Ashton Woods GP and Ashton Woods LP has duly
      authorized, executed and delivered this Agreement, and this Agreement is
      the legal and binding obligation of each of Ashton Woods GP and Ashton
      Woods LP.

                  (iii) The execution, delivery and performance of this
      Agreement by each of Ashton Woods GP and Ashton Woods LP does not and will
      not conflict with, violate or constitute a breach or default under the
      respective organizational documents of Ashton Woods GP or Ashton Woods LP,
      any agreement or instrument by which either is

                                       38
<PAGE>

      bound or to which its properties or assets are subject, or any law,
      regulation, writ, order, injunction or decree to which either is subject.

                  (iv)  There is no action, suit or proceeding pending against
      such Partner or, to its knowledge, threatened in any court or by or before
      any other governmental agency or instrumentality that could adversely
      affect or would prohibit its entering into or performing its obligations
      under this Agreement.

            (b)   CLGP and CL hereby represent and warrant to and covenant with
the other Partners the following:

                  (i)   CLGP is a Georgia limited liability company duly
      organized and validly existing in the State of Georgia, and has full power
      to carry on its business, to own and operate its assets and to carry out
      the transactions contemplated in this Agreement. CL is a Texas limited
      partnership duly organized and validly existing in the State of Texas, and
      has full power to carry on its business, to own and operate its assets and
      to carry out the transactions contemplated in this Agreement.

                  (ii)  Each of CLGP and CL has duly authorized, executed and
      delivered this Agreement, and this Agreement is the legal and binding
      obligation of each of CLGP and CL.

                  (iii) The execution, delivery and performance of this
      Agreement by each of CLGP and CL does not and will not conflict with,
      violate or constitute a breach or default under the certificate of
      formation or operating agreement of CLGP or the certificate of limited
      partnership or limited partnership agreement of CL, any agreement or
      instrument by which either is bound or to which its properties or assets
      are subject, or any law, regulation, writ, order, injunction or decree to
      which either is subject.

                  (iv)  There is no action, suit or proceeding pending against
      such Partner or, to its knowledge, threatened in any court or by or before
      any other governmental agency or instrumentality that could adversely
      affect or would prohibit its entering into or performing its obligations
      under this Agreement.

      SECTION 7.2 INDEMNITY FOR BREACH OF WARRANTY. If there is a breach by a
Partner of any of the representations, warranties set forth in Section 7.1
above, and if the non-breaching Partner(s) or the Partnership, as applicable,
suffer any loss or damages as a result thereof, then the breaching Partner shall
duly, irrevocably and unconditionally indemnify, defend and hold the other
Partners and the Partnership harmless from and against any claims, causes of
action, liabilities, costs, expenses, damages or losses of any nature whatsoever
arising out of, incident to or resulting from such breach, including without
limitation reasonable attorneys' fees and costs of litigation.

      SECTION 7.3 SCOPE OF AUTHORITY. Each Partner agrees to indemnify, defend
and hold harmless the other Partners and the Partnership from and against all
claims, causes of action, liabilities, costs, expenses, damages or losses of any
nature whatsoever arising or resulting from or by reason of (a) such Partner's
acting outside of the scope of its authority under this Agreement, or (b) such
Partner's gross negligence or willful misconduct (excluding, however,

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<PAGE>

failure to make a required Additional Capital Contribution) in the performance
of its obligations and duties under this Agreement.

                                  ARTICLE VIII
                   CONTRACTS WITH RELATED PARTIES; ACQUISITION
                         AND DEVELOPMENT OF THE PROPERTY

      SECTION 8.1 RELATED PARTY CONTRACTS.

            (a)   With the exception of Lot Sale Contracts with an Affiliate of
Ashton Woods that are approved by CLGP, the Partnership shall not enter into any
agreement with any Partner or with any Affiliate of such Partner for the
furnishing to the Partnership of goods or services for the Project or for the
acquisition or sale of property, unless such relationship has been disclosed, in
writing, to the other Partners and such agreement is approved by the holders of
at least a majority of the Percentage Interests held by the Partners who are not
Affiliates of such Partner, with the rates of compensation, commission,
remuneration or purchase price not in excess of those prevailing in the market
place.

            (b)   Notwithstanding anything in this Agreement to the contrary, in
the event Ashton Woods or any Affiliate of Ashton Woods is in default under any
Lot Sale Contract (after giving effect to any applicable notice and cure period)
with the Partnership, then in such event and as long as the default is
continuing, CLGP will have the sole, exclusive and unilateral right on behalf of
the Partnership (i) to select which remedy or remedies that the Partnership may
exercise, and (ii) if a Lot Sale Contract is terminated, to thereafter remarket
to third parties the Lots in the Project which are the subject of such
terminated Lot Sale Contract (or portion thereof). In addition, notwithstanding
anything in this Agreement to the contrary, CLGP shall have the sole, exclusive
and unilateral right on behalf of the Partnership (1) to give all notices on
behalf of the Partnership under or with respect to all Lot Sale Contracts with
Ashton Woods or any Affiliate of Ashton Woods, (2) to terminate any Lot Sale
Contract executed by Ashton Woods or any Affiliate of Ashton Woods with the
Partnership if Ashton Woods or any Affiliate of Ashton Woods is in default with
respect to such Lot Sale Contract (after giving effort to any applicable notice
and cure period thereunder), (3) to select which remedy or remedies that the
Partnership may exercise, and (4) to remarket and sell to third parties the Lots
which are the subject of any terminated Lot Sale Contract(s).

            (c)   The Managing Partner shall have the unilateral right to
designate one or more third party national title companies to be used for all
lot closings.

      SECTION 8.2 ACQUISITION OF THE REAL PROPERTY. The Partnership shall
acquire the Real Property pursuant to the Purchase Agreement.

                                   ARTICLE IX
                                    BUY-SELL

      SECTION 9.1 BUY-SELL.

            (a)   At any time after the execution of this Agreement if any Major
Decision described in Section 6.9(c) hereof, is proposed by a Partner and
Approval of the Partners is not

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<PAGE>

obtained within thirty (30) days following delivery of such proposal in writing
to the General Partners, the Partners agree to meet again within seven (7)
Business Days of a "Deadlock" (herein so called) on such Major Decision and
attempt in good faith to negotiate a mutually acceptable resolution to the
Deadlock. In the event the Partners are unable to reach such agreement and
resolve the Deadlock within ten (10) days thereafter, any Partner (that is not a
Defaulting Partner) shall have the right, by giving written notice (the "Offer
Notice") to the other Partner(s), to offer to purchase the other Partners' who
are not its Affiliates entire Partnership Interest(s) in the Partnership. The
Offer Notice shall state that the Partner giving such notice (on behalf of
itself and its Affiliates in this Partnership) (the Partner giving such notice
and all of such Partner's Affiliates in the Partnership shall hereinafter be
collectively referred to as the "Offering Party") desires to purchase (1) the
entire Partnership Interest(s) of the other Partner(s) and such other Partner's
Affiliates in the Partnership (the other Partner and such other Partner's
Affiliates in the Partnership shall hereinafter be collectively referred to as
the "Other Party"). The Offer Notice shall also specify (A) an amount (the
"Stated Amount") which the Offering Party would pay for all Partnership assets
which Stated Amount shall in any case be not less than the aggregate of all
indebtedness owed at that time by the Partnership, and which shall be used in
the calculations under this Section 9.1, and (B) the total amount of all
indebtedness for the Partnership.

            (b)   The aggregate purchase price (the "Interest Purchase Price")
for the Partnership Interest(s) of the Selling Partner (as defined in Section
9.1(d) below) pursuant to this Section 9.1 shall be the aggregate amount which
would be distributed to the Selling Partner pursuant to Section 4.9 of this
Agreement (after giving effect to all applicable provisions of this Agreement
and after liquidating all Partnership indebtedness and all the indebtedness and
reserves then existing but without establishing any additional reserves) if all
of the assets then held by the Partnership were sold on the Purchase Closing
Date (as defined below) for a gross sales price equal to the Stated Amount and
the proceeds of such sale were distributed pursuant to Section 4.9. In the event
that the amount described above which would be distributed to the Selling
Partner under Section 4.9 would be zero, then the Interest(s) Purchase Price
shall be Ten and No/100 Dollars ($10.00), subject to the provisions of Section
9.1(f) hereof. The Interest Purchase Price to be paid for the Selling Partner's
Partnership Interest(s) in the Partnership, and the terms of payment and closing
of such transaction, shall be subject to the provisions hereof.

            (c) The Other Party shall have a period of twenty (20) days after
the receipt of the Offer Notice within which to notify the Offering Party in
writing whether such Other Party shall, at the Other Party's option, (i)
purchase all of the Partnership Interest(s) of the Offering Party at the pro
rata Interest(s) Purchase Price and subject to the other terms established as
provided above, or (ii) sell its (and its Affiliates') entire Partnership
Interest(s) in the Partnership to the Offering Party at the pro rata Interest(s)
Purchase Price and subject to the other terms established as provided above. The
Other Party's failure to timely deliver such written notice shall be deemed to
be its election to sell its Interest(s) to the Offering Party.

            (d) If the Selling Partner (or its Affiliate) is also the Developer
then such Development Agreement may be terminated in whole or in part at the
option of the Purchasing Partner (as defined in Section 9.1(e) below) on notice
to the Selling Partner; provided, however, notwithstanding such termination of
the Development Agreement, the Developer will be entitled to be paid any unpaid
Development Fees and expenses accrued through the date of termination

                                       41
<PAGE>

of the Development Agreement(s) and shall remain liable for any of its
obligations arising prior to such termination. In the event the Managing Partner
is a Selling Partner, no further fees shall be payable to it under Section 6.6
except as may accrue prior to the Purchase Closing Date (as defined in (e)
below).

            (e)   Irrespective of whether the Other Party timely notifies the
Offering Party that such Other Party desires to purchase the Partnership
Interest of the Offering Party or to sell its Partnership Interest to the
Offering Party, and irrespective of whether the Other Party fails to timely
reply within the specified twenty (20) day period, the purchase and sale
transaction to be effectuated pursuant to this Section 9.1 hereof with respect
to the applicable Partnership Interest(s) shall be closed on the date (the
"Purchase Closing Date"), whichever is earlier, that is (A) ninety (90) days
from the receipt by the Other Party of the original Offer Notice given by the
Offering Party, or (B) the date specified in the Offer Notice, but not earlier
than sixty (60) days from receipt of the Offer Notice. On the Purchase Closing
Date, the selling Partner and its Affiliates in the Partnership (the selling
Partner and its Affiliates are hereafter collectively referred to as the
"Selling Partner") shall convey, transfer and assign to the purchasing Partner
(herein the "Purchasing Partner"), by deed, bill of sale and/or other
instruments of transfer as may be reasonably requested by the Purchasing
Partner, the Selling Partner's entire Partnership Interest(s) in the Partnership
and shall then and thereafter, to the extent requested by the Purchasing
Partner, cooperate to effect an efficient continuation of the affairs of the
Partnership and the operation, management and maintenance of the Project. On the
Purchase Closing Date, the Purchasing Partner shall pay to the Selling Partner
the Interest(s) Purchase Price for the Selling Partner's interest(s) in the
Partnership.

            (f)   It shall be a condition precedent to the closing of the
purchase and sale of the Selling Partner's Partnership Interest(s) that the
Purchasing Partner shall either (i) pay in full any loan to the Partnership from
any Person under which the Selling Partner (or any Affiliate thereof) has
personal liability (plus any deferred and accrued and unpaid interest thereon
and any required prepayment premium and/or yield maintenance fees), or (ii) have
the Selling Partner (or any Affiliate thereof) released from personal liability
for payment of the principal and interest of such loan (and provide a complete
indemnity to the Selling Partner from the Purchasing Partner for other
obligations thereunder or relating thereto). In addition, the Selling Partner
may, in its sole, absolute and unilateral discretion, and without prejudice to
any other legal or equitable remedies it may have, unilaterally prohibit the
closing from occurring unless simultaneously therewith either (1) any such loan
is so repaid, or (2) such release from liability is obtained. For the avoidance
of doubt, the Interest Purchase Price shall not be increased or adjusted whether
any such loan is repaid or such release is obtained (it being understood and
agreed for purposes of calculation of the Interest Purchase Price that the
amount of any such indebtedness shall be deducted from the Stated Amount in
determining the Interest Purchase Price).

            (g) In the event a Partner (or any Affiliate) is at the time of the
Offer Notice holding a bona fide written third party offer to buy any Interest
in the Partnership (or all or substantially all of the Project), such offer must
be disclosed to the other Partner.

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<PAGE>

                                    ARTICLE X
                       TRANSFER OF PARTNERSHIP INTEREST(S)

      SECTION 10.1 TRANSFER OF PARTNERSHIP INTEREST(S)S HELD BY THE GENERAL
PARTNER. Except as otherwise herein expressly provided, no General Partner may,
without the prior Approval of the Partners, voluntarily retire or withdraw from
the Partnership, substitute any person, firm or corporation in its stead or
sell, assign, transfer or otherwise dispose of all or any part of its
Partnership Interest(s) in the Partnership; provided, however, that nothing in
this Section 10. 1 shall prevent or restrict a General Partner from:

            (a)   pledging, granting a security interest in or otherwise
encumbering its Partnership Interest(s) to secure the Financing(s); or

            (b)   selling, assigning, transferring or otherwise disposing of its
right to receive distributions with respect to its respective Partnership
Interest(s) to Affiliates of the General Partner, provided that no such transfer
shall dissolve the Partnership or entitle the assignee to become a partner or to
interfere or otherwise participate in the management or administration of the
affairs or business of the Partnership, to require any information or accounts
of Partnership transactions, to inspect the Partnership's books or otherwise to
have any connection with or rights against the Partnership or the Partners
(except the assigning Partner), and provided further that the Partnership shall
not be required to recognize any such transfer until the Partners shall have
received from the General Partner notice and other evidence reasonably
satisfactory to the Partners of such transfer; or

            (c)   in the case of CLGP, transferring or assigning all of its
Partnership Interest to CREC and/or Lumberman's Investment Corporation or any
other Affiliate of CREC and/or Lumberman's Investment Corporation.

      SECTION 10.2 ACQUISITION OF PARTNERSHIP INTEREST(S) FOR INVESTMENT.

            (a)   Each Partner hereby represents and warrants to the other
Partners and to the Partnership that the acquisition of its Partnership
Interest(s) is made for its own account for investment purposes only and not
with a view to the resale or distribution of such Partnership Interest(s).

            (b)   Each Partner represents and agrees that it is aware that its
Partnership Interest has not been registered under the Securities Act of 1933,
as amended, or under any applicable state securities laws, and agrees that it
will not sell, assign or otherwise transfer its Partnership Interest(s) or any
fraction thereof unless the Partnership Interest(s) has(have) been registered
under the Securities Act of 1933, as amended, and under any applicable state
securities laws, or such sale, assignment or transfer is exempt from such
registration (and, if requested, opinions of counsel to such effect are obtained
and Approved by the Partners) and, in any event, it will not so sell, assign or
otherwise transfer its Partnership Interest(s) or any fraction thereof to any
person or entity who does not similarly represent, warrant and agree as provided
herein.

            (c)   Each Partner understands that its right to sell, pledge,
transfer, assign or dispose of its Partnership Interest is restricted by the
terms of this Agreement and state and federal securities laws.

                                       43
<PAGE>

            (d)   Each Partner represents that it is a sophisticated and
knowledgeable investor with experience in making investments such as the one it
is making in the Partnership, it has been provided with, or has had access to,
such information as it deems necessary to or useful in its evaluation of the
merits, risks and tax consequences of an investment in the Partnership and of
making an informed investment decision, and it has been advised by its counsel,
accountants, financial advisors or such other Persons it has deemed appropriate
concerning this Agreement and its investment in the Partnership

      SECTION 10.3 TRANSFER OF PARTNERSHIP INTEREST(S) HELD BY ANY LIMITED
PARTNER.

            (a)   Except as otherwise herein expressly provided, no Partnership
Interest(s) of any Limited Partner nor any fraction thereof may be voluntarily
sold, exchanged, pledged, assigned or transferred by any Limited Partner without
being Approved by the Partners; provided, however, nothing in this Section
10.3(a) shall prevent or restrict any Limited Partner from (i) pledging,
granting a security interest in or otherwise encumbering its Partnership
Interest(s) for the Financing(s) subject to the terms and provisions of this
Agreement, including specifically, but not limited to, Section 10.5 hereof, and
(ii) transferring or assigning its Partnership Interest(s) to one or more
Affiliates of such Limited Partner.

            (b)   Any Approval of the Partners of a permitted sale, exchange,
transfer or assignment under Section 10.3(a) above shall be conditioned upon
receipt by the General Partners of a written opinion of counsel (if requested by
a Partner) reasonably satisfactory in all respects to counsel for the
Partnership and counsel for the Partner requesting same confirming that,

                  (i)   such sale, exchange, transfer or assignment would not
      violate the Securities Act of 1933, as amended, or any state securities or
      "blue sky" laws (including any investor suitability standards) applicable
      to the Partnership or the Partnership Interest(s) to be sold, exchanged,
      transferred or assigned;

                  (ii)  such sale, exchange, transfer or assignment would not
      terminate the Partnership or cause the Partnership to lose its status as a
      partnership for federal income tax purposes; and

                  (iii) such sale, exchange, transfer or assignment, when added
      to the total of all other sales, exchanges, transfers or assignments of
      Partnership Interest(s) within the preceding twelve (12) months, shall not
      result in the Partnership being considered to have terminated within the
      meaning of Section 708(b)(1)(B) of the Code.

      SECTION 10.4 INCAPACITY OF A PARTNER. Upon the incapacity of any Partner
that is a natural person, its permitted successors or assigns shall have (i) all
the rights of such Partner for the purpose of settling or managing its affairs,
and (ii) such power as the incapacitated Partner possessed to assign all or any
part of its Partnership Interest(s) and to join with such assignee in satisfying
conditions precedent to such assignee becoming a substituted Partner. The
incapacity of any Partner shall not dissolve the Partnership.

                                       44
<PAGE>

      SECTION 10.5 ASSIGNEES.

            (a)   The Partnership shall not recognize for any purpose any
purported sale, exchange, pledge, assignment or transfer of all or any fraction
of the Partnership Interest(s) of any Partner unless (i) such Partner complies
with the provisions of this Article X, (ii) the Partnership shall have received
evidence satisfactory to the unaffected Partners that the proposed purchaser,
assignee or transferee has the financial capacity to fully perform and observe
the obligations of such Partner under this Agreement, and (iii) there shall have
been filed with the Partnership a written and dated notification of such sale,
exchange, pledge, assignment or transfer, in form Approved by the Partners,
executed and acknowledged by both the seller, assignor or transferor and the
purchaser, assignee or transferee, and such notification (1) contains the
acceptance and assumption by the purchaser, assignee or transferee of all of the
terms and provisions of this Agreement in a manner reasonably satisfactory to
the Partners, and (2) represents that such sale, exchange, pledge, assignment or
transfer was made in accordance with all applicable laws and regulations.
Notwithstanding anything to the contrary, no assignment hereunder shall release
the Partner assigning its Interest hereunder from the obligations and
indemnities contained herein and arising prior to the date of the assignment.

            (b)   If any Partner shall sell, assign or transfer all of its
Partnership Interest(s), it shall cease to be a Partner hereunder, as the case
may be, except that, unless and until a substituted partner is admitted in its
stead, such Partner shall retain the statutory rights of the assignor of a
partner's interest under the Act.

            (c)   A person who is the assignee of all or any fraction of the
Partnership Interest(s) of any Partner, but does not become a substituted
partner and desires to make a further assignment of such Partnership
Interest(s), shall be subject to all the provisions of this Section 10.5 to the
same extent and in the same manner as the assigning Partner.

      SECTION 10.6 SUBSTITUTED PARTNER. No Partner shall have any right to
substitute a purchaser, assignee, transferee, donee or other recipient of all or
any portion of such Partner's Partnership Interest as a partner in its place.
Any such purchaser, assignee, transferee, donee or other recipient of any such
Partner's Partnership Interest(s) shall be admitted to the Partnership as a
substituted partner only with the Approval of the Partners, which consent may
be arbitrarily granted or withheld in the sole discretion of the General
Partners. Any such consent by the General Partners shall be binding and
conclusive and shall be evidenced by the execution by the General Partners of an
amendment to this Agreement evidencing the admission of such person as a
substituted partner.

      SECTION 10.7 INDIRECT TRANSFERS. In order to effectuate the purpose of
this Article X, each Partner agrees that, except as expressly authorized in
Section 10.1 and Section 10.3 hereof, no transfer or other disposition of any
stock, partnership, limited liability company, or other beneficial interest in
any Partner or other such Person which controls any part of any Partnership
Interest will be effected, directly or indirectly, unless Approved by the
Partners; provided, however, the trading of shares of stock of any Person whose
shares are traded on a national securities exchange or in the over-the-counter
securities market, or a sale of all or substantially all the assets of such a
Person, or the merger or consolidation of such a Person, or acquisition of

                                       45
<PAGE>

a controlling interest in such a Person, shall be permitted and will not be
deemed to violate the provisions of this Article X.

                                   ARTICLE XI
                                     DEFAULT

      SECTION 11.1 EVENTS OF DEFAULT. The occurrence of any of the events set
forth below shall constitute an event of default ("Event of Default") hereunder
on the part of a Partner with respect to whom such Event of Default occurs (the
Partner with respect to whom such Event of Default has occurred, shall
hereinafter be referred to as the "Defaulting Partner") if, within fifteen (15)
Business Days following the receipt of written notice of such Event of Default
described in Subsection 11.1(g), (h), (i), or (j) below from any other Partner,
the Defaulting Partner fails to pay such monies or, in the case of non-monetary
defaults, fails to cure such default; provided, however, notwithstanding the
foregoing, the occurrence of any of the events described in Subsections 11.1(a)
through (f) below shall constitute an Event of Default immediately upon such
occurrence without any requirement of notice or passage of time except as
specifically set forth in any such subsection. The Partners, other than the
Defaulting Partner and its Affiliate, shall hereinafter be collectively referred
to as the "Non-Defaulting Partners." The following shall be Events of Default as
set forth above and for all purposes of this Agreement:

            (a)   The violation of a Partner of any of the restrictions or
prohibitions set forth in this Agreement upon the right of a Partner to sell,
exchange, pledge, assign or transfer its Partnership Interest(s) or any portion
thereof or any interest therein;

            (b)   Institution of any Bankruptcy affecting a Partner or the
commencement of any other proceedings of any nature under any laws of the United
States or of any state for the relief of debtors wherein such Partner is seeking
relief as a debtor;

            (c)   A general assignment by a Partner for the benefit of
creditors;

            (d)   A proposed plan, arrangement or other action by a Partner's
creditors taken as a result of a general meeting of the creditors of such
Partner;

            (e)   Admission by a Partner in writing of its or his inability to
pay its or his debts as they mature;

            (f)   Attachment, execution or other judicial seizure of all or any
substantial part of a Partner's Partnership Interest(s) or other assets, such
attachment, execution or seizure remaining undismissed or undischarged for a
period of ninety (90) days after the levy thereof;

            (g)   Default in performance of or failure to comply with any
material agreement, obligation or undertaking of a Partner contained herein or
material breach of fiduciary duty by such Partner, or in the case of a General
Partner, any other event not specified herein which would constitute an "event
of withdrawal" of such general partner under the Act;

            (h)   Failure of a Partner to make an Additional Capital
Contribution when required pursuant to Article III of this Agreement;

                                       46
<PAGE>

            (i)   Failure to repay any Contribution Loan when required pursuant
to Section 3.4(c) herein; and

            (j)   If any representation or warranty made by a Partner in this
Agreement shall be false or misleading or otherwise untrue in any material
respect.

      SECTION 11.2 ELECTIONS OF NON-DEFAULTING PARTNER.

            (a)   Purchase of Defaulting Partner's Interest. Within one-hundred
eighty (180) days following the occurrence of an Event of Default that is
continuing, any Non- Defaulting Partner that is not an Affiliate of the
Defaulting Partner shall have the right to acquire the entire Partnership
Interests of the Defaulting Partner (and such Defaulting Partner's Affiliates)
for cash, except as provided in Section 11.2(b) hereof, at a "Purchase Price"
determined pursuant to the procedure set forth in Section 11.2(c), subject to
reduction by the amount of any indebtedness, plus accrued interest thereon, owed
to the Non-Defaulting Partner (or its Affiliates) or the Partnership by the
Defaulting Partner (and such Defaulting Partner's Affiliates) as of the date on
which the Non-Defaulting Partner's purchase of the Defaulting Partner's (and
such Defaulting Partner's Affiliates) entire Partnership Interests is closed and
consummated, whereupon such indebtedness shall be simultaneously canceled. Any
indebtedness owed by the Partnership to the Defaulting Partner (and such
Defaulting Partner's Affiliates) as of such closing date shall be repaid at
closing. In furtherance of such right, the Non-Defaulting Partner may notify the
Defaulting Partner, at any time following an Event of Default and prior to a
cure thereof, of its election to institute the arbitration procedure set forth
in Article XIII to determine the Purchase Price of the Partnership Interests.
Upon receipt of notice of determination of the "Fair Market Value" pursuant to
Section 11.2(c), of the Defaulting Partner's (and its Affiliates') entire
Partnership Interests in the Partnership, the Non-Defaulting Partner may notify
the Defaulting Partner of its election to purchase the Partnership Interests of
the Defaulting Partner and its Affiliates. The right of the Non-Defaulting
Partner to institute the procedures for purchase of the Defaulting Partner's and
its Affiliates' entire Partnership Interests in the Partnership as set forth in
this Section 11.2 shall continue until either the Event of Default is cured or
the Non-Defaulting Partner elects to exercise its right to dissolve and
terminate the Partnership as provided in Section 11.2(d) below.

            (b)   Closing.

                  (i)   The purchase by the Non-Defaulting Partner of the
      Defaulting Partner's (and such Defaulting Partner's Affiliates) entire
      Partnership Interests shall be closed and consummated in the principal
      office of the Partnership at 11:00 a.m., local time, on a date specified
      by the Non-Defaulting Partner on at least five (5) days' notice to the
      Defaulting Partner, to be not later than the one hundred eightieth (180th)
      calendar day following the date of the Non-Defaulting Partner's notice of
      its election to purchase such Partnership Interests from the Defaulting
      Partner (and such Defaulting Partner's Affiliates). The Defaulting Partner
      (and such Defaulting Partner's Affiliates) shall transfer to the
      Non-Defaulting Partner their entire Partnership Interests free and clear
      of all liens, security interests, encumbrances and competing claims. The
      Non-Defaulting Partner shall deliver to the Defaulting Partner the
      Purchase Price, as provided in Section 11.2(g), by wire transfer of
      immediately available Federal Reserve System funds to an

                                       47
<PAGE>

      account designated by the Defaulting Partner (such designation to be
      deemed given by the Defaulting Partner for itself and its Affiliates).
      Simultaneously with the receipt of such cash payment, the Defaulting
      Partner (and such Defaulting Partner's Affiliates) shall execute and
      deliver, and each does irrevocably constitute and appoint the
      Non-Defaulting Partner as its true and lawful attorney to execute and
      deliver for and on its behalf, such instruments of transfer, such evidence
      of due authorization, execution and delivery, and such evidence of the
      absence of any claims, security interests or competing claims as the
      Non-Defaulting Partner shall reasonably request.

                  (ii)  In addition to the adjustment provided for in Section
      11.2(c) the Non-Defaulting Partner may elect to offset against the cash
      portion of the purchase price, when such cash portion is paid, the amount
      of any loss, damage or injury, the amount of which has been caused to it
      by the Event of Default.

            (c)   Determination of Price. The purchase price (the "Purchase
Price") for the Defaulting Partner and its Affiliates' aggregate Partnership
Interests shall equal eighty percent (80%) of the Fair Market Value of the
Defaulting Partner's (and such Defaulting Partner's Affiliates') Partnership
Interests. The Partners shall first attempt to agree upon such Fair Market Value
of the Defaulting Partner's (and its Affiliates') Partnership Interests. The
"Fair Market Value" of the Partnership Interests shall mean the aggregate
amount, if any, that would be distributed by the Partnership to the Defaulting
Partner or its Affiliates, as the case may be, with respect to such Partnership
Interest (other than in repayment of loans made by such Partner to the
Partnership) if all of the assets then held by the Partnership were sold for a
gross sales price equal to their Fair Market Value and the proceeds thereof,
after payment of all debts and obligations of the Partnership (including loans
owed to Partners), were distributed to the Partners pursuant to Section 4.9
hereof. For this purpose, the "Fair Market Value" of the assets of the
Partnership shall mean the cash price which a bona fide arm's length purchaser
would pay on the date of the valuation for all assets of the Partnership. The
Fair Market Value of the Defaulting Partner's (and its Affiliates') Partnership
Interests, shall be determined pursuant to the arbitration provisions in Article
XIII unless the Partner otherwise agree regarding such value prior to either
Partners involving the arbitrator. In the event that the amount distributed to
the Defaulting Partner and its Affiliates under Section 4.9 would be zero, then
the Purchase Price shall be ten dollars ($10.00).

            (d)   Election to Dissolve. If the Non-Defaulting Partners do not
elect to acquire the entire Partnership Interests of the Defaulting Partner (and
such Defaulting Partner's Affiliates) as set forth in Section 11.2(a), the
holders of a majority of the Percentage Interests held by the Non-Defaulting
Partners may elect to dissolve and terminate the Partnership pursuant to Section
12.2 of this Agreement by written notice to the Defaulting Partner.

            (e)   Voting Rights of Defaulting Partner. Following the occurrence
and during the continuance of an Event of a Default by a Partner, such Partner
(and its Affiliates) shall cease to have any voting or approval rights as a
Partner or Managing Partner in the Partnership, except only that the Defaulting
Partner shall retain the right to approve and veto actions or decisions that are
set forth in Section 6.9(a) as surviving such Event of Default (except as
otherwise provided in Section 6.9(a)).

                                       48
<PAGE>

            (f)   Conversion of Defaulting Partners' Partnership Interests. Any
Defaulting Partner and any Affiliate of a Defaulting Partner who may have been a
General Partner shall have its Partnership Interests automatically converted
into a Partnership Interest of a Limited Partner in the Partnership and the
Partnership shall continue with any remaining General Partners continuing to
serve as such, or in the event such Defaulting Partner is at the time of the
Event of Default the only general partner, such Person as shall be appointed as
successor general partner by the Non-Defaulting Partners acting by the vote of
the holders of a majority of the Partnership Interests held by Persons who are
not Affiliates of the Defaulting Partner. The Defaulting Partner (and its
Affiliates) shall not be entitled to exercise any voting right or other right of
approval, consent or determination under this Agreement, or otherwise to
participate in the management of the business of the Partnership, or to vote
upon or otherwise participate in Major Decisions or any of the other affairs of
the Partnership for so long as the Event of Default remains uncured, except as
otherwise may be provided in Section 6.9(a).

            (g)   Remedies. Non-Defaulting Partners shall be entitled to pursue
such other rights and remedies as may be available at law or in equity as a
result of the Event of Default by the Defaulting Partner. Notwithstanding
anything contained herein to the contrary, no party herein shall be entitled to
seek, claim, receive or collect any consequential, speculative, exemplary,
multiple or punitive damages except in the case of proven fraud or willful
misconduct.

                                   ARTICLE XII
                        TERM; LIQUIDATION AND DISSOLUTION

      SECTION 12.1 TERM. The Partnership shall commence on the date hereof and
shall continue until terminated in accordance with the provisions of Section 2.5
or this Article XII, provided that if it is not sooner terminated, the
Partnership shall terminate on December 31, 2025 (the applicable termination
date is hereinafter referred to as the "Partnership Termination Date") and will
be dissolved and its affairs shall be wound up, unless an extension is Approved
by the Partners. No Partner shall have the right to cause, and each Partner
hereby agrees not to cause, the dissolution, termination or liquidation of the
Partnership, or to petition a court for a dissolution, termination or
liquidation of the Partnership, except as provided in this Agreement. No Partner
at any time shall have the right to take any action or to subject the
Partnership's assets or any part thereof to the authority of any court of
bankruptcy, insolvency, receivership or similar proceedings, without the express
written consent and approval of the other Partners.

      SECTION 12.2 DISSOLUTION. The Partnership shall only be dissolved in the
event that (i) the General Partners determine to dissolve the Partnership, (ii)
the Partnership by its terms, as set forth in Section 12.1, is terminated by
virtue of the occurrence of the Partnership Termination Date, as extended in
accordance with the provisions of Section 12.1, if applicable, or (iii) an Event
of Default has occurred and the Non-Defaulting Partner(s) elect(s) to dissolve
the Partnership.

      SECTION 12.3 LIQUIDATION AND DISTRIBUTION PROCEDURE.

            (a)   Upon the dissolution of the Partnership, the General Partners
shall cause the Partnership to wind up the business and affairs of the
Partnership, to pay all just debts and

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<PAGE>

obligations of the Partnership and to distribute the assets of the Partnership
in accordance with this Section 12.3. The expenses of liquidation shall be
expenses of the Partnership. Upon completion of any such distribution and
winding up, the parties hereto shall be relieved of all obligations hereunder
except for obligations, duties or rights which have not been determined or
ascertained as of the date of such termination and for rights or remedies which
a Non-Defaulting Partner may have against a Defaulting Partner at law or in
equity. During the period of such winding up, the business and affairs of the
Partnership shall be conducted so as to preserve the assets of the Partnership
in a manner consistent with the winding up of the affairs thereof.

            (b)   In the event of a liquidation and distribution as a result of
the occurrence of an Event of Default pursuant to Article XI hereof, the
Defaulting Partner shall have no power or authority to bind the Partnership or
Partners or to participate in any decisions pertaining to the liquidation and
winding up of the Partnership, but shall assist the other Partners in the
dissolution and winding up of the Partnership and the distribution of the assets
hereof. The Non-Defaulting Partners shall have the unilateral right to continue
or to terminate, in whole or in part, any Development Agreement between the
Defaulting Partner and the Partnership.

            (c) The assets of the Partnership shall be applied or distributed in
liquidation in the following order of priority (giving effect to repayment of
Contribution Loans pursuant to Section 3.4(c) hereof):

                  (i)   In payment of debts and obligations of the Partnership
      to third parties and to the establishment of such capital reserves as may
      be Approved by the Partners;

                  (ii)  In repayment of any loans, plus accrued interest
      thereon, made to the Partnership by the Partners (including Optional Loans
      in the priorities set forth in, and otherwise in accordance with the
      provisions of, Section 3.3 hereof); and

                  (iii) Then to the Partners in accordance with the provisions
      of Section 4.9 hereof.

            (d)   Upon dissolution, every reasonable effort shall be made to
dispose of the Partnership's assets so that distributions may be made to the
Partners in cash. If, upon termination of the Partnership, the Partnership shall
nevertheless own non-cash assets, such assets, if any, may be distributed in
kind to the Partners in lieu of cash, in proportion to their right to receive
the cash assets of the Partnership, on the basis of undivided interests in each
non-cash asset in proportions reflecting the net fair market value of the
assets so distributed, and reflecting all allocations that would have been made
had the assets distributed in kind been sold by the Partnership for their fair
market value.

            (e)   Notwithstanding any other provision of this Agreement, no
Partner will be required to pay to the Partnership or to any other Partner any
deficit or negative balance which may exist from time to time in such Partner's
Capital Account.

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<PAGE>

                                  ARTICLE XIII
                                   ARBITRATION

      SECTION 13.1 INITIATION.

            (a)   Following either a Deadlock regarding any matter described in
Section 6.9(b) or a deadlock regarding the determination of Fair Market Value of
a Defaulting Partner's (and its Affiliates) Partnership Interests pursuant to
Section 11.2(c), (i) the Partners and their respective Affiliates shall attempt
in good faith for a period of at least ten (10) days following notice by one
Partner to the others, which notice is entitled "Notice of Dispute", to resolve
the dispute, and (ii) if the dispute is not resolved in such ten (10) day
period, arbitration may be invoked by one Partner after such Partner has
presented its (and its Affiliates) written proposal for resolution of the
dispute entitled "Proposal for Resolution" to the other and the other Partner
(and its Affiliates) have failed to deliver a written acceptance of such
proposal within five (5) days of receipt. The Partner invoking arbitration shall
do so by sending a notice entitled "Notice of Arbitration."

            (b)   In such cases where this Agreement provides for the
determination of any matter by arbitration, the same shall be settled and
finally determined by arbitration in accordance with the Rules of Commercial
Arbitration of the American Arbitration Association, subject to the provisions
of this Section 13.1. Any arbitration pursuant to this Agreement shall be
conducted by one (1) arbitrator, and the arbitration proceeding shall be held in
Atlanta, Georgia. The General Partners shall mutually select the arbitrator, who
shall be required to have at least ten (10) years of experience in real estate
finance or investment in the Southwestern United States and independent of each
of the Partners. If the General Partners are unable to agree upon an arbitrator
within twenty (20) days of the sending of a Notice of Arbitration, then at the
written request of either General Partner each shall select one arbitrator
within twenty (20) days of receipt of such request, and the two arbitrators so
selected shall appoint the arbitrator to make the determination under this
Section. In the event a General Partner fails to appoint its arbitrator in
accordance with the preceding sentence, the arbitrator appointed by the other
shall be the arbitrator for purposes of settling the dispute which is the
subject of such arbitration. In the event there is only one General Partner,
such General Partner and the unaffiliated Limited Partner holding the greatest
Percentage Interest among the unaffiliated Limited Partners shall select the
arbitrator(s).

            (c)   In all cases in which an arbitrator is required to render a
decision under this Section 13.1, each General Partner (or, if applicable,
Limited Partner) shall submit to the arbitrator, within ten (10) days of his
selection, its complete proposal for resolution of the issue in dispute. The
arbitrator shall be required to select one such proposal as the sole resolution
of the matter within ten (10) days of receipt of each party's proposal or after
receipt of any evidence and briefs requested by the arbitrator from the parties,
provided that the arbitrator's decision must be based on the standard of
determining which proposal is in the best interest of the Partnership and also
prudent in terms of permitting the Partnership to realize revenues sufficient to
pay the Preferred Return payable to the Partners and to return the amounts in
the Unreturned Contribution Accounts of the Partners, and taking into account
practices normally and customarily followed by real estate operating companies
with respect to comparable property in the Houston, Texas metropolitan area. The
arbitrator may, in its sole discretion, require that each

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<PAGE>

party to the arbitration submit briefs and evidence to support its position,
which the parties shall be required to produce within ten (10) days after the
request by the arbitrator. Evidence submitted by the parties may be admitted or
excluded in the sole discretion of the arbitrator. The arbitrator shall
determine the rules of the hearing procedures for the arbitration, but each
party shall have the right to present witnesses to support its position, with
the other parties having the right to pose questions or cross-examine such
witnesses.

      SECTION 13.2 COURT ENFORCEMENT OF ARBITRATION AWARD. The decision of the
arbitrator and any award thereunder including award of costs and attorneys' fees
shall be binding upon all Partners and the Partnership and may be confirmed by
the judgment of a court of competent jurisdiction. The prevailing party in
arbitration shall be entitled to recover its costs and attorneys' fees in the
arbitration and in any subsequent legal proceedings required to enforce the
award.

      SECTION 13.3 CONSOLIDATION PROCEEDINGS. If Notices of Arbitration are sent
with respect to more than one Notice of Dispute involving some or all of the
same parties and arising from the same transactions or series of similar
transactions, all such arbitration proceedings for which hearings have not yet
commenced shall be consolidated through a Notice of Consolidation sent to all
General Partners and the Partnership. The process for selecting the arbitrator
shall be the same as set forth in Section 13.1, except the time periods for the
selection process shall run from the date of the deemed receipt of the Notice of
Consolidation instead of running from the sending of the Notice of Arbitration.

                                   ARTICLE XIV
                               GENERAL PROVISIONS

      SECTION 14.1 INDEPENDENT PARTIES. Nothing herein contained shall be
construed to constitute any Partner hereof as the agent of any other Partner
hereof or to limit in any manner the Partners or their respective Affiliates in
the carrying on of their own respective projects, businesses or activities.

      SECTION 14.2 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, for the same effect as if all parties hereto had all signed the
same signature page. Any signature page of this Agreement may be detached from
any counterpart of this Agreement without impairing the legal effect of any
signature thereon and may be attached to another counterpart of this Agreement
identical in form hereto but having attached to it one or more additional
signature pages.

                                       52
<PAGE>

      SECTION 14.3 NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be (a) effective
(i) upon delivery of the same to the intended addressee by hand delivery,
facsimile (with confirmation of delivery), or email (with confirmation of
delivery), (ii) upon deposit of the same with a reputable overnight courier
service (such as Federal Express) for delivery to the intended addressee, or
(iii) upon deposit of the same in the United States mail, postage prepaid,
registered or certified mail, return receipt requested, and (b) sent to the
intended addressee at the following addresses:

      Ashton Woods GP:           c/o AW Southern Trails, Inc.
               or                11375 West Sam Houston Parkway South, Suite 100
      Ashton Woods LP            Houston, Texas 77031
                                 Attn: Bob Salomon
                                 Fax: 281-561-7774

      with a copy to:            Ashton Woods Homes
                                 1080 Holcomb Bridge Road
                                 Building 200, Suite 350
                                 Atlanta, Georgia 30076
                                 Attn: Bob Salomon
                                 Fax: 770-998-7493

      with a copy to:            Hagen & Parsons, P.C.
                                 14043 Dallas Parkway, Suite 570
                                 Dallas, Texas 75254
                                 Attn: Tim Hagen
                                 Fax: 972-386-0443

      CLGP or CL:                CL Texas I GP, LLC
                                 c/o Cousins Properties Incorporated
                                 2500 Windy Ridge Parkway, Suite 1600
                                 Atlanta, Georgia 30339-5683
                                 Attn: Corporate Secretary
                                 Fax: 770-303-2893

      with copy to:              CL Texas I GP, LLC
                                 5495 Beltline Road, Suite 225
                                 Dallas, Texas 75254
                                 Attention: Craig Knight and Tom Burleson
                                 Telephone: (972) 702-8699
                                 Facsimile: (972) 702-8372
                                 Email: tburleson@guarantygroup.com

      with copy to:              Cousins Properties Incorporated
                                 2500 Windy Ridge Parkway, Suite 1600
                                 Atlanta, Georgia 30339-5683
                                 Attn: Chuck Olderman, Esq.
                                 Fax: 770-857-2362

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<PAGE>

      with a copy to:    Troutman Sanders LLP
                         600 Peachtree Street, N.E.
                         Suite 5200
                         Atlanta, Georgia 30308-2216
                         Attn: Richard H. Brody, Esq.
                         Fax: 404-962-6514

or to such different address as the intended addressee shall have designated by
written notice sent in accordance herewith.

      SECTION 14.4 EFFECT AND INTERPRETATION. This Agreement shall be governed
by and shall be construed in conformance with the laws of the State of Texas.

      SECTION 14.5 SEVERABILITY. In the event any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, but this Agreement
shall be construed as if such invalid or unenforceable provision shall
automatically and retroactively be amended to the minimum extent absolutely
necessary to render such provision valid, legal and/or enforceable.

      SECTION 14.6 BINDING UPON SUCCESSORS. Subject to any restrictions on
transfer, sale, assignment, pledge, hypothecation or encumbrance contained in
this Agreement, this Agreement shall inure to the benefit of and be binding upon
the heirs, personal representatives, assigns, successors (including successor
trustees), distributees, transferees or other successors in interest to all of
the parties hereto. Anyone to whom any Partnership Interest(s) in the
Partnership may be properly transferred pursuant to the terms of this Agreement,
or who shall take such Partnership Interests) by operation of law, shall
automatically take such Partnership Interest(s) subject to all of the terms and
conditions of this Agreement and shall not be considered to have title to such
Partnership Interest(s) until such party has signified his acceptance and
assumption of the terms and conditions of this Agreement in writing delivered to
each of the Partners in form and substance Approved by the Partners.

      SECTION 14.7 GENDER. All words denoting gender herein shall be deemed to
include the masculine, feminine, neuter, singular or plural as the context and
facts require.

      SECTION 14.8 HEADINGS. The headings, titles and subtitles herein are
inserted for convenience of reference only and shall not control or affect the
meaning or construction of any of the provisions hereof.

      SECTION 14.9 ENTIRE AGREEMENT. This Agreement contains the entire
understanding among the parties with respect to this Partnership and shall not
be modified except in writing by all of the parties hereto. This Agreement may
not be amended or modified, except by a written amendment signed by the
Partners.

      SECTION 14.10 FORCE MAJEURE. If any party shall be unable to perform its
obligations in whole or in part due to a Force Majeure Event, such party shall
promptly notify the other parties of the nature of such Force Majeure Event and
the obligations affected thereby. Upon delivery of such notice, the performance
by the notifying party of the obligations set forth in such notice

                                       54
<PAGE>

shall be suspended to the extent, but solely to the extent, performance of such
obligations is adversely affected by such Force Majeure Event.

      SECTION 14.11 TIME. Time is of the essence in this Agreement, In computing
a period of days for performance or payment as provided hereunder, the first day
shall be excluded and the last day shall be included. If the last day of any
such period is a Saturday, Sunday or legal holiday, the period shall extend to
include the next day which is not a Saturday, Sunday or legal holiday. Any
performance or payment which must be taken or made under this Agreement must be
taken or made prior to 5:00 p.m. Atlanta, Georgia time on the last day of the
applicable period provided hereunder for such action, unless another time is
expressly specified. All references to time shall be Atlanta, Georgia time.

                     [SIGNATURE PAGE IMMEDIATELY FOLLOWING]

                                       55
<PAGE>


      IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date first above written.

                            AW SOUTHERN TRAILS, INC.,
                            a Texas corporation

                            By: /s/ Robert L. Saldmon
                                ------------------------------------------------
                            Name: Robert L. Saldmon
                            Title: Authorized Representatives

                            ASHTON HOUSTON RESIDENTIAL L.L.C.,
                            a Texas limited liability company

                            By: /s/ Robert L. Saldmon
                                ------------------------------------------------
                            Name: Robert L. Saldmon
                            Title: Authorized Representatives

                            CL Texas I GP, L.L.C.,
                            a Georgia limited  liability company

                            By: C L Realty, LLC
                            By: [ILLEGIBLE] Real Estate Corporation

                            By: /s/ Michael J. Quinley
                                ------------------------------------------------
                            Name: Michael J. Quinley
                            Title: Senior Vice President

                            CL TEXAS, L.P.,
                            a Taxas limited partnership

                            By: CL Texas I GP, L.L.C., a Georgia limited company
                            Its: General Partner
                            By: C L Realty, LLC
                            By: [ILLEGIBLE] Real Estate Corporation

                            By: /s/ Michael J. Quinley
                                ------------------------------------------------
                            Name: Michael J. Quinley
                            Title: Senior Vice President

                                       56