Document:

Exhibit 10.1

                                CONTRACT OF SALE
                          AND PURCHASE OF REAL PROPERTY

          This Contract of Sale and Purchase ("Contract") is entered into
between the following parties:

          WATERMARK TEXAS ONE, INC., a Maryland corporation ("Seller") and THE
          PETERSON GROUP, INC., a Texas corporation and/or Assigns
          ("Purchaser").

                       1. AGREEMENT TO SELL AND PURCHASE

          1.1 Sale of Property. Subject to the terms and conditions stated in
this Contract, Seller agrees to sell and convey or cause to be conveyed to
Purchaser and Purchaser agrees to purchase the Property defined in Section 1.2.

          1.2 Property. The "Property" means an approximate 3.09 acre tract of
real property situated in Harris County, Texas, described on Exhibit "A"
attached to this Contract, together with any rights pertaining to such real
property.

                                2. DEFINED TERMS

          2.1 The following capitalized terms shall have the meanings set forth
below. There are additional capitalized terms in this Contract which may be
defined subsequent to their initial use.

               (a) "Closing Date" means the date specified in section 11.1.

               (b) "Date of this Contract" means the date specified in Section
          13.11.

               (c) "Earnest Money" means that portion of the Purchase Price
          deposited by Purchaser in escrow with the Title Company at the times
          and in the form and amounts specified in Section 3.3.

               (d) "Inspection Period" means the time period described in
          Section 5.2.

               (e) "Permitted Exceptions" means those exceptions or conditions
          which affect or may affect Seller's title to the Property to which
          Purchaser does not object or as to which Purchaser has waived any
          objections in accordance with Section 4.3.

               (f) "Purchase Price" means the consideration paid for the
          purchase of the Property as set out in Section 3.

               (g) "Regulation" means any zoning or land use requirement, or any
          ordinance, regulation, code, rule, statute or law of any special
          district, utility company, city, county, state or federal agency or
          authority.

               (h) "Title Company" means Houston Title Company, Attn: Heidi
          Andrews (713) 626-9220.

<PAGE>

               (i) "Title Policy" means the basic Owner's Policy of Title
          Insurance issued on the standard form in use in the State of Texas.

                               3. PURCHASE PRICE

          3.1 Purchase Price. The purchase price to be paid at Closing for the
Property shall be $510,000.00 (the "Purchase Price").

          3.2 Payment of Purchase Price. The Purchase price shall be paid to
Seller in cash or by wire transfer of funds into the Title Company's escrow
account at the time of closing.

          3.3 Earnest Money. Within two days after execution of this Contract
Purchaser shall deliver into escrow with the Title Company the sum of
$10,000.00, to be held as Earnest Money in immediately available funds. At
Closing, the Earnest Money shall be disbursed as required by other provisions of
this Contract. The Earnest Money shall be invested by the Title Company in an
interest bearing account or other federally insured instrument designated by
Purchaser. The interest shall accrue in favor of and shall be payable to the
party entitled to the Earnest Money pursuant to the terms of this Contract.
Purchaser shall pay to Seller as of the Date of this Contract the sum of $100.00
to be retained by Seller as a nonrefundable fee in consideration for this
Contract and the Inspection Period.

                              4. TITLE AND SURVEY

          4.1 Survey. Within ten (10) days after the Date of this Contract, the
Seller shall deliver to Purchaser any survey of the Property in Seller's
possession.

          4.2 Title Commitment. Within ten (10) days after the Date of this
Contract, Seller, at Seller's sole cost and expense, shall obtain a commitment
for Title Policy (the "Commitment") dated no earlier than the Date of this
Contract, issued through the Title Company, setting forth the state of title to
the Property and any exceptions and conditions affecting the Property which
would appear in a Title Policy if issued, together with correct, complete and
legible copies of all instruments referred to in the Commitment (the "Title
Documents") and shall have the Commitment delivered to Purchaser.

          4.3 Review of Title Documents. Purchaser shall have thirty (30) days
(the "Review Period") after date of this Contract to review the Title Documents
and to give Seller written notice of each condition and exception shown in them
to which Purchaser objects. Any condition or exception in the Title Documents to
which Purchaser does not object within the Review Period and any objection which
Purchaser timely makes but subsequently waives shall be considered "Permitted
Exceptions".

          If Purchaser gives Seller written notice of any objections within the
Review Period, Seller shall have ten (10) days after receipt of such notice in
which to notify Purchaser in writing of which of Purchaser's objections, if any,
Seller elects to satisfy to the satisfaction of Purchaser. If Seller does not
elect to satisfy any of such objections within the ten (10) day period, then
Purchaser may terminate this Contract by written notice to the Seller within ten
(10) days after expiration of such ten day elective period, (or if Seller elects
to cure certain objections within the ten day elective period, but fails to
satisfy such objections within thirty (30) days (the "Cure Period") after
expiration of the ten day elective period, then Purchaser may terminate within
ten days after the expiration of the Cure Period) in which case this Contract
shall terminate and the Earnest Money shall be immediately returned to
Purchaser. If Purchaser fails to terminate this Contract by giving such

<PAGE>

written notice to Seller within the applicable time periods, then Purchaser
shall be deemed conclusively to have waived its objection to those exceptions
and conditions in the Title Documents which Seller was unable or elected not to
cure, except that recorded liens and encumbrances which are filed after the
issuance of the Commitment which can be released or cured with the payment of
money shall be released or otherwise cured at Closing by payment out of the cash
proceeds of the Purchase Price payable to Seller.

                              5. INSPECTION PERIOD

          Purchaser's obligations under this Contract are subject to and
contingent upon the following:

          5.1 Delivery of Documents. Within ten (10) days after the Date of this
Contract, Seller at Seller's sole cost and expense, will deliver to Purchaser
copies of the most recent real estate and personal property tax statements, if
any, for the Property, including any notices regarding future assessments.

          5.2 Purchaser's Inspection. Purchaser shall have sixty (60) days (the
"Inspection Period") from the date of this Contract to inspect the Property, and
to conduct engineering and economic feasibility studies of the Property. If the
Purchaser is satisfied with the Property and Property Information and the
feasibility studies, Purchaser shall notify Seller in writing that the Property
is satisfactory to Purchaser. If Purchaser is not satisfied with any of such
matters for any reason, in Purchaser's sole and absolute discretion, then
Purchaser shall have the right to terminate this Contract on or before the date
of expiration of the Inspection Period. If Purchaser fails to deliver written
notice to Seller on or before expiration of the Inspection Period of approval or
disapproval of the Property, then this Contract shall terminate as of the
expiration date of the Inspection Period and any Earnest Money that may have
been previously deposited with the Title Company shall immediately be refunded
to Purchaser and neither party shall have any further liability or obligation
under this Contract.

          5.3 Access to the Property. Purchaser shall have the right to enter on
the Property from time to time prior to Closing for the purpose of conducting
inspections and studies at Purchaser's cost and expense and is authorized to
inspect and copy any records and information in Seller's possession pertaining
to the zoning or use of the Property. Purchaser shall indemnify and hold Seller
harmless from any loss, claim, liability or cost, including without limitation,
damage to Property, injury to persons and claims of mechanic's or materialmen's
liens caused by Purchaser's entry and conduct of tests on the Property.

                                6. TITLE POLICY

          6.1 Title Policy. The Title Policy to be issued to Purchaser by the
Title Company pursuant to this Contract shall be in the amount of the Purchase
Price, dated as of the Closing Date and shall contain the Permitted Exceptions.

                       7. REPRESENTATIONS AND WARRANTIES

          7.1 Representations and Warranties of Seller. Seller represents and
warrants to Purchaser the following as of the Date of this Contract and as of
the Closing Date, except where specific reference is made to another date or
dates, in which case such date or dates will be applicable:

<PAGE>

               (a) That Seller has, and as of the Closing Date will have and
          will convey to Purchaser, good and indefeasible fee simple title to
          the Property, free and clear of all conditions, exceptions, easements
          and reservations, except the Permitted Exceptions.

               (b) That the execution and delivery of this Contract and the
          consummation of this transaction in compliance with the terms of this
          Contract do not, or with notice or the passage of time or both will
          not, constitute a default under any indenture, mortgage, loan
          agreement, lease or instrument to which Seller is a party.

               (c) There are no bills unpaid, liens filed or claims pending in
          connection with the Seller's ownership of the Property, and none will
          exist as of the Closing Date.

                                   8. BROKERS

          8.1 Brokers. Neither party has engaged any other broker, finder or
agent in connection with this transaction, and each party to this Contract
agrees to indemnify and hold the other party harmless from any costs, damages or
expense, including reasonable attorneys fees and court costs, resulting from any
claim for a commission, finder's fee or other compensation in connection with
this transaction asserted by any person acting or claiming to act based on an
agreement with such indemnifying party. Notwithstanding anything to the contrary
Contained elsewhere in this Contract, the indemnities set forth in this Section
9 shall survive the Closing.

                          9. CONDEMNATION AND CASUALTY

          9.1 Condemnation. If on or before the Closing Date, any portion of the
Property has been condemned or sold under threat of condemnation or becomes the
subject of a condemnation proceeding or notice of an intention to take, Seller
shall promptly notify Purchaser and Purchaser may at its sole election, within
ten (10) days after receipt of such notice, terminate this Contract by written
notice to Seller, in which event the Earnest Money shall be returned to
Purchaser. If Purchaser does not elect to terminate within such ten (10) day
period, then Purchaser shall be deemed to have waived any objection to such
condemnation, in which event Purchaser shall accept title to the Property at
Closing subject to such condemnation, and Seller shall deliver all condemnation
proceeds or assign its rights to such proceeds to Purchaser.

          9.2 Casualty. If on or before the Closing Date, any portion of the
Property has been damaged by fire, storm, flood or other casualty, Seller shall
promptly notify Purchaser in writing. Purchaser shall have the right at its sole
election, within ten (10) days after receipt of such notice, to terminate this
Contract by written notice to Seller, in which event Purchaser's Earnest Money
shall be returned. If Purchaser fails to give such notice of termination,
Purchaser shall be deemed to have waived any objection to such damage, in which
event Purchaser shall accept title to the Property at Closing subject to such
damage, and Seller shall deliver to Purchaser all insurance proceeds received by
Seller or assign to Purchaser all rights to negotiate, settle and collect such
proceeds with respect to such damage.

                                  10. CLOSING

          10.1 Date and Place of Closing. The Closing of this Contract shall
take place in the offices of the Title Company at 10:00 a.m., local time, on the
Closing Date. The Closing Date shall be the date which thirty (30) days after
the Inspection Period; provided, however, Purchaser may

<PAGE>

designate an earlier date for Closing by giving Seller at least ten days prior
written notice of such earlier date. "Closing" shall mean the consummation of
this transaction including without limitation the execution and delivery by
Purchaser and Seller of the items specified in Section 10.2 and recordation of
the warranty deed. Upon delivery into escrow of the items to be delivered by
Seller pursuant to Section 10.2(a) and by Purchaser pursuant to Section 10.2(b)
and completion at Closing of such other acts as are provided for in this
Contract, then the proceeds of the Purchase Price shall be disbursed to Seller.

          10.2 Items to be Delivered at the Closing.

               (a) Seller. On the Closing Date, Seller shall cause to be
          delivered to the Title Company, at Seller's sole cost and expense,
          originals of each of the following items, duly executed and
          acknowledged by Seller in recordable form where applicable, in form
          and substance acceptable to Purchaser:

                    (i) A Special Warranty Deed properly executed and in proper
               form for recording so as to convey to Purchaser or its assignee
               good, marketable and fee simple title to the Property as required
               by this Contract, subject only to the Permitted Exceptions.

                    (ii) An affidavit, sworn to by Seller, or if Seller is a
               corporation by the President or any Vice President of Seller,
               stating under penalty of perjury, that the Seller is not a
               "foreign person" as defined in the Internal Revenue Code Section
               1445 and the regulations promulgated under such Code, that the
               Purchaser is not required to withhold any portion of the Purchase
               Price under the provisions of such Code, and stating the Seller's
               United States taxpayer identification number.

                    (iii) All additional documents and instruments which
               Purchaser and Seller may mutually and reasonably determine are
               necessary to the consummation of this transaction.

               (b) Purchaser. At Closing, Purchaser shall deliver to Title
          Company, when the Title Company has received from Seller the items in
          Section 10.2(a) as required by such section: (i) the Purchase Price in
          cash or by wire transfer of funds into the bank escrow account of the
          Title Company or in other immediately available funds so as to permit
          the Title Company to disburse the proceeds to Seller as of the Closing
          Date; (ii) a signed ALTA Statement and/or such other documents as may
          be required by the Title Company to issue a Title Policy pursuant to
          this Contract, and (iii) all additional documents and instruments
          which Purchaser and Seller may mutually and reasonably determine are
          necessary to the consummation of this transaction.

               (c) Title Company shall consummate closing when it has received
          the items specified in Section 10.2(a) and (b) and is ready to issue
          to Purchaser the Title Policy and deliver to seller the Purchase Price
          as provided in this Contract. At Closing, Title Company shall:

                    (i) Record the deed to Purchaser;

                    (ii) Deliver the Title Policy to Purchaser;

<PAGE>

                    (iii) Deliver to Purchaser two sets, including one original
               or duplicate original copy of the documents specified in Section
               10.2(a) and to Seller the documents specified in Section 10.2(b);

                    (iv) Pay the Purchase Price to Seller, subject to
               adjustments and deductions as provided in this Contract.

          10.3 Adjustments at Closing. Notwithstanding anything to the contrary
contained in this Contract, the provisions of this Section shall survive the
Closing. The following items shall be adjusted or prorated between Seller and
Purchaser at Closing or at such other time as is provided in this Section:

                    (a) Ad valorem and similar taxes relating to the Property
               for the calendar year in which the Closing Date occurs shall be
               prorated between Seller and Purchaser as of the Closing Date,
               based upon the most recent ascertainable assessed valuation and
               tax rate applicable to the Property and Seller shall pay to
               Purchaser in cash at the Closing the Seller's pro rata portion of
               such estimate. Any special assessments applicable to the Property
               shall be paid by Seller on the Closing Date.

          10.4 Possession at Closing. Full possession of the Property shall be
delivered to Purchaser by Seller at the Closing.

          10.5 Closing Costs. The Purchaser and the Seller shall each bear the
cost of any recording fees incurred in connection with any documents required to
be recorded by such party. The Purchaser shall pay the cost for recording the
deed and for any survey which Purchaser or Title Company may require and shall
pay any documentary, stamp or transfer taxes required in connection with
transfer of title to the Property. Any fee charged by the Title Company for
serving as escrow agent in connection with the Closing shall be divided equally
between the parties. Seller shall pay for all costs associated with issuance of
the base Owner's Title Policy. Each party shall be responsible for the payment
of its own attorney's fees.

                           11. DEFAULTS AND REMEDIES

          11.1 Seller's Default; Purchaser's Remedies.

               (a) Seller's Default. Seller shall be deemed to be in default
          under this Contract if Seller fails to close this transaction for any
          reason other than the default of Purchaser.

               (b) Purchaser's Remedies. If Seller is in default under this
          Contract, Purchaser's sole and exclusive remedies shall be to:

                    (i) Terminate this Contract by written notice delivered to
               Seller on or before the Closing Date; or

                    (ii) Enforce specific performance of this Contract.

          11.2 Purchaser's Default; Seller's Remedies.

               (a) Purchaser's Default. Purchaser shall be deemed to be in
          default if Purchaser fails to Close for any reason other than a
          default by Seller or termination of this Contract at or before Closing
          pursuant to a permitted termination.

<PAGE>

               (b) Seller's Remedy; Liquidated Damages. If Purchaser is in
          default under this Contract, Seller, as Seller's sole and exclusive
          remedy for such default, shall be entitled to the Earnest Money
          previously deposited by Purchaser with the Title Company, it being
          agreed between Purchaser and Seller that such sum shall be liquidated
          damages for a default of Purchaser under this Contract because of the
          difficulty, inconvenience, and uncertainty of ascertaining actual
          damages for such default. The amount of the Earnest Money represents
          Seller's and Purchaser's best estimate of the damages suffered by
          Seller because of Purchaser's default. If Seller is entitled to the
          Earnest Money in accordance with this Section, Purchaser shall
          promptly, on written request of Seller or the Title Company, execute
          and deliver such documents as may be required to cause the Title
          Company to deliver the Earnest Money to Seller. If the Earnest Money
          is in the form of a letter of credit, the Title Company shall draw and
          deliver to Seller the proceeds of the letter of credit as such
          liquidated damages.

          11.3 Indemnification. Purchaser and Seller each hereby agree to
indemnify and hold Title Company harmless from any liability, cost or expense,
including reasonable attorney's fees and court costs, by reason of the delivery
of the Earnest Money by Title Company in accordance with this Section 12.

                               12. MISCELLANEOUS

          12.1 References. All references to "Section" or "Paragraph" are,
unless specifically stated otherwise, references to sections and paragraphs as
numbered or lettered in this Contract. All references to the expiration of any
time period under this Contract shall mean and refer to the expiration of any
extension of such time period whenever exercised pursuant to this Contract or
the agreement of Purchaser and Seller. The term "hereof," "herein," "hereby,"
and any similar terms shall refer to this Contract in its entirety. The terms
"included," "including" and similar terms shall be construed as if followed by
the phrase "without limitation."

          12.2 Exhibits. All references to Exhibits refer to Exhibits attached
to this Contract, which are incorporated into and made a part of this Contract
by such reference.

          12.3 Captions. The captions, headings, and arrangements in this
Contract are for convenience only and do not in any way define, limit, or modify
the terms and provisions of this Contract.

          12.4 Number and Gender of Words. Whenever the singular number is used
in this Contract, the same shall include the plural where appropriate, and words
of any gender shall include the other gender where appropriate.

          12.5 Notices. All notices, demands, requests and other communications
("Notices") required or permitted by this Contract shall be in writing and shall
be deemed to be received (i) when actually received or refused by any person at
the intended address, if personally served or sent by courier, (ii) two hours
after electronic confirmation if sent by facsimile machine, or (iii) whether
actually received or not, forty-eight (48) hours after the date of deposit of
the Notice (and on the date of deposit in the case of any permitted termination)
in a regularly maintained receptacle for the United States mail, registered or
certified, return receipt requested, postage fully prepaid, addressed as
follows:

<PAGE>

If to the Purchaser:             The Peterson Group, Inc.
                                 5102 Verdenbruk Drive
                                 Houston, Texas  77066
                                 Attention:  David Y. Smith
                                 Telephone: 281-893-8727
                                 Facsimile: 281-893-4267

Copies to:                       _____________________________________
                                 _____________________________________
                                 _____________________________________
                                 _____________________________________
                                 Telephone:___________________________
                                 Facsimile:___________________________

If to the Seller:                Watermark Texas One, Inc.
                                 c/o HPI Management
                                 227 W. Trade Street, Suite 2320
                                 Charlotte, North Carolina  28202
                                 Telephone:  704-343-9334
                                 Facsimile:  704-343-0532

Copies to:                       David C. Cameron
                                 Riggs, Abney, Neal, Turpen, Orbison & Lewis
                                 Frisco Building, 502 W. 6th St.
                                 Tulsa, Oklahoma  74119
                                 Telephone:  (918) 587-3161
                                 Facsimile:(918)587-2150 _______________________

          Either party may, in substitution of the foregoing, designate a
different street address and addressee within the continental United States for
purposes of this Section by written notice delivered to the other party in the
manner prescribed above at least ten (10) days in advance of the date upon which
such change of address is to be effective, provided that for purposes of
receiving notice of any termination rights under this Contract, only one
addressee at one street address shall be specified at any given time.

          12.6 Entire Agreement. This Contract embodies the entire agreement
between the parties and supersedes all prior agreements, negotiations,
warranties, representations and understandings, if any, relating to the
Property, and may be amended or supplemented only by an instrument in writing
executed by the party against whom enforcement is sought.

          12.7 Survival of Representations and Warranties. The representations,
warranties and indemnities set forth in this Contract shall survive the Closing.

          12.8 Multiple Counterparts. This Contract may be executed in a number
of identical counterparts. If so executed, each of such counterpart is to be
deemed an original for all purposes, and all such counterparts shall,
collectively, constitute one agreement, the signature pages of which
counterparts may be combined into one document.

          12.9 Parties Bound. This Contract shall be binding upon and inure to
the benefit of Seller and Purchaser and their respective heirs, personal
representatives, successors, and assigns.

<PAGE>

          12.10 Further Acts. In addition to the acts and deeds recited in this
Contract and contemplated to be performed, executed, and/or delivered by Seller
and Purchaser, Seller and Purchaser agree to perform, execute, and/or deliver or
cause to be performed, executed, and/or delivered at the Closing or after the
Closing any and all such further acts, deeds, and assurances as may be necessary
to consummate the transactions contemplated by this Contract.

          12.11 Date of this Contract. The term "date of this Contract" or "date
hereof" or similar references shall for all purposes in this Contract mean the
date on which a copy of this Contract has been fully executed and acknowledged
by Purchaser and Seller with all changes to the typewritten portion of this
Contract initialed by Purchaser and Seller.

          12.12 Expiration. The execution of this Contract by the first party to
do so and delivery of copies to the other party constitutes an offer to purchase
or sell and shall be automatically revoked unless the party to which the offer
is made shall execute at least two (2) copies of this Contract and deliver them
to the offering party at the address stated in Section 12.5 on or before 12:00
noon, local time, no later than the date which is ten (10) business days after
the date on which the offering party has executed this Contract.

          12.13 Time of the Essence. It is expressly agreed that time is of the
essence with respect to this Contract and each provision contained in this
Contract.

          12.14 Business Days. All references to "business days" in this
Contract are references to working days, Monday through Friday of each calendar
week. If any date specified in this Contract for commencement or expiration of
time periods for termination or approvals, or for the Closing Date, occurs on a
Saturday, Sunday or a holiday observed by national banks or the Title Company,
then any such date shall be postponed to the next following business day.

          12.15 Attorney Fees. In the event of a dispute arising between the
parties to this Contract, the prevailing party shall be paid by the
non-prevailing party reasonable attorney's fees and court costs, if any,
incurred in connection with such dispute.

          12.16 Authorization and Capacity. Purchaser and Seller each represents
to the other that it has the full right, power and authority to enter into this
Contract and to fully perform its obligations. Each person executing this
Contract warrants and represents that each has the authority to execute this
Contract in the capacity stated and to bind the Purchaser and Seller,
respectively, and that no third party consent or approval nor any other
signature is necessary to create a valid and binding obligation or to consummate
this transaction. Each party will furnish to the Title Company at closing copies
of such resolutions, affidavits, certificates and agreements as the Title
Company or the other party shall require in order to confirm such authority and
capacity of Seller or Purchaser, as applicable, and of the persons who are to
execute documents in connection with the Closing.

          12.17 Assignment. Purchaser shall have the right to assign this
Contract at its sole option to a partnership in which the sole general partner
is Purchaser, an affiliate or a partnership in which Purchaser or an affiliate
is a managing partner. Purchaser shall have the right to assign this Contract to
any other party upon the consent of Seller, which consent shall not be
unreasonably withheld. If a permitted assignee assumes all obligations of
Purchaser and agrees to execute all documents and to perform all obligations
imposed on Purchaser as if the assignee were the original purchaser in this
Contract, then Purchaser shall be relieved of its obligation under this
Contract.

          12.18 Governing Law. This Contract is to be performed in the county
and state in which the Property is located and the laws of such state shall
govern the validity, construction and

<PAGE>

enforcement of this Contract. Venue for any litigation shall be fixed in the
county where the Property is located.

Executed by Seller effective as of the 16th day of October, 2003.

                                        SELLER:

                                        WATERMARK TEXAS ONE, INC.,
                                        a Maryland corporation
                                        By: /s/ David Givner
                                        Name (Print): David Givner
                                                      ------------------
                                        Title: President
                                               ---------------

Executed by Purchaser effective as of the 16th day of October, 2003.

                                        PURCHASER:

                                        THE PETERSON GROUP, INC.,
                                        A  Texas  corporation
                                          --------
                                        _____________________________________

                                        By: /s/ Authorized Officer
                                            ----------------------
                                        Name (Print):/s/ Authorized Officer
                                                     ----------------------
                                        Title:/s/ Authorized Officer
                                              ----------------------

<PAGE>

                                   EXHIBIT "A"

Being approximately 3.0905 acres of land, more or less in Lot Six (6) of
MITCHELL PLACE, a subdivision, Section 7, Block One, in the City of Houston,
Harris County, Texas. Said subdivision being shown by Plat of record in Volume
69, Page 394 of the Deed Records of Harris County, Texas.Exhibit 10.1

                         LIMITED PARTNERSHIP AGREEMENT

                                      OF

                      MARINER TIPTREE (CDO) FUND I, L.P.

                            Dated as of May 1, 2003

<PAGE>

                                                           TABLE OF CONTENTS

                                                                           Page

ARTICLE I      GENERAL PROVISIONS............................................1
   Sec. 1.01   Partnership Name and Address..................................1
   Sec. 1.02   Fiscal Year...................................................1
   Sec. 1.03   Liability of Partners.........................................1
   Sec. 1.04   Purposes of Partnership.......................................2
   Sec. 1.05   Assignability of Interest.....................................3
ARTICLE II     MANAGEMENT OF PARTNERSHIP.....................................4
   Sec. 2.01   Management Generally..........................................4
   Sec. 2.02   Authority of Partners.........................................4
   Sec. 2.03   Reliance by Third Parties.....................................5
   Sec. 2.04   Activity of the General Partner...............................5
   Sec. 2.05   Exculpation...................................................6
   Sec. 2.06   Indemnification of General Partner............................6
   Sec. 2.07   Management Fee................................................7
   Sec. 2.08   Expenses......................................................7
   Sec. 2.09   CDO Management Fees...........................................8
ARTICLE III    CAPITAL ACCOUNTS OF PARTNERS AND OPERATION THEREOF............9
   Sec. 3.01   Definitions...................................................9
   Sec. 3.02   Capital Commitments...........................................9
   Sec. 3.03   Capital Accounts.............................................10
   Sec. 3.04   Partnership Percentages......................................10
   Sec. 3.05   Allocation of Net Capital Appreciation or Net
               Capital Depreciation.........................................11
   Sec. 3.06   Amendment of Incentive Allocation............................12
   Sec. 3.07   Valuation of Assets..........................................12
   Sec. 3.08   Liabilities..................................................13
   Sec. 3.09   Allocation for Tax Purposes..................................14
   Sec. 3.10   Determination by General Partner of Certain Matters..........14
   Sec. 3.11   Adjustments to Take Account of Interim Year Events...........15
ARTICLE IV     WITHDRAWALS AND DISTRIBUTIONS OF CAPITAL.....................15
   Sec. 4.01   Withdrawals and Distributions in General.....................15
   Sec. 4.02   Withdrawals..................................................15
   Sec. 4.03   Limitation on Withdrawals....................................15
   Sec. 4.04   Required Withdrawals.........................................16
   Sec. 4.05   Effective Date of Withdrawal.................................16
   Sec. 4.06   Distribution.................................................16
ARTICLE V      ADMISSION OF NEW PARTNERS....................................17
   Sec. 5.01   New Partners.................................................17
ARTICLE VI     WITHDRAWAL, DEATH, DISABILITY................................17
   Sec. 6.01   Withdrawal, Death, etc. of Limited Partners..................17
   Sec. 6.02   Limitations on Withdrawal of Capital Account.................18
ARTICLE VII    DURATION AND TERMINATION OF PARTNERSHIP......................18
   Sec. 7.01   Duration.....................................................18
   Sec. 7.02   Termination..................................................18

                                        -i-

<PAGE>

ARTICLE VIII   TAX RETURNS; REPORTS TO PARTNERS.............................19
   Sec. 8.01   Independent Auditors.........................................19
   Sec. 8.02   Filing of Tax Returns........................................19
   Sec. 8.03   Tax Matters Partner..........................................19
   Sec. 8.04   Reports to Current Partners..................................19
   Sec. 8.05   Reports to Partners and Former Partners......................20
ARTICLE IX     MISCELLANEOUS................................................20
   Sec. 9.01   General......................................................20
   Sec. 9.02   Power of Attorney............................................20
   Sec. 9.03   Amendments to Partnership Agreement..........................21
   Sec. 9.04   Choice of Law................................................21
   Sec. 9.05   Adjustment of Basis of Partnership Property..................21
   Sec. 9.06   Notices......................................................22
   Sec. 9.07   Goodwill.....................................................22
   Sec. 9.08   Headings.....................................................22
   Sec. 9.09   Pronouns.....................................................22

                                     -ii-

<PAGE>

                          LIMITED PARTNERSHIP AGREEMENT

                                       OF

                       MARINER TIPTREE (CDO) FUND I, L.P.

                  This Limited Partnership, dated as of May 1, 2003 (the
"Agreement") of Mariner Tiptree (CDO) Fund I, L.P. (the "Partnership"), by and
among Tricadia Capital, LLC, a limited liability company organized under the
laws of Delaware, as the general partner ("General Partner"), and the Limited
Partners (as herein defined). The term "Partners" shall include any persons
hereafter admitted to the Partnership pursuant to Article V of this Agreement
and shall exclude any persons who cease to be Partners pursuant to Article VI of
this Agreement.

                                    RECITALS

                  WHEREAS, General Partner and the Limited Partners desire to
form the Partnership as a limited partnership pursuant to the provisions of the
Delaware Revised Uniform Limited Partnership Act (the "Act").

                  NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained and other good and valuable consideration,
the parties hereto hereby agree as follows:

                                    ARTICLE I

                               General Provisions

                  Sec. 1.01 Partnership Name and Address. The name of the
Partnership is Mariner Tiptree (CDO) Fund I, L.P. Its principal office is
located at 780 Third Avenue, 16th Floor, New York, New York 10017, or at such
other location as the General Partner (as hereinafter defined) in the future may
designate. The General Partner shall promptly notify the Limited Partners of any
change in the Partnership's address.

                  Sec. 1.02 Fiscal Year. The fiscal year of the Partnership
(herein called the "fiscal year") shall end on December 31 of each calendar
year.

                  Sec. 1.03 Liability of Partners. The names of all of the
Partners and the amounts of their respective contributions to the Partnership
(herein called the "Capital Commitments") are set forth in a schedule entitled
"Schedule of Capital Commitments" (herein called the "Schedule"), which shall be
filed with the records of the Partnership at the Partnership's principal office
(as set forth in Sec. 1.01) and is hereby incorporated by reference and made a
part of this Agreement.

                  The Partner designated in Part I of the Schedule as the
General Partner (herein called the "General Partner") shall have unlimited
liability for the repayment and discharge of all debts and obligations of the
Partnership.

                                     -1-
<PAGE>

                  The Partners designated in Part II of the Schedule as Limited
Partners (herein called the "Limited Partners"), and former Limited Partners
shall be liable for the repayment and discharge of all debts and obligations of
the Partnership attributable to any fiscal year (or relevant portion thereof)
during which they are or were Limited Partners of the Partnership to the extent
of their respective interests in the Partnership (including any unfunded Capital
Commitment, if any) in the fiscal year (or relevant portion thereof) to which
any such debts and obligations are attributable.

                  The Partners and all former Partners shall share all losses,
liabilities or expenses suffered or incurred by virtue of the operation of the
preceding paragraphs of this Sec. 1.03 in the proportions of their respective
Partnership Percentages (determined as provided herein) for the fiscal year (or
relevant portion thereof) to which any debts or obligations of the Partnership
are attributable. A Limited Partner's or former Limited Partner's share of all
losses, liabilities or expenses shall not be greater than his or its respective
interest in the Partnership for such fiscal year (or relevant portion thereof).
The General Partner shall share all losses, liabilities or expenses suffered or
incurred in excess of the interests of the Limited Partners and former Limited
Partners.

                  As used in this Sec. 1.03, the terms "interests in the
Partnership" and "interest in the Partnership" shall mean with respect to any
fiscal year (or relevant portion thereof) and with respect to each Partner (or
former Partner) the Capital Account (as defined in Sec. 3.03) that such Partner
(or former Partner) would have received (or in fact did receive) pursuant to the
terms and provisions of Article VI upon withdrawal from the Partnership as of
the end of such fiscal year (or relevant portion thereof).

                  Notwithstanding any other provision in this Agreement, in no
event shall any Limited Partner (or former Limited Partner) be obligated to make
any additional contribution whatsoever to the Partnership in excess of its
Capital Commitment, or have any liability for the repayment and discharge of the
debts and obligations of the Partnership (apart from its interest in the
Partnership), except that a Limited Partner's obligations under this Sec. 1.03,
to make additional contributions or payments, respectively, up to, but in no
event in excess of, the aggregate amount of returns of capital and other amounts
actually received by him or it from the Partnership during or after the fiscal
year to which any debt or obligation is attributable.

                  As used in this Agreement, the terms "former Limited Partner"
and "former Partner" refer to such persons or entities as hereafter from time to
time cease to be a Limited Partner or Partner, respectively, pursuant to the
terms and provisions of this Agreement.

                  Sec. 1.04 Purposes of Partnership. The Partnership is
organized for the purposes of realizing capital appreciation by investing in
Securities (as hereinafter defined), particularly, purchasing interests in
Collateralized Debt Obligation ("CDO") securities, Credit-Related Structured
Product ("CRS") securities and other structured product securities that are
structured, managed, advised and/or issued by the General Partner and/or
Investment Manager, as well as, engaging in all activities and transactions as
the General Partner may deem necessary or advisable in connection therewith,
including, without limitation:

                                     -2-
<PAGE>

                  (a)      Issue, purchase and invest in CDOs, CRSs and other
structured product securities, including CDOs, CRSs and other structured
products which are structured, managed, advised and/or issued by the General
Partner and/or Investment Manager;

                  (b)      to invest, on margin or otherwise, in securities and
other financial instruments of United States and foreign entities, to the extent
necessary to achieve the objective of the Partnership and/or to protect the
assets of the Partnership, in each case as the General Partner may from time to
time determine;

                  (c)      to possess, transfer, mortgage, pledge or otherwise
deal in, and to exercise all rights, powers, privileges and other incidents of
ownership or possession with respect to, Securities and other property and funds
held or owned by the Partnership;

                  (d)      to acquire a long position or a short position with
respect to any Security and to make purchases or sales increasing, decreasing or
liquidating such position or changing from a long position to a short position
or from a short position to a long position, without any limitation as to the
frequency of the fluctuation in such positions or as to the frequency of the
changes in the nature of such positions;

                  (e)      to purchase Securities and hold them for investment;

                  (f)      to engage personnel, whether part-time or full-time,
and attorneys, independent accountants or such other persons as the General
Partner may deem necessary or advisable;

                  (g)      to lend Securities of the Partnership, on terms
customary to the securities industry, to lend funds or other properties of the
Partnership, either with or without security, to borrow or raise monies, enter
into repurchase agreements and, from time to time without limitation as to
amount or manner and time of repayment, to buy Securities on margin, to issue,
accept, endorse and execute promissory notes, drafts, bills of exchange,
warrants, bonds, debentures and other negotiable and non-negotiable evidences of
indebtedness, and to secure the payment of such or other obligations of the
Partnership by mortgage upon, or pledge or hypothecation of, all or part of the
property of the Partnership whether at the time owned or thereafter acquired;

                  (h)      to maintain for the conduct of Partnership affairs
one or more offices and in connection therewith rent or acquire office space,
and do such other acts as the General Partner may deem necessary or advisable in
connection with the maintenance and administration of the Partnership;

                  (i)      to enter into custodial arrangements regarding
Securities owned beneficially by the Partnership with banks and brokers wherever
located; and

                  (j)      to do such other acts as the General Partner may deem
necessary or advisable in connection with the maintenance and administration of
the Partnership.

                                     -3-
<PAGE>

                  Sec. 1.05 Assignability of Interest. Without the prior written
consent of the General Partner which consent can be withheld in the General
Partner's discretion, a Limited Partner may not (i) pledge or assign its
interest in the Partnership in whole or in part to any person except by
operation of law, or (ii) substitute for itself as a Partner any other person.
Notwithstanding the foregoing, in no event shall the General Partner have the
authority to consent to the subdivision for resale of an interest in the
Partnership into an interest smaller than an interest the initial offering price
of which would have been at least $5,000,000. Any attempted pledge, assignment
or substitution not made in accordance with this Sec. 1.05 shall be void.

                                   ARTICLE II

                            Management of Partnership

                  Sec. 2.01 Management Generally. The management of the
Partnership shall be vested exclusively in the General Partner. The General
Partner may delegate or assign any of its duties or authority in connection with
the management of the Partnership to the Investment Manager (as defined in Sec.
2.02). Except as authorized by the General Partner, the Limited Partners shall
have no part in the management of the Partnership, and shall have no authority
or right to act on behalf of the Partnership in connection with any matter.

                  Sec. 2.02 Authority of Partners. The General Partner shall
have the power on behalf and in the name of the Partnership to carry out any and
all of the objects and purposes of the Partnership set forth in Sec. 1.04, and
to perform all acts and enter into and perform all contracts and other
undertakings which he may deem necessary or advisable or incidental thereto,
including, without limitation, the power to:

                  (a)      open, maintain and close accounts, including margin
and custodial accounts, with brokers, including brokers located outside the
United States and/or affiliated with the General Partner, which power shall
include the authority to issue all instructions and authorizations to brokers
regarding the Securities and/or money therein; to pay, or authorize the payment
of, commissions that may be in excess of the lowest rates available that are
paid to futures commission merchants who execute transactions for the account of
the Partnership and who supply research products or services;

                  (b)      open, maintain and close accounts, including
custodial accounts, with banks, including banks located outside the United
States, and draw checks or other orders for the payment of monies;

                  (c)      lend Securities of the Partnership, on terms
customary to the securities industry, lend, either with or without security, any
funds or other properties of the Partnership and borrow or raise funds and
secure the payment of obligations of the Partnership by pledges or hypothecation
of all or any part of the property of the Partnership;

                  (d)      do any and all acts on behalf of the Partnership, and
exercise all rights of the Partnership, with respect to its interest in any
person, including, without limitation, the voting of Securities, participation
in arrangements with creditors, the institution and settlement or compromise of
suits and administrative proceedings and other like or similar matters;

                                     -4-
<PAGE>

                  (e)      organize one or more corporations or other entities
formed to hold record title, as nominee for the Partnership, to Securities or
funds of the Partnership;

                  (f)      combine purchase or sale orders on behalf of the
Partnership with orders for other accounts to whom the General Partner or any of
its affiliates provides investment services ("Other Accounts") and allocate the
securities or other assets so purchased or sold, on an average price basis,
among such accounts;

                  (g)      enter into arrangements with brokers to open "average
price" accounts wherein orders placed during a trading day are placed on behalf
of the Partnership and Other Accounts and are allocated among such accounts
using an average price;

                  (h)      retain Tricadia CDO Management, LLC ("Tricadia CDO
Management"), or other persons, firms or entities selected by the General
Partner, to provide certain management and administrative services to the
Partnership (Mariner Investment Group, or any such other person, firm or entity
providing such services from time to time is herein called the "Investment
Manager") and to cause the Partnership to compensate the Investment Manager for
such services; provided, however, that the management, control and conduct of
the activities of the Partnership shall remain the responsibility of the General
Partner;

                  (i)      to invest the assets of the Partnership in CDOs or
other structured products, which are structured, managed, advised and/or issued
by the General Partner and/or Investment Manager.

                  (j)      provide research and analysis and direct the
formulation of investment policies and strategies for the Partnership;

                  (k)      invest in other pooled investment vehicles and with
managers who are either affiliated or unaffiliated with the General Partner,
which investments shall be subject in each case to the terms and conditions of
the respective governing document for such vehicle or the respective investment
advisory agreement entered into with such manager; and

                  (l)      authorize any partner, employee or other agent of the
General Partner or agent or employee of the Partnership to act for and on behalf
of the Partnership in all matters incidental to the foregoing.

                  Sec. 2.03 Reliance by Third Parties. Persons dealing with the
Partnership are entitled to rely conclusively upon the certificate of the
General Partner to the effect that it is then acting as a General Partner and
upon the power and authority of the General Partner as herein set forth.

                  Sec. 2.04 Activity of the General Partner. The General Partner
and the Investment Manager and any of the Investment Manager's or the General
Partner's respective partners, officers, directors, stockholders, employees or
other agents (collectively, "Affiliates"), shall devote so much of their time to
the affairs of the Partnership as in the judgment of the General Partner the
conduct of its business shall reasonably require, and the General Partner or its
Affiliates shall not be obligated to do or perform any act or thing in

                                     -5-
<PAGE>

connection with the business of the Partnership not expressly set forth herein.
Nothing herein contained shall be deemed to preclude the General Partner or an
Affiliate from exercising investment responsibility, from engaging directly or
indirectly, in any other business, irrespective of whether any such business is
similar to the business of the Partnership or shall otherwise involve
purchasing, selling, holding or otherwise dealing with Securities; and nothing
herein contained shall be deemed to preclude the General Partner or an Affiliate
from directly or indirectly purchasing, selling, holding or otherwise dealing
with any Securities for the account of any such other business, for its own
account, for any of its family members or for other clients, irrespective of
whether any such Securities are purchased, sold, held or otherwise dealt with
for the account of the Partnership. No Limited Partner shall, by reason of being
a partner in the Partnership, have any right to participate in any manner in any
profits or income earned or derived by or accruing to a General Partner or its
Affiliates from the conduct of any business other than the business of the
Partnership or from any transaction in Securities effected by a General Partner
or its Affiliates for any account other than that of the Partnership. The
Investment Manager may structure and/or advise a structured product (such as a
CDO, CRS or other product) on behalf of a certain investor (or group of
investors) and the Partnership may play no role in managing, structuring or
offering such other product.

                  Sec. 2.05 Exculpation. Neither the General Partner nor any of
its Affiliates shall be liable to any Limited Partner or the Partnership for
mistakes of judgment or for action or inaction or for losses due to such
mistakes, action or inaction so long as said person acted honestly and in good
faith and reasonably believed that his conduct was in the best interests of the
Partnership or for losses due to the negligence, dishonesty or bad faith of any
employee, broker or other agent of the Partnership, provided that such employee,
broker or agent was selected, retained or engaged by the General Partner or an
Affiliate with reasonable care. The General Partner and each Affiliate may
consult with counsel and accountants in respect of Partnership affairs and be
fully protected and justified in any action or inaction which is taken in
accordance with the advice or opinion of such counsel or accountants, provided
that they shall have been selected with reasonable care. Notwithstanding any of
the foregoing to the contrary, the provisions of this Sec. 2.05 shall not be
construed so as to relieve (or attempt to relieve) the General Partner or an
Affiliate of any liability, to the extent (but only to the extent) that such
liability may not be waived, modified or limited under applicable law, but shall
be construed so as to effectuate the provisions of this Sec. 2.05 to the fullest
extent permitted by law.

                  Sec. 2.06 Indemnification of General Partner. (a) To the
fullest extent permitted by law, the Partnership shall indemnify and hold
harmless the General Partner, each Affiliate and the legal representatives of
any of them (each, an "Indemnified Party"), from and against any loss or expense
suffered or sustained by an Indemnified Party by reason of the fact that said
person is or was an Indemnified Party, including, without limitation, any
judgment, settlement, reasonable attorneys' fees and other costs or expenses
incurred in connection with the defense of any actual or threatened action or
proceeding (collectively, "Losses"), provided that such Losses resulted from (i)
a mistake of judgment or action or inaction taken by an Indemnified Party
honestly and in good faith that said Indemnified Party reasonably believed to be
in the best interests of the Partnership, and, in the case of criminal
proceedings, that the Indemnified Party had no reasonable cause to believe was
unlawful or (ii) the negligence, dishonesty or bad faith of any employee, broker
or other agent of the Partnership provided that such employee, broker or other
agent was selected, retained or engaged by the Indemnified Party with reasonable
care. The Partnership shall, in the discretion of the General Partner, advance

                                     -6-
<PAGE>

to any Indemnified Party reasonable attorneys' fees and other costs and expenses
incurred in connection with the defense of any action or proceeding that arises
out of such conduct. In the event that such an advance is made by the
Partnership, the Indemnified Party shall agree to reimburse the Partnership for
such fees, costs and expenses to the extent that it shall be determined that it
was not entitled to indemnification under this Sec. 2.06.

                  (b)      The indemnification provided by this Sec. 2.06 shall
not be deemed to be exclusive of any other rights to which each Indemnified
Party may be entitled under any agreement, or as a matter of law, or otherwise,
both as to action in such Indemnified Party's official capacity and to action in
another capacity, and shall continue as to such Indemnified Party who has ceased
to have an official capacity for acts or omissions during such official capacity
or otherwise when acting at the request of the General Partner and shall inure
to the benefit of the heirs, successors and administrators of such Indemnified
Party.

                  (c)      Notwithstanding any of the foregoing to the contrary,
the provisions of this Sec. 2.06 shall not be construed so as to provide for the
indemnification of an Indemnified Party for any liability to the extent (but
only to the extent) that such indemnification would be in violation of
applicable law or that such liability may not be waived, modified or limited
under applicable law, but shall be construed so as to effectuate the provisions
of this Sec. 2.06 to the fullest extent permitted by law.

                  Sec. 2.07 Management Fee. (a) The Partnership will pay the
Investment Manager or its affiliates a quarterly management fee (the "Management
Fee"), in arrears, equal to 0.375% (approximately 1.5% per annum). The
Management Fee will be calculated on the higher of each Limited Partner's (i)
committed capital amount, during the draw down period, or (ii) the value of such
Limited Partner's Capital Account, as of the last day of each month in the
fiscal quarter to which the Management Fee relates. After a Limited Partner has
completed the draw down period, the Management Fee will be calculated against
the value of such Limited Partner's Capital Account only.

                  Sec. 2.08 Expenses. (a) The Investment Manager will provide
investment management and certain administrative services to the Partnership
including, among other things, office space and utilities, news, quotation and
computer equipment and services, administrative services, and secretarial,
clerical and other personnel.

                  (b)      The Partnership will pay all of its organizational
expenses, including all expenses incurred in connection with the offering and
sale of interests in the Partnership. Organizational expenses will be amortized
over a 60-month period from the date of formation of the Partnership.

                  (c)      The Partnership will be responsible for all expenses
incurred in the buying, selling and holding of securities and other investments
(including, without limitation, all custody, accounting, transfer and legal
fees, brokerage commissions and interest expense), certain research and
portfolio management expenses, the Management Fee, risk management expenses,
consulting fees, insurance premiums, the Partnership's legal, accounting and
auditing fees. Certain of the Partnership's expenses may be borne or reimbursed
by broker-dealers executing transactions for the Partnership. Except as noted in
the preceding sentence, the Investment Manager will bear its own operating and

                                     -7-
<PAGE>

overhead expenses attributable to the management of the Partnership (such as
salaries, non-trader bonuses, rent, office and administrative expenses,
depreciation and amortization, and auditing expenses). The Partnership will also
pay any extraordinary expenses it may incur, including any litigation expenses.

                  Sec. 2.09 CDO Management Fees. To the extent the Partnership
invests in a CDO or CRS, managed or advised by the Investment Manager, any fee
received by the Investment Manager from such CDO or CRS for structuring or
managing such CDO or CRS, exclusive of any fees paid to Mariner Investment
Group, Inc., (collectively, "CDO Management Fees") shall be shared with the
Partnership on a 50/50 basis. CDO Management Fees received by the Investment
Manager from a CDO or CRS that the Partnership does not invest in at its
offering shall be retained solely by the Investment Manager. In addition,
notwithstanding anything to the contrary herein, Net Deal Profit (as defined
immediately below) derived by the Partnership in connection with the sale of
securities warehoused during the 'ramp-up' phase of any CDO offering shall be
allocated 50% to the General Partner and 50% to Limited Partners. "Net Deal
Profit" for purposes of this Section 2.09 shall mean the aggregate amount of
profit realized, less (i) the aggregate amount of any losses realized plus (ii)
that portion of the Management Fee paid with respect to the relevant securities.
For purposes of calculating Net Deal Profit (i) accrued interest on a security
shall be excluded and (ii) all transfers of CDOs or other securities into a
specific product managed or advised by the Investment Manager shall be included
in the evaluation of Net Deal Profit for such product.

                  Sec. 2.10 Co-Investment Opportunities. The General Partner, in
its sole discretion, may from time to time determine that more opportunities
exist in the CDO market than the Partnership can exploit with its available
capital. Upon making such determination, the General Partner may, but is not
required to, inform the Limited Partners of such investment possibilities and
extend to them the opportunity to engage in the transactions on their own
account (a "Co-Investment Opportunity"). The General Partner is under no
obligation to offer to Limited Partners the same terms and conditions as the
Partnership's investment, but any differences will be disclosed to the extent
consistent with the General Partner's fiduciary obligation to the Partnership.
The General Partner may elect to make Co-Investment Opportunities available to
Limited Partners in opportunities in which the Partnership ultimately does not
participate. Each Limited Partner is responsible for independently evaluating
the decision to engage in a Co-Investment Opportunity. If the General Partner
makes a Co-Investment Opportunity available to Limited Partners and more Limited
Partners elect to take advantage of such opportunity than can be accommodated in
the transaction, the General Partner, in its sole discretion, may allocate the
opportunity among the various Limited Partners on a basis that the General
Partner in good faith deems to be equitable. Limited Partners that participate
in such co-investment opportunities will be charged a fee equal to one-half
(50%) of the Net Co-Investment Profit realized. "Net Co-Investment Profit" shall
mean the aggregate amount of profit realized, less (i) the aggregate amount of
any losses realized and (ii) that portion of the management fees paid with
respect to the account in which the CDO or other security was held pending
transfer (if such fee was paid to the General Partner or an affiliate). For
purposes of calculating Net Co-Investment Profit (i) accrued interest on a
security shall be excluded and (ii) all transfers of CDOs or other securities by
a Limited Partner into a specific product managed or advised by the Investment
Manager shall be included in the evaluation of Net Co-Investment Profit for such
product. Limited Partners that participate in a Co-Investment Opportunity must
make arrangements for payment of the Co-Investment Fee to the General Partner
independent of the existing arrangement with the Partnership.

                                     -8-
<PAGE>

                                   ARTICLE III

                          Capital Accounts of Partners
                              and Operation Thereof

                  Sec. 3.01  Definitions. For the purposes of this Agreement,
unless the context otherwise requires:

                  (a)      The term "Accounting Period" shall mean the following
periods: The initial Accounting Period shall commence upon the initial opening
of the Partnership. Each subsequent Accounting Period shall commence immediately
after the close of the next preceding Accounting Period. Each Accounting Period
hereunder shall close at the close of business on the first to occur of (i) the
last day of each fiscal quarter of the Partnership, (ii) the date immediately
prior to the effective date of the admission of a new Partner pursuant to Sec.
5.01, (iii) the date immediately prior to the effective date of the increase in
a Partner's Capital Account as a result of an additional Capital Contribution
pursuant to Sec. 3.02, (iv) the effective date of any withdrawal pursuant to
Articles IV or VI hereof, or (v) the date when the Partnership shall dissolve.

                  (b)      The term "Beginning Value" shall, with respect to any
Accounting Period, mean the value of the Partnership's Net Assets at the
beginning of such Accounting Period.

                  (c)      The term "Ending Value" shall, with respect to any
Accounting Period, mean the value of the Partnership's Net Assets at the end of
such Accounting Period (before giving effect to withdrawals).

                  (d)      The term "Net Assets" shall mean the excess of the
Partnership's assets over all of its liabilities.

                  (e)      The term "Net Capital Appreciation", with respect to
any Accounting Period, shall mean the excess, if any, of the Ending Value over
the Beginning Value and, with respect to any fiscal year of the Partnership or
other period used to determine the Incentive Allocation (as defined in Sec.
3.05(b)) shall mean the aggregate Net Capital Appreciation for such period less
the aggregate Net Capital Depreciation for such period.

                  (f)      The term "Net Capital Depreciation" shall, with
respect to any Accounting Period, mean the excess, if any, of the Beginning
Value over the Ending Value.

                  Sec. 3.02 Capital Commitments.

                  (a)      The minimum Aggregate Capital Commitment by Limited
Partners will be US $5 million subject to reduction in the discretion of the
General Partner. The General Partner shall contribute that amount as set forth
opposite its name on Schedule A hereto.

                                     -9-
<PAGE>

                  (b)      Capital Commitments will be payable over a two year
period. Limited Partners will contribute 10% of their commitment at the initial
closing of the Partnership. Thereafter a minimum of 10% of the unfunded
commitments will be drawn down pro rata on an "as needed" basis with a minimum
of five (5) business days prior notice provided to the Limited Partners. Each
such contribution to the Partnership (whether a contribution at the initial
closing of the Partnership or a contribution in response to capital call from
the General Partner, when made in immediately available funds, shall be referred
to herein as a "Capital Contribution".

                  (c)      In the event that any Limited Partner does not fund a
Capital Commitment when due, the General Partner will have the right to pursue a
number of remedies, including, without limitation, requiring the defaulting
member to forfeit its interest in the Partnership entirely. The General Partner
will use reasonable efforts to secure another person or entity (which may be an
existing Limited Partner) to assume the remaining unpaid Capital Commitment of
any Limited Partner that defaults in making a required Capital Commitment. The
General Partner may arrange for the purchase of the Interest of a defaulting
Limited Partner by a third party, which party may be an affiliate of the General
Partner.

                  (d)      The Partnership may borrow up to 20% of total Capital
Commitments to cover shortfalls caused by a defaulting Limited Partner or for
other unforeseen circumstances. The Partnership will make commitments to invest
its assets within 2 years of the first closing of the Partnership. Any
Partnership Commitments not committed by the Partnership for investment or
reserved to pay Partnership expenses by this date will be released from any
further obligation to the Partnership. A Limited Partner will not be required to
make capital contributions in excess of its Capital Commitment.

                  Sec. 3.03 Capital Accounts. A capital account (herein called
the "Capital Account") shall be established on the books of the Partnership for
each Partner. The Capital Account of each Partner shall be in an amount equal to
such Partner's initial Capital Contribution, adjusted as hereinafter provided.
At the beginning of each Accounting Period, the Capital Account of each Partner
shall be increased by the amount of any Capital Contribution to the Partnership
made by such Partner as of the first day of such Accounting Period. At the end
of each Accounting Period, the Capital Account of each Partner shall be (i)
increased or decreased by the amount credited or debited to the Capital Account
of such Partner pursuant to Sec. 3.05 and (ii) decreased by the amount of any
withdrawals made by such Partner pursuant to Sec. 4.02 or any distributions made
to such Partner pursuant to Sec. 4.04.

                  Sec. 3.04 Partnership Percentages. There shall be determined
for each Accounting Period the "Partnership Percentage" of each Partner.

                  A Partnership Percentage shall be determined for each Partner
for each Accounting Period of the Partnership by dividing the amount of each
Partner's Capital Account by the aggregate Capital Accounts of all Partners as
of the beginning of such Accounting Period. The sum of the Partnership
Percentages shall equal 100 per cent.

                                     -10-
<PAGE>

                  Sec. 3.05 Allocation of Net Capital Appreciation or Net
Capital Depreciation.

                  (a)      At the end of each Accounting Period, the Capital
Account of each Partner (including the General Partner) for such Accounting
Period shall be adjusted by crediting (in the case of Net Capital Appreciation)
or debiting (in the case of Net Capital Depreciation) the Net Capital
Appreciation or Net Capital Depreciation, as the case may be, to the Capital
Accounts of all the Partners in proportion to their respective Partnership
Percentages.

                  (b)      Except as provided in subparagraph (c) of this Sec.
3.05, at the end of each fiscal year of the Partnership or the effective date as
of which any Limited Partner withdraws from the Partnership pursuant to Sec.
6.01, 20% of the Net Capital Appreciation allocated to a Limited Partner's
Capital Account for such fiscal year pursuant to Sec. 3.05(a) shall be
reallocated to the Capital Account of the General Partner, or one of its
affiliates, (the "Incentive Allocation"); provided, however, that Net Capital
Appreciation upon which the calculation of the Incentive Allocation is based
shall be reduced to the extent of any unrecovered balance remaining in the Loss
Recovery Account (defined below) maintained on the books and records of the
Partnership for such Limited Partner as of the beginning of such fiscal year
(or, if later, the date on which the Loss Recovery Account was last adjusted for
any Limited Partner withdrawal). The amount of the unrecovered balance remaining
in the Loss Recovery Account at the time of calculating the Incentive Allocation
shall be the amount existing immediately prior to its reduction pursuant to the
second clause of the second sentence of Sec. 3.05(c). The Incentive Allocation
shall not be applied with respect to any revenues allocated to a Limited
Partner's capital account that are attributable to (i) CDO Management Fees
received by the Partnership from the Investment Manager or (ii) amounts subject
to allocation under Section 2.09 of this agreement.

                  (c)      There shall be established on the books of the
Partnership for each Limited Partner a memorandum account (the "Loss Recovery
Account"), the opening balance of which shall be zero. At the end of each fiscal
year or such other date during a fiscal year as the calculation of an Incentive
Allocation is required to be made under this Sec. 3.05, the balance in each
Limited Partner's Loss Recovery Account shall be adjusted as follows: first, if
there has been, in the aggregate, Net Capital Depreciation (as adjusted pursuant
to the last sentence of this paragraph) with respect to such Limited Partner
since the immediately preceding date as of which a calculation of an Incentive
Allocation was made (or if no calculation has yet been made with respect to such
Limited Partner, since his or its admission to the Partnership), an amount equal
to such Net Capital Depreciation shall be debited to such Limited Partner's Loss
Recovery Account; and, second, if there has been, in the aggregate, Net Capital
Appreciation (as adjusted pursuant to the last sentence of this paragraph) with
respect to such Limited Partner since the immediately preceding date as of which
a calculation of an Incentive Allocation was made, an amount equal to such Net
Capital Appreciation, before any Incentive Allocation to the General Partner,
shall be credited to and reduce any unrecovered balance in such Limited
Partner's Loss Recovery Account, but not beyond zero.

                  In the event that a Limited Partner with an unrecovered
balance in his or its Loss Recovery Account withdraws all or a portion of its
Capital Account, the unrecovered balance in such Limited Partner's Loss Recovery
Account shall be reduced as of the beginning of the next Accounting Period by an

                                     -11-
<PAGE>

amount equal to the product obtained by multiplying the balance in such Limited
Partner's Loss Recovery Account by a fraction, the numerator of which is the
amount of the withdrawal made by such Limited Partner as of the last day of the
prior Accounting Period and the denominator of which is the balance in such
Limited Partner's Capital Account on the last day of the prior Accounting Period
(prior to the withdrawal made by the Limited Partner as of the last day of the
Accounting Period). Additional Capital Commitments shall not affect any Limited
Partner's Loss Recovery Account.

                  (d)      In the event the General Partner determines that,
based upon tax or regulatory reasons, or any other reasons as to which the
General Partner and any Partner agree, such Partner should not participate in
the Net Capital Appreciation or Net Capital Depreciation, if any, attributable
to trading in any Security or type of Security or to any other transaction, the
General Partner may allocate such Net Capital Appreciation or Net Capital
Depreciation only to the Capital Accounts of Partners to whom such reasons do
not apply. In addition, if for any of the reasons described above, the General
Partner determines that a Partner should have no interest whatsoever in a
particular Security, type of Security or transaction, the interests in such
Security, type of Security or transaction may be set forth in a separate
memorandum account and the Net Capital Appreciation and Net Capital Depreciation
for each such memorandum account shall be separately calculated.

                  Sec. 3.06 Amendment of Incentive Allocation. The General
Partner shall have the right to amend, without the consent of the Limited
Partners, Sec. 3.05 of this Agreement so that the Incentive Allocation therein
provided conforms to any applicable requirements of the Securities and Exchange
Commission and other regulatory authorities; provided, however, that no such
amendment shall increase the Incentive Allocation as so amended to more than 20%
of the Net Capital Appreciation allocated to any Limited Partner's Capital
Account.

                  Sec. 3.07 Valuation of Assets.

                  (a)      Securities that are listed on a securities exchange
(including such Securities when traded in the after hours market) shall be
valued at their last sales prices on the date of determination on the largest
securities exchange on which such securities shall have traded on such date, or
if trading in such Securities on the largest securities exchange on which such
Securities shall have traded on such date was reported on the consolidated tape,
their last sales prices on the consolidated tape (or, in the event that the date
of determination is not a date upon which a securities exchange was open for
trading, on the last prior date on which such securities exchange was so open
not more than 10 days prior to the date of determination). If no such sales of
such Securities occurred on either of the foregoing dates, such Securities shall
be valued at the "bid" price for long positions and "asked" price for short
positions on the largest securities exchange on which such Securities are
traded, on the date of determination, or, if "bid" prices for long positions and
"asked" prices for short positions in such Securities on the largest securities
exchange on which such Securities shall have traded on such date was reported on
the consolidated tape, the "bid" price for long positions and "asked" price for
short positions on the consolidated tape (or, if the date of determination is
not a date upon which such securities exchange was open for trading, on the last
prior date on which such a securities exchange was so open not more than 10 days
prior to the date of determination). Securities that are not listed on an

                                     -12-
<PAGE>

exchange but are traded over-the-counter shall be valued at representative "bid"
quotations if held long by the Partnership and representative "asked" quotations
if held short by the Partnership, unless included in the NASDAQ National Market
System, in which case they shall be valued based upon their last sales prices
(if such prices are available). Options that are listed on a securities exchange
shall be valued at their last sales prices on the date of determination on the
largest securities exchange on which such options shall have traded on such
date; provided, however, that if the last sales prices of such options do not
fall between the last "bid" and "asked" prices for such options on such date,
then the General Partner shall value such options at the mean between the last
"bid" and "asked" prices for such options on such date. Non-U.S. Securities
shall be valued at the closing "bid" price in the principal market where they
are traded. If such closing prices for non-U.S. Securities are not available,
such non-U.S. Securities shall be valued at the last traded "bid" price
available prior to the date of determination.

                  Securities that are commodities or commodity contracts shall
be valued at their last prior sales prices on the principal board of trade or
other contracts market in which dealings are made or by quotations from the
contraparty bank in the case of a forward contract. The value of any shares of
stock held or sold short by the Partnership in an investment company shall be
valued in accordance with the manner in which such shares are valued by such
investment company; provided, however, that the General Partner may make such
adjustments in such valuation as it from time to time may consider appropriate.
Notwithstanding the foregoing, if any cash or other asset of the Partnership has
been realized or contracted to be realized on the date of valuation, the assets
of the Partnership shall include, in place of such cash or other asset, the
assets receivable by the Partnership in respect thereof.

                  Securities for which no such market prices are available shall
be valued by the General Partner in reliance upon one or more quotes received
from a securities broker-dealer that has been granted the designation of primary
dealer by the Federal Reserve Bank of New York, and if such quotes are
unavailable, at such value as the General Partner may reasonably determine in
its discretion. For all purposes, the value of all assets held by the
Partnership will be determined based upon the value of such asset as of the
relevant valuation date and no consideration will be given to future accruals on
such assets beyond such valuation date.

                  (b)      All other assets and liabilities of the Partnership
(except goodwill, which shall not be taken into account) shall be assigned such
value as the General Partner may reasonably determine in its discretion.

                  (c)      If the General Partner determines that the valuation
of any Securities or other property pursuant to Sec. 3.07(a) does not fairly
represent market value, the General Partner shall value such Securities or other
property as it reasonably determines in its discretion and shall set forth the
basis of such valuation in writing in the Partnership's records.

                  (d)      All values assigned to Securities and other assets
and liabilities by the General Partner pursuant to this Sec. 3.07 shall be final
and conclusive as to all of the Partners.

                  Sec. 3.08 Liabilities. Liabilities shall be determined in
accordance with generally accepted accounting principles, applied on a
consistent basis; provided, however, that the General Partner in its discretion
may provide reserves for estimated accrued expenses, liabilities or
contingencies, including general reserves for unspecified contingencies, even
though not in accordance with generally accepted accounting principles.

                                     -13-
<PAGE>

                  Sec. 3.09 Allocation for Tax Purposes. For each fiscal year,
items of income, deduction, gain, loss or credit shall be allocated for income
tax purposes among the Partners in such manner as to reflect equitably amounts
credited or debited to each Partner's Capital Account for the current and
prior fiscal years (or relevant portions thereof). Allocations under this Sec.
3.09 shall be made pursuant to the principles of Section 704(c) of the
Internal Revenue Code of 1986, as amended (the "Code"), and in conformity with
Regulations Sections 1.704l(b)(2)(iv)(f) and 1.704-1(b)(4)(i) promulgated
thereunder, or the successor provisions to such Section and Regulations.
Notwithstanding anything to the contrary in this Agreement, there shall be
allocated to the Partners such gains or income as shall be necessary to
satisfy the "qualified income offset" requirement of Regulations Sections
1.704-1(b)(2)(ii)(d).

                  If the Partnership realizes net gains for Federal income tax
purposes for any fiscal year as of the end of which one or more Positive Basis
Partners (as hereinafter defined) withdraw from the Partnership pursuant to
Articles IV, VI or VII, the General Partner may elect to allocate such net gains
as follows: (i) to allocate such net gains among such Positive Basis Partners,
pro rata in proportion to the respective Positive Basis (as hereinafter defined)
of each such Positive Basis Partner, until either the full amount of such net
gains shall have been so allocated or the Positive Basis of each such Positive
Basis Partner shall have been eliminated, and (ii) to allocate any net gains not
so allocated to Positive Basis Partners to the other Partners in such manner as
shall equitably reflect the amounts credited to such Partners' Capital Accounts
pursuant to Sec. 3.05; provided, however, that if, following such fiscal year,
the Partnership realizes net gains from a sale of Securities the proceeds of
which are designated on the Partnership's books and records as being used to
effect payment of all or part of the interest in the Partnership of any Positive
Basis Partner, there shall be allocated to such Positive Basis Partner an amount
of such net gains equal to the amount, if any, by which his or its Positive
Basis as of the effective date of his or its withdrawal (as determined under
Sec. 6.04) exceeds the amount allocated to him or it pursuant to clause (i) of
this sentence.

                  As used herein, (i) the term "Positive Basis" shall mean, with
respect to any Partner and as of any time of calculation, the amount by which
his or its interest in the Partnership (determined in accordance with Sec. 6.04)
as of such time exceeds his or its "adjusted tax basis", for Federal income tax
purposes, in his or its interest in the Partnership as of such time (determined
without regard to any adjustments made to such "adjusted tax basis" by reason of
any transfer or assignment of such interest, including by reason of death), and
(ii) the term "Positive Basis Partner" shall mean any Partner who withdraws from
the Partnership and who has Positive Basis as of the effective date of his or
its withdrawal, but such Partner shall cease to be a Positive Basis Partner at
such time as he or it shall have received allocations pursuant to clause (i) of
the preceding sentence equal to his or its Positive Basis as of the effective
date of his or its withdrawal.

                  Sec. 3.10 Determination by General Partner of Certain Matters.
All matters concerning the valuation of Securities and other assets of the
Partnership, the allocation of profits, gains and losses among the Partners,
including taxes thereon, and accounting procedures not expressly provided for by
the terms of this Agreement shall be determined by the General Partner, whose
determination shall be final and conclusive as to all of the Partners.

                                     -14-
<PAGE>

                  Sec. 3.11 Adjustments to Take Account of Interim Year Events.
If the Code or regulations promulgated thereunder require a withholding or other
adjustment to the Capital Account of a Partner or some other interim year event
occurs necessitating in the General Partner's judgment an equitable adjustment,
the General Partner shall make such adjustments in the determination and
allocation among the Partners of Net Capital Appreciation, Net Capital
Depreciation, Capital Accounts, Partnership Percentages, Incentive Allocation,
items of income, deduction, gain, loss, credit or withholding for tax purposes,
accounting procedures or such other financial or tax items as shall equitably
take into account such interim year event and applicable provisions of law, and
the determination thereof by the General Partner shall be final and conclusive
as to all of the Partners.

                                   ARTICLE IV

                    Withdrawals and Distributions of Capital

                  Sec. 4.01 Withdrawals and Distributions in General. No Partner
shall be entitled (i) to receive distributions from the Partnership, except as
provided in Sec. 4.04 and Sec. 7.02; or (ii) to withdraw any amount from his or
its Capital Account other than upon his or its withdrawal from the Partnership,
except as provided in Sec. 4.02 or upon the consent of the General Partner in
its discretion.

                  (a)      Withdrawals. Subject to Sec. 4.02, each Limited
Partner shall have the right at the end of any calendar year to withdraw any
amount of his or its Capital Account upon one year's prior written notice to the
General Partner stating the amount to be withdrawn, provided, however that the
relevant Limited Partner has been invested in the Partnership for three (3)
years. The General Partner, in its sole discretion, may (i) permit withdrawals
at other times and under different conditions, (ii) waive in whole or in part
any requirement as to withdrawal and/or (iii) permit the revocation of a notice
to withdraw. Payment of 90% of the amount withdrawn will be made within 10 days
after the withdrawal date and such balance, together with interest thereon,
computed from the withdrawal date, at the average (calculated weekly) per annum
short term (13 weeks) Treasury Bill rate, will be paid (subject to audit
adjustments) after completion of the audit of the Partnership's books pursuant
to Sec. 8.01. The General Partner may require any Limited Partner seeking to
withdraw part of his or its Capital Account pursuant to Sec. 4.02 to terminate
his or its interest in the Partnership in the manner provided in Sec. 6.02.

                  (b)      Limitation on Withdrawals. The right of any Partner
to withdraw any amount from his or its Capital Account pursuant to the
provisions of Sec. 4.02 is subject to (i) the provision by the General Partner
for all Partnership liabilities in accordance with the Act, and for reserves for
estimated accrued expenses, liabilities and contingencies all in accordance with
Sec. 3.08 and (ii) delay by the General Partner if, in the discretion of the
General Partner, such withdrawal would violate the rules or regulations of the
Securities and Exchange Commission (the "SEC"), any exchange or any
self-regulatory agency. In the event of a deferral of a withdrawal under clause
(ii) above, the payment of such amount shall be deferred until such time as such
payment is permitted under such rules or regulations.

                                     -15-
<PAGE>

                  Sec. 4.02 Required Withdrawals. At any time after the
completion of a three (3) year period after a Limited Partner's initial
investment, the General Partner may require a Limited Partner to withdraw from
the Partnership in whole or in part, in return for a payment to such Limited
Partner for such interest withdrawn in an amount equal to the higher of (or in
the case of a partial withdrawal, a pro rata portion of such amount): (i) such
Limited Partner's actual capital account value in the Partnership at the time of
withdrawal; or (ii) a notional amount equal to such Limited Partner's original
contributions to the Partnership plus an amount equal to the annual compound
interest factored at twenty-five per cent (25%) over the term of such Limited
Partner's actual investment (as adjusted for withdrawals and distributions).

                  Sec. 4.03 Effective Date of Withdrawal. The Capital Account of
a withdrawing Partner shall be determined as of the effective date of his or its
withdrawal. For purposes of this Sec. 4.05, the effective date of a Partner's
withdrawal shall mean (as the case may be): (i) the last day of the fiscal year
or quarter in which such Partner shall cease to be a Partner pursuant to Sec.
4.02(a); or (ii) the date determined by the General Partner if such Partner
shall be required to withdraw from the Partnership pursuant to Sec. 4.04. In the
event the effective date of a Partner's withdrawal shall be a date other than
the last day of a fiscal year of the Partnership, the Capital Account of the
withdrawing Partner shall be adjusted as described in and pursuant to Sec. 3.05
as if the effective date of such Partner's withdrawal was the last day of a
fiscal year.

                  Sec. 4.04 Distribution.

                  (a)      The General Partner may, in its discretion, make
distributions in cash or in kind (i) in connection with a withdrawal of funds
from the Partnership by a Partner and (ii) at any time to all of the Partners on
a pro rata basis in accordance with the Partners' Partnership Percentages.

                  (b)      If a distribution is made in kind, immediately prior
to such distribution, the General Partner shall determine the fair market value
of the property distributed and adjust the Capital Accounts of all Partners
upwards or downwards to reflect the difference between the book value and the
fair market value thereof, as if such gain or loss had been recognized upon an
actual sale of such property and allocated pursuant to Sec. 3.05. Each such
distribution shall reduce the Capital Account to the distributee Partner by the
fair market value thereof.

                  (c)      The General Partner may withhold taxes from any
distribution to any Partner to the extent required by the Code or any other
applicable law. For purposes of this Agreement, any taxes so withheld by the
Partnership with respect to any amount distributed by the Partnership to any
Partner shall be deemed to be a distribution or payment to such Partner,
reducing the amount otherwise distributable to such Partner pursuant to this
Agreement and reducing the Capital Account of such Partner.

                                     -16-
<PAGE>

                                    ARTICLE V

                            Admission of New Partners

                  Sec. 5.01 New Partners.

                  (a)      Subject only to the condition that each new Partner
shall execute an appropriate supplement to this Agreement pursuant to which he
or it agrees to be bound by the terms and provisions hereof, the General Partner
may admit one or more new Partners at such times as the General Partner may in
its discretion determine. The name and residence address of each new Partner
admitted to the Partnership under this Sec. 5.01 shall be reflected on the
Schedule as of the effective date of his or its admission. Admission of a new
Partner shall not be a cause for dissolution of the Partnership.

                                   ARTICLE VI

                    Withdrawals Upon Death, Disability, etc.

                  Sec. 6.01 Withdrawal Upon Death, etc. of Limited Partners.

                  (a)      In the event of the death, disability, incapacity,
incompetency, termination, bankruptcy, insolvency or dissolution of a Limited
Partner, the legal representative of such Limited Partner shall have the right
to withdraw from the Partnership at the end of the relevant fiscal year upon one
year prior written notice to the General Partner.

                  (b)      The withdrawal, death, disability, incapacity,
adjudication of incompetency, termination, bankruptcy, insolvency or dissolution
of a Limited Partner shall not dissolve the Partnership. The legal
representatives of a Limited Partner shall succeed as assignee to the Limited
Partner's interest in the Partnership upon the death, disability, incapacity,
incompetency, termination, bankruptcy, insolvency or dissolution of such Limited
Partner, but shall not be admitted as a substituted partner without the consent
of the General Partner.

                  (c)      In the event of the death, disability, incapacity,
incompetency, termination, bankruptcy, insolvency or dissolution of a Limited
Partner, the interest of such Limited Partner shall continue at the risk of the
Partnership business until the last day of the fiscal year in which (the
withdrawal) takes place, or the earlier termination of the Partnership. In
addition, in the case of a withdrawal pursuant to Sec. 6.01(a), the interest of
such Limited Partner shall continue at the risk of the Partnership business
until the end of the fiscal year in which the one-year notice period expires, or
the earlier termination of the Partnership. If the Partnership is continued
after the expiration of the fiscal year, such Limited Partner or his or its
legal representatives shall be paid within 30 days of the end of such fiscal
year in accordance with Sec. 6.03, 90% of the estimated Capital Account of such
Limited Partner as of the end of such fiscal year (computed on the basis of
unaudited data). The Partnership shall pay such Limited Partner interest from
the effective date of the withdrawal on the balance of his or its Capital
Account at the average (calculated weekly) per annum short term (13 weeks)
Treasury Bill rate and such balance, together with all such interest earned
thereon, shall be paid (subject to audit adjustments) within 30 days after
completion of the audit of the Partnership's books pursuant to Sec. 8. 01

                                     -17-
<PAGE>

                  (d)      The interest of a Limited Partner that gives notice
of withdrawal pursuant to Sec. 6.01(a) shall not be included in calculating the
Partnership Percentages of the Limited Partners required to take any action
under this Agreement.

                  (e)      In the event the General Partner receives a
withdrawal notice pursuant to Sec. 6.01(a), the General Partner will promptly
give notice to the Investment Manager in order that funds are available to
facilitate a withdrawal under this Sec. 6.01.

                  Sec. 6.02 Limitations on Withdrawal of Capital Account. The
right of any withdrawn Partner or his or its legal representatives to have
distributed the Capital Account of such Partner pursuant to this Article VI is
subject to the provision by the General Partner for all Partnership liabilities
in accordance with the Act and for reserves for estimated accrued expenses,
liabilities and contingencies all in accordance with Sec. 3.08. The unused
portion of any reserve shall be distributed, with interest at the prevailing
savings bank rate for unrestricted deposits from time to time in effect in New
York, New York, as determined by the General Partner, after the General Partner
shall have determined that the need therefor shall have ceased.

                                   ARTICLE VII

                     Duration and Termination of Partnership

                  Sec. 7.01 Duration. The Partnership shall continue to operate
until the earlier of the following dates: (i) the withdrawal, termination,
bankruptcy, insolvency or dissolution of the General Partner unless within 30
days of notice to the Partnership of such event, a majority in interest of the
remaining Partners agree to continue the Partnership, or (ii) at any date during
the Partnership's duration by decision of the General Partner; provided,
however, that the General Partner shall not use its discretion to terminate the
Fund until the earlier of (i) the satisfaction of the obligations to Limited
Partners under section 4.02 hereof or (ii) the complete withdrawal of all
Limited Partners, unless all Partners mutually agree otherwise.

                  Sec. 7.02 Termination. On termination of the business of the
Partnership, the General Partner shall, within no more than 30 days after
completion of a final audit of the Partnership's books and records (which shall
be performed within 90 days of such termination), make distributions out of
Partnership assets, in the following manner and order:

                  (a)      to creditors, including Partners who are creditors,
to the extent otherwise permitted by law, in satisfaction of liabilities of the
Partnership (whether by payment or by establishment of reserves); and

                  (b)      to the Partners in the proportion of their
respective Capital Accounts.

                           In the event that the  Partnership is terminated on
a date other than the last day of a fiscal year, the date of such termination
shall be deemed to be the last day of a fiscal year for purposes of adjusting
the Capital Accounts of the Partners pursuant to Sec. 3.05. For purposes of
distributing the assets of the Partnership upon termination, the General
Partner shall be entitled to a return, on a pari passu basis with the Limited
Partners, of the amount standing to its credit in its Capital Account and,
with respect to its share of profits, based upon its Partnership Percentage.

                                     -18-
<PAGE>

                                 ARTICLE VIII

                       Tax Returns; Reports to Partners

                  Sec. 8.01 Independent Auditors. The books and records of the
Partnership shall be audited by accountants selected by the General Partner, as
of the end of each fiscal year of the Partnership.

                  Sec. 8.02 Filing of Tax Returns. The General Partner shall
prepare and file, or cause the accountants of the Partnership to prepare and
file, a Federal information tax return in compliance with Section 6031 of the
Code, and any required state and local income tax and information returns for
each tax year of the Partnership.

                  Sec. 8.03 Tax Matters Partner. The General Partner shall be
designated on the Partnership's annual Federal information tax return, and have
full powers and responsibilities, as the Tax Matters Partner of the Partnership
for purposes of Section 6231(a)(7) of the Code. Each person (for purposes of
this Sec. 8.03, called a "Pass-Thru Partner") that holds or controls an interest
as a Limited Partner on behalf of, or for the benefit of, another person or
persons, or which Pass-Thru Partner is beneficially owned (directly or
indirectly) by another person or persons shall, within 30 days following receipt
from the Tax Matters Partner of any notice, demand, request for information or
similar document, convey such notice or other document in writing to all holders
of beneficial interests in the Partnership holding such interests through such
Pass-Thru Partner. In the event the Partnership shall be the subject of an
income tax audit by any Federal, state or local authority, to the extent the
Partnership is treated as an entity for purposes of such audit, including
administrative settlement and judicial review, the Tax Matters Partner shall be
authorized to act for, and its decision shall be final and binding upon, the
Partnership and each Partner thereof. All expenses incurred in connection with
any such audit, investigation, settlement or review shall be borne by the
Partnership.

                  Sec. 8.04 Reports to Current Partners. Within 90 days after
the end of each fiscal year or as soon thereafter as is reasonably possible, the
Partnership shall prepare and mail to each Partner, together with the report
thereon of the accountants selected by the General Partner, an audited financial
report setting forth as of the end of such fiscal year:

                  (a)      a balance sheet of the Partnership;

                  (b)      a statement showing the Net Capital Appreciation or
Net Capital Depreciation as the case may be, for such year;

                  (c)      such Partner's Capital Account as of the end of such
fiscal year and the manner of its calculation; and

                  (d)      such Partner's Capital Account and Partnership
Percentage for the then current Accounting Period.

                                     -19-
<PAGE>

The Partnership will also provide periodic performance reports, no less
frequently than quarterly, to the Limited Partners within 45 days following the
end of each of the first three fiscal quarters of each fiscal year.

                  Sec. 8.05 Reports to Partners and Former Partners. Within 90
days of the end of each fiscal year or as soon thereafter as is reasonably
possible, the Partnership shall prepare and mail, or cause its accountants to
prepare and mail, to each Partner and, to the extent necessary, to each former
Partner (or his or its legal representatives), a report setting forth in
sufficient detail such information as shall enable such Partner or former
Partner (or his or its legal representatives) to prepare their respective
Federal income tax returns in accordance with the laws, rules and regulations
then prevailing.

                                   ARTICLE IX

                                  Miscellaneous

                  Sec. 9.01 General. This Agreement: (i) shall be binding on the
executors, administrators, estates, heirs, and legal successors and
representatives of the Partners; and (ii) may be executed, through the use of
separate signature pages or supplemental agreements in any number of
counterparts with the same effect as if the parties executing such counterparts
had all executed one counterpart; provided, however, that each such counterpart
shall have been executed by the General Partner and that the counterparts, in
the aggregate, shall have been signed by all of the Partners.

                  Sec. 9.02 Power of Attorney. Each of the Partners hereby
appoints the General Partner as his or its true and lawful representative and
attorney-in-fact, in his or its name, place and stead to make, execute, sign,
acknowledge, swear to and file:

                  (a)      a Certificate of Limited Partnership of the
Partnership and any amendments thereto as may be required under the Act;

                  (b)      any duly adopted amendment to this Agreement;

                  (c)      any and all instruments, certificates, and other
documents that may be deemed necessary or desirable to effect the winding-up and
termination of the Partnership (including, but not limited to, a Certificate of
Cancellation of the Certificate of Limited Partnership); and

                  (d)      any business certificate, fictitious name
certificate, amendment thereto, or other instrument or document of any kind
necessary or desirable to accomplish the business, purpose and objectives of the
Partnership, or required by any applicable Federal, state or local law.

                  The power of attorney hereby granted by each of the Limited
Partners is coupled with an interest, is irrevocable, and shall survive, and
shall not be affected by, the subsequent death, disability, incapacity,
incompetency, termination, bankruptcy, insolvency or dissolution of such Limited
Partner; provided, however, that such power of attorney will terminate upon the
substitution of another limited partner for all of such Limited Partner's
interest in the Partnership or upon the complete withdrawal of such Limited
Partner from participation in the Partnership.

                                     -20-
<PAGE>

                  Sec. 9.03 Amendments to Partnership Agreement. The terms and
provisions of this Agreement may be modified or amended at any time and from
time to time with the written consent of Limited Partners having in excess of
50% of the Partnership Percentages of the Limited Partners and the written
consent of the General Partner, insofar as is consistent with the laws governing
this Agreement; provided, however, that without the consent of the Limited
Partners, the General Partner may amend the Agreement or the Schedule hereto to
(i) reflect changes validly made in the membership of the Partnership and the
capital contributions and Partnership Percentages of the Partners; (ii) change
the provisions relating to the Incentive Allocation as provided in, and subject
to the provisions of, Sec. 3.06; (iii) reflect a change in the name of the
Partnership; (iv) make a change that is necessary or, in the opinion of the
General Partner, advisable to qualify the Partnership as a limited partnership
or a partnership in which the Limited Partners have limited liability under the
laws of any state or foreign jurisdiction, or ensure that the Partnership will
not be treated as an association taxable as a corporation for Federal income tax
purposes; (v) make a change that does not adversely affect the Limited Partners
in any material respect; that is necessary or desirable to cure any ambiguity,
to correct or supplement any provision in this Agreement that would be
inconsistent with any other provision in this Agreement, or to make any other
provision with respect to matters or questions arising under this Agreement that
will not be inconsistent with the provisions of this Agreement, in each case so
long as such change does not adversely affect the Limited Partners in any
material respect; that is necessary or desirable to satisfy any requirements,
conditions or guidelines contained in any opinion, directive, order, statute,
ruling or regulation of any Federal, state or foreign governmental entity, so
long as such change is made in a manner which minimizes any adverse effect on
the Limited Partners; or that is required or contemplated by this Agreement;
(vi) make a change in any provision of this Agreement that requires any action
to be taken by or on behalf of the General Partner or the Partnership pursuant
to applicable Delaware law if the provisions of applicable Delaware law are
amended, modified or revoked so that the taking of such action is no longer
required; (vii) prevent the Partnership or the General Partner from in any
manner being deemed an "Investment Company" subject to the provisions of the
Investment Company Act of 1940, as amended; or (viii) make any other amendments
similar to the foregoing. Each Partner, however, must approve of any amendment
which would (a) reduce his or its Capital Account or rights of contribution or
withdrawal; or (b) amend the provisions of this Agreement relating to
amendments.

                  Sec. 9.04 Choice of Law. Notwithstanding the place where this
Agreement may be executed by any of the parties thereto, the parties expressly
agree that all the terms and provisions hereof shall be construed under the laws
of the State of Delaware and, without limitation thereof, that the Act as now
adopted or as may be hereafter amended shall govern the partnership aspects of
this Agreement.

                  Sec. 9.05 Adjustment of Basis of Partnership Property. In the
event of a distribution of Partnership property to a Partner or an assignment or
other transfer (including by reason of death) of all or part of the interest of
a Limited Partner in the Partnership, at the request of a Partner, the General
Partner, in its discretion, may cause the Partnership to elect, pursuant to
Section 754 of the Code, or the corresponding provision of subsequent law, to
adjust the basis of the Partnership property as provided by Sections 734 and 743
of the Code.

                                     -21-
<PAGE>

                  Sec. 9.06 Notices. Each notice relating to this Agreement
shall be in writing and delivered in person or by registered or certified mail.
All notices to the Partnership shall be addressed to its principal office and
place of business. All notices addressed to a Partner shall be addressed to such
Partner at the address set forth in the Schedule. Any Partner may designate a
new address by notice to that effect given to the Partnership. Unless otherwise
specifically provided in this Agreement, a notice shall be deemed to have been
effectively given when mailed by registered or certified mail to the proper
address or delivered in person.

                  Sec. 9.07 Goodwill. No value shall be placed on the name or
goodwill of the Partnership, which shall belong exclusively to the General
Partner.

                  Sec. 9.08 Headings. The titles of the Articles and the
headings of the Sections of this Agreement are for convenience of reference
only, and are not to be considered in construing the terms and provisions of
this Agreement.

                  Sec. 9.09 Pronouns. All pronouns shall be deemed to refer to
the masculine, feminine, neuter, singular or plural, as the identity of the
person or persons, firm or corporation may require in the context thereof.

                                     -22-
<PAGE>

                  IN WITNESS WHEREOF, the undersigned have hereunto set their
hands as of the date first set forth above.

GENERAL PARTNER:                           LIMITED PARTNER:

TRICADIA CAPITAL, LLC

                                           __________________________________
                                           Print Name of Limited Partner

  By:________________________________      By: ______________________________
  Name:                                        Signature of Limited Partner
  Title:                                       or Authorized Signatory

                                           __________________________________
                                           Print Name of Authorized Signatory

                                           __________________________________
                                           Title of Authorized Signatory

                                     -23-

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