Document:

OPERATING AGREEMENT

                                       OF

                        SILVER MESA AT PALOMINO PARK LLC,
                      A COLORADO LIMITED LIABILITY COMPANY

                             as of December 10, 1998
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                                TABLE OF CONTENTS

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ARTICLE 1- DEFINITIONS.........................................................1

ARTICLE 2-FORMATION OF COMPANY................................................13
   2.1      Formation.........................................................13
   2.2      Name..............................................................13
   2.3      Principal Place of Business.......................................13
   2.4      Registered Office and Registered Agent............................14
   2.5      Articles of Organization..........................................14
   2.6      Term..............................................................14

ARTICLE 3-BUSINESS OF COMPANY.................................................14
   3.1      Permitted Businesses..............................................14
   3.2      Other Activity or Business........................................14

ARTICLE 4-CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS

AND LOANS TO THE COMPANY......................................................14
   4.1      Capital Contributions.............................................15
   4.2      Withdrawal or Reduction of Members' Contributions to Capital......15
   4.3      Development Deficit Payments......................................15
   4.4      Operating Deficit Payments........................................16
   4.5      Additional Capital Contributions..................................16
   4.6      Miscellaneous.....................................................16

ARTICLE 5-INITIAL CLOSING; INFRASTRUCTURE LAND CLOSING;

CONSTRUCTION LOAN CLOSING.....................................................16
   5.1      Initial Closing...................................................16
   5.2      Construction Procedures and Closing...............................17
   5.3      Infrastructure Land Closing and Bond Financing of Infrastructure..20
   5.4      Failure of Initial Closing or Construction Loan Closing to Occur..20

ARTICLE 6-DEVELOPMENT OF PROJECT; OPERATIONS PRIOR TO THE

FINAL CLOSING DATE............................................................20
   6.1      Duties of Feld....................................................20
   6.2      Construction Completion...........................................22
   6.3      Development Deficit Guaranty......................................22
   6.4      Operating Deficit Guaranty........................................23
   6.5      Liabilities of the Company........................................23
   6.6      Construction Contracts............................................23
   6.7      Administration of the Construction Loan...........................23
   6.8      Change Orders.....................................................24

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   6.9      Retainage.........................................................24
   6.10     Agreements with Affiliates........................................24
   6.11     Warranty by Feld..................................................24
   6.12     Insurance.........................................................25
   6.13     Personal Obligation...............................................26
   6.14     Force Majeure.....................................................26
   6.15     Limitations of Feld's Authority...................................26
   6.16     Pre-Existing Environmental Condition Liability....................27

ARTICLE 7-COMPENSATION TO FELD................................................27
   7.1      Development Management Fee........................................27
   7.2      Construction Management Fee.......................................27
   7.3      Construction Loan Guarantee Fee...................................27
   7.4      Cost Savings Fee..................................................28
   7.5      Incentive Fee.....................................................28
   7.6      Completion Fee....................................................28
   7.7      Conditions to Payment of Fees; Right of Offset....................28

ARTICLE 8-FINAL CLOSING.......................................................29
   8.1      Conditions to Final Closing.......................................29
   8.2      Initiation of Final Closing.......................................29
   8.3      Actions at the Final Closing......................................29
   8.4      Certain Rights of Feld Upon Satisfaction of
            Final Closing Funding Conditions .................................30

ARTICLE 9-ALLOCATIONS.........................................................30
   9.1      Profits and Losses................................................30
   9.2      General Provisions................................................30
   9.3      Special Provisions................................................31
   9.4      Code Section 704(c) Allocations...................................32
   9.5      Allocations Relating to Taxable Issuance of Interest..............32

ARTICLE 10-DISTRIBUTIONS......................................................33
   10.1     Cash Flow.........................................................33
   10.2     Division Among Members............................................33
   10.3     Special Distribution to WPHC......................................33

ARTICLE 11-BOOKS, RECORDS, AND ACCOUNTING.....................................33
   11.1     Books and Records.................................................33
   11.2     Reports...........................................................33
   11.3     Tax Returns.......................................................34
   11.4     Special Basis Adjustment..........................................34
   11.5     Tax Matters Partner...............................................34
   11.6     Bank Accounts.....................................................34

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ARTICLE 12-MANAGEMENT.........................................................35
   12.1     Management........................................................35
   12.2     Number, Tenure and Qualifications.................................35
   12.3     Appointment of Feld as Manager....................................35
   12.4     Certain Powers of Managers........................................35
   12.5     Member Approval of Certain Acts...................................36
   12.6     Liability for Certain Acts........................................36
   12.7     Indemnity of the Members and the Managers.........................37
   12.8     Manner of Acting..................................................37
   12.9     Informal Act by Managers..........................................37
   12.10    Participation by Electronic Means.................................37
   12.11    Resignation.......................................................37
   12.12    Removal...........................................................38
   12.13    Vacancies.........................................................39
   12.14    Prohibition Against Publicly Traded Partnership...................39

ARTICLE 13-REPRESENTATIONS, WARRANTIES AND COVENANTS..........................40
   13.1     Representations and Warranties of Each Member.....................40
   13.2     Representations, Warranties and Covenants of Feld.................41
   13.3     General Representation............................................43
   13.4     Survival; Indemnity...............................................43

ARTICLE 14-RIGHTS AND OBLIGATIONS OF MEMBERS..................................44
   14.1     Limitation of Liability...........................................44
   14.2     Company Debt Liability............................................44
   14.3     List of Members...................................................44
   14.4     Company Books.....................................................45
   14.5     Priority and Return of Capital....................................45
   14.6     Outside Activity..................................................45

ARTICLE 15-MEETINGS OF MEMBERS................................................45
   15.1     Annual Meeting....................................................46
   15.2     Special Meetings..................................................46
   15.3     Place of Meeting..................................................46
   15.4     Notice of Meetings................................................46
   15.5     Meeting of all Members............................................46
   15.6     Record Date.......................................................46
   15.7     Quorum............................................................46
   15.8     Manner of Acting..................................................47
   15.9     Proxies...........................................................47
   15.10    Action by Members Without a Meeting...............................47
   15.11    Voting by Ballot..................................................47
   15.12    Waiver of Notice..................................................47

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ARTICLE 16-TRANSFERABILITY; PUT-CALL PROVISIONS...............................47
   16.1     Restrictions on Transferability...................................47
   16.2     Put-Call Rights...................................................48
   16.3     Calculation of Option Price.......................................48
   16.4     Right of Offset...................................................49
   16.5     Restrictions on Resignation.......................................49
   16.6     Permitted WPHC Transfer...........................................49

ARTICLE 17-ADMISSION OF ADDITIONAL MEMBERS....................................49

ARTICLE 18-DISSOLUTION AND TERMINATION........................................50
   18.1     Dissolution.......................................................50
   18.2     Effect of Filing of Dissolving Statement..........................50
   18.3     Distribution of Assets Upon Dissolution...........................50
   18.4     Articles of Dissolution...........................................51
   18.5     Filing of Articles of Dissolution.................................51
   18.6     Winding Up........................................................51
   18.7     No Restoration of Deficit Capital Accounts........................51
   18.8     Deemed Liquidation................................................51
   18.9     Permitted Withdrawal by Feld......................................52

ARTICLE 19-MISCELLANEOUS PROVISIONS...........................................52
   19.1     Statement of Intent of Parties....................................52
   19.2     Notices...........................................................52
   19.3     Application of Colorado Law.......................................53
   19.4     Waiver of Action for Partition....................................53
   19.5     Amendments........................................................54
   19.6     Construction......................................................54
   19.7     Headings..........................................................54
   19.8     Waivers...........................................................54
   19.9     Time of the Essence...............................................54
   19.10    Remedies for Default..............................................54
   19.11    Rights and Remedies Cumulative....................................54
   19.12    Severability......................................................54
   19.13    Heirs, Successors and Assigns.....................................54
   19.14    Counterparts......................................................54
   19.15    Further Assurances................................................55
   19.16    Entire Agreement..................................................55
   19.17    Attorneys Fees....................................................55

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THE SECURITIES REPRESENTED BY THIS INSTRUMENT OR DOCUMENT HAVE BEEN ACQUIRED FOR
INVESTMENT  AND HAVE NOT BEEN  REGISTERED  UNDER THE  SECURITIES ACT OF 1933, AS
AMENDED,  OR THE SECURITIES LAWS OF ANY STATE.  WITHOUT SUCH REGISTRATION,  SUCH
SECURITIES  MAY NOT BE SOLD OR OTHERWISE  TRANSFERRED  AT ANY TIME,  EXCEPT UPON
DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE MANAGERS OF
THE  COMPANY  THAT  REGISTRATION  IS  NOT  REQUIRED  FOR  SUCH  TRANSFER  OR THE
SUBMISSION  TO THE  MANAGERS  OF THE  COMPANY OF SUCH OTHER  EVIDENCE  AS MAY BE
SATISFACTORY  TO THE MANAGERS TO THE EFFECT THAT ANY SUCH  TRANSFER OR SALE WILL
NOT BE IN VIOLATION OF THE  SECURITIES  ACT OF 1933,  AS AMENDED,  OR APPLICABLE
STATE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER.

                             OPERATING AGREEMENT OF
                        SILVER MESA AT PALOMINO PARK LLC,
                      A COLORADO LIMITED LIABILITY COMPANY

     THIS OPERATING  AGREEMENT is made as of the 10th day of December,  1998, by
and among AL FELD, an individual ("Feld"), and WELLSFORD PARK HIGHLANDS CORP., a
Colorado  corporation  ("WPHC"),  as the members of SILVER MESA AT PALOMINO PARK
LLC, a Colorado limited liability company (the "Company").

     NOW  THEREFORE,  pursuant to the Act, the following  shall  constitute  the
Operating  Agreement  of SILVER  MESA AT PALOMINO  PARK LLC, a Colorado  limited
liability company.

1    DEFINITIONS

     The  following  terms  used in this  Operating  Agreement  shall  have  the
following meanings (unless otherwise expressly provided herein):

     (a) "Accountants"  means Ernst & Young or such other accountant  engaged by
the Company with the unanimous consent of the Members.

     (b) "Act" means the version of the Colorado Limited  Liability  Company Act
adopted by the State of Colorado, Colo. Rev. Stat.ss.ss.7-80-101 to 7-80-913, as
amended from time to time.

     (c) "Adjusted Capital Account Deficit" with respect to any Member means the
deficit  balance,  if any, in such Member's Capital Account as of the end of any
Fiscal Year after giving effect to the following adjustments: (i) credit to such
Capital  Account  the sum of (A) any amount  which such Member is  obligated  to
restore to such Capital  Account  pursuant to any  provision of this  Agreement,
plus (B) an amount equal to such Member's share of  Partnership  Minimum Gain as

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determined under  Regulation  Section  1.704-2(g)(1)  and such Member's share of
Partner  Nonrecourse Debt Minimum Gain as determined  under  Regulation  Section
1.704-2(i)(5),  plus (C) any amounts which such Member is deemed to be obligated
to restore pursuant to Regulation Section  1.704-1(b)(2)(ii)(c);  and (ii) debit
to  such   Capital   Account  the  items   described  in   Regulation   Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6).

     (d)  "Affiliate"  means  any  Person  controlling  the  outstanding  equity
interests or profits interests of any other Person, any Person whose outstanding
equity interests are controlled by any other Person, or any Person  controlling,
controlled by, or under common control with any other Person.

     (e) "Agreement" shall mean this Operating  Agreement as originally executed
and as it may be amended from time to time.

     (f)  "Approved  Affiliate  Agreements"  shall have the meaning set forth in
Section 5.2.6 hereof.

     (g) "Architect's  Agreement" means the agreement to be entered into between
the Company and Feld Design,  Inc.  ("Architect"),  an Affiliate of Feld,  at or
prior to the Construction Loan Closing.

     (h) "Asset Value" with respect to any Company asset means:

     (i) The fair market value,  when  contributed,  of any asset contributed to
the Company by any Member;

     (ii)  The  fair  market  value on the  date of  distribution  of any  asset
distributed by the Company to any Member as consideration for an Interest in the
Company;

     (iii) The fair market value of all Property at the time of the happening of
any of the following  events:  (A) the admission of a Member to, or the increase
of an Interest of an existing  Member in, the Company in exchange  for a Capital
Contribution;  or (B) the  liquidation of the Company under  Regulation  Section
1.704-1(b)(2)(ii)(g); or

     (iv) The Basis of the asset in all other circumstances.

     (i) "Bankruptcy  Event" with respect to the Company or any Member means any
one of:

     (A) Filing a voluntary  petition in bankruptcy or for reorganization or for
adoption of an arrangement under the Bankruptcy Code;

     (B) Making a general assignment for the benefit of creditors;

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     (C) The  appointment  by a court of a receiver  for all or a portion of the
property of the Company or for all or a portion of a Member's property having an
aggregate value in excess of $500,000;

     (D) The entry of an order for relief in the case of an involuntary petition
in bankruptcy; or

     (E) The  assumption  of custody or  sequestration  by a court of  competent
jurisdiction  of all or  substantially  all of the  Company's  or such  Member's
property, as appropriate.

     (j) "Basis" with respect to an asset means the adjusted  basis from time to
time of such asset for federal income tax purposes.

     (k) "Budgeted  Construction  Loan Interest" means that amount which appears
in the line item of the Final  Project  Budget  (attached  hereto as  Exhibit O)
denoted as "CONSTR. LOAN INTEREST.

     (l) "Call  Option"  means  the call  option  of WPHC  with  respect  to the
Interest of Feld as described in Section 16.2.1 hereof.

     (m)  "Capital  Account"  means an  account  maintained  for each  Member in
accordance  with  Regulation  Sections  1.704-1(b)  and 1.704-2 and to which the
following provisions apply to the extent not inconsistent with such Regulations:

     (i) There  shall be  credited  to each  Member's  Capital  Account (A) such
Member's Capital Contributions; (B) such Member's distributive share of Profits;
(C) any items of income or gain specially allocated to such Member under Section
9.3 of this Agreement; and (D) the amount of any Company liabilities (determined
as provided in Code Section 752(c) and the  Regulations  thereunder)  assumed by
such Member or to which Property distributed to such Member is subject;

     (ii) There shall be debited to each Member's Capital Account (A) the amount
of money and the Asset Value of any Property distributed to such Member pursuant
to this Agreement; (B) such Member's distributive share of Losses; (C) any items
of expense or loss which are  specially  allocated to such Member under  Section
9.3 of this Agreement, and (D) the amount of liabilities (determined as provided
in Code Section 752(c) and the Regulations thereunder) of such Member assumed by
the Company or to which  Property  contributed  to the Company by such Member is
subject; and

     (iii) The  Capital  Account of any  transferee  Member  shall  include  the
appropriate  portion  of  the  Capital  Account  of the  Member  from  whom  the
transferee Member's Interest was obtained.

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     (n) "Capital Contribution" means the amount of money and the Asset Value of
any  property  other  than money  contributed  to the  Company by a Member  with
respect to such Member's Interest in the Company.

     (o)  "Capital  Contribution  Balance"  means with respect to any Member the
aggregate   Capital   Contributions   made  by  such  Member,   plus  an  amount
corresponding to interest thereon at an annual rate of twelve percent (12%) from
the date(s) such Capital  Contributions  are made until the Option Closing Date.
The parties acknowledge that the definition of Capital  Contribution  Balance is
only used in connection  with the  determination  of Fair Market Value of Feld's
Interest.

     (p) "Cash Flow" means the Operating Cash Flow and Sales or Refinancing Cash
Flow for any given period.

     (q)  "Code"  means  the  Internal  Revenue  Code of 1986,  as  amended,  or
corresponding provisions of subsequent superseding federal revenue laws.

     (r) "Company"  means SILVER MESA AT PALOMINO  PARK LLC, a Colorado  limited
liability company.

     (s) "Construction Consultant" means the Construction Consultant selected by
WPHC to monitor  construction on behalf of WPHC, or such other consultant as may
be selected by WPHC.

     (t) "Construction  Lender" means the maker of the Construction Loan, or its
successor and assigns in such capacity.

     (u)  "Construction  Loan" means the Construction Loan in a principal amount
not to  exceed  $29,000,000.00  to be made to the  Company  by the  Construction
Lender at the Construction Loan Closing.

     (v)  "Construction  Loan  Closing"  means the  closing of the  transactions
described in Section 5.2 hereof.

     (w)  "Construction   Loan  Closing  Date"  means  the  date  on  which  the
Construction Loan Closing occurs.

     (x) "Construction Loan Outside Date" has the definition given it in Section
5.2.4 hereof.

     (y) "Construction Procedures" means the requirements regarding construction
procedures set forth on Exhibit B attached hereto.

     (z) "Conversion  Date" means the date on which  Substantial  Completion has
occurred.

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     (aa)  "Control"  means the direct or indirect  ownership of at least 50% of
the equity interests or profits interests of any other Person.

     (bb) "Cost  Savings"  means the positive  amount,  if any,  equal to: Total
Budgeted  Development  Costs,  minus  (i) the  undisbursed  amount,  if any,  of
Budgeted  Construction  Loan Interest through  Substantial  Completion and minus
(ii) the actual Development Costs incurred through the Final Closing Date."

     (cc)  "Deposit  Agreement"  means the Deposit and  Contract  Administration
Agreement between WPHC and The Feld Company  regarding the Land Contract,  which
Deposit and Contract Administration Agreement is attached hereto as Exhibit C.

     (dd)  "Depreciation"  for any Fiscal  Year or other  period  means the cost
recovery  deduction  with  respect to an asset for such year or other  period as
determined for federal income tax purposes,  provided that if the Asset Value of
such asset differs from its Basis at the beginning of such year or other period,
depreciation   shall  be   determined   as   provided  in   Regulation   Section
1.704-1(b)(2)(iv)(g)(3).

     (ee) "Development Costs" means the direct or indirect costs paid or accrued
by the  Company  related  to  the  acquisition  of  the  Project  Land  and  the
development  of the  Project,  including  without  limitation:  (i) all costs of
construction  and  development  of the  Project;  (ii) all costs of causing  the
Project and its  operations to comply with laws prior to the date of Substantial
Completion; (iii) all real estate taxes, assessments and personal property taxes
relating to the period prior to the Conversion Date; (iv) all costs of insurance
incurred  by or  charged to the  Company  relating  to the  period  prior to the
Conversion  Date;  (v) all fees paid to Feld or its  Affiliates  (excluding  the
property  management  fee paid to The Feld  Company);  (vi) all financing  costs
relating to the period prior to the Conversion Date, including origination fees,
reimbursement  of expenses of the  Construction  Lender and interest;  (vii) all
costs of  administration  of the Company,  including  legal and accounting  fees
prior to or on the Final  Closing  Date;  and  (viii)  costs of title  insurance
endorsements  deleting the  mechanic's  lien  exception  from the owner's  title
policy and  bringing  the date of the owner's  title  policy down to the date of
Final Closing.

     (ff)  "Development  Deficits" means the positive  amount,  if any, by which
Development  Costs  exceed  the sum of:  (a) the  Capital  Contributions  of the
Members  required  to be made at the  Initial  Closing,  (b) the  Final  Closing
Capital  Contribution,  and (c) the  aggregate  NOI  Construction  Loan Interest
Payments,  less any undisbursed  Budgeted  Construction  Loan Interest,  for the
period prior to the date of Substantial Completion.

     (gg)  "Development  Deficit  Payments" shall mean the  Development  Deficit
Payments to be paid by Feld pursuant to Section 6.3 of this Agreement.

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     (hh) "Entity" means any general partnership,  limited partnership,  limited
liability  company,   corporation,   joint  venture,   trust,   business  trust,
cooperative or association,  or any governmental or quasi-governmental agency or
body.

     (ii) "Environmental Laws" means the Comprehensive  Environmental  Response,
Compensation  and  Liability  Act, 42  U.S.C.A.  Section  9601,  et.  seq.;  the
Hazardous  Materials - Transportation  Act, 49 U.S.C.A.  Section 1801, et. seq.;
the Resource Conversation and Recovery Act, 42 U.S.C.A.  Section 6901, et. seq.;
the Toxic  Substances  Control Act, 15 U.S.C.A.  Section  2601,  et.  seq.;  the
Federal Water  Pollution  Control Act, 33 U.S.C.A.  Section 1251,  et. seq.; any
Colorado  environmental laws; or any successor to such laws (in existence on the
date any  relevant  representation  is made or updated),  or any other  federal,
state or local environmental,  health or safety statute,  ordinance, code, rule,
regulation,  order or decree  regulating,  relating to or imposing  liability or
standards   concerning  or  in  connection   with  hazardous  or  toxic  wastes,
substances,  material,  smoke,  gas or particulate  matter as now or at any time
hereafter  in  effect,  or any common law  theory  based on  nuisance  or strict
liability.

     (jj)  "Environmental  Reports"  means  the  Environmental  Site  Assessment
prepared by ATC  Associates  dated March 16, 1994,  concerning the Land, and the
Phase I Environmental Site Assessment Update dated November ___, 1998,  prepared
by ATC Associates.

     (kk) "Fair Market Value of Feld's Interest" means the following:

     (i) one percent (1.0%) of the  following:  (A) the fair market value of the
Company's assets as determined by the Accountants based on the books and records
of the Company and on a current  appraisal of the Project,  minus (B) the amount
of the Company's debts and liabilities,  including without limitation,  any debt
encumbering the Project,  trade payables,  accrued  expenses and adjustments for
any  reasonably   foreseeable   contingent  liabilities  as  determined  by  the
Accountants  and any other fees  payable to Feld,  minus (C) the  Infrastructure
Cost  allocable  to the Project made on the same basis that such  allocation  of
Infrastructure  Cost is made in connection with the calculation of the Incentive
Fee; minus

     (ii) the amount  determined as of the Option  Closing Date by which (A) one
percent (1.0%) of the aggregate Capital  Contribution  Balances of Feld and WPHC
exceeds (B) the Capital Contribution Balance of Feld.

     (ll) "Final  Closing"  means the closing of the  transactions  described in
Article 8 hereof.

     (mm) "Final Closing Date" means the date on which the Final Closing occurs.

     (nn) "Final Closing Capital Contribution" means the Capital Contribution to
be made by WPHC pursuant to Section 4.1.2(c) hereof, when, as and if required by
this Agreement.

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     (oo)  "Final  Closing  Funding  Conditions"  means  the  conditions  to the
obligations of WPHC to make the Final Closing Capital Contribution, or otherwise
to satisfy its obligation  under Section 8.3.1 hereof,  which conditions are set
forth on Exhibit D attached hereto.

     (pp) "Final  Completion" means the lien-free  completion of construction of
the improvements in accordance with the Plans and  Specifications  (subject only
to minor and  inconsequential  field changes and other  changes  consented to by
WPHC),  including without limitation,  completion or correction of all punchlist
items and seasonal items such as landscaping to the reasonable  satisfaction  of
WPHC, payment and release of all liens of subcontractors, materialmen, and other
providers of labor, equipment,  material and/or services to the Property and the
Project as evidenced by the receipt of all unconditional  lien releases from all
such  subcontractors,  materialmen and all other providers of labor,  equipment,
material and/or services to the Property and the Project, or in the event a lien
is being  contested,  the  posting by Feld of  collateral  in an amount and form
reasonably  satisfactory to WPHC,  which may include  providing a surety bond to
which the lien is transferred  and providing title  insurance  coverage  against
such liens.

     (qq) "Fiscal Year" means the taxable year of the Company for federal income
tax  purposes  as  determined   under  Code  Section  706  and  the  Regulations
thereunder.

     (rr) "Force  Majeure"  means acts of God,  strikes,  shortages  of labor or
materials,  weather  conditions  or other matters not  reasonably  within Feld's
control  ("Force  Majeure"),  except that under no  circumstances  shall lack of
available funds be considered an event of Force Majeure.

     (ss)  "Gross  Operating  Revenues"  shall mean,  with  respect to any given
period of time, all gross operating income and rental revenues actually received
by or paid to or for the account of the Company with  respect to the  ownership,
operation,  leasing and  occupancy of the  Project,  excluding  tenant  security
deposits paid under Leases but including, but not limited to, any and all of the
following:  (i)  rentals  paid by tenants  under  leases of space in the Project
("Leases");  (ii) late charges and interest paid by tenants under Leases;  (iii)
rents and receipts  from  vending  machines  and similar  items;  (iv) fees from
parking  garages  or  carports,  if  applicable;  and (v) cable  television  and
telephone revenues.

     (tt) "Hazardous  Materials" means without  limitation,  (i) asbestos or any
material composed of or containing asbestos or urea formaldehyde in any form and
in any type; (ii)  polychlorinated  biphenyl compounds;  (iii) oil hydrocarbons,
petroleum,  petroleum products or products containing or derived from petroleum;
(iv)  any  hazardous  or  toxic  waste,  substance,   material,  smoke,  gas  or
particulate  matter,  as presently  defined by or for purposes of  Environmental
Laws.

     (uu) "Incentive Fee" has the meaning set forth in Exhibit P hereof.

     (vv)  "Infrastructure"  means the interior street improvements,  utilities,
landscaping,  a perimeter wall and gate, a guardhouse, a recreational center and
amenities, and a park and

<PAGE>

recreational  amenities to be  constructed on the  Infrastructure  Land, as more
particularly described on Exhibit E attached hereto.

     (ww)   "Infrastructure   Costs"   means  the  actual  cost  of   acquiring,
constructing  and  developing  all  of  the  Infrastructure,  including  without
limitation the cost of the  Infrastructure  Land, design and engineering  costs,
construction  management fees,  general  contractor fees,  property taxes on the
Infrastructure Land prior to completion of the Infrastructure,  interest expense
on the  Infrastructure  Land and the  Infrastructure  at an assumed nine percent
(9.0%)  rate  of  interest  for  the  period  prior  to the  completion  of each
applicable  phase of the  Infrastructure.  Infrastructure  shall not include the
cost  of  issuance  of  bonds  to  finance  the  Infrastructure.  If  all of the
Infrastructure  has not been finally  completed at the time of  determination of
Infrastructure Costs due to phasing of the construction of Infrastructure or for
any other reason, then Infrastructure Costs shall include an amount equal to the
expected  amount  of   Infrastructure   Costs  upon  final   completion  of  the
Infrastructure as reasonably determined by WPHC.

     (xx)  "Infrastructure   Land"  means  the  parcel  of  land  on  which  the
Infrastructure  improvements shall be constructed,  which parcel is described on
Exhibit F attached hereto.

     (yy) "Infrastructure  Improvements  Agreement" has the meaning set forth in
Section 5.3.3 hereof.

     (zz) "Initial  Closing" means the closing of the transactions  described in
Section 5.1 hereof.

     (aaa)  "Initial  Closing Date" means the date on which the Initial  Closing
occurs.

     (bbb) "Interest" means the ownership interest of a Member in the Company at
any particular time,  including the right of such Member to any and all benefits
to which such member may be entitled as provided in this  Agreement  or the Act,
together  with the  obligations  of such Member to comply with all the terms and
provisions  of this  Agreement  and the Act. Such Interest of each Member shall,
except as specifically  provided  herein,  be the percentage of the aggregate of
such  benefits or  obligations  specified  in this  Agreement  as such  Member's
Percentage Interest.

     (ccc) "Land" means the parcel of land located in Douglas County,  Colorado,
which parcel is described on Exhibit G attached hereto.

     (ddd) "Land Contract" means that certain Second Amended and Restated Vacant
Land Purchase and Sale  Agreement  dated March 23, 1995,  between  Mission Viejo
Company,  as Seller,  and The Feld  Company,  as  Purchaser,  as assigned to and
assumed by WPHC by that certain  Assignment and Assumption  Agreement - Purchase
Agreement dated May 2, 1995.

     (eee)  "Majority In Interest"  shall mean Members holding a majority of the
Percentage Interests.

<PAGE>

     (fff) "Managers" shall mean one or more managers. Specifically,  "Managers"
shall mean Feld or any other Persons that succeed such Manager in that capacity.
Managers  need not be  residents  of the State of  Colorado  or  Members  of the
Company.  References to the Manager in the singular or as him, her, it,  itself,
or other like references shall also, where the context so requires, be deemed to
include the plural or the masculine or feminine reference, as the case may be.

     (ggg) "Master Development" means a five-phase, gated apartment community to
be constructed on the Master Development Land,  including a central 23-acre park
containing  a  clubhouse,   swimming  pool  and  health  club.  The  approximate
anticipated  number  of units  in each  phase of the  Master  Development  is as
follows: Phase I -- 456; Phase II -- 304; Phase III -- 264; Phase IV -- 424; and
Phase V -- 352, plus 80 units  unallocated,  for a total of 1,880 units if fully
developed.

     (hhh)  "Master  Development  Land"  means the Land  described  on Exhibit H
attached hereto,  which land is all of the land to be sold and conveyed pursuant
to the Land Contract.

     (iii) "Material  Default" means a default by Feld in any of its obligations
hereunder  which in the  reasonable  judgment of WPHC has caused or is likely to
cause damages to WPHC of $250,000 or more.

     (jjj)  "Members"  shall mean Feld and WPHC and each of the  parties who may
hereafter become additional or substituted Members.

     (kkk) "Minimum Option Price" means $50,000.

     (lll) "Multi-Family  Project" shall mean an apartment project,  condominium
project, town- home project or other multi-family residential project.

     (mmm) "Net  Operating  Income"  means,  with respect to any given period of
time, the aggregate  Gross  Operating  Revenue for such period of time minus the
aggregate  Operating  Expenses  for such  period  of time.  Notwithstanding  the
foregoing,  in  connection  with the  calculation  of the  Completion  Fee,  Net
Operating Income shall be determined on an accrual basis for the relevant period
with the  following  additional  adjustments:  if  property  taxes do not  fully
reflect  the  completion  of the  Project,  then  the  property  taxes  shall be
increased to the amount of property  taxes that would have been assessed had the
Project been completed and included in the  calculation  of the property  taxes.
With respect to calculating  the Completion Fee only,  such  fully-assessed  tax
estimate shall be applied on a per-building basis beginning only upon receipt of
a certificate of occupancy for each building.

     (nnn) "NOI Construction Loan Interest Payments" has the definition given it
in Section 6.3 hereof.

<PAGE>

     (ooo)  "Operating Cash Flow" means with respect to any given period the Net
Operating  Income of the Company  actually  received  and  attributable  to such
period reduced by all debt service  charges and expenses  related to such period
and by  expenditures  required to be capitalized for federal income tax purposes
incurred during such period (other than Development Costs).

     (ppp) "Operating  Deficits" means, for any specified period, the greater of
0 or the following: (A) the interest payments, accruals and periodic charges and
expenses  on the  Construction  Loan for such  period to the extent  each of the
foregoing  exceeds  the amount  available  for such item under the  Construction
Loan; plus (B) the aggregate  Operating  Expenses for such period of time; minus
(C) Gross Operating Revenue for such period of time.

     (qqq) [INTENTIONALLY DELETED].

     (rrr)  "Operating  Expenses" shall mean with respect to any given period of
time all expenses of the Company in connection  with the  ownership,  operation,
leasing and occupancy of buildings in the Project,  which either are  rent-ready
or all or any portion of which are  occupied by  tenants,  attributable  to such
period of time as determined on an accrual basis,  excluding  interest  payments
and accruals on the Construction Loan but including, but not limited to, any and
all of the following: (i) general real estate taxes; (ii) special assessments or
similar charges; (iii) personal property taxes, if any; (iv) sales and use taxes
applicable to such  operating  expenses;  (v) cost of utilities for the Project;
(vi) maintenance and repair costs of the Project; (vii) operating and management
expenses and fees;  (viii)  premiums of insurance  carried on or with respect to
the  Project;  (ix) costs,  including  leasing  commissions,  advertisement  and
promotional  costs,  to obtain  leases and the cost of work  performed  to ready
space in the Project for occupancy  under leases;  (x)  accounting  and auditing
fees and costs,  attorneys' fees and other  administrative  and general expenses
and  disbursements  of the Company in connection with the ownership,  operation,
leasing and management of the Project;  (xi) expensed improvements in accordance
with the accounting practices of WPHC; (xii) an allocable share of the costs and
expenses of operating and maintaining the  Infrastructure,  excluding such costs
and  expenses  that  are  paid by the  owner of any  other  phase of the  Master
Development  or are paid from  operating  reserves of the  Infrastructure  owner
established in connection with the financing of the  Infrastructure  (the method
of allocation of such costs and expenses  shall be agreed upon by the Members at
or prior to the Construction Loan Closing);  and (xiii) any other costs, charges
or expenses incurred by the Company which are not Development Costs.

     (sss) "Option  Closing Date" means the date on which the Call Option or the
Put Option shall close.

     (ttt)  "Option  Price" means the greater of the Fair Market Value of Feld's
Interest and the Minimum Option Price.

<PAGE>

     (uuu)  "Outside  Date"  means the date  that is  twenty-eight  (28)  months
following the Construction  Loan Closing Date. Such Outside Date may be extended
by Force Majeure, but in no event by more than 120 days.

     (vvv) "Percentage  Interest" shall mean the following:  (i) with respect to
Feld, one percent  (1.0%);  and (ii) with respect to WPHC,  ninety-nine  percent
(99.0%).

     (www)  "Person"  shall  mean  any  individual  or  Entity,  and the  heirs,
executors,  administrators,  legal representatives,  successors,  and assigns of
such Person where the context so admits.

     (xxx)  "Plans  and  Specifications"  means the  for-construction  plans and
specifications   for  the   construction   of  the  Project,   which  plans  and
specifications  are to be prepared  and  approved by the Members as described in
Section 5.2.2 hereof.

     (yyy) "Pre-Existing Environmental Condition" means the presence, if any, of
Hazardous  Materials  on or about the Project  Land on the Initial  Closing Date
which at any subsequent time  constitutes a violation of  Environmental  Laws or
which  subjects or is reasonably  expected to subject the Company or its Members
or Managers to liability to any Person.

     (zzz) "Pre-Existing Environmental Condition Liability" means any liability,
loss,  damage or cost  incurred by the Company  prior to the Final  Closing Date
arising  from  a  Pre-Existing   Environmental   Condition,   including  without
limitation,  any increase in  Development  Costs or Operating  Expenses  arising
directly from a Pre-Existing Environmental Condition.

     (aaaa)  "Profits" and "Losses" for any Fiscal Year or other period means an
amount  equal to the  Company's  taxable  income or loss for such year or period
determined in accordance with Code Section 703(a) and the Regulations thereunder
with the following adjustments:

     (i) All items of income,  gain, loss and deduction of the Company  required
to be stated separately shall be included in taxable income or loss;

     (ii) Income of the Company  exempt from federal income tax shall be treated
as taxable income;

     (iii) Expenditures of the Company described in Code Section 705(a)(2)(B) or
treated as such expenditures under Regulation Section 1.704-1(b)(2)(iv)(i) shall
be subtracted from taxable income;

     (iv) The difference  between Basis and Asset Value shall be treated as gain
or loss upon the happening of any event  described in Article  1(h)(i),  (ii) or
(iii);

<PAGE>

     (v) Gain or loss resulting from the disposition of Property from which gain
or loss is recognized for federal  income tax purposes shall be determined  with
reference to the Asset Value of such Property;

     (vi) Depreciation  shall be determined based upon Asset Value instead of as
determined for federal income tax purposes; and

     (vii) Items which are specially allocated under Article 9 of this Agreement
shall not be taken into account.

     (bbbb)  "Project"  means  the  264-unit   apartment   complex  and  related
facilities  and  amenities to be  constructed  on the Project Land in accordance
with the Plans and Specifications. Project does not include the Infrastructure.

     (cccc) "Project  Budget" means the budget for  construction and development
of the Project by the Company.  An "Initial Project Budget is attached hereto as
Exhibit  I. As  described  in  Section  5.2.3  hereof,  in  connection  with the
Construction  Loan  Closing,  the Members  shall  agree upon the "Final  Project
Budget."

     (dddd) "Project Land" means the Land, excluding the Infrastructure Land.

     (eeee)  "Property"  means  all real and  personal  property,  tangible  and
intangible, owned by the Company.

     (ffff)  "Property  Management  Agreement"  means  the  Property  Management
Agreement  to be entered  into  between  the Company  and The Feld  Company,  an
Affiliate  of Feld,  in the form  attached  hereto as  Exhibit  J. The  Property
Management  Agreement  provides that it shall terminate on the first to occur of
the following:  (i) at the option of either party, upon the Removal of Feld; and
(ii) after the Final Closing Date,  upon 30 days' written  notice of termination
from one party to the other.

     (gggg)  "Put  Option"  means the put  option of Feld  with  respect  to the
Interest of Feld as described in Section 16.2.2 hereof.

     (hhhh)  "Regulations"  means the federal income tax regulations,  including
temporary (but not proposed) regulations, promulgated under the Code.

     (iiii)  "Removal"  means the  removal of Feld  pursuant  to  Section  12.12
hereof.

     (jjjj) "Removal Event" has the meaning set forth in Section 12.12 hereof.

     (kkkk)  "Restricted  Party" has the  meaning  set forth in  Section  14.6.4
hereof.

<PAGE>

     (llll) "Sales or Refinancing  Cash Flow" means,  for any given period,  the
cash proceeds  received from the Company from the sale,  other  disposition,  or
refinancing of any or all of the Property  (including  payments of principal and
interest on obligations  received by the Company in connection with such sale or
other   disposition)  in  excess  of  amounts  necessary  to  discharge  Company
obligations with respect to such Property.

     (mmmm) "Substantial Completion" means satisfaction of all of the following:
(i) completion of  construction  of the Project in compliance with the Plans and
Specifications  (subject  only to minor and  inconsequential  field  changes and
other changes  consented to by WPHC, punch list items and seasonal items such as
landscaping  which do not  interfere  with the occupancy and use of the Project,
and  liens  of  subcontractors,  materialmen,  and  other  providers  of  labor,
equipment,  material and/or services to the Property and the Project not yet due
and  payable or for which  either a surety  bond or title  insurance  reasonably
acceptable to WPHC is provided by Feld),  as evidenced by temporary or permanent
certificate(s)  of  occupancy,  or the  equivalent,  issued  by  the  applicable
governmental  authority for all buildings  which are part of the Project,  which
permit the occupancy and use of all the apartment  units;  and (ii) each unit in
the Project having been made  rent-ready,  including,  without  limitation,  the
installation of all appliances (including, without limitation, refrigerators and
ranges),  light fixtures,  floor coverings and window coverings  required by the
Plans and  Specifications  or  otherwise  required for the use,  occupancy,  and
operation of the units.

     (nnnn)  "Substitute  Member" shall mean any Person who or which is admitted
to the Company as a substitute Member pursuant to Colo. Rev. Stat.ss.7-80-702(2)
(1991), as it may be amended.

     (oooo) "Total Budgeted Development Costs" means the Total Development Costs
as shown on the Final Project Budget.

     (pppp)  "WRP"  shall  mean  Wellsford  Real  Properties,  Inc.,  a Delaware
corporation.

     (qqqq) "WPHC" means Wellsford Park Highlands Corp., a Colorado corporation.

2    FORMATION OF COMPANY

     2.1 FORMATION. On May 13, 1998, the parties hereto caused the Company to be
organized as a Colorado limited liability company under and pursuant to the Act.

     2.2 NAME.  The name of the Company is Silver  Mesa at Palomino  Park LLC, a
Colorado limited liability company.

     2.3 PRINCIPAL  PLACE OF BUSINESS.  The  principal  place of business of the
Company  within the State of  Colorado  shall be 1623 Blake  Street,  Suite 270,
Denver, Colorado 80202. The

<PAGE>

Company may locate its places of  business  and  registered  office at any other
place or places as the Managers may from time to time deem advisable.

     2.4 REGISTERED OFFICE AND REGISTERED AGENT. The Company's registered office
shall be at the office of its registered  agent at Corporation  Service Company,
1560 Broadway,  Denver,  Colorado  80202 and the name of its initial  registered
agent at such address shall be Corporation Service Company. The registered agent
shall provide promptly to the Managers copies of all written notices,  summonses
and  other  documents  received  by  the  registered  agent  on  behalf  of  the
corporation (other than general  advertising and promotional  materials) and, in
any event,  such copies shall be provided not more than ten (10)  business  days
after  receipt  thereof by such  registered  agent.  The Managers  shall have no
liability  for the  effects  of any  failure by the  registered  agent to timely
deliver any such items to the  Managers  except to the extent the  Managers  had
actual notice of such items prior to delivery by the  registered  agent.  In any
contracts,  subcontracts, loan agreements or other documents entered into by the
Company,  the Managers  shall  provide that the addresses for notice to be given
under  any such  agreements  shall  include  both the  registered  agent and the
Managers.

     2.5 ARTICLES OF  ORGANIZATION.  The Articles of Organization  filed for the
Company with the Secretary of State of the State of Colorado  (the  "Articles of
Organization")  are hereby  adopted  and  incorporated  by  reference  into this
Agreement.   In  the  event  of  any  inconsistency   between  the  Articles  of
Organization and this Agreement, the terms of the Articles of Organization shall
govern.

     2.6 TERM.  The term of the Company shall be thirty (30) years from the date
of filing of Articles of  Organization  with the Secretary of State of the State
of Colorado,  unless the Company is earlier  dissolved in accordance with either
the provisions of this Agreement or the Act.

3    BUSINESS OF COMPANY

     3.1 PERMITTED BUSINESSES. The business of the Company shall be:

     3.1.1 To acquire the Land and to construct,  develop, own, operate, manage,
lease, finance, improve and sell or otherwise dispose of the Project; and

     3.1.2 To engage in all  activities  necessary,  customary,  convenient,  or
incidental to any of the foregoing.

     3.2 OTHER  ACTIVITY OR BUSINESS.  The Company shall not engage in any other
activity or business unless approved by all Members.

<PAGE>

4    CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS AND LOANS TO THE COMPANY

     4.1 CAPITAL CONTRIBUTIONS. Subject to the provisions of this Agreement, the
Members shall be obligated to make the following  Capital  Contributions  to the
Company:

     4.1.1 CAPITAL  CONTRIBUTIONS  BY FELD. At the Initial  Closing,  Feld shall
make a Capital Contribution of $1,000.

     4.1.2 CAPITAL  CONTRIBUTIONS BY WPHC. WPHC shall make the following Capital
Contributions:

     (a) At the  Initial  Closing,  WPHC  shall make a Capital  Contribution  by
conveying the Land to the Company,  which Capital Contribution the parties agree
shall be valued at $2,127,999 for the Land purchase  price plus  pre-development
costs and carrying costs of $1,305,759, for a total of $3,433,758.

     (b) WPHC shall  have the right,  but not the  obligation,  to make  Capital
Contributions  from  time to time in its sole and  absolute  discretion  to fund
Operating  Deficits or other expenses  incurred by the Company.  Notwithstanding
the  foregoing,  so long as:  (i) Feld is not in  material  default  under  this
Agreement,  and (ii)  Feld  has  personally  guaranteed  the  Construction  Loan
pursuant to Section 5.2.4 and is not in material  default  under such  guaranty,
then WPHC shall be obligated to make Capital Contributions to fund: (y) prior to
Substantial  Completion,  the amount (if any) by which Operating Expenses exceed
Gross Operating  Revenue,  and (z) Operating Deficits which were incurred during
the  period  between   Substantial   Completion  and  payment  in  full  of  the
Construction Loan.

     (c) At the Final Closing and contingent on satisfaction of all of the Final
Closing  Funding   Conditions,   WPHC  shall  make  the  Final  Closing  Capital
Contribution  in an  amount  equal  to the  following:  (i) the  Total  Budgeted
Development Costs, minus (ii) any Capital  Contributions made prior to the Final
Closing  Date by WPHC,  plus (iii) any  distributions  made to WPHC  pursuant to
Section 10.3 hereof,  minus (iv) an amount equal to fifty  percent (50%) of Cost
Savings,  if any; or WPHC shall otherwise  satisfy its obligations under Section
8.3.1 hereof.

WRP shall  guaranty the  obligation  of WPHC to make the Final  Closing  Capital
Contribution by executing the Guaranty attached hereto.

     4.2 WITHDRAWAL OR REDUCTION OF MEMBERS' CONTRIBUTIONS TO CAPITAL.

     4.2.1 A Member shall not receive out of the Company's  Property any part of
such Member's Capital Contributions in violation of the Act.

<PAGE>

     4.2.2  A  Member,  irrespective  of the  nature  of such  Member's  Capital
Contribution,  has the right to demand and receive  only cash in return for such
Member's Capital Contribution and then only in accordance with the terms of this
Agreement.

     4.3 DEVELOPMENT  DEFICIT  PAYMENTS.  Feld shall have the obligation to make
Development  Deficit  Payments  when and as  required  under  Article  6 of this
Agreement.

     4.4 OPERATING DEFICIT PAYMENTS. [INTENTIONALLY DELETED].

     4.5 ADDITIONAL CAPITAL CONTRIBUTIONS. Except as expressly described in this
Article 4, no Member has an  obligation  to make any  Capital  Contributions  or
loans or advances to the Company.

     4.6 MISCELLANEOUS.

     4.6.1 NO INTEREST ON CAPITAL  CONTRIBUTION.  No Member shall be entitled to
or shall receive interest on such Member's Capital Contribution.

     4.6.2 NO  WITHDRAWAL  OF CAPITAL  CONTRIBUTION.  No Member may withdraw any
capital from the capital of the Company except as expressly  provided  herein or
under the Act.

     4.6.3 NO PRIORITY OF RETURN OF CAPITAL  CONTRIBUTION.  No Member shall have
any  priority  over any other  Member with  respect to the return of any Capital
Contribution, except as expressly provided herein.

     4.6.4 NO THIRD PARTY  BENEFICIARIES.  The  provisions of this Article 3 are
not  intended  to be for the  benefit  of and shall not confer any rights on any
creditor or other  Person  (other than a Member in such  Member's  capacity as a
Member) to whom any debts, liabilities or obligations are owed by the Company or
any of the Members.

5    INITIAL CLOSING; INFRASTRUCTURE LAND CLOSING; CONSTRUCTION LOAN CLOSING

     5.1 INITIAL CLOSING. The Members of the Company shall cooperate to cause an
Initial Closing at which the following shall occur:

     5.1.1 LAND  CLOSING.  The Company  shall  acquire  the Land from WPHC.  The
Company shall obtain an Owner's  Policy of Title  Insurance from a title insurer
acceptable to the Members (the "Title Company").

     5.1.2  REIMBURSEMENT  OF FELD  EXPENSES.  Notwithstanding  anything  to the
contrary herein, only those Reimbursable Expenses which constitute actual, third
party costs of Feld shall be

<PAGE>

paid  at  the  Initial   Closing.   Any   Reimbursable   Expenses  for  in-house
architectural  services or other  services  provided by Feld or The Feld Company
("In House Reimbursable Expenses") shall be paid only if and when a Construction
Loan Closing occurs.  In connection with any request for the payment of In House
Reimbursable Expenses, Feld shall submit to WPHC for approval the following: (i)
detailed  invoices  setting forth the services  performed and work  delivered by
Feld and its Affiliates;  and (ii) receipts,  releases and documents of transfer
and conveyance in connection  with the work  performed and services  provided as
may be reasonably  requested by WPHC.  The payment of any In House  Reimbursable
Expenses  shall be subject to the approval of WPHC,  which approval shall not be
unreasonably  withheld.  If Feld is  removed  or  withdraws  as a  Member  and a
Construction  Loan  Closing  has not  occurred  by the date of such  removal  or
withdrawal,  then the Company  shall have no  obligation  to pay Feld,  The Feld
Company or their Affiliates for any In House  Reimbursable  Expenses.  Except as
set forth in this Section  5.1.2,  neither Feld nor The Feld Company  shall have
any right of reimbursement  from the Company with respect to any other costs and
expenses  incurred in connection  with the Project prior to the Initial  Closing
Date.

     5.1.3  APPROVAL OF LAND  DOCUMENTS.  The Company shall not proceed with the
Initial Closing unless and until the form of documents related to the closing of
the  acquisition  of the  Land by the  Company  have  been  approved  by all the
Members.

     5.1.4 PLEDGE OF INTEREST.

     5.1.4.1 As collateral for the performance by Feld of its obligations  under
this Agreement,  at the Initial Closing Feld shall execute a Pledge and Security
Agreement in the form of Exhibit L attached  hereto,  wherein Feld grants WPHC a
first lien  security  interest  in Feld's  Interest in the Company and in Feld's
right to receive all fees,  payments and  distributions  from the  Company.  Any
uncured  default under this Agreement  shall  constitute an Event of Default (as
such term is defined in said Pledge and  Security  Agreement)  under said Pledge
and Security Agreement,  and any Event of Default under said Pledge and Security
Agreement shall be a default under this Agreement.

     5.1.4.2 As collateral for the  performance by WPHC of their  obligations to
make Capital  Contributions  as required  under this  Agreement,  at the Initial
Closing  WPHC  shall  execute a Pledge  and  Security  Agreement  in the form of
Exhibit M attached hereto, wherein it grants Feld a first lien security interest
in its  Interest in the  Company and in its right to receive all fees,  payments
and  distributions  from the Company.  Any uncured  default under this Agreement
shall constitute an Event of Default (as such term is defined in said Pledge and
Security Agreement) under said Pledge and Security  Agreement,  and any Event of
Default under said Pledge and Security  Agreement  shall be a default under this
Agreement.

<PAGE>

     5.2 CONSTRUCTION PROCEDURES AND CLOSING.

     5.2.1 PREDEVELOPMENT ACTIVITIES.

     5.2.1.1 Feld shall  pursue,  with  reasonable  diligence and subject to the
reasonable direction of WPHC, all approvals required to commence construction of
the  Project.  Subject to the input and  approval  of WPHC,  Feld shall  develop
appropriate  site  plans  and other  plans as may be  required  to  obtain  such
approvals.  Feld shall not submit any proposed  plans or other  materials to any
governmental agency without the prior approval of WPHC. In addition,  Feld shall
not incur any third  party  expense  without the prior  approval  of WPHC.  WPHC
agrees to  reasonably  cooperate  with Feld in obtaining  the  Approvals,  which
cooperation  shall  include,  without  limitation,  prompt review of any matters
submitted  to WPHC and prompt  response to Feld in  connection  with any matters
submitted to WPHC.  Copies of all  reports,  studies and other  information  and
material  generated for or on behalf of Feld in  connection  with its review and
evaluation  of the Property  shall  promptly be  delivered  to WPHC,  including,
without  limitation,  the  full  text of all  drawings,  reports  and  memoranda
supplied by engineers and other  consultants  and any  memoranda of  discussions
with governmental officials and neighborhood groups.

     5.2.1.2  Feld  shall  prepare  and  submit  to WPHC for a  approval  a pre-
development  budget for the activities of the Company prior to the  Construction
Loan  Closing  Date.  If and when WPHC  approves  in  writing a  pre-development
budget,  Feld  shall be  authorized  to  incur  costs in  accordance  with  such
pre-development  budget  and  WPHC  shall be  obligated  to fund  such  approved
pre-development budget.

     5.2.2 PLANS AND SPECIFICATIONS.  Prior to the Construction Loan Closing and
after  consultation  with  WPHC,  Feld  shall  cause  to  be  prepared  detailed
construction  Plans and  Specifications  for the Project,  and shall submit such
Plans and  Specifications  to WPHC for  approval.  If and when WPHC approves the
Plans and  Specifications,  the Members shall initial a description of the Plans
and Specifications and attach the description to this Agreement as Exhibit N.

     5.2.3  PROJECT  BUDGET.  Prior to the  Construction  Loan Closing and after
consultation with WPHC, Feld shall cause to be prepared a revised Project Budget
based on the approved  Plans and  Specifications,  and shall submit such Project
Budget to WPHC for  approval.  If and when WPHC  approves  the  revised  Project
Budget,  the Members  shall  initial such  Project  Budget and attach it to this
Agreement as Exhibit O. Upon approval, such revised Project Budget shall for all
purposes be the "Final Project Budget."

     5.2.4  OBTAINING A  CONSTRUCTION  LOAN.  Feld shall use its best efforts to
cause the Company to obtain a Construction  Loan for construction of the Project
on terms and from a Construction  Lender  acceptable to the Members,  including,
but not  limited to, the  following:  (a) the  Construction  Loan amount must be
acceptable to WPHC and  sufficient to reimburse  WPHC at the  Construction  Loan
Closing for the acquisition cost of the Project Land and any advances it made to
the Company for  predevelopment  activities;  (b) the  interest  rate shall be a
variable rate equal to

<PAGE>

LIBOR plus a spread reasonably  acceptable to the Members;  (c) the Construction
Loan Closing must take place on or before December 31, 1998, provided,  however,
such date shall be extended to a date not later than January 31,  1999,  if Feld
is diligently pursuing his obligations and if the delay is not attributable to a
default by Feld (such date as it may be  extended  is  referred to herein as the
"Construction  Loan Outside  Date");  (d) Feld shall  personally  guarantee  the
Construction  Loan and shall  guarantee  Operating  Deficits,  all to the extent
required by the  Construction  Lender;  (e) the  Construction  Loan shall have a
maturity  date  of at  least  twenty-eight  (28)  months  from  the  date of the
Construction  Loan  Closing;  and  (f)  the  other  terms  shall  be  reasonably
acceptable to WPHC.

     5.2.5  CONSTRUCTION LOAN DOCUMENTS.  The Company shall not proceed with the
Construction  Loan Closing unless and until the form of documents related to the
Construction  Loan have been  approved  by all the  Members.  There  shall be no
modification  to the  Construction  Loan  documents  without  the prior  written
approval of all Members.

     5.2.6 APPROVED AFFILIATE  AGREEMENTS.  On or prior to the Construction Loan
Closing Date and only with the approval of all of the Members, the Company shall
enter into (a) a  construction  management  agreement  with Tricor  Construction
Company, an Affiliate of Feld ("Contractor"),  (b) a construction  contract with
Contractor,  and (c) the  Architect's  Agreement  with  Architect.  Except for a
reasonable  fee to be  paid  pursuant  to the  Architect's  Agreement  with  the
approval of WPHC, no fees or other compensation, profit or cost savings shall be
paid to Contractor under such agreements except the fees provided for in Article
7 below.  The Company  hereby agrees that  Contractor may enter into a landscape
design  contract  and an  interior  design  contract  with  Architect,  and  all
subcontracts  entered into by Contractor  and/or  Architect shall be included in
the  Final  Project  Budget,   but  such  subcontracts  shall  provide  for  the
subcontractor  to look only to  Contractor  or  Architect,  as  applicable,  for
payment under the subcontracts. Fees or other profit, compensation or sharing of
cost savings under such subcontracts shall not exceed the amount a prudent owner
would pay in a bona fide arm's length  transaction  after obtaining  competitive
bids. The agreements described in this Section 5.2.6, together with the Property
Management   Agreement,   are   hereinafter   called  the  "Approved   Affiliate
Agreements."  Neither Feld nor  Contractor  nor  Architect  shall enter into any
other agreements with parties  affiliated with Feld without specific  disclosure
to all Members in writing of such  affiliation and without prior written consent
of all the Members in each instance.  In the event of any conflict  between this
Agreement and such Approved Affiliate Agreements,  this Agreement shall control.
In the event of an uncured  default by Feld under this  Agreement,  the Approved
Affiliate  Agreements  may be terminated  at the option of WPHC.  Any default by
Feld under any Approved Affiliate Agreement which is not timely cured shall be a
default  hereunder.  There shall be no  modification  to the Approved  Affiliate
Agreements  without the prior  written  approval of all Members.  Each  Approved
Affiliate  Agreement  shall  provide  that the  Company  shall have the right to
terminate  such  agreement  upon the Removal of Feld  without  such  termination
constituting a default.

     5.2.7 FELD GUARANTEE.  Feld shall personally  guarantee to the Construction
Lender the payment and  performance of all  obligations of the Company under the
Construction Loan, subject to such limitations on liability of Feld and guaranty
termination provisions as are acceptable

<PAGE>

to the  Construction  Lender.  Subject to the  requirements of the  Construction
Lender,  Feld's  obligation  to the  Company and to WPHC to  guarantee  interest
payments on the Construction  Loan applies to payments which are due and payable
through Substantial  Completion;  Feld shall not be responsible for guaranteeing
payments which come due after  Substantial  Completion.  Nothing in this Section
5.2.7 shall  relieve Feld of any other  obligations  which accrue prior to Final
Completion.

     5.2.8 [INTENTIONALLY DELETED]

     5.2.9 PROPERTY MANAGEMENT AGREEMENT.  At the Construction Loan Closing, the
Company  shall  enter  into  the  Property  Management  Agreement  with The Feld
Company, an Affiliate of Feld.

     5.3 INFRASTRUCTURE LAND CLOSING AND BOND FINANCING OF INFRASTRUCTURE. It is
the intent of the Members that the Infrastructure Land be acquired and developed
by  Palomino  Park  Public  Improvements  Corporation,   a  Colorado  non-profit
corporation  ("PPPIC"),  which has  financed  acquisition  and  development  and
certain land and Infrastructure  improvements through the issuance of tax-exempt
bonds (the "Bonds").

     5.3.1 [INTENTIONALLY DELETED].

     5.3.2   CONTROL  OVER  MATTERS   RELATED  TO   INFRASTRUCTURE   AND  BONDS.
Notwithstanding  anything  to the  contrary  herein,  WPHC  shall  have sole and
exclusive  control over all decisions of the Company  relating to the Bonds,  to
the  subdivision  and  sale of the  Infrastructure  Land  and to the  financing,
construction, use and development of the Infrastructure. In order to procure for
the Project the benefits of the use and  enjoyment of the  Infrastructure  to be
constructed by PPPIC, the Company shall enter into such agreements with PPPIC as
WPHC may require, in form and content acceptable to WPHC in its sole discretion,
providing, among other things, for the encumbering of the Land by liens securing
payment  of the Bonds,  operation  and  maintenance  of the  Infrastructure  and
satisfaction  of certain  indemnification  obligations  undertaken by PPPIC with
respect to the Infrastructure.

     5.3.3  CONSTRUCTION  OF  INFRASTRUCTURE.  An Affiliate of Feld, has entered
into  one  or  more  agreements  and  may  enter  into   additional   agreements
(collectively,  the "Infrastructure  Improvements Agreement") with PPPIC (or its
contractor)  to construct the  Infrastructure  for a guaranteed  maximum  price,
including a fee to Feld not to exceed  three  percent  (3%) of the hard costs of
construction of the Infrastructure.  A default by Feld in the performance of its
obligations  under that  contract  not cured within any  applicable  cure period
shall  constitute a default  under this  Agreement.  WPHC may in its  discretion
cause the phasing of the construction of the Infrastructure Improvements.

     5.4 FAILURE OF CONSTRUCTION  LOAN CLOSING TO OCCUR. Feld covenants to cause
the Construction Loan Closing to occur by the Construction Loan Outside Date. If
for  any  reason  the  Construction   Loan  Closing  has  not  occurred  by  the
Construction Loan Outside Date, then WPHC

<PAGE>

shall have the right to remove  Feld as a Member and  Manager of the  Company in
accordance with the provisions of Section 12.12.

6    DEVELOPMENT OF PROJECT; OPERATIONS PRIOR TO THE FINAL CLOSING DATE

     6.1 DUTIES OF FELD. Feld shall have the authority,  duty and the obligation
to:

     6.1.1 act on behalf of the Company in relation with any governmental agency
or authority,  the Construction  Lender,  and all contractors and subcontractors
with respect to all matters  relating to the construction and development of the
Project;

     6.1.2 use its best efforts to cause the Company to obtain a commitment  for
the Construction Loan on terms and conditions  acceptable to all the Members and
satisfy the conditions for the Construction Loan Closing;

     6.1.3   coordinate   with  Architect  the  preparation  of  the  Plans  and
Specifications,  ensure that the Plans and Specifications are in compliance with
all applicable codes,  laws,  ordinances,  rules and regulations,  and recommend
alternative solutions whenever design details affect construction feasibility or
schedules;

     6.1.4  negotiate  all  necessary   contracts  and   subcontracts   for  the
construction of the Project and monitor disbursement and payment of amounts owed
the Architect, Contractor and subcontractors;

     6.1.5 choose the products and materials necessary to equip the Project in a
manner which satisfies all requirements of the Construction Lender and the Plans
and Specifications;

     6.1.6  secure  all  building  code  approvals  and obtain  certificates  of
occupancy for all of the apartment units of the Project;

     6.1.7  cause the  Project to be  commenced  not more than  thirty (30) days
after the Construction Loan Closing,  or by such earlier date as may be required
under the Construction Loan documents, and completed in a prompt and expeditious
manner,  consistent  with  good  workmanship,  and in  compliance,  without  any
material deviation, with the following:

     (a) the Plans and  Specifications as they may be amended in accordance with
the terms of this Agreement;

     (b) any and all zoning  regulations,  county ordinances,  including health,
fire and safety  regulations,  and any other requirements of federal,  state and
local laws, rules,  regulations and ordinances applicable to construction of the
Project;

<PAGE>

     6.1.8  cause  to be  performed  in a  diligent  and  efficient  manner  the
following:

     (a) construction of the Project pursuant to and in accordance,  without any
material deviation, with the Plans and Specifications, free and clear (except as
otherwise permitted herein) of all mechanics and materialmen's liens; and

     (b) general  administration and supervision of construction of the Project,
including but not limited to activities of  subcontractors  and their  employees
and agents,  and others employed as to the Project in a manner which complies in
all material respects with the Construction  Loan, the Plans and  Specifications
and the Construction Procedures;

     6.1.9  keep,  or cause  to be kept,  accounts  and cost  records  as to the
construction  of the Project and make available to WPHC,  during normal business
hours copies of all material contracts and subcontracts;

     6.1.10 provide regular  monitoring,  and periodically (at least monthly, or
more often if  requested  by any Member)  update the Project  construction  time
schedule  and  summarize  potential  variances  between  scheduled  and probable
completion dates, the schedule for work not started or incomplete;

     6.1.11  revise and refine  the  approved  estimate  of  Development  Costs,
incorporate  changes as they occur,  and develop cash flow reports and forecasts
as needed;

     6.1.12  develop and implement a system for review and  processing of change
orders as to construction of the Project;

     6.1.13  develop and implement a procedure for the review and  processing of
applications by subcontractors for progress and final payments; and

     6.1.14  record the  progress  of the Project  and submit  written  progress
reports to WPHC,  including  the  percentage  of  completion  and the number and
amounts of change orders.

     6.2  CONSTRUCTION  COMPLETION.  Feld hereby  unconditionally  covenants and
warrants  as  follows:  (i) the  Project  shall  be  constructed  in a good  and
workmanlike  manner and all work shall be performed in accordance with the terms
of Section  6.11  hereof;  (ii) Feld shall  fully and timely  perform all of its
other obligations under this Agreement;  and (iii) subject to Force Majeure,  it
shall cause (a) Substantial Completion of the Project to occur within twenty-one
(21) months after the  Construction  Loan Closing Date; (b) Final  Completion to
occur within  twenty-four (24) months after the Construction  Loan Closing Date;
and (c) all Final Closing  Funding  Conditions  shall be satisfied  prior to the
Outside Date.

     6.3 DEVELOPMENT DEFICIT GUARANTY. Feld hereby guarantees Feld shall advance
to or for the account of the Company amounts equal to all  Development  Deficits
at such time as such

<PAGE>

Development  Deficits occur ("Development  Deficit  Payments").  Feld shall make
Development  Deficit  Payments  required  of him by the  earlier of (A) the date
required  to  avoid a  default  under  Company  obligations,  including  without
limitation the Construction  Loan, and (B) the date required to keep all sources
of funding for the Project "in  balance" as adequate  sources of funds to timely
cause Final Completion of the Project and  satisfaction of other  obligations of
the Company.  In any event,  all  Development  Deficits shall be paid by Feld in
full prior to the Final Closing Date. All Development  Deficit  Payments made to
the Company shall be non-reimbursable  payments,  and Feld shall not be entitled
to any repayment from the Company (unless advances of the Construction  Loan are
later available to reimburse Feld for the same), and the Capital Account of Feld
shall not be affected by any Deficit Payments made by Feld. Without limiting the
generality of the foregoing, Feld shall not be entitled to reimburse himself for
any  Development  Deficits.  Notwithstanding  anything  to the  contrary in this
Agreement,  the Members agree that,  prior to Substantial  Completion,  all debt
service  expenses  shall be paid  only  from the  funds  reserved  for  Budgeted
Construction Loan Interest and from Development  Deficit Payments,  not from any
other  funds  of the  Company  (including,  without  limitation,  Net  Operating
Income); provided,  however, that Net Operating Income shall be used to pay debt
service expenses if so requested by the  Construction  Lender (such payments are
herein referred to as "NOI  Construction Loan Interest  Payments").  If any such
payments  are  requested  by the  Construction  Lender,  such  payments  will be
included in the  calculation  of the  Completion  Fee to the extent any Budgeted
Construction  Loan  Interest  remains  undisbursed.  Without  the prior  written
consent of WPHC, the funds reserved as Budgeted  Construction Loan Interest will
be used for the sole purpose of debt service expenses on the  Construction  Loan
and  for no  other  purpose  (including,  without  limitation,  the  payment  of
Development Deficits).  Any funds remaining after the payment of debt service on
the Construction Loan will be treated as net Cash Flow.

     6.4 OPERATING DEFICIT GUARANTY. [INTENTIONALLY DELETED].

     6.5  LIABILITIES OF THE COMPANY.  Feld covenants that by the earlier of the
Final  Closing  Date or the  Outside  Date,  provided  WPHC  has  satisfied  its
obligation  to make the Final  Closing  Capital  Contribution,  or has otherwise
satisfied  its  obligation  under  Section  8.3.1  hereof,  Feld shall cause the
Company to have no unsatisfied debts or liabilities other than obligations under
service contracts and other agreements relating to the Project permitted by this
Agreement  related  to the  period  after the Final  Closing,  or related to the
period  prior to the Final  Closing if adequate  cash  reserves  are held by the
Company to pay such liabilities.

     6.6 CONSTRUCTION  CONTRACTS.  Feld shall obtain and the Company shall enter
into such contracts,  agreements or  obligations,  as are necessary to construct
and  develop the  Project.  Feld shall not,  without the consent of WPHC,  which
consent shall not be unreasonably  withheld,  do or permit to be done any of the
following:

     6.6.1  Enter  into or cause the  Company  to enter  into any other  primary
contract relating to the construction of the Project; and

<PAGE>

     6.6.2 Amend or modify any Approved Affiliate Agreements.

     6.7  ADMINISTRATION  OF THE  CONSTRUCTION  LOAN. Feld shall  administer the
Construction  Loan  on  behalf  of  the  Company  and  in  accordance  with  the
Construction Procedures. The Company shall engage the Construction Consultant to
monitor the progress of  construction of the Project and to review draw requests
on behalf of WPHC.  Feld shall  cooperate with the  Construction  Consultant and
shall  provide  access to the  Construction  Consultant  for  inspection  of the
construction work of the Project as it progresses. Feld shall approve and submit
Construction  Loan draw  requests  to the  Construction  Lender on behalf of the
Company,  which  requests  shall be  accompanied  by those items of  information
required by the  Construction  Lender and the Title Company.  Copies of all draw
requests  and of the monthly  construction  ledger  shall be  delivered  to WPHC
simultaneously  with delivery to the  Construction  Lender.  If the Construction
Consultant  determines  that a draw request is not  justified on a percentage of
completion basis and the draw would result in construction  funding being out of
balance  by an  amount  in  excess of  $250,000,  WPHC  shall  have the right to
disapprove  such draw request in its sole  discretion  unless Feld modifies such
draw  request  to  correspond  to  percentage  of  completion   and/or  makes  a
Development  Deficit Payment such that the Construction Loan shall not be out of
balance by more than $250,000.  After any such  disapproval of a draw request by
WPHC,  all  subsequent  draw requests  shall require the prior  approval of WPHC
unless and until such right to prior approval is waived in writing by WPHC.

     6.8  CHANGE  ORDERS.  No  change  orders  with  respect  to the  Plans  and
Specifications  may be made without the prior  written  consent of WPHC,  except
that Feld shall have the right to approve  minor change orders which comply with
the  Construction  Procedures,  do not have a  material  adverse  effect  on the
Project,  do not  increase  Total  Development  Costs,  do not reduce the amount
available from the Construction Loan for payment of interest on the Construction
Loan,  and do not exceed  $10,000 as to any one change  order or $250,000 in the
aggregate.  Unless expressly approved in writing by all Members, no change order
shall be  permitted  or approved  that would cause  total  Development  Costs to
exceed Total Budgeted Development Costs.

     6.9  RETAINAGE.  Feld  shall  cause all  agreements  with  contractors  and
subcontractors  to provide for retainages at levels  acceptable to  Construction
Lender  and the  release of  retainages  as set forth in the  Construction  Loan
documents as executed at the Construction Loan Closing.

     6.10  AGREEMENTS WITH  AFFILIATES.  Feld shall cause the Company to enforce
each  Approved  Affiliate  Agreement  to which the Company is a party as would a
prudent manager of a limited liability company,  and Feld shall cause each other
Approved  Affiliate  Agreement  to be enforced  in a prudent  manner and for the
benefit of the Company.  Feld hereby  agrees,  for himself and on behalf of each
Person affiliated with Feld that is a party to an Approved Affiliate  Agreement:
(i) in the  event  of any  conflict  between  this  Agreement  and any  Approved
Affiliate  Agreement,  this Agreement  shall  control;  (ii) in the event of any
uncured  material  default by Feld under this Agreement,  the Company shall have
the right to terminate any or all of the Approved Affiliate Agreements; (iii) an
uncured  default by Feld or any person  affiliated  with Feld under an  Approved
Affiliate Agreement shall constitute a default by Feld under this Agreement; and
(iv) Feld shall

<PAGE>

defend,  indemnify and hold the Company  harmless with respect to the effects of
any default by any Person  affiliated  with Feld under such  Approved  Affiliate
Agreements,  including,  without limitation, any mechanics liens with respect to
claims under any Approved Affiliate Agreements.

     6.11  WARRANTY  BY FELD.  If,  within  one (1) year after the date of Final
Completion  of the  Project,  any  of  the  structural  or  non-structural  work
performed to construct the Project is found to be materially defective or not in
accordance in all material respects with the Plans and  Specifications  and with
all applicable  building codes, laws, rules and regulations,  Feld shall correct
or shall cause the construction contractor to correct such defect promptly after
receipt of written notice from WPHC to do so, unless WPHC has  previously  given
Feld specific written  acceptance of such defective  condition.  With respect to
portions of the work first performed after Final Completion,  this period of one
(1) year shall be extended by the period of time between  Final  Completion  and
the actual  performance  of the work.  The  obligation  under this Section shall
survive  acceptance of the work  performed to construct the Project.  WPHC shall
give such notice  promptly  after  discovery  of the  condition.  In the event a
material  defect is  discovered  more than one (1) year  after the date of Final
Completion,  as such period may be extended  under this Section  6.11,  and such
defect was known to Feld or a Person  affiliated with Feld and was not disclosed
to WPHC or was intentionally  concealed by Feld or such affiliated Person,  then
Feld shall  promptly take such action as may be necessary at Feld's sole expense
to correct such  defective  work.  WPHC shall report to Feld within  thirty (30)
days after discovery any such defective  condition  discovered more than one (1)
year after Final  Completion,  as such period may be extended under this Section
6.11. Nothing contained herein shall require Feld to correct defective work that
is discovered  more than three (3) years  following  Final  Completion,  as such
period may be extended under this Section 6.11.

     6.12  INSURANCE.  Feld  shall  at all  times  keep in force  the  following
policies of insurance naming the Company as the insured:

     6.12.1 During the construction period (which ends on the date a certificate
of occupancy for each  building  comprising  the Project is issued),  "Builder's
Risk" insurance as required by the holder(s) of the Construction Loan;

     6.12.2  After  issuance of a  certificate  of occupancy  for each  building
comprising  the  Project,  all risk  property  and,  if  applicable,  boiler and
machinery  insurance  against  loss or damage  to the  Property  or the  Project
(including  contents)  including  but not limited to fire and extended  coverage
perils (but excluding flood and earthquake unless either or both are required by
the Construction  Lender) as WPHC may from time to time require, but in no event
less  than  one  hundred  percent  (100%)  of the full  replacement  cost of the
Property or the Project  without  deduction  for physical  depreciation,  or the
unpaid balance of any loans secured by the Property or the Project, whichever is
greater;

     6.12.3  After  issuance of a  certificate  of occupancy  for each  building
comprising  the  Project,  insurance  against the loss of "rental  value" of the
improvements  on a "rented or vacant  basis"  arising out of the perils  insured
against pursuant to Section 6.12.2 above, in any reasonable

<PAGE>

amount  required  by WPHC but in no event  less  than 100% of one  year's  gross
"rental value" of the improvements with co-insurance  waived.  "Rental value" as
used  herein is defined  as the sum of (A) the total  anticipated  gross  rental
income from tenant occupancy of the Project, (B) the amount of all charges which
are the  legal  obligation  of  tenants,  and (C) the fair  rental  value of any
portion of the Project occupied by the Company, if any; and

     6.12.4 At all times,  (i)  commercial  general  liability  insurance  in an
amount of not less than Five Million  Dollars  ($5,000,000)  against  claims for
personal injury, death or property damage occurring on, in or about the Property
or the Project or arising  from or connected  with use,  conduct or operation of
the Company's  business in the amount from time to time  required by WPHC;  (ii)
automobile  liability  insurance  with a combined  single  limit of One  Million
Dollars  ($1,000,000);  and (iii) workers  compensation  coverage with statutory
limits and  employers  liability  insurance  with limits of One Million  Dollars
($1,000,000).  Any workers  compensation  insurance  shall be  accompanied  by a
waiver of subrogation from the insurer endorsed on the policy.

     All insurance  policies and renewals  thereof shall be in a form and issued
by insurers  acceptable to WPHC and shall provide for  deductibles not to exceed
$2,500.00.  WPHC and Feld (but only as long as Feld is a Manager and a Member of
the Company)  shall each be additional  named  insureds on all such policies and
renewals.  Feld hereby irrevocably  appoints WPHC as Feld's attorney in fact for
purposes of endorsing payments, submitting claims and otherwise dealing with all
such  insurance and the proceeds  thereof in the name,  place and stead of Feld,
such power of attorney to take effect  immediately upon  withdrawal,  Removal or
resignation  of Feld as Manager of the Company  and member of the LLC,  and Feld
agrees that such power shall be coupled with an interest  and shall  survive the
disability  or death of Feld.  Each  policy  shall  provide  that it will not be
modified or canceled without thirty (30) days prior written notice to WPHC. Feld
shall  promptly  furnish to WPHC all renewal  notices  and all  receipts of paid
premiums.  At least thirty (30) days prior to the  expiration  date of a policy,
Feld  shall  deliver  to WPHC a  renewal  policy in form  satisfactory  to WPHC,
together with a receipt showing payment of annual premiums. Any excess insurance
proceeds or refunds of insurance premiums shall be the property of the Company.

     6.13 PERSONAL OBLIGATION.  The obligations of Feld under this Agreement are
personal  recourse  obligations  of Feld,  as limited by Section  14.1.3 of this
Agreement, for which Feld shall be fully responsible to the Company and WPHC.

     6.14 FORCE  MAJEURE.  Feld shall not be liable for delay in  performance of
his obligations under this Agreement to the extent such failure or delay results
solely  from an event of Force  Majeure,  and in no event shall any delay for an
event of Force Majeure exceed one hundred twenty (120) days.

     6.15  LIMITATIONS  OF FELD'S  AUTHORITY.  Anything to the  contrary  herein
notwithstanding,  Feld  shall not have the power or  authority  to do any of the
following without the prior written consent of all the other Members:

<PAGE>

     6.15.1 to commit any act contrary to the purpose of the Company;

     6.15.2 to refinance  the Project or incur any  indebtedness  other than the
Construction Loan;

     6.15.3 to enter  into any  agreements  with  affiliates  of Feld  except as
specified above;

     6.15.4 to modify the Construction  Loan documents or any agreement with any
affiliate of Feld which previously was consented to by the other Members; or

     6.15.5 to sell or dispose of any portion of the Project.

     6.16  PRE-EXISTING   ENVIRONMENTAL  CONDITION  LIABILITY.  Feld  agrees  to
promptly  disclose  to WPHC in writing if it becomes  aware of any  Pre-Existing
Environmental  Condition  Liability.  If the  Company  incurs  any  Pre-Existing
Environmental Condition Liability, it shall use any available contingency in the
Project  Budget or any Cost Savings to satisfy such  Pre-Existing  Environmental
Condition  Liability.  If such  sources of funds are not adequate to satisfy the
Pre-Existing  Environmental Condition Liability,  then WPHC shall make a Capital
Contribution to the Company equal to one-half of the amount of the  Pre-Existing
Environmental  Condition  Liability  which  is then due and  Feld  shall  make a
Development Deficit Payment equal to one-half of the amount of such Pre-Existing
Environmental  Condition Liability.  This provision is solely for the benefit of
the members and no other  Person shall have the right to rely on or enforce this
provision.  A Pre-  Existing  Environmental  Condition  Liability  shall  not be
satisfied from Net Operating Income.

7    COMPENSATION TO FELD

     In  consideration  of the  performance  by  Feld of his  obligations  under
Article 6 of this Agreement, the Company shall pay Feld or his designee the fees
described  in this  Article 7 at the time,  in the  manner  and  subject  to the
conditions set forth herein.

     7.1 DEVELOPMENT MANAGEMENT FEE. Feld shall receive a development management
fee equal to $2,000 per unit. Such  development  management fee shall be payable
from monthly draws on the Construction Loan, on a percentage of completion basis
as certified by the Construction Consultant.

     7.2  CONSTRUCTION  MANAGEMENT FEE.  Contractor shall receive a construction
management fee under the construction  management agreement to be executed at or
before the  Construction  Loan  Closing  equal to $2,000 per unit,  payable from
monthly  draws on the  Construction  Loan based on  percentage  of completion as
certified  by the  Construction  Consultant  as  certified  by the  Construction
Consultant, minus $49,000. All amounts paid to Contractor under the construction
management  agreement  described in Section 5.2.6 above shall be applied against
and reduce the amount due under this Section 7.2.

<PAGE>

     7.3 CONSTRUCTION LOAN GUARANTEE FEE. Feld shall receive a construction loan
guarantee  fee  equal  to  1.0%  of  the  final  committed  loan  amount  of the
Construction  Loan,  payable at the Construction Loan Closing from a draw on the
Construction Loan.

     7.4 COST SAVINGS FEE.  The Company  shall pay Feld at Final  Closing a cost
savings fee equal to fifty  percent  (50%) of cost  savings,  if any. Feld shall
submit to WPHC a proposed  calculation of the amount of the fee to be paid under
this Section 7.4. WPHC shall be entitled, at its sole discretion, to submit such
calculation to the Company's  Accountants for  verification or auditing prior to
approving such  calculation.  For a period of twelve (12) months after the Final
Closing Date, each Member shall have the right to cause the recalculation of the
Cost  Savings  Fee and the  post-closing  adjustment  of the  amount of the Cost
Savings  Fee,  if such  Member pays the costs of the  Company's  Accountants  in
making such  recalculation  and if the amount of the  adjustment is in excess of
$5,000.  No post-closing  adjustment shall be made for amounts of $5,000 or less
or based on a  recalculation  made more than twelve (12) months  after the Final
Closing Date.

     7.5 INCENTIVE FEE. [INTENTIONALLY DELETED].

     7.6 COMPLETION  FEE. The Company shall pay Feld at Final Closing a fee (the
"Completion Fee") equal to 100% of Net Operating Income for the period beginning
with the Construction Loan Closing and ending with Substantial Completion,  less
(i) an amount equal to all  interest  accrued or paid on the  Construction  Loan
from the date on which Budgeted  Construction  Loan Interest is exhausted to the
date of Substantial Completion; and less (ii) an amount equal to interest at the
rate of seven and one half  percent  (7 1/2%)  per  annum on the  total  Capital
Contributions  made by WPHC,  such  interest  to be  calculated  for the  period
described in (i) above; provided, however, that in no event shall the Completion
Fee exceed $500,000.

     7.7  CONDITIONS TO PAYMENT OF FEES;  RIGHT OF OFFSET.  Each payment of fees
described  in this  Article 7 shall be  conditioned  upon there being no uncured
event  of  default  by Feld  under  this  Agreement  or any  Approved  Affiliate
Agreement. In the event of nonpayment of fees due to an uncured default, if such
default is  subsequently  cured prior to  withdrawal,  resignation or removal of
Feld as a Member and Manager, then the unpaid fees shall be payable,  subject to
all the terms and provisions of this Agreement. All fees will be included in the
Final Project Budget to be approved by WPHC.  With respect to fees payable prior
to Final Closing,  if the Construction Loan does not provide a source of funding
for such fees,  then  payment of such fees shall be deferred  until the later of
the  date(s)  the  Construction  Loan  permits  such  funding or until the Final
Closing. All fees payable to Feld shall be subject to a right of offset in favor
of the  Company  and WPHC with  respect to any  claims or damages  they may have
against Feld and for any Development  Deficits.  In the event of the withdrawal,
resignation  or  Removal  of Feld as a Member  and  Manager  prior to the  Final
Closing  Date,  except in the case of  Removal  of Feld due to Feld  failing  to
provide a Construction Loan acceptable to all the Members, in which case no fees
shall  have been  earned by or be due to Feld,  Feld shall be  entitled  to fees
fully  earned and accrued  through the date of his Removal when and as such fees
are otherwise payable pursuant to this Agreement, subject to the foregoing right
of

<PAGE>

offset and provided that WPHC has been fully  compensated  for its out of pocket
expenses  with  respect to the  Project.  In no event  shall the Removal of Feld
accelerate  the due date for any fees earned by Feld during the period  prior to
his Removal.

8    FINAL CLOSING

     8.1 CONDITIONS TO FINAL  CLOSING.  The obligation of WPHC to participate in
the Final  Closing  shall be  conditioned  on all of the Final  Closing  Funding
Conditions  being  satisfied  either prior to the Final Closing or  concurrently
with the Final Closing.  WPHC shall have the right,  but not the obligation,  to
waive one or more of the Final Closing Funding Conditions. Any Member shall have
the right to require an escrow  closing  to effect  the Final  Closing,  and the
other Members shall cooperate with regard to such escrow closing.

     8.2  INITIATION OF FINAL  CLOSING.  Upon ten (10) days prior written notice
from WPHC to Feld,  the Final  Closing  shall be held on the date  designated by
WPHC.  If WPHC has not  designated  a date for the Final  Closing by the Outside
Date,  upon ten (10) days  prior  written  notice  from Feld to WPHC,  the Final
Closing shall be held on the date designated by Feld, provided such date for the
Final Closing designated by Feld shall be not less than twenty-eight (28) months
after the Construction Loan Closing Date.

     8.3 ACTIONS AT THE FINAL  CLOSING.  Once the date for the Final Closing has
been  designated as provided  herein and provided that the Final Closing Funding
Conditions  have been satisfied by Feld, the Members shall  cooperate to cause a
Final Closing at which the following shall occur:

     8.3.1 WPHC shall either (i) fund its Final  Closing  Capital  Contribution,
(ii)  obtain a release  from the  Construction  Lender of Feld's  obligation  to
guarantee the  Construction  Loan, or (iii) provide to Feld a written  indemnity
from WPHC, secured by the guaranty of WRP and by WPHC's interest in the Company,
indemnifying  and holding Feld  harmless  from any further  liability  under his
guarantee  of the  Construction  Loan,  provided  that such  indemnity  shall be
subject  to a right of  offset  in favor of WRP and  WPHC  with  respect  to any
liability  of Feld to WPHC or the Company  arising  under this  Agreement.  Such
indemnity shall expire upon payment in full of the  Construction  Loan. The form
of such indemnity agreement shall be reasonably acceptable to Feld.

     8.3.2 The Company shall pay the Construction  Loan in full or shall provide
one of the items in 8.3.1(ii) or (iii) above.

     8.3.3 Any accrued and unpaid fees due to Feld under this Agreement shall be
paid.

<PAGE>

     8.3.4 If  either  WPHC or Feld has  exercised  its (his)  option  under the
Put-Call  provisions  of Article 16 hereof,  the closing of the  transfer of the
Interest of Feld to WPHC shall occur.

     8.3.5 At the election of WPHC, the responsibility for maintaining insurance
coverage on the Project or any portion thereof may be transferred to WPHC.

     8.4  CERTAIN  RIGHTS OF FELD UPON  SATISFACTION  OF FINAL  CLOSING  FUNDING
CONDITIONS.  At any time after Final  Completion and  satisfaction of all of the
other Final Closing  Funding  Conditions but prior to the Outside Date, Feld may
provide WPHC notice that all of the Final Closing  Funding  Conditions have been
satisfied  and that it is  prepared  to proceed  with the Final  Closing,  which
notice shall be accompanied by all documents  necessary to verify that the Final
Closing Funding Conditions have been satisfied.  Within fifteen (15) days of its
receipt of its notice,  WPHC shall notify Feld of the election of WPHC to do one
of the  following  by the date  that is  within  forty-five  (45) days of WPHC's
receipt of notice from Feld: (the "Release Date"): (i) WPHC shall participate in
the Final Closing and make its Final  Closing  Capital  Contribution;  (ii) WPHC
shall cause Feld to be released from its guaranty of the  Construction  Loan; or
(iii) WPHC shall deliver to Feld an indemnity agreement executed by WRP, wherein
WRP agrees to  indemnify  Feld  against any loss or liability it may suffer as a
guarantor  of the  Construction  Loan,  provided  that such  indemnity  shall be
subject  to a right of  offset  in favor of WRP and  WPHC  with  respect  to any
liability of Feld to WPHC or the Company  arising under this Agreement (the form
of such indemnity  agreement shall be reasonably  acceptable to Feld). If all of
the Final  Closing  Funding  Conditions  have been and remain  satisfied  on the
Release Date, WPHC shall take the action specified in its notice to Feld.

9    ALLOCATIONS

     9.1 PROFITS AND LOSSES.  Subject to the special  allocation  provisions  in
this Article 9, the Members' distributive shares of the Profits or Losses of the
Company for any Fiscal Year shall be as follows:

     9.1.1  PROFITS.  Profits  shall be  allocated  to each  Member  pro rata in
proportion with such Member's respective Percentage Interest.

     9.1.2  LOSSES.  Losses  shall  be  allocated  to each  Member  pro  rata in
proportion to such Member's respective Percentage Interest.

     9.2 GENERAL PROVISIONS.

     9.2.1  Except  as  otherwise  provided  in  this  Agreement,  the  Members'
distributive  shares of all items of Company income,  gain,  loss, and deduction
are the same as their distributive shares of Profits and Losses.

<PAGE>

     9.2.2 The Managers shall allocate Profits, Losses, and other items properly
allocable to any period  using any method  permitted by Code Section 706 and the
Regulations thereunder.

     9.2.3 To the extent permitted by Regulations Section 1.704-2(h) and Section
1.704- 2(i)(6),  the Managers shall endeavor to avoid treating  distributions of
Operating  Cash Flow and of Sales and  Refinancing  Cash Flow as being  from the
proceeds of a Nonrecourse Liability or a Partner Nonrecourse Debt (as defined in
Regulation Sections 1.704-2(b)(3) and 1.704-2(b)(4), respectively).

     9.2.4 If there is a change in any Member's Interest in the Company during a
Fiscal Year, each Member's  distributive  share of Profits or Losses or any item
thereof for such Fiscal Year,  shall be determined  by any method  prescribed by
Code Section 706(d) or the  Regulations  thereunder  that takes into account the
varying Interests of the Members in the Company during such Fiscal Year.

     9.2.5 The  Members  agree to  report  their  shares of income  and loss for
federal income tax purposes in accordance with the provisions of this Agreement.

     9.3 SPECIAL PROVISIONS.

     9.3.1 MINIMUM GAIN CHARGEBACK.  Notwithstanding any other provision of this
Article 9, if there is a net decrease in Partnership Minimum Gain (as defined in
Regulation Section 1.704-2(d)) during any Fiscal Year, then each Member shall be
allocated such amount of income and gain for such year (and subsequent years, if
necessary)  determined  under and in the manner  required by Regulation  Section
1.704-2(f)  as  is  necessary  to  meet  the  requirements  for a  minimum  gain
chargeback as provided in that Regulation.

     9.3.2 PARTNER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK. Notwithstanding any
other  provision  of this  Article 9, except  Section  9.3.1,  if there is a net
decrease in Partner Nonrecourse Debt Minimum Gain (as defined in accordance with
Regulation Section 1.704-2(i)(3)) attributable to a Partner Nonrecourse Debt (as
defined in Regulation Section  1.704-2(b)(4)) during any Fiscal Year, any Member
who has a share of the Partner  Nonrecourse  Debt Minimum Gain  attributable  to
such Partner  Nonrecourse Debt determined in accordance with Regulation  Section
1.704-2(i)(5),  shall be allocated  such amount of income and gain for such year
(and subsequent years, if necessary) determined under and in the manner required
by Regulation Section 1.704-2(i)(4) as is necessary to meet the requirements for
a  chargeback  of Partner  Nonrecourse  Debt Minimum Gain as is provided in that
Regulation.

     9.3.3  QUALIFIED  INCOME  OFFSET.  If a Member  unexpectedly  receives  any
adjustment,   allocation  or  distribution   described  in  Regulation   Section
1.704-1(b)(2)(ii)(d)(4),  (5) or (6),  items of Company income and gain shall be
specifically  allocated  to such  Member in an amount and manner  sufficient  to
eliminate,  to the extent  required by the  Regulations,  the  Adjusted  Capital
Account  Deficit  of such  Member  as  quickly  as  possible,  provided  that an
allocation  pursuant  to this  Section  9.3.3  shall be made  only if and to the
extent that such Member would have an Adjusted

<PAGE>

Capital Account Deficit after all other allocations  provided for in Section 9.1
and this  Section 9.3 of this  Agreement  tentatively  have been made as if this
Section 9.3.3 were not in this Agreement.

     9.3.4 LIMITATION ON LOSSES. Notwithstanding anything else contained in this
Agreement,  Losses  allocated  to any Member  pursuant  to  Section  9.1 of this
Agreement  shall not exceed the maximum  amount of Losses that may be  allocated
without  causing such Member to have an Adjusted  Capital Account Deficit at the
end of the Fiscal Year for which the allocation is made.

     9.3.5 CODE SECTION 754 ADJUSTMENT.  To the extent that an adjustment to the
Basis of any asset  pursuant to Code Section  734(b) or Code  Section  743(b) is
required to be taken into account in determining Capital Accounts as provided in
Regulation Section 1.704-1(b)(2)(iv)(m),  the adjustment shall be treated (if an
increase)  as an item of gain or (if a  decrease)  as an item of loss,  and such
gain or loss shall be allocated to the Members consistent with the allocation of
the adjustment pursuant to such Regulation.

     9.3.6 NONRECOURSE  DEDUCTIONS.  Nonrecourse Deductions (as determined under
Regulation Section  1.704-2(c)) for any Fiscal Year shall be allocated among the
Members in proportion to their Percentage Interests.

     9.3.7 PARTNER NONRECOURSE  DEDUCTIONS.  Any Partner Nonrecourse  Deductions
(as defined under Regulation Section  1.704-2(i)(2)) shall be allocated pursuant
to  Regulation  Section  1.704-2(i) to the Member who bears the economic risk of
loss with respect to the Partner Nonrecourse Debt to which it is attributable.

     9.3.8  PURPOSE AND  APPLICATION.  The purpose and the intent of the special
allocations  provided for in this Section 9.3 are to comply with the  provisions
of Regulation Sections 1.704-1(b) and 1.704-2,  and such special allocations are
to be made so as to accomplish that result. However, to the extent possible, the
Managers,  in allocating  items of income,  gain,  loss, or deduction  among the
Members,  shall take into account the special  allocations in such a manner that
the net amount of  allocations to each Member shall be the same as such Member's
distributive  share of  Profits  and  Losses  would  have  been  had the  events
requiring the special  allocations not taken place. The Managers shall apply the
provisions of this Section 9.3 in whatever order the Managers reasonably believe
will  minimize  any economic  distortion  that  otherwise  might result from the
application of the special allocations.

     9.4 CODE SECTION 704(C) ALLOCATIONS.  Solely for federal,  state, and local
income tax  purposes and not with respect to  determining  any Member's  Capital
Account,  distributive shares of Profits, Losses, other items, or distributions,
a Member's  distributive share of income,  gain, loss, or deduction with respect
to any Property (other than money)  contributed to the Company,  or with respect
to any  Property  the Asset  Value of which was  adjusted as provided in Article
1(g)(iii) of this  Agreement upon the  acquisition of an additional  Interest in
the  Company  by a new  Member  or  existing  Member in  exchange  for a Capital
Contribution, shall be determined in accordance with Code Section 704(c) and the
Regulations thereunder or with the principles of such provisions.

<PAGE>

     9.5 ALLOCATIONS RELATING TO TAXABLE ISSUANCE OF INTEREST. Any income, gain,
loss or deduction  realized by the Company as a direct or indirect result of the
issuance of an Interest by the Company (the "Issuance Items") shall be allocated
among the  Members  so that,  to the  extent  possible,  the net  amount of such
Issuance Items, together with all other allocations under this Agreement to each
Member,  shall be equal to the net amount that would have been allocated to each
such Member if the Issuance Items had not been realized.

10   DISTRIBUTIONS

     10.1 CASH FLOW.  Except when the  Company is in the process of  dissolution
and  winding  up as  provided  in  Article  18 of this  Agreement  and except as
otherwise  provided in Section 10.3 hereof,  the Managers  shall  determine  and
distribute the Cash Flow on a quarterly basis,  less reserves  determined by the
Managers for future expenditures, to the Members as follows: (i) first, to WPHC,
until it has  received  aggregate  distributions  equal to the amount of Capital
Contributions made by it pursuant to Section 4.1.2(b), (ii) then, to the Members
in accordance with their respective  Percentage  Interests.  Notwithstanding the
foregoing,  no distributions  shall be made at or prior to the completion of the
Final Closing without the consent of WPHC.

     10.2 DIVISION AMONG MEMBERS. If there is a change in a Member's Interest in
the Company during a Fiscal Year, any distributions  thereafter shall be made so
as to take into account the varying  Interests of the Members  during the period
to which the  distribution  relates in any manner chosen by the Managers that is
provided in Code Section 706(d) and the Regulations thereunder.

     10.3 SPECIAL DISTRIBUTION TO WPHC.  Immediately after the Construction Loan
Closing,  the  Company  shall  make a  distribution  to WPHC as a return  of its
capital  in  the  amount  allowed  for  such  purpose  under  the  terms  of the
Construction Loan.

11   BOOKS, RECORDS, AND ACCOUNTING

     11.1 BOOKS AND RECORDS.  The Company shall maintain at its principal  place
of  business  books of account  that  accurately  record all items of income and
expenditure  relating to the  business of the  Company and that  accurately  and
completely disclose the results of the operations of the Company.  Such books of
account  shall  be  maintained   according  to  generally  accepted   accounting
principles  consistently applied and, unless otherwise agreed by the Members, on
the basis of the Fiscal Year. Each Member shall have the right to inspect, copy,
and audit the  Company's  books and records at any time during  normal  business
hours without notice to any other Member.

     11.2 REPORTS.  Within thirty (30) days after the close of each Fiscal Year,
the  Managers  shall  furnish  to each  Member  a copy of the  income  and  loss
statement  and of the balance  sheet of the Company for such Fiscal Year,  and a
statement disclosing all allocations of income, gain, loss,

<PAGE>

or  deduction  among the  Members and  distributions  made by the Company to the
Members  during such year.  The statements of income and loss and balance sheets
to be delivered hereunder may be unaudited in the sole discretion of WPHC.

     11.3 TAX RETURNS.  The Managers shall cause  independent  certified  public
accountants  of the  Company to prepare and timely file all income tax and other
tax returns of the Company.  The Managers shall furnish to each Member a copy of
all such returns together with all schedules  thereto and such other information
which each Member may request in connection with such Member's own tax affairs.

     11.4 SPECIAL BASIS  ADJUSTMENT.  At the request of either the transferor or
transferee in connection with a transfer of an Interest in the Company  approved
by the Members  pursuant to Article 16 of this  Agreement,  the  Managers  shall
cause the  Company to make the  election  provided  for in Code  Section 754 and
maintain a record of the  adjustments  to Basis of Property  resulting from that
election.  Any such  transferee  shall pay all costs  incurred by the Company in
connection with such election and the maintenance of such records.

     11.5 TAX MATTERS PARTNER.

     11.5.1 WPHC is hereby designated the Tax Matters Partner (as defined in the
Code) on behalf of the Company.

     11.5.2  Without  the  unanimous  consent of the  Members,  the Tax  Matters
Partner shall have no right to extend the statute of  limitations  for assessing
or computing any tax liability  against the Company or the amount of any Company
tax item.

     11.5.3  If  the  Tax  Matters   Partner  elects  to  file  a  petition  for
readjustment of any Company tax item (in accordance  with Code Section  6226(a))
such  petition  shall be filed in the United States Tax Court unless the Members
unanimously agree otherwise.

     11.5.4 The Tax Matters  Partner  shall,  within ten (10)  business  days of
receipt  thereof,  forward  to each  Member a  photocopy  of any  correspondence
relating to the Company  received  from the Internal  Revenue  Service.  The Tax
Matters Partner shall, within ten (10) business days thereof, advise each Member
in writing of the substance of any conversation held with any  representative of
the Internal Revenue Service and of any petition for readjustment.

     11.5.5  Any  reasonable  costs  incurred  by the Tax  Matters  Partner  for
retaining accountants and/or lawyers on behalf of the Company in connection with
any  Internal  Revenue  Service  audit of the  Company  shall be expenses of the
Company.  Any accountants  and/or lawyers  retained by the Company in connection
with any Internal  Revenue Service audit of the Company shall be selected by the
Tax Matters Partner and the fees therefor shall be expenses of the Company.

<PAGE>

     11.6 BANK ACCOUNTS.  The Managers shall  establish and maintain one or more
separate  accounts in the name of the Company in one or more  federally  insured
banking institutions acceptable to all the Members into which shall be deposited
all funds of the  Company  and from  which all  Company  expenditures  and other
disbursements  shall be made.  At least one such account  shall be maintained at
First Interstate Bank.  Unless otherwise  decided by the Managers,  funds may be
withdrawn  from  such  accounts  on the  signatures  of  all  of  the  Managers,
collectively  and not  individually,  or such other  Person or Persons  that the
Managers  shall  determine,  provided,  however,  that two  signatures  shall be
required on all checks.

12   MANAGEMENT

     12.1  MANAGEMENT.  The business and affairs of the Company shall be managed
by the  designated  Managers.  Subject  to the  terms  and  limitations  of this
Agreement,  the Managers  shall  direct,  manage and control the business of the
Company to the best of such  Managers'  ability with  reasonable  diligence  and
prudence and, subject to the terms and limitations of this Agreement, shall have
the authority,  power and discretion to make any and all decisions and to do any
and all things which the Managers shall deem to be reasonably  required in light
of the Company's business and objectives.

     12.2  NUMBER,  TENURE AND  QUALIFICATIONS.  The number of  Managers  of the
Company and the length of the term of each  Manager  shall be fixed from time to
time by the Members who hold a Majority In  Interest.  Each  Manager  shall hold
office until removed  pursuant to Section  12.12 hereof or until such  Manager's
successor shall have been selected.  Managers need not be residents of the State
of Colorado or Members of the Company.

     12.3  APPOINTMENT  OF FELD AS MANAGER.  Feld is appointed as the Manager to
serve from the date hereof until the earliest to occur of (i) the Final  Closing
Date,  (ii) his  withdrawal  or Removal as a Member  and  Manager,  or (iii) the
Outside Date.  Notwithstanding  the provisions of Section 12.2, Feld shall serve
as Manager  for the  duration of his  initial  term unless and until  removed in
accordance with the terms of this Agreement.

     12.4 CERTAIN POWERS OF MANAGERS. Without limiting the generality of Section
12.1,  the  Managers  shall  have the power and  authority,  upon the  unanimous
agreement of all Managers, on behalf of the Company:

     12.4.1 To cause the Company to develop the Project in  accordance  with the
Plans and Specifications without any material deviation therefrom;

     12.4.2 To purchase  liability and other  insurance to protect the Company's
Property and business;

<PAGE>

     12.4.3 To hold and own any and all Company Property on behalf of and in the
name of the Company;

     12.4.4 To invest  any  Company  funds  temporarily  in time  deposits  with
federally   insured   financial   institutions   or  short-term   United  States
governmental obligations;

     12.4.5 Subject to the provisions of this Agreement,  to employ accountants,
legal  counsel,  managing  agents or other  experts to perform  services for the
Company and to compensate them from Company funds; and

     12.4.6 To do and perform all other acts as may be necessary or  appropriate
to the conduct of the Company's ordinary course of business.

     Unless  authorized  to do so by this  Agreement  or by the  Managers of the
Company,  no Member,  agent,  or employee of the Company shall have any power or
authority  to bind the  Company in any way, to pledge its credit or to render it
liable  pecuniarily  for any  purpose.  However,  the Managers may act by a duly
authorized attorney-in-fact.

     12.5 MEMBER APPROVAL OF CERTAIN ACTS. The Managers shall have the power and
authority, but only upon the unanimous written consent of all Members, on behalf
of the Company:

     12.5.1 to amend or modify any of the documents  executed in connection with
the Construction  Loan at the  Construction  Loan Closing or to waive any rights
under such documents;

     12.5.2  to  borrow  money  or  incur  any  indebtedness   (other  than  the
Construction Loan) or to grant any liens on any assets of the Company;

     12.5.3 to enter into any agreements  with  affiliates of the Managers other
than the Approved Affiliate Agreements;

     12.5.4 to amend or modify the Approved Affiliate Agreements or to waive any
rights thereunder;

     12.5.5 except for the Management Agreement,  to execute any agreement which
will impose any  obligations on the Company which will survive the Final Closing
Date; and

     12.5.6  to sell or  dispose  of any  portion  of the  Project  or any other
material assets of the Company.

     12.6  LIABILITY  FOR CERTAIN  ACTS. A Manager of the Company  shall perform
such Manager's duties,  including duties as a member of any committee upon which
such  Manager may serve,  in good faith,  in a manner  such  Manager  reasonably
believes to be in the best  interests of the  Company,  and with such care as an
ordinarily prudent person in a like position would use under

<PAGE>

similar  circumstances.  A Person who so performs such Person's duties shall not
have any  liability  by reason of being or having  been a Manager of the Company
except as  otherwise  provided in this  Agreement.  Nothing in this Section 12.6
shall limit  Feld's  liability to the other  Members to perform its  obligations
with respect to the  development  of the Project,  to make  Development  Deficit
Payments and to perform its other obligations to the other Members arising under
this Agreement.

     12.7 INDEMNITY OF THE MEMBERS AND THE MANAGERS.

     12.7.1 The Company shall  indemnify  every Member and Manager in respect to
the payments made and personal liabilities reasonably incurred by that Member or
Manager  in the  ordinary  and  proper  conduct  of the  Company's  business  or
property.  No  indemnification  shall be provided if and to the extent that such
liability was incurred based on the breach of this Agreement by the Manager, his
negligence (to the extent not reimbursed by insurance), fraud or misconduct.

     12.7.2  Provided that Feld has fully and timely  performed his  obligations
under this Agreement,  the Company shall indemnify Feld against any liability he
may incur as a result of his  guaranty  of the  Construction  Loan;  the Company
shall, nevertheless, have a right of offset with respect to all damages incurred
by  the  Company  or any  Member  resulting  from  any  breach  by  Feld  of his
obligations  hereunder,  in addition to all other rights and  remedies  that the
Company and the other Members may have with respect to such breach by Feld.

     12.7.3 The  indemnification  set forth in this Article 12 shall in no event
cause the  Members to incur any  liability,  or result in any  liability  of the
Members to any third party, beyond those liabilities  specifically enumerated in
the Articles of Organization, the Act or this Agreement.

     12.8 MANNER OF ACTING.  In all actions to be taken by the Managers pursuant
to this Agreement, the unanimous act of the Managers shall be required.

     12.9 INFORMAL ACT BY MANAGERS. Any action required or permitted to be taken
at a meeting of the Managers or of any committee designated by said Managers may
be taken  without a meeting if the action is  evidenced  by one or more  written
consents  describing  the action  taken,  signed by each  Manager  or  committee
member,  and delivered to the Person having  custody of the Company  records for
inclusion in the minutes or for filing with the records. Action taken under this
Section 12.9 is effective when all Managers or committee members have signed the
consent,  unless the consent specifies a different  effective date. Such consent
has the same force and effect as an unanimous  vote of the Managers or committee
members and may be stated as such in any document.

     12.10  PARTICIPATION  BY  ELECTRONIC  MEANS.  Any Manager or any  committee
designated  by the  Managers  may  participate  in a meeting of the  Managers or
committee by means of telephone conference or similar  communications  equipment
by which all  Persons  participating  in the  meeting can hear each other at the
same  time.  Such  participation  shall  constitute  presence  in  person at the
meeting.

<PAGE>

     12.11  RESIGNATION.  Feld covenants and agrees to serve as the sole Manager
until the earlier of the Final Closing Date or the Outside Date. Otherwise,  any
Manager of the  Company may resign at any time by giving  written  notice to the
Members of the Company.  The  resignation  of any Manager shall take effect upon
receipt of notice  thereof or at such later time as shall be  specified  in such
notice.

     12.12 REMOVAL.

     12.12.1 CAUSES FOR REMOVAL. WPHC shall have the right to remove Feld as the
Manager and as a Member  ("Removal") and substitute WPHC as Manager or appoint a
new Manager upon any of the following (a "Removal Event"):

     12.12.1.1 [INTENTIONALLY DELETED.]

     12.12.1.2  If  the  Construction  Loan  Closing  has  not  occurred  by the
Construction Loan Closing Outside Date;

     12.12.1.3  Delays in construction  not caused by Force Majeure which result
in the Project  falling  behind  schedule by six (6) months or more based on the
Construction  Schedule  approved by the parties prior to the  Construction  Loan
Closing, or delays in construction, whether or not caused by Force Majeure which
cause  WPHC to  reasonably  conclude  that the  Project  will not or  cannot  be
completed by the Outside Date;

     12.12.1.4 The Project  having  incurred  Development  Deficits in excess of
$250,000  which have not been funded by Development  Deficit  Payments from Feld
within thirty (30) days of notice from WPHC requiring such funding;

     12.12.1.5 [INTENTIONALLY DELETED.]

     12.12.1.6 The death or disability of Feld;

     12.12.1.7 If the Final Closing has not occurred by the Outside Date;

     12.12.1.8 If Feld shall be in Material  Default Feld under this  Agreement,
and such  Material  Default is not cured within  thirty (30) days after  written
notice  thereof from WPHC or, if such  Material  Default  cannot be cured within
such  30-day  period,  Feld does not  commence  within such thirty (30) days and
diligently  proceed to cure such breach and actually  completes such cure in any
event within ninety (90) days after such notice; or

     12.12.1.9 If any breach or default under the  Construction  Loan,  which is
not  caused  solely by the act or  omission  of WPHC,  is not cured  within  any
applicable cure period provided for under the Construction Loan.

<PAGE>

     12.12.2  DOCUMENTATION  IN CONNECTION  WITH REMOVAL.  Upon Removal of Feld,
Feld shall cease to have any  interest in the Company and Feld shall cease to be
a Member of the Company.  Such removal shall be effective  without the necessity
of the execution of any  documents by Feld.  Nevertheless,  Feld shall  promptly
execute such assignment and transfer documents as WPHC may reasonably request to
evidence the Removal of Feld.

     12.12.3 EFFECT OF REMOVAL ON CERTAIN OBLIGATIONS OF FELD.

     12.12.3.1 If Feld is removed prior to the  Construction  Loan Closing Date,
he shall have no continuing  obligations  for the performance of his obligations
under  Article 6 after the date of his Removal and no  obligation to perform any
continuing covenants set forth in Article 13. Feld shall be liable, however, for
any  breach  of any  representation  or  warranty  which  occurred  prior to his
Removal.

     12.12.3.2 If Feld is removed after the Construction Loan Closing Date, Feld
shall not be released from his ongoing  performance  obligations  under Sections
6.3 or 6.10 or Article 13 of this Agreement and Feld shall be liable to WPHC for
damages  resulting  from any  breach by Feld of his  obligations  arising  under
Sections 6.1, 6.2, 6.3, 6.6, 6.7, 6.10 or 6.11 or Article 13 of this  Agreement,
including  without  limitation,  damages  relating  to the period  after  Feld's
Removal,  unless such  damages  arise  solely from acts or  omissions of a party
other than Feld.  WPHC shall have the obligation to make  reasonable  efforts to
mitigate  its damages  following a Removal of Feld after the  Construction  Loan
Closing Date.

     12.12.4  DEATH OR  DISABILITY  OF  FELD.  Prior  to the  Construction  Loan
Closing,  Feld,  WPHC and The  Feld  Company  shall  execute  the  "Substitution
Agreement" in the form attached hereto as Exhibit U. The Substitution  Agreement
shall include the following principle terms: (i) upon the death or disability of
Feld, at the written  request of WPHC,  The Feld Company shall acquire from Feld
(or his estate) the entire  interest of Feld in the  Company,  The Feld  Company
shall be admitted as the Managing  Member,  and The Feld Company shall assume in
writing all of the obligations of the Managing Member  hereunder;  (ii) Feld (or
his estate) shall remain obligated for the performance of all of the obligations
of the Managing  Member,  whether  relating to the period before or after Feld's
Removal; and (iii) if WPHC fails to exercise its option under this Section 12.13
to cause The Feld Company to be substituted as the Managing Member within ninety
(90) days of the date of Removal,  then such option shall lapse and Feld (or his
estate) shall be released from any  obligation  hereunder  related to the period
after his withdrawal in connection with his death or disability.

     12.13  VACANCIES.  Any  vacancy  occurring  for any reason in the number of
Managers of the Company may be filled by WPHC or a Manager appointed by WPHC.

     12.14 PROHIBITION  AGAINST PUBLICLY TRADED  PARTNERSHIP.  The Manager shall
take all action  necessary to prevent the Company from  qualifying as a publicly
traded partnership within the

<PAGE>

meaning of Code Section 7704, including, without limitation, limiting the number
of Members to less than 500 in compliance  with the safe harbor under IRS Notice
88-75.

13   REPRESENTATIONS, WARRANTIES AND COVENANTS

     13.1  REPRESENTATIONS  AND  WARRANTIES  OF EACH MEMBER.  Each Member hereby
represents and warrants as of the date hereof as follows:

     13.1.1 Such Member, if other than an individual, is a duly organized entity
under  the laws of its state of  organization  and has the  requisite  power and
authority  to enter  into and  carry out the  terms of this  Agreement,  and all
required  action  has  been  taken to  authorize  such  Member  to  execute  and
consummate this Agreement.

     13.1.2 Such Member has been duly  authorized to enter into this  Agreement,
and  such  Member  is  not a  foreign  person  as  defined  under  Code  Section
1445(f)(3).

     13.1.3 To the best of such Member's knowledge, neither the execution of nor
the  compliance  with this  Agreement  has  resulted or will result in a default
under, or will create,  any encumbrance on the Property,  and there is no action
pending or threatened  which  questions the validity or  enforceability  of this
Agreement as to such Member.

     13.1.4 The  Interests to be acquired  hereunder  are being  acquired by the
Member for  investment  only and for such Member's own account;  no Person other
than the Member has or shall have any beneficial interest in the Interests;  and
the Member has no present intention of distributing,  reselling or assigning the
Interests.

     13.1.5 Such Member  understands that the Interests have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), or under the laws
of any jurisdiction; that the Company does not intend and is under no obligation
to so register the  Interests;  that the  Interests  may not be sold,  assigned,
pledged or  otherwise  transferred  except  upon  delivery  to the Company of an
opinion of counsel satisfactory to the Managers that registration under the 1933
Act is not required for such transfer, or the submission to the Managers of such
other evidence as may be  satisfactory  to the Managers,  to the effect that any
such  transfer  will not be in  violation  of the  1933  Act,  applicable  state
securities  laws or any  rule or  regulation  promulgated  thereunder;  and that
legends to the foregoing  effect will be placed on all documents  evidencing the
Interests.  The  Member  understands  that the  foregoing  does not limit  other
restrictions regarding the transfer of its Interests set forth in this Agreement
or in the Act.

     13.1.6 Such Member,  either itself or through its shareholders,  partner or
advisors,  is  sophisticated  and experienced in investment  matters,  and, as a
result,  is in a position to evaluate the merits and risks of an  investment  in
the Company.

<PAGE>

     13.1.7 Such Member is an  "Accredited  Investor" as defined in Regulation D
promulgated under the 1933 Act.

     13.1.8 Except as may be disclosed in the Environmental  Report, each Member
represents  that it does not have current actual  knowledge of any  Pre-existing
Environmental Condition.

     13.2 REPRESENTATIONS,  WARRANTIES AND COVENANTS OF FELD. In addition to the
warranties  provided for in Article 6 of this  Agreement,  as of the date hereof
and as of the  date of Final  Closing,  Feld  hereby  represents,  warrants  and
covenants to the Company and the Members as follows:

     13.2.1 To the best of Feld's  knowledge,  the  Master  Development  Land is
zoned to permit its use as a matter of right for  multi-family  residential use,
subject to compliance with statutory  requirements  regarding obtaining approval
of a site development  plan.  Under the Land Contract and the closing  documents
executed  in  connection  therewith,   Mission  Viejo  Company  has  irrevocably
allocated the right to build 1880  multi-family  residential units on the Master
Development Land.

     13.2.2  Feld shall use his best  efforts to cause the  approval  by Douglas
County and any other governmental  authority whose approval may be required of a
site  development  plan for the Land (the "Land Use  Approval"),  which approval
will  permit as a matter of right the  construction  of a  multi-family  project
having not less than 264 units on the Project Land.

     13.2.3  Feld  shall use its best  efforts  to cause by the  earlier  of the
Construction  Loan Closing Date and the  Construction  Loan  Outside  Date,  the
County of  Douglas to  approve  the Plans and  Specifications  for  issuance  of
building permits for construction of the Project (the "Building Permits") and to
issue all of the Building Permits necessary for construction of the Project.

     13.2.4 Feld shall use its best efforts to cause the Company to obtain prior
to the earlier of the starting  construction of the Project or the  Construction
Loan Outside  Date,  such permits  licenses,  waivers,  consents,  approvals and
authorizations, and Feld will make such material registrations,  qualifications,
designations,  declarations and filings required (collectively, the "Approvals")
as  determined  or as may be  determined  necessary  by Feld to the  best of his
knowledge  so that the  Project  may be  constructed  and,  subject  only to the
issuance of customary  temporary or permanent  certificates  of occupancy by the
County of Douglas  and any other  necessary  operating  permits,  operated  as a
multi-family  housing  development  with related  facilities  as depicted on the
Plans and  Specifications.  As of the date hereof, Feld has no reason to believe
such  certificates  of occupancy  will not be issued in the  ordinary  course of
business  following  completion of construction of the Project  substantially in
accordance with the Plans and Specifications. Feld shall use its best efforts to
cause all of the Approvals at the commencement of construction of the Project to
be in full force and effect. Feld shall, promptly upon receipt of any Approvals,
deliver to WPHC true, correct and complete copies of all such Approvals.

<PAGE>

     13.2.5 The Land is, and at the Final Closing shall be, free from delinquent
water charges, sewer rents, taxes and assessments.

     13.2.6 To the best knowledge of Feld, all utility  services,  including but
not  limited  to storm  and  sanitary  sewer,  water,  gas,  electric  power and
telephone service will be prior to the earlier of Substantial  Completion of the
Project or the Outside Date,  available to the Project Land in form and capacity
sufficient for the useful  enjoyment and operation of the Project and there will
be no  unpaid  assessments,  impact  fees,  development  fees,  tap-on  fees  or
recapture costs payable in connection  therewith except for charges shown on the
tax  certificates  and the usual and customary  charges involved in the ordinary
course of business and specifically identified in the Final Project Budget.

     13.2.7 To the best of Feld's knowledge,  when constructed  substantially in
accordance with the Plans and  Specifications,  the Project shall not violate in
any material  respects all applicable  covenants,  conditions and  restrictions,
zoning ordinances and regulations,  building codes,  environmental and all other
federal,  state and local  laws,  ordinances,  statutes,  rules and  regulations
applicable  to the  Project.  To the best of  Feld's  knowledge,  as of the date
hereof,  the Project is not subject to any laws, rules,  regulations,  orders or
requirements,  which  require  the  Company to  designate  any of the Project as
affordable housing, low income housing or moderate income housing.

     13.2.8 The  construction and development of the Project shall be undertaken
and  shall be  completed  in a timely  and  workmanlike  manner  in  substantial
compliance with (a) all applicable requirements of the Construction Loan, (b) to
the best of Feld's  knowledge,  all applicable  requirements  of all appropriate
governmental  entities, the violation of which would have, or would be likely to
have,  an adverse  effect on the Project or the  Company,  and (c) the Plans and
Specifications  for the Project that have been or shall be hereafter approved by
the  Construction  Lender,  WPHC, and if required,  any applicable  governmental
entities, as such Plans and Specifications may be changed from time to time with
the approval of the Construction Lender,  WPHC, and any applicable  governmental
entities, if such approval shall be required.

     13.2.9 To the best of Feld's  knowledge  and based on Feld's  review of the
Environmental  Reports,  copies of which have been  provided to the, Land is not
designated by any governmental or quasi-governmental  authority to be subject to
environmental,  wetlands or other  regulation  that would  materially  adversely
affect the use of the Land for the Project as  contemplated  by this  Agreement,
and at the Final Closing the Land and the Project  shall be in  compliance  with
all  Environmental  Laws  and  free of  Hazardous  Materials  except  for  those
necessary for and lawfully used in operation and maintenance of the Project, and
then only in  reasonable  amounts  which  shall be  labeled,  stored and used in
compliance with Environmental Laws.

     13.2.10  To the best of Feld's  knowledge,  the Land is or will be prior to
Final  Closing  benefitted  by  such  easements  of  unlimited  duration  as are
necessary  for  the  operation  of the  Project.  As of the  Final  Closing,  no
additional easements will be required,  subsequent to the Final Closing, for the
provision of utilities, access, egress and drainage to or for the benefit of the
Land

<PAGE>

or the  Project  in  connection  with the use and  operation  of the Land as the
Project contemplated by this Agreement.

     13.2.11  Feld shall use his best  efforts  to cause the  Company to obtain,
prior to the  earlier of the date of Final  Closing  or the  Outside  Date,  all
permanent  certificates  of occupancy and other consents and approvals  required
from the County of Douglas and other  governmental  authorities and associations
and boards with jurisdiction  over the Project and such consents,  approvals and
certificates shall be in full force and effect without the presence or existence
of any unsatisfied  conditions or requirements  with respect thereto,  and true,
correct and complete  copies of such  consents,  approvals and  certificates  of
occupancy shall be delivered to WPHC upon issuance thereof.

     13.2.12 For the  purpose of this  Section  13.2,  the terms "to the best of
Feld's  knowledge," "to the best of his knowledge" and "to the best knowledge of
Feld" shall mean and include such  information  as is actually  known to Feld or
should  have  been  known  to him upon  diligent  inquiry  or of which  Feld has
received  constructive  notice.  If,  prior  to the  Final  Closing,  any of the
foregoing   representations,   warranties  or  covenants   become  incorrect  or
misleading  in any  material  respect,  Feld shall  immediately  notify  WPHC in
writing and such representation,  warranty or covenant shall be deemed remade by
Feld as of the date of such notification based upon such new information.

     13.2.13 Feld,  all  Affiliates of Feld and all other parties  related to or
affiliated with Feld or with such Affiliates shall receive no fees, compensation
or other profit or share of cost savings with respect to the Project  except the
amounts set forth in Article 7 hereof or in any Approved Affiliate Agreement. In
the event of any breach of this Section 13.2.13,  any amount improperly received
by such parties  shall be  immediately  paid over to the Company,  together with
interest  thereon  from the date  received  at twelve  percent  (12%) per annum,
compounded monthly.

     13.2.14  Feld  shall  cause the  Project to be at least 75% leased on terms
reasonably   acceptable  to  WPHC  within   thirty-six  (36)  months  after  the
Construction  Loan  Closing.  Failure  to do so shall be a  default  under  this
Agreement and shall give WPHC the right to cause the Removal of Feld.

     13.3 GENERAL  REPRESENTATION.  No representation,  warranty or statement of
Feld in this Agreement or in any document,  certificate or schedule furnished or
to be furnished by Feld or its agents or  contractors  to WPHC  pursuant  hereto
contains or will  contain any untrue  statement  of a material  fact or omits or
will omit to state a material  fact  necessary to make the  statements  or facts
contained therein not misleading.

     13.4  SURVIVAL;  INDEMNITY.  All of  the  representations,  warranties  and
covenants of Feld contained in this Article 13 shall survive the  resignation or
withdrawal of Feld as Manager and/or Member of the Company and shall survive the
Final  Closing  Date for a period of one (1) year after the Final  Closing  Date
except that, in the case of any material matter intentionally concealed or

<PAGE>

intentionally  not disclosed by Feld, such period shall be extended to three (3)
years  after the Final  Closing  Date.  Feld shall  defend,  indemnify  and hold
harmless  WPHC  against  a  breach  of  any of  the  foregoing  representations,
warranties and covenants and any damage, loss or claim caused thereby, including
reasonable attorneys' fees and costs and expenses of litigation and collection.

14   RIGHTS AND OBLIGATIONS OF MEMBERS

     14.1 LIMITATION OF LIABILITY.

     14.1.1 Each  Member's  liability  to Persons  other than the other  Members
shall be limited as set forth in the Act and other applicable law.

     14.1.2 No  officer,  director or  shareholder  of WPHC shall be bound by or
have  any  personal  liability  hereunder  or  under  any  document,  agreement,
understanding or arrangement  relating to this transaction.  The parties to this
Agreement  shall  look  solely  to the  assets of WPHC for  satisfaction  of any
liability of WPHC in respect of this  Agreement and all  documents,  agreements,
understandings  and arrangements  relating to this transaction and will not seek
recourse  or  commence  any action  against  any of the  directors,  officers or
shareholders  of WPHC or any of their  personal  assets for the  performance  or
payment of any  obligation  hereunder or  thereunder.  The foregoing  shall also
apply to any and all future documents, agreements, understandings,  arrangements
and transactions  between the parties hereto with respect to the Project or this
Agreement.

     14.1.3 The Members  acknowledge that Feld has made certain transfers to the
LES Trust and the LF Trust prior to  November 4, 1991,  and agree that no Member
will assert any right to recover  against either of such trusts by reason of any
transfer made prior to November 4, 1991, regardless of the consideration or lack
of  consideration  for such  transfer.  Feld shall make no further  transfers to
either of such  trusts as long as all or any part of  Feld's  obligations  under
this Agreement  remain  outstanding.  In addition to the foregoing,  the Members
hereby  agree  that the  personal  residence  of Feld to be located at 170 South
Eudora Street,  Denver,  Colorado and Feld's vacation home at 19 Creekside Drive
in Palm Springs, California (the "Palm Springs Residence"), are not available to
support the obligations of Feld under this Agreement and agree not to assert any
right to recover against such personal  residence or the Palm Springs Residence,
and the Members hereby disclaim,  quitclaim, release and relinquish any right to
proceed  against  such  personal  residence or the Palm  Springs  Residence  for
amounts owed by Feld under this  Agreement.  It is understood  and  acknowledged
that Feld  intends to replace his  secondary  residence  in Palm  Springs with a
residence  located at 101 Wanish in Palm  Desert,  California,  and upon  Feld's
acquisition of the residence located at 101 Wanish in Palm Desert, the same will
be automatically substituted as the Palm Springs Residence hereunder.

     14.2 COMPANY DEBT LIABILITY. A Member will not personally be liable for any
debts or losses of the Company, except as provided herein or in the Act.

<PAGE>

     14.3 LIST OF MEMBERS.  Upon  written  request of any Member,  the  Managers
shall provide a list showing the names,  addresses and  Percentage  Interests of
all Members in the Company.

     14.4 COMPANY BOOKS.  The Managers  shall maintain and preserve,  during the
term of the Company, and for five (5) years thereafter, all accounts, books, and
other relevant Company  documents.  Upon reasonable  request,  each Member shall
have the right, during ordinary business hours, to inspect and copy such Company
documents at the Member's expense.

     14.5  PRIORITY  AND  RETURN OF  CAPITAL.  Except as  specifically  provided
herein,  no Member shall have priority  over any other Member,  either as to the
return of  Capital  Contributions  or as to  Profits,  Losses or  distributions;
provided  that this  Section  shall not  apply to loans (as  distinguished  from
Capital Contributions) which a Member may make to the Company.

     14.6 OUTSIDE ACTIVITY.

     14.6.1  Except for the  limitations  on the  activities of Feld and certain
Affiliates  set forth  herein,  each  Member,  including  but not limited to the
Manager,  may  engage  in any  capacity  (as  owner,  employee,  consultant,  or
otherwise)  in any activity,  whether or not such  activity  competes with or is
benefitted  by the business of the Company,  without being liable to the Company
or the other Members for any income or profit derived from such activity.

     14.6.2 [INTENTIONALLY DELETED.]

     14.6.3 From the date hereof  until the date that Feld ceases to be a Member
of the Company,  neither Feld nor any other Restricted Party shall (i) purchase,
construct or commence construction of any Multi-Family Project any part of which
Multi-Family  Project is located  within  three (3) miles of any  portion of the
Land, or (ii) purchase,  construct or commence  construction of any Multi-Family
Project  outside said  three-mile  area without  giving prior written  notice to
WPHC.

     14.6.4  "Restricted  Parties"  shall mean Feld,  The Feld  Company  and any
entity in which they individually or collectively,  directly or indirectly, have
an ownership interest of in excess of 20 percent of any class of security.  Feld
covenants  that it  shall  cause  each  Restricted  Party  to  comply  with  the
restrictions in this Section 14.6, and a failure of a Restricted Party to comply
with the terms of this Agreement shall  constitute a breach of this Agreement by
Feld. Feld shall comply with the  restrictions set forth in this Section 14.6 in
good faith and shall not employ  any  artifice  or device to evade the intent of
this  provision.   The  restrictions  in  Subsections   14.6.2  and  14.6.3  are
cumulative,  and  shall  apply to a  Restricted  Party  as an owner  for its own
account or as a developer,  construction manager,  general contractor or partner
of any other Person.  This Section 14.6 shall not prohibit any Restricted  Party
from  conducting  pre-development  activities in connection with a Multi- Family
Project, provided that construction activity (including any activity for which a
building permit is required) has not commenced on such Multi-Family Project.

<PAGE>

15   MEETINGS OF MEMBERS

     15.1 ANNUAL MEETING. The annual meeting of the Members shall be held on the
first  business  day of May or at such  other  time as  shall be  determined  by
resolution of the Members, commencing with the year 1999, for the purpose of the
transaction of such business as may come before the meeting.

     15.2 SPECIAL MEETINGS.  Special meetings of the Members, for any purpose or
purposes,  unless otherwise  prescribed by statute, may be called by any Manager
or by any Member or Members holding at least 1% of the Percentage Interests.

     15.3 PLACE OF MEETINGS.  The Members may designate any place, either within
or outside the State of Colorado, as the place of meeting for any meeting of the
Members. If no designation is made, or if a special meeting be otherwise called,
the place of meeting  shall be the principal  business  office of the Company in
the State of Colorado.

     15.4 NOTICE OF MEETINGS.  Except as otherwise provided for herein,  written
notice  stating  the  place,  day and hour of the  meeting  and the  purpose  or
purposes for which the meeting is called  shall be  delivered  not less than ten
(10) nor more  than  fifty  (50) days  before  the date of the  meeting,  either
personally or by mail, by or at the direction of the Managers or Person  calling
the meeting, to each Member entitled to vote at such meeting.

     15.5 MEETING OF ALL MEMBERS.  If all of the Members  shall meet at any time
and place, either within or outside of the State of Colorado, and consent to the
holding of a meeting at such time and place, such meeting shall be valid without
call or notice, and at such meeting lawful action may be taken.

     15.6 RECORD DATE. For the purpose of determining Members entitled to notice
of or to vote at any meeting of Members or any adjournment  thereof,  or Members
entitled  to  receive  payment  of  any  distribution,  or in  order  to  make a
determination of Members for any other purpose,  the date on which notice of the
meeting is sent or the date on which the resolution  declaring such distribution
is adopted,  as the case may be, shall be the record date for such determination
of Members.  When a determination  of Members entitled to vote at any meeting of
Members has been made as  provided in this  Section,  such  determination  shall
apply to any adjournment thereof.

     15.7 QUORUM.  Members holding at least a Majority In Interest,  represented
in person or by proxy,  shall constitute a quorum at any meeting of Members.  In
the  absence  of a quorum at any such  meeting,  a  majority  of the  Percentage
Interests so represented  may adjourn the meeting from time to time for a period
not  to  exceed  sixty  (60)  days  without  further  notice.  However,  if  the
adjournment is for more than sixty (60) days, or if after the  adjournment a new
record  date is fixed  for the  adjourned  meeting,  a notice  of the  adjourned
meeting shall be given to each Member of record entitled to vote at the meeting.

<PAGE>

     At  such  adjourned   meeting  at  which  a  quorum  shall  be  present  or
represented,  any business may be transacted which might have been transacted at
the  meeting as  originally  noticed.  The Members  present at a duly  organized
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal  during such  meeting of Members  owning  that  number of  Percentage
Interests whose absence would cause less than a quorum.

     15.8 MANNER OF ACTING.  If a quorum is  present,  the  affirmative  vote of
Members  holding at least a Majority  In  Interest  and  entitled to vote on the
subject matter shall be the act of the Members,  unless the vote of a greater or
lesser proportion or number is otherwise required by the Act, by the Articles of
Organization, or by this Agreement.

     15.9 PROXIES. At all meetings of Members, a Member may vote in person or by
proxy   executed   in   writing   by  the   Member  or  by  a  duly   authorized
attorney-in-fact.  Such proxy  shall be filed with the  Managers  of the Company
before  or at the time of the  meeting.  No proxy  shall be valid  after  eleven
months from the date of its execution, unless otherwise provided in the proxy.

     15.10 ACTION BY MEMBERS WITHOUT A MEETING.  Action required or permitted to
be taken at a meeting of Members may be taken without a meeting if the action is
evidenced by one or more written consents describing the action taken, signed by
each Member  entitled to vote and  delivered  to the Managers of the Company for
inclusion  in the minutes or for filing with the Company  records.  Action taken
under this  Section  15.10 is effective  when all Members  entitled to vote have
signed the consent, unless the consent specifies a different effective date.

     The record date for determining  Members  entitled to take action without a
meeting shall be the date the first Member signs a written consent.

     15.11 VOTING BY BALLOT. Voting on any question or in any election may be by
voice vote  unless the  Managers  or any Member  shall  demand that voting be by
ballot.

     15.12  WAIVER OF  NOTICE.  When any notice is  required  to be given to any
Member,  a waiver  thereof in  writing  signed by the  Person  entitled  to such
notice,  whether  before,  at,  or  after  the  time  stated  therein,  shall be
equivalent to the giving of such notice.

16   TRANSFERABILITY; PUT-CALL PROVISIONS

     16.1  RESTRICTIONS ON  TRANSFERABILITY.  Except as provided in Section 16.2
and Section  16.6,  no transfer,  pledge or  assignment  of all or any part of a
Member's  Interest  in the  Company  (including  the  transfer  of any rights to
receive or share in  profits,  losses,  income or the  return of  contributions)
shall be  effective  unless and until  written  notice  (including  the name and
address of the proposed purchaser,  transferee, or assignee and the date of such
transfer)  has been  provided to the Company  and the  non-transferring  Members
approve of the proposed sale, pledge or assignment

<PAGE>

of a selling,  pledging or  assigning  Member's  Interest by  unanimous  written
consent, which may be withheld in their sole discretion.

     16.2 PUT-CALL RIGHTS.

     16.2.1  WPHC shall  have the option  (the  "Call  Option")  to acquire  the
Interest  of  Feld  in  the  Company,   including   his  right  to  receive  any
distributions  related to any periods prior to and including the Option  Closing
Date:  (i) on and after the Final  Closing for the Option  Price,  or (ii) on or
after the Construction  Loan Outside Date, for $100.00 if the Construction  Loan
Closing has not  occurred by the  Construction  Loan Outside Date for any reason
whatsoever,  or (iii) at any time for  $100.00 if Feld fails to timely  cure any
default by Feld under this  Agreement.  The  exercise by WPHC of the Call Option
described  in item (i) of this Section is  conditioned  on WPHC  performing  its
obligation under Section 8.3.1 hereof when and as required under this Agreement.
To exercise its Call Option,  WPHC shall provide  written  notice of exercise to
Feld.

     16.2.2 Feld shall have the right to cause WPHC to acquire  the  Interest of
Feld in the Company, including his right to receive any distributions related to
any periods prior to and including the Option Closing Date, at Final Closing for
the Option  Price (the "Put  Option")  by  providing  written  notice to WPHC of
Feld's intention to exercise the Put Option, provided that all the Final Closing
Funding Conditions have been satisfied.

     16.2.3 If the Call Option or Put Option is exercised,  Feld shall forthwith
upon request of WPHC execute an  Assignment of Interest in the form of Exhibit Q
or Exhibit R, as  applicable,  attached  hereto,  wherein  Feld shall assign its
Interest  in the Company  free and clear of all liens,  security  interests  and
competing  claims.  Feld shall execute such other instruments of transfer and of
due authorization,  execution and delivery and of the absence of any such liens,
security  interests or competing  claims as WPHC may  reasonably  request.  Feld
shall have no duty,  obligation  or right to  continue as Manager of the Company
after such transfer of its Interest.

     16.3 CALCULATION OF OPTION PRICE.

     16.3.1  The  Members  shall use their  respective,  good  faith  efforts to
determine the Option Price prior to the Option  Closing Date. For a period of at
least ten (10) business  days prior to ordering an appraisal in connection  with
the determination of the Option Price, WPHC and Feld shall attempt in good faith
to  negotiate  the  fair  market  value  of  the  Project  to be  used  in  such
determination. Each of WPHC and Feld shall be entitled to submit the calculation
of the Option Price to the Company's  Accountants for  verification or auditing.
If WPHC and Feld are unable to determine the Option Price by the Option  Closing
Date,  then WPHC shall pay Feld the Minimum Option Price as estimated by WPHC in
its good faith judgment.  The parties shall make a  determination  of the Option
Price  promptly  after the Option  Closing,  and (i) if the  Option  Price as so
determined  exceeds  the  estimated  Minimum  Option  Price  paid at the  Option
Closing,  then WPHC shall pay Feld such  excess  within five (5)  business  days
after the  determination  of the Option Price, or (ii) if the Option Price as so
determined is less than the estimated Minimum Option Price paid at

<PAGE>

the Option  Closing,  then Feld shall pay the difference to WPHC within five (5)
business days after the  determination  of the Option Price. In addition,  for a
period of twelve (12) months after the Final Closing  Date,  WPHC and Feld shall
each have the right to cause the  recalculation  of the  Option  Price,  if such
Member pays the costs of the Company's Accountants in making such recalculation.
If the amount of the adjustment is in excess of $5,000, then WPHC and Feld shall
adjust the Option Price within five (5) business days after the recalculation of
the Option Price. No  post-closing  adjustment in the Option Price shall be made
for amounts of $5,000 or less or based on a recalculation  made more than twelve
(12)  months  after the Option  Closing  Date.  Notwithstanding  anything to the
contrary herein, the appraised value of the Project as determined shall be final
and shall not be subject to challenge or recalculation by any Member.

     16.4 RIGHT OF OFFSET.  Payment  of the Option  Price  shall be subject to a
right of offset in favor of the Company  and WPHC with  respect to any claims or
damages they may have against Feld.

     16.5 RESTRICTIONS ON RESIGNATION.  Notwithstanding anything to the contrary
contained herein or under the Act, no Member shall have the right to resign from
the Company.  In the event a Member does resign in  violation  of the  foregoing
provision,  (i) the  Company  shall not be  obligated  to pay any amounts to the
Member,  nor to  distribute  any of the  Property to the Member or any  interest
therein,  (ii) the Member shall be deemed to have  forfeited any rights to legal
or beneficial ownership of its Interest,  and (iii) the Company may recover from
the resigning Member damages for breach of this Agreement.

     16.6  PERMITTED  WPHC  TRANSFER.  WPHC shall  have the right to  transfer a
portion of WPHC's  Interest in the Company (a "WPHC  Permitted  Transfer")  to a
Person (a "WPHC Permitted  Transferee"),  provided that WPHC at all times during
the term of this  Agreement  shall retain an Interest in the Company of at least
twenty-one percent (21%) of the total Interests in capital,  income, gain, loss,
deduction  and credit.  WPHC  acknowledges  that any  transfer  pursuant to this
Section  16.6 shall be solely from the  Interest of WPHC and shall not result in
the dilution of the Interest of Feld. In the event of a Permitted WPHC Transfer,
(I) WPHC shall have the exclusive authority to communicate all decisions,  votes
and elections ("Decisions") made by it and by the WPHC Permitted Transferee with
respect to the Interest of WPHC and such  transferee  in the Company,  (II) Feld
shall be  entitled  to rely  exclusively  on  communications  made by WPHC  with
respect  to all  such  Decisions,  and any  communications  by a WPHC  Permitted
Transferee  with respect to a Decision other than through WPHC shall be invalid,
and (III)  prior to and as a  condition  to the  admission  of a WPHC  Permitted
Transferee as a Member, the WPHC Permitted Transferee shall execute an admission
agreement  wherein  it agrees  to be bound by all the  terms of this  Agreement,
including without limitation, this Section 16.6.

<PAGE>

17   ADMISSION OF ADDITIONAL MEMBERS

     From the date of the formation of the Company,  with the unanimous  written
consent of the Members, any Person acceptable to the Members may, subject to the
terms and conditions of this Agreement:  (i) become an additional Member in this
Company by the sale of new  Interests for such  consideration  as the Members by
unanimous  vote  shall  determine,  or (ii)  become  a  Substitute  Member  as a
transferee of a Member's Interest or any portion thereof.

18   DISSOLUTION AND TERMINATION

     18.1 DISSOLUTION.

     18.1.1 The Company  shall be dissolved  upon the  occurrence  of any of the
following events ("Dissolution Event"):

     (a)  When the period fixed for the duration of the Company shall expire;

     (b)  by the unanimous written agreement of all Members; or

     (c)  upon  the  death,   retirement,   resignation,   expulsion,   Removal,
          bankruptcy,  dissolution  of a Member or occurrence of any other event
          which  terminates the continued  membership of a Member in the Company
          (a  "Withdrawal  Event"),  unless  the  business  of  the  Company  is
          continued  by  the  consent  of a  majority  of the  Interests  of the
          remaining  Members  in the  capital  and  profits of the  Company,  as
          determined in accordance  with Revenue  Procedure 94- 46 within ninety
          (90) days after the termination.

     18.1.2 As soon as possible  following  the  occurrence of any of the events
specified  in  this  Section  effecting  the  dissolution  of the  Company,  the
appropriate representative of the Company shall execute a statement of intent to
dissolve in such form as shall be prescribed by the Colorado  Secretary of State
and file duplicate  originals of the same with the Colorado Secretary of State's
office.

     18.2  EFFECT OF FILING OF  DISSOLVING  STATEMENT.  Upon the filing with the
Colorado  Secretary of State of a statement  of intent to dissolve,  the Company
shall cease to carry on its business, except insofar as may be necessary for the
winding up of its business,  but its separate  existence  shall  continue  until
articles of  dissolution  have been filed with the Secretary of State or until a
decree  dissolving  the  Company  has  been  entered  by a  court  of  competent
jurisdiction.

     18.3  DISTRIBUTION OF ASSETS UPON  DISSOLUTION.  In settling accounts after
dissolution,  the liabilities of the Company shall be entitled to payment in the
following order:

<PAGE>

     18.3.1 to creditors, in the order of priority as provided by law (except to
Members on account of their Capital Contributions);

     18.3.2 to Members and former Members in  satisfaction  of  liabilities  for
distributions under Section 7-80-601 or 7-80-603 of the Act; and

     18.3.3 to Members  pro rata in  accordance  with the  positive  balances in
their Capital  Accounts after taking into account all adjustments to the Capital
Accounts for all periods.

     18.4 ARTICLES OF DISSOLUTION.  When all debts,  liabilities and obligations
have been paid and discharged or adequate provisions have been made therefor and
all of the remaining  Property and assets have been  distributed to the Members,
articles  of  dissolution  shall be executed in  duplicate  and  verified by the
Person  signing the articles,  which  articles  shall set forth the  information
required by the Act.

     18.5 FILING OF ARTICLES OF DISSOLUTION.

     18.5.1  Duplicate  originals  of such  articles  of  dissolution  shall  be
delivered to the Colorado Secretary of State.

     18.5.2 Upon the filing of the articles of dissolution, the existence of the
Company  shall cease,  except for the purpose of suits,  other  proceedings  and
appropriate  action as provided in the Act. The  Managers  shall  thereafter  be
trustees  for the  Members and  creditors  of the Company and as such shall have
authority  to  distribute   any  Property  of  the  Company   discovered   after
dissolution,  convey real estate and take such other  action as may be necessary
on behalf of and in the name of the Company.

     18.6 WINDING UP. If the Property of the Company remaining after the payment
or  discharge of the debts and  liabilities  of the Company is  insufficient  to
return the  Capital  Contribution  of each  Member,  such  Member  shall have no
recourse against any other Member.  The winding up of the affairs of the Company
and the  distribution  of its  assets  shall  be  conducted  exclusively  by the
Managers,  who are hereby authorized to take all actions necessary to accomplish
such  distribution,  including  without  limitation,  selling  the assets of the
Company.  In the  discretion of the Managers,  a pro rata portion of the amounts
that otherwise  would be distributed to the Members under this Article 18 may be
withheld to provide a reasonable  reserve for unknown or contingent  liabilities
of the Company.

     18.7 NO RESTORATION OF DEFICIT CAPITAL  ACCOUNTS.  If the Company is deemed
to be  liquidated  for  federal  income  tax  purposes  within  the  meaning  of
Regulation Section 1.704-  1(b)(2)(ii)(g),  distributions  under Section 14.3(c)
shall be made in compliance with Regulation Section 1.704-1  (b)(2)(ii)(b)(2) to
those Members who have positive Capital Accounts.  If the Capital Account of any
Member has a deficit  balance after such  distributions  (after giving effect to
all contributions,  distributions,  and allocations for all taxable years), such
Member shall have no

<PAGE>

obligation to make any  contribution  to the capital of the Company with respect
to such  deficit and such  deficit  shall not be  considered  a debt owed to the
Company or any other Person for any purpose whatsoever.

     18.8 DEEMED  LIQUIDATION.  If no  Dissolution  Event has occurred,  but the
Company is deemed  liquidated for federal income tax purposes within the meaning
of Regulation Section 1.704-1  (b)(2)(ii)(g),  the Company shall not be wound up
and  dissolved  but its  assets  and  liabilities  shall be  deemed to have been
distributed to the Members and  contributed to a new limited  liability  company
which shall operate and be governed by the terms of this Agreement.

     18.9 PERMITTED WITHDRAWAL BY FELD. If the Construction Loan Closing has not
occurred by the Construction Loan Outside Date, upon not less than ten (10) days
prior written  notice to WPHC,  Feld may withdraw as the Manager and as a Member
without such withdrawal (a "Permitted Withdrawal") constituting a breach of this
Agreement.  In the  event of a  Permitted  Withdrawal,  Feld  shall not have any
obligation under the Development  Deficit  Guaranty,  and Feld shall be released
from any obligation hereunder related to the period after his Withdrawal. Upon a
Permitted Withdrawal,  Feld shall have no right to any fees or payments from the
Company or any interest in any property of the Company.  Feld shall execute such
documents  or  instruments  evidencing  his  withdrawal  as WPHC may  reasonably
request.  Except for a Permitted  Withdrawal  or a withdrawal  upon the death or
disability of Feld, any  withdrawal by Feld from the Company shall  constitute a
default by Feld under this  Agreement  and WPHC shall be entitled to damages and
any other legally available relief based upon such default.

19   MISCELLANEOUS PROVISIONS

     19.1  STATEMENT OF INTENT OF PARTIES.  It is the present intent of WPHC and
Feld to jointly  develop the Project as the third phase  leading to the eventual
development of the Master Development. Due to the changes that may take place in
the  capital and real estate  markets  and other  events,  unknown at this time,
which may alter either WPHC's or Feld's interest in or outlook on future phases,
no specific  provision is made in this Agreement in regard to future phases.  It
is the present intent of the parties to use the basic  economic and  transaction
structure of this Operating  Agreement on future phases.  However,  either party
may require  changes or elect not to  participate  in the joint  development  of
future  phases.  It is  imperative  to WPHC that it  control  the future of this
development in regard to all issues,  including timing, cost, design, etc. While
this  control is  absolute,  it is WRP's and  Feld's  present  intent  that Feld
continue as  development  partner.  Notwithstanding  the foregoing  statement of
intent,  the  provisions of this Agreement and related  documents  governing the
duties and  relationships  among the parties  shall  control over the  foregoing
statement  of intent and  neither  party shall have any  obligation,  express or
implied,  to jointly  develop another phase of the Master  Development  with the
other party.

     19.2 NOTICES. Any notice or communication required or permitted to be given
by any provision of this  Agreement,  including but not limited to any consents,
shall be in writing and shall

<PAGE>

be deemed to have been given and  received  by the Person to whom  directed  (a)
when  delivered  personally  to such  Person or to an  officer or partner of the
Member to which  directed,  (b)  twenty-four  (24) hours  after  transmitted  by
facsimile,  evidence of transmission  attached,  to the facsimile number of such
Person who has  notified  the Company  and all of the  Members of its  facsimile
number,  or (c) three (3) business  days after being posted in the United States
mails if sent by registered or certified mail, return receipt requested, postage
and charges  prepaid,  or one (1) business day after  deposited  with  overnight
courier,  return receipt  requested,  delivery charges  prepaid,  in either case
addressed  to the Person to which  directed  at the address of such Person as it
appears  in this  Agreement  or such  other  address  of which  such  Person has
notified the Company and all of the Members.

         WPHC:    c/o Wellsford Real Properties, Inc.
                  1623 Blake Street, Suite 270
                  Denver, Colorado 80202
                  Attention: David M. Strong
                  Facsimile No. (303) 534-4398

                  with copies to:

                  Lynda A. McNeive, Esq.
                  Brownstein Hyatt Farber & Strickland, P.C.
                  410  17th Street, 22nd Floor
                  Denver, Colorado  80202
                  Facsimile No. (303) 623-1956

         Feld:    Mr. Al Feld
                  The Feld Company
                  4600 South Ulster Street, Suite 350
                  Denver, Colorado  80237
                  Facsimile No. (303) 721-9418

                  with a copy to:

                  Alan B. Lottner, Esq.
                  Haligman & Lottner, P.C.
                  633  17th Street, Suite 2700, North Tower
                  Denver, Colorado  80202
                  Facsimile No. (303) 292-1300

     19.3  APPLICATION OF COLORADO LAW. This  Agreement,  and the application or
interpretation  hereof,  shall be governed  exclusively  by its terms and by the
laws of the State of Colorado, and specifically by the Act.

<PAGE>

     19.4 WAIVER OF ACTION FOR PARTITION.  Each Member irrevocably waives during
the term of the  Company  any right that such  Member may have to  maintain  any
action for partition with respect to the Property of the Company.

     19.5  AMENDMENTS.  This  Agreement  may be  amended  only upon the  written
Agreement of all of the Members.

     19.6  CONSTRUCTION.  Whenever the singular number is used in this Agreement
and when  required by the context,  the same shall  include the plural,  and the
masculine gender shall include the feminine and neuter genders, and vice versa.

     19.7 HEADINGS.  The headings in this Agreement are inserted for convenience
only and are in no way intended to  describe,  interpret,  define,  or limit the
scope, extent or intent of this Agreement or any provision hereof.

     19.8 WAIVERS.  The failure of any party to seek redress for violation of or
to insist  upon the strict  performance  of any  covenant or  condition  of this
Agreement  shall not  prevent a  subsequent  act,  which  would have  originally
constituted a violation, from having the effect of an original violation.

     19.9  TIME  OF  THE  ESSENCE.  Time  is of the  essence  in  regard  to the
obligations of the parties set forth in this Agreement.

     19.10 REMEDIES FOR DEFAULT. If any party hereto fails to perform any of its
obligations  under  this  Agreement,  at the time and in the  manner  set  forth
herein,  and such failure continues uncured after any applicable notice and cure
period, then any other party may assert a claim against the defaulting party for
damages  and, to the extent  damages are not an adequate  remedy,  for  specific
performance of this Agreement.

     19.11 RIGHTS AND REMEDIES  CUMULATIVE.  The rights and remedies provided by
this  Agreement  are  cumulative  and the use of any one  right or remedy by any
party shall not  preclude  or waive the right to use any or all other  remedies.
Said rights and  remedies  are given in addition to any other rights the parties
may have by law, statute, ordinance or otherwise.

     19.12  SEVERABILITY.  If any provision of this Agreement or the application
thereof to any Person or circumstance shall be invalid, illegal or unenforceable
to any extent, the remainder of this Agreement and the application thereof shall
not be affected and shall be enforceable to the fullest extent permitted by law.

     19.13 HEIRS, SUCCESSORS AND ASSIGNS. Each and all of the covenants,  terms,
provisions and agreements  herein  contained  shall be binding upon and inure to
the benefit of the parties hereto and,

<PAGE>

to the  extent  permitted  by this  Agreement,  their  respective  heirs,  legal
representatives, successors and assigns.

     19.14 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which shall  constitute one and the
same instrument.

     19.15 FURTHER  ASSURANCES.  The Members and the Company agree that they and
each of them will take whatever action or actions as are reasonably necessary or
desirable  from  time to time to  effectuate  the  provisions  or intent of this
Agreement,  and to that end,  the Members  and the Company  agree that they will
execute,  acknowledge,  seal,  and deliver any further  instruments or documents
which may be necessary to give force and effect to this  Agreement or any of the
provisions  hereof,  or to carry out the intent of this  Agreement or any of the
provisions hereof.

     19.16 ENTIRE  AGREEMENT.  This Agreement and each of the exhibits  attached
hereto  set  forth  all  (and  are  intended  by  all  parties  hereto  to be an
integration  of all) of the promises,  agreements,  conditions,  understandings,
warranties,  and  representations  among the parties  hereto with respect to the
formation and operations of the Company; and there are no promises,  agreements,
conditions,  understandings,  warranties,  or representations,  oral or written,
express or  implied,  among them other than as set forth  herein.  The  exhibits
attached hereto are incorporated herein by reference.

     19.17 ATTORNEYS FEES. Should any party hereto institute any legal action or
proceeding to enforce any provision of the Operating Agreement or for damages by
reason of any alleged breach of any provision of the Operating  Agreement or for
any other judicial  remedy,  the  prevailing  party shall be entitled to receive
from the non-prevailing party all reasonable attorneys' fees and all court costs
in connection with said action or proceeding, in addition to any other award.

                                   CERTIFICATE

     The  undersigned  hereby agree,  acknowledge and certify that the foregoing
Agreement  constitutes  the Operating  Agreement of Silver Mesa at Palomino Park
LLC adopted by the Members of the Company effective as of December 10, 1998.

           /s/ Al Feld
           -----------------------------------------
           Al Feld

           WELLSFORD PARK HIGHLANDS CORP., a Colorado corporation

            By: /s/ David M. Strong
                -----------------------------------------
                David M. Strong, Vice President

<PAGE>

STATE OF COLORADO  )
                   )  ss.
COUNTY OF Denver   )

     The foregoing  operating agreement was acknowledged before me this 17th day
of December, 1998 by Al Feld.

     WITNESS my hand and official seal.

     My commission expires: 9/14/99

                           /s/
                           ------------------------------------------
                           Notary Public

STATE OF COLORADO           )
                            )  ss.
CITY AND COUNTY OF DENVER   )

     The foregoing  operating agreement was acknowledged before me this 16th day
of  December,  1998 by David M.  Strong  as Vice  President  of  Wellsford  Park
Highlands Corp., a Colorado corporation.

     WITNESS my hand and official seal.

     My commission expires: 11/25/2001

                           /s/
                           ------------------------------------------
                           Notary Public

<PAGE>

                                    GUARANTY

     By its  execution  hereof,  WELLSFORD  REAL  PROPERTIES,  INC.,  a Colorado
corporation  ("WRP"),  hereby guarantees to Al Feld ("Feld") that Wellsford Park
Highlands  Corp.,  a Colorado  corporation,  shall timely and fully  satisfy its
obligation  to fund the Final  Closing  Capital  Contribution  or  otherwise  to
satisfy its obligation under Section 8.3.1 of the foregoing  Operating Agreement
when, as and if required by the foregoing Operating Agreement, as such Agreement
may be amended from time to time (the "Obligation").

     This guaranty is a guaranty of payment and performance of the  Obligations,
not merely of collection.  Any amendment or modification of the Obligations made
by WPHC and Feld shall not release the duties and  obligations of WRP hereunder,
and this  Guaranty  shall extend to the  Obligations  as so amended or modified.
This Guaranty shall be continuing and  irrevocable  until the  Obligations  have
been satisfied in full. WRP hereby waives notice of acceptance of this Guaranty.

     WRP waives and agrees not to assert or take  advantage of: (a) any right to
require  Feld to  proceed  against  any other  person or to  proceed  against or
exhaust any  security  held by Feld at any time or to pursue any other remedy in
Feld's  power  before  proceeding  against WRP; (b) any right to require Feld to
proceed  against WPHC or any other  person or to proceed  against or exhaust any
security  held by Feld at any time or to pursue any other remedy in Feld's power
before  proceeding  against WRP; and (c) any requirement that notice be provided
to WRP.

     This   Guaranty  and  all   documents,   agreements,   understandings   and
arrangements  relating to this Guaranty have been executed by the undersigned on
behalf of WRP in his/her  capacity as an officer of WRP,  and not  individually,
and neither the  officers or  shareholders  of WRP shall be bound by or have any
personal  liability  hereunder or thereunder.  The  beneficiary of this Guaranty
shall look solely to the assets of WRP for  satisfaction of any liability of WRP
in respect of this Agreement and all documents,  agreements,  understandings and
arrangements relating to this transaction and will not seek recourse or commence
any action  against any of the officers or  shareholders  of WRP or any of their
personal  assets for the  performance or payment of any obligation  hereunder or
thereunder.  The  foregoing  shall also  apply to all and any future  documents,
agreements,  understandings,  arrangements and transactions  between the parties
hereto with respect to the this Guaranty or any matter related thereto.

     Should any one or more  provisions  of this  Guaranty be  determined  to be
illegal or unenforceable, all other provisions nevertheless shall be effective.

     This Guaranty  shall be governed by and  construed in  accordance  with the
laws of the State of Colorado.

<PAGE>

     EXECUTED as of December 16, 1998.

                  WELLSFORD REAL PROPERTIES, INC.,
                   a Delaware corporation

                  By: /s/ David M. Strong
                      -----------------------
                      David M. Strong, Vice President

STATE OF COLORADO          )
                           )  ss.
CITY AND COUNTY OF DENVER  )

     The  foregoing  guaranty  was  acknowledged  before  me  this  16th  day of
December,  1998  by  David  M.  Strong,  as Vice  President  of  Wellsford  Real
Properties, Inc., a Delaware corporation.

     WITNESS my hand and official seal.

     My commission expires:  11/25/01

                           /s/
                           ------------------------------------------
                           Notary Public

<PAGE>

                                    EXHIBITS

EXHIBIT A         [INTENTIONALLY OMITTED]
EXHIBIT B         Construction Procedures
EXHIBIT C         Deposit and Contract Administration Agreement
EXHIBIT D         Final Closing Funding Conditions
EXHIBIT E         Description of Infrastructure
EXHIBIT F         Description of Infrastructure Land
EXHIBIT G         Description of the Land
EXHIBIT H         Description of the Master Development Land
EXHIBIT I         [INTENTIONALLY OMITTED]
EXHIBIT J         Property Management Agreement
EXHIBIT K         Release and Waiver
EXHIBIT L         Pledge and Security Agreement -- Feld to WPHC
EXHIBIT M         Pledge and Security Agreement -- WPHC to Feld
EXHIBIT N         Description of Plans and Specifications
EXHIBIT O         Final Project Budget
EXHIBIT P         Calculation of the Feld Incentive Fee
EXHIBIT Q         Assignment of Interest -- Call Option
EXHIBIT R         Assignment of Interest -- Put Option
EXHIBIT S-1       Architect's Certificate
EXHIBIT S-2       Engineer's Certificate
EXHIBIT T         [INTENTIONALLY OMITTED]
EXHIBIT U         Substitution Agreement

<PAGE>

                                    EXHIBIT A

                             [INTENTIONALLY OMITTED]

<PAGE>

                                    EXHIBIT B

                             CONSTRUCTION PROCEDURES

1.   Requests  for advances by the  Construction  Lender for payment of costs of
     labor,  materials,  and  services  supplied  for  the  construction  of the
     improvements and other items shown in the Project Budget shall be submitted
     by Feld, not more  frequently then as specified in the  Construction  Loan,
     after actual  commencement of construction of the  improvements.  WPHC, and
     the   Construction   Consultant  shall  be  provided  with  copies  of  the
     application for advance  simultaneously  with delivery to the  Construction
     Lender,  except as  otherwise  provided  in  Section  6.6 of the  Operating
     Agreement.

2.   WPHC and the  Construction  Consultant  shall have the right and Feld shall
     permit them to enter upon the  Property and any  location  where  materials
     which are intended to be utilized in the  construction of the  improvements
     are stored for purpose of inspection of the Property and such  materials at
     all reasonable times.

3.   Feld shall timely comply with and promptly furnish to WPHC and Construction
     Consultant  a  true  and  complete  copy  of any  notice  or  claim  by any
     governmental  authority  pertaining  to the  Property  and of any notice or
     claim from the  Construction  Lender or any  subcontractor or supplier with
     respect to the Project.

4.   Feld shall  disburse  all  advances  for payment of costs and  expenses for
     purposes specified in the Project Budget, and for no other purpose.

5.   WPHC and Construction Consultant shall be advised, in advance of, and shall
     have the right to attend all meetings pertaining to the construction of the
     improvements. Feld agrees to use his best efforts to attempt to notify WPHC
     and Construction Consultant reasonably in advance of such meetings in order
     to allow  attendance  at such  meeting by  representatives  of WPHC and the
     Construction Consultant.

6.   Feld shall not reallocate to other line items any portion of the line items
     in the Project  Budget that relate to  Construction  Loan  interest or loan
     fees.

7.   Feld shall deliver copies of the monthly  construction ledger to WPHC on or
     before the 10th day of the following month.

8.   Change  orders  shall be  dealt  with as  provided  in  Section  6.7 of the
     Operating Agreement.

<PAGE>

                                    EXHIBIT C

                  DEPOSIT AND CONTRACT ADMINISTRATION AGREEMENT

<PAGE>

                                    EXHIBIT D

                        FINAL CLOSING FUNDING CONDITIONS

     (a) No Default; Certificate From Feld. There shall be no uncured default by
Feld under this Agreement and no uncured  default under the  Construction  Loan,
and WPHC shall have received a certificate  from Feld that the  representations,
warranties  and covenants of Feld in Articles 6 and 13 are  materially  true and
accurate  as of the date of the  proposed  Final  Closing  and that Feld and the
Company are not in default of any of their  obligations  hereunder  or under any
contracts or  agreements  relating to the Project as of the date of the proposed
Final Closing.

     (b)  Construction  Loan. Feld shall provide  evidence  satisfactory to WPHC
that the  principal  amount of the  Construction  Loan and all accrued  interest
thereon  have either been paid in full or will be paid in full from the proceeds
of the Final Closing Capital  Contribution  immediately  upon the funding of the
Final Closing Capital Contribution. Such evidence may consist of a payoff letter
in form  sufficient  to allow the title  insurer to insure  over the lien of the
Construction Loan.

     (c) Physical Inspection.  The Construction Consultant shall have prepared a
physical inspection report reasonably satisfactory to WPHC.

     (d) Final Completion; Development Deficits. Final Completion of the Project
shall have occurred,  and all Development  Deficit Payments shall have been made
by Feld.

     (e)  Lien  Waivers.  Feld  shall  obtain  and  provide  copies  to  WPHC of
unconditional lien releases from all  subcontractors,  materialmen and providers
of labor,  equipment,  material and/or services to the Property and the Project,
as to all  work  performed  and  materials  purchased  in  connection  with  the
construction of the Project,  in form  reasonably  satisfactory to WPHC or, with
respect to any liens not so released,  Feld shall have provided  surety bonds to
which any contested liens are  transferred  (and released from the Property) and
title insurance over any such liens.

     (f) Title  Policy.  The title  insurance  company  shall  have  issued  the
following  endorsements  to the  Company's  title  policy:  (1)  an  endorsement
indicating  that the Company  owns fee simple title to the Project Land and that
the Project Land will be free and clear of the Construction Loan upon payment of
the Final Closing  Capital  Contribution;  (2) a "date down"  endorsement to the
title policy  extending  the  effective  date of the title policy to the date of
Final  Closing and  showing no  exceptions  to title  other than the  exceptions
reflected  on the  title  policy  as of  Initial  Closing,  except  as  shall be
acceptable to WPHC in its  reasonable  judgment;  (3) an  endorsement  affording
mechanics lien coverage;  (4) an endorsement  increasing the amount of insurance
by an amount equal to the Final Closing Capital Contribution; and (5) such other
endorsements as WPHC may reasonably require,  including without limitation,  the
following:  (i) 103.1 and  103.2  (Encroachments)  to the  extent  required  and
available; (ii) 103.7 (Property Abuts Open Street); (iii) 107.2 (Increase Policy
Amount) for the amount of the Final Closing Capital

<PAGE>

Contribution plus the Initial Closing Capital Contribution; (iv) 110.1 (Deleting
Standard Exceptions) if not already provided;  (v) 110.2 (Special Exceptions) if
any  new  exceptions  appear  that  are  not  acceptable  to  WPHC  in its  sole
discretion; (vi) 115.2 (PUD); (vii) 116.1 (Survey); (viii) 123.2 (Zoning).

     (g)  Survey.   WPHC  shall  have  received  and  approved  an  updated  and
recertified  as-built survey reasonably  satisfactory to WPHC dated no more than
thirty (30) days prior to the date of Final Closing, showing no encroachments or
other  adverse  matters  affecting  title  to the  Project,  except  as shall be
reasonably acceptable to or have been previously approved in writing by WPHC.

     (h) As-Built Plans and Specifications.  Feld shall have submitted to WPHC a
written  document  executed by Feld,  the architect  and the general  contractor
certifying  no  material  change to the  approved  "for-construction"  Plans and
Specifications  except any changes  stated  therein  that have  previously  been
approved by WPHC.

     (i)  Permits,  Licenses  and  Certificates  of  Occupancy.  WPHC shall have
received a copy of the final and  unconditional  certificate or  certificates of
occupancy issued by the appropriate  governmental authorities for the Project in
its entirety  and a copy of any permits and licenses  which are required for the
operation and use of the Project.

     (j) Architect's and Engineer's  Certificates.  Feld shall have delivered to
WPHC an architect's  certificate in the form attached  hereto as Exhibit S-1 and
an Engineer's Certificate in the form attached hereto as Exhibit S-2.

     (k) Payment of Taxes. WPHC shall have received satisfactory evidence (which
may be included in the title policy  described in subsection  (f) of these Final
Closing Funding Conditions) that all real property taxes and assessments for the
Project due and payable  through the date of funding  have been timely and fully
paid.

     (l) Release and Waiver.  Feld and each affiliate of Feld that is a party to
an  Approved  Affiliate  Agreement  shall have  executed  for the benefit of the
Members a Release  and  Waiver,  substantially  in the form  attached  hereto as
Exhibit K with respect to all liabilities  incurred by Feld during its period of
membership  in the  Company,  including,  without  limitation,  all  liabilities
incurred by Feld under the Architect's Agreement,  the construction contract for
the  construction  of the  Project,  and any  contracts,  agreements,  or  other
instruments  entered into by Feld in  connection  with the  construction  of the
Project or the business of the Company.

<PAGE>

                                    EXHIBIT E

                          DESCRIPTION OF INFRASTRUCTURE

<PAGE>

                                    EXHIBIT F

                       DESCRIPTION OF INFRASTRUCTURE LAND

<PAGE>

                                    EXHIBIT G

                             DESCRIPTION OF THE LAND

PARCEL 1

LOT  3-A,  HIGHLANDS  RANCH  FILING  NO.  126-A,  AS  DESCRIBED  IN THE LOT LINE
ADJUSTMENT  CERTIFICATE,  RECORDED  APRIL  29,  1996 IN BOOK  1337 AT PAGE  324,
RECEPTION NO. 9622585 IN THE OFFICE OF THE CLERK AND RECORDER OF DOUGLAS COUNTY,
COLORADO.

PARCEL 2

THAT CERTAIN PERPETUAL  EASEMENT INTEREST AND ESTATE APPURTENANT TO PARCEL 1 AND
ALL RIGHTS AND PRIVILEGES IN CONNECTION THEREWITH, RESERVED BY PARK AT HIGHLANDS
LLC,  A  COLORADO  LIMITED  LIABILITY  COMPANY,  ITS  SUCCESSORS,   ASSIGNS  AND
DESIGNEES,  UNDER AND  PURSUANT TO THE TERMS OF THAT  CERTAIN  SPECIAL  WARRANTY
DEED,  EXECUTED BY PARK AT  HIGHLANDS  LLC,  GRANTOR,  TO  PALOMINO  PARK PUBLIC
IMPROVEMENTS CORPORATION,  A COLORADO NON-PROFIT CORPORATION,  GRANTEE, RECORDED
JANUARY  3, 1996,  UNDER  RECEPTION  NO.  9600509 IN THE OFFICE OF THE CLERK AND
RECORDER  OF  DOUGLAS  COUNTY,   COLORADO,   COVERING  THE  REAL  PROPERTY  MORE
PARTICULARLY DESCRIBED AS FOLLOWS:

     TRACT A,  HIGHLANDS  RANCH FILING NO.  126-A,  1ST  AMENDMENT,  AS FILED ON
     DECEMBER 19, 1995 UNDER  RECEPTION  NO.  9560621 IN THE OFFICE OF THE CLERK
     AND RECORDER OF DOUGLAS COUNTY, COLORADO.

<PAGE>

                                    EXHIBIT H

                   DESCRIPTION OF THE MASTER DEVELOPMENT LAND

LOTS 4 AND 5, HIGHLANDS RANCH FILING 126-A, DOUGLAS COUNTY, COLORADO

<PAGE>

                                    EXHIBIT I

                             [INTENTIONALLY OMITTED]

<PAGE>

                                    EXHIBIT J

                          PROPERTY MANAGEMENT AGREEMENT

<PAGE>

                                    EXHIBIT K

                               RELEASE AND WAIVER

<PAGE>

                                    EXHIBIT L

                      PLEDGE AND SECURITY AGREEMENT BY FELD

<PAGE>

                                    EXHIBIT M

                      PLEDGE AND SECURITY AGREEMENT BY WPHC

<PAGE>

                                    EXHIBIT N

                            PLANS AND SPECIFICATIONS

(to be approved by all Members prior to the closing of the Construction Loan and
a  description  thereof to be  attached  hereto at or before  Construction  Loan
Closing)

<PAGE>

                                    EXHIBIT O

                              FINAL PROJECT BUDGET

<PAGE>

                                    EXHIBIT P

                  CALCULATION AND PAYMENT OF THE INCENTIVE FEE

NOTE:This  Exhibit  is  retained  solely  for the  purpose  of  calculating  the
     allocation  of  Infrastructure  costs.  No  Incentive  Fee  shall be due or
     payable under this Agreement.

     1.  Definitions.  The following  definitions shall apply for the purpose of
calculation of the Incentive Fee:

     a. "Cost  Recovery"  shall mean that (I) the sum of  Disposition  Recovery,
Land Recovery, and Ownership Recovery, exceeds (II) Infrastructure Costs for any
an all phases of the Infrastructure, plus interest on Infrastructure Costs at an
annual  rate of  nine  percent,  compounded  monthly.  Cost  Recovery  shall  be
determined on a calendar year basis; such  determination  shall be made by March
31 of each year for the preceding calendar year.

     b. "Disposition Recovery" shall mean (I) the sale proceeds net of all costs
of closing  and  brokerage  costs  received  by the  Company  from a sale of the
Project by the Company,  plus (II) the sale proceeds net of all costs of closing
and brokerage  costs  received  from the sale of Future  Projects by the initial
owner(s) of such Future Projects,  minus (III) Total  Development  Costs for the
Project  (if sold by the  Company)  and Total  Development  Costs for all Future
Projects (which have been sold).

     c. "Future Project" shall mean any apartment  project  constructed by WPHC,
WRP or an Affiliate of them  (provided  that WPHC or WRP directly or  indirectly
owns 50% or more of such Affiliate),  which project is constructed on the Master
Development Land. "Future Project" shall not include, however, the Project which
is the subject of the Operating Agreement.

     d. "Incentive Cap" shall mean the lesser of $1,957,447.00 or the product of
$4,255.32 and the number of apartment units actually  constructed in Phase I. If
subsequent  phases are  developed,  each will have an Incentive Cap based on the
number of units in such  phases and a per unit limit of  $4,255,32.  In no event
shall the Incentive Cap for all phases exceed an aggregate of $8,000,000.

     e.  "Land  Recovery"  shall  mean  (I) the  amount(s)  received  by WPHC in
connection  with the  sale(s)  of all or a portion of its  interest  in the Land
Contract or in the Master  Development  Land acquired by it pursuant to the Land
Contract,  minus (II) the purchase  price paid by the WPHC or its Affiliates for
such Master  Development Land, plus all closing costs and incidental holding and
carrying costs at an assumed annual  interest rate of nine percent (9%), and the
earnest money deposit in connection with the Land Contract unless and until such
earnest  money  deposit  is  applied   against  the  purchase  price  of  Master
Development  Land. Land Recovery shall not include any amounts received from the
sale of the Project or a Future Project.

<PAGE>

     f.  "Ownership  Recovery"  shall mean (I) the Project Value for the Project
and any Future Projects,  minus (II) Total Development Costs for the Project and
all such Future  Projects.  If the Project or a Future  Project is sold  anytime
during the calendar year preceding the date of  determination  of Cost Recovery,
such  Project or Future  Project  shall not be  included in the  calculation  of
Ownership Recovery for such calendar year.

     g. "Project  NOI" shall mean the Net Operating  Income for the Project or a
Future Project for the calendar year preceding the date of determination of Cost
Recovery.

     h.  "Project  Value"  shall mean with  respect to the Project or any Future
Project  the  Project  NOI for such  Project  or Future  Project  divided by ten
percent (10.0%).

     i.  "Stabilized  NOI" shall mean the Net Operating  Income for Phase II for
the 12 month period following the Stabilization Date.

     j. "Stabilization Date" shall mean the first day of the month following the
date on which any one of the following shall have occurred: (i) 93% occupancy in
the operations of the Project at any point in time; (ii) 6 months after issuance
of a certificate of occupancy for all of the apartments  comprising the Project;
or (iii) forty-two (42) months after the Initial Closing.

     k. "Total  Development  Costs" with respect to the Project shall mean Total
Development Costs as set forth in the Operating  Agreement,  and with respect to
any Future Phase shall have an equivalent meaning.  Total Development Costs does
not include an allocation of Infrastructure Costs.

     l. "Target Fee" shall mean an amount equal to 3% of Total Development Costs
(including any Cost Saving Fee paid to Feld).

     m. "Yield" shall mean (i)  Stabilized  NOI,  divided by (ii) the sum of (A)
Total  Development  Costs  (including any Cost Saving Fee paid to Feld), (B) the
Incentive Fee, (C) the  Infrastructure  Costs allocable to the Project (i.e. for
Phase  I,  24.26%  of  total  Infrastructure  Cost),  and  (D)  interest  at 9%,
compounded monthly, on the pro rata share of the Infrastructure Cost.

     2. Calculation of Incentive Fee. The LLC's  accountants shall calculate the
Incentive  Fee promptly  after they have  sufficient  information  to accurately
calculate Stabilized NOI. The Incentive Fee shall equal the following,  provided
that in no event shall the Incentive Fee exceed the Incentive Cap:

     a. If the Yield is 9% or less, the Incentive Fee shall equal zero;

     b. If the Yield is greater than 9% and less than or equal to 10%,  then the
Incentive Fee shall equal (A) the Target Fee,  multiplied by (B) the Yield minus
9%, multiplied by (C) 100.

<PAGE>

     c. If the Yield is greater  than 10% and less than or equal to 11.5%,  then
the Incentive Fee shall equal the following:

     (i) the Target Fee, plus

     (ii) (A) the  Incentive  Cap minus the Target  Fee,  multiplied  by (B) the
Yield minus 10%, divided by (C) 1.5, multiplied by (D) 100.

     d. If the Yield is greater than 11.5%,  then the  Incentive Fee shall equal
the Incentive Cap.

     3. Payment of Incentive  Fee. The  Incentive  Fee shall be deemed earned at
the time it is calculated  but shall not be due or payable unless and until Cost
Recovery has occurred.  The Incentive Fee shall accrue simple interest at 9% per
annum from the date it is deemed earned until paid.

     4. Accelerated  Payment of Incentive Fee.  Notwithstanding  anything to the
contrary in this Exhibit P, if WPHC,  in its sole  discretion,  causes the Final
Closing to occur more than thirty (30) days prior to the Outside Date,  then the
Incentive Fee shall equal the Target Fee and the Company shall pay 50 percent of
such  Incentive  Fee at the Final  Closing and 50 percent of such  Incentive Fee
within two years of the date of Final Closing.

     5. Allocation of  Infrastructure  Costs.  The allocation of  Infrastructure
Costs for purposes of the  calculation  of the  Incentive Fee is solely for such
purpose and is distinct  from and will not be modified by the actual  allocation
of Infrastructure Costs per unit.

<PAGE>

                                    EXHIBIT Q

                 EXERCISE OF CALL OPTION; ASSIGNMENT OF INTEREST
                                POWER OF ATTORNEY

     THIS ASSIGNMENT OF INTEREST (this "Assignment") is made and entered into as
of the ____ day of  ______________  19__,  by and between Al Feld, an individual
("Assignor"),  and  Wellsford  Park  Highlands  Corp.,  a  Colorado  corporation
("Assignee").

                                    RECITALS

     b. Pursuant to that certain Operating Agreement (the "Operating Agreement")
of Silver Mesa at Palomino Park LLC, a Colorado limited  liability  company (the
"Company")  dated  as of  _______________,  1998,  by  and  among  Assignor  and
Assignee,  Assignee is the owner of an option (the "Call Option") to acquire the
ownership  interest of Assignor in the Company as of the date hereof  (including
the right of Assignor to receive any distributions  related to any periods prior
to and including the date hereof),  which ownership  interest includes the right
of  Assignor  to any and all  benefits  to which  Assignor  may be entitled as a
Member  and as a  Manager  (each as  defined  in the  Operating  Agreement),  as
provided  in the  Operating  Agreement  or the version of the  Colorado  Limited
Liability  Company  Act  adopted  by the  State  of  Colorado,  Co.  Rev.  Stat.
ss.ss.7-80-101 to 7-80- 913, as amended from time to time (the "Act"),  together
with the  unaccrued  obligations  of  Assignor,  in its capacity as a Member and
Manager,  to comply with all the terms and provisions of the Operating Agreement
and the Act (collectively, the "Ownership Interest").

     c. In accordance with Section 16.2.1 of the Operating Agreement,  Assignee,
by its execution and delivery of this Assignment to Assignor, hereby desires (i)
to exercise the Call Option as  contemplated  therein and (ii) to cause Assignor
to resign as Member and Manager of the Company.

     d. Assignor has agreed,  concurrently  with the exercise of the Call Option
by Assignee:  (i) to assign and sell the Ownership Interest to Assignee pursuant
to the terms and  conditions  set forth in the  Operating  Agreement and (ii) to
appoint Assignee as its true and lawful attorney-in-fact, as set forth herein.

     e. Terms not otherwise  defined herein shall have the meanings set forth in
the Operating Agreement.

                                    AGREEMENT

     In  consideration  of the receipt of Ten and no/100  Dollars  ($10.00)  and
other good and valuable  consideration in hand paid by Assignee to Assignor, the
receipt and sufficiency of which

<PAGE>

are hereby acknowledged and confessed by Assignor,  Assignor and Assignee hereby
agree as follows:

     1. Assignment and Assumption.  Concurrently  with and conditioned  upon the
satisfaction  of all of the  conditions  and covenants of Section  16.2.1 of the
Operating Agreement, Assignor hereby assigns, grants and conveys to Assignee all
of  Assignor's  right,  title and  interest  in and to the  Ownership  Interest.
Assignee  hereby  assumes the  Ownership  Interest and agrees to be bound by and
comply with and perform all of the  obligations of Assignor in its capacity as a
Member and as a Manager arising under the Operating Agreement which accrue after
the  date  hereof.  Assignor  shall  remain  obligated  to  perform  all  of the
obligations  of  Assignor  under  the  Operating  Agreement  (i)  which  are not
expressly  assumed  hereunder or (ii) which have accrued on or prior to the date
hereof.

     Further,  all  benefits of the  Operating  Agreement  relating to Assignor,
including, without limitation, the right to receive any distributions related to
any periods prior to and  including the date hereof,  shall inure to the benefit
of Assignee.

     2.  Representation  and  Warranty  of  Assignor.  Assignor  represents  and
warrants that: (i) Assignor is the sole owner of the entire Ownership  Interest;
(ii)  Assignor  is  not in  default  under  or in  breach  of any of the  terms,
covenants or  provisions of the Operating  Agreement,  and Assignor  knows of no
event which, but for the passage of time or the giving of notice, or both, would
constitute an event of default  under or a breach of the Operating  Agreement by
Assignor;  (iii)  Assignor  is duly  authorized  to  execute  and  deliver  this
Assignment;  and (iv) the  Ownership  Interest  is free and clear of any and all
liens, security interests, encumbrances, and competing claims.

     3.  Appointment of Assignee as  Attorney-in-Fact.  Effective as of the date
hereof,  Assignor hereby irrevocably constitutes and appoints Assignee to be its
true and lawful  attorney-in-  fact to act for Assignor,  in the name, place and
stead of Assignor, for the following purposes:

     to endorse any check or other instrument  payable to Assignor in connection
     with the Project,  to submit claims and  otherwise  deal with all insurance
     and  insurance  proceeds  with respect to the Project,  to execute and file
     with  the  appropriate   governmental  authority  or  office  any  and  all
     certificates,  reports or other evidence of the withdrawal of Assignor from
     the  Company,  and to perform  such other acts as may be necessary to carry
     out the purpose  and intent of the within  assignment  or to  continue  the
     business of the Company.

Assignor hereby ratifies,  acknowledges and confirms all acts taken by Assignee,
as  attorney-in-fact,  pursuant to this  appointment.  Assignor  hereby revokes,
annuls and cancels any and all powers of attorney,  if any,  previously executed
by Assignor  with respect to such stated  purposes,  and the same shall be of no
further force or effect.  Assignor hereby  acknowledges that such power shall be
coupled  with an  interest  and shall  survive  the  disability  or death of the
Assignor.

<PAGE>

     4.  Indemnity.  Assignor hereby agrees to indemnify and defend Assignee and
hold it harmless  against any claim,  loss or liability  arising from any of the
following:  (i) any breach of any representation or warranty hereunder;  or (ii)
any assertion  that Assignee is liable for any debts or obligations of Assignor,
whether  based  on any  act or  omission  of  Assignor  which  occurs  prior  or
subsequent to the date of this Assignment.

     5. Governing Law. This Assignment  shall be governed by and construed under
the laws of the State of Colorado.

     6. Successors and Assigns.  This Assignment  shall inure to the benefit and
be binding upon the successors and assigns of Assignor and Assignee.

     7.  Counterparts.  This  Assignment  may  be  executed  in  any  number  of
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

     This  Assignment is executed to be effective as of the date first set forth
above.

                    ASSIGNOR:

                    -------------------------
                    AL FELD, an individual

                    ASSIGNEE:

                    WELLSFORD PARK HIGHLANDS CORP., a
                    Colorado corporation

                    By:
                        ------------------------------
                             Name:
                             Title:

<PAGE>

CONSENT:

     Pursuant  to  Section  18.1.1  of  the  Operating   Agreement  and  Section
7-80-801(1)(c)  of the Act,  Assignee hereby consents to the continuation of the
business of the Company,  notwithstanding  the  withdrawal  and  resignation  of
Assignor as a Member of the Company.

                     ASSIGNEE:

                    WELLSFORD PARK HIGHLANDS CORP., a
                    Colorado corporation

                    By:
                        ------------------------------
                             Name:
                             Title:

[NOTE: Continuing  Members to execute  Unanimous  Written Consent per Schedule A
       attached hereto.]

STATE OF                         }
         ---------------------
                                 }ss
COUNTY OF                        }
          --------------------

The foregoing  instrument was acknowledged  before me on __________ __, 19__, by
AL FELD, an individual.

         My Commission expires:
                                -----------

          ------------------------------------------
          Notary Public

<PAGE>

STATE OF                       }
         ---------------------
                               }ss
COUNTY OF                      }
          --------------------

     The foregoing instrument was acknowledged before me on ________, ______, by
______________, as of Wellsford Park Highlands Corp., a Colorado corporation.

     My Commission expires:

                  ------------------------------------------
                  Notary Public

<PAGE>

                                  SCHEDULE A TO
                                    EXHIBIT Q

                            UNANIMOUS WRITTEN CONSENT
                               IN LIEU OF MEETING
                                       BY
                                 THE MEMBERS OF
                        SILVER MESA AT PALOMINO PARK LLC,
                      a Colorado Limited Liability Company

                          __________________ ___, 19___

     Section 7-80-711 of the Colorado Limited  Liability Company Act, as amended
(the "Act")  provides  that any action  required or  permitted  to be taken at a
meeting of the members of a limited  liability  company  may be taken  without a
meeting if a written consent, setting forth the action so taken, shall be signed
by all the members  entitled to vote with respect to the subject  matter thereof
and delivered to the limited  liability  company in the manner  described in the
Act. Section 15.10 of that certain Operating Agreement  ("Operating  Agreement")
of  Silver  Mesa at  Palomino  Park  LLC (the  "Company"),  a  Colorado  limited
liability  company,  dated as of  ___________,  1998, by and between Al Feld and
Wellsford Park Highlands Corp., a Colorado corporation  ("WPHC"),  provides that
action required or permitted to be taken at a meeting of Members of the Company,
may be taken without a meeting under similar circumstances.

The undersigned,  which constitute all of the Remaining  Members (defined below)
of the Company,  by signing this document,  waive any and all notice that may be
required  for a meeting of the  members of the  Company  and take the  following
action:

     WHEREAS,  pursuant to Section 16.2.1 of the Operating  Agreement,  WPHC, by
executing the attached Exercise of Call Option, Assignment of Interest and Power
of Attorney  attached  hereto as Exhibit L-1, has given notice to the Company of
its desire (i) to exercise  the Call  Option as  contemplated  in the  Operating
Agreement  and (ii) to cause Al Feld to  resign  as Member  and  Manager  of the
Company; and

     WHEREAS,  the Members other than Al Feld (the "Remaining  Members")  desire
(i) to accept the withdrawal and resignation of Al Feld as Member and Manager of
the Company,  (ii) to consent to the transfer and  assignment  of the  Ownership
Interest  (as  defined in the  attached  exhibit)  of Al Feld to WPHC,  (iii) to
appoint and elect WPHC as the successor Manager to Al Feld, to hold office until
removed  pursuant  to  Section  12.12 of the  Operating  Agreement  or until its
successor  has been elected and  qualified;  and (iv) to consent to continue the
business of the Company  after the  resignation  and  termination  of Al Feld as
Member and Manager of the Company;

     RESOLVED,  that the  Remaining  Members  hereby accept the  withdrawal  and
resignation of Al Feld as Member and Manager of the Company; and

<PAGE>

     FURTHER  RESOLVED,  that the  Remaining  Members  hereby (i) consent to the
transfer and  assignment of the  Ownership  Interest (as defined in the attached
exhibit)  of Al Feld to  WPHC,  (ii)  appoint,  elect  and  qualify  WPHC as the
successor  Manager to Al Feld, to hold office until removed  pursuant to Section
12.12 of the  Operating  Agreement or until its  successor  has been elected and
qualified;  (iii)  consent to continue  the  business  of the Company  after the
resignation and termination of Al Feld as Member and Manager of the Company; and
(iv) authorize the Members to execute,  deliver and take all action necessary to
effectuate the actions contemplated under the attached Exhibit L-1.

     This Consent,  when signed by all of the  Remaining  Members of the Company
and delivered to the Company in the manner prescribed in the Act, shall have the
same  force and  effect as a  unanimous  vote,  and may be stated as such in any
document.

     IN WITNESS  WHEREOF,  the undersigned  have executed this Consent as of the
date above written.

                  WELLSFORD PARK HIGHLANDS CORP.,
                  a Colorado corporation, Member

                  By:      ____________________________
                  Title:

<PAGE>

                                    EXHIBIT R

                 EXERCISE OF PUT OPTION; ASSIGNMENT OF INTEREST
                                POWER OF ATTORNEY

     This ASSIGNMENT OF INTEREST (this "Assignment") is made and entered into as
of the  ____  day  of  ___________________  , 19 by  and  between  Al  Feld,  an
individual  ("Assignor"),   and  Wellsford  Park  Highlands  Corp.,  a  Colorado
corporation ("Assignee").

                                    RECITALS

     A. Pursuant to that certain Operating Agreement (the "Operating Agreement")
of Silver Mesa at Palomino Park LLC, a Colorado limited  liability  company (the
"Company")  dated as of __________,  1998, by and between Assignor and Assignee,
Assignor  is the owner of an option  (the "Put  Option")  to cause  Assignee  to
acquire the ownership  interest of Assignor in the Company as of the date hereof
(including  the right of Assignor to receive  any  distributions  related to any
periods  prior to and  including  the date  hereof),  which  ownership  interest
includes the right of Assignor to any and all benefits to which  Assignor may be
entitled  as a  Member  and as a  Manager  (each  as  defined  in the  Operating
Agreement),  as  provided  in the  Operating  Agreement  or the  version  of the
Colorado  Limited  Liability  Company Act adopted by the State of Colorado,  Co.
Rev.  Stat.  ss.ss.7-80-  101 to  7-80-913,  as  amended  from time to time (the
"Act"),  together with the unaccrued obligations of Assignor, in its capacity as
a Member  and  Manager,  to  comply  with all the terms  and  provisions  of the
Operating Agreement and the Act (collectively, the "Ownership Interest").

     B. In accordance with Section 16.2.2 of the Operating Agreement,  Assignor,
by its execution and delivery of this Assignment to Assignee, hereby desires (i)
to exercise the Put Option as contemplated  therein and (ii) to resign as Member
and Manager of the Company.

     C. At Final Closing (as defined in the Operating  Agreement),  concurrently
with the above  exercise of the Put Option by Assignor,  (i) Assignee has agreed
to acquire and buy the Ownership  Interest  from Assignor  pursuant to the terms
and  conditions set forth in the Operating  Agreement,  provided that all of the
Final  Closing  Funding  Conditions  have been  satisfied  and (ii) Assignor has
agreed to appoint Assignee as its true and lawful attorney-in-fact, as set forth
herein.

     D. Terms not otherwise  defined herein shall have the meanings set forth in
the Operating Agreement.

<PAGE>

                                    AGREEMENT

     In  consideration  of the receipt of Ten and no/100  Dollars  ($10.00)  and
other good and valuable  consideration in hand paid by Assignor to Assignee, the
receipt  and  sufficiency  of which are hereby  acknowledged  and  confessed  by
Assignee, Assignor and Assignee hereby agree as follows:

     1. Assignment and Assumption. At Final Closing (as defined in the Operating
Agreement),  concurrently  with and conditioned  upon the satisfaction of all of
the conditions and covenants of Section 16.2.2 of the Operating  Agreement,  (i)
Assignor hereby assigns, grants and conveys to Assignee all of Assignor's right,
title and interest in and to the  Ownership  Interest and (ii)  Assignee  hereby
assumes  the  Ownership  Interest  and agrees to be bound by and comply with and
perform all of the  obligations  of Assignor in its  capacity as a Member and as
Manager,  arising  under the  Operating  Agreement  which  accrue after the date
hereof.  Assignor  shall remain  obligated to perform all of the  obligations of
Assignor  under the  Operating  Agreement  (i) which are not  expressly  assumed
hereunder or (ii) which have  accrued on or prior to the date  hereof.  Further,
all benefits of the Operating Agreement relating to Assignor, including, without
limitation,  the right to receive any distributions related to any periods prior
to and including the date hereof, shall inure to the benefit of Assignee.

     2.  Representation  and  Warranty  of  Assignor.  Assignor  represents  and
warrants that: (i) Assignor is the sole owner of the entire Ownership  Interest;
(ii)  Assignor  is  not in  default  under  or in  breach  of any of the  terms,
covenants or  provisions of the Operating  Agreement,  and Assignor  knows of no
event which, but for the passage of time or the giving of notice, or both, would
constitute an event of default  under or a breach of the Operating  Agreement by
Assignor;  (iii)  Assignor  is duly  authorized  to  execute  and  deliver  this
Assignment;  and (iv) the  Ownership  Interest  is free and clear of any and all
liens, security interests, encumbrances, and completing claims.

     3.  Appointment of Assignee as  Attorney-in-Fact.  Effective as of the date
hereof,  Assignor hereby  constitutes  and appoints  Assignee to be its true and
lawful  attorney-in-fact  to act for Assignor,  in the name,  place and stead of
Assignor, for the following purposes:

     to endorse any check or other instrument  payable to Assignor in connection
     with the Project,  to submit claims and  otherwise  deal with all insurance
     and  insurance  proceeds  with respect to the Project,  to execute and file
     with  the  appropriate   governmental  authority  or  office  any  and  all
     certificates,  reports or other evidence of the withdrawal of Assignor from
     the  Company,  and to perform  such other acts as may be necessary to carry
     out the purpose  and intent of the within  assignment  or to  continue  the
     business of the Company.

Assignor hereby ratifies,  acknowledges and confirms all acts taken by Assignee,
as  attorney-in-fact,  pursuant to this  appointment.  Assignor  hereby revokes,
annuls and cancels any and all powers of attorney,  if any,  previously executed
by Assignor with respect to such stated purposes, and the same

<PAGE>

shall be of no further force or effect.  Assignor hereby  acknowledges that such
power shall be coupled  with an interest  and shall  survive the  disability  or
death of the Assignor.

     4.  Indemnity.  Assignor hereby agrees to indemnify and defend Assignee and
hold it harmless  against any claim,  loss or liability  arising from any of the
following:  (i) any breach of any representation or warranty hereunder;  or (ii)
any assertion  that Assignee is liable for any debts or obligations of Assignor,
whether  based  on any  act or  omission  of  Assignor  which  occurs  prior  or
subsequent to the date of this Assignment.

     5. Governing Law. This Assignment  shall be governed by and construed under
the laws of the State of Colorado.

     6. Successors and Assigns.  This Assignment  shall inure to the benefit and
be binding upon the successors and assigns of Assignor and Assignee.

     7.  Counterparts.  This  Assignment  may  be  executed  in  any  number  of
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

     This  Assignment is executed to be effective as of the date first set forth
above.

                   ASSIGNOR:

                   -----------------------
                   AL FELD, an individual

                   ASSIGNEE:

                   WELLSFORD PARK HIGHLANDS CORP., a
                   Colorado corporation

                   By:
                       -----------------------
                       Name:
                       Title:

<PAGE>

CONSENT:

Pursuant to Section 18.1.1 of the Operating Agreement and Section 7-80-801(1)(c)
of the Act,  Assignee hereby consents to the continuation of the business of the
Company,  notwithstanding the withdrawal and resignation of Assignor as a Member
of the Company.

                   ASSIGNEE:

                   WELLSFORD PARK HIGHLANDS CORP., a
                   Colorado corporation

                   By:
                       -----------------------
                       Name:
                       Title:

[NOTE: Continuing  Members to execute  Unanimous  Written Consent per Schedule A
     attached hereto.]

STATE OF   }
           }ss
COUNTY OF  }

     The  foregoing  instrument  was  acknowledged  before me on  _____________,
_____, by AL FELD, an individual.

                  My Commission expires: ____________

                            ------------------------------------------
                            Notary Public

<PAGE>

STATE OF    }
            }ss
COUNTY OF   }

     The foregoing instrument was acknowledged before me on ___________,  199__,
by  ____________,  as   __________________________________   of  WELLSFORD  PARK
HIGHLANDS CORP., a Colorado corporation.

     My Commission expires:
                            -----------

                        ------------------------------------------
                        Notary Public

<PAGE>

                                   SCHEDULE A
                                  TO EXHIBIT R

                            UNANIMOUS WRITTEN CONSENT
                               IN LIEU OF MEETING
                                       BY
                                 THE MEMBERS OF
                        SILVER MESA AT PALOMINO PARK LLC,
                      a Colorado Limited Liability Company

                          __________________ ___, 19__

     Section 7-80-711 of the Colorado Limited  Liability Company Act, as amended
(the "Act")  provides  that any action  required or  permitted  to be taken at a
meeting of the members of a limited  liability  company  may be taken  without a
meeting if a written consent, setting forth the action so taken, shall be signed
by all the members  entitled to vote with respect to the subject  matter thereof
and delivered to the limited  liability  company in the manner  described in the
Act. Section 15.10 of that certain Operating Agreement  ("Operating  Agreement")
of  Silver  Mesa at  Palomino  Park  LLC (the  "Company"),  a  Colorado  limited
liability  company,  dated as of  __________,  1998 by and  between  Al Feld and
Wellsford Park Highlands Corp., a Colorado corporation  ("WPHC"),  provides that
action required or permitted to be taken at a meeting of Members of the Company,
may be taken without a meeting under similar circumstances.

     The  undersigned,  which  constitute all of the Remaining  Members (defined
below) of the Company,  by signing this document,  waive any and all notice that
may be  required  for a  meeting  of the  members  of the  Company  and take the
following action:

     WHEREAS, pursuant to Section 16.2.2 of the Operating Agreement, Al Feld, by
executing the attached Exercise of Put Option,  Assignment of Interest and Power
of Attorney  attached  hereto as Exhibit L-2, has given notice to the Company of
its  desire (i) to  exercise  the Put Option as  contemplated  in the  Operating
Agreement and (ii) to resign as Member and Manager of the Company; and

     WHEREAS,  the Members other than Al Feld (the "Remaining  Members")  desire
(i) to accept the withdrawal and resignation of Al Feld as Member and Manager of
the Company,  (ii) to consent to the transfer and  assignment  of the  Ownership
Interest  (as  defined in the  attached  exhibit)  of Al Feld to WPHC,  (iii) to
appoint and elect WPHC as the successor Manager to Al Feld, to hold office until
removed  pursuant  to  Section  12.12 of the  Operating  Agreement  or until its
successor  has been elected and  qualified;  and (iv) to consent to continue the
business of the Company  after the  resignation  and  termination  of Al Feld as
Member and Manager of the Company;

     RESOLVED,  that the  Remaining  Members  hereby accept the  withdrawal  and
resignation of Al Feld as Member and Manager of the Company; and

<PAGE>

     FURTHER  RESOLVED,  that the  Remaining  Members  hereby (i) consent to the
transfer and  assignment of the  Ownership  Interest (as defined in the attached
exhibit)  of Al Feld to  WPHC,  (ii)  appoint,  elect  and  qualify  WPHC as the
successor  Manager to Al Feld, to hold office until removed  pursuant to Section
12.12 of the  Operating  Agreement or until its  successor  has been elected and
qualified;  (iii)  consent to continue  the  business  of the Company  after the
resignation and termination of Al Feld as Member and Manager of the Company; and
(iv) authorize the Members to execute,  deliver and take all action necessary to
effectuate the actions contemplated under the attached Exhibit L-2.

     This Consent,  when signed by all of the  Remaining  Members of the Company
and delivered to the Company in the manner prescribed in the Act, shall have the
same  force and  effect as a  unanimous  vote,  and may be stated as such in any
document.

     IN WITNESS  WHEREOF,  the undersigned  have executed this Consent as of the
date above written.

                                 WELLSFORD PARK HIGHLANDS CORP.,
                                 a Colorado Corporation, Member

                                 -------------------------------
                                 By:
                                 Title:

<PAGE>

                                   EXHIBIT S-1

                         FORM OF ARCHITECT'S CERTIFICATE

                            (Letterhead of Architect)

                            CERTIFICATE OF ARCHITECT

______________, 1998

Silver Mesa at Palomino Park LLC
Wellsford Real Properties, Inc.
Wellsford Park Highlands Corp.
l623 Blake Street, Suite 270
Denver, Colorado 80202

Reference:        ______________________
                  ____________, Colorado

Ladies and Gentlemen:

Please refer to the final architectural plans,  specifications and Architectural
Supplemental Instructions (the "Plans") described in the attached Exhibit A. The
undersigned  understands  that Wellsford Real  Properties,  Inc. or its designee
("Wellsford") is acquiring an interest in a residential  project owned by Silver
Mesa at  Palomino  Park LLC, a Colorado  limited  liability  company  ("Owner"),
located  on a  parcel  of real  property  in the  County  of  Douglas,  State of
Colorado,  and  described on Exhibit B attached  hereto (the  "Site"),  on which
Owner has  constructed a complex of 264 apartment  units known as Silver Mesa at
Palomino Park (the  "Project").  This  Certificate  is a condition  precedent to
Wellsford acquiring the Project, and the undersigned acknowledges that Wellsford
will be relying upon this Certificate in consummating such transaction.

With  such   understanding,   the  undersigned  has  reviewed  the  Plans,   the
construction of the Project in relationship to the Plans, and its conformity and
compliance  with  applicable laws and  regulations  (i.e.,  applicable  federal,
state,  county and municipal  laws and  regulations  and  ordinances,  including
without limitation,  governing building and fire codes, zoning,  subdivision and
land  use  laws  and   regulations,   environmental   and  safety  statutes  and
regulations, and the rules and regulations of other governmental agencies having
jurisdiction over the Site or the Project  ("Applicable Laws"). Based upon these
reviews and upon due professional investigation, the undersigned declares on its
behalf and certifies to and for the benefit of only Owner and Wellsford that:

<PAGE>

1.   The undersigned is the architect who prepared the Plans and coordinated and
     supervised the construction of the Project.

2.   The Project  contains 264 apartment  units in __ buildings  with a total of
     approx.  478,824  square feet of gross  leasable  living area ("GLA"),  and
     _______  parking  spaces  (including  ____ detached  garage  spaces),  with
     related amenities and facilities.  The GLA is calculated from the Plans and
     the square  footage  includes  the outside  face of frame and the  interior
     stairs, but excludes the interior storage space and any non-usable space.

3.   We have  examined  all  applicable  materials  relative  to those  types of
     restrictions and requirements  sometimes  referred to as use,  dimensional,
     bulk  and  parking  restrictions,   jurisdictional  wetlands  requirements,
     setback and buffering  requirements,  density  restraints,  landscaping and
     vegetation  preservation  ordinances,   laws,  rules  and  regulations  and
     environmental restraints, which relate to the Site (hereinafter referred to
     as  "Development  Constraints")  and  have  determined,  to the best of our
     knowledge, that the Project and Site are in compliance with the Development
     Constraints and are permitted as a matter of right.

4.   The Site is zoned Highlands  Ranch Planned  Development - Planning areas 73
     (Town  Center)  and 67 (High  Density  Residential)  under  the  applicable
     regulations of the County of Douglas, Colorado.

5.   The  improvements   contemplated  by  the  Plans  have  been  completed  in
     substantial  compliance  therewith  with no  material  changes,  except for
     Architectural Supplemental Instructions  ____________________________;  and
     except for Change Orders  _____________________ which have been approved by
     Wellsford; and except for the items in the attached Exhibit C and estimated
     cost-to-complete as shown.

6.   We are of the opinion that the Project has been designed in accordance with
     the applicable  provisions of Colorado law, the Americans with Disabilities
     Act of 1990, 42 U.S.C.  Section 12101,  et seq., as amended,  and any other
     applicable  law, rule or regulation of any kind or description  relating to
     the elimination of architectural barriers for the handicapped.

7.   All amounts due and payable to us under or in connection  with the Standard
     form of Agreement  between Owner and Architect for Housing  Services  dated
     _________,  19__,  and all amendments  thereto,  with regard to the Project
     have been paid in full.

8.   The Project,  the Plans and all  improvements  comply with known Applicable
     Laws, including without limitation,  the applicable Plat, and all necessary
     and required notices,  permits or license agreements in connection with the
     Plans.  To the best of our knowledge,  all permits,  licenses and approvals
     required for the construction of the improvements contemplated by the Plans
     and  for  the  use  and  occupancy  of  the  Project,  including,   without
     limitation,  all final  certificates of occupancy,  have been obtained from
     the  applicable   governmental   or  quasi-   governmental   agency  having
     jurisdiction or any private party from whom any license is required.

9.   The improvements are ready for occupancy.

10.  The undersigned is a licensed  architect and has the power and authority to
     render  this  Certificate  and to  execute  and  deliver  it on  behalf  of
     _______________.

For the purposes of this Certificate,  the terms "known" and "to the best of our
knowledge" shall mean and include information  actually known to the undersigned
or  should  have  been  known  to it  upon  diligent  inquiry  or of  which  the
undersigned has received constructive notice.

Very truly yours,

By:
         ----------------------------------------------
         Supervising Architect

Dated:________________________

<PAGE>

                                  EXHIBIT A TO
                            CERTIFICATE OF ARCHITECT

                                  DRAWING LIST

ARCHITECTURAL:

STRUCTURAL:

FOUNDATION:

MECHANICAL:

PLUMBING:

ELECTRICAL:

LANDSCAPING:

<PAGE>

                                  EXHIBIT B TO
                            CERTIFICATE OF ARCHITECT

                                LEGAL DESCRIPTION

LOT 3-A, HIGHLANDS RANCH FILING NO. 126-A, AS DESCRIBED IN THE LOT LINE
ADJUSTMENT CERTIFICATE, RECORDED APRIL 29, 1996 IN BOOK 1337 AT PAGE 324,
RECEPTION NO. 9622585 IN THE OFFICE OF THE CLERK AND RECORDER OF DOUGLAS
COUNTY, COLORADO.

<PAGE>

                                  EXHIBIT C TO
                            CERTIFICATE OF ARCHITECT

Incomplete Items                                              Cost of Completion

<PAGE>

                                   EXHIBIT S-2

                         FORM OF ENGINEER'S CERTIFICATE

                        (Letterhead of Project Engineer)

                             ENGINEER'S CERTIFICATE

__________________, 1997

Silver Mesa at Palomino Park LLC
Wellsford Real Properties, Inc.
Wellsford Park Highlands Corp.
l623 Blake Street, Suite 270
Denver, Colorado 80202

Reference:        ______________
                  _________________, Colorado

Ladies and Gentlemen:

The  undersigned  understands  that  __________________________  or its designee
("Wellsford")  is  acquiring  an interest in or is causing the  repayment of the
construction  loan for a  residential  complex  owned by Silver Mesa at Palomino
Park LLC,  a  Colorado  limited  liability  company  ("Owner"),  located on that
certain parcel of real property having an address of  ______________________  in
the City of ___________,  County of __________,  State of Colorado and described
on Exhibit A attached  hereto (the  "Site"),  on which Owner has  constructed  a
complex of ______ apartment units known as ______________ (the "Project").  This
Certificate  is a condition  precedent to  Wellsford's  acquiring the Project or
repaying such loan,  and the  undersigned  acknowledges  that  Wellsford will be
relying upon this Certificate in consummating such transaction.

With such  understanding,  the  undersigned  has reviewed  those portions of the
plans and  specifications  for the Project that are listed on Exhibit B attached
hereto  (the   "Engineering   Plans"),   the  construction  of  the  Project  in
relationship  to the Engineering  Plans,  and its conformity and compliance with
certain  applicable laws and regulations.  Based upon these reviews and upon due
professional  investigation,  the undersigned  declares and certifies to and for
the benefit of Owner and Wellsford that:

1.   Satisfactory  methods of access to and egress from the Site and the Project
     and adjoining or nearby  public ways are  available  and are  sufficient to
     meet the reasonable needs of the Project and all applicable requirements of
     public authorities.

<PAGE>

     Sanitary  water supply and storm sewer and sanitary  sewer  facilities  and
     other required utilities (gas, electricity,  telephone,  etc.) are likewise
     available and are  sufficient to meet the  reasonable  needs of the Project
     and all applicable requirements of public authorities.

2.   We are of the opinion that the Property is not located in a 100-Year  Flood
     Plain or in an  identified  "flood  prone  area,"  as  defined  by the U.S.
     Department of Housing and Urban Development, pursuant to the Flood Disaster
     Protection  Act of 1973,  as amended,  and is not  subject to any  federal,
     state or local "wetlands" rules, regulations, ordinances or requirements.

3.   We have reviewed and are familiar with all tests and analyses performed and
     professional  recommendations  made by soil engineers and other consultants
     regarding  the  condition  of the  soil of the  Site.  In our  professional
     opinion,  the  condition of the soil of the Site is adequate to support the
     Project as completed.

4.   We have reviewed the locations of all easements, rights-of-way,  subsurface
     rights or jurisdictional wetlands, and all rules and regulations pertaining
     to the same in force  relating to the Site,  and the Plans are  prepared so
     that the Project does not encroach over, across or upon any such easements,
     rights-of-way,  subsurface rights or jurisdictional  wetlands and the like,
     and all necessary permits and approvals  required for the Project have been
     obtained.

5.   We have reviewed all deeds,  easements,  covenants,  restrictions and other
     matters set forth in Schedule B of Title Commitment No.  __________  issued
     by Land Title Guaranty  Company,  and the Project satisfies and/or does not
     violate any provisions concerning  construction of improvements on the Site
     set  forth in such  deeds,  easements,  covenants,  restrictions  and other
     matters.

This Certificate may be relied upon only by Owner and Wellsford.

Very Truly yours,

[ENGINEER]

By:
   -----------------------------------------
         Title:
               -----------------------------
Dated:
      ------------------------------

<PAGE>

                                  EXHIBIT A TO
                           CERTIFICATE OF ENGINEERING

                                LEGAL DESCRIPTION

LOT 3-A, HIGHLANDS RANCH FILING NO. 126-A, AS DESCRIBED IN THE LOT LINE
ADJUSTMENT CERTIFICATE, RECORDED APRIL 29, 1996 IN BOOK 1337 AT PAGE 324,
RECEPTION NO. 9622585 IN THE OFFICE OF THE CLERK AND RECORDER OF DOUGLAS
COUNTY, COLORADO.

<PAGE>

                                  EXHIBIT B TO
                           CERTIFICATE OF ENGINEERING

                            ______________, Colorado

                                  DRAWING LIST

CIVIL ENGINEERING
 DRAWINGS:

STRUCTURAL:

FOUNDATION:

MECHANICAL:

PLUMBING:

ELECTRICAL:

LANDSCAPING:

<PAGE>

                                    EXHIBIT T

                             [INTENTIONALLY DELETED]

<PAGE>

                                    EXHIBIT U

                             SUBSTITUTION AGREEMENT

         TO BE AGREED UPON BY PARTIES PRIOR TO CONSTRUCTION LOAN CLOSING

<PAGE>FIRST AMENDMENT TO OPERATING AGREEMENT
                       OF SILVER MESA AT PALOMINO PARK LLC

     THIS FIRST AMENDMENT TO OPERATING AGREEMENT OF SILVER MESA AT PALOMINO PARK
LLC (this "Second  Amendment") is made as of the 19th day of December,  2000, by
and between AL FELD, an individual ("Feld"), and WELLSFORD PARK HIGHLANDS CORP.,
a Colorado corporation ("WPHC").

                                    RECITALS

     A.  Feld  and  WPHC  constitute  all  of  the  members  (collectively,  the
"Members")  of Silver Mesa at Palomino  Park LLC, a Colorado  limited  liability
company (the "Company"),  which is governed by that certain Operating  Agreement
of  Silver  Mesa at  Palomino  Park  LLC  dated as of  December  10,  1998  (the
"Operating Agreement").

     B. The Members  now desire to amend the  Operating  Agreement  as set forth
herein.

     C.  Capitalized   terms  not  otherwise   defined  herein  shall  have  the
definitions set forth in the Operating Agreement.

     NOW,  THEREFORE,  for and in  consideration of the above recitals and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged,  Feld and WPHC hereby  agree to amend the  Operating  Agreement as
follows:

     1.   Single-Member  LLC.  Feld and WPHC hereby agree that,  notwithstanding
          any provisions to the contrary in the Operating Agreement, the Company
          shall continue in existence and its business shall be continued  after
          the transfer to WPHC of all of Feld's interest in the Company pursuant
          to the Call Option.  The Articles of Organization  shall be amended to
          permit  continuation  of  the  Company  as  a  single-member   limited
          liability  company  and,  upon  such  amendment  to  the  Articles  of
          Organization,  the Operating  Agreement shall be and hereby is amended
          to conform thereto.

     2.   Full  Force and  Effect.  The  Operating  Agreement,  as  specifically
          amended herein,  is hereby ratified by the Members and shall remain in
          full force and effect.

     3.   Counterparts.  This  Amendment  may  be  executed  in  any  number  of
          counterparts,  each of which shall be deemed to be an original and all
          of which, when taken together,  shall constitute one agreement binding
          on the parties  hereto,  notwithstanding  that all the parties may not
          have signed the same counterpart. Signature pages from one counterpart
          may be  removed  and  attached  to another  counterpart  to create one
          fully-executed document.

<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto,  being all of the Members of the
Company, have executed this Amendment as of the date first written above.

           /s/ Al Feld
           -----------------------------------------
           Al Feld

           WELLSFORD PARK HIGHLANDS CORP., a Colorado corporation

            By: /s/ David M. Strong
                -----------------------------------------
                David M. Strong, Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}]]