Document:

Exhibit 10.1.1

 

 

 

FIRST AMENDED AND RESTATED

 

AGREEMENT OF LIMITED PARTNERSHIP

 

OF

 

AFFORDABLE RESIDENTIAL COMMUNITIES LP

 

 

a Delaware limited partnership

 

 

THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN
REGISTERED

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

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

TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH

REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE PARTNERSHIP

AN OPINION OF COUNSEL SATISFACTORY TO THE PARTNERSHIP, IN FORM

AND SUBSTANCE SATISFACTORY TO THE PARTNERSHIP, TO THE EFFECT

THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE

EFFECTED WITHOUT REGISTRATION UNDER THE ACT AND UNDER

APPLICABLE STATE SECURITIES OR “BLUE SKY” LAWS.

 

 

Amended and Restated as of February 11, 2004

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I

  DEFINED TERMS

  	
   

  
	
   

  	
   

  
	
  ARTICLE II

  ORGANIZATIONAL MATTERS

  	
   

  
	
   

  	
   

  
	
  Section 2.1  Organization

  	
   

  
	
  Section 2.2  Name

  	
   

  
	
  Section 2.3  Registered
  Office and Agent; Principal Office

  	
   

  
	
  Section 2.4  Power of
  Attorney

  	
   

  
	
  Section 2.5  Term

  	
   

  
	
   

  	
   

  
	
  ARTICLE III

  PURPOSE

  	
   

  
	
   

  	
   

  
	
  Section 3.1  Purpose and
  Business

  	
   

  
	
  Section 3.2  Powers.

  	
   

  
	
  Section 3.3  Partnership
  Only for Partnership Purposes

  	
   

  
	
  Section 3.4  Representations
  and Warranties by the Parties

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV

  CAPITAL CONTRIBUTIONS

  	
   

  
	
   

  	
   

  
	
  Section 4.1  Capital
  Contributions of the Partners

  	
   

  
	
  Section 4.2  Issuances of
  Additional Partnership Interests

  	
   

  
	
  Section 4.3  Additional Funds and
  Capital Contributions

  	
   

  
	
  Section 4.4  Stock Option Plan

  	
   

  
	
  Section 4.5  No Interest; No
  Return

  	
   

  
	
  Section 4.6  Conversion or
  Redemption of Preferred Shares

  	
   

  
	
  Section 4.7  Conversion or Redemption
  of Junior Shares

  	
   

  
	
  Section 4.8  Other Contribution
  Provisions.

  	
   

  
	
  Section 4.9  Not Publicly Traded.

  	
   

  
	
   

  	
   

  
	
  ARTICLE V

  DISTRIBUTIONS

  	
   

  
	
   

  	
   

  
	
  Section 5.1  Requirement and
  Characterization of Distributions

  	
   

  
	
  Section 5.2  Distributions
  In-Kind

  	
   

  
	
  Section 5.3  Amounts Withheld

  	
   

  
	
  Section 5.4  Distributions Upon
  Liquidation

  	
   

  
	
  Section 5.5  Distributions to
  Reflect Issuance of Additional Partnership Units.

  	
   

  
	
  Section 5.6  Restricted
  Distributions

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI

  ALLOCATIONS

  	
   

  
	
   

  	
   

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

  	
   

  
	
  Section 6.2  General Allocations

  	
   

  

 

 

i

 

	
  Section 6.3  Additional
  Allocation Provisions

  	
   

  
	
  Section 6.4  Tax Allocations.

  	
   

  
	
   

  	
   

  
	
  ARTICLE VII

  MANAGEMENT AND OPERATIONS OF BUSINESS

  	
   

  
	
   

  	
   

  
	
  Section 7.1  Management.

  	
   

  
	
  Section 7.2  Certificate of
  Limited Partnership

  	
   

  
	
  Section 7.3  Restrictions on
  General Partner’s Authority

  	
   

  
	
  Section 7.4  Reimbursement of the
  General Partner

  	
   

  
	
  Section 7.5  Outside Activities
  of the General Partner

  	
   

  
	
  Section 7.6  Contracts with
  Affiliates

  	
   

  
	
  Section 7.7  Indemnification

  	
   

  
	
  Section 7.8  Liability of the
  General Partner

  	
   

  
	
  Section 7.9  Other Matters
  Concerning the General Partner

  	
   

  
	
  Section 7.10  Title to
  Partnership Assets

  	
   

  
	
  Section 7.11  Reliance by Third
  Parties

  	
   

  
	
   

  	
   

  
	
  ARTICLE VIII

  RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

  	
   

  
	
   

  	
   

  
	
  Section 8.1  Limitation of
  Liability

  	
   

  
	
  Section 8.2  Management of
  Business

  	
   

  
	
  Section 8.3  Outside Activities
  of Limited Partners

  	
   

  
	
  Section 8.4  Return of Capital

  	
   

  
	
  Section 8.5 Adjustment Factor

  	
   

  
	
  Section 8.6  Redemption Rights of
  Qualifying Parties

  	
   

  
	
  Section 8.7  Partnership Right to
  Call Limited Partner Interests

  	
   

  
	
  Section 8.8  Special Provisions
  Applicable to Reorganization Common Units

  	
   

  
	
  Section 8.9  Special Provisions
  Applicable to Paired Common Units

  	
   

  
	
   

  	
   

  
	
  ARTICLE IX

  BOOKS, RECORDS, ACCOUNTING AND REPORTS

  	
   

  
	
   

  	
   

  
	
  Section 9.1  Records and
  Accounting

  	
   

  
	
  Section 9.2  Partnership Year

  	
   

  
	
  Section 9.3  Reports

  	
   

  
	
   

  	
   

  
	
  ARTICLE X

  TAX MATTERS

  	
   

  
	
   

  	
   

  
	
  Section 10.1  Preparation of Tax
  Returns

  	
   

  
	
  Section 10.2  Tax Elections

  	
   

  
	
  Section 10.3  Tax Matters
  Partner

  	
   

  
	
  Section 10.4  Withholding

  	
   

  
	
  Section 10.5  Organizational
  Expenses

  	
   

  

 

 

ii

 

	
  ARTICLE XI

  TRANSFERS AND WITHDRAWALS

  	
   

  
	
   

  	
   

  
	
  Section 11.1  Transfer

  	
   

  
	
  Section 11.2  Transfer of
  General Partner’s Partnership Interest

  	
   

  
	
  Section 11.3  Transfer of
  Limited Partners’ Partnership Interests

  	
   

  
	
  Section 11.4  Substituted
  Limited Partners

  	
   

  
	
  Section 11.5  Assignees

  	
   

  
	
  Section 11.6  General Provisions

  	
   

  
	
   

  	
   

  
	
  ARTICLE XII

  ADMISSION OF PARTNERS

  	
   

  
	
   

  	
   

  
	
  Section 12.1  Admission of
  Successor General Partner

  	
   

  
	
  Section 12.2  Admission of
  Additional Limited Partners

  	
   

  
	
  Section 12.3  Amendment of
  Agreement and Certificate of Limited Partnership

  	
   

  
	
  Section 12.4 Limit on Number of
  Partners

  	
   

  
	
   

  	
   

  
	
  ARTICLE XIII

  DISSOLUTION, LIQUIDATION AND TERMINATION

  	
   

  
	
   

  	
   

  
	
  Section 13.1  Dissolution

  	
   

  
	
  Section 13.2  Winding Up

  	
   

  
	
  Section 13.3  Deemed
  Distribution and Recontribution

  	
   

  
	
  Section 13.4  Rights of Limited
  Partners

  	
   

  
	
  Section 13.5  Notice of
  Dissolution

  	
   

  
	
  Section 13.6  Cancellation of
  Certificate of Limited Partnership

  	
   

  
	
  Section 13.7  Reasonable Time
  for Winding-Up

  	
   

  
	
   

  	
   

  
	
  ARTICLE XIV

  PROCEDURES FOR ACTIONS AND CONSENTS

  OF PARTNERS; AMENDMENTS; MEETINGS

  	
   

  
	
   

  	
   

  
	
  Section 14.1  Procedures for
  Actions and Consents of Partners

  	
   

  
	
  Section 14.2  Amendments

  	
   

  
	
  Section 14.3  Meetings of the
  Partners

  	
   

  
	
   

  	
   

  
	
  ARTICLE XV

  GENERAL PROVISIONS

  	
   

  
	
   

  	
   

  
	
  Section 15.1  Addresses and
  Notice

  	
   

  
	
  Section 15.2  Titles and
  Captions

  	
   

  
	
  Section 15.3  Pronouns and
  Plurals

  	
   

  
	
  Section 15.4  Further Action

  	
   

  
	
  Section 15.5  Binding Effect

  	
   

  
	
  Section 15.6  Waiver

  	
   

  
	
  Section 15.7  Counterparts

  	
   

  
	
  Section 15.8  Applicable Law

  	
   

  
	
  Section 15.9  Entire Agreement

  	
   

  

 

 

iii

 

	
  Section 15.10  Invalidity of
  Provisions

  	
   

  
	
  Section 15.11  Limitation to
  Preserve REIT Status

  	
   

  
	
  Section 15.12  No Partition

  	
   

  
	
  Section 15.13  No Third-Party
  Rights Created Hereby

  	
   

  
	
  Section 15.14  No Rights as
  Stockholders

  	
   

  

 

	
  Exhibit A

  	
  PARTNERS AND PARTNERSHIP UNITS

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit
  B

  	
  EXAMPLES
  REGARDING ADJUSTMENT FACTOR

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
  NOTICE OF REDEMPTION

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit D

  	
  FORM OF UNIT
  CERTIFICATE

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit
  E

  	
  FORM
  OF PAIRED COMMON UNIT CERTIFICATE

  	
   

  

 

 

iv

 

FIRST AMENDED AND RESTATED AGREEMENT OF

LIMITED PARTNERSHIP OF AFFORDABLE RESIDENTIAL COMMUNITIES LP

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE I

DEFINED TERMS

 

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

 

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

 

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

 

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

 

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

 

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

3

 

(i)                                    
the sum, without
duplication, of:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

7

 

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

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

13

 

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

 

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

 

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

 

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

 

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

 

“SEC”
means the Securities and Exchange Commission.

 

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

 

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

 

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

 

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

 

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

 

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

 

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

15

 

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

 

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

 

ARTICLE II

ORGANIZATIONAL MATTERS

 

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

 

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

 

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

 

Section 2.4            
Power of
Attorney.

 

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

 

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

 

 

16

 

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

 

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

 

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

 

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

 

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

 

 

17

 

ARTICLE III

PURPOSE

 

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

 

Section 3.2            
Powers.

 

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

 

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

 

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

 

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

 

Section 3.4            
Representations and Warranties by the Parties.

 

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

 

 

18

 

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

 

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

 

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

 

 

19

 

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

 

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

 

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

 

ARTICLE IV

CAPITAL CONTRIBUTIONS

 

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

 

Section 4.2            
Issuances of Additional Partnership Interests.

 

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

 

 

20

 

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

 

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

 

Section 4.3
            Additional
Funds and Capital Contributions.

 

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

 

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

 

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

 

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

 

 

21

 

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

 

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

 

Section 4.4
            Stock
Option Plan.

 

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

 

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

 

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

 

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

 

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

 

 

22

 

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

 

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

 

Section 4.6            
Conversion or Redemption of Preferred Shares.

 

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

 

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

 

Section 4.7
            Conversion
or Redemption of Junior Shares.

 

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

 

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

 

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

 

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

 

 

23

 

ARTICLE V

DISTRIBUTIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

 

24

 

ARTICLE VI

ALLOCATIONS

 

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

 

Section 6.2
            General
Allocations.

 

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

 

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

 

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

 

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

 

B.           
Regulatory Allocations.

 

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

 

 

25

 

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

 

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

 

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

 

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

 

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

 

 

26

 

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

 

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

 

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

 

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

 

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

 

Section 6.4
            Tax
Allocations.

 

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

 

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

 

 

27

 

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

 

ARTICLE VII

MANAGEMENT AND OPERATIONS
OF BUSINESS

 

Section 7.1
            Management.

 

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

 

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

 

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

 

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

 

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

 

 

28

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

29

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

30

 

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

 

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

 

Section 7.3
            Restrictions
on General Partner’s Authority.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

31

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 7.4
            Reimbursement
of the General Partner.

 

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

 

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

 

 

32

 

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

 

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

 

Section 7.5
            Outside
Activities of the General Partner.

 

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

 

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

 

Section 7.6
            Contracts
with Affiliates.

 

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

 

 

33

 

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

 

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

 

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

 

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

 

Section 7.7
            Indemnification.

 

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

 

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

 

 

34

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 7.8
            Liability
of the General Partner.

 

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

 

 

35

 

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

 

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

 

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

 

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

 

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

 

Section 7.9
            Other
Matters Concerning the General Partner.

 

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

 

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

 

 

36

 

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

 

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

 

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

 

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

 

ARTICLE VIII

RIGHTS AND OBLIGATIONS OF
LIMITED PARTNERS

 

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

 

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

 

 

37

 

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

 

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

 

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

 

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

 

Section 8.6
            Redemption
Rights of Qualifying Parties.

 

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

 

 

38

 

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

 

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

 

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

 

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

 

 

39

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

40

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

41

 

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

 

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

 

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

 

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

 

Section 8.8
            Special
Provisions Applicable to Reorganization Common Units.

 

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

 

 

42

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

43

 

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

 

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

 

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

 

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

 

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

 

 

44

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE IX

BOOKS, RECORDS, ACCOUNTING AND REPORTS

 

Section 9.1            
Records and Accounting.

 

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

 

 

45

 

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

 

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

 

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

 

Section 9.3            
Reports.

 

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

 

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

 

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

 

ARTICLE X

TAX MATTERS

 

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

 

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

 

 

46

 

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

 

Section 10.3          
Tax Matters Partner.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

47

 

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

 

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

 

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

 

ARTICLE XI

TRANSFERS AND WITHDRAWALS

 

Section 11.1          
Transfer.

 

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

 

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

 

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

 

 

48

 

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

 

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

 

Section 11.2          
Transfer of General Partner’s Partnership Interest.

 

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

 

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

 

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

 

Section 11.3          
Transfer of Limited Partners’ Partnership Interests.

 

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

 

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

 

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

 

 

49

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 11.4          
Substituted Limited Partners.

 

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

 

 

50

 

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

 

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

 

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

 

Section 11.6          
General Provisions.

 

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

 

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

 

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

 

 

51

 

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

 

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

 

ARTICLE XII

ADMISSION OF PARTNERS

 

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

 

Section 12.2          
Admission of Additional Limited Partners.

 

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

 

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

 

 

52

 

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

 

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

 

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

 

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

 

ARTICLE XIII

DISSOLUTION, LIQUIDATION AND TERMINATION

 

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

 

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

 

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

 

 

53

 

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

 

D.           
the occurrence of a Terminating Capital Transaction; or

 

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

 

Section 13.2          
Winding Up.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

54

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

55

 

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

 

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

 

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

 

ARTICLE XIV

PROCEDURES FOR ACTIONS AND CONSENTS

OF PARTNERS; AMENDMENTS; MEETINGS

 

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

 

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

 

Section 14.3          
Meetings of the Partners.

 

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

 

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

 

 

56

 

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

 

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

 

ARTICLE XV

GENERAL PROVISIONS

 

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

 

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

 

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

 

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

 

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

 

Section 15.6          
Waiver.

 

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

 

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

 

 

57

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

58

 

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

 

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

 

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

 

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

 

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

 

 

[the next page is
the signature page]

 

 

59

 

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

 

	
   

  	
  GENERAL PARTNER:

  
	
   

  	
   

  	
   

  
	
   

  	
  AFFORDABLE RESIDENTIAL
  COMMUNITIES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott L. Gesell

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Scott L. Gesell

  
	
   

  	
   

  	
  Title:

  	
  Vice President and
  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

60

 

	
   

  	
  PAIRED COMMON UNIT
  HOLDERS,

  
	
   

  	
   

  	
  Listed on Exhibit A
  hereto

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  AFFORDABLE RESIDENTIAL
  COMMUNITIES INC.,

  
	
   

  	
   

  	
  Attorney-in-fact

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott L. Gesell

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Scott L. Gesell

  
	
   

  	
   

  	
  Title: 

  	
  Vice President and
  Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 

As of February 11,  2004

 

Exhibit A

PARTNERS AND PARTNERSHIP UNITS

 

	
  Name
  and Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  General Partner:

  	
   

  	
   

  
	
  ARC IV REIT, Inc.

  600 Grant Street, Suite 900

  Denver, Colorado  80203

  Attention: Scott L. Gesell

  Facsimile No.:  (303) 294-0085

  	
   

  	
  17,120,837 Partnership
  Common Units

  
	
   

  	
   

  	
   

  
	
  Limited Partners:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  511 Equities
  Corporation

  c/o Rachel Kuluva

  590 Fifth Avenue, 19th Floor

  New York, NY  10036

  	
   

  	
  19,683 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Andrew and Elaine Pesky

  10 East 53rd Street

  New York, NY  10022

  	
   

  	
  28,356 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  ARC II Investor

  Charles A. Davis

  Marsh & McClennan Risk Capital Corp.

  20 Horseneck Lane

  Greenwich, CT  06830

  	
   

  	
  126,174 Paired Common
  Units

  

 

 

A-1

 

	
  Name
  and Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  ARC Ventures

  c/o Greg Green

  2911 Turtle Creek Blvd., Ste. 1240

  Dallas, TX  75219-6252

  	
   

  	
  14,614 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Arno P. Niemand

  777 -15th Street

  Boulder, CO  80302

  	
   

  	
  4,920 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Brittany Ridge
  Investment Partners, L.P

  c/o John J. Oros

  280 Highland Avenue

  Ridgewood, NJ  07450-4004

  	
   

  	
  8,025 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Bruce V. Rauner

  GTCR Golder Rauner L.L.C.

  6100 Sears Tower

  Chicago, IL  60606

  	
   

  	
  68,298 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Curtis S. Lane

  135 Central Park West

  New York, NY  10023

  	
   

  	
  5,536 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Daniel J. Sullivan Jr.

  141 Forest Street

  Wellesley, MA  02181

  	
   

  	
  6,888 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  David Lurie

  1050 Fifth Avenue

  New York, NY  10028

  	
   

  	
  8,025 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  David N. Roberts

  Angelo Gordon & Co.

  245 Park Avenue, 26th Floor

  New York, NY  10167

  	
   

  	
  4,871 Paired Common
  Units

  

 

 

A-2

 

	
  Name
  and Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  David S. Krivitsky

  220 East 72nd Street, #26F

  New York, NY  10021

  	
   

  	
  984 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Dean R. O’Hare

  370 Lake Road

  Far Hills, NJ  07931

  	
   

  	
  4,871 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Deborah Roberts

  515 West End Avenue

  New York, NY  10024

  	
   

  	
  2,102 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Delaney Investment
  Partners Limited

  c/o Mike Delaney

  BCRS Associates

  67 Wall Street

  New York, NY  10005

  	
   

  	
  14,871 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Dennis and Cynthia
  Suskind

  136 E. 79th St. Apt. 9

  New York, NY  10021

  	
   

  	
  9,294 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Donald R. Gant

  Youngs Road

  New Vernon, NJ  07976

  	
   

  	
  65,821 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Edgell Street Partners

  c/o James Harasimowicz

  210 Central Park South #24B

  New York, NY  10019

  	
   

  	
  3,717 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Edward Dunay

  300 East 57th St., Apt. 12D

  New York, NY  10022

  	
   

  	
  17,435 Paired Common
  Units

  

 

 

A-3

 

	
  Name
  and Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Eugene Atkinson

  Ripplewood Holdings Inc.

  1 Rockefeller Center, 32nd Floor

  New York, NY  10020

  	
   

  	
  4,920 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Eugene Mercy, Jr.

  1111 Park Avenue

  New York, NY  10128

  Phone:  (212) 407-3334

  	
   

  	
  128,059 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Farmer Family Trust

  John R. Farmer & Tawna B. Farmer

  Trustees

  2 Morrison Road

  P.O. Box 1405

  Ross, CA  94957

  	
   

  	
  27,737 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  FAWPEAS L.P.

   Alan D. & Wendy Pesky

  59 East 54th Street, Suite 42

  New York, NY  10022

  	
   

  	
  47,016 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Fern K. Hurst

  1060 Fifth Avenue

  New York, NY  10128

  	
   

  	
  2,435 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Frederick Garonzik

  Goldman Sachs

  85 Broad Street

  New York, NY  10004

  Phone:  (212) 902-8717

  	
   

  	
  39,618 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Gamco Investors, Inc.

  Mario J. Gabelli

  Gabelli Group Capital Partners, Inc.

  One Corporate Center

  Rye, NY  10580

  	
   

  	
  19,809 Paired Common
  Units

  

 

 

A-4

 

	
  Name
  and Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Gary D. and Karen A.
  Rose

  Trustees for the
  benefit of Adam James Rose

  and Alexander Mark Rose

  24 Dryden Terrace

  Short Hills, NJ  07078

  	
   

  	
  9,841 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Granite Capital, L.P

  c/o Lloyd Moskowitz

  126 E. 56th Street, 25th Floor

  New York, NY  10022

  	
   

  	
  95,766 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Grantor Trust for Dana
  E. Tang

  c/o Oscar Tang

  New England Investment Co.

  600 Fifth Avenue, 8th Floor

  New York, NY  10020

  	
   

  	
  3,153 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Grantor Trust for Kevin
  C. Tang

  c/o Oscar Tang

  New England Investment Co.

  600 Fifth Avenue, 8th Floor

  New York, NY  10020

  	
   

  	
  3,153 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Grantor Trust for
  Kristin A. Tang

  c/o Oscar Tang

  New England Investment Co.

  600 Fifth Avenue, 8th Floor

  New York, NY  10020

  	
   

  	
  3,153 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Grantor Trust for Tracy
  L. Tang

  c/o Oscar Tang

  New England Investment Co.

  600 Fifth Avenue, 8th Floor

  New York, NY  10020

  	
   

  	
  3,153 Paired Common
  Units

  

 

 

A-5

 

	
  Name
  and Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Gregory Stephen Pesky

  5344 James Avenue South

  Minneapolis, MN  55419

  	
   

  	
  2,619 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Heidi Pesky Worcester

  40 Blood Street

  Lyme, CT  06371

  	
   

  	
  2,619 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Henry Barkhorn

  1095 Park Avenue

  New York, NY  10128

  	
   

  	
  19,809 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Howard Silverstein

  895 Park Avenue, Apt. 9C

  New York, NY  10021

  	
   

  	
  15,757 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Howard P. Berkowitz

  65 East 55th Street, 30th Floor

  New York, NY  10022

  	
   

  	
  79,237 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Indian Creek Partners,
  LP

  c/o David C. Clapp

  Goldman Sachs & Co.

  85 Broad Street, 29th Floor

  New York, NY  10004

  	
   

  	
  37,061Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Indosuez ARC Partners

  c/o Michael Walsh, Esq.

  666 Third Avenue

  New York, NY  10017

  	
   

  	
  63,08 7 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Irving and Carol
  Yoskowitz

  11517 Highland Farm Road

  Potomac, MD  20854

  	
   

  	
  7,671 Paired Common
  Units

  

 

 

A-6

 

	
  Name
  and Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  J.  Russell
  Bellamy

  3504 Drexel Drive

  Dallas, TX  75205

  	
   

  	
  9,576 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  James E. Hunt

  1111 Park Avenue

  New York, NY 10128

  	
   

  	
  13,193 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Joanne D. Corzine

  25 Lenox Road

  Summit, NJ 07901

  	
   

  	
  19,809 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Joel and Helen Portugal

  30 E. 72nd Street

  New York, NY 10021

  	
   

  	
  3,827 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  John A. Roberds

  Odyssey Digital Printing

  6935-A East 38th

  Tulsa, OK 74 145

  	
   

  	
  4,871 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  John G. Duffy

  415 Crestwood Avenue

  Crestwood, NY 10707

  	
   

  	
  42,335 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  John Markham Green

  15 East 91st Street, Apt. 10A

  New York, NY 10028

  	
   

  	
  34,871 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Joseph E. Robert Jr.

  1288 Ballantrae Farm Drive

  MacLean, VA 22101

  	
   

  	
  2,435 Paired Common
  Units

  

 

 

A-7

 

	
  Name
  and Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Joseph Ellis

  Goldman Sachs

  530 East 86th Street

  New York, NY 10028

  	
   

  	
  7,873 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Joseph P. and Beatrice
  L. Riccardo

  311 Sweetbriar Court

  Franklin Lakes, NJ 07417

  	
   

  	
  11,094 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Judith Berkowitz

  c/o HPB Associates, L.P.

  65 East 55th Street, 30th Floor

  New York, NY 10022

  	
   

  	
  15,721 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Kathryn Briger

  200 East 65th Street

  New York, NY 10021

  	
   

  	
  11,885 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Kendrick R. Wilson III

  161 Cantitoe Road

  Katonah, NY 10536

  	
   

  	
  11,094 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Laura T. Traphagen

  Ha’ Penny House

  Van Beuren Road

  Morristown, NJ 07960

  	
   

  	
  33,284 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Lawrence E. and Valerie
  C. Uhl

  1370 Old Mill Road

  San Marino, CA 91 108 

  	
   

  	
  4,871 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Lewis M. Eisenberg

  Granite Capital International Group

  126 E. 56th Street, 25th Floor

  New York, NY 10022

  	
   

  	
  19,809 Paired Common
  Units

  

 

 

A-8

 

	
  Name
  and Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Mary Kong

  375 S. End Ave #30E

  New York, NY 10280

  	
   

  	
  4,647 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  McMahon Investment
  Partners, L.P.

  c/o T. Gordon McMahon

  350 E. 79th Street, Apt. 37B

  New York, NY 10021 -9209

  	
   

  	
  171,387 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Mercy Foundation

  c/o Eugene Mercy, Jr.

  1111 Park Avenue

  New York, NY 10128-1234

  	
   

  	
  26,202 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Michael Ainslie

  415 Sea Spray Avenue

  Palm Beach, FL 33480

  	
   

  	
  35,812 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Michael J. Moss

  258 Soundview Avenue

  White Plains, NY 10606

  	
   

  	
  4,647 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Mobilecourt Partners I

  c/o Irv Flinn, Esq.

  Sullivan & Cromwell

  125 Broad Street

  New York, NY 10004

  	
   

  	
  48,859 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Mobilecourt Partners II

  c/o Irv Flinn, Esq.

  Sullivan & Cromwell

  125 Broad Street

  New York, NY 10004

  	
   

  	
  37,835 Paired Common
  Units

  

 

 

A-9

 

	
  Name
  and Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Mobilecourt Partners
  III

  c/o Irv Flinn, Esq.

  Sullivan & Cromwell

  125 Broad Street

  New York, NY 10004

  	
   

  	
  18,883 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  NTP Partners

  Anthony Ittleson

  c/o Hennan Holding Corp.

  111 Great Neck Road

  New York, NY 11021

  	
   

  	
  9,294 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Oscar L. Tang

  New England Investment Co.

  600 Fifth Avenue, 8th Floor

  New York, NY 10021

  	
   

  	
  12,087 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Park Partners II

  c/o Marc Wolinsky

  Wachtell, Lipton, Rosen & Katz

  51 West 52nd Street

  New York, NY 10019

  	
   

  	
  75,031 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Peter Fahey

  Goldman, Sachs & Co.

  85 Broad Street, 2nd Floor

  New York, NY 10004

  	
   

  	
  9,841 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Peter L. Briger

  Fortress Investment Group

  1301 Avenue of the Americas

  42nd Floor

  New York, NY 10019

  	
   

  	
  11,094 Paired Common
  Units

  

 

 

A-10

 

	
  Name
  and Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Quidnet Investment
  Partners, L.P.

  c/o Alan A. Shuch

  Managing General Partner

  145 Forest Drive

  Short Hills, NJ 07078

  	
   

  	
  4,920 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Richard D. Reiss Jr.
  and Bonnie Reiss, JTWROS

  100 1 Park Avenue

  New York, NY 10028

  	
   

  	
  30,290 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Richard T. Pratt

  1694 South Mohawk Way

  Salt Lake City, UT 84108

  	
   

  	
  4,871 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Richard W. &
  Catherine E. Herbst

  12 Gap View Road

  Short Hills, NJ 07078

  	
   

  	
  14,999 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Robert Cenci

  45 Overlook Drive

  Greenwich, CT 06830

  	
   

  	
  27,669 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Robert E. Mnuchin

  218 Nettleton Hollow Road

  Washington, CT 06793

  	
   

  	
  27,737 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Robert J. Hurst

  Goldman Sachs & Co.

  85 Broad Street, 30th Floor

  New York, NY 10004

  	
   

  	
  7,507 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Robert L. Callender,
  Revocable Trust

  201 Somerset Avenue

  Southampton, NY 11968

  	
   

  	
  984 Paired Common Units

  

 

 

A-11

 

	
  Name
  and Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Robert N. Downey

  Goldman Sachs & Co.

  85 Broad Street, 2nd Floor

  New York, NY 10004

  	
   

  	
  47,882 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Robert Yedid

  Pelham Avenue

  Sands Point, NY 11050

  	
   

  	
  3,654 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Ross E. Traphagen

  Van Beuren Road

  Morristown, NJ 07960

  	
   

  	
  203,646 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Roy Anderes

  60 Culver Street

  Southampton, NY 11968

  	
   

  	
  984 Paired Common Units

  
	
   

  	
   

  	
   

  
	
  Sally Gordon

  1080 Fifth Avenue, Apt. 14B

  New York, NY 10128

  	
   

  	
  11,162 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Steven Malkenson

  17 West 67th Street, #9F

  New York, NY 10023

  	
   

  	
  17,029 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Susan Mercy

  1111 Park Ave

  New York, NY 10128

  	
   

  	
  23,182 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Tanavon Corporation

  c/o Oscar Tang

  600 Fifth Avenue, 8th Floor

  New Y ork, NY 10021

  	
   

  	
  149,769 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Thomas I. Unterberg

  C.E. Unterberg, Towbin

  350 Madison Avenue, 10th Floor

  New York, NY 10017

  	
   

  	
  39,618 Paired Common
  Units

  

 

 

A-12

 

	
  Name
  and Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Thomas Mendell

  J.P. Morgan Partners

  1221 Avenue of the Americas

  New York, NY 10020-0180

  	
   

  	
  5,298 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Thomas Rhodes

  c/o National Review

  215 Lexington Avenue, 4th Floor

  New York, NY 10016

  	
   

  	
  6,888 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Todd and Gretchen Zelek

  2000 Ashbourne Drive

  S. Pasadena, CA 91030

  	
   

  	
  8,057 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Todd J. Zelek

  2000 Ashbourne Drive

  S. Pasadena, CA 91030

  	
   

  	
  10,787 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Trust for benefit of
  Gregory S. Pesky

  c/o A.D. Pesky Company

  437 Madison Avenue, 36th Floor

  New York, NY 10022

  	
   

  	
  4,028 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Trust for benefit of
  Heidi Pesky Worcester

  c/o A.D. Pesky Company

  437 Madison Avenue, 36th Floor

  New York, NY 10022

  	
   

  	
  4,028Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Victor Wright

  Goldman, Sachs & Co.

  One New York Plaza, 45th Floor

  New York, NY 10004

  	
   

  	
  19,809 Paired Common
  Units

  

 

 

A-13

 

	
  Name
  and Address of Partners

  	
   

  	
  Partnership Units (Type and Amount)

  
	
   

  	
   

  	
   

  
	
  Walter Harrison III

  Granite Capital

  126 E. 56th Street, 25th Floor

  New York, NY 10022

  	
   

  	
  7,923 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  Watchung Road
  Associates, L.P.

  Attn: Leon Cooperman

  45 Watchung Road

  Short Hills, NJ 07078

  	
   

  	
  274,746 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  William H. Ingram and
  Cathy M. Brienza

  c/o Sutton Capital Associates, Inc.

  One Rockefeller Plaza, Suite 3300

  New York, NY 10020

  	
   

  	
  4,744 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  William Ingram

  Sutton Capital Associates, Inc.

  One Rockefeller Plaza, Suite 3300

  New York, NY 10020-2102

  	
   

  	
  6,670 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  William Malkenson

  PMB #442

  4132 S. Rainbow Blvd. `1

  Las Vegas, NV 89103

  	
   

  	
  5,942 Paired Common
  Units

  
	
   

  	
   

  	
   

  
	
  TOTALS

  	
   

  	
  2,717,673 Paired Common
  Units

  

 

 

A-14

 

Exhibit B

EXAMPLES REGARDING ADJUSTMENT FACTOR

 

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

 

Example
1

 

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

 

 

 

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

 

Example
2

 

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

 

 

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

 

Example
3

 

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

 

 

B-1

 

 

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

 

 

B-2

 

Exhibit C

NOTICE OF REDEMPTION

 

	
  To:

  	
  Affordable Residential
  Communities Inc.

  
	
   

  	
  c/o

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

C-1

 

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

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name of Limited Partner
  or Assignee:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Signature of Limited
  Partner or Assignee)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Street Address)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (City)

  	
   

  	
  (State)

  	
   

  	
  (Zip Code)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature Guaranteed
  by:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Issue Check Payable to:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Please insert social
  security

  or identifying number:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

C-2

 

Exhibit D

FORM OF UNIT CERTIFICATE

 

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

 

 

Certificate Number
            

 

AFFORDABLE RESIDENTIAL COMMUNITIES LP

FORMED UNDER THE LAWS OF THE STATE OF DELAWARE

 

This certifies that 

is the owner of 

 

FULLY PAID PARTNERSHIP COMMON UNITS

OF

AFFORDABLE RESIDENTIAL COMMUNITIES LP

 

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

 

IN WITNESS WHEREOF, the
undersigned has signed this Certificate.

 

	
  Dated:

  
	
   

  
	
   

  
	
   

  	
  By

  	
   

  	
   

  

 

 

D-1

 

Exhibit E

FORM OF PAIRED COMMON UNIT CERTIFICATE

 

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

 

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

 

Certificate Number
            

 

AFFORDABLE RESIDENTIAL COMMUNITIES LP

FORMED UNDER THE LAWS OF THE STATE OF DELAWARE

 

This certifies that 

is the owner of 

 

FULLY PAID PARTNERSHIP COMMON UNITS

OF

AFFORDABLE RESIDENTIAL COMMUNITIES LP

 

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

 

IN WITNESS WHEREOF, the
undersigned has signed this Certificate.

 

	
  Dated:

  
	
   

  
	
   

  
	
   

  	
  By

  	
   

  	
   

  

 

 

E-1Exhibit 10.5

 

 

 

THIRD AMENDED AND RESTATED
REGISTRATION RIGHTS

AGREEMENT

 

by and among

 

AFFORDABLE RESIDENTIAL COMMUNITIES
INC.

 

and

 

The parties listed on Exhibit A,
Exhibit B, Exhibit C and Exhibit D hereto

 

 

 

Dated as of February 18, 2004

 

 

 

 

 

TABLE OF CONTENTS

 

	
  1.

  	
   

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Shelf Registration
  Statements

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Shelf Registration of
  Warrants

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Shelf Registration
  of Common Stock

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Demand
  Registrations

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Requests for Registration

  	
   

  
	
   

  	
   

  	
  (b)

  	
  Registration Statement
  Form

  	
   

  
	
   

  	
   

  	
  (c)

  	
  [Reserved]

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Priority on Demand
  Registrations

  	
   

  
	
   

  	
   

  	
  (e)

  	
  Limits on Demand
  Registrations

  	
   

  
	
   

  	
   

  	
  (f)

  	
  Restrictions on
  Demand Registrations

  	
   

  
	
   

  	
   

  	
  (g)

  	
  Pre-emption of
  Demand Registration

  	
   

  
	
   

  	
   

  	
  (h)

  	
  Selection of Underwriters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Piggyback Registrations

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Right to
  Piggyback

  	
   

  
	
   

  	
   

  	
  (b)

  	
  [Reserved]

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Priority on Primary
  Registrations

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Priority on
  Secondary Registrations

  	
   

  
	
   

  	
   

  	
  (e)

  	
  Expiration
  of Partnership Unit Holder Piggyback Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Holdback
  Agreements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Registration
  Procedures

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Registration
  Expenses

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

i

 

	
  9.

  	
   

  	
  Participation
  in Underwritten Registrations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Rule 144
  Reporting

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
  (a)

  	
  Other Registration Rights

  	
   

  
	
   

  	
   

  	
  (b)

  	
  No Inconsistent Agreements

  	
   

  
	
   

  	
   

  	
  (c)

  	
  Remedies

  	
   

  
	
   

  	
   

  	
  (d)

  	
  Amendments
  and Waivers

  	
   

  
	
   

  	
   

  	
  (e)

  	
  Successors
  and Assigns

  	
   

  
	
   

  	
   

  	
  (f)

  	
  Severability

  	
   

  
	
   

  	
   

  	
  (g)

  	
  Counterparts

  	
   

  
	
   

  	
   

  	
  (h)

  	
  Descriptive
  Headings

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Recapitalizations,
  Exchanges Affecting the Registrable Securities

  	
   

  
	
   

  	
   

  	
  (j)

  	
  Governing Law

  	
   

  
	
   

  	
   

  	
  (k)

  	
  Third Party Beneficiaries

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Subscribers

  	
   

  
	
  Exhibit B

  	
   

  	
  Original Investors

  	
   

  
	
  Exhibit C

  	
   

  	
  Reorganization Shareholders

  	
   

  
	
  Exhibit D

  	
   

  	
  Partnership Unit Holders

  	
   

  

 

 

ii

 

THIRD AMENDED AND RESTATED
REGISTRATION RIGHTS

AGREEMENT

 

THIS
THIRD AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”),
dated as of February 18, 2004 is by and among Affordable Residential
Communities Inc., a Maryland corporation (the “Company”) and the parties
listed on Exhibit A (the “Subscribers”), Exhibit B (the “Original
Investors”), Exhibit C (the “Reorganization Shareholders”)
and Exhibit D (the “Partnership Unit Holders”) hereto, as amended
from time to time.  Capitalized terms used but not otherwise defined
herein have the meanings set forth in Section 1 hereof.

 

WHEREAS,
the Company and the Original Investors entered into a subscription and stock
purchase agreement, dated as of September 30, 1998, pursuant to which the
Company agreed to issue and sell, and the Original Investors agreed to
purchase, shares of Common Stock (the “1998 Subscription Agreement”);

 

WHEREAS,
in connection with the execution of the 1998 Subscription Agreement, the
Company and the Original Investors executed a Registration Rights Agreement,
dated as of September 30, 1998 (the “Original Agreement”);

 

WHEREAS,
the Company and the Subscribers entered into a subscription and stock purchase
agreement, dated as of August 9, 2000 (as amended, the “2000
Subscription Agreement”) pursuant to which the Company agreed to issue and
sell, and the Subscribers agreed to purchase, shares of Common Stock;

 

WHEREAS,
concurrently with the execution of the 2000 Subscription Agreement, the Company
and the Subscribers amended and restated the Original Agreement (as amended and
restated, the “First Amended and Restated Registration Rights Agreement”)
to modify certain of its terms and add Capital ARC Holdings, LLC f/k/a UBS
Capital ARC Holdings, LLC (“UBS”) and The Travelers Indemnity Company (“Travelers”)
as parties thereto;

 

WHEREAS,
the Company and certain of its affiliates entered into an Agreement and Plan of
Reorganization, dated as of April 6, 2002 (as may be amended, the “Reorganization
Agreement”) which provided for certain reorganization transactions
involving the Company and certain of its affiliates (collectively, the “Reorganization”);

 

 

 

WHEREAS,
in connection with the Reorganization (i) the Company issued additional shares
of Common Stock which were distributed to the Reorganization Shareholders, and
(ii) ARC IV issued Partnership Units to the Partnership Unit Holders, which
Partnership Units are redeemable in exchange for cash or, at the Company’s
election, shares of Common Stock;

 

WHEREAS,
in connection with the Reorganization the Company and the Subscribers amended
and restated the First Amended and Restated Registration Rights Agreement (as
amended and restated, the “Second Amended and Restated Registration Rights
Agreement”) to modify certain of its terms and add the Reorganization
Shareholders and the Partnership Unit Holders as parties thereto;

 

WHEREAS,
the Company proposes to effect an initial public offering (the “IPO”) of
shares of Common Stock;

 

WHEREAS,
in connection with the IPO the Company and the holders of a majority of the
Registrable Securities desire to amend and restate the Second Amended and
Restated Registration Rights Agreement to modify certain of its terms;

 

WHEREAS,
the Second Amended and Restated Registration Rights Agreement provides that
such agreement may be amended only upon the written consent of the Company and
the holders of a majority of the Registrable Securities under the Second Amended
and Restated Registration Rights Agreement; and

 

WHEREAS,
this Agreement has been executed by the Company and the holders of a majority
of the Registrable Securities under the Second Amended and Restated
Registration Rights Agreement.

 

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

 

1.                                      
Definitions.  As used herein, the following terms shall have
the following meanings:

 

 

2

 

“Aggregate
Offering Price” means an amount equal to the product of (i) the Average
Closing Price and (ii) the aggregate number of Registrable Securities held by a
Demand Party in respect of which such demand for registration is being made.

 

“ARC
LP” means Affordable Residential Communities LP, a Delaware limited
partnership.

 

“ARC
LP Partnership Agreement” means the First Amended and Restated Agreement of
Limited Partnership of ARC LP,  dated as of February 11, 2004, as
amended from time to time.

 

“Average
Closing Price” means, with respect to any Registrable Security, the average
of the closing sale prices of such Registrable Security as reported on a
national securities exchange or quoted on The Nasdaq Stock Market during the
Valuation Period.

 

“Business
Day” means any calendar day which is not a Saturday, Sunday or a day on
which banks in the State of New York are generally closed for regular business.

 

“Common
Stock” means the common stock, $0.01 par value per share, of the Company.

 

“Demand
Party” means any Holder or Holders that, either individually or in the
aggregate with all other Holders with whom or on whose behalf it is acting to
demand registration, holds not less than 9% of the class of Registrable
Securities in respect of which such demand for registration is being made, provided,
however, that in no event shall any Partnership Unit Holder (a) comprise
all or part of any Demand Party hereunder or (b) otherwise have any right,
either alone or with any other Holder or Holders, to request registration
pursuant to Section 3(a)(i) of this Agreement.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute.

 

“Holder”
means the Subscribers, the Original Investors, the Reorganization Shareholders,
the Partnership Unit Holders and any transferee which is or becomes the
beneficial owner of Registrable Securities.  For purposes of determining
the number of Registrable Securities held by a Holder, for purposes of this
Agreement but not for any

 

 

3

 

other purpose, any holder
of record of a Warrant shall be deemed to be a Holder of the number of shares
of Common Stock underlying such Warrants.

 

“Nassau”
means, collectively, Nassau Capital Partners II, L.P., Nassau Capital Funds
L.P. and NAS Partners I, L.L.C.

 

“Partnership
Unit” shall have the meaning assigned to such term in the ARC LP
Partnership Agreement.

 

“Partnership
Unit Holders” means the Person listed on Exhibit D hereto.

 

“Person”
means an individual, corporation, partnership, trust, joint venture, limited
liability company, unincorporated organization or other legal entity or a
government or any agency or political subdivision thereof.

 

“Qualified
Public Offering” means the completion of the sale of shares of Common
Stock, whether by the Company and/or for the account of one or more
shareholders of the Company, pursuant to an effective registration statement
under the Securities Act (other than a special purpose registration statement
such as an S-8 or an S-4) in which the aggregate gross proceeds of such sale,
together with the aggregate gross proceeds of any such underwritten public
offerings previously completed, equal or exceed $100,000,000, provided that
after the completion of such sale the shares of Common Stock are listed on a
national securities exchange or are authorized for quotation on The Nasdaq Stock
Market.

 

“Registrable
Securities” means (i) shares of Common Stock issued (A) to the Original
Investors from time to time pursuant to the 1998 Subscription Agreement, (B) to
the Subscribers from time to time pursuant to the 2000 Subscription Agreement,
(C) upon exercise of the Warrants, (D) upon completion of the transactions
contemplated by the Reorganization Agreement (including any such shares
distributed to any member of ARC Holdings Limited Liability Company upon its
liquidation) but not including any shares issued or issuable pursuant to any
management incentive plan and (E) upon redemption of any Partnership Unit
issued by ARC LP to a Partnership Unit Holder upon completion of the
transactions contemplated by the Reorganization Agreement, (ii) any shares of
stock of the Company or any successor corporation issued or issuable in respect
of the Common Stock referred to in clause (i) above, whether by way of a split
of interests or dividends or in connection with a combination of such Common
Stock, recapitalization, merger, consolidation or other reorganization or
otherwise, and (iii) Warrants; provided, however,

 

4

 

that such securities
shall cease to be Registrable Securities when (i) a registration statement with
respect to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in accordance
with such registration statement, (ii) they shall have been distributed to the
public pursuant to Rule 144 (or any successor provisions) under the Securities
Act, (iii) they shall have been otherwise transferred, new certificates for
them not bearing a legend restricting further transfer shall have been
delivered by the Company and subsequent disposition of them shall not require
registration or qualification under the Securities Act or any state securities
or blue sky law then in force, (iv) they shall have ceased to be outstanding,
or (v) solely with respect to the shares of Common Stock covered by
clause (i)(E) above, the “shelf” registration statement with respect to
such shares contemplated by Section 8.8 of the ARC LP Partnership
Agreement shall have become effective under the Securities Act in accordance
with the provisions of such Section 8.8, after which time the securities
covered by clause (i)(E) above shall no longer be Registrable Securities
(except as otherwise provided in Section 4(e)).

 

“Registration”
means any registration of the securities of the Company under the Securities Act
(including without limitation, any Demand Registration or Piggyback
Registration) pursuant to the terms of this Agreement.

 

“Registration
Expenses” means all expenses incurred or incident to the Company’s
performance of or compliance with this Agreement, including without limitation
all registration and filing fees (including any such fees paid or payable to
the National Association of Securities Dealers, Inc., any stock exchange or The
Nasdaq Stock Market), fees and expenses of compliance with securities or blue
sky laws, printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for the Company and all independent certified public
accountants (including the costs of any accountants’ “comfort letters”),
underwriters (excluding underwriting discounts and commissions with respect to
any Registrable Securities) and other Persons retained by the Company.

 

“Reorganization
Shareholders” means the Persons listed on Exhibit C hereto.

 

“Rule
144” means Rule 144 under the Securities Act (or any similar rule then in
force).

 

“SEC”
means the Securities and Exchange Commission.

 

 

5

 

“Securities
Act” means the Securities Act of 1933, as amended, or any successor
statute.

 

“Shareholders”
means, collectively, the Subscribers, the Original Investors and the
Reorganization Shareholders.

 

“THL”
means, collectively, Thomas H. Lee Charitable Investments, Thomas H. Lee
Foreign Fund IV-B, L.P., Thomas H. Lee Equity Fund IV, L.P., Thomas H. Lee Foreign
Fund IV, L.P. and Thomas H. Lee Investors Limited Partnership and all
shareholders affiliated with Thomas H. Lee Partners.

 

“Valuation
Period” means the thirty (30) consecutive trading days during which the
applicable Registrable Security is traded on a national securities exchange or
quoted on The Nasdaq Stock Market ending on the calender day immediately prior
to the date a Demand Party requests a Demand Registration.

 

“Violation”
means any untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
(in the case of any prospectus, preliminary prospectus or any amendment or
supplement thereto, in light of the circumstances under which they were made)
not misleading.

 

“Warrants”
means the warrants to purchase an aggregate of 723,627 shares of Common Stock
granted to the Original Investors prior to the date of the First Amended and
Restated Registration Rights Agreement.

 

2.                                      
Shelf Registration Statements.

 

(a)                                 
Shelf Registration of Warrants.  As promptly as practicable following the date
when the Company first becomes eligible for use of a registration statement on
Form S-3 of the SEC (or any similar short form registration statement which is
a successor to Form S-3) the Company shall file with the SEC a registration
statement on Form S-3 (or any successor form) (together with the prospectus
included therein, the “Warrant Shelf Registration Statement”) pursuant
to Rule 415 of the Securities Act in order to register with the SEC the resale,
from time to time, by the Holders thereof, of all of the Warrants constituting
Registrable Securities (including all shares of Common Stock

 

 

6

 

issuable upon exercise of
the Warrants).  The Company shall use its reasonable best efforts to keep
the Warrant Shelf Registration Statement effective in order to permit the
prospectus forming a part thereof to be usable by the Holders of the Warrants
for the sale of the Warrants and, upon their sale, to cover (if permitted by
applicable law and by the SEC) the issuance of shares of Common Stock upon any
exercise thereof, until all of the Warrants (including all shares of Common
Stock issuable upon exercise of the Warrants) registered thereunder have been
distributed (or issued in the case of the Common Stock underlying the Warrants)
as contemplated thereby, but in any event, with respect to the Warrants, not
later than the fourth anniversary of the date the Warrant Shelf Registration
Statement is declared effective by the SEC.  The foregoing
notwithstanding, the Company shall have the right in its sole discretion, based
on any valid business purpose (including, without limitation, to avoid the
disclosure of any material non-public information that the Company is not otherwise
obligated to disclose), to suspend the use of the Warrant Shelf Registration
Statement for a reasonable length of time (a “Warrant Shelf Delay Period”)
and from time to time; provided that the aggregate number of days in all
Warrant Shelf Delay Periods occurring in any period of twelve consecutive
months shall not exceed 90 days.  The Company shall provide written notice
to each Holder of Warrants covered by the Warrant Shelf Registration Statement
of the beginning and the end of each Warrant Shelf Delay Period and such
Holders shall cease all disposition efforts pursuant to the Warrant Shelf
Registration Statement with respect to all Warrants held by them immediately
upon receipt of notice of the beginning of any Warrant Shelf Delay Period and
shall maintain in confidence the fact that such notice has been provided by the
Company.  Other than as set forth in this paragraph (a), the Holders of
Warrants shall not have any registration rights with respect to the Warrants
(or the Common Stock underlying such Warrants) under this Agreement.

 

(b)                                
Shelf Registration of Common Stock.  As promptly as practicable following the date
when the Company first becomes eligible for use of a registration statement on
Form S-3 of the SEC (or any similar short form registration statement which is
a successor to Form S-3) the Company shall file with the SEC a registration
statement on Form S-3 (or any successor form) (together with the prospectus
included therein, the “Common Stock Shelf Registration Statement”)
pursuant to Rule 415 of the Securities Act in order to register with the SEC
the resale, from time to time, by THL, UBS and Nassau of the Common Stock held
by each of them.  The Company shall provide piggyback registration rights,
in accordance with Section 4 hereof, to all other Shareholders who hold,
at the time of the initial filing of the Common Stock Shelf Registration
Statement, Registrable Securities constituting greater than 1% of the
outstanding shares of Common

 

 

7

 

Stock.  The Company
shall use its reasonable best efforts to cause the Common Stock Shelf
Registration Statement to be declared effective as soon thereafter as is
practicable.  The Company shall use its reasonable best efforts to keep
the Common Stock Shelf Registration effective in order to permit the prospectus
forming a part thereof to be usable by the Shareholders named therein for the
sale of the Common Stock held by them, until all of the Common Stock registered
thereunder has been distributed as contemplated thereby, but in any event not
later than the fourth anniversary of the date the Common Stock Shelf
Registration Statement is declared effective by the SEC.  The foregoing
notwithstanding, the Company shall have the right in its sole discretion, based
on any valid business purpose (including, without limitation, to avoid the
disclosure of any material non-public information that the Company is not
otherwise obligated to disclose), to suspend the use of the Common Stock Shelf
Registration Statement for a reasonable length of time (a “Common Stock
Shelf Delay Period”) and from time to time; provided that the
aggregate number of days in all Common Stock Shelf Delay Periods occurring in
any period of twelve consecutive months shall not exceed 90 days.  The
Company shall provide written notice to each Shareholder named in the Common
Stock Shelf Registration Statement of the beginning and the end of each Common
Stock Shelf Delay Period, and each such Shareholder shall cease all disposition
efforts pursuant to the Common Stock Shelf Registration Statement with respect
to all Common Stock held by it immediately upon receipt of notice of the
beginning of any Common Stock Shelf Delay Period and shall maintain in confidence
the fact that such notice has been provided by the Company.

 

3.                                      
Demand Registrations.

 

(a)                                 
Requests for Registration.

 

(i)                                    
At any time and from time
to time after the closing of a Qualified Public Offering, a Demand Party may
request registration, whether underwritten or otherwise, under the Securities
Act of all or part of such Demand Party’s Registrable Securities (other than
Warrants and the Common Stock underlying such Warrants) in an amount equal to
not less than the lesser of (A) 25% of the total number of Registrable
Securities held by each Holder (each of Nassau and THL shall be deemed to be
one Holder for purposes of this clause (A)) comprising such Demand Party
of the class in respect of which such demand for registration is being made and
(B) $75,000,000 in Aggregate Offering Price of Registrable Securities. 
Each such request for a registration shall specify

 

 

8

 

the approximate number and class of Registrable
Securities requested to be registered and the anticipated per share price range
for such offering.

 

(ii)                                 
Within ten (10) days
after receipt of any such request for a registration, the Company will give
written notice (a “Demand Notice”) of such requested registration
(including the number of Registrable Securities included and the possible
intended methods of disposition thereof) to all other Holders of Registrable
Securities, if any (including, in the case of a Demand Registration involving
Common Stock, all Partnership Unit Holders for purposes of this
Section 3(a)(ii) but subject to Section 4(e) hereof and all
applicable restrictions and limitations on the redemption of Partnership Units
set forth in the ARC LP Partnership Agreement, in order to afford such Holders
the opportunity to participate in such Demand Registration through a redemption
of Partnership Units in exchange for shares of Common Stock to be sold in the
related offering), and will include (subject to the provisions of this
Agreement) in such registration all Registrable Securities of the same class as
the securities being registered with respect to which the Company has received
written requests from any other Holders for inclusion therein within 20 days
after the receipt of the Demand Notice, provided, however, that
(A) if such Demand Registration involves an underwritten offering, all
Holders of Registrable Securities requesting to be included in such
registration must sell their Registrable Securities to the underwriters on the
same terms and conditions as apply to the Demand Party, and each such Holder
(including Partnership Unit Holders who request to be included in such
registration) shall, if requested by the underwriters, enter into a customary
holdback agreement with respect to such Holder’s Registrable Securities as
contemplated by Section 5(a) hereof, and (B) it shall be a condition to
the participation by any Partnership Unit Holder in any such Demand
Registration that no provision of the ARC LP Partnership Agreement shall
prohibit or restrict the redemption by such Partnership Unit Holder of any
Partnership Units as to which such Partnership Unit Holder has made a request
hereunder for inclusion in such Demand Registration and that (1) in the case of
an underwritten offering, such Partnership Unit Holder shall have delivered to
ARC LP a notice of redemption, together with the certificates evidencing the
Partnership Units to be converted into the Registrable Securities to be
included in such offering (the “Redemption Notice Package”) not less
than five (5) Business Days prior to the closing date of such offering, and (2)
in the case of any other offering, such Partnership Unit Holder shall have
delivered to ARC LP a Redemption Notice

 

 

9

 

Package a reasonable time prior to the proposed sale
of such Holder’s Registrable Securities in such offering, as determined by the
Company.

 

(iii)                              
All registrations
requested pursuant to this Section 3(a) are referred to herein as “Demand
Registrations.”

 

(b)                                
Registration Statement Form.  Demand Registrations shall be on such appropriate
registration form of the SEC (i) as shall be selected by the Company and as
shall be reasonably acceptable to the Holders of 51% of the Registrable
Securities requested to be registered and (ii) as shall permit the disposition
of such Demand Party’s Registrable Securities in accordance with the intended
method or methods of disposition specified in their request for such
registration. If, in connection with any Demand Registration which is proposed
by the Company to be on Form S-3 or any similar short form registration
statement which is a successor to Form S-3, the managing underwriters, if any,
shall advise the Company in writing that in their opinion the use of another
permitted form is of material importance to the success of the offering, then
such Demand Registration shall be on such other permitted form.

 

(c)                                 
[Reserved]

 

(d)                                
Priority on Demand Registrations.  If a Demand Registration is an underwritten
offering and the managing underwriters advise in writing that in their opinion
the number of Registrable Securities requested to be included in such offering
exceeds the number of Registrable Securities which can be sold therein without
materially and adversely affecting the marketability of the offering, the
amount of Registrable Securities to be sold pursuant to such registration shall
be allocated pro rata among the
Holders of Registrable Securities desiring to participate in such registration
on the basis of the amount of such Registrable Securities requested to be
registered by such Holders.

 

(e)                                 
Limits on Demand Registrations.  The Holders of Registrable Securities shall
not be entitled to request more than one (1) Demand Registration during any six-month
period.

 

(f)                                   
Restrictions on Demand Registrations.  Notwithstanding anything to the contrary
contained herein:

 

 

10

 

(i)                                    
the Company shall not
be obligated to effect (A) any Demand Registration within six months after the
effective date of the Company’s initial public offering or any previous Demand
Registration or (B) any Demand Registration that would cause the Company to violate
Section 5(b) of this Agreement;

 

(ii)                                 
the Company shall not
be required to effect a registration of Registrable Securities pursuant to this
Section 3 if it shall have delivered to the Demand Party a written opinion
of counsel to the Company of recognized national standing reasonably acceptable
to the Holders to the effect that the disposition of the Registrable Securities
with respect to which such demand has been made shall not require registration
under the Securities Act or any state securities or blue sky law then in force;
and

 

(iii)                              
the Company may
postpone or withdraw for a reasonable period, not to exceed ninety (90) days
(subject to extension for up to 45 additional days by a vote of a majority of
the members of the Company’s Board of Directors), the filing or the
effectiveness of a registration statement for a Demand Registration if based on
the good faith judgment of a majority of the members of the Company’s Board of
Directors and on advice of counsel, such postponement or withdrawal is
necessary in order to avoid premature disclosure of:  (1) a matter that
the Board of Directors has determined would not be in the best interest of the
Company to be disclosed at such time or (2) a material fact the disclosure of
which would have a material adverse effect on any proposal or plan by the
Company or any of its subsidiaries to engage in any acquisition of assets
(other than in the ordinary course of business) or any merger, consolidation,
tender offer or other significant transaction; provided, however,
that in no event shall the Company withdraw a registration statement after such
registration statement has been declared effective; provided  further,
however, that, to the extent applicable, such postponement or withdrawal
period shall terminate upon the completion or abandonment of the acquisition of
assets, merger, consolidation, tender offer or other significant transaction to
which such postponement or withdrawal relates.  The Company shall be
entitled to one (1) postponement or withdrawal (including any extension
thereof) in any 12 month period regardless of the number of days in such
postponement or withdrawal.  The Company shall provide prompt written
notice to the Holders of Registrable Securities initiating the request for such
Demand Registration of (x) any postponement or withdrawal of the filing or

 

 

11

 

effectiveness of a registration statement pursuant to
this paragraph, (y) the Company’s decision to file or seek effectiveness of
such registration statement following such postponement or withdrawal and (z)
the effectiveness of such registration statement.  If the Company so
elects to postpone or withdraw a registration statement, such registration
shall not count as one of the permitted Demand Registrations of the Holders who
requested such registration.

 

(g)                                
Pre-emption of Demand Registration.  Notwithstanding anything to the contrary
contained herein, if at any time a Holder or Holders shall request a Demand
Registration pursuant to this Section 3, the Company may elect at that
time to effect an underwritten primary registration if, based on the good faith
judgment of a majority of the Company’s Board of Directors, it would be in the
best interests of the Company to access the public market to raise equity
capital.  If the Company elects to effect a primary registration after
receiving such a request for a Demand Registration, the Company will give prompt
written notice (and in any event within thirty (30) days after receiving such a
request for a Demand Registration) to all Holders of Registrable Securities of
the class to be registered of its intention to effect such a registration and
shall afford such Holders rights to Piggyback Registrations contained in
Section 4 hereof, except that if the managing underwriters of such
offering advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without materially and adversely affecting
the marketability of such offering, the provisions of Section 4(d) hereof
shall not apply to such offering, and instead the Company shall include in such
registration the maximum number of securities which such underwriters advise
can be sold in such offering allocated (x) first, equally (as opposed to pro rata) among the Company, on the one
hand, and the Holders as a group, on the other hand (and reallocated among such
Holders pro rata on the basis of
the number of securities requested to be registered by such Holders), until
either the Company or the Holders as a group have been allocated the full
number of securities requested to be included in such registration by the
Company or the Holders, as the case may be, (y) second, to either the Company
or the Holders as a group (and reallocated among such holders pro rata on the basis of the number of
securities requested to be registered by such Holders), as the case may be, to
the extent that such party was not allocated the full number of its requested
securities pursuant to clause (x) above, until the Company or the Holders as a
group, as the case may be, have been allocated the full number of securities
requested to be included in such registration, and (z) third, to the holders of
all other securities requested to be included in such registration pro rata among such holders on the basis
of the number of securities requested to be registered by such holders. 
In the event

 

 

12

 

that the Company so
elects to effect such a primary registration after receiving a request for such
a Demand Registration, such registration shall not count as one of the
permitted Demand Registrations of the Holders who requested such registration.

 

(h)                                
Selection of Underwriters.  In the case of a Demand Registration for an
underwritten offering, the Holders of a majority of the Registrable Securities
to be included in such Demand Registration will have the right to select the
investment banker(s) and manager(s) to administer the offering, which
investment banker(s) and manager(s) will be nationally recognized.  The
Company may select a nationally-recognized co-manager to participate in the
offering if the Company is offering any securities in the offering.

 

4.                                      
Piggyback Registrations.

 

(a)                                 
Right to Piggyback.  Whenever the Company proposes to
register any securities (the “Priority Securities”) under the Securities
Act (other than pursuant to (1) a Demand Registration, for which “piggyback”
rights are provided in Section 3 hereof, (2) the Warrant Shelf
Registration Statement, (3) the Common Stock Shelf Registration Statement
(except to the extent specifically referred to in Section 2(b) hereof),
(4) a registration of the issuance by the Company, or the resale by any holder
of Partnership Units, of any securities of the Company issued upon redemption
of such Partnership Units, (5) a registration statement on Form S-8 or Form S-4
or any similar form or (6) a registration the primary purpose of which is to
register debt securities), and a registration form to be used in such
registration may be used for the registration of Registrable Securities of the
same class (a “Piggyback Registration”), the Company shall give prompt
written notice (a “Piggyback Notice”) to all Holders of Registrable
Securities of such class (including, in the case of a Piggyback Registration
involving Common Stock, all Partnership Unit Holders for purposes of this
Section 4 but subject to Section 4(e) hereof and all applicable
restrictions and limitations on the redemption of Partnership Units set forth
in the ARC LP Partnership Agreement, in order to afford such Holders the
opportunity to participate in such Piggyback Registration through a redemption
of Partnership Units in exchange for shares of Common Stock to be sold in the
related offering) of its intention to effect such a registration. Subject to
Section 4(c) and 4(d), the Company shall include in any such registration
by it all Registrable Securities of the same class as the securities being
registered with respect to which it has received written requests for inclusion
therein from the Holders thereof within 20 days after the receipt of the
Company’s Piggyback Notice; provided, however, that (A) if such
Piggyback Registration involves an underwritten offering, all Holders of
Registrable Securities requesting to be included in such registration

 

 

13

 

must sell their
Registrable Securities to the underwriters selected by the Company on the same
terms and conditions as apply to the Company, and each such Holder (including
Partnership Unit Holders who request to be included in such registration)
shall, if requested by the underwriters, enter into a customary holdback
agreement with respect to such Holder’s Registrable Securities as contemplated
by Section 5(a) hereof, (B) if, at any time after giving written notice
pursuant to this Section 4(a) of its intention to register any Priority
Securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any
reason not to register such Priority Securities, the Company shall give written
notice to all Holders of Registrable Securities and shall thereupon be relieved
of its obligation to register any Registrable Securities in connection with
such registration (without prejudice, however, to rights of Holders of
Registrable Securities under Section 3), (C) in the event of the initial
public offering by the Company of shares of Common Stock, the Company may
determine, in its sole and absolute discretion, that such registered offering
shall not constitute a Piggyback Registration for purposes of this
Section 4 only, and in the event of such a determination no Holder shall
have any rights under this Section 4 with respect to such offering, and
(D) it shall be a condition to the participation by any Partnership Unit Holder
in any such Piggyback Registration that no provision of the ARC LP Partnership
Agreement shall prohibit or restrict the redemption by such Partnership Unit
Holder of any Partnership Units as to which such Partnership Unit Holder has
made a request hereunder for inclusion in such Piggyback Registration and that
(1) in the case of an underwritten offering, such Partnership Unit Holder shall
have delivered to ARC LP a Redemption Notice Package not less than five (5)
Business Days prior to the closing date of such offering, and (2) in the case
of any other offering, such Partnership Unit Holder shall have delivered to ARC
LP a Redemption Notice Package a reasonable time prior to the proposed sale of
such Holder’s Registrable Securities in such offering, as determined by the
Company.

 

(b)                                
[Reserved].

 

(c)                                 
Priority on Primary Registrations.  If a Piggyback Registration is an underwritten
primary registration on behalf of the Company, and the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering without materially and adversely affecting the
marketability of such offering, the Company shall include in such registration
(i) first, all Priority Securities the Company proposes to sell, (ii) second,
the Registrable Securities pro rata
among the Holders of

 

 

14

 

such Registrable
Securities on the basis of the number of such securities requested to be
registered by such Holders, and (iii) third, other securities requested to be
included in such registration pro rata
among the holders of such securities on the basis of the number of such
securities requested to be registered by such holders.

 

(d)                                
Priority on Secondary Registrations.  If a Piggyback Registration is an underwritten
secondary registration on behalf of a holder of the Company’s securities other
than Registrable Securities, and the managing underwriters advise the Company
in writing that in their opinion the number of securities requested to be
included in such registration exceeds the number which can be sold in such
offering without materially and adversely affecting the marketability of such
offering, the Company shall include in such registration (i) first, the
securities requested to be included therein by the holders requesting such
registration and the Registrable Securities requested to be included in such
registration, pro rata among the
holders of such securities on the basis of the number of such securities
requested to be registered by such holders, and (ii) second, other securities
requested to be included in such registration pro
rata among the holders of such securities on the basis of the number
of such securities requested to be registered by such holders.

 

(e)                                 
Expiration of Partnership Unit Holder Piggyback Rights.  Notwithstanding anything to the contrary
contained herein, the Partnership Unit Holders shall have no rights under
Section 3(a)(ii) and this Section 4 with respect to any Demand
Registration or Piggyback Registration the Demand Notice or Piggyback Notice
for which was provided by the Company on or after the date that the “shelf
registration statement” contemplated by Section 8.8 of the ARC LP
Partnership Agreement has become effective under the Securities Act in
accordance with the provisions of such Section 8.8.

 

5.                                      
Holdback Agreements.

 

(a)                                 
In connection with
any Demand Registration or Piggyback Registration involving an underwritten
offering, each Holder of Registrable Securities hereby agrees, at the request
of the underwriters, to enter into a customary holdback agreement with respect
to such Holder’s Registrable Securities, provided, however, that
the terms of such holdback agreement shall be no less favorable than any
holdback agreement executed by any other holders of securities of the Company
in connection with such underwritten offering.  The Company agrees to use
its reasonable best efforts to cause such underwriters to agree in the
underwriting agreement to notify in writing all Holders of Registrable
Securities who have executed a holdback agreement in connection

 

 

15

 

with such offering of any
agreement by such underwriters to release any Holder of Registrable Securities
from any such holdback agreement at least five (5) Business Days in advance of
such release.

 

(b)                                
The Company agrees
(i) not to effect any public sale or distribution of its equity securities, or
any securities convertible into or exchangeable or exercisable for such
securities, during the seven (7) days prior to and during the 90-day period
beginning on the effective date of any underwritten Demand Registration (except
as part of such underwritten registration or pursuant to registrations on Forms
S-4 or S-8 or any successor forms), unless the underwriters managing the
registered public offering otherwise agree, and (ii) to use its reasonable
efforts to cause each holder of Registrable Securities and each other holder of
at least 5% (on a fully diluted basis) of equity securities of the Company,
respectively, or any securities convertible into or exchangeable or exercisable
for such equity securities, purchased from the Company at any time after the
date hereof (other than in a registered public offering) to agree not to effect
any public sale or distribution (including sales pursuant to Rule 144) of any
such securities during such period (except as part of such underwritten registration,
if otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree.

 

6.                                      
Registration Procedures.  Whenever the Holders of Registrable Securities
have requested that any Registrable Securities be registered pursuant to this
Agreement, the Company will use its best efforts to effect the registration and
the sale of such Registrable Securities in accordance with the intended method
of disposition thereof, and pursuant thereto the Company will as expeditiously
as possible:

 

(a)                                 
prepare and file with
the SEC a registration statement with respect to such Registrable Securities
(in the case of a Demand Registration, no later than forty-five (45) days after
the receipt of the request for registration) and use its best efforts to cause
such registration statement to become effective as promptly as practicable
after filing; provided, that before filing a registration statement or
prospectus or any amendments or supplements thereto, the Company will furnish
to the counsel selected by the Holders of a majority of the Registrable
Securities covered by such registration statement copies of all such documents
proposed to be filed; provided  further, that no such registration
statement or prospectus or amendment or supplement thereto shall be filed
unless the Holders of Registrable Securities to be included in such
registration statement and, if the offering is an underwritten offering,
counsel to the underwriters, have had a reasonable opportunity

 

 

16

 

to provide comments thereon; provided  further,
that the Holders of the Registrable Securities shall have provided their
comments promptly following their receipt of such registration statement or
prospectus or amendment or supplement thereto;

 

(b)                                
(i)  prepare and
file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary
to keep such registration statement effective for a period of not less than six
months and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during
such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement and (ii) use its best
efforts to have such supplements or amendments declared effective, if required,
as soon as practicable after filing; provided, that no such amendment or
supplement shall be filed unless the Holders of Registrable Securities to be
included in such registration statement and, if the offering is an underwritten
offering, counsel to the underwriters, have had a reasonable opportunity to
provide comments thereon; provided  further, that the Holders of
the Registrable Securities shall have provided their comments promptly
following their receipt of such amendment or supplement;

 

(c)                                 
furnish to each
seller of Registrable Securities, without charge, such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus)
and such other documents as such seller may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such seller;

 

(d)                                
use its best efforts
to register or qualify such Registrable Securities under such other securities
or blue sky laws of such jurisdictions as any seller reasonably requests and do
any and all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such seller (provided that
the Company will not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
subsection, (ii) subject itself to taxation in any such jurisdiction or (iii)
consent to general service of process (i.e., service of process which is
not limited solely to securities law violations) in any such jurisdiction);

 

 

17

 

(e)                                 
promptly notify each
seller of such Registrable Securities of the happening of any event as a result
of which the prospectus included in such registration statement contains an
untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading, promptly prepare a supplement or amendment
to such prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue statement of
a material fact or omit to state any fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and promptly furnish to each seller of Registrable Securities, without
charge, copies of such prospectus supplement or amended prospectus;

 

(f)                                   
use its best efforts
to cause all such Registrable Securities to be listed on each securities
exchange or automated quotation system on which securities of the same class
issued by the Company are then listed and, if not so listed, use commercially
reasonable efforts to cause such Registrable Securities to be authorized for
quotation on the Nasdaq Stock Market or to be listed on a national securities
exchange selected by the Company;

 

(g)                                
provide a transfer
agent and registrar for all such Registrable Securities not later than the
effective date of such registration statement;

 

(h)                                
enter into such
customary agreements (including underwriting agreements in customary form with
customary indemnity and contribution obligations to the underwriters) and take
all such other actions as the holders of a majority of the Registrable
Securities being sold or the underwriters, if any, reasonably request in order
to expedite or facilitate the disposition of such Registrable Securities
(including, without limitation, effecting a stock split or a combination of
shares);

 

(i)                                    
make available for
inspection by any seller of Registrable Securities, any underwriter
participating in any disposition pursuant to such registration statement and
any attorney, accountant or other agent retained by any such seller or underwriter,
all financial and other records, pertinent corporate documents and properties
of the Company and cause the officers, members, advisors, employees and
independent accountants of the Company to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement;

 

 

18

 

(j)                                    
otherwise use its
best efforts to comply with all applicable rules and regulations of the SEC,
and make available to its security holders, as soon as reasonably practicable,
an earning statement covering the period of at least twelve months beginning
with the first day of the first full calendar quarter of the Company after the
effective date of the registration statement, which earning statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
promulgated thereunder;

 

(k)                                 
permit any Holder of
Registrable Securities which holder, in its reasonable judgment, might be
deemed to be an underwriter or a controlling person of the Company, to
participate in the preparation of such registration or comparable statement and
to require the insertion therein of material, furnished to the Company, as the
case may be, in writing, which in the reasonable judgment of such Holder and
its counsel should be included;

 

(l)                                    
promptly notify the
selling Holders and the underwriters, if any, of the issuance or threatened
issuance of any stop order suspending the effectiveness of a registration
statement, or of any order suspending or preventing the use of any related
prospectus or suspending the qualification of any securities included in such registration
statement for sale in any jurisdiction and use its reasonable best efforts
promptly to either obtain the prompt withdrawal of any such order that is
issued or prevent the issuance of any such threatened order;

 

(m)                              
use its best efforts
to cause such Registrable Securities covered by such registration statement to
be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the sellers thereof to consummate the
disposition of such Registrable Securities;

 

(n)                                
obtain a “cold
comfort” letter from the independent public accountants of the Company in
customary form and covering such matters of the type customarily covered by
“cold comfort” letters as the underwriters or Holders of a majority of the
Registrable Securities being sold reasonably request;

 

(o)                                
provide an opinion of
the Company’s counsel in customary form and covering such matters of the type
customarily covered by such an opinion as the underwriters or the Holders of a
majority of the Registrable Securities being

 

 

19

 

sold reasonably request and dated the date of the
closing of the sale of Registrable Securities relating thereto;

 

(p)                                
to the extent
recommended by the underwriters in any underwritten offering of Registrable
Securities, cooperate with the selling Holders and the underwriters for such
offering in the marketing of the Registrable Securities, including making its
officers available to participate in such “road show” presentations and
conference calls as the underwriters may reasonably request and making the
Company’s accountants, counsel, premises, books and records available for such
purpose; and

 

(q)                                
promptly notify each
Holder, and each underwriter (A) when a registration statement or any related
prospectus or any amendment or supplement has been filed, and, with respect to
a registration statement or any amendment thereto, when the same has become
effective or (B) of any request by the SEC for amendments or supplements to the
registration statement or the related prospectus or for additional information.

 

If any such registration
or comparable statement refers to any Holder by name or otherwise as the Holder
of any securities of the Company, and if, in its sole and exclusive judgment,
such Holder is or might be deemed to be a controlling Person of the Company, as
the case may be, such Holder shall have the right to require (i) the insertion
therein of language, in form and substance satisfactory to such Holder and
presented to the Company in writing, to the effect that the holding by such
Holder of such securities is not to be construed as a recommendation by such
Holder of the investment quality of the Company’s securities covered thereby
and that such holding does not imply that such Holder will assist in meeting
any future financial requirements of the Company, as the case may be, or (ii)
in the event that such reference to such Holder by name or otherwise is not
required by the Securities Act or any similar Federal statute then in force,
the deletion of the reference to such Holder; provided, that with
respect to this clause (ii) such holder shall furnish to the Company, as
applicable, an opinion of counsel to such effect, which opinion of counsel
shall be reasonably satisfactory to the Company.

 

It
shall be a condition precedent to the obligation of the Company to take any
action with respect to any Registrable Securities pursuant to this
Section 6 that the Holder thereof shall furnish to the Company such
information regarding such Holder, the Registrable Securities and any other
securities of the Company held by such Holder as the 

 

 

20

 

Company shall reasonably
request and as shall be required in connection with the action taken by the
Company.

 

Each
Holder of Registrable Securities agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in
Section 6(e), such Holder will forthwith discontinue disposition of
Registrable Securities until such Holder’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 6(e), and, if
so directed by the Company such Holder will deliver to the Company (at the
Company’s expense) all copies (including, without limitation, any and all
drafts), other than permanent file copies, then in such Holder’s possession, of
the prospectus covering such Registrable Securities current at the time of
receipt of such notice. In the event that the Company shall give any such
notice, the six-month period mentioned in Section 6(b) shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to Section 6(e) to and including the date
when each Holder of Registrable Securities covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by Section 6(e).

 

7.                                      
Registration Expenses.

 

(a)                                 
All reasonable
expenses incident to the Company’s performance of or compliance with this
Agreement, including without limitation all Registration Expenses of the
Company and the Holders, will be borne by the Company, with respect to any
registration, proposed or otherwise, of its securities; provided, however,
that notwithstanding anything to the contrary contained herein, each Holder
shall bear and pay all underwriting discounts and commissions and all transfer
taxes, if any, attributable to and/or payable in respect of any sale of
Registrable Securities by such Holder.

 

(b)                                
In connection with
each Demand Registration and each Piggyback Registration and any registration
of Warrants or other Registrable Securities hereunder, the Company will also
reimburse the Holders of Registrable Securities covered by or proposed
(pursuant to the terms of this Agreement) to be included in such registration
for the reasonable fees and disbursements of one counsel chosen by the Holders
of a majority of the Registrable Securities, regardless of whether such
Registrable Securities are ultimately included in or sold pursuant to such
registration.

 

 

21

 

8.                                      
Indemnification.

 

(a)                                 
The Company shall
indemnify and hold harmless, to the extent permitted by law, each Holder of
Registrable Securities, its respective partners, members, shareholders,
officers and directors and each Person who controls such Holder (within the
meaning of the Securities Act) against all losses, claims, damages, liabilities
and expenses arising out of or based upon any Violation and shall reimburse
such Holder, partner, member, director, officer or controlling Person for any
legal or other fees or expenses reasonably incurred by such Holder, director,
officer or controlling Person in connection with the investigation or defense
of such loss, claim, damage, liability or expense, except insofar as the same
are caused by or contained in any information furnished in writing to the
Company by such Holder expressly for use in any registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or, if such Holder participates as an underwriter in the offering or
sale of Registrable Securities, to the extent that any such loss, claim,
damage, liability or expense arises out of such Holder’s failure to send or
give a copy of the final prospectus, as the same may be then supplemented or
amended, after the Company has furnished to such Holder a sufficient number of
copies of same, to the Person asserting the existence of a Violation at or
prior to the written confirmation of the sale of Registrable Securities to such
Person if such statement or omission was corrected in such final
prospectus.  In connection with an underwritten offering, the Company
shall indemnify and hold harmless such underwriters, their officers and
directors and each Person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities; provided, however,
that the Company will not be liable to any Person who participates as an
underwriter in the offering or sale of Registrable Securities or any other
Person, if any, who controls such underwriter within the meaning of the
Securities Act, under the indemnity agreement in this Section 8(a) with
respect to any preliminary prospectus or the final prospectus as amended or
supplemented, as the case may be, to the extent that any such loss, claim, damage
or liability of such underwriter or controlling Person results from the fact
that such underwriter sold Registrable Securities to a Person to whom there was
not sent or given, at or prior to the written confirmation of such sale, a copy
of the final prospectus (including any documents incorporated by reference
therein) or of the final prospectus as then amended or supplemented (including
any documents incorporated by reference therein), whichever is most recent, if
the Company has previously furnished sufficient copies thereof to such
underwriter.  Any fees and expenses incurred by the indemnified party
(including any fees and expenses incurred in connection with investigating or
preparing to defend such action or proceeding) shall be

 

 

22

 

paid to the indemnified
party, as incurred, within thirty (30) days of written notice thereof to the
indemnifying party.  Any amounts advanced by the indemnifying party to an
indemnified party pursuant to this Section 8 shall be returned to the
indemnifying party if it shall be finally determined by such a court in a
judgment not subject to appeal or final review that such indemnified party was
not entitled to indemnification by the indemnifying party.

 

(b)                                
In connection with
any registration statement in which a Holder of Registrable Securities is
participating, each such Holder will furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to the
extent permitted by law, will indemnify the Company and its respective members,
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act), as applicable, against any losses, claims,
damages, liabilities and expenses arising out of or based upon any Violation,
but only to the extent that the untrue statement or omission constituting such
Violation is contained in any information or affidavit so furnished in writing
by such Holder expressly for use in any registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto; provided,
that the obligation to indemnify will be individual to each Holder and will be
limited to the net amount of proceeds received by such Holder from the sale of
Registrable Securities pursuant to such registration statement.

 

(c)                                 
Any Person entitled
to indemnification hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (ii) unless in such indemnified party’s reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party will not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent will not be unreasonably withheld). An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in
the reasonable judgment of any indemnified party a conflict of interest may
exist between such indemnified party and any other of such indemnified parties
with respect to such claim.

 

 

23

 

(d)                                
The indemnification
provided for under this Agreement will remain in full force and effect
regardless of any investigation made by or on behalf of the indemnified party
or any partner, member, officer, director or controlling Person of such
indemnified party and will survive the transfer of securities.

 

(e)                                 
If the
indemnification required by this Section 8 from the indemnifying party is
unavailable to an indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to in this Section 8:

 

(i)                                    
The indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate
to reflect the relative fault of the indemnifying party and indemnified parties
in connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations.  The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any Violation has been committed by, or relates to information supplied
by, such indemnifying party or indemnified parties, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such Violation.  The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with the investigation or defense of such loss, claim,
damage, liability or expense.

 

(ii)                                 
The parties hereto
agree that it would not be just and equitable if contribution pursuant to this
Section 8(e) were determined by pro rata allocation or by any other method
of allocation which does not take into account the equitable considerations
referred to in Section 8(e)(i).  No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation.

 

(f)                                   
If indemnification is
available under this Section 8, the indemnifying parties shall indemnify
each indemnified party to the full extent provided in this Section 8
without regard to the relative fault of such indemnifying party or indemnified
party or any other equitable consideration referred to in Section 8(e)
except that no selling Holder shall

 

 

24

 

be liable for any amount
in excess of the net proceeds it receives in the offering which is the subject
of the indemnification proceeding.

 

(g)                                
The obligations of
the Company under this Section 8 shall be in addition to any liability
which the Company may otherwise have to the persons specified in
Section 8(a) and the obligations of the selling Holders under this
Section 8 shall be in addition to any liability which such Persons may
otherwise have to the Company.  The remedies provided in this
Section 8 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to an indemnified party at law or in equity.

 

9.                                      
Participation in Underwritten Registrations.  No Person may participate in any registration
hereunder which is underwritten unless such Person (a) agrees to sell such
Person’s securities on the basis provided in any underwriting arrangements
approved by the Person or Persons entitled hereunder to approve such
arrangements and (b) completes and executes all customary questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements; provided,
that no Holder of Registrable Securities included in any underwritten
registration pursuant to Section 3(a)(ii) or Section 4 hereof shall
be required to make any representations or warranties to the Company (in
connection with the registration of the Company’s securities) or the
underwriters other than representations and warranties (a) as are ordinarily
given by a seller of securities with respect to such seller’s authority to
sell, the enforceability of agreements against such seller, such seller’s good
title in such securities and the interest in such securities to be acquired at
closing by the buyer of such securities, and (b) regarding such Holder and such
Holder’s intended method of distribution; provided, further, that
no Holder of Registrable Securities included in any underwritten registration
pursuant to Section 3(a)(ii) or Section 4 hereof shall be required to
provide any indemnification or contribution agreements other than to the same
extent provided in Section 8.

 

10.                                
Rule 144 Reporting.  With a view to making available
to the holders of Registrable Securities the benefits of certain rules and
regulations of the SEC which may permit the sale of the Registrable Securities
to the public without registration, the Company agrees to use its best efforts
to:

 

(a)                                 
make and keep current
public information available, within the meaning of Rule 144 or any similar or
analogous rule promulgated under the

 

 

25

 

Securities Act, at all times after it has become
subject to the reporting requirements of the Exchange Act;

 

(b)                                
file with the SEC, in
a timely manner, all reports and other documents required under the Securities
Act and Exchange Act (after it has become subject to such reporting
requirements);

 

(c)                                 
so long as any party
hereto owns any Registrable Securities, furnish to such Person forthwith upon
request a written statement as to its compliance with the reporting
requirements of said Rule 144 (at any time commencing 90 days after the
effective date of the first registration filed by the Company for an offering
of its securities to the general public), the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements); a
copy of its most recent annual or quarterly report; and such other reports and
documents as such Person may reasonably request in availing itself of any rule
or regulation of the SEC allowing it to sell any such securities without
registration; and

 

(d)                                
in connection with
any sale, transfer or other disposition by any Holder of any Registrable
Securities pursuant to Rule 144 promulgated under the Securities Act, cooperate
with such holder to facilitate the timely preparation and delivery of
certificates representing the Registrable Securities to be sold and not bearing
any Securities Act legend, and enable certificates for such Registrable
Securities to be for such number of shares and registered in such name as the
selling Holders may reasonably request in writing no more than three (3)
Business Days after any sale of Registrable Securities; provided, that,
if requested by the Company, such Holder shall have furnished to the Company an
opinion of counsel reasonably satisfactory to the Company and the Company’s
counsel that registration of such Registrable Securities under the Securities
Act is not required.

 

11.                                
Notices. 
All notices,
demands or other communications to be given or delivered under or by reason of
the provisions of this Agreement will be in writing and will be deemed to have
been given when delivered personally, mailed by certified or registered mail,
return receipt requested and postage prepaid, or the day after sent if sent via
a nationally recognized overnight courier, or upon written confirmation if sent
via facsimile to any recipient (other than Travelers, to whom facsimile
transmission shall not be a valid means of notice under this Agreement). Such
notices, demands and other communications will be sent to the address indicated
below:

 

 

26

 

To
the Company:

 

Affordable Residential Communities Inc.

600 Grant Street, Suite 900

Denver, Colorado  80203

Telecopy:  (303) 294-0085

Attention:  Scott L. Gesell, Esq.

 

To
the Subscribers:

 

At the address or facsimile number set forth on Exhibit
A hereto

 

To
the Original Investors:

 

At the address or facsimile number set forth on Exhibit
B hereto

 

To
the Reorganization Shareholders:

 

At the address or facsimile number set forth on Exhibit
C hereto

 

To
the Partnership Unit Holders:

 

At the address or facsimile number set forth on Exhibit
D hereto

 

In each case, with copies
to each of:

 

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York  10036

Attention:  Fred B. White, III,  Esq.

Facsimile No.:  (212) 735-2000

 

Weil, Gotshal & Manges LLP

100 Federal Street - 34th Floor

Boston, MA 02110

Attention:  James Westra, Esq.

 

 

27

 

Attention:  Andrew M. Troop, Esq.

Facsimile No.:  (617) 772-8333

 

Paul, Hastings, Janofsky & Walker LLP

75 East 55th Street

New York, New York  10022

Attention:  Frank T. Cannone, Esq.

Facsimile No.:  (212) 319-4090

 

Clifford Chance US LLP

200 Park Avenue

New York, New York  10166

Attention: Larry P. Medvinsky, Esq.

Facsimile No.:  (212) 878-8375

 

Kirkland & Ellis

Citicorp Center

153 East 53rd Street

New York, New York 10022-4675

Attention:  Kirk Radke, Esq.

Facsimile No.:  (212) 446-4900

 

or such other address or
to the attention of such other person as the recipient party shall have
specified by prior written notice to the sending party.

 

12.                                
Miscellaneous.

 

(a)                                 
Other Registration Rights. The Company shall not grant to any holders of Common
Stock or other equity securities of the Company any demand or piggyback
registration rights with respect to any such securities that have priority over
the demand and piggyback registration rights set forth in this Agreement, provided,
however, that the Company may agree to effect one or more “shelf”
registrations of the Common Stock issuable upon redemption of any Partnership
Units, whether outstanding on the Effective Date or thereafter, including the
shelf registration statement contemplated by Section 8.8 of the ARC LP
Partnership Agreement.

 

 

28

 

(b)                                
No Inconsistent Agreements. The Company will not enter into any agreement which
is inconsistent with or violates the rights granted to the holders of
Registrable Securities in this Agreement.

 

(c)                                 
Remedies.
Any Person having rights under any provision of this Agreement (including any
Original Investor, Subscriber, Reorganization Shareholder or Partnership Unit
Holder) will be entitled to enforce such rights specifically to recover damages
caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.

 

(d)                                
Amendments and Waivers. Except as otherwise provided herein, the provisions
of this Agreement may be amended or waived only upon the prior written consent
of the Company and the Holders of a majority of the Registrable Securities
(which for this purpose shall not include the Warrants but shall include the
shares of Common Stock underlying any outstanding Warrants), provided, however,
that any amendment or waiver of any provision of this Agreement which adversely
affects the rights of any party to this Agreement shall be executed by each
such party; provided  further, however, that a grant by the
Company of demand and/or piggyback registration rights that do not have
priority over the demand and piggyback registration rights granted to the
Holders hereunder shall not be deemed to “adversely affect” the rights of any
party to this Agreement.

 

(e)                                 
Successors and Assigns. All covenants and agreements in this Agreement by or
on behalf of any of the parties hereto will bind and inure to the benefit of
their respective heirs, legal representatives, successors and assigns of the
parties hereto whether so expressed or not. In addition, whether or not any
express assignment has been made, the provisions of this Agreement which are
for the benefit of purchasers or Holders of Registrable Securities are also for
the benefit of, and enforceable by, any subsequent Holder of Registrable
Securities.

 

(f)                                   
Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law,

 

 

29

 

such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.

 

(g)                                
Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the
same Agreement.

 

(h)                                
Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.

 

(i)                                    
Recapitalizations, Exchanges Affecting the Registrable Securities.  The provisions of this Agreement shall apply,
to the full extent set forth herein, with respect to the Registrable
Securities, to any and all shares of stock of the Company or any successor or
assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in exchange for, or in
substitution of the Registrable Securities, by reason of a stock dividend,
stock split, stock issuance, reverse stock split, combination,
recapitalization, reclassification, merger, consolidation or otherwise. 
Upon the occurrence of any of such events, amounts hereunder shall be
appropriately adjusted.

 

(j)                                    
Governing
Law.  This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
giving effect to the conflicts of law principles thereof.

 

(k)                                 
Third Party Beneficiaries.  Except with respect to the Partnership Unit
Holders and the Original Investors, this Agreement is not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.

 

*  *  *  *  *

 

 

30

 

IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and
year first above written.

 

 

	
  THOMAS H. LEE EQUITY

  FUND IV, L.P.

  	
  THOMAS H. LEE FOREIGN

  FUND IV, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  THL Equity Advisors IV,
  LLC,

  its General Partner

  	
  By:

  	
  THL Equity Advisors IV,
  LLC,

  its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  Thomas H. Lee Partners,
  L.P.,

  its Managing Member

  	
  By:

  	
  Thomas H. Lee Partners,
  L.P.,

  its Managing Member

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  Thomas H. Lee Advisors,
  LLC,

  its General Partner

  	
  By:

  	
  Thomas H. Lee Advisors,
  LLC,

  its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Thomas H. Lee

  	
   

  	
  By:

  	
  /s/ Thomas H. Lee

  	
   

  
	
   

  	
  Name:

  	
  Thomas H. Lee

  	
   

  	
  Name:

  	
  Thomas H. Lee

  
	
   

  	
  Title:

  	
  Principal Managing

  Director

  	
   

  	
  Title:

  	
  Principal Managing

  Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  THOMAS H. LEE
  CHARITABLE

  INVESTMENTS LIMITED

  PARTNERSHIP

  	
  THOMAS H. LEE INVESTORS

  LIMITED PARTNERSHIP 

  
	
   

  	
   

  	
   

  	
  By:

  	
  THL Investment
  Management

  Corp.,  its General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Thomas H. Lee

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Thomas H. Lee

  	
   

  	
   

  	
   

  
	
   

  	
  Title:  
  General Partner

  	
  By:

  	
  /s/ Thomas H. Lee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Thomas H. Lee

  
	
   

  	
   

  	
   

  	
   

  	
  Title:  General
  Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 

	
  THOMAS H. LEE FOREIGN

  FUND IV-B, L.P.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  THL Equity Advisors IV,
  LLC,

  its General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Thomas H. Lee Partners,
  L.P.,

  its Managing Member

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Thomas H. Lee Advisors,
  LLC,

  its General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Thomas H. Lee

  	
   

  
	
   

  	
  Name: Thomas H. Lee

  
	
   

  	
  Title: 

  	
  Principal Managing

  Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 

	
  CAPITAL ARC HOLDINGS,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Michael Greene

  	
   

  
	
   

  	
   

  	
  Name: Michael Greene

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 

	
   

  	
  NASSAU CAPITAL PARTNERS
  II, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Randall A.
  Hack

  	
   

  
	
   

  	
   

  	
  Name:  Randall A.
  Hack

  
	
   

  	
   

  	
  Title: Sr. Managing
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NASSAU CAPITAL FUNDS
  L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Randall A.
  Hack

  	
   

  
	
   

  	
   

  	
  Name:  Randall A.
  Hack

  
	
   

  	
   

  	
  Title: Sr. Managing
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NAS PARTNERS I, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Randall A.
  Hack

  	
   

  
	
   

  	
   

  	
  Name:  Randall A.
  Hack

  
	
   

  	
   

  	
  Title: Sr. Managing
  Director

  

 

 

 

	
  AFFORDABLE RESIDENTIAL
  COMMUNITIES INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Scott Gesell

  	
   

  
	
   

  	
  Name: Scott Gesell

  
	
   

  	
  Title: Executive Vice
  President

  

 

 

 

Exhibit A

 

	
  Thomas H. Lee Equity
  Fund IV, L.P.

  	
  Thomas H. Lee Foreign
  Fund IV, L.P.

  
	
  c/o Thomas H. Lee
  Company

  	
  c/o Thomas H. Lee
  Company

  
	
  75 State Street, Suite
  2600

  	
  75 State Street, Suite
  2600

  
	
  Boston,
  Massachusetts  02109

  	
  Boston,
  Massachusetts  02109

  
	
  Telecopy:  (617)
  227-3514

  	
  Telecopy:  (617)
  227-3514

  
	
  Attention:  Todd
  Abbrecht

  	
  Attention:  Todd
  Abbrecht

  
	
   

  	
   

  
	
  Thomas H. Lee
  Charitable Investments Limited Partnership

  	
  Thomas H. Lee Investors
  Limited Partnership

  
	
  c/o Thomas H. Lee
  Company

  	
  c/o Thomas H. Lee
  Company

  
	
  75 State Street, Suite
  2600

  	
  75 State Street, Suite
  2600

  
	
  Boston,
  Massachusetts  02109

  	
  Boston,
  Massachusetts  02109

  
	
  Telecopy:  (617)
  227-3514

  	
  Telecopy:  (617)
  227-3514

  
	
  Attention:  Todd
  Abbrecht

  	
  Attention:  Todd
  Abbrecht

  
	
   

  	
   

  
	
  Thomas H. Lee Foreign
  Fund IV-B, L.P.

  	
  The Travelers Indemnity
  Company

  
	
  c/o Thomas H. Lee
  Company

  	
  205 Columbus Blvd., 9PB

  
	
  75 State Street, Suite
  2600

  	
  Hartford, Connecticut
  06083-2030

  
	
  Boston,
  Massachusetts  02109

  	
  Attention:  

  	
  Real Estate Department,

  
	
  Telecopy:  (617)
  227-3514

  	
   

  	
  David Colangelo

  
	
  Attention:  Todd
  Abbrecht

  	
   

  	
  Investment No.: 12809

  
	
   

  	
   

  
	
  Capital ARC Holdings,
  LLC

  	
   

  
	
  c/o UBS Capital

  	
   

  
	
  48 Signal Road

  	
   

  
	
  Stamford, CT 06902

  	
   

  

 

 

 

Exhibit B

(attached)

 

 

 

Exhibit C

 

	
  Nassau Capital Partners
  II, L.P.

  	
  Scott D. Jackson

  
	
  c/o Nassau Capital
  Funds, L.P.

  	
  185 S. Elm Street

  
	
  22 Chambers Street

  	
  Denver, CO 80246

  
	
  Princeton, NJ 08542

  	
   

  
	
  Attention:  Robert
  L. Honstein

  	
   

  
	
  Facsimile No.: 
  (609) 924-8887

  	
   

  
	
   

  	
   

  
	
  Nassau Capital Funds
  L.P.

  	
  John G. Sprengle

  
	
  22 Chambers Street

  	
  1727 E. Sunset Ridge
  Road

  
	
  Princeton, NJ 08542

  	
  Highlands Ranch, CO
  80126

  
	
  Attention:  Robert
  L. Honstein

  	
   

  
	
  Facsimile No.: 
  (609) 924-8887

  	
   

  
	
   

  	
   

  
	
  NAS Partners I, L.L.C.

  	
  Matthew H. Briger

  
	
  c/o Nassau Capital
  Funds, L.P.

  	
  517 Garfield Street

  
	
  22 Chambers Street

  	
  Denver, CO 80206

  
	
  Princeton, NJ 08542

  	
   

  
	
  Attention:  Robert
  L. Honstein

  	
   

  
	
  Facsimile No.: 
  (609) 924-8887

  	
   

  
	
   

  	
   

  
	
  John Markham Green

  	
  Scott L. Gesell

  
	
  15 East 91st Street,
  Apt.  10A

  	
  1685 Muirfield Lane

  
	
  New York, NY 10028

  	
  Evergreen, CO 80439

  
	
   

  	
   

  
	
  Eugene Mercy, Jr.

  	
  Stratton R. Smith

  
	
  1111 Park Avenue

  	
  778 13th Street

  
	
  New York, NY 10128

  	
  Boulder, CO 80302

  

 

 

C-1

 

	
  McMahon Investment
  Partnership, L.P.

  	
  R. Haynes Chidsey

  
	
  c/o T. Gordon McMahon

  	
  1435 Wazee Street #403

  
	
  350 E. 79th Street,
  Apt. 37B

  	
  Denver, CO 80202

  
	
  New York, NY 10021-9209

  	
   

  
	
   

  	
   

  
	
  Albert F. Hummel

  	
  Nicholas Campbell

  
	
  P.O. Box 3407

  	
  77 Falcon Hills Drive

  
	
  Rancho Santa Fe, CA
  92067

  	
  Highlands Ranch, CO
  80126

  
	
   

  	
   

  
	
  Mercy 1995 Family Trust

  	
  Scott Vanderhoofven

  
	
  c/o Eugene Mercy, Jr.

  	
  4453 W. Hinsdale Avenue

  
	
  1111 Park Avenue

  	
  Littleton, CO 80128

  
	
  New York, NY 10128-1234

  	
   

  

 

 

C-2

 

Exhibit D

 

	
  511
  Equities Corporation

  
	
  c/o
  Rachel Kuluva

  
	
  590
  Fifth Avenue, 19th Floor

  
	
  New
  York, NY  10036

  
	
  Phone: 
  (212) 403-2916

  
	
   

  
	
  Andrew
  and Elaine Pesky

  
	
  10
  East 53rd Street

  
	
  New
  York, NY  10022

  
	
  Phone: 
  (212) 889-6969

  
	
   

  
	
  ARC
  II Investor

  
	
  Charles
  A. Davis

  
	
  Marsh
  & McClennan Risk Capital Corp.

  
	
  20
  Horseneck Lane

  
	
  Greenwich,
  CT  06830

  
	
   

  
	
   

  
	
  Arno
  P. Niemand

  
	
  777
  - 15th Street

  
	
  Boulder,
  CO  80302

  
	
  Phone: 
  (303) 938-6866

  
	
   

  
	
  Brittany
  Ridge Investment Partners, L.P

  
	
  c/o
  John J. Oros

  
	
  280
  Highland Avenue

  
	
  Ridgewood,
  NJ  07450-4004

  
	
  Phone: 
  (201) 445-5066

  
	
   

  
	
  Bruce
  V. Rauner

  
	
  GTCR Golder Rauner L.L.C.

  
	
  6100
  Sears Tower

  
	
  Chicago,
  IL  60606

  
	
  Phone: 
  (847) 256-9018

  
	
   

  
	
  Curtis
  S. Lane

  
	
  135
  Central Park West

  
	
  New
  York, NY  10023

  
	
  Phone: 
  (212) 887-2113

  

 

 

D-1

 

	
  Daniel
  J. Sullivan Jr.

  
	
  141
  Forest Street

  
	
  Wellesley,
  MA  02181

  
	
  Phone: 
  (617) 237-5507

  
	
   

  
	
  David
  Lurie

  
	
  1050
  Fifth Avenue

  
	
  New
  York, NY  10028

  
	
  Phone: 
  (212) 427-3855

  
	
   

  
	
  David
  N. Roberts

  
	
  Angelo
  Gordon & Co.

  
	
  245
  Park Avenue, 26th Floor

  
	
  New
  York, NY  10167

  
	
  Phone: 
  (212) 692-2025

  
	
   

  
	
   

  
	
  Dean
  R. O’Hare

  
	
  370
  Lake Road

  
	
  Far
  Hills, NJ  07931

  
	
   

  
	
  Deborah
  Roberts

  
	
  515
  West End Avenue

  
	
  New
  York, NY  10024

  
	
  Phone: 
  (212) 362-2323

  
	
   

  
	
   

  
	
  Dennis
  and Cynthia Suskind

  
	
  136
  E. 79th St. Apt. 9

  
	
  New
  York, NY  10021

  
	
  Phone: 
  (212) 472-9408

  
	
   

  
	
  Donald
  R.Gant

  
	
  Youngs
  Road

  
	
  New
  Vernon, NJ  07976

  
	
  Phone: 
  (212) 902-6202

  
	
   

  
	
  Edgell
  Street Partners

  
	
  c/o
  James Harasimowicz

  
	
  210
  Central Park South #24B

  
	
  New
  York, NY  10019

  
	
  Phone: 
  (212) 262-9697

  

 

 

D-2

 

	
  Edward
  Dunay

  
	
  300
  East 57th St., Apt. 12D

  
	
  New
  York, NY  10022

  
	
  Phone: 
  (212) 838-7563

  
	
   

  
	
   

  
	
  Eugene
  Mercy, Jr.

  
	
  1111
  Park Avenue

  
	
  New
  York, NY  10128

  
	
  Phone: 
  (212) 407-3334

  
	
   

  
	
  Farmer
  Family Trust

  
	
  John
  R. Farmer & Tawna B. Farmer

  
	
  Trustees

  
	
  2
  Morrison Road

  
	
  P.O.
  Box 1405

  
	
  Ross,
  CA  94957

  
	
  Phone: 
  (415) 456-3843

  
	
   

  
	
  FAWPEAS
  L.P.

  
	
  Alan
  D. & Wendy Pesky

  
	
  59
  East 54th Street, Suite 42

  
	
  New
  York, NY  10022

  
	
  Phone: 
  (212) 339-7745

  
	
   

  
	
  Fern
  K. Hurst

  
	
  1060
  Fifth Avenue

  
	
  New
  York, NY  10128

  
	
   

  
	
   

  
	
  Gamco
  Investors, Inc.

  
	
  Mario
  J. Gabelli

  
	
  Gabelli
  Group Capital Partners, Inc.

  
	
  One
  Corporate Center

  
	
  Rye,
  NY  10580

  
	
  Phone: 
  (914) 921-5145

  

 

 

D-3

 

	
  Gary
  D. and Karen A. Rose

  
	
  Trustees
  for the benefit of Adam James Rose

  and Alexander Mark Rose

  
	
  24
  Dryden Terrace

  
	
  Short
  Hills, NJ  07078

  
	
  Phone: 
  (212) 902-6114

  
	
   

  
	
  Granite
  Capital, L.P

  
	
  c/o
  Lloyd Moskowitz

  
	
  126
  E. 56th Street, 25th Floor

  
	
  New
  York, NY  10022

  
	
  Phone: 
  (212) 407-3344

  
	
   

  
	
  Grantor
  Trust for Dana E. Tang

  
	
  c/o
  Oscar Tang

  
	
  New
  England Investment Co.

  
	
  600
  Fifth Avenue, 8th Floor

  
	
  New
  York, NY  10020

  
	
  Phone: 
  (212) 830-5301

  
	
   

  
	
  Grantor
  Trust for Kevin C. Tang

  
	
  c/o
  Oscar Tang

  
	
  New
  England Investment Co.

  
	
  600
  Fifth Avenue, 8th Floor

  
	
  New
  York, NY  10020

  
	
  Phone: 
  (212) 830-5301

  
	
   

  
	
  Grantor
  Trust for Kristin A. Tang

  
	
  c/o
  Oscar Tang

  
	
  New
  England Investment Co.

  
	
  600
  Fifth Avenue, 8th Floor

  
	
  New
  York, NY  10020

  
	
  Phone: 
  (212) 830-5301

  
	
   

  
	
  Grantor
  Trust for Tracy L. Tang

  
	
  c/o
  Oscar Tang

  
	
  New
  England Investment Co.

  
	
  600
  Fifth Avenue, 8th Floor

  
	
  New
  York, NY  10020

  
	
  Phone: 
  (212) 830-5301

  

 

 

D-4

 

	
  Heidi
  Pesky Worcester

  
	
  40
  Blood Street

  
	
  Lyme,
  CT  06371

  
	
  Phone: 
  (860) 434-6052

  
	
   

  
	
  Henry
  Barkhorn

  
	
  1095
  Park Avenue

  
	
  New
  York, NY  10128

  
	
  Phone: 
  (212) 313-2491

  
	
   

  
	
  Howard
  Silverstein

  
	
  895
  Park Avenue, Apt. 9C

  
	
  New
  York, NY  10021

  
	
  Phone: 
  (212) 902-6102

  
	
   

  
	
  Howard
  P. Berkowitz

  
	
  65
  East 55th Street, 30th Floor

  
	
  New
  York, NY  10022

  
	
  Phone: 
  (212) 664-0990

  
	
   

  
	
  Indian
  Creek Partners, LP

  
	
  c/o
  David C. Clapp

  
	
  Goldman
  Sachs & Co.

  
	
  85
  Broad Street, 29th Floor

  
	
  New
  York, NY  10004

  
	
  Phone: 
  (212) 902-6445

  
	
   

  
	
  Indosuez
  ARC Partners

  
	
  c/o
  Michael Walsh, Esq.

  
	
  666
  Third Avenue

  
	
  New
  York, NY  10017

  
	
  Phone: 
  (646) 658-2000

  
	
   

  
	
   

  
	
  J. 
  Russell Bellamy

  
	
  3504
  Drexel Drive

  
	
  Dallas,
  TX  75205

  
	
  Phone: 
  (214) 855-1060

  
	
   

  
	
  James
  E. Hunt

  
	
  1111
  Park Avenue

  
	
  New
  York, NY 10128

  
	
  Phone:
  (212) 758-2800

  

 

 

D-5

 

	
  Joanne
  D. Corzine

  
	
  25
  Lenox Road

  
	
  Summit,
  NJ 07901

  
	
  Phone:
  (212) 902-8281

  
	
   

  
	
  Joel
  and Helen Portugal

  
	
  30
  E. 72nd Street

  
	
  New
  York, NY 10021

  
	
  Phone:
  (212) 744-0930

  
	
   

  
	
   

  
	
  John
  G. Duffy

  
	
  415
  Crestwood Avenue

  
	
  Crestwood,
  NY 10707

  
	
  Phone:
  (212) 323-8300

  
	
   

  
	
  John
  Markham Green

  
	
  15
  East 91st Street, Apt. 10A

  
	
  New
  York, NY 10028

  
	
  Phone:
  (212) 902-5240

  
	
   

  
	
  Joseph
  E. Robert Jr.

  
	
  1288
  Ballantrae Farm Drive

  
	
  MacLean,
  VA 22101

  
	
  Phone:
  (703) 506-0560

  
	
   

  
	
  Joseph
  Ellis

  
	
  Goldman
  Sachs

  
	
  530
  East 86th Street

  
	
  New
  York, NY 10028

  
	
  Phone:
  (212) 902-6766

  
	
   

  
	
  Joseph
  P. and Beatrice L. Riccardo

  
	
  311
  Sweetbriar Court

  
	
  Franklin
  Lakes, NJ 07417

  
	
   

  
	
  Judith
  Berkowitz

  
	
  c/o
  HPB Associates, L.P.

  
	
  65
  East 55th Street, 30th Floor

  
	
  New
  York, NY 10022

  
	
  Phone:
  (212) 664-0990

  

 

 

D-6

 

	
  Kendrick
  R. Wilson III

  
	
  161
  Cantitoe Road

  
	
  Katonah,
  NY 10536

  
	
  Phone:
  (212) 902-8655

  
	
   

  
	
  Laura
  T. Traphagen

  
	
  Ha’
  Penny House

  
	
  Van
  Beuren Road

  
	
  Morristown,
  NJ 07960

  
	
  Phone:
  (973) 455-0666

  
	
   

  
	
  Lawrence
  E. and Valerie C. Uhl

  
	
  1370
  Old Mill Road

  
	
  San
  Marino, CA 91 108

  
	
   

  
	
  Lewis
  M. Eisenberg

  
	
  Granite
  Capital International Group

  
	
  126
  E. 56th Street, 25th Floor

  
	
  New
  York, NY 10022

  
	
  Phone:
  (212) 407-3338

  
	
   

  
	
  Mary
  Kong

  
	
  375
  S. End Ave #30E

  
	
  New
  York, NY 10280

  
	
  Phone:
  (212) 306-1364

  
	
   

  
	
  McMahon
  Investment Partners, L.P.

  
	
  c/o
  T. Gordon McMahon

  
	
  350
  E. 79th Street, Apt. 37B

  
	
  New
  York, NY 10021 - 9209

  
	
  Phone:
  (212) 407-5277

  
	
   

  
	
  Mercy
  Foundation

  
	
  c/o Eugene Mercy, Jr.

  
	
  1111
  Park Avenue

  
	
  New
  York, NY 10128-1234

  
	
  Phone:
  (212) 407-3334

  
	
   

  
	
  Michael
  Ainslie

  
	
  415
  Sea Spray Avenue

  
	
  Palm
  Beach, FL 33480

  
	
  Phone:
  (203) 86 1-6635

  

 

 

D-7

 

	
  Michael
  J. Moss

  
	
  258
  Soundview Avenue

  
	
  White
  Plains, NY 10606

  
	
  Phone:
  (914) 694-5851

  
	
   

  
	
  Mobilecourt
  Partners I

  
	
  c/o Irv Flinn, Esq.

  
	
  Sullivan
  & Cromwell

  
	
  125
  Broad Street

  
	
  New
  York, NY 10004

  
	
  Phone:
  (212) 558-3922

  
	
   

  
	
  Mobilecourt
  Partners II

  
	
  c/o Irv Flinn, Esq.

  
	
  Sullivan
  & Cromwell

  
	
  125
  Broad Street

  
	
  New
  York, NY 10004

  
	
  Phone:
  (212) 558-3922

  
	
   

  
	
  Mobilecourt
  Partners III

  
	
  c/o Irv Flinn, Esq.

  
	
  Sullivan
  & Cromwell

  
	
  125
  Broad Street

  
	
  New
  York, NY 10004

  
	
  Phone:
  (212) 558-3922

  
	
   

  
	
   

  
	
  Oscar
  L. Tang

  
	
  New
  England Investment Co.

  
	
  600
  Fifth Avenue, 8th Floor

  
	
  New
  York, NY 10021

  
	
  Phone:
  (212) 830-5301

  
	
   

  
	
  Park
  Partners II

  
	
  c/o
  Marc Wolinsky

  
	
  Wachtell,
  Lipton, Rosen & Katz

  
	
  51
  West 52nd Street

  
	
  New
  York, NY 10019

  
	
  Phone:
  (212) 403-1226

  

 

 

D-8

 

	
  Peter
  L. Briger

  
	
  Fortress
  Investment Group

  
	
  1301
  Avenue of the Americas

  
	
  42nd
  Floor

  
	
  New
  York, NY 10019

  
	
   

  
	
   

  
	
  Richard
  D. Reiss Jr. and Bonnie Reiss, 

  JTWROS

  
	
  100
  1 Park Avenue

  
	
  New
  York, NY 10028

  
	
  Phone:
  (212) 536-9720

  
	
   

  
	
  Richard
  T. Pratt

  
	
  1694
  South Mohawk Way

  
	
  Salt
  Lake City, UT 84108

  
	
   

  
	
  Richard
  W. & Catherine E. Herbst

  
	
  12
  Gap View Road

  
	
  Short
  Hills, NJ 07078

  
	
  Phone:
  (212) 339-0160

  
	
   

  
	
  Robert
  Cenci

  
	
  45
  Overlook Drive

  
	
  Greenwich,
  CT 06830

  
	
  Phone:
  (203) 625-9376

  
	
   

  
	
  Robert
  E. Mnuchin

  
	
  218
  Nettleton Hollow Road

  
	
  Washington,
  CT 06793

  
	
  Phone:
  (203) 868-9466

  
	
   

  
	
  Robert
  J. Hurst

  
	
  Goldman
  Sachs & Co.

  
	
  85
  Broad Street, 30th Floor

  
	
  New
  York, NY 10004

  
	
  Phone:
  (212) 902-5262

  

 

 

D-9

 

	
  Robert
  N. Downey

  
	
  Goldman
  Sachs & Co.

  
	
  85
  Broad Street, 2nd Floor

  
	
  New
  York, NY 10004

  
	
  Phone:
  (212) 902-6407

  
	
   

  
	
  Robert
  Yedid

  
	
  Pelham
  Avenue

  
	
  Sands
  Point, NY 11050

  
	
   

  
	
  Ross
  E. Traphagen

  
	
  Van
  Beuren Road

  
	
  Morristown,
  NJ 07960

  
	
  Phone:
  (407) 546-72 10

  
	
   

  
	
   

  
	
  Sally
  Gordon

  
	
  1080
  Fifth Avenue, Apt. 14B

  
	
  New
  York, NY 10128

  
	
   

  
	
  Steven
  Malkenson

  
	
  17
  West 67th Street, #9F

  
	
  New
  York, NY 10023

  
	
  Phone:
  (212) 874-6764

  
	
   

  
	
  Susan
  Mercy

  
	
  1111
  Park Ave

  
	
  New
  York, NY 10128

  
	
  Phone:
  (212) 407-3334

  
	
   

  
	
  Tanavon
  Corporation

  
	
  c/o
  Oscar Tang

  
	
  600
  Fifth Avenue, 8th Floor

  
	
  New
  Y ork, NY 10021

  
	
  Phone:
  (212) 830-5301

  
	
   

  
	
  Thomas
  I. Unterberg

  
	
  C.E.
  Unterberg, Towbin

  
	
  350
  Madison Avenue, 10th Floor

  
	
  New
  York, NY 10017

  
	
  Phone:
  (212) 389-8005

  

 

 

D-10

 

	
  Thomas
  Mendell

  
	
  J.P.
  Morgan Partners

  
	
  1221
  Avenue of the Americas

  
	
  New
  York, NY 10020-0180

  
	
  Phone:
  (212) 899-3448

  
	
  Email:
  tom.mendell@chasecapital.com

  
	
   

  
	
  Thomas
  Rhodes

  
	
  c/o
  National Review

  
	
  215
  Lexington Avenue, 4th Floor

  
	
  New
  York, NY 10016

  
	
  Phone:
  (212) 213-9380

  
	
   

  
	
  Todd
  and Gretchen Zelek

  
	
  2000
  Ashbourne Drive

  
	
  S.
  Pasadena, CA 91030

  
	
  Phone:
  (213) 362-2550

  
	
   

  
	
  Todd
  J. Zelek

  
	
  2000
  Ashbourne Drive

  
	
  S.
  Pasadena, CA 91030

  
	
  Phone:
  (213) 362-2550

  
	
   

  
	
   

  
	
  Victor
  Wright

  
	
  Goldman,
  Sachs & Co.

  
	
  One
  New York Plaza, 45th Floor

  
	
  New
  York, NY 10004

  
	
  Phone:
  (212) 902-0101

  
	
   

  
	
  Walter
  Harrison III

  
	
  Granite
  Capital

  
	
  126
  E. 56th Street, 25th Floor

  
	
  New
  York, NY 10022

  
	
  Phone:
  (212) 407-3338

  
	
   

  
	
  Watchung
  Road Associates, L.P.

  
	
  Attn:
  Leon Cooperman

  
	
  45
  Watchung Road

  
	
  Short
  Hills, NJ 07078

  
	
  Phone:
  (201) 379-6282

  

 

 

D-11

 

	
  William
  H. Ingram and Cathy M. Brienza

  
	
  c/o
  Sutton Capital Associates, Inc.

  
	
  One
  Rockefeller Plaza, Suite 3300

  
	
  New
  York, NY 10020-2

  
	
  Phone:
  (212) 218-4351 102

  
	
   

  
	
  William
  Ingram

  
	
  Sutton
  Capital Associates, Inc.

  
	
  One
  Rockefeller Plaza, Suite 3300

  
	
  New
  York, NY 10020-2 102

  
	
  Phone:
  (212) 218-4351

  
	
   

  
	
  William
  Malkenson

  
	
  PMB
  #442

  
	
  4132
  S. Rainbow Blvd.

  
	
  Las
  Vegas, NV 89103

  
	
  Phone:
  (702) 247-9047

  

 

 

D-12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}]]