Document:

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                                                                 Exhibit 10.5(a)

                            THREE-FIVE SYSTEMS, INC.
                              AMENDED AND RESTATED
                         1997 EMPLOYEE STOCK OPTION PLAN
                        (AMENDED AS OF FEBRUARY 12, 2001)

SECTION 1.        ADOPTION AND PURPOSE OF PLAN

         (a)      ADOPTION. On May 12, 1997, the Board of Directors (the
"Board") of Three-Five Systems, Inc., a Delaware corporation (the Company"),
adopted the 1997 Employee Stock Option Plan (the "Original Plan"). The Original
Plan did not require stockholder approval. Under the Original Plan, there were
100,000 shares of stock issuable. In December 1999, a stock dividend increased
the shares issuable under the Original Plan to 133,333. On January 27, 2000, the
Board adopted an amendment to the Original Plan to (i) increase the available
options to be issued thereunder by an additional 100,000 shares and (ii) impose,
for purposes of Internal Revenue Code Section 162(m), and annual grant
limitation under this Plan of 100,000 shares. In April 2000, a stock dividend
increased the shares issuable under the amended Original Plan to 350,000. On
August 3, 2000, the Board unanimously approved an amendment to the Original Plan
to increase the available options to be issued thereunder by an additional
300,000 shares. On February 12, 2001, the Board unanimously approved an
amendment to the Original Plan to increase the available options to be issued
thereunder by an additional 500,000 shares and to give the Plan Administrator
the power to extend the period of an option's exercisability upon the cessation
of Service of an Optionee. Those amendments did not require stockholder approval
and were effective immediately. As a result, the total number of shares issuable
under the Plan is 1,150,000. The amended and restated Plan shall be known as the
Three-Five Systems, Inc. Amended and Restated 1997 Employee Stock Option Plan
(the "Plan").

         (b)      GENERAL PURPOSE. The purpose of the Plan is to further the
interests of Three-Five Systems, Inc., a Delaware corporation (the "Company"),
and its stockholders by encouraging employees associated with the Company (or
parent or subsidiary corporations of the Company) to acquire shares of the
Company's common stock, thereby acquiring a proprietary interest in its business
and an increased personal interest in its continued success and progress. Such
purpose shall be accomplished by providing for the granting of options to
acquire the Company's common stock ("Options"). A "parent corporation" for
purposes of this Plan is any corporation in the unbroken chain of corporations
ending with the employer corporation, where, at each link of the chain, the
corporation and the link above owns at least 50 percent of the combined total
voting power of all classes of the stock in the corporation in the link below. A
"subsidiary corporation" for purposes of this Plan is any corporation in the
unbroken chain of corporations starting with the employer corporation, where, at
each link of the chain, the corporation and the link above owns at least 50
percent of the combined voting power of all classes of stock in the corporation
below.

                  (i)      Options. All Options granted under this Plan will be
nonqualified options and shall not be "incentive stock options" as defined in
section 422 of the Code.

                  (ii)     Duration of Plan. The term of the Plan is 10 years
commencing on the date of adoption of the Plan by the Board. No Option shall be
granted under the Plan unless granted within 10 years of the adoption of the
Plan by the Board, but Options outstanding on that date shall not be terminated
or otherwise affected by virtue of the Plan's expiration.

SECTION 2.        STOCK AND MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN

         (a)      Description of Stock and Maximum Shares Allocated. The stock
subject to the provisions of the Plan and issuable upon the grant of Options
granted under the Plan is shares of the Company's common stock, $.01 par value
per share (the "Stock"), which may be either unissued or treasury shares, as the
Board may from time to time determine. Subject to adjustment as provided in
Section 7 hereof, the aggregate number of shares of Stock covered by the Plan
and issuable thereunder as of February 12, 2001 shall be 1,150,000 shares of
Stock. The aggregate number of shares of Stock that may be covered by options
granted to any one individual in any year shall not exceed 100,000.

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         (b)      Calculation of Available Shares. For purposes of calculating
the maximum number of shares of Stock that may be issued under the Plan, the
shares issued (including the shares, if any, withheld for tax withholding
requirements) upon exercise of an Option shall be counted.

         (c)      Restoration of Unpurchased Shares. If an Option expires or
terminates for any reason prior to its exercise in full and before the term of
the Plan expires, the shares of Stock subject to, but not issued under, such
Option shall, without further action or by or on behalf of the Company, again be
available under the Plan. If shares of Stock are used to pay for the exercise
price, those shares shall be added to the shares available under the Plan.

SECTION 3.        ADMINISTRATION; APPROVAL; AMENDMENTS

         (a)      General Administration. The power to administer the Plan with
respect to Eligible Persons shall be vested exclusively with the Board.

         (b)      Plan Administrator. The Board shall be referred to herein as
the "Plan Administrator." The Board may, at any time, appoint a committee of one
or more persons who are members of the Board and delegate to that committee the
power to administer the Plan. Members of such committee shall serve for such
period of time as the Board may determine and shall be subject to removal by the
Board at any time. The Board may, at any time, terminate the functions of any
such committee and reassume all powers and authority previously delegated to
that committee. The Plan Administrator shall have the authority and discretion
to select which Eligible Persons shall participate in the Plan, to grant Options
under the Plan, to establish such rules and regulations as they may deem
appropriate with the proper administration of the Plan and to make such
determinations under, and issue such interpretations of, the Plan and any
outstanding Option as they may deem necessary or advisable. Decisions of the
Plan Administrator shall be final and binding on all parties who have an
interest in the Plan or any outstanding Option.

         (c)      Approval of Plan. This Plan shall not require the approval of
the stockholders of the Company and shall be effective as of the date adopted by
the Board.

         (d)      Amendments to Plan. The Board may, without action on the part
of the Company's stockholders, make such amendments to, changes in and additions
to the Plan as it may, from time to time, deem necessary or appropriate and in
the best interests of the Company; provided, the Board may not, without the
consent of the Optionholder, take any action which adversely affects or impairs
the rights of the Optionholder of any Option outstanding under the Plan.

SECTION 4.        PARTICIPANTS

         (a)      Eligibility and Participation. Options may be granted only to
persons ("Eligible Persons") who at the time of grant are employees of or
consultants to the Company or parent or subsidiaries of the Company; provided,
however, that any person that is an Affiliate shall not be an Eligible Person
under this Plan. The Plan Administrator shall have full authority to determine
which Eligible Persons in its administered group are to receive Option grants
under the Plan, the number of shares to be covered by each such grant, the time
or times at which each such Option is to become exercisable, and the maximum
term for which the Option is to be outstanding.

         (b)      Guidelines for Participation. In designating and selecting
Eligible Persons for participation in the Plan, the Plan Administrator shall
consult with and give consideration to the recommendations and criticisms
submitted by appropriate managerial and executive officers of the Company. The
Plan Administrator also shall take into account the duties and responsibilities
of the Eligible Persons, their past, present and potential contributions to the
success of the Company and such other factors as the Plan Administrator shall
deem relevant in connection with accomplishing the purpose of the Plan.

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SECTION 5.        TERMS AND CONDITIONS OF OPTIONS

         (a)      Allotment of Shares. The Plan Administrator shall determine
the number of shares of Stock to be optioned from time to time and the number of
shares to be optioned to any Eligible Person (the "Optioned Shares"). The grant
of an Option to a person shall neither entitle such person to, nor disqualify
such person from, participation in any other grant of Options under this Plan or
any other stock option plan of the Company.

         (b)      Exercise Price. Upon the grant of any Option, the Plan
Administrator shall specify the option price per share. In no event may the
option price per share specified by the Plan Administrator be less than 100
percent of the fair market value per share of the Stock on the date the Option
is granted.

         (c)      Calculation of Fair Market Value of Stock. The fair market
value of a share of Stock on any relevant date shall be the closing selling
price per share of Stock on the date in question on the stock exchange
determined by the Board to be the primary market for the Stock, as such price is
officially quoted in the composite tape of transactions on such exchange. If
there is no reported sale of Stock on such exchange on the date in question,
then the fair market value shall be the closing selling price on the exchange on
the last preceding date for which such quotation exists.

         (d)      Individual Stock Option Agreements. Options granted under the
Plan shall be evidenced by option agreements in such form and content as the
Plan Administrator from time to time approves, which agreements shall
substantially comply with and be subject to the terms of the Plan, including the
terms and conditions of this Section 5. As determined by a Plan Administrator,
each option agreement shall state (i) the total number of shares to which it
pertains, (ii) the exercise price for the shares covered by the Option, (iii)
the time at which the Options vest and become exercisable and (iv) the Option's
scheduled expiration date. The option agreements may contain such other
provisions or conditions as the Plan Administrator deems necessary or
appropriate to effectuate the sense and purpose of the Plan, including covenants
by the Optionholder not-to-compete and remedies to the Company in the event of
the breach of any such covenant.

         (e)      Option Period. No Option granted under the Plan shall be
exercisable for a period in excess of 10 years from the date of its grant
subject to earlier termination in the event of termination of employment,
retirement or death of the Optionholder. An Option may be exercised in full or
in part at any time or from time to time during the term of the Option or
provide for its exercise in stated installments at stated times during the
Option's term.

         (f)      Vesting; Limitations. The time at which the Optioned Shares
vest with respect to a participant shall be in the discretion of the Plan
Administrator.

         (g)      No Fractional Shares. Options shall be exercisable only for
whole shares; no fractional shares will be issuable upon exercise of any Option
granted under the Plan.

         (h)      Method of Exercising Options; Full Payment. Options shall be
exercised by written notice to the Company, addressed to the Company at its
principal place of business. Such notice shall state the election to exercise
the Option and the number of shares with respect to which it is being exercised,
and shall be signed by the person exercising the Option. Such notice shall be
accompanied by payment in full of the exercise price for the number of shares
being purchased. Payment may be made in cash or by check as prescribed by the
applicable Plan Administrator or by tendering duly endorsed certificates
representing shares of Stock then owned by the Optionholder and held for the
requisite period necessary to avoid a charge to the Company's earnings and
valued at fair market value on the date of exercise (as determined in accordance
with Section 5(c) hereof). Upon the exercise of any Option, the Company shall
deliver, or cause to be delivered, to the Optionholder a certificate or
certificates representing the shares of Stock purchased upon such exercise as
soon as practicable after payment for those shares has been received by the
Company. If an Option is exercised pursuant to Section 5(j) hereof by any person
other than the Optionholder, such notice shall be accompanied by appropriate
proof of the right of such person to exercise the Option. All shares that are
purchased and paid for in full upon the exercise of an Option shall be fully
paid and non-assessable.

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         (i)      Rights of a Stockholder. An Optionholder shall have no rights
as a stockholder with respect to shares covered by his Option until such
Optionholder shall have exercised the Option and paid the full exercise price
for the Optioned Shares. No adjustment will be made for dividends or other
rights with respect to any Optioned Shares for which the record date is prior to
the date on which the Optionholder exercises the Option for such shares.

         (j)      Exercise of Options After Cessation of Service; Termination of
Employment. If any Optionholder ceases to be in Service to the Company for a
reason other than death, such Optionholder may, within one month after the date
of termination of such Service, but in no event after the Option's stated
expiration date, exercise some or all of the Options that the Optionholder was
entitled to exercise on the date the Optionholder's Service terminated;
provided, that (i) if the Optionholder's Service is terminated by the Company in
its good faith judgment, for (A) commission of a crime by the Optionholder or
for reasons involving moral turpitude; (B) an act by the Optionholder which
tends to bring the Company into disrepute; or (C) negligent, fraudulent or
willful misconduct by the Optionholder, or (ii) if after the Service of the
Optionholder is terminated, the Optionholder commits acts detrimental to the
Company's interests, then the Option shall thereafter be void for all purposes.
Notwithstanding the foregoing, if any Optionholder who is an employee of the
Company ceases to be in Service to the Company by reason of permanent disability
within the meaning of section 22(e)(3) of the Internal Revenue Code (as
determined by the applicable Plan Administrator), the Optionholder shall have 12
months after the date of termination of Service, but in no event after
Optionholder's Option's stated expiration date, to exercise Options that the
Optionholder was entitled to exercise on the date the Optionholder's Service
terminated as a result of disability. Notwithstanding anything to the contrary
in this Section 5(j), the Plan Administrator shall have the discretion and
authority at any time to extend the period of exercisability of any Option.

         (k)      Death of Optionholder. If an Optionholder dies while in the
Company's Service, the Optionholder's vested Options on the date of death shall
be exercisable within three months of such death or until the stated expiration
date of the Optionholder's Option, whichever occurs first, by the person or
persons ("successors") to whom the Optionholder's rights pass under a will or by
the laws of descent and distribution. Notwithstanding anything to the contrary
in this Section 5(k), the Plan Administrator shall have the discretion and
authority at any time to extend the period of exercisability of any Option. An
Option may be exercised and payment of the option price made in full by the
successors only after written notice to the Company specifying the number of
shares to be purchased. Such notice shall state that the Option price is being
paid in full in the manner specified in Section 5(h) hereof. As soon as
practicable after receipt by the Company of such notice and of payment in full
of the Option price, a certificate or certificates representing such shares
shall be registered in the name or names specified by the successors in the
written notice of exercise and shall be delivered to the successors.

         (l)      Other Plan Provisions Still Applicable. If an Option is
exercised upon the termination of Service or death of an Optionholder under this
Section 5, the other provisions of the Plan shall still be applicable to such
exercise.

         (m)      Definition of "Service." For purposes of this Plan, unless it
is evidenced otherwise in the option agreement with the Optionholder, the
Optionholder shall be deemed to be in "Service" to the Company so long as such
individual renders services on a periodic basis to the Company (or to any parent
or subsidiary corporation) in the capacity of an employee or a consultant or
independent contractor. The Optionholder shall be considered to be an employee
for so long as such individual remains in the employ of the Company or one or
more of its parent or subsidiary corporations.

         (n)      Nonassignability. Except as specifically allowed by the Plan
Administrator at the time of grant and as set forth in the documents evidencing
an Option, no Option granted under the Plan or any of the rights and privileges
conferred thereby shall be assignable or transferable by an Optionholder other
than by will or the laws of descent and distribution, and such Option shall be
exercisable during the Optionholder's lifetime only by the Optionholder.

SECTION 6.        CERTAIN ADJUSTMENTS.

         (a)      Capital Adjustments. The aggregate number of shares of Stock
subject to the Plan (and the number of shares covered by outstanding Options and
the price per share stated in such Options) shall be proportionately adjusted
for any increase or decrease in the number of outstanding shares of Stock of the
Company resulting from a subdivision

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or consolidation of shares or any other capital adjustment or the payment of a
stock dividend or any other increase or decrease in the number of such shares
effected without the Company's receipt of consideration therefor in money,
services or property.

         (b)      Mergers, Etc. If the Company is the surviving corporation in
any merger or consolidation, any Option granted under the Plan shall pertain to
and apply to the securities to which a holder of the number of shares of Stock
subject to the Option would have been entitled prior to the merger or
consolidation. A dissolution or liquidation of the Company shall cause every
Option outstanding hereunder to terminate. A merger or consolidation in which
the Company is not the surviving corporation shall also cause every Option
outstanding hereunder to terminate.

         (c)      Change in Control. With respect to any Change in Control, the
Plan Administrator shall have the discretion and authority, exercisable at any
time, whether before or after the Change in Control, to provide for the
automatic acceleration of one or more outstanding Options granted by it under
the Plan upon the occurrence of such Change in Control. The Plan Administrator
may also impose limitations upon the automatic acceleration of such Options to
the extent it deems appropriate. Any Options accelerated upon a Change in
Control will remain fully exercisable until the expiration or sooner termination
of the Option term.

SECTION 7.        MISCELLANEOUS

         (a)      Use of Proceeds. The proceeds received by the Company from the
sale of Stock pursuant to the exercise of Options hereunder, if any, shall be
used for general corporate purposes.

         (b)      Cancellation of Options. The Plan Administrator shall have the
authority to effect, at any time and from time to time, with the consent of the
affected Optionholders, the cancellation of any or all outstanding Options
granted under the Plan by the Plan Administrator and to grant in substitution
therefore new Options under the Plan covering the same or different numbers of
shares of Stock as long as such new Options have an exercise price per share of
Stock no less than the minimum exercise price as set forth in Section 5(b)
hereof on the new grant date.

         (c)      Regulatory Approvals. The implementation of the Plan, the
granting of any Option hereunder, and the issuance of Stock upon the exercise of
any such Option shall be subject to the procurement by the Company of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the Options granted under it and the Stock issued pursuant to it.

         (d)      Indemnification. In addition to such other rights of
indemnification as they may have, the members of the Plan Administrator shall be
indemnified and held harmless by the Company, to the extent permitted under
applicable law, for, from and against all costs and expenses reasonably incurred
by them in connection with any action, legal proceeding to which any member
thereof may be a party by reason of any action taken, failure to act under or in
connection with the Plan or any rights granted thereunder and against all
amounts paid by them in settlement thereof or paid by them in satisfaction of a
judgment of any such action, suit or proceeding, except a judgment based upon a
finding of bad faith.

         (e)      Plan Not Exclusive. This Plan is not intended to be the
exclusive means by which the Company may issue options or warrants to acquire
its Stock, stock awards or any other type of award. To the extent permitted by
applicable law, any such other option, warrants or awards may be issued by the
Company other than pursuant to this Plan without stockholder approval.

         (f)      Governing Law. The Plan shall be governed by, and all
questions arising hereunder shall be determined in accordance with, the laws of
the State of Arizona.

         (g)      Withholding Taxes. Whenever the Company issues Stock under the
Plan pursuant to an Option, the Company shall have the right to require the
grantee to remit to the Company an amount sufficient to satisfy any federal,
state and/or local withholding or employment tax requirements prior to the
delivery of any certificate or certificates for such shares. Alternatively, the
Company may issue or transfer such shares of Stock net of the number of shares

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sufficient to satisfy the withholding or employment tax requirements. For such
purposes, the shares of Stock shall be valued on the date the withholding or
employment tax obligation is incurred.

SECTION 8.        SECURITIES RESTRICTIONS

         (a)      Legend on Certificates. All certificates representing shares
of Stock issued upon exercise of Options granted under the Plan shall be
endorsed with a legend reading as follows:

                  The shares of Common Stock evidenced by this certificate have
                  been issued to the registered owner in reliance upon written
                  representations that these shares have been purchased solely
                  for investment. These shares may not be sold, transferred or
                  assigned unless in the opinion of the Company and its legal
                  counsel such sale, transfer or assignment will not be in
                  violation of the Securities Act of 1933, as amended, and the
                  rules and regulations thereunder.

         (b)      Private Offering for Investment Only. The Options are, and
shall be, made available only to a limited number of present and future
employees of the Company, and their permitted transferees, who have knowledge of
the Company's financial condition, management and its affairs. The Plan is not
intended to provide additional capital for the Company, but to encourage
ownership of Stock among the Company's employees. By the act of accepting an
Option, each grantee or such permitted transferee agrees (i) that, any shares of
Stock acquired will be solely for investment and not with any intention to
resell or redistribute those shares and (ii) such intention will be confirmed by
an appropriate certificate at the time the Stock is acquired if requested by the
Company. The neglect or failure to execute such a certificate, however, shall
not limit or negate the foregoing agreement.

         (c)      Registration Statement. If a Registration Statement covering
the shares of Stock issuable upon exercise of options granted under the Plan is
filed under the Securities Exchange Act of 1933, as amended, and is declared
effective by the Securities Exchange Commission, the provisions of Sections 8(a)
and (b) shall terminate during the period of time that such Registration
Statement, as periodically amended, remains effective.

SECTION 9.        DEFINITIONS

         The following capitalized terms used in this Plan shall have the
meaning described below:

         "Affiliates" shall mean all "executive officers" (as that term is
defined in Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934)
and directors of the Company and all persons who own 10 percent or more of the
Company's issued and outstanding Stock.

         "Board" shall mean the Board of Directors of the Company.

         "Change in Control" shall mean (i) a person or related group of
persons, other than the Company or a person that directly or indirectly
controls, is controlled by, or under common control with the Company, acquires
ownership of 40 percent or more of the Company's outstanding common stock
pursuant to a tender or exchange offer which the Board of Directors recommends
that the Company's stockholders not accept, or (ii) the change in the
composition of the Board occurs such that those individuals who were elected to
the Board at the last stockholders' meeting at which there was not a contested
election for Board membership subsequently ceased to comprise a majority of the
Board by reason of a contested election.

         "Code" shall mean the Internal Revenue Code of 1986, as amended.

         "Company" shall mean Three-Five Systems, Inc., a Delaware corporation.

         "Eligible Persons" shall mean those persons who, at the time that the
Option is granted, are employees of the Company, who provide valuable services
to the Company or parent or subsidiaries of the Company.

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         "Optionholder" shall mean an Eligible Person to whom Options have been
granted.

         "Optioned Shares" shall be those shares of Stock to be optioned from
time to time to any Eligible Person.

         "Options" shall mean options to acquire Stock granted under the Plan.

         "Plan" shall mean this stock option plan for Three-Five Systems, Inc.

         "Plan Administrator" shall mean the Board of Directors or a committee
thereof.

         "Service" shall have the meaning set forth in Section 5(m) hereof.

         "Stock" shall mean shares of the Company's common stock, $.01 par value
per share, which may be unissued or treasury shares, as the Board may from time
to time determine.

         This Amended and Restated Plan is hereby executed this 12th day of
February 2001.

                                         THREE-FIVE SYSTEMS, INC.

                                                /s/ Jeffrey D. Buchanan
                                         By:    ________________________________
                                         Name:  Jeffrey D. Buchanan
                                         Its:   Secretary

                                       7EXHIBIT 10.1

                          PROPERTY MANAGEMENT AGREEMENT

         This Agreement (the "Agreement") is made as of April 4, 2001 by and
between CAC III LIMITED PARTNERSHIP, a Virginia limited partnership (the
"Owner"), and APPLE GENERAL, INC., a Virginia Corporation (the "Manager").

                                    RECITALS:

         Owner is the owner of the real property or real properties listed on
Schedule A hereto (collectively, the "Properties"). Owner has selected Manager
to manage, rent and take other actions with respect to the Properties on the
terms and conditions set forth in this Agreement.

         NOW THEREFORE, for good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

         1. Designation of Property Manager. Owner hereby engages Manager as the
sole and exclusive manager to rent, manage and operate the Properties, upon the
conditions and for the term and compensation herein set forth. All or a portion
of the services being performed by Manager may be contracted or subcontracted to
another property management company, provided that such company agrees in
writing to be bound by the terms of this Agreement.

         2. Term of Agreement. This Agreement shall be valid for an initial term
of two (2) years. In the event Owner sells its interest in a Property, this
Agreement will terminate as to such Property upon the date of such sale. This
Agreement shall renew automatically for successive terms of two (2) years, on
the same terms and conditions as set forth in this Agreement, unless a party
elects not to renew this Agreement by delivering written notice to the other
party at least sixty (60) calendar days before the end of any two-year term.

         3. Acceptance of Engagement. Manager hereby accepts its engagement as
the manager of the Properties and agrees to perform all services necessary for
the care, protection, maintenance and operation of the Properties. Without
limiting the scope of the foregoing:

            (a) Manager shall collect all rents and other income from the
Properties, provided that nothing herein contained shall constitute a guarantee
by Manager of the payment of rent by tenants.

            (b) Manager shall purchase, at the expense of Owner, all equipment,
tools, appliances, materials, supplies and uniforms necessary for the
maintenance or operation of the Properties.

            (c) Manager shall contract on behalf of Owner for water, gas,
electricity and other services necessary for the operation and maintenance of
the Properties.

            (d) Manager shall advertise for the rental of units at the
Properties, the cost of which shall be paid by Owner.

<PAGE>

            (e) Manager shall use all reasonable efforts to keep the Properties
rented by procuring tenants for the Properties and negotiating and executing on
behalf of Owner all leases for units at the Properties.

            (f) Manager shall hire, evaluate, supervise, discharge and pay all
employees or contractors necessary for the management and operation of the
Properties. Owner agrees that all wages and compensation (and federal and state
unemployment insurance and other required charges) with respect to such
employees and contractors shall be paid from Owner's funds.

            (g) Manager shall prepare and file all returns and other documents
(other than promissory notes, mortgages, deeds of trust or other documents or
instruments which would encumber the Properties) required under the Federal
Insurance Contributions Act and the Federal Unemployment Tax Act, or any similar
federal or state legislation. Manager also shall file returns and reports, and
pay from Owner's funds, all sums as may be required from time to time by the
states or localities in which the Properties are located.

            (h) Manager shall maintain accurate and complete books of account
with entries for all receipts and expenditures, and such books of account shall
be the property of Owner and shall at all times be open to the inspection of
Owner, or any of its employees or duly authorized agents.

            (i) Manager shall deliver to Owner of all lenders' annual property
inspection letters regarding repairs necessary to avoid mortgage loan defaults.
Manager shall deliver a detailed monthly statement of all receipts and
disbursements on or before the 20th day of each month for the preceding month.
Such statement shall show the status of collections, shall be supported by
cancelled checks, vouchers, duplicate invoices and similar documentation
covering all items of income and expense, and shall be kept in Manager's office
and shall be available for inspection by Owner's representatives at all times.
Manager also shall deliver a monthly operating statement showing the income and
expense for the month, for the year-to-date and for the same month of the
preceding year. The cost of performing the accounting functions outlined in
paragraph (h) and this paragraph (i) shall be paid by Owner pursuant to the
terms of this Agreement.

            (j) Manager shall deliver to Owner annual reports containing a
composite financial report of the monthly statements provided in accordance with
paragraph (i), plus a statement by Manager as to the operations of the
Properties during the previous year and recommendations, if any, as to necessary
policy changes or improvements for the forthcoming year, accompanied by an
estimated budget for such items.

            (k) Manager shall deliver to Owner from time to time, and at least
semi-annually, a tentative budget of expenses.

            (l) Manager shall deliver to Owner from time to time, and at least
annually, the following schedules with respect to the Properties: (1) forecast
of rental and occupancy changes; (2) review of lease negotiations; (3) annual
analysis of leases; and (4) schedule of capital improvements and method of
financing such improvements.

                                      -2-

<PAGE>

            (m) Manager shall deliver to Owner, on a regular basis, all forms
necessary to operate and lease the Properties and manage the personnel,
including but not limited to form leases, contracts and management policies.

            (n) During the initial term of this Agreement, Manager shall
supervise the transition from the former owners of the Properties and shall, to
the extent necessary, implement new management systems with respect to the
operation of the Properties.

         4. Deposits of Rent and Other Income. All sums received from rents,
tenant security deposits or other deposits on units at the Properties, deposits
on keys and other income from the Properties, shall be deposited as collected by
Manager to the credit of Owner in such bank or banks as may be designated by
Owner from time to time. Such funds shall be disbursed only in accordance with
the terms of each particular lease and any applicable federal, state or local
laws, regulations or ordinances.

         5. Insurance. Owner shall place all insurance policies with respect to
the Properties and their operation. Manager shall be included as an insured in
the policies covering general liability, public liability and workers'
compensation insurance. In the event Manager is authorized by Owner to place
insurance policies, the companies, the general agents, the amounts of coverage
and the risks insured shall be subject to the approval of Owner.

         6. Indemnification. Owner hereby agrees to indemnify Manager against,
and to hold Manager harmless from, any loss, cost or expense (including
reasonable investigative expenses and legal fees), judgment, award, settlement,
fine, penalty and liability of any kind incurred by or asserted against Manager
by reason of, or in connection with, the engagement of Manager hereunder, the
performance by Manager of the services described herein or the occurrence or
existence of any event or circumstance which results or is alleged to have
resulted in any death or injury to any person, any destruction of, or damage to,
any of the Properties, or any suit, action or proceeding (whether threatened,
initiated or completed) arising from any of the foregoing. Notwithstanding the
preceding, however, no such indemnification of Manager shall be made, and
Manager shall indemnify Owner against, and shall hold Owner harmless from, any
loss that a court of competent jurisdiction shall determine, by final
adjudication, to have resulted from willful misconduct, gross negligence or
fraud by or on the part of Manager.

         7. Compensation of Manager for Managing the Properties. Owner shall pay
to Manager a "Property Management Fee" for management of the Properties pursuant
to this Agreement in an amount equal to five percent (5%) of the monthly gross
revenues from the Properties. The Property Management Fee shall be paid to
Manager on or before the 10th day of each month and shall be based upon the
income from the Properties received by Owner (for such month) by such date. If
additional income from the Properties is received by Owner after such date, the
sum due to Manager with respect to such additional income shall be paid to
Manager when Manager is paid its fees for the next succeeding month.

         8. Reimbursement of Expenses. Owner shall reimburse Manager for
Manager's expenses, including salaries and related overhead expenses, associated
with bookkeeping, accounting and financial reporting services pertaining to the
Properties.

                                      -3-

<PAGE>

         9. Reserves for Capital Items. Owner acknowledges that the budget of
expenses prepared by Manager, pursuant to paragraph 3(k), shall contain a
category labeled "Reserve for Capital Items." Owner agrees to place rents and
other income in a bank account, or to permit Manager to transfer Owner's funds
to such account, in sufficient amounts to meet the needs reflected in such
budget. Such funds shall be placed in the account on a monthly basis as
reflected in the budget.

         10. Cash Flow. Owner acknowledges that the budget of expenses prepared
by Manager, pursuant to paragraph 3(k), shall contain a category labeled "Cash
Flow." Owner agrees, in the event that the budgeted cash flow for the Properties
is negative in any month covered by the budget, to place sufficient funds in a
bank account, or to permit Manager to transfer Owner's funds to such account, to
correct the budgeted operating deficit. Such funds shall be placed in such
account at least forty-five (45) calendar days before the budgeted deficit is to
occur.

         11. Power of Attorney. Owner hereby makes, constitutes and appoints
Manager as Owner's true and lawful attorney-in-fact, for Owner and in its name,
place and stead and for its use and benefit, to sign, acknowledge and file all
documents and agreements (other than promissory notes, mortgages, deeds of trust
or other documents or instruments which would encumber the Properties) necessary
to perform or effect the duties and obligations of Manager under the terms of
this Agreement. The foregoing power of attorney is a special power of attorney
coupled with an interest, and may only be terminated by canceling this Agreement
as provided herein.

         12. Relationship of Parties. The parties agree and acknowledge that
Manager is, and shall operate as, an independent contractor in performing duties
and services under this Agreement, and shall not be deemed an employee or agent
of Owner.

         13. Entire Agreement. This Agreement represents the entire
understanding between the parties hereto with regard to the transactions
described herein and may only be amended by a written instrument signed by the
party against whom enforcement is sought.

         14. Governing Law. This Agreement shall be construed in accordance
with, and be governed by, the laws of the Commonwealth of Virginia, without
regard to any rules or principles thereof regarding choice or conflicts of laws.

                          (next page is signature page)

                                      -4-

<PAGE>

WITNESS the following signatures:

OWNER:                              CAC III LIMITED PARTNERSHIP
                                    a Virginia limited partnership

                                    By:    CAC III Special General, Inc.
                                           a Virginia Corporation
                                    Title: General Partner

                                    By:    /s/ Stanley J. Olander, Jr.
                                           -------------------------------------
                                    Name:  Stanley J. Olander, Jr.
                                    Title: Vice President

MANAGER:                            APPLE GENERAL, INC.,
                                    a Virginia Corporation

                                    By:    /s/ Stanley J. Olander, Jr.
                                           -------------------------------------
                                    Name:  Stanley J. Olander, Jr.
                                    Title: Vice President

                                      -5-

<PAGE>

                                   SCHEDULE A

                              (List of Properties)

The Properties consist of those real properties, together with all improvements
thereon, that are located at the following addresses:

1.       Silver Brook I Apartments
         2934 Alouette Drive
         Grand Prairie, Texas

                                      -6-

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