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                       FORM OF 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     , 2004

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                 FORM OF 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 [ ], 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.ss.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 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

                                        2

     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,

         (i) the sum, without duplication, of:

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

                                        3

               (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.

     "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:

                                        4

     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

         (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.

                                        5

         "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 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.

                                        6

         "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.

         (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

                                        7

     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 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

                                        8

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.

     "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.

                                        9

     "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."

     "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.

                                       10

     "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.

     "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.

                                       11

     "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.

     "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.

                                       12

     "Registration Rights Agreement" means the Third Amended and Restated
Registration Rights Agreement, dated as of February [ ], 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 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.

                                       13

     "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.

     "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.

                                       14

     "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 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.

                                       15

     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 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.

                                       16

     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.

                                   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

                                       17

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 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

                                       18

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 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

                                       19

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.

     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;

                                       20

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 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

                                       21

     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.

     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

                                       22

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.

                                    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.

                                       23

     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.

                                   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

                                       24

     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.

         (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.

                                       25

         (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 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

                                       26

the Holders of Partnership Common Units for income tax purposes pursuant to
Regulations promulgated under Code 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 limitation, the
     Partnership's Subsidiaries) and the repayment of obligations of the
     Partnership, its

                                       27

     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;

                                       28

         (13) the enforcement of any rights against any Partner pursuant to
     representa tions, 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 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.

                                       29

     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;

         (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;

                                       30

         (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 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

                                       31

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.

     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.

                                       32

     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 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

                                       33

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.

     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

                                       34

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.

     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.

                                       35

     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 (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

                                       36

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.

     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

                                       37

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.

         (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

                                       38

     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.

         (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

                                       39

     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 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,

                                      40

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 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;

                                       41

         (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;

         (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

                                       42

(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 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.

                                       43

     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 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.

                                       44

                                    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 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

                                       45

     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
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.

                                       46

                                   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 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.

                                       47

     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, 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

                                       48

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.

     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

                                       49

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 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.

                                       50

     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 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"):

                                       51

     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;

     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.

                                       52

     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 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

                                       53

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 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.

                                       54

     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.

     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.

                                       55

     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 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)

                                       56

     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);

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]

                                       57

     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:
                                            ------------------------------------
                                            Name:  Scott L. Gesell
                                            Title: Vice President and Secretary

                                    PAIRED COMMON UNIT HOLDERS,
                                       Listed on Exhibit A hereto

                                    By: AFFORDABLE RESIDENTIAL COMMUNITIES INC.,
                                        Attorney-in-fact

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

                                    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:

                                         200
                                   1.0 * ---  = 2.0
                                         100

     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:

                              (100+100)
                    1.0 *  --------------------- = 1.1111
                                  100*$4.00
                           (100 + ---------)
                                    $5.00

     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

                                    $5.00
                         1.0 * ------------- = 1.25
                               $5.00 - $1.00

     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 [ ], 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
     [ ], 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 [ ], 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-1

                                TABLE OF CONTENTS
                                -----------------

                                                                            Page
                                                                            ----

                                    ARTICLE I
                                  DEFINED TERMS

                                   ARTICLE II
                             ORGANIZATIONAL MATTERS

Section 2.1  Organization.....................................................16
Section 2.2  Name.............................................................16
Section 2.3  Registered Office and Agent; Principal Office....................16
Section 2.4  Power of Attorney................................................16
Section 2.5  Term.............................................................17

                                   ARTICLE III
                                     PURPOSE

Section 3.1  Purpose and Business.............................................18
Section 3.2  Powers...........................................................18
Section 3.3  Partnership Only for Partnership Purposes........................18
Section 3.4  Representations and Warranties by the Parties....................18

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS

Section 4.1  Capital Contributions of the Partners............................20
Section 4.2  Issuances of Additional Partnership Interests....................20
Section 4.3  Additional Funds and Capital Contributions.......................21
Section 4.4  Stock Option Plan................................................22
Section 4.5  No Interest; No Return...........................................23
Section 4.6  Conversion or Redemption of Preferred Shares.....................23
Section 4.7  Conversion or Redemption of Junior Shares........................23
Section 4.8  Other Contribution Provisions....................................23
Section 4.9  Not Publicly Traded..............................................23

                                    ARTICLE V
                                  DISTRIBUTIONS

Section 5.1  Requirement and Characterization of Distributions................24
Section 5.2  Distributions In-Kind............................................24
Section 5.3  Amounts Withheld.................................................24
Section 5.4  Distributions Upon Liquidation...................................24
Section 5.5  Distributions to Reflect Issuance of Additional
               Partnership Units..............................................24
Section 5.6  Restricted Distributions.........................................24

                                   ARTICLE VI
                                   ALLOCATIONS

Section 6.1  Timing and Amount of Allocations of Net Income and Net Loss......25
Section 6.2  General Allocations..............................................25
Section 6.3  Additional Allocation Provisions.................................25

                                        i

                                                                            Page
                                                                            ----

Section 6.4  Tax Allocations..................................................27

                                   ARTICLE VII
                      MANAGEMENT AND OPERATIONS OF BUSINESS

Section 7.1   Management......................................................28
Section 7.2   Certificate of Limited Partnership..............................31
Section 7.3   Restrictions on General Partner's Authority.....................31
Section 7.4   Reimbursement of the General Partner............................32
Section 7.5   Outside Activities of the General Partner.......................33
Section 7.6   Contracts with Affiliates.......................................33
Section 7.7   Indemnification.................................................34
Section 7.8   Liability of the General Partner................................35
Section 7.9   Other Matters Concerning the General Partner....................36
Section 7.10  Title to Partnership Assets.....................................37
Section 7.11  Reliance by Third Parties.......................................37

                                  ARTICLE VIII
                   RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

Section 8.1   Limitation of Liability.........................................37
Section 8.2   Management of Business..........................................37
Section 8.3   Outside Activities of Limited Partners..........................38
Section 8.4   Return of Capital...............................................38
Section 8.5   Adjustment Factor...............................................38
Section 8.6   Redemption Rights of Qualifying Parties.........................38
Section 8.7   Partnership Right to Call Limited Partner Interests.............42
Section 8.8   Special Provisions Applicable to Reorganization Common Units....42
Section 8.9   Special Provisions Applicable to Paired Common Units............45

                                   ARTICLE IX
                     BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 9.1   Records and Accounting..........................................45
Section 9.2   Partnership Year................................................46
Section 9.3   Reports.........................................................46

                                    ARTICLE X
                                   TAX MATTERS

Section 10.1  Preparation of Tax Returns......................................46
Section 10.2  Tax Elections...................................................46
Section 10.3  Tax Matters Partner.............................................47
Section 10.4  Withholding.....................................................48
Section 10.5  Organizational Expenses.........................................48

                                   ARTICLE XI
                            TRANSFERS AND WITHDRAWALS

Section 11.1  Transfer........................................................48
Section 11.2  Transfer of General Partner's Partnership Interest..............49

                                       ii

                                                                            Page
                                                                            ----

Section 11.3   Transfer of Limited Partners' Partnership Interests............49
Section 11.4   Substituted Limited Partners...................................50
Section 11.5   Assignees......................................................51
Section 11.6   General Provisions.............................................51

                                   ARTICLE XII
                              ADMISSION OF PARTNERS

Section 12.1   Admission of Successor General Partner.........................52
Section 12.2   Admission of Additional Limited Partners.......................52
Section 12.3   Amendment of Agreement and Certificate of Limited Partnership..53
Section 12.4   Limit on Number of Partners....................................53

                                  ARTICLE XIII
                    DISSOLUTION, LIQUIDATION AND TERMINATION

Section 13.1   Dissolution....................................................53
Section 13.2   Winding Up.....................................................54
Section 13.3   Deemed Distribution and Recontribution.........................55
Section 13.4   Rights of Limited Partners.....................................55
Section 13.5   Notice of Dissolution..........................................55
Section 13.6   Cancellation of Certificate of Limited Partnership.............56
Section 13.7   Reasonable Time for Winding-Up.................................56

                                   ARTICLE XIV
                       PROCEDURES FOR ACTIONS AND CONSENTS
                        OF PARTNERS; AMENDMENTS; MEETINGS

Section 14.1   Procedures for Actions and Consents of Partners................56
Section 14.2   Amendments.....................................................56
Section 14.3   Meetings of the Partners.......................................56

                                   ARTICLE XV
                               GENERAL PROVISIONS

Section 15.1   Addresses and Notice...........................................57
Section 15.2   Titles and Captions............................................57
Section 15.3   Pronouns and Plurals...........................................57
Section 15.4   Further Action.................................................57
Section 15.5   Binding Effect.................................................57
Section 15.6   Waiver.........................................................57
Section 15.7   Counterparts...................................................58
Section 15.8   Applicable Law.................................................58
Section 15.9   Entire Agreement...............................................58
Section 15.10  Invalidity of Provisions.......................................58
Section 15.11  Limitation to Preserve REIT Status.............................58
Section 15.12  No Partition...................................................59
Section 15.13  No Third-Party Rights Created Hereby...........................59
Section 15.14  No Rights as Stockholders......................................59

                                       iii

                                                                           Page
                                                                           ----

Exhibit A    PARTNERS AND PARTNERSHIP UNITS................................A-1

Exhibit B    EXAMPLES REGARDING ADJUSTMENT FACTOR..........................B-1

Exhibit C    NOTICE OF REDEMPTION..........................................C-1

Exhibit D    FORM OF UNIT CERTIFICATE......................................D-1

Exhibit E    FORM OF PAIRED COMMON UNIT CERTIFICATE........................E-1

                                       iv[Fixed Rate Pool A-1]
================================================================================

                                 LOAN AGREEMENT

          ARC COMMUNITIES 1 LLC, a Delaware limited liability company

                                       AND

         GMAC COMMERCIAL MORTGAGE CORPORATION, a California corporation

                            Dated: As of May 2, 2002

================================================================================

                          This Instrument Prepared by:

                              John A. Cahill, Esq.
                      Paul, Hastings, Janofsky & Walker LLP
                               75 East 55th Street
                            New York, New York 10022

                                TABLE OF CONTENTS

                                                                                       Page
                                                                                       ----

ARTICLE I.        DEFINITIONS; PRINCIPLES OF CONSTRUCTION...................................2

        Section 1.1.      Definitions.......................................................2

        Section 1.2.      Principles of Construction.......................................17

ARTICLE II.       THE LOAN.................................................................17

        Section 2.1.      The Loan.........................................................17

        Section 2.2.      Interest Rate....................................................18

        Section 2.3.      Loan Payments....................................................18

        Section 2.4.      Prepayments......................................................19

        Section 2.5.      Defeasance.......................................................20

        Section 2.6.      Fees.............................................................22

ARTICLE III.      Intentionally Omitted....................................................23

ARTICLE IV.       REPRESENTATIONS AND WARRANTIES...........................................23

        Section 4.1.      Borrower Representations.........................................23

        Section 4.2.      Survival of Representations......................................28

ARTICLE V.        BORROWER COVENANTS.......................................................28

        Section 5.1.      Affirmative Covenants............................................28

        Section 5.2.      Negative Covenants of Borrower...................................35

ARTICLE VI.       INSURANCE, CASUALTY AND CONDEMNATION.....................................38

        Section 6.1.      Insurance Coverage...............................................38

        Section 6.2.      Condemnation.....................................................45

ARTICLE VII.      PROPERTY MANAGEMENT......................................................45

        Section 7.1.      The Management Agreement.........................................45

        Section 7.2.      Subordination of Fees; Removal of Property
                          Manager..........................................................46

ARTICLE VIII.     ENVIRONMENTAL PROVISIONS.................................................46

        Section 8.1.      Environmental Provisions.........................................49

ARTICLE IX.       RESERVE FUNDS............................................................49

        Section 9.1.      Tax Funds........................................................49

        Section 9.2.      Insurance Premium Funds..........................................50

        Section 9.3.      Ordinary Capital Expenditures Funds..............................51

        Section 9.4.      Capital Improvement Funds........................................52

                                        -i-

                                  TABLE OF CONTENTS
                                  -----------------
                                     (continued)

                                                                                       Page
                                                                                       ----

        Section 9.5.      Additional Provisions relating to Ordinary
                          Capital Expenditure Funds and Capital
                          Improvement Funds................................................54

        Section 9.6.      Intentionally Omitted............................................55

        Section 9.7.      Prepaid Rent Funds...............................................55

        Section 9.8.      Security Interest in Funds.......................................55

        Section 9.9.      Cash Management..................................................56

ARTICLE X.        DEFAULTS.................................................................56

        Section 10.1.     Events of Default................................................56

        Section 10.2.     Remedies.........................................................59

        Section 10.3.     Application of Moneys............................................61

        Section 10.4.     Remedies Cumulative..............................................61

        Section 10.5.     Right to Cure Defaults...........................................61

ARTICLE XI.       INTENTIONALLY OMITTED....................................................62

ARTICLE XII.      SALE AND SECURITIZATION AND SERVICER.....................................62

        Section 12.1.     Syndication of the Loan..........................................62

        Section 12.2.     Cooperation......................................................63

        Section 12.3.     Securitization Indemnification...................................65

        Section 12.4.     Rating Surveillance..............................................67

        Section 12.5.     Component Notes..................................................67

        Section 12.6.     Event of Default.................................................67

        Section 12.7.     Servicer.........................................................67

        Section 12.8.     Creation of Security Interest....................................68

ARTICLE XIII.     PARTIAL RELEASE OF PROPERTIES............................................68

        Section 13.1.     Partial Release of Properties....................................68

        Section 13.2.     [Intentionally Reserved].........................................69

        Section 13.3.     Allocated Loan Amounts...........................................70

ARTICLE XIV.      MISCELLANEOUS............................................................70

        Section 14.1.     Non-Waiver.......................................................70

        Section 14.2.     Sole Discretion..................................................70

        Section 14.3.     Absolute and Unconditional Obligation............................71

                                        -ii-

                                  TABLE OF CONTENTS
                                  -----------------
                                     (continued)

                                                                                       Page
                                                                                       ----

        Section 14.4.     Relationship.....................................................71

        Section 14.5.     Anti-Forfeiture..................................................71

        Section 14.6.     Deposits.........................................................72

        Section 14.7.     No Brokers.......................................................72

        Section 14.8.     Submission to Jurisdiction.......................................73

        Section 14.9.     Retention of Counsel and Consultants.............................73

        Section 14.10.    Waiver of Notice.................................................73

        Section 14.11.    Indemnification of Lender........................................73

        Section 14.12.    Construction of Agreement........................................73

        Section 14.13.    Parties Bound, etc...............................................74

        Section 14.14.    COMPLETE AGREEMENT...............................................74

        Section 14.15.    Governing Law....................................................74

        Section 14.16.    Severability.....................................................74

        Section 14.17.    Notices..........................................................74

        Section 14.18.    Modification.....................................................76

        Section 14.19.    Waivers..........................................................76

        Section 14.20.    WAIVER OF TRIAL BY JURY..........................................76

                                           -iii-

EXHIBITS

Exhibit A         Consolidated Summary of Capital Improvement Plan
Exhibit B         Intentionally Omitted
Exhibit C         Form of Note
Exhibit D         Form of Mortgage
Exhibit E         Form of Deed of Trust
Exhibit F         Form of Assignment of Leases and Rents
Exhibit G         Intentionally Omitted
Exhibit H         Intentionally Omitted
Exhibit I         Intentionally Omitted
Exhibit J         Intentionally Omitted
Exhibit K         Intentionally Omitted
Exhibit L         Intentionally Omitted
Exhibit M         Form of Annual Consolidated Operating Statement of Properties
                  (Section 5.1.8(ii))
Exhibit N         Form of Annual Operating and Capital Expenditure Budget
                  Section 5.1.8(iii))
Exhibit O         Form of Monthly Operating Statements
                  (Section 5.1.8(iv))
Exhibit P         Intentionally Form of Quarterly Operating Statements
                  (Section 5.1.8(v))
Exhibit Q         Intentionally Omitted
Exhibit R         Intentionally Omitted
Exhibit S         Form of Monthly Statement for ARC IV (Section 5.1.8(ix))
Exhibit T         Intentionally Omitted
Exhibit U         Insurance Requirements
Exhibit V         Form of Capital Improvement Reconciliation
Exhibit W         Intentionally Omitted
Exhibit X         Cap-X Information Sheet
Exhibit Y         Form of Certificate for Prepaid Rent
Exhibit Z         Form of Evidence of Payment of Taxes
Exhibit AA        Form of Rent Roll

SCHEDULES

Schedule 1        List of Properties and Portion of Principal Balance
                  allocated to each Property
Schedule 2        Capital Improvement Costs for Properties
Schedule 4.1.16   Trade Names
Schedule 4.1.21   Exceptions to Violations Representation
Schedule 4.1.22   Exceptions to Condemnation Representation

                                    -iv-

                                 LOAN AGREEMENT
                                  [Fixed Rate]

               THIS LOAN AGREEMENT made as of the 2nd day of May, 2002, among
GMAC COMMERCIAL MORTGAGE CORPORATION, a California corporation having an office
at 200 Witmer Road, Horsham, Pennsylvania 19044 ("LENDER"), and ARC Communities
1 LLC, a Delaware limited liability company ("BORROWER") having an office c/o
Affordable Residential Communities, 600 Grant Street, Suite 900, Denver,
Colorado 80203.

                              PRELIMINARY STATEMENT

               Borrower is a special purpose limited liability company
established for the sole purpose of the operation of real property on which
manufactured home communities are located.

               ARC MEZZ 1 LLC, a Delaware limited liability company ("ARC
MEZZ"), is the owner and holder of a 100% membership interest in Borrower.

               ARC Real Estate Holdings, LLC, a Delaware limited liability
company ("ARC"), is the owner and holder of a 100% membership interest in ARC
MEZZ.

               ARC Real Estate, LLC, a Delaware limited liability company ("ARC
LLC") is the owner and holder of 99% of the "Class B" member interest in ARC.

               Affordable Residential Communities, IV, LP, a Delaware limited
partnership ("ARC IV") is the owner and holder of (i) 1% of the "Class B" member
interest in ARC and the sole managing member thereof and (ii) a 100% membership
interest in ARC LLC; and GMAC Commercial Mortgage Corporation ("GMAC") is the
owner and holder of 100% of the "Class A" member interest in ARC.

               ARC IV REIT,  Inc.,  a Maryland  corporation  ("ARC REIT") is the
sole general partner of ARC IV.

               Lender has agreed on the terms, covenants and provisions of this
Agreement hereinafter set forth to extend a loan in the principal sum of
$45,716,015 (the "LOAN") to Borrower pursuant to which Lender will make the Loan
to Borrower (i) to finance certain manufactured home community properties owned
by Borrower and (ii) to finance the cost of certain capital improvements to be
made at the Properties.

               NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt of which is hereby
acknowledged, and to induce Lender to extend the Loan to Borrower, Borrower and
Lender hereby represent and warrant to and covenant and agree as follows:

                                   ARTICLE I.

                     DEFINITIONS; PRINCIPLES OF CONSTRUCTION

     SECTION 1.1.  Definitions. As used in this Agreement, the following terms
shall have the following definitions:

"ACCOUNTS" shall mean the Deposit Account, the Cash Management Account, the Tax
Account, the Insurance Premium Account, the Ordinary Capital Expenditures
Account, the Capital Improvement Account, the Operating Account and the Prepaid
Rent Account established in accordance with this Agreement and the Cash
Management Agreement.

"AFFILIATE" shall mean any Person directly or indirectly controlling, controlled
by or under direct or indirect common control with any other Person. A Person
shall be deemed to control another Person if the controlling Person owns
fifty-one (51%) percent or more of any class of voting securities of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.

"AGENT BANK" shall mean LaSalle Bank National Association, as agent and as
securities intermediary with respect to the Agent Bank Accounts under the Cash
Management Agreement.

"AGREEMENT" shall mean this Agreement.

"ALLOCATED LOAN AMOUNT" shall mean the allocated Principal Balance of the Loan
among the Properties, as set forth on SCHEDULE 1 opposite the trade name for
each such Property.

"APPROVED ACCOUNTING FIRM" shall have the meaning given to such term in SECTION
2.5.1(viii).

"ARC" shall have the meaning given to such term in the Preliminary Statement.

"ARC IV" shall have the meaning given to such term in the Preliminary Statement.

"ARC LLC" shall have the meaning given to such term in the Preliminary
Statement.

"ARC MEZZ" shall have the meaning given to such term in the Preliminary
Statement.

"ARC PROPERTIES" shall mean the manufactured home community properties owned by
ARC, as further described in Schedule 1.

"ARC REIT" shall have the meaning given to such term in the Preliminary
Statement.

"ASSIGNMENTS OF LEASES AND RENTS" shall mean the Assignments of Leases and Rents
to be given by Borrower to Lender, as security for the payment of the Debt and
constituting a first lien on all of Borrower's right, title and interest now
owned or hereafter acquired in and to all Leases and Rents pertaining to or
derived from the Properties, the form of which is attached to this

                                    -2-

Agreement as EXHIBIT F, as the same may from time to time be amended, modified,
extended, supplemented, renewed, replaced or restated.

"AVAILABLE CASH FLOW" shall mean Underwritable Cash Flow, except that there
shall be deducted from Gross Revenues in the definition of Underwritable Cash
Flow the fees and expenses payable to Property Manager under the Management
Agreement and in compliance with SECTION 5.2.11 hereof.

"BORROWER" shall have the meaning given to such term in the preamble to this
Agreement.

"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a legal
holiday on which national banks are not open for general business in (i) the
State of New York (ii) the state where the corporate trust office of the Trustee
is located or (iii) the state where servicing offices of the Servicer are
located.

"CAPITAL IMPROVEMENT ACCOUNT" shall have the meaning given to such term in
SECTION 9.9.

"CAPITAL IMPROVEMENT COSTS" shall mean, with respect to a particular Property,
the cost associated with the Capital Improvement Plan for such Property.

"CAPITAL IMPROVEMENT FUNDS" shall have the meaning given to such term in SECTION
9.4.1.

"CAPITAL IMPROVEMENT PLAN" shall mean, with respect to a particular Property,
the capital improvement plan for such Property approved by Lender, which plan
shall contain the anticipated date of completion for each capital improvement
and a consolidated summary of such capital improvement plan in the form of
EXHIBIT A attached hereto.

"CAPITAL WORK" shall mean any item of work specified in the Capital Improvement
Plan or other item of work at the Property which would constitute a capital item
entitled to be capitalized in accordance with GAAP.

"CASH AND CASH EQUIVALENTS" shall mean any or a combination of currency of the
government of the United States of America and U.S. Government Obligations.

"CASH MANAGEMENT ACCOUNT" shall have the meaning given to such term in SECTION
9.9.

"CASH MANAGEMENT AGREEMENT" shall mean the Cash Management Agreement dated as of
the date hereof entered into among Borrower, Property Manager, Lender, Agent
Bank and Deposit Bank, as the same may from time to time be amended, modified,
extended, supplemented, renewed, replaced or restated.

"CASUALTY RETAINAGE" shall have the meaning given to such term in SECTION 6.1.1.

"CERTIFIED INSURANCE AMOUNT" shall have the meaning given to such term in
SECTION 9.2.2.

"CERTIFIED TAX AMOUNT" shall have the meaning given to such term in SECTION
9.1.2.

"CLOSING DATE" shall mean May 2, 2002.

                                 -3-

"CONDEMNATION RETAINAGE" shall have the meaning given to such term in SECTION
6.2.

"CONSULTANT" shall mean an independent consulting engineer selected by Lender.

"DAMAGED PROPERTY" shall have the meaning given to such term in SECTION 6.1.

"DEBT" shall mean all principal, interest, additional interest and other sums of
any nature whatsoever which may or shall become due and payable to Lender in
accordance with the provisions of the Loan Documents.

"DEBT SERVICE" shall mean, with respect to any period of time an amount equal to
the Principal Balance of the Loan multiplied by the Interest Rate multiplied by
a fraction, the numerator of which is the number of days in such period of time,
and the denominator of which is 360.

"DEBT SERVICE COVERAGE RATIO" shall mean, for the relevant computation period,
the ratio of Underwritable Cash Flow of the Properties to the Debt Service on
the Principal Balance of the Loan. Except as otherwise set forth herein, the
Debt Service Coverage Ratio shall be calculated by Borrower on a calendar
quarter basis and shall be subject to verification and final determination by
Lender which determination shall be conclusive and binding on Borrower absent
manifest error.

"DEFAULT" as used in this Agreement shall mean the occurrence of any default by
Borrower or any other Person in the observance or performance of any of the
terms, covenants or provisions of this Agreement, the Note, the Mortgages or the
other Loan Documents on the part of Borrower or such other Person to be observed
or performed without regard to whether such default constitutes or would upon
notice or lapse of time, or both, constitute an Event of Default under this
Agreement, the Note, the Mortgages or the other Loan Documents or the other ARC
Loan Documents.

"DEFAULT RATE" shall mean a rate per annum equal to the lesser of (a) the
maximum rate permitted by applicable law, or (b) three percent (3%) plus the
Interest Rate.

"DEFEASANCE COLLATERAL" shall mean U.S. Government Obligations, which provide
payments (i) on or prior to, but as close as possible to, the Business Day
immediately preceding the Monthly Payment Date under the Note after the
Defeasance Date and (ii) in amounts equal to or greater than the Scheduled
Defeasance Payments and other scheduled payment dates.

"DEFEASANCE COLLATERAL ACCOUNT" shall have the meaning set fort in SECTION
2.5.2.

"DEFEASANCE DATE" shall have the meaning set fort in SECTION 2.5.1(a)(i).

"DEFEASANCE EVENT" shall have the meaning set forth in SECTION 2.5.1(a).

"DEPOSIT BANK" shall mean Compass Bank, an Alabama banking corporation, as
deposit bank under the Cash Management Agreement.

"ELIGIBLE ACCOUNT" shall mean a separate and identifiable account from all other
funds held by the holding institution that is either (i) an account or accounts
maintained with a federal or state-

                                 -4-

chartered depository institution or trust company which complies with the
definition of Eligible Institution or (ii) a segregated trust account or
accounts maintained with a federal or state chartered depository institution or
trust company acting in its fiduciary capacity which, in the case of a state
chartered depository institution or trust company is subject to regulations
substantially similar to 12 C.F.R. ss.9.10(b), having in either case a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by federal and state authority. An Eligible Account will not be
evidenced by a certificate of deposit, passbook or other instrument.

"ELIGIBLE INSTITUTION" shall mean a depository institution or trust company
insured by the Federal Deposit Insurance Corporation the short term unsecured
debt obligations or commercial paper of which are rated at least A-1 by Standard
& Poor's Ratings Services, P-1 by Moody's Investors Service, Inc. and F-1+ by
Fitch, Inc. in the case of accounts in which funds are held for thirty (30) days
or less or, in the case of accounts in which funds are held for more than thirty
(30) days, the long term unsecured debt obligations of which are rated at least
"AA" by Fitch, and S&P and "Aa2" by Moody's. For purposes of this Agreement
only, as of the Closing Date, Deposit Bank is deemed to be an Eligible
Institution provided; however, that in the event the long and/or short-term
credit rating of the Deposit Bank is downgraded (or withdrawn) by any of the
Rating Agencies from its credit rating as of the Effective Date, the Deposit
Bank shall no longer be deemed an Eligible Institution unless Borrower shall
secure from the Rating Agencies a Rating Confirmation letter within thirty (30)
days of such downgrade.

"ENVIRONMENTAL REQUIREMENTS" shall mean, collectively, all present and future
laws, statutes, ordinances, rules, regulations, orders, codes, licenses,
permits, decrees, judgments, directives or the equivalent of or by any
Governmental Authority and relating to or addressing the protection of the
environment or human health.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.

"EVENTS OF DEFAULT" shall have the meaning given to such term in SECTION 10.1.

"EXCHANGE ACT" shall have the meaning given such term in SECTION 12.3.

"EXPOSURE FEE" shall mean a fee equal to $0.00 paid by Borrower to Lender.

"FASIT" shall mean Financial Asset Securitization Investment Trust.

"FINANCING STATEMENTS" shall mean Uniform Commercial Code Financing Statements,
in form and content acceptable to Lender.

"FIRREA" shall mean the Financial Institutions Reform, Recovery and Enforcement
Act.

"GAAP" shall mean generally accepted accounting practices consistently applied.

"GMAC" shall have the meaning given to such term in the Preliminary Statement.

                                 -5-

"GOVERNMENTAL AUTHORITY" shall mean any court or governmental board, agency,
commission, office or authority of any nature whatsoever or any governmental
unit or political subdivision thereof (federal, state, district, municipal,
city, foreign or otherwise) whether now or hereafter in existence, exercising
executive, legislative, judicial, regulatory or administrative functions.

"GROSS REVENUE" shall mean, with respect to a particular period of time, all
revenue of Borrower during such period relating to the ownership and operation
of the Properties to be included in the calculation or in connection with any
services, equipment or furnishing provided in connection with the operation of
such Properties from whatever source, including but not limited to, Rents
(excluding security deposits until such time as they may become available to
Borrower for application to a tenant's obligations), but excluding revenues
derived from (i) the rental of manufactured homes and (ii) sales, use and
occupancy or other taxes on receipts required to be accounted for by Borrower to
any Governmental Authority, non-recurring revenues as determined by Lender,
refunds and uncollectible accounts, proceeds of casualty insurance and
condemnation awards (other than business interruption or other loss of income
insurance), and any disbursements to Borrower of the Required Reserve Funds or
any other fund established by the Loan Documents. Gross Revenues shall be
determined in a manner consistent with GAAP.

"GUARANTOR" shall mean collectively, ARC LLC and ARC IV and any other Person now
or hereafter guaranteeing all or any portion of the Debt or the performance by
Borrower of all or any of the obligations of Borrower under the Loan Documents.

"GUARANTY (RECOURSE OBLIGATIONS)" shall mean that certain Guaranty (Recourse
Obligations) dated as of the date hereof given by ARC LLC and ARC IV to Lender,
as the same may from time to time be amended, modified, extended, supplemented,
renewed, replaced or restated.

"HAZARDOUS MATERIAL" shall mean any material or substance that, whether by its
nature or use, is now or hereafter defined as a hazardous waste, hazardous
substance, pollutant or contaminant under any Environmental Requirement, or
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and which is now or hereafter
regulated under any Environmental Requirement, or which is or contains
petroleum, gasoline, diesel fuel or another petroleum hydrocarbon product.

"HAZARDOUS MATERIAL GUARANTY AND INDEMNIFICATION AGREEMENT" shall mean that
certain Hazardous Material Guaranty and Indemnification Agreement dated the date
hereof given by Borrower, ARC IV and ARC LLC to Lender, as the same may from
time to time be amended, modified, extended, supplemented, renewed, replaced or
restated.

"INDEPENDENT DIRECTOR" and "INDEPENDENT MANAGER" shall mean an individual
reasonably satisfactory to Lender who shall not have been at the time of such
individual's appointment, may not have been at any time during the preceding
five (5) years and shall not during its tenure as Independent Director or
Independent Manager be (i) a shareholder, director, officer, employee, partner,
member, attorney or counsel of Borrower or any of its members, subsidiaries or
affiliates, (ii) a customer of, or supplier to, or any other Person who derives
any of its purchases or revenues for its activities with Borrower or any of its
members, subsidiaries or Affiliates, (iii) a person or other entity controlling
or under common control with any such member,

                                 -6-

customer, supplier or other Person, or (iv) a member of the immediate family of
any such shareholder, director, officer, employee, partner, customer, supplier
or other Person. As used herein, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a person or entity, whether through ownership of
voting securities, by contract or otherwise.

"INITIAL INTEREST PERIOD" shall mean, the period commencing on the date hereof
and ending on the day immediately preceding the first (1st) day of the first
(1st) full month following the date hereof.

"INSURANCE POLICIES" shall have the meaning given to such term in SECTION 6.1.

"INSURANCE PREMIUM ACCOUNT" shall have the meaning given to such term in SECTION
9.9.

"INSURANCE PREMIUM FUNDS" shall have the meaning given to such term in SECTION
9.2.1.

"INSURANCE PREMIUMS" shall have the meaning given to such term in SECTION 6.1.

"INTEREST PERIOD" shall mean (a) the Initial Interest Period, and (b) for each
period thereafter, the period commencing on the first (1st) day of each calendar
month during the term of the Loan and ending on the last day of such calendar
month.

"INTEREST RATE" shall mean a rate per annum equal to seven and thirty-five
one-hundredths percent (7.35%).

"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986, as
amended, or any successor statute.

"INVESTOR ACCOUNT" shall have the meaning as defined in the Cash Management
Agreement.

"LEASES" shall mean collectively all leases, licenses and other agreements now
or hereafter entered into and affecting or relating to the use or occupancy of
the Properties or any portion thereof.

"LEGAL REQUIREMENTS" shall mean all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting Borrower or the
Properties or any part thereof or the construction, use, alteration or operation
thereof, or any part thereof, whether now or hereafter enacted and in force,
including, without limitation, the Americans with Disabilities Act of 1990, and
all permits, licenses and authorizations and regulations relating thereto, and
all covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Borrower, at any time in force
affecting the Properties or any part thereof, including, without limitation, any
which may (i) require repairs, modifications or alterations in or to the
Properties or any part thereof, or (ii) in any way limit the use and operation
thereof as it is currently being utilized.

"LENDER" shall have the meaning given to such term in the Preamble.

                                 -7-

"LENDER GROUP" shall have the meaning given to such term in SECTION 12.3.

"LETTER OF CREDIT" shall mean an irrevocable, unconditional, transferable, clean
sight draft letter of credit acceptable to Lender and the Rating Agencies
(either an evergreen letter of credit or one which does not expire until at
least thirty (30) Business Days after the Maturity Date) in favor of Lender and
entitling Lender to draw thereon in New York, New York, issued by a domestic
Eligible Institution or the U.S. agency or branch of a foreign Eligible
Institution, or if there are no domestic U.S. agencies or branches of a foreign
Eligible Institution then issuing letters of credit, then such letter of credit
may be issued by a domestic bank, the long term unsecured debt rating of which
is the highest such rating then given by the Rating Agencies to a domestic
commercial bank. If at any time the bank issuing any such Letter of Credit shall
cease to be an Eligible Institution, Lender shall have the right immediately to
draw down the Letter of Credit in full and hold the proceeds of such draw in
accordance with the applicable provisions hereof.

"LIABILITIES" shall have the meaning given to such term in SECTION 12.3.

"LOAN" shall have the meaning given to such term in the Preliminary Statement.

"LOAN DOCUMENTS" shall collectively mean this Agreement, the Note, the
Mortgages, the Assignments of Leases and Rents, the Hazardous Material Guaranty
and Indemnification Agreement, Guaranty (Recourse Obligations), the Cash
Management Agreement and all other documents and instruments of any nature
whatsoever now or hereafter executed and delivered in connection with this
Agreement or the Loan, as any of the same may from time to time be amended,
modified, extended, supplemented, renewed, replaced or restated.

"MANAGEMENT AGREEMENT" shall mean that certain Property and Asset Management
Agreement dated May 2, 2002 entered into between Borrower and Property Manager,
or such other management agreement with respect to the Properties as may be
entered into by Borrower with the approval of Lender.

"MATURITY DATE" shall mean May 1, 2012.

"MAXIMUM LEGAL RATE" shall mean the maximum non-usurious interest rate, if any,
that at any time or from time to time may be contracted for, taken, reserved,
charged or received on the indebtedness evidenced by the Note and as provided
for herein or the other Loan Documents, under the laws of such state or states
whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.

"MAXIMUM LOAN TO VALUE RATIO" shall mean with respect to all Properties
seventy-seven percent (77%).

"MONTHLY DEBT SERVICE PAYMENT AMOUNT" shall mean an amount equal to the
interest, computed at the Applicable Interest Rate, due on the outstanding
balance of the Loan on any given Monthly Payment Date, plus a monthly
amortization payment as set forth on Schedule 3.

"MONTHLY INSURANCE PREMIUM DEPOSIT" shall have the meaning given to such term in
SECTION 9.2.1.

                                 -8-

"MONTHLY ORDINARY CAPITAL EXPENDITURES DEPOSIT" shall have the meaning given to
such term in SECTION 9.3.1.

"MONTHLY PAYMENT DATE" shall mean the first Business Day of every calendar month
occurring during the term of the Loan.

"MONTHLY TAX DEPOSIT" shall have the meaning given to such term in SECTION
9.1.1.

"MORTGAGES" shall mean fully cross defaulted and cross collateralized blanket
mortgages and deeds of trust constituting a first lien on the fee estate of
Borrower in all Properties constituting collateral for the Loan executed and
delivered by Borrower to or for the benefit of Lender and securing payment in
full of the Debt, the forms of which are attached hereto as EXHIBITS D
(mortgage) and E (deed of trust), as the same may from time to time be amended,
modified, extended, supplemented, renewed, replaced or restated.

"NET AWARD DEFICIENCY" shall have the meaning given to such term in SECTION 6.2.

"NET PROCEEDS" shall have the meaning given to such term in SECTION 6.1.1.

"NET PROCEEDS DEFICIENCY" shall have the meaning given to such term in SECTION
6.1.1.

"NET RESTORATION AWARD" shall have the meaning given to such term in SECTION
6.2.

"NON-CONSOLIDATION OPINION" shall have the meaning given to such term in the
definition of the term "Single-Purpose" in this SECTION 1.1.

"NOTE" shall mean the consolidated, amended and restated note in the aggregate
principal amount of $45,716,015 given by Borrower to Lender evidencing the Loan,
which shall be in the form of EXHIBIT C as the same may from time to time be
amended, modified, extended, supplemented, renewed, replaced or restated.

"OFFICER'S CERTIFICATE" shall mean a certificate delivered to Lender by Borrower
which is signed by an authorized representative of Borrower.

"OPERATING ACCOUNT" shall have the meaning given to such term in SECTION 9.9.

"OPERATING EXPENSE" shall mean, with respect to any period of time, all costs
and expenses paid (or due and payable) by Borrower (or by Property Manager for
the account of Borrower) during such period relating to the operation,
maintenance and management of the Properties to be included in the calculation,
including, without limitation, utilities, repairs and maintenance, insurance,
property taxes and assessments (which insurance, property taxes and assessments
shall be calculated in accordance with GAAP), advertising expenses, payroll and
related taxes, equipment lease payments permitted under the terms of this
Agreement, a management fee equal to the greater of (i) 4% of Gross Revenues of
the Properties to be included in the calculation for the applicable period or
(ii) the actual management fees paid under the Management Agreement for such
period, but excluding depreciation and amortization and any extraordinary
non-recurring expenses. Operating Expenses shall be determined in a manner
consistent with GAAP except as otherwise set forth herein. It is expressly
understood that for purposes of calculating Operating

                                 -9-

Expenses, Operating Expenses shall be deemed to include a $50 per annum capital
expenditure allowance per pad site located at the Properties.

"ORDINARY CAPITAL EXPENDITURES ACCOUNT" shall have the meaning given to such
term in SECTION 9.9.

"ORDINARY CAPITAL EXPENDITURES FUNDS" shall have the meaning given to such term
in SECTION 9.3.1.

"ORIGINATION FEE" shall have the meaning given to such term in SECTION 2.6.2.

"PERMITTED FUND MANAGER" means any entity which is not subject to a bankruptcy
proceeding and either (a) as determined by Lender has been approved from time to
time by the Rating Agencies as the general partner, managing member or fund
manager of a Permitted Investment Fund or (b) a nationally-recognized manager of
investment funds investing in debt or equity interests relating to commercial
real estate which is investing through a fund which has committed capital of at
least $250,000,000.

"PERMITTED INVESTMENT FUND" shall have the meaning set forth in the definition
of Qualified Transferee.

"PERMITTED INVESTMENTS" shall have the meaning set forth in the Cash Management
Agreement.

"PERMITTED TITLE EXCEPTIONS" shall mean those matters set forth in the title
insurance policies insuring the respective liens of the Mortgages and those
matters otherwise approved by Lender.

"PERSON" shall mean an individual, a corporation, a firm, a limited or general
partnership, a limited liability company, a limited liability partnership, an
association, a joint venture or any other entity or organization, including a
governmental or political subdivision or an agent or instrumentality thereof.

"PREPAID RENT ACCOUNT" shall have the meaning given to such term in SECTION 9.9.

"PREPAID RENT CERTIFICATE" shall have the meaning given to such term in SECTION
9.7.1.

"PREPAID RENT FUNDS" shall have the meaning given to such term in SECTION 9.7.1.

"PREPAID RENTS" shall mean for purposes of SECTION 9.7 hereof, and, as of any
given date during the term of the Loan, the amount of Rent paid by or for the
benefit of a tenant under a Lease that exceeds the amount of Rent that has
accrued and is due and payable through the last day of the calendar month in
which such given date occurs, provided that, notwithstanding anything herein to
the contrary, Prepaid Rent shall not include tenant security deposits.

"PRINCIPAL BALANCE" shall mean the outstanding principal balance of the Note.

"PROPERTY" shall mean individually and collectively the manufactured home
communities owned by Borrower and which constitute collateral for the Loan
including any personal property,

                                 -10-

equipment or manufactured home owned by Borrower and located thereon or
otherwise used in connection with the management thereof.

"PROPERTY MANAGER" shall mean (i) ARC Management Services, Inc., a Delaware
corporation, (ii) such other Qualified Manager of the Properties as may be
approved by GMAC or a Qualified Transferee if GMAC or such Qualified Transferee
shall become the managing member of ARC, or (iii) such other manager of the
Properties as may be approved by Lender in its sole and absolute discretion.

"QUALIFIED MANAGER" shall mean a reputable and experienced nationally-recognized
manager having not less than five (5) years experience in the management of
commercial properties similar in type and class as the manufactured home
communities presently owned by Borrower and at the time of engagement as manager
manage at least twenty-five (25) manufactured home communities similar to the
Properties, not including manufactured home communities owned by Borrower or any
affiliate of Borrower.

"QUALIFIED TRANSFEREE" means (a) GMAC or any Affiliate of GMAC, or (b) one or
more of the following: (i) a real estate investment trust, bank, saving and loan
association, investment bank, insurance company, trust company, commercial
credit corporation, pension plan, pension fund or pension advisory firm, mutual
fund, government entity or plan, (ii) investment company, money management firm
or "qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, as amended, or an institutional "accredited investor"
within the meaning of Regulation D under the Securities Act of 1933, as amended,
which is regularly engaged in the business of making debt and/or equity
investments in real estate, (iii) a Qualified Trustee in connection with a
securitization of, the creation of collateralized debt obligations ("CDO")
secured by or financing through an "owner trust" of, GMAC's equity investment in
ARC, so long as (I) the special servicer or manager of such securitization, CDO
or trust has the Required Special Servicer Rating, (II) the "controlling class"
of such securitization vehicle is held by GMAC or a Qualified Transferee and
(III) the operative documents of the related securitization vehicle, CDO or
financing must require that (x) the "controlling class" or "equity interest" in
such securitization vehicle or CDO are owned by GMAC, a Qualified Transferee or
a Permitted Investment Fund and (y) if any of the relevant trustee, special
servicer, manager or controlling class fails to meet the requirements of such
clause, such entity must be replaced by a qualifying entity within 30 days, (iv)
an investment fund, limited liability company, limited partnership or general
partnership (a "Permitted Investment Fund") where GMAC or a Qualified Transferee
or a Permitted Fund Manager acts as the general partner, managing member or fund
manager and at least 50% of the equity interests in such Investment Fund are
owned, directly or indirectly, by one or more of the following: GMAC, a
Qualified Transferee, an institutional "accredited investor", within the meaning
of Regulation D promulgated under the Securities Act of 1933, as amended, and/or
a "qualified institutional buyer" or both within the meaning of Rule 144A
promulgated under the Securities Exchange Act of 1934 (provided each
institutional "accredited investor" or "qualified institutional buyer" meets the
test set forth in clause (A) below), as amended, (v) any other entity (including
any opportunity funds) regularly engaged in the business of making debt and/or
equity investments in real estate which has been approved as a Qualified
Transferee hereunder by the Rating Agencies, (vi) an institution substantially
similar to any of the foregoing entities described in clauses (b)(i) or (ii) of
this definition, provided that any institution described in clauses (b)(i), (ii)
and (vi) of this definition (A) has total assets (in name

                                 -11-

or under management) in excess of $650,000,000 (excluding its investment in ARC)
and (except with respect to a pension advisory firm or similar fiduciary)
capital/statutory surplus or shareholders' equity of $250,000,000 (excluding its
investment in ARC); and (B) is regularly engaged in the business of making debt
and/or equity investments in real estate or (vii) any entity Controlled (as
defined below) by any one or more of the entities described in clause (b) above.
For purposes of this definition only, "Control" means the ownership, directly or
indirectly, in the aggregate of more than fifty percent (50%) of the beneficial
ownership interest of an entity and the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of an
entity, whether through the ability to exercise voting power, by contract or
otherwise.

"QUALIFIED TRUSTEE" means (i) a corporation, national bank, national banking
association or a trust company, organized and doing business under the laws of
any state or the United States of America, authorized under such laws to
exercise corporate trust powers and to accept the trust conferred, having a
combined capital and surplus of at least $100,000,000 and subject to supervision
or examination by federal or state authority, (ii) an institution insured by the
Federal Deposit Insurance Corporation or (iii) an institution whose long-term
senior unsecured debt is rated either of the then in effect top two rating
categories of S&P and either Fitch or Moody's (provided, however, if the Loan
has been Securitized, the rating requirement of any Rating Agency which has not
rated such transactions will be disregarded).

"RATING AGENCIES" shall mean Standard & Poor's Ratings Services, Moody's
Investors Service, Inc. and Fitch, Inc. or, if any such corporation shall for
any reason no longer perform the functions of a securities rating agency, any
other nationally recognized statistical rating agency designated by Lender.

"RATING CONFIRMATION" with respect to the matter in question, shall mean that as
a condition precedent thereto one or more of the Rating Agencies shall have
confirmed in writing that such action shall not result, in and of itself, in a
downgrade, withdrawal or qualification to any rating then assigned to any
outstanding Securities.

"REGISTRATION STATEMENT" shall have the meaning given to such term in SECTION
12.3.

"REGULATION D, G, T, V AND X" shall mean, respectively, Regulation D, G, T, V
and X of the Board of Governors of the Federal Reserve System as from time to
time in effect and any successor to all or a portion thereof.

"REQUIRED SPECIAL SERVICER RATING" means a special servicer rating of "CSS1" in
the case of Fitch, a servicer on its approved list of special servicers in the
case of S&P and, in the case of Moody's, such special servicer is acting as
special servicer in a commercial mortgage loan securitization that was rated by
Moody's within the six month period prior to the date of determination and
Moody's has not downgraded or withdrawn the then-current rating on any class of
commercial mortgage securities or placed any class of commercial mortgage
securities on watch citing the continuation of such special servicer as special
servicer of such commercial mortgage securities provided, however, if the Loan
has been Securitized, the rating requirement of any Rating Agency which has not
rated such transaction shall be disregarded.

                                 -12-

"RELEASE DATE" shall mean the date that is two (2) years from (i) the "startup
day" (within the meaning of Section 860G(a)(9) of the Code) of the REMIC Trust
established in connection with the last Securitization involving any portion of
the Loan or (ii) the last date of a Secondary Market Transaction arranged by
Lender.

"RELEASE PARCEL(S)" shall have the meaning given to such term in Section 13.2.

"REMIC TRUST" shall mean a "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code that holds the Note.

"RENT ROLLS" shall mean the rent rolls for the Properties delivered by Borrower
to Lender in connection with the Loan.

"RENTS" shall mean all rents, income, receipts, accounts, accounts receivable,
royalties, issues, profits, rent equivalent income, security deposits, insurance
proceeds, tax refunds and any other revenues, income benefits or proceeds of any
nature whatsoever generated by, arising from or otherwise relating to the
Properties or any portion thereof excluding rent collected for the rental of
manufactured homes, storage sheds or other assets which are not owned by the
Borrower.

"REQUIRED RESERVE FUNDS" shall mean, collectively, the Tax Funds, the Insurance
Premium Funds, the Capital Improvement Funds, and the Ordinary Capital Reserve
Funds or any other reserves required hereunder.

"SCHEDULED DEFEASANCE PAYMENTS" shall mean in the case of a (i) full Defeasance
Event, the scheduled payments of interest and principal under the Note for all
Monthly Payment Dates occurring after the Defeasance Date and up to and
including the Maturity Date (including the outstanding principal balance on the
Note as of the Maturity Date) and (ii) a partial Defeasance Event, 125% of the
scheduled payments of interest and principal with respect to the Allocated Loan
Amount for the released Property for all Monthly Payment Dates occurring after
the Defeasance Date and up to and including the Maturity Date (including the
outstanding principal balance allocated to the released Property on the Note as
of the Maturity Date).

"SECONDARY MARKET CLOSING DATE" shall have the meaning given to such term in
SECTION 12.2.

"SECONDARY MARKET TRANSACTIONS" shall have the meaning given to such term in
SECTION 12.1.

"SECURITIES" shall have the meaning given to such term in SECTION 12.1.

"SECURITIES ACT" shall have the meaning given to such term in SECTION 12.3.

"SECURITIZATION" shall have the meaning given to such term in SECTION 12.1.

"SECURITY AGREEMENT" shall mean a security agreement and subordinate security
agreement (as to the other ARC Loans) in form and substance that would be
satisfactory to a prudent lender pursuant to which Borrower grants Lender a
perfected, first priority security interest or second priority security
interest, as the case may be, in the Defeasance Collateral Account and the
Defeasance Collateral.

                                 -13-

"SERVICER" shall have the meaning given to such term in SECTION 12.7.

"SINGLE-PURPOSE" The term "Single Purpose" shall mean, with respect to a Person,
other than an individual, that such Person at all times since its formation (i)
has not and will not merge into or consolidate with any Person or dissolve,
terminate or liquidate in whole or in part, transfer or otherwise dispose of all
or substantially all of its assets or change its legal structure, (ii) is formed
or organized solely for the purpose of holding, directly, or, indirectly, an
ownership interest in the Properties, (iii) does not engage in any business
unrelated to the Properties and the financing thereof, (iv) has not and will not
have any assets other than those related to its interest in the Properties or
the financing thereof or any indebtedness other than the Loan and unsecured
trade payables not more than sixty (60) days past due incurred in the ordinary
course of business and in an aggregate amount of not more than 4% of the
Principal Balance, from time to time, of the Loan, (v) maintains its own
separate books and records and its own accounts, in each case which are separate
and apart from the books and records and accounts of any other Person, (vi)
holds itself out as being a Person, separate and apart from any other Person,
(vii) does not and will not commingle its funds or assets with those of any
other Person, (viii) conducts its own business in its own name, (ix) maintains
separate financial statements and will not (A) permit its assets or liabilities
to be listed as assets or liabilities on the financial statement of any other
Person or (B) include the assets or liabilities of any other Person on its
financial statements unless, in connection with any consolidated statements,
such assets are clearly identified as the separate assets of such Person, (x)
pays its own liabilities out of its own funds, (xi) observes all partnership
formalities or corporate formalities or limited liability company formalities,
as applicable and will not, without prior consent of Lender and delivery to
Lender of a Rating Confirmation, amend, modify, terminate or fail to comply with
the provisions of such Person's partnership agreement, articles or certificate
of incorporation, articles of organization or similar organizational documents,
as the case may be, (xii) maintains an arm's-length relationship with its
Affiliates, (xiii) pays the salaries of its own employees and maintains a
sufficient number of employees in light of its contemplated business operations,
(xiv) does not guarantee or otherwise obligate itself with respect to the debts
of any other Person or hold out its credit as being available to satisfy the
obligations of any other Person, (xv) does not acquire obligations or securities
of its partners, members or shareholders, (xvi) allocates fairly and reasonably
shared expenses, including, without limitation, any overhead for shared office
space and services performed by any employee of an Affiliate, (xvii) uses
separate stationery, telephone numbers, invoices, and checks or otherwise
identifies itself as a separate legal entity from its Affiliates, (xviii) does
not and will not pledge its assets for the benefit of any other Person or make
any loans or advances to any other Person, (xix) does and will correct any known
misunderstanding regarding its separate identity, (xx) maintains adequate
capital in light of its contemplated business operations, (xxi) does not and
will not own any subsidiary or make an investment in any Person without the
consent of the Lender and delivery to the Lender of a Rating Confirmation,
(xxii) has not and will not become insolvent or fail to pay its debts and
liabilities (including, as applicable, shared personnel and overhead expenses)
from its assets as the same shall become due, (xxiii) has not and will not seek
dissolution or winding up in whole, or in part, of such Person, (xxiv) has and
will file its own tax returns and not be included on the tax returns of any
other Person except as required by applicable law, (xxv) has and will conduct
its business solely in its own name or a name franchised or licensed to it by a
Person other than an Affiliate of such Person and not as a division or part of
any other Person in order not to (A) mislead others as to the identity with
which such other party is transacting business, or (B) suggest that such Person

                                 -14-

is responsible for the debts of any third party (including any Affiliate of such
Person), (xxvi) has not and will not share any common logo with or hold itself
out as or be considered as a department or division of any other Person, (xxvii)
has and will hold all of its assets in its own name, (xxviii) other than the
Guaranty (Recourse Obligations) has not and will not have any of its obligations
guaranteed by any Affiliate of such Person (xxix) will not violate or cause to
be violated the assumptions made with respect to such Person and its general
partner(s) or managing member(s), as applicable (collectively, a "Controlling
Party") in any opinion letter pertaining to substantive consolidation (a
"Non-Consolidation Opinion") delivered to the Lender and one or more of the
Rating Agencies in connection with the Loan, (xxx) if applicable, permit the
board of directors of its Controlling Party to take any action which, under the
terms of any certificate of incorporation, by-laws or any voting trust agreement
with respect to any common stock, requires the unanimous vote of one hundred
percent (100%) of the members of the board unless at the time of such action
there shall be at least two (2) members who are Independent Directors, and
(xxxi) has and will have a partnership or operating agreement, certificate of
incorporation or other organizational document which complies with the
Single-Purpose standards and requirements set by the Rating Agencies at such
time. In addition, if such Person is a limited partnership, then, at all times:
(1) all general partners of such Person shall be a Single-Purpose Person and (2)
if such Person has more than one general partner, then the organizational
documents shall provide that such Person shall continue (and not dissolve) for
so long as a solvent general partner exists. In addition, if such Person is a
corporation, then, at all times: (1) such Person shall have at least two (2)
Independent Directors, (2) the board of directors of such Person may not take
any action requiring the unanimous affirmative vote of one hundred percent
(100%) of the members of the board of directors unless all of the directors,
including the Independent Directors, shall have participated in such vote and
(3) such Person shall consider the interests of its creditors in connection with
all corporate actions to the extent permitted by applicable law. In addition, if
such Person is a limited liability company, then, at all times: (1) each
managing member shall be a Single-Purpose Person, (2) its articles of
organization, certificate of formation and/or operating agreement, as
applicable, shall provide that such entity will dissolve only upon the
bankruptcy of each managing member, and (3) if such Person has more than one
managing member, then the organizational documents shall provide that such
Person shall continue (and not dissolve) for so long as a solvent managing
member exists; in the alternative, if the members of such limited liability
company are not the managers, such limited liability company shall be managed by
not less than three individuals, two of which shall constitute Independent
Managers and such Person may not take any action requiring the unanimous
affirmative vote of one hundred percent (100%) of the managers unless at the
time of such action there shall be at least two (2) managers who are Independent
Managers, and all the managers, including the Independent Managers, shall have
participated in such vote and such Person shall consider the interests of its
creditors in connection with all limited liability company actions to the extent
permitted by applicable law. In addition, such Person (1) without the unanimous
consent of all of the partners, directors, members or managers, as applicable,
has not and will not with respect to itself or to any other Person in which it
has a direct or indirect legal or beneficial interest (a) seek or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or other similar official for such Person or all or any portion of
such Person's properties, or (b) take any action that might cause such Person to
become insolvent, (2) has and will maintain its books, records, resolutions and
agreements as official records, (3) has held and will hold its assets in its own
name, (4) has and will maintain its

                                 -15-

financial statements, accounting records and other entity documents separate and
apart from any other Person, (5) has not and will not identify its partners,
members or shareholders, or any affiliates of any of them as a division or part
of it. Notwithstanding the foregoing, Lender agrees that until a Securitization
of the Loan shall occur, the requirements with respect to an Independent
Director and/or Manager shall be satisfied by one (1) such Independent Director
and/or Manager.

"SPONSOR OWNED HOME" shall mean any manufactured home located at the Properties
owned by Borrower, any affiliate of Borrower and any parent entity of Borrower.

"SUCCESSOR BORROWER" shall have the meaning set forth in SECTION 2.5.3.

"TAKEN PROPERTY" shall have the meaning given to such term in SECTION 6.2.

"TAX ACCOUNT" shall have the meaning given to such term in SECTION 9.9.

"TAX FUNDS" shall have the meaning given to such term in SECTION 9.1.1.

"TAXES" shall mean, with respect to the Properties, all real estate taxes,
personal property taxes, assessments, water rates, sewer rents, and other
charges, including vault charges and license fees for the use of vaults, chutes
and similar areas adjoining the Properties, now or hereafter levied or assessed
against the Properties.

"TITLE COMPANY" shall mean, First American Title Insurance Company, Land America
and Chicago Title Insurance Company and other national title company acceptable
to Lender.

"TITLE INSURANCE POLICY" shall mean a title insurance policy issued by the Title
Company in favor of Lender, its successors and assigns, as their interests may
appear insuring the lien of a mortgage in an amount determined by Lender.

"TRUSTEE" shall mean any trustee holding the Loan in a Securitization.

"UNDERWRITABLE CASH FLOW" shall, with respect to any period of time, mean the
excess of Gross Revenue for such period of time over Operating Expenses for such
period of time. Lender's calculation of Underwritable Cash Flow (including
determination of items that do not qualify as Gross Revenue or Operating
Expenses) shall be final absent manifest error. Underwritable Cash Flow shall be
subject to adjustment by Lender to normalize extraordinary costs of expenses and
receipt of extraordinary Gross Revenue items.

"UNDERWRITER GROUP" shall have the meaning given to such term in SECTION 12.3.

"USPAP" shall mean Uniform Standards of Professional Appraisal Practices.

"U.S. GOVERNMENT OBLIGATIONS" shall mean any direct obligations of the United
States Government or any agency or instrumentality thereof, provided that such
obligations are backed by the full faith and credit of the United States,
including, without limitation, treasury bills, notes and bonds, and having a
maturity of not more than one (1) year.

                                 -16-

"YIELD MAINTENANCE PREMIUM" shall mean an amount equal to the greater of: (i)
one percent (1%) of the principal amount of the Loan being prepaid or (ii) the
present value as of the Prepayment Date of the Calculated Payments from the
Prepayment Date through the Maturity Date determined by discounting such
payments at the Discount Rate. As used in this definition, the term "PREPAYMENT
DATE" shall mean the date on which prepayment is made. As used in this
definition, the term "CALCULATED PAYMENTS" shall mean the monthly payments of
interest only which would be due based on the principal amount of the Loan being
prepaid on the Prepayment Date and assuming an interest rate per annum equal to
the difference (if such difference is greater than zero) between (y) the
Interest Rate and (z) the Yield Maintenance Treasury Rate, when compounded
semi-annually. As used in this definition, the term "DISCOUNT RATE" shall mean
the rate which, when compounded monthly, is equivalent to the Yield Maintenance
Treasury Rate, when compounded semi-annually. As used in this definition, the
term "YIELD MAINTENANCE TREASURY RATE" shall mean the yield calculated by Lender
by the linear interpolation of the yields, as reported in the Federal Reserve
Statistical Release H.15-Selected Interest Rates under the heading U.S.
Government Securities/Treasury Constant Maturities for the week ending prior to
the Prepayment Date, of U.S. Treasury Constant Maturities with maturity dates
(one longer or one shorter) most nearly approximating the Maturity Date. In the
event Release H.15 is no longer published, Lender shall select a comparable
publication to determine the Yield Maintenance Treasury Rate. In no event,
however, shall Lender be required to reinvest any prepayment proceeds in U.S.
Treasury obligations or otherwise.

         SECTION 1.2  Principles of Construction. All references to sections,
exhibits and schedules are to sections, exhibits and schedules in or to this
Agreement unless otherwise specified. Unless otherwise specified, the words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless otherwise specified, all meanings attributed
to defined terms herein shall be equally applicable to both the singular and
plural forms of the terms so defined.

                                   ARTICLE II.

                                    THE LOAN

         SECTION 2.1. The Loan.

               2.1.1. Agreement to Lend and Borrow. Subject to and upon the
terms and conditions set forth herein, Lender hereby agrees to make the Loan to
Borrower and Borrower hereby accepts the Loan from Lender. Borrower shall
receive only one borrowing hereunder in respect of the Loan and any amount
borrowed and repaid hereunder in respect of the Loan may not be reborrowed.

               2.1.2. The Note, the Mortgage and the Other Loan Documents. The
Loan shall be evidenced by, and payable, together with interest thereon, in
accordance with the provisions of the Note and this Agreement, shall be secured
by the Mortgages, the Assignment of Leases and the other Loan Documents and
shall be governed by this Agreement, it being

                                 -17-

understood that the Note, the Mortgages and the other Loan Documents shall be
cross-defaulted and cross-collateralized in the manner hereinafter set forth.

               2.1.3. Use of Proceeds. Borrower shall use the proceeds of the
Loan to (i) finance the Properties, (ii) fund capital improvements of the
Properties in the manner hereinafter set forth, and (iii) retain for use by
Borrower or, subject to the terms of this Agreement, distribute to its members
the balance, if any.

               2.1.4. Loan. The Loan shall be made by Lender to Borrower on the
Closing Date and shall be evidenced by the Note and secured by, inter alia, the
Mortgages.

         SECTION 2.2. Interest Rate.

               2.2.1. Interest Rate. Subject to the provisions of SECTION 2.2.2,
interest on the Principal Balance of the Note shall accrue from the date of
advance up to, but not including, the Maturity Date at the Interest Rate.

               2.2.2. Default Rate. The Principal Balance of the Loan and, to
the extent permitted by law, overdue interest in respect of the Loan, shall
accrue interest at the Default Rate from the earlier to occur of an Event of
Default and the Maturity Date to, but not including, the earlier to occur of the
date the Principal Balance of the Loan and all other amounts due and owing under
this Agreement, the Note and the other Loan Documents have been paid in full and
the date the Event of Default has been cured.

               2.2.3. Interest Calculation. Interest on the Principal Balance
shall be calculated by multiplying (a) the actual number of days elapsed in the
period for which the calculation is being made by (b) a daily rate based on a
three hundred sixty (360) day year by (c) the Principal Balance.

               2.2.4. Usury Savings. This Agreement and the other Loan Documents
are subject to the express condition that at no time shall Borrower be required
to pay interest on the Principal Balance at a rate which could subject Lender to
either civil or criminal liability as a result of being in excess of the Maximum
Legal Rate. If by the terms of this Agreement or the other Loan Documents,
Borrower is at any time required or obligated to pay interest on the Principal
Balance due hereunder at a rate in excess of the Maximum Legal Rate, the
interest rate shall be deemed immediately reduced to the Maximum Legal Rate and
all previous payments in excess of the Maximum Legal Rate shall be deemed
payments in reduction of principal and not on account of interest due hereunder.
All sums paid or agreed to be paid to Lender for the use, forbearance, or
detention of the sums due under the Loan shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full term of the Loan until payment in full so that the rate or amount of
interest on account of the Loan does not exceed the Maximum Legal Rate.

         SECTION 2.3. Loan Payments.

               2.3.1. Payment Before Maturity Date. Borrower shall make a
payment to Lender of interest only with respect to the Loan on the date hereof
for the period from the Closing Date to, but not including, June 1, 2002.
Borrower shall make a payment to Lender of

                                 -18-

an equal monthly payment in the amount of $314,971.00 on the Monthly Payment
Date occurring on July 1, 2002 and on each Monthly Payment Date thereafter to,
but not including, the Maturity Date

               2.3.2. Payment on Maturity Date. Borrower shall pay to Lender on
the Maturity Date, the Principal Balance of the Loan, all accrued and unpaid
interest and all other amounts due hereunder and under the Note, the Mortgages
and the other Loan Documents.

               2.3.3. Intentionally Omitted.

               2.3.4. Late Payment Charge. If any principal, payment of interest
and any other sums due under the Loan Documents, other than the payment of
principal due on the Maturity Date is not paid by Borrower on the date on which
it is due, Borrower shall pay to Lender upon demand an amount equal to the
lesser of three percent (3%) of such unpaid sum or the maximum amount permitted
by applicable law in order to defray the expense incurred by Lender in handling
and processing such delinquent payment and to compensate Lender for the loss of
the use of such delinquent payment. Any such amount shall be secured by the
Mortgages and the other Loan Documents.

               2.3.5. Method and Place of Payment. (a) Except as otherwise
specifically provided herein, all payments and prepayments under this Agreement
and the Note shall be made to Lender not later than 1:00 P.M. New York City
time, on the date when due and shall be made in lawful money of the United
States of America in immediately available funds at Lender's office, and any
funds received by Lender after such time shall, for all purposes hereof, be
deemed to have been paid on the next succeeding Business Day.

     (b) Whenever any payment to be made hereunder or under any other Loan
Document shall be stated to be due on a day which is not a Business Day, the due
date thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable at the Interest Rate
during such extension.

         SECTION 2.4. Prepayments.

               2.4.1. Voluntary Prepayments. The Debt may not be prepaid, either
in whole or in part, at any time during the period of this Agreement

               2.4.2. Mandatory Prepayments. On each date on which Borrower
actually receives a distribution of the Net Proceeds or Net Restoration Award in
respect of any Property, if Lender does not make such proceeds or award
available to Borrower for the restoration of such Property in accordance with
the provisions of ARTICLE VI, Borrower shall prepay the outstanding principal
balance of the Note pertaining to such Property (based on the Allocated Loan
Amount therefore) in an amount equal to one hundred percent (100%) of such Net
Proceeds or Net Restoration Award together with interest that would have accrued
on such amount through, but not including, the next Monthly Payment Date. No
Yield Maintenance Premium shall be due in connection with any prepayment made
pursuant to this SECTION 2.4.2

               2.4.3. Prepayments After Default. If after the occurrence and
continuance of an Event of Default, payment of all or any part of the principal
of the Loan is

                                 -19-

tendered by Borrower, a purchaser at foreclosure or any other Person, such
tender shall be deemed an attempt to circumvent the prohibition against
prepayment set forth in SECTION 2.4.1 and Borrower, such purchaser at
foreclosure or other Person shall pay the Yield Maintenance Premium, in addition
to the outstanding principal balance of the Loan, all accrued and unpaid
interest and other amounts payable under the Loan Documents. The full amount of
any such prepayment shall be applied by Lender toward the payment of interest
and/or principal of the Loan and/or any other amounts due under the Loan
Documents in such order, priority and proportions as Lender in its sole
discretion shall deem proper.

         SECTION 2.5. Defeasance.

               2.5.1. Conditions to Defeasance. (a) Provided no Event of Default
shall have occurred and remain uncured, Borrower shall have the right at any
time after the Release Date to voluntarily defease the entire Loan or a portion
thereof (subject to the limitations set forth in SECTION 13.1 and herein) and
obtain a release of the lien of the Mortgages (or in the case of a partial
Defeasance, the Mortgage encumbering such released Property) by providing Lender
with the Defeasance Collateral (hereinafter, a "DEFEASANCE EVENT"), subject to
the satisfaction of the following conditions precedent:

                    (i) Borrower shall provide Lender not less than thirty (30)
               days notice (or such shorter period of time if permitted by
               Lender in its sole discretion) specifying a date (the "DEFEASANCE
               DATE") on which the Defeasance Event is to occur;

                    (ii) Borrower shall pay to Lender (A) all payments of
               principal and interest due on the Loan to and including the
               Defeasance Date, and (B) all other sums, then due under the Note,
               this Agreement, the Mortgages and the other Loan Documents;

                    (iii) Borrower shall deposit the Defeasance Collateral into
               the Defeasance Collateral Account and otherwise comply with the
               provisions of SECTIONS 2.5.2 and 2.5.3 hereof;

                    (iv) Borrower shall execute and deliver to Lender a Security
               Agreement in respect of the Defeasance Collateral Account and the
               Defeasance Collateral;

                    (v) Borrower shall deliver to Lender an opinion of counsel
               for Borrower that is standard in commercial lending transactions
               and subject only to customary qualifications, assumptions and
               exceptions opining, among other things, that (A) Lender has a
               legal and valid perfected first priority security interest in the
               Defeasance Collateral Account and the Defeasance Collateral, (B)
               if a Securitization has occurred, the REMIC Trust formed pursuant
               to such Securitization will not fail to maintain its status as a
               "real estate mortgage investment conduit" within the meaning of
               Section 860D of the Code as a result of a Defeasance Event
               pursuant to this SECTION 2.5, (C) the Defeasance Event

                                 -20-

               will not result in a deemed exchange for purposes of the Code and
               will not adversely affect the status of the Note as indebtedness
               for federal income tax purposes, (D) delivery of the Defeasance
               Collateral and the grant of a security interest therein to Lender
               shall not constitute an avoidable preference under Section 547 of
               the Bankruptcy Code or applicable state law and (E) a
               non-consolidation opinion with respect to the Successor Borrower;

                    (vi) Borrower shall deliver to Lender a Rating Confirmation
               as to the Defeasance Event;

                    (vii) Borrower shall deliver an Officer's Certificate
               certifying that the requirements set forth in this Section 2.5
               have been satisfied;

                    (viii) Borrower shall deliver a certificate of a "Big Five"
               accounting firm ("Approved Accounting Firm") certifying that the
               Defeasance Collateral will generate monthly amounts equal to or
               greater than the Scheduled Defeasance Payments;

                    (ix) Borrower shall deliver such other certificates,
               opinions, documents and instruments as Lender may reasonably
               request; and

                    (x) Borrower shall pay all out-of-pocket reasonable costs
               and expenses of Lender incurred in connection with the Defeasance
               Event, including Lender's reasonable attorneys' fees and expenses
               and Rating Agency fees and expenses.

     (b) If Borrower has elected to defease the Note, either in full or in part
as provided herein, and the requirements of this SECTION 2.5 have been
satisfied, the applicable Properties shall be released from the lien of the
Mortgages and, in the case of a full Defeasance Event, the Defeasance Collateral
pledged pursuant to the Security Agreement shall be the sole source of
collateral securing the Note. In connection with the release of such liens,
Borrower shall submit to Lender, not less than thirty (30) days prior to the
Defeasance Date (or such shorter time as is acceptable to Lender in its sole
discretion), a release of such lien(s) (and related Loan Documents) for
execution by Lender. Such release shall be in a form appropriate in the
jurisdiction in which the Properties encumbered thereby are located and that
contains standard provisions protecting the rights of the releasing lender. In
addition, Borrower shall provide all other documentation Lender reasonably
requires to be delivered by Borrower in connection with such release, together
with an Officer's Certificate certifying that such documentation (i) is in
compliance with all Legal Requirements, and (ii) will effect such release in
accordance with the terms of this Agreement. Borrower shall pay all costs, taxes
and expenses associated with the release of the lien of the Mortgages, including
Lender's reasonable attorneys' fees. Except as set forth in this Section 2.5, no
repayment, prepayment or defeasance of all or any portion of the Note shall
cause, give rise to a right to require, or otherwise result in, the release of
the lien of the Mortgage on the Property.

                                 -21-

               2.5.2. Defeasance Collateral Account. On or before the date on
which Borrower delivers the Defeasance Collateral, Borrower shall open at any
Eligible Institution the defeasance collateral account (the "DEFEASANCE
COLLATERAL ACCOUNT") which shall at all times be an Eligible Account. The
Defeasance Collateral Account shall contain only (i) Defeasance Collateral, and
(ii) cash from interest and principal paid on the Defeasance Collateral. All
cash from interest and principal payments paid on the Defeasance Collateral
shall be paid over to Lender on each Monthly Payment Date and applied first to
accrued and unpaid interest and then to principal. Any cash from interest and
principal paid on the Defeasance Collateral not needed to pay the Scheduled
Defeasance Payments shall be paid to Borrower monthly after Borrower causes the
Scheduled Defeasance Payments to be made to Lender. Borrower shall cause the
Eligible Institution at which the Defeasance Collateral is deposited to enter an
agreement with Borrower and Lender, satisfactory to Lender in its sole
discretion, pursuant to which such Eligible Institution shall agree to hold and
distribute the Defeasance Collateral in accordance with this Agreement. The
Borrower or Successor Borrower, as applicable, shall be the owner of the
Defeasance Collateral Account and shall report all income accrued on Defeasance
Collateral for federal, state and local income tax purposes in its income tax
return. Borrower shall prepay all cost and expenses associated with opening and
maintaining the Defeasance Collateral Account. Lender shall not in any way be
liable by reason of any insufficiency in the Defeasance Collateral Account.

               2.5.3. Successor Borrower. In connection with a Defeasance Event
under this Section 2.5, Borrower shall, if required by the Rating Agencies or if
Borrower elects to do so, establish or designate a successor entity (the
"SUCCESSOR BORROWER") which shall be a single purpose bankruptcy remote entity
and which shall be approved by the Rating Agencies. Any such Successor Borrower
may, at Borrower's option, be an Affiliate of Borrower unless the Rating
Agencies shall require otherwise. Borrower shall transfer and assign all
obligations, rights and duties under and to the Note, together with the
Defeasance Collateral to such Successor Borrower; provided, however, fee title
to the Property shall not be transferred to such Successor Borrower. Such
Successor Borrower shall assume the obligations under the Note and the Security
Agreement and Borrower shall be relieved of its obligations under such
documents. Borrower shall pay a minimum of $1,000 to any such Successor Borrower
as consideration for assuming the obligations under the Note and the Security
Agreement. Borrower shall pay all costs and expenses incurred by Lender,
including Lender's reasonable out-of-pocket attorney's fees and expenses,
incurred in connection therewith.

         SECTION 2.6. Fees.

               2.6.1. Intentionally Omitted.

               2.6.2. Origination Fee. Borrower shall pay to Lender on the
Closing Date a fee (the "ORIGINATION FEE") in an amount equal to 1% multiplied
by the Principal Balance of the Loan less the "EXPOSURE FEE" previously paid by
Borrower to Lender. The Origination Fee shall constitute part of the Debt and
the obligation of Borrower to pay the Origination Fee pursuant to this Section
shall be secured by the Mortgages and the other Loan Documents.

                                 -22-

                                  ARTICLE III.

                              INTENTIONALLY OMITTED

                                  ARTICLE IV.

                         REPRESENTATIONS AND WARRANTIES

         SECTION 4.1. Borrower Representations. Borrower hereby represents and
warrants as follows:

               4.1.1. Existence; Organization and Authority. Borrower is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of its organization with full power and authority to
own its assets and conduct its business, is duly qualified in all jurisdictions
in which the ownership or lease of its property or the conduct of its business
requires such qualification, except where the failure to be so qualified would
not have a material adverse effect on its ability to perform its obligations
hereunder, and Borrower has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and the other Loan
Documents by it, and has the power and authority to execute, deliver and perform
under this Agreement, the other Loan Documents and all the transactions
contemplated thereby.

               4.1.2. Ownership. As of the date of this Agreement, the sole
member of (i) Borrower is ARC MEZZ and (ii) ARC MEZZ is ARC. ARC IV, ARC LLC and
GMAC are the sole members of ARC and ARC IV is the sole managing member of ARC.
As of the date of this Agreement, Scott D. Jackson is the manager of Borrower.
ARC REIT has a one hundred (100%) percent general partnership interest in ARC
IV. Mary S. Stawikey is, as of the date of this Agreement, the Independent
Manager of Borrower and Kari L. Johnson as of the date of this Agreement, the
Independent Manager of ARC MEZZ. ARC Management Services, Inc., a Delaware
corporation, serves as the Property Manager of the Properties pursuant to the
Management Agreement.

               4.1.3. Single Purpose Entity. Each of Borrower and ARC MEZZ is a
Single Purpose entity. The sole business of Borrower is the ownership,
management and operation of the Properties and the sole business of ARC MEZZ is
its 100% membership interest in Borrower.

               4.1.4. No Conflicts. The execution, delivery and performance by
Borrower of this Agreement and the other Loan Documents, will not (i) violate
(A) any provision of any law, rule, regulation, order, writ, judgment, decree,
determination or award having applicability to Borrower or any of the
organizational documents of Borrower, or (B) any indenture, agreement or other
instrument to which Borrower is a party, or by which Borrower or its properties
or assets is bound, or (ii) be in conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or (iii) result in or require (except
as specifically contemplated by this Agreement)

                                 -23-

the creation or imposition of any lien of any nature upon any of the assets or
property of Borrower.

               4.1.5. Enforceability. This Agreement has been duly executed and
constitutes, and (when executed and delivered by Borrower) each other Loan
Document now or hereafter executed and delivered by Borrower pursuant hereto or
thereto or in connection herewith, or therewith, will each constitute the legal,
valid and binding obligation of Borrower enforceable against Borrower in
accordance with their terms, except as enforcement may be limited by equitable
principles of law, bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors' rights generally.

               4.1.6. No Consents. No consent, approval, authorization, license
or formal exemption from, nor any filing, declaration or registration with, any
Person or Governmental Authority is required by Borrower for the execution,
delivery and performance by Borrower or compliance by Borrower with, this
Agreement or the other Loan Documents or the consummation of the transaction
contemplated hereby, other than those already obtained or completed by Borrower.

               4.1.7. Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of Borrower, threatened against Borrower or any of
its properties or assets by or before any court or any Governmental Authority
which would materially and adversely affect the ability of Borrower to perform
its obligations hereunder or to consummate the transaction contemplated hereby.

               4.1.8. Tax Returns. Borrower has filed, or caused to be filed, or
sought valid extensions for filing, all returns (federal, state, local and
foreign) required to be filed and paid all amounts of taxes shown thereon to be
due (including interest and penalties) and has paid all other taxes, material
fees, assessments and other material governmental charges owing by it, except
such taxes which are not delinquent. No tax liens other than tax liens affecting
individual manufactured homes located on the Property and not affecting the
Property have been filed against Borrower or against its assets and property.

               4.1.9. No Defaults. Borrower is not in default beyond any
applicable grace or cure period under any contract, lease, agreement or other
instrument or under any order, judgment, award or decree of any court arbitrator
or other Governmental Authority binding upon or affecting it or by which it or
its property or assets may be bound. No Event of Default has occurred and is
continuing and no event has occurred which but for notice, lapse of time, or
both, would constitute an Event of Default.

               4.1.10. No Misrepresentations. Neither this Agreement, nor any
other Loan Document nor any document, financial statement, report, notice,
schedule, certificate, statement or other writing furnished by Borrower in
connection with the Loan or otherwise in connection with the transactions
contemplated hereby, contains any untrue or misleading statement of, or omission
of, any material fact.

               4.1.11. Financial Information. All financial data, including,
without limitation, the financial statements of Borrower and statements of cash
flow and income and

                                 -24-

operating expense with respect to each Property, that have been delivered to
Lender, (i) are true, complete and correct in all material respects, and
accurately represent the financial condition of Borrower and the Properties in
all material respects as of the date of such statements, and (iii) have been
prepared in accordance with GAAP through the periods covered. Since the date of
such statements, there has not occurred any material adverse change in the
business, assets, operations, property or financial or other condition of
Borrower or in the operations of any Property which has not been disclosed to
the Lender.

               4.1.12. Use of Proceeds; Margin Stock. Borrower does not own
"margin stock". None of the proceeds of the Loan will be used for the purpose of
purchasing or carrying an "margin stock" as defined in Regulation U, Regulation
X, Regulation G or Regulation T or for the purpose of reducing or retiring any
indebtedness which might constitute this transaction a "purpose credit" within
the meaning of Regulation U, Regulation X or Regulation G.

               4.1.13. ERISA. Borrower is not an "employee benefit plan" as
defined in Section 3(3) of ERISA, or a "governmental plan" as defined in Section
3(32) of ERISA, or a "plan" as defined in Section 4975(e)(1) of the Internal
Revenue Code and none of the assets of Borrower constitute "plan assets" as
defined in 29 C.F.R. Section 2510.3-101.

               4.1.14. Government Regulation. Borrower is not subject to
regulation under the Public Utility Holding Company Act of 1935 or the Federal
Power Act, each as amended. Borrower is not (i) an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended and is not controlled by such a company, or (ii) a "holding
company", or a "subsidiary company" of a "holding company" or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
Borrower is not an investment company within the meaning of the Investment
Company Act of 1940.

               4.1.15. Foreign Person. Borrower is not a "foreign person" within
the meaning of Section 1445 or 7701 of the Internal Revenue Code.

               4.1.16. Trade Name; Place of Business. Other than with respect to
the operation of individual Properties, Borrower does not use a trade name and
Borrower has not conducted and does not presently conduct business under any
name other than its actual name set forth herein. The principal place of
business of Borrower is as stated in the recitals hereto. The trade names under
which Borrower is currently operating any of the Properties are set forth in
SCHEDULE 4.1.16.

               4.1.17. Solvency; No Intent to Defraud. Borrower is in a solvent
condition. As used herein, "solvent" means that the present fair saleable value
of Borrower's assets is in excess of the total amount of its liabilities
(including contingent liabilities); Borrower is able to pay its debts as they
become due; and Borrower does not have unreasonably small capital to carry on
such Person's business as theretofore operated and all businesses in which such
Person is about to engage. Borrower has not entered into the Loan Documents or
the transactions contemplated thereby with the actual intent to hinder, delay or
defraud any creditor.

                                 -25-

               4.1.18. Liens. When duly recorded or filed in the appropriate
public records, the Mortgages and the Financing Statements shall each create in
the Lender (i) valid, first priority, perfected liens upon the applicable
Property and (ii) perfected security interests in and to, and perfected
collateral assignments of, all personalty (including the Leases and Rents), all
in accordance with the terms thereof, in such case subject only to the Permitted
Title Exceptions. To the best of Borrower's knowledge, there are no mechanic's,
materialman's or other similar liens or claims which have been filed for work,
labor or materials affecting any Property which are or may be liens prior to, or
equal or coordinate with, the lien of the related Mortgage, unless such lien is
insured against under the related title insurance policy.

               4.1.19. Assignment of Leases. Each Assignment of Leases and Rents
creates a valid assignment of, or a valid security interest in, the Rents and
certain rights under the related Leases, subject only to a license granted to
Borrower to exercise certain rights and to perform certain obligations of the
lessor under the Leases, including the right to operate the Property unless and
until an Event of Default shall have occurred. No Person other than Borrower and
Lender has any interest in or assignment of the Leases or any portion of the
Rents due and payable or to become due and payable thereunder.

               4.1.20. Title. Borrower has good, marketable and insurable title
in fee simple to the Properties free and clear of all liens and monetary
encumbrances of any nature whatsoever except for the Permitted Title Exceptions.

               4.1.21. Compliance; Licenses and Violations. The Properties and
their use comply in all material respects with all applicable zoning
resolutions, building codes, fire safety, environmental, subdivision and other
applicable laws, rules and regulations including, without limitation, the
Americans with Disabilities Act or are grandfathered under prior regulations.
All permits and approvals, including, without limitation, certificates of
occupancy required by any Governmental Authority for the use, occupancy and
operation of each of the Properties in the manner in which such Property is
currently being used, occupied and operated have been obtained and are in full
force and effect other than such immaterial permits and approvals for which the
failure to obtain will not have a material adverse effect on the Property or the
operation thereof. Except as otherwise set forth in SCHEDULE 4.1.21, Borrower
has no knowledge of any notices of violation of Federal law or municipal
ordinances or orders or requirements of the States in which the Properties are
located or any municipal department or other governmental authority having
jurisdiction over any of the Properties.

               4.1.22. No Damage; No Condemnation. No portion of any Property
nor any improvements located on any Property which are material to the
operation, use or value of a Property, are damaged or injured in any material
respect as a result of any fire, explosion, accident, flood or other casualty.
Except as otherwise set forth in SCHEDULE 4.1.22, no condemnation or eminent
domain proceeding has been commenced or to the knowledge of Borrower is
threatened against any Property.

               4.1.23. Leases. Except as may be required by applicable law, or
in circumstances where Leases were in existence at the time Borrower acquired a
particular Property, all Leases at the Properties are in substantially the
standard form submitted to Lender for approval, with such customary market
charges as shall not materially affect the rights of

                                 -26-

landlord thereunder or are otherwise on substantially similar terms. The Leases
identified on the Rent Roll submitted to Lender are in full force and effect and
except as noted therein, to the best of Borrower's knowledge, there are no
defaults thereunder by either party. Except as otherwise set forth in the Rent
Roll submitted to Lender, no Rent (excluding security deposits) has been paid
more than one (1) month in advance of its due date.

               4.1.24. No Material Agreements. Other than the Leases, the
Permitted Title Exceptions, the Management Agreement, service and supply
contracts cancellable on not more than thirty (30) days' notice and arm's-length
third party contracts for cable service, laundry services, trash contracts and
sewer facilities not cancellable on thirty (30) days or less notice and which do
not in the aggregate provide for annual payments by Borrower in excess of
$25,000, there are no other agreements affecting the Properties.

               4.1.25. Flood Zone. Except as disclosed on the surveys of the
Properties delivered to and approved by Lender, none of the Properties are
located in an area identified by the Federal Emergency Management Agency as a
special flood hazard area.

               4.1.26. Utilities and Public Access. Each of the Properties has
rights of access to public ways and is served by water, sewer, sanitary sewer
and storm drainage adequate to service such Property for its intended uses.

               4.1.27. Separate Lots. Each Property is comprised of one (1) or
more parcels which constitutes a separate tax lot and does not constitute a
portion of any other tax lot not a part of such Property.

               4.1.28. Assessments. Except as disclosed in writing to Lender, to
the best of Borrower's knowledge, there are no pending or proposed special or
other assessments for public improvements or otherwise affecting any of the
Properties.

               4.1.29. Intentionally Omitted.

               4.1.30. Boundaries. Except as shown on the surveys of the
Properties, all of the improvements which were included in determining the
appraised value of each Property lie wholly within the boundaries and building
restriction lines of such Property, and no improvements on adjoining properties
encroach upon such Property, and no easements or other encumbrances affecting
such Property encroach upon any of the improvements, so as to affect the value
or marketability of the applicable Property except those which are insured
against by title insurance.

               4.1.31. Insurance. Borrower maintains with financially sound and
reputable insurance companies, with premiums at all times currently paid,
property and casualty insurance upon fixed assets and inventories, public
liability insurance, fidelity bond coverage, business interruption insurance,
and all insurance required by law, all in form and amounts required by law and
customary to the nature of its businesses and properties, and including, without
limitation, the Insurance Policies required pursuant to SECTION 6.1. Borrower
has not received notice from any insurance company or bonding company of any
defect or inadequacy in any Property, or any portion thereof, which would
adversely affect its insurability or cause the

                                 -27-

imposition of extraordinary premiums or charges thereon or any termination of
any policy of insurance or bond.

               4.1.32. Transfer Taxes; Mortgage Taxes; Real Property Taxes. All
transfer taxes, deed stamps, intangible taxes or other amounts in the nature of
transfer taxes required to be paid under applicable legal requirements in
connection with the transfer of the Properties to Borrower have been paid. All
mortgage, mortgage recording, stamp, intangible or other similar tax required to
be paid under applicable Legal Requirements in connection with the execution,
delivery, recordation, filing, registration, perfection or enforcement of any of
the Loan Documents, including, without limitation, the Mortgages, have been
paid. All taxes and governmental assessments due and owing in respect of each
Property have been paid, or an escrow of funds in an amount sufficient to cover
such payments has been established hereunder or are insured against by the title
insurance policy issued in connection with the Mortgages.

               4.1.33. Usury. No aspect of any of the transactions contemplated
herein violates or will violate any usury laws or laws regarding the validity of
agreements to pay interest in effect on the date hereof.

               4.1.34. Intentionally Omitted.

               4.1.35. Non-Consolidation Opinion Assumptions. All of the
assumptions made in any Non-Consolidation Opinion, including, but not limited
to, any exhibits attached thereto, are true and correct.

         SECTION 4.2. Survival of Representations. The representations and
warranties of Borrower under this Section shall be deemed to be continuing
representations and warranties which may at all times during the term of the
Loan be relied upon by Lender unless Lender shall have been informed by Borrower
of any change in fact or circumstance which would affect the continuing accuracy
of the representations and warranties set forth in this paragraph. Borrower
shall promptly inform Lender (but in no event later than five (5) Business Days
after Borrower shall have knowledge thereof) of the occurrence of any fact,
circumstance or event which would materially change or materially affect in any
way the continuing accuracy of the representations and warranties set forth in
this Section or which would render any such representation or warranty
inaccurate or false in any material respect.

                                   ARTICLE V.

                               BORROWER COVENANTS

         SECTION 5.1. Affirmative Covenants. Borrower hereby covenants and
agrees that so long as this Agreement is in effect to and until the Debt has
been paid in full, Borrower shall observe and perform the following:

               5.1.1. Payment of Debt, Observance and Performance. Borrower
shall pay the Debt in accordance with the provisions of this Agreement, the Note
and the other Loan Documents and shall observe and perform all of the terms,
covenants and provisions contained in the Loan Documents.

                                 -28-

               5.1.2. Preservation of Existence and Franchises. Borrower shall
do or cause to be done all things commercially reasonably required to preserve,
renew and keep in full force and effect and in good standing, its existence,
foreign qualifications, rights, licenses, permits and franchises.

               5.1.3. Legal Requirements. Borrower shall comply in all material
respects with all existing and future governmental laws, orders, ordinances,
rules and regulations applicable to it and/or its Properties or the use thereof.
Notwithstanding the foregoing, in the case of any material item, Borrower, at
its own expense, may contest by appropriate legal proceeding, promptly initiated
and conducted in good faith and with due diligence, validity or application in
whole or in part of any such legal requirements, provided that (i) Borrower
shall have given prior notice of such contest to Lender, no default shall have
occurred and shall be continuing under the Note, the Mortgage, this Agreement or
any of the other Loan Documents, (ii) such proceeding shall suspend application
of such legal requirements to Borrower and the Properties, (iii) such proceeding
shall be permitted under and be conducted in accordance with the provisions of
any other instrument to which Borrower or the Properties are subject and shall
not constitute a default thereunder, (iv) neither the Properties nor any part
thereof nor any interest therein will in the opinion of Lender be in danger of
being sold, forfeited, terminated, canceled or lost, and (v) Borrower shall, if
required by Lender, have delivered to Lender in escrow all sums necessary for
the compliance by Borrower or the Properties with such legal requirements,
together with all interest and penalties that may be required to be paid in
connection therewith.

               5.1.4. Property Agreements. Borrower shall comply in all material
respects with the requirements of, shall maintain, preserve, enforce and renew
all reciprocal easements and operating agreements, rights of way, easements,
grants, privileges, leases, licenses and restrictive covenants which from time
to time affect or pertain to and benefit the whole or any portion of a Property.

               5.1.5. Leases. Borrower shall enforce the material obligations of
the tenants under the Leases and observe and perform the material terms,
covenants and provisions of the Leases on Borrower's part to be observed and
performed. All new Leases for the Properties shall be in substantially the state
specific standard form of Lease approved by Lender with such changes as shall
not materially affect the rights of landlord thereunder except as may be
required by applicable law or in circumstances where Leases were, or are, in
existence at the time Borrower acquires a particular Property.

               5.1.6. Taxes. Borrower shall pay, or cause to be paid, the Taxes
prior to the date upon which any fine, penalty, interest or cost may be added
thereto or imposed by law for non-payment thereof. Borrower shall deliver to
Lender, upon request, receipted bills, canceled checks, and other evidence
satisfactory to Lender (which may include third party reports similar to those
attached as EXHIBIT Z and acceptable to Lender, which forms may be modified from
time to time with the prior reasonable approval of Lender) evidencing the
payment of the Taxes prior to the date upon which any fine, penalty, interest or
cost may be added thereto or imposed by law for the non-payment thereof.
Notwithstanding the foregoing, in the case of any material item, Borrower, at
its own expense, may contest by appropriate legal proceeding, promptly initiated
and conducted in good faith and with due diligence, the amount or

                                 -29-

validity or application in whole or in part of any of the Taxes, provided that
(i) Borrower shall have given prior notice of such contest to Lender, (ii) no
default shall have occurred and shall be continuing under the Note, the
Mortgages, this Agreement or any of the other Loan Documents, (iii) to the
extent Borrower shall not have paid in full the contested taxes, such proceeding
shall suspend the collection of the contested Taxes from Borrower and from the
Properties, (iv) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrowers, or
the Properties, are subject and shall not constitute a default thereunder, (v)
neither the Properties nor any part thereof nor any interest therein will in the
opinion of Lender be in danger of being sold, forfeited, terminated, canceled or
lost, and (vi) to the extent the contested taxes have not been paid in full,
Borrower shall have delivered to Lender in escrow all sums necessary for the
full payment of the contested Taxes, together with all interest and penalties
thereon.

               5.1.7. Maintenance of Properties. Borrower shall keep the
Properties in good repair, working order and condition, and from time to time
make, or cause to be made in a prompt manner, all repairs, renewals and
replacements thereto, so that the business carried on in connection therewith
may be properly conducted at all times. Borrower shall, to the extent necessary
so that the business carried on at the Property may be properly conducted at all
times, promptly repair, replace or rebuild any part of a Property which may be
damaged or destroyed by fire or other property hazard or casualty (including any
fire or other property hazard or casualty for which insurance was not obtained
or obtainable) or which may be affected by any taking by any public or
quasi-public authority through eminent domain or otherwise, and complete and pay
for, within a reasonable time, any portion of any Property which is at any time
in the process of renovation or repair.

               5.1.8. Books and Records; Financial Statements. Borrower will
keep and maintain or will cause to be kept and maintained on a fiscal year basis
in accordance with GAAP consistently applied proper and accurate books, records
and accounts reflecting all of the financial affairs of Borrower, and all items
of income and expense in connection with the operation of the Properties or in
connection with any services, equipment or furnishings provided in connection
with the operation of the Properties, whether such income or expense be realized
by Borrower or any other Person in connection with the Properties excepting
lessees unrelated to and unaffiliated with Borrower who have leased from
Borrower portions of any Properties for the purpose of occupying the same.
Lender and its respective employees and agents shall have the right upon
reasonable notice from time to time at all times during normal business hours to
examine such books, records and accounts at the offices of Borrower or other
Person maintaining such books, records and accounts and to make copies or
extracts thereof as Lender, or its employees or agents shall desire. Lender
shall also have the right upon reasonable notice and during normal business
hours to conduct an audit of the books and records of Borrower, which audit may
be performed by an independent certified public accountant selected and retained
by Lender. If such audit is conducted by Lender subsequent to the occurrence of
a default under any of the Loan Documents or if the results of such audit
discloses a material discrepancy from the information previously provided by
Borrower irrespective of whether or not such audit was conducted subsequent to
the occurrence of a default under the Loan Documents, then the cost of such
audit shall be borne by Borrower, shall be paid by the Borrower within ten (10)
days after demand by Lender and shall constitute part of the Debt. The
obligation of Borrower to pay the aforementioned audit costs pursuant to this
paragraph shall be secured by the Mortgages and the

                                 -30-

other Loan Documents. Except as otherwise set forth in this paragraph, the cost
of any audit conducted hereunder shall be paid by Lender. Borrower shall furnish
or cause to be furnished to Lender each of the following:

                    (i) annually, within ninety (90) days next following the end
               of each calendar year during the term of the Loan, audited
               financial statements of Borrower prepared by an Approved
               Accounting Firm for the immediately preceding year, which
               financial statements shall be in form satisfactory to Lender and
               shall include an income statement, balance sheet, cash flow
               statement and statement of member's equity and shall otherwise be
               in form and substance satisfactory to Lender. Any audit
               requirements of the Borrower pursuant to this SECTION 5.1.8.(i),
               may also be satisfied by delivery of audited consolidated
               financial statements of ARC provided that such financial
               statements of ARC are in form satisfactory to Lender and contains
               a separate (i) detailed schedule that includes an income and
               expense statement of Borrower and (ii) a balance sheet of
               Borrower and a statement of Borrower's equity, each of which may
               be unaudited;

                    (ii) annually, within ninety (90) days next following the
               end of each calendar year during the term of the Loan, an
               unaudited annual consolidated operating statement of the
               Properties for the immediately preceding calendar year, which
               operating statement shall be in the form of EXHIBIT M attached
               hereto and shall be presented in a manner consistent with GAAP
               for all Properties and shall be reconciled to the audited
               financial statement of Borrower delivered in accordance with
               SECTION 5.1.8(i) above and shall otherwise be in form and
               substance satisfactory to Lender;

                    (iii) annually, within fifteen (15) days following the end
               of each calendar year during the term of the Loan, individual and
               consolidated operating and capital expenditure budgets for the
               then calendar year covering each of the Properties (the operating
               budget shall be in the form of EXHIBIT N attached hereto; the
               capital budget shall be in form satisfactory to Lender);
               provided, however, Borrower shall use commercially reasonable
               efforts to submit preliminary budgets prior to the end of each
               calendar year;

                    (iv) monthly, within thirty (30) days following the end of
               each preceding calendar month during the term of the Loan,
               monthly individual and consolidated operating statements covering
               each of the Properties, which statements shall be in the form of
               EXHIBIT O attached hereto, shall be compared on a quarterly basis
               to the then current annual individual and consolidated operating
               budgets for the Properties showing the actual performance of each
               of the Properties and shall be presented in a manner consistent
               with GAAP for such prior calendar month;

                                 -31-

                    (v) quarterly, within sixty (60) days following the end of
               each calendar quarter during the term of the Loan, quarterly
               unaudited individual and consolidated operating statements
               covering each of the Properties, which statements shall be in the
               form of EXHIBIT P attached hereto, shall be compared on a
               quarterly basis to the then current annual individual and
               consolidated operating budgets for the Properties and showing the
               actual performance of each of the Properties and shall be
               presented in a manner consistent with GAAP of all of the
               Properties for such prior calendar quarter;

                    (vi) quarterly, within sixty (60) days following the end of
               each calendar quarter during the term of the Loan, a certified
               rent roll for each of the Properties, signed and dated by
               Borrower (which shall be in the form attached as EXHIBIT AA or
               otherwise reasonably acceptable to Lender);

                    (vii) promptly after it has been sent to investors of ARC, a
               copy of the investor report, if any, covering the operation of
               ARC;

                    (viii) quarterly, within sixty (60) days following the end
               of each calendar quarter during the term of the Loan, an income
               statement and balance sheet with respect to ARC IV which
               statement shall be in the form of EXHIBIT S attached hereto;

                    (ix) annually, within ninety (90) days next following the
               end of each calendar year during the term of the Loan, audited
               financial statement of ARC IV prepared by an Approved Accounting
               Firm for the immediately preceding year, which financial
               statements shall be in form reasonably satisfactory to Lender and
               shall include an income statement and balance sheet and shall
               otherwise be in form and substance reasonably satisfactory to
               Lender; and

                    (x) Such other information with respect to Borrower, ARC,
               ARC LLC and ARC IV, the properties and the properties and assets
               owned by Borrower, ARC, ARC LLC and ARC IV and the respective
               subsidiaries and Affiliates of Borrower, ARC, ARC LLC and ARC IV
               as may be reasonably requested by Lender.

All audited financial statements required to be prepared pursuant to the
provisions of this Section shall be prepared and certified by an Approved
Accounting Firm, shall be prepared in accordance with GAAP, and shall be in form
and substance satisfactory to Lender. All unaudited financial statements and
operating statements delivered to Lender pursuant to the provisions of this
paragraph shall be certified to be true and correct in all material respects by
an authorized officer of the managing member of Borrower. Borrower may, and
shall at Lender's request, provide the foregoing annual, quarterly and monthly
reports by electronic media in such format as may be reasonably requested by
Lender.

                                 -32-

               5.1.9. Compliance Certificate. Borrower shall furnish to Lender
within sixty (60) days next following the end of each calendar quarter during
the term of the Loan, a certificate signed by an authorized officer of the
managing member of Borrower certifying on the date thereof either that there
does or does not exist an event which constitutes, or which upon notice or lapse
of time or both would constitute, a default or an Event of Default under any of
the Loan Documents, and if such default or Event of Default exists, the nature
thereof and the period of time it has existed.

               5.1.10. Notifications. Borrower shall give Lender prompt written
notice of (i) the occurrence and nature of any Event of Default; (ii) the
occurrence and nature of any event which has resulted in, or which Borrower
believes will result in, a materially adverse change in any Property or in the
condition or operations of any Property or in the financial condition or
operations of Borrower; (iii) any litigation or governmental proceedings pending
or threatened against Borrower which if adversely determined, could be
reasonably expected to materially adversely affect Borrower's condition
(financial or otherwise) or business of any Property; or (iv) any matter (other
than those specified above as to which Lender has received due notice) which has
resulted in, or which Borrower reasonably believes will result in, a materially
adverse change in any Property or in the condition or operations of any Property
or in the financial condition or operations of Borrower.

               5.1.11. Single Purpose. Borrower shall cause to be observed and
performed in all material respects each and every term, covenant and provision
contained in Borrower's organizational documents and in the Loan Documents
relating to Borrower's (and its managing member(s)' or general partner(s)', as
applicable) Single-Purpose nature. ARC MEZZ shall at all times observe and
perform in all material respects each and every term, covenant and provision
contained in its organizational documents and in the Loan Documents relating to
its Single-Purpose nature.

               5.1.12. Ownership of Borrower; Management. Except as expressly
permitted under SECTION 5.2.2, at all times during the Loan (i) ARC will own,
through ARC MEZZ, on an unencumbered basis, 100% of all membership or ownership
interests in Borrower, (ii) ARC will own, on an unencumbered basis, 100% of all
membership or ownership interests in ARC MEZZ, (iii) ARC IV will own, on an
unencumbered basis (a) 1% of the "Class B" membership interests in ARC and shall
be the sole managing member of ARC and (b) 100% of all membership or ownership
interests in ARC LLC, (iv) ARC LLC will own, on an unencumbered basis, 99% of
the "Class B" membership interests in ARC, (v) GMAC or a Qualified Transferee
will own, on an unencumbered basis, 100% of the "Class A" membership interests
in ARC and (v) ARC REIT will own directly, on an unencumbered basis, not less
than 100% of the general partnership interests in ARC IV.

               5.1.13. Intentionally Omitted.

               5.1.14. Transaction Costs. Borrower shall pay (or the same shall
be paid contemporaneously with the closing) all fees, commissions, costs,
charges, taxes and other expenses incurred by Lender in connection with the
preparation, execution and delivery of this Agreement and the other Loan
Documents and in connection with the Loan, including but not limited to
reasonable fees of Lender's counsel, appraisal fees, fees and expenses incurred
in

                                 -33-

accounting review, fees and charges for surveys, examination of title to the
Property and mortgage title insurance thereon, hazard insurance, mortgage taxes,
transfer taxes and all recording fees and charges.

               5.1.15. Servicer Fees. Borrower shall pay all fees, costs and
expenses incurred by Lender in connection with the servicing of the Loan by the
Servicer which shall in no event exceed four hundredths of one percent (0.04%),
per annum, of the Principal Balance of the Loan.

               5.1.16. Fees and Expenses. Borrower shall pay all fees, cost,
charges and other expenses incurred by Lender in connection with the enforcement
of this Agreement and the other Loan Documents and in connection with the
collection of the Debt, including, without limitation, reasonable attorneys'
fees, appraisal fees, environmental engineer and consultant fees, fees and
expenses incurred in accounting review and fees and expenses relating to
examination of title, title insurance premiums, surveys, hazard insurance and
mortgage recording, documentary, intangible, transfer or other similar taxes,
revenue stamps and all recording fees and charges. Notwithstanding the
foregoing, Borrower shall not be responsible for Lender's costs and expenses
associated with the implementation of any Secondary Market Transaction except as
otherwise provided herein or by separate agreement between the parties.

               5.1.17. Further Assurances. Borrower agrees to do or cause to be
done all such further reasonable acts and things, and to execute and deliver or
cause to be executed and delivered all such additional conveyances, assignments,
agreements and instruments as Lender may at any time reasonably request in
connection with the administration or enforcement of this Agreement and the
other Loan Documents or in order better to assure, perfect and confirm unto
Lender its rights, powers and remedies under this Agreement and under the other
Loan Documents. Nothing contained in this paragraph shall be construed as
obligating Borrower to provide or to cause to be provided any collateral or
security for the Loan other than as expressly contemplated by the provisions of
this Agreement and the other Loan Documents, or to incur any cost other than as
expressly contemplated under this Agreement.

               5.1.18. Filing of Mortgages, etc. Borrower forthwith upon the
execution and delivery of the Mortgages and thereafter, from time to time, will
cause the Mortgages, and any security instrument creating a lien or evidencing
the lien thereof upon the Properties and each instrument of further assurance to
be filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to
protect, preserve and perfect the lien thereof upon, and the interest of Lender
in, the Properties. Borrower will pay all filing, registration and recording
fees, and all expenses incident to the preparation, execution and acknowledgment
of the Mortgages, any deed of trust or mortgage supplemental thereto, any
security instrument with respect to the Properties, and any instrument of
further assurance, and all Federal, state, county and municipal taxes, duties,
imposts, assessments and charges arising out of or in connection with the
execution and delivery of the Mortgages, any deed of trust or mortgage
supplemental thereto, any security instrument with respect to the Properties or
any instrument of further assurance. Borrower shall hold harmless and indemnify
Lender, and its respective successors and assigns, against any liability
incurred by reason of the imposition of any tax on the making and recording of
the Mortgages.

                                 -34-

               5.1.19. Estoppel Certificates. Borrower, within ten (10) Business
Days after request by Lender and at Borrower's expense, will furnish Lender with
a statement, duly certified, setting forth the amount of the Debt and the
offsets or defenses thereto, if any. Lender, within ten (10) days after request
by Borrower and at Borrower's expense, and provided that no Event of Default has
occurred and is continuing under the Loan Documents, will furnish Borrower with
a statement setting forth the then outstanding principal balance of the Note and
the interest, if any, accrued and unpaid thereon.

               5.1.20. Capital Improvement Plan. Borrower shall complete within
a reasonable period of time following the date hereof the material elements of
all Capital Work required by the Capital Improvement Plan with respect to such
Property and shall complete such Capital Work as set forth in the Capital
Improvement Plan, subject to delays caused by force majeure. The term "force
majeure" as used in this Section shall include strikes, lockouts or other labor
trouble, fire or other casualty, inclement weather, governmental preemption in
connection with a national emergency, inability to secure materials or labor
because of any such emergency, war, civil disturbance or other emergency, cause
or event beyond the reasonable control of Borrower, it being agreed insufficient
funds shall not constitute an event of force majeure.

         SECTION 5.2. Negative Covenants of Borrower. Borrower covenants and
agrees that, without the prior consent of Lender, at no time during the term of
the Loan shall it do any of the following:

               5.2.1. Operation of Properties. Borrower shall not (i) modify,
amend or terminate any material rights of way, easements, grants, privileges,
leases, licenses or restrictive covenants which from time to time affect or
pertain to the whole or any portion of a Property that may adversely affect the
use or operation of such Property in any material manner, (ii) initiate, join in
or consent to any private restrictive covenant, zoning ordinance or amendment
thereto, or other public or private restrictions, materially limiting or
materially adversely affecting the uses which may be made of any Property or any
material part thereof, (iii) enter into, modify or amend any Lease for space
located on any Property unless such Lease (or such modification or amendment
thereof) is consistent with normal and prudent business practices pertaining to
comparable leases of space in properties which are similar to the Property in
question and is otherwise consistent with Borrower's usual business practices,
and unless the rent payable thereunder and the other terms of such Lease (or
such modification or amendment) are consistent with prevailing market
conditions, (iv) modify, amend, terminate or enter into any operating agreement,
partnership agreement, joint venture agreement, condominium agreement, ground
lease or, except as otherwise provided herein, any property agreement relating
to any Property, or (v) terminate any Lease for space located in any Property
other than in accordance with normal and prudent business practices; provided,
however, Borrower shall not terminate any Lease if such termination is likely to
result in any ongoing material impairment of the value of any Property.

               5.2.2. Further Encumbrance or Sale. Except as otherwise set forth
in this Section 5.2, Borrower shall not further encumber, sell, transfer or
convey or permit to be further encumbered, sold, transferred or conveyed any
Property (or any portion thereof or interest therein) or any direct or indirect
interest in Borrower (or in any of Borrower's members) which would violate the
ownership covenants set forth in Section 5.1.12 hereof. Borrower shall

                                 -35-

not create, incur, assume, permit or suffer to exist any lien on any portion of
any Property (or any portion thereof or interest therein) or legal or beneficial
ownership interest in Borrower (or in any of Borrower's members), subject to
Borrower's right to contest such liens as provided herein. Except as otherwise
expressly provided to the contrary in the Loan Documents, no part of the
Properties nor any interest of any nature whatsoever therein (whether legal or
beneficial or whether held directly or indirectly), nor any interest of any
nature whatsoever in Borrower (whether partnership, stock, equity, beneficial,
profit, loss or otherwise or whether held directly or indirectly), shall in any
manner be further encumbered, sold, transferred, assigned or conveyed without
the prior consent of Lender (other than indirect transfers of partnership,
stock, equity or beneficial interests which would not violate the ownership
covenants set forth in Section 5.1.12 hereof), which consent in any and all
circumstances may be withheld in the sole and absolute discretion of Lender. The
provisions of the foregoing sentence of this subsection shall apply to each and
every such further encumbrance, sale, transfer, assignment or conveyance,
regardless of whether or not Lender has consented to, or waived by its action or
inaction its rights hereunder with respect to, any such previous further
encumbrance, sale, transfer, assignment or conveyance, and irrespective of
whether such further encumbrance, sale, transfer, assignment or conveyance is
voluntary, by reason of operation of law or is otherwise made. Notwithstanding
the foregoing, (i) Borrower shall have the right to sell obsolete equipment or
the individual manager's home located at a particular Property, provided that
any such equipment or individual manager's home which is necessary for the
continued operation and management of the Property shall be replaced by
equipment or a home, as the case may be, of adequate quality, (ii) Borrower may
grant utility easements so long as the granting of such easement(s) is to an
unaffiliated third party for the sole purpose of allowing or otherwise providing
for utility service to the Property and does not materially impair its ability
to operate the property or encroach upon any improvements on the Property (iii)
ownership interests in ARC MEZZ may be transferred provided that, following such
transfer, ARC shall retain not less than a 51% ownership interest in ARC MEZZ
and shall be the sole managing member having the right to control day to day and
general management decisions of such entity, (iv) the "Class A" membership
interests in ARC may be transferred to a Qualified Transferee or to ARC IV or an
Affiliate of ARC IV, and (v) GMAC or a Qualified Transferee may become the
managing member of ARC and the "Class B" membership interests in ARC may be
transferred to GMAC or a Qualified Transferee which is the holder of the "Class
A" membership interests, provided that GMAC or such Qualified Transferee shall
then be the managing member of ARC as permitted herein.

               5.2.3. Governing Documents. Except at the request of Lender,
Borrower shall not modify or amend any provision of its organizational documents
which relates to Borrower's Single-Purpose nature, nor modify or amend in any
material manner any other provision of its organizational documents.

               5.2.4. Nature of Business. Borrower shall not engage in any
business or activity other than the ownership, operation or management of the
Properties.

               5.2.5. Consolidation, Merger, Sale or Purchase of Assets, etc.
Borrower will not (a) dissolve, liquidate or wind up its affairs, (b) enter into
any transaction of merger or consolidation, or sell or otherwise dispose of all
or any part of its property or assets having a value in excess of $50,000, (c)
acquire any assets having a value in excess of $50,000

                                 -36-

per Property per year if such assets do not enhance or improve the value of the
Property, or (d) acquire any assets having a value in excess of $50,000, except
for capital improvements contained in the Capital Improvement Plans approved by
Lender or otherwise permitted under this Agreement and manufactured home
community properties financed with Loans made under this Agreement or under a
separate facility extended by Lender as permitted hereunder.

               5.2.6. Indebtedness. Borrower shall not incur, either directly or
as a guarantor, any liability (whether recourse or non-recourse) for the payment
of any indebtedness other than (i) the Debt, (ii) trade payables incurred in the
ordinary course of operating Borrower's business, provided that each such amount
shall be paid to trade creditors within sixty (60) days following the date on
which each such amount was incurred unless validly contested and (iii) current
liabilities for taxes and assessments incurred or arising in the ordinary course
of business.

               5.2.7. Assignment. Borrower shall not assign this Agreement by
agreement, operation of law or otherwise, or the moneys to be advanced and
disbursed hereunder.

               5.2.8. ERISA. Borrower shall not take any action which would
cause it to become an "employee benefit plan" as defined in Section 3(3) of
ERISA, or a "governmental plan" as defined in Section 3(32) of ERISA, or a
"plan" as defined in Section 4975(e)(1) of the Internal Revenue Code, or its
assets to become "plan assets" as defined in 29 C.F.R. Section 2510.3-101.

               5.2.9. Waste. Borrower shall not commit or suffer to be committed
any material waste with respect to any Property. The failure of Borrower to pay
any Taxes or any installment thereof, or any Insurance Premiums payable with
respect to any of the Insurance Policies covering the Properties or any portion
thereof, or to use and apply the Rents strictly in accordance with the
provisions of the Loan Documents, shall be deemed for all purposes to constitute
waste, regardless of whether the same would, in the absence of this provision,
otherwise constitute waste under applicable law.

               5.2.10. Property Management. Borrower shall not modify, amend,
terminate or enter into any management or operating agreement with respect to
any Property, or waive any material provisions of any such management operating
agreement.

               5.2.11. Distributions. Borrower shall not declare or make any
distribution of any property, cash or rights, or purchase, redeem or otherwise
acquire for value any of its membership interests now or hereafter outstanding,
or advance funds to the holder of any of its membership interests now or
hereafter outstanding; provided, however, that Borrower shall be permitted to
distribute funds in the Operating Account in excess of amounts required for
Borrower to pay its liabilities and obligations on a current basis and amounts
deposited in the Investor Account established under the Cash Management
Agreement in accordance with the terms of such agreement shall be deemed
directly distributed to ARC, provided no Event of Default shall have occurred
and be continuing. The provisions of the operating agreement of Borrower
restricting affiliate payments and the payment of salaries and compensation
shall not be amended or modified without the consent of Lender, which consent
shall not be unreasonably

                                 -37-

withheld. In no event shall Borrower have the right to declare or make any
distribution of any property, cash or rights, or purchase, redeem or otherwise
acquire for value any of its membership interests now or hereafter outstanding,
or advance funds to the holder of any of its membership interests now or
hereafter outstanding if an Event of Default shall have occurred and be
continuing.

               5.2.12. Affiliate Transactions. Borrower shall not enter into, or
be a party to, any transaction with an Affiliate of Borrower or any of the
partners of Borrower except in the ordinary course of business and on terms no
less favorable to Borrower or such Affiliate than would be obtained in a
comparable arm's-length transaction with an unrelated third party. Borrower
shall not enter into leases for more than 20% of its home pads (in the
aggregate) with Affiliates of Borrower without the prior written consent of
Lender. Borrower shall cause all leases relating to leasing any portion of the
Property to any Affiliate of Borrower to be entered into on the then current
market terms.

                                  ARTICLE VI.

                      INSURANCE, CASUALTY AND CONDEMNATION

         SECTION 6.1. Insurance Coverage. Borrower will insure the Properties
against such perils and hazards, and in such amounts and with such limits as
Lender may from time to time reasonably require, and in any event will
continuously maintain with respect to each of the Properties, without cost to
Lender, the insurance described in EXHIBIT U of this Agreement (collectively,
the "INSURANCE POLICIES"). All Insurance Policies shall be in form, issued by
companies, in amounts and with deductibles satisfactory to Lender from time to
time and shall be maintained throughout the term of the Loan without cost to
Lender. An insurance company shall not be satisfactory unless such insurance
company (a) has a Standard & Poor's rating of "AA" or better or Moody's Aa2 or
better; (b) is licensed in the State in which the insured Property is located;
(c) has actively been in business for at least five (5) years; (d) if it is a
mutual company, is a nonassessable company; and (e) does not provide insurance
on any one building in excess of ten (10%) percent of its policyholders' surplus
(including capital). Notwithstanding the foregoing, Lender hereby approves
American Modern Lloyd's as a satisfactory insurance company provided American
Modern Lloyd's shall continue to maintain a Best's rating of "AVIII" or better
and a Standard & Poor's rating of "A" or better. All Insurance Policies insuring
against casualty and business interruption and other appropriate policies shall
include non-contributing mortgagee endorsements in favor of Lender with loss
payable to Lender, as well as standard waiver of subrogation endorsements, and
shall provide that the coverage shall not be terminated or modified, nor a risk
changed without thirty (30) days' advance written notice to Lender. A verified
copy of each Insurance Policy shall be delivered to Lender. If a blanket policy
is issued, a certified copy of said policy shall be furnished, together with an
endorsement indicating that Lender, and its affiliates, subsidiaries, successors
and assigns are additional insureds under such policy in the designated amount.
If any portion of the insured risks are reinsured, the reinsurance policies
shall contain "cut-through" endorsements in form satisfactory to Lender.
Borrower shall pay the premiums for the Insurance Policies (the "INSURANCE
PREMIUMS") as the same become due and payable. Borrower will deliver all
Insurance Policies to Lender and, in case of Insurance Policies about to expire,
Borrower will

                                 -38-

deliver renewal or replacement policies to Lender not less than thirty (30) days
prior to the date of expiration. The foregoing requirements of this Section
shall apply to any separate policies of insurance taken out by Borrower
concurrent in form or contributing in the event of loss with the Insurance
Policies. If any Insurance Policy or part thereof shall expire or be withdrawn
or become void by reason of the failure or impairment of the capital of any
company in which the insurance shall be carried, or if at any time Lender is not
in receipt of written evidence that all insurance required hereunder is in force
and effect or if the Borrower fails to obtain the insurance as required in
EXHIBIT U and/or as is otherwise set forth herein, Lender shall have the
absolute and unconditional right without prior notice to Borrower to take such
action as Lender deems necessary to protect the interest of Lender in the
Properties, including without limitation, the obtaining of such insurance
coverage as set forth herein, and all expenses incurred by Lender in connection
with such action or by Lender in obtaining such insurance and keeping it in
effect shall be paid by Borrower to Lender upon demand together with interest
thereon at the Default Rate. Borrower shall at all times comply with and shall
cause the Properties, and the use, occupancy, operation, maintenance,
alteration, repair and restoration thereof to comply with the terms, conditions,
stipulations and requirements of the Insurance Policies. If any building
improvement on any Property, or any portion thereof, is located in a Federally
designated flood hazard area other than Zone C or Zone X, in addition to the
other Insurance Policies required under this paragraph, a flood insurance policy
shall be delivered by Borrower to Lender with respect thereto. If no portion of
a Property is located in a Federally designated "special flood hazard area" such
fact shall be substantiated by a certificate in form satisfactory to Lender from
a licensed surveyor, appraiser or professional engineer or other qualified
individual.

               6.1.1. Damage or Destruction. If any Property shall be damaged or
destroyed, in whole or in part, by fire or other property hazard or casualty,
Borrower shall give prompt notice thereof to Lender and one hundred (100%)
percent of the net amount of all insurance proceeds received by Lender or
Borrower as a result of such damage or destruction after deduction of reasonable
costs and the expenses, if any, in collecting the same, shall be applied in
reduction of the outstanding Principal Balance under the Note pertaining to the
Damaged Property. Notwithstanding anything to the contrary set forth above, if a
particular Property (a "DAMAGED PROPERTY") shall be damaged or destroyed, in
whole or in part, by fire or other casualty, Lender shall, in accordance with
the provisions of this Section hereinafter set forth, make the net amount of all
insurance proceeds received by Lender pursuant to the provisions of this
Agreement as a result of such damage or destruction after deduction of its
reasonable costs and expenses, if any, in collecting the same (hereinafter
referred to as the "NET PROCEEDS") available for the repair and restoration of
the Damaged Property, provided that (i) no default shall have occurred and shall
be continuing under the Loan Documents, (ii) Borrower shall commence the repair
and restoration of the Damaged Property, as nearly as possible to the condition
the Damaged Property was in immediately prior to such fire or other casualty,
with such alterations as may be approved by Lender, as soon as reasonably
practicable, and shall diligently pursue the same to satisfactory completion,
(iii) Lender shall be satisfied that any operating deficits which will be
incurred with respect to the Damaged Property as a result of the occurrence of
any such fire or other casualty will be covered out of the Net Proceeds or by
Borrower out-of-pocket or with the proceeds, if any, of business interruption or
rental interruption insurance, (iv) Lender shall be satisfied that, within a
reasonable period of time, not to exceed one hundred eighty (180) days following
the completion of such repair and restoration of the Damaged Property, the gross
cash flow and the net cash flow of the Damaged Property

                                 -39-

will be restored to a level sufficient to cover all carrying costs and operating
expenses of the Damaged Property, (v) Lender shall be satisfied that the repair
and restoration of the Damaged Property will be completed on or before the
earlier to occur of (w) ninety (90) days prior to the Maturity Date, or (x) the
date on which the business interruption insurance covered by such Borrower shall
expire, (vi) Lender shall be satisfied that all of the terms, covenants and
provisions of this Agreement and the other Loan Documents will continue to be
complied with during and subsequent to the completion of such repair and
restoration and (vii) Borrower and ARC IV shall execute and deliver to Lender a
completion guaranty in form and substance satisfactory to Lender pursuant to the
provisions of which Borrower and ARC IV shall jointly and severally guaranty to
Lender the lien-free completion of the repair and restoration of the Damaged
Property in accordance with the provisions of this paragraph. The Net Proceeds
shall be held by Lender in an interest-bearing account, and until disbursed in
accordance with the provisions of this paragraph, shall constitute additional
security for the payment of the Debt. The Net Proceeds together with interest
earned thereon, shall be disbursed by Lender to, or as directed by, Borrower
from time to time during the course of the repair and restoration of the Damaged
Property, upon receipt of evidence satisfactory to Lender (which evidence shall
in each instance and to the full extent required by Lender include receipted
bills, invoices, lien waivers and a continuation and date down of title to the
Damaged Property in form satisfactory to Lender and issued by the title company
insuring the lien of the Mortgage encumbering such Property or another title
company satisfactory to Lender) that (i) all materials installed and work and
labor performed (except to the extent that they are to be paid for out of the
requested disbursement) in connection with the repair and restoration of the
Damaged Property have been paid for in full, and (ii) there exist no notice of
pendency, stop order, notice of intention to file mechanic's or materialman's
lien, mechanic's or materialman's lien or other lien or encumbrance of any
nature whatsoever on the Damaged Property arising out of the repair and
restoration of the Damaged Property which have not either been fully bonded to
the satisfaction of Lender and discharged of record or in the alternative fully
insured over to the satisfaction of Lender by the title company insuring the
lien of the Mortgage encumbering the Damaged Property. The repair and
restoration of the Damaged Property shall be done and completed by Borrower in
an expeditious and diligent fashion and in compliance with all applicable
governmental laws, rules and regulations (including, without limitation, all
applicable Environmental Requirements), and all plans and specifications
required in connection with the repair and restoration of the Damaged Property
shall be subject to review and acceptance in all respects by Lender and by the
Consultant. If Lender fails to respond within ten (10) Business Days following a
request and submissions of plans and specifications for approval, such plans and
specification shall be deemed approved by Lender. Upon the occurrence of an
Event of Default, Lender shall have the use of such plan and specifications and
all permits, licenses and approvals required or obtained in connection with the
repair and restoration of the Damaged Property. The identity of the contractors,
subcontractors and materialmen engaged in the repair and restoration of the
Damaged Property, as well as the contracts under which they have been engaged,
shall be identified to Lender and Consultant, if any. All costs and expenses
incurred by Lender in connection with making the Net Proceeds available for the
repair and restoration of the Damaged Property including, without limitation,
reasonable counsel fees and reasonable fees of the Consultant, shall be paid by
Borrower. In no event shall Lender be obligated to make disbursements of the Net
Proceeds in excess of an amount equal to the costs actually incurred from time
to time for work in place as part of the repair and restoration of the Damaged
Property,

                                 -40-

as certified by the Consultant, minus the Casualty Retainage. The term "CASUALTY
RETAINAGE" as used in this paragraph shall mean an amount equal to 10% of the
costs actually incurred for work in place as part of the repair and restoration
of the Damaged Property, as certified by the Consultant. The Casualty Retainage
shall in no event, and notwithstanding anything to the contrary therein above
set forth in this paragraph, be less than the amount actually held back by
Borrower from contractors, subcontractors and materialmen engaged in the making
of the repair and restoration of the Damaged Property. Lender shall not be
obligated to make disbursements of the Net Proceeds more frequently than once
every thirty (30) days. The Casualty Retainage shall not be released until the
Consultant certifies to Lender that the repair and restoration of the Damaged
Property have been completed in accordance with the provisions of this
paragraph, and Lender receives evidence satisfactory to Lender that the costs of
the repair and restoration of the Damaged Property have been paid in full or
will be paid in full out of the Casualty Retainage; provided, however, that
Lender will release the portion of the Casualty Retainage being held with
respect to any contractor, subcontractor or materialman engaged in the repair
and restoration of the Damaged Property as of the date upon which the Consultant
certifies to Lender that such contractor, subcontractor or materialman has
satisfactorily completed all work and has supplied all materials in accordance
with the provisions of such contractor's, subcontractor's or materialman's
contract, and such contractor, subcontractor or materialman delivers such lien
waivers and evidence of payment in full of all sums due to such contractor,
subcontractor or materialman as may be reasonably requested by Lender or by the
title company insuring the lien of the Mortgage encumbering the Damaged
Property. If required by Lender, the release of any such portion of the Casualty
Retainage shall be approved by the surety company, if any, which has issued a
payment or performance bond with respect to such contractor, subcontractor or
materialman. Notwithstanding anything to the contrary contained in this
paragraph, if the Net Proceeds shall be less than $250,000 and if the costs of
completing the repair and restoration of the Damaged Property shall be less than
$250,000, the Net Proceeds will be disbursed by Lender to Borrower upon receipt,
provided that no default shall have occurred and shall be continuing under the
Loan Documents, and Borrower delivers to Lender a written undertaking to
expeditiously commence and to satisfactorily complete with due diligence the
repair and restoration of the Damaged Property. If at any time the Net Proceeds
or the undisbursed balance thereof shall not, in the opinion of Lender, be
sufficient to pay in full the balance of the costs which will be incurred in
connection with the completion of the repair and restoration of the Damaged
Property, Borrower shall deposit the deficiency (hereinafter referred to as the
"NET PROCEEDS DEFICIENCY") with Lender before any further disbursement of the
Net Proceeds shall be made, which Net Proceeds Deficiency deposit shall be held
by Lender in an interest-bearing account, shall be disbursed together with
interest earned thereon, for costs actually incurred in connection with the
repair and restoration of the Damaged Property on the same conditions applicable
to the disbursement of the Net Proceeds, and until so disbursed pursuant to this
paragraph shall constitute additional security for the payment of the Debt. Upon
the occurrence of an Event of Default, Lender shall have the right to apply the
undisbursed balance of any Net Proceeds Deficiency deposit, together with
interest thereon, to the payment of the Debt whether or not then due and payable
in such order, priority and proportions as Lender shall deem to be appropriate
in its discretion. The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposit, together with interest
thereon, after the Consultant certifies to Lender that the repair and
restoration of the Damaged Property have been completed in accordance with the
provisions of this paragraph, and the receipt by Lender of

                                 -41-

evidence satisfactory to Lender that all costs incurred in connection with the
repair and restoration have been paid in full, shall be applied to the reduction
of the outstanding Principal Balance of the Note with respect to such Damaged
Property (based on the Allocated Loan Amount, with any excess being applied to
the Principal Balance). All costs of the repair and restoration of the Damaged
Property in excess of the Net Proceeds shall be paid for by Borrower. All
insurance proceeds received by Lender and not required to be disbursed for the
repair and restoration of the Damaged Property pursuant to the provisions of
this paragraph herein above set forth may be retained and applied by Lender
toward the payment of the Debt whether or not then due and payable in such
order, priority and proportions as Lender in its discretion shall deem proper
or, at the discretion of Lender, the same may be paid, either in whole or in
part, to Borrower for such purposes as Lender shall designate, in its
discretion. If Lender shall receive and retain insurance proceeds, the lien of
the Mortgage with respect to such Damaged Property shall be reduced only by the
amount thereof received and retained by Lender and actually applied by Lender in
reduction of the Debt.

         SECTION 6.2. Condemnation. Notwithstanding any taking by any public or
quasi-public authority through eminent domain or otherwise, Borrower shall
continue to pay the Debt at the time and in the manner provided for its payment
in the Note, this Agreement and the Mortgages and the Debt shall not be reduced
until any award or payment therefor shall have been actually received and
applied by Lender to the discharge of the Debt. Except as hereinafter
specifically provided to the contrary in this paragraph, if all or any portion
of a Property is taken by any public or quasi-public authority through eminent
domain or otherwise, one hundred (100%) percent of the aggregate award or
payment received by Lender or Borrower as a result of such taking after
deduction of reasonable costs and expenses, if any, in collecting the same shall
be applied in reduction of the portion of the outstanding Principal Balance
under the Note which pertains to such Property. If any Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of such award or
payment, Lender shall have the right, whether or not a deficiency judgment on
the Note shall have been sought, recovered or denied, to receive such award or
payment, or a portion thereof sufficient to pay the Debt, whichever is less.
Borrower shall file and prosecute its claim or claims for any such award or
payment in good faith and with due diligence and cause the same to be collected
and paid over to Lender. Borrower hereby irrevocably authorizes and empowers
Lender, in the name of Borrower or otherwise, to collect and receipt for any
such award or payment and, subsequent to the occurrence of a default beyond the
expiration of applicable notice and cure periods, if any, under any of the Loan
Documents and during the continuance thereof, to file and prosecute such claim
or claims. Although it is hereby expressly agreed that the same shall not be
necessary in any event, Borrower shall, upon demand of Lender, make, execute and
deliver any and all assignments and other instruments sufficient for the purpose
of assigning any such award or payment to Lender, free and clear of any
encumbrances of any kind or nature whatsoever. If less than all of a particular
Property (the "TAKEN PROPERTY") is taken by any public or quasi-public authority
through eminent domain or otherwise, Lender shall, in accordance with the
provisions of this paragraph hereinafter set forth, make the portion of the
aggregate award or payment received by Lender pursuant to the provisions of this
Agreement as a result of such taking which is specifically awarded for the
repair and restoration of the portion of the Taken Property not taken or, in the
absence of any such specific award, is in the opinion of Lender reasonably
necessary to pay for the costs which will be incurred in connection with the
repair and restoration of the portion of the Taken Property not taken after
deduction of its reasonable costs and expenses, if any, in collecting the same

                                 -42-

(hereinafter referred to as the "NET RESTORATION AWARD") available for the
repair and restoration of the Taken Property, provided that (i) no default shall
have occurred and shall be continuing under the Loan Documents, (ii) Borrower
shall commence the repair and restoration of the Taken Property, as nearly as
possible to the condition the Taken Property was in immediately prior to such
taking, with such alterations as may be approved by Lender, as soon as
reasonably practicable and shall diligently pursue the same to satisfactory
completion, (iii) Lender shall be satisfied that any operating deficits which
will be incurred with respect to the Taken Property as a result of the
occurrence of any such taking will be covered out of the Net Restoration Award
or by Borrower out-of-pocket, (iv) Lender shall be of the opinion that it is
economically feasible to repair and restore the Taken Property, (v) Lender shall
be satisfied that within a reasonable period of time, not to exceed one hundred
eighty (180) days following completion of the repair and restoration of the
Taken Property, the gross cash flow and the net cash flow of the Taken Property
will be restored to a level sufficient to cover all carrying costs and operating
expenses of the Taken Property, (vi) Lender shall be satisfied that the repair
and restoration of the Taken Property will be completed on or before the earlier
to occur of (w) ninety (90) days prior to the Maturity Date, or (x) the date on
which the business interruption insurance carried by such Borrower shall expire,
(vii) Lender shall be satisfied that all of the terms, covenants and provisions
of this Agreement and the other Loan Documents will continue to be complied with
during and subsequent to the completion of such repair and restoration and
(viii) Borrower and ARC IV shall execute and deliver to Lender a completion
guaranty pursuant to the provisions of which Borrower and ARC IV shall jointly
and severally guaranty to Lender the lien-free completion of the repair and
restoration of the Taken Property in accordance with the provisions of this
paragraph. Notwithstanding anything to the contrary contained in this paragraph,
Lender shall not be obligated to make the Net Restoration Award available for
the repair and restoration of the Taken Property in accordance with the
provisions of this paragraph if more than 30% of the Property (as measured by
area) is taken. The Net Restoration Award shall be held by Lender in an interest
bearing account, and until disbursed in accordance with the provisions of this
paragraph, shall constitute additional security for the payment of the Debt. The
Net Restoration Award, together with interest thereon, shall be disbursed by
Lender to, or as directed by, Borrower from time to time during the course of
the repair and restoration of the Taken Property, upon receipt of evidence
satisfactory to Lender (which evidence shall in each instance and to the full
extent required by Lender include receipted bills, invoices, lien waivers and a
continuation and date down of title to the Taken Property in form satisfactory
to Lender and issued by the title company insuring the lien of the Mortgage
pertaining to such Property or another title company satisfactory to Lender)
that (i) all materials installed and work and labor performed (except to the
extent that they are to be paid for out of the requested disbursement) in
connection with the repair and restoration of the Taken Property have been paid
for in full, and (ii) there exist no notice of pendency, stop order, notice of
intention to file mechanic's or materialman's lien, mechanic's or materialman's
lien or other lien or encumbrance of any nature whatsoever on the Taken Property
arising out of the repair and restoration of the Taken Property which have not
either been fully bonded to the satisfaction of Lender and discharged of record
or in the alternative otherwise fully insured over to the satisfaction of Lender
by the title company insuring the lien of the Mortgage encumbering the Taken
Property. The repair and restoration of the Taken Property shall be done and
completed by Borrower in an expeditious and diligent fashion and in compliance
with all applicable governmental laws, rules and regulations (including, without
limitation, all applicable Environmental Requirements), and all plans and

                                 -43-

specifications required in connection with the repair and restoration of the
Taken Property shall be subject to review and acceptance in all respects by
Lender and by the Consultant. If Lender fails to respond within ten (10)
Business Days following a request and submission of plans and specifications for
approval, such plans and specifications shall be deemed approved by Lender. Upon
the occurrence of an Event of Default, Lender shall have the use of such plans
and specifications and all permits, licenses and approvals required or obtained
in connection with the repair and restoration of the Taken Property. The
identity of the contractors, subcontractors and materialmen engaged in the
repair and restoration of the Taken Property, as well as the contracts under
which they have been engaged, shall be identified to Lender and Consultant, if
any. All costs and expenses incurred by Lender in connection with making the Net
Restoration Award available for the repair and restoration of the Taken
Property, including, without limitation, appraisal fees, reasonable counsel fees
and reasonable fees of the Consultant shall be paid by Borrower. In no event
shall Lender be obligated to make disbursements of the Net Restoration Award in
excess of an amount equal to the costs actually incurred for work in place as
part of the repair and restoration of the Taken Property, as certified by the
Consultant, minus the Condemnation Retainage. The term "CONDEMNATION RETAINAGE"
as used in this paragraph shall mean an amount equal to 10% of the costs
actually incurred for work in place as part of the repair and restoration of the
Taken Property, as certified by the Consultant. The Condemnation Retainage shall
in no event, and notwithstanding anything to the contrary herein-above set forth
in this paragraph, be less than the amount actually held back by Borrower from
contractors, subcontractors and materialmen engaged in the making of the repair
and restoration of the Taken Property. Lender shall not be obligated to make
disbursements of the Net Restoration Award more frequently than once every
fifteen (15) days. The Condemnation Retainage shall not be released until the
Consultant certifies that the repair and restoration of the Taken Property have
been completed in accordance with the provisions of this paragraph, and Lender
receives evidence satisfactory to Lender that the costs of the repair and
restoration of the Taken Property have been paid in full or will be paid in full
out of the Condemnation Retainage; provided, however, that Lender will release
the portion of the Condemnation Retainage being held with respect to any
contractor, subcontractor or materialman engaged in the repair and restoration
of the Taken Property as of the date upon which the Consultant certifies to
Lender that such contractor, subcontractor or materialman has satisfactorily
completed all work and has supplied all materials in accordance with the
provisions of such contractor's, subcontractor's or materialman's contract, and
such contractor, subcontractor or materialman delivers such lien waivers and
evidence of payment in full of all sums due to such contractor, subcontractor or
materialman as may be reasonably requested by Lender or by the title company
insuring the lien of the Mortgage encumbering the Taken Property. If required by
Lender, the release of any such portion of the Condemnation Retainage shall be
approved by the surety company, if any, which has issued a payment or
performance bond with respect to such contractor, subcontractor or materialman.
The excess, if any, of the Net Restoration Award after the repair and
restoration of the Taken Property as nearly as possible to their former
condition and the payment in full of all costs incurred in connection therewith
shall be applied by Lender in reduction of the Debt in such order, priority and
proportions as Lender in its discretion shall deem proper. Notwithstanding
anything to the contrary contained in this paragraph, if the Net Restoration
Award shall be less than $250,000 and if the costs of completing the repair and
restoration of the Taken Property shall be less than $250,000, the Net
Restoration Award will be disbursed by Lender to Borrower upon receipt, provided
that no default shall have occurred and shall be

                                 -44-

continuing under the Loan Documents, and Borrower delivers to Lender a written
undertaking to expeditiously commence and to satisfactorily complete with due
diligence the repair and restoration of the Taken Property. If at any time the
Net Restoration Award, or the undisbursed balance thereof, shall not, in the
opinion of Lender, be sufficient to pay in full the balance of the costs which
will be incurred in connection with the completion of the repair and restoration
of the Taken Property, Borrower shall deposit the deficiency (hereinafter
referred to as the "NET AWARD DEFICIENCY") with Lender before any further
disbursement of the Net Restoration Award shall be made, which Net Award
Deficiency deposit shall be held by Lender in an interest bearing special
account, shall be disbursed, together with interest thereon, for costs actually
incurred in connection with the repair and restoration of the Taken Property on
the same conditions applicable to the disbursement of the Net Restoration Award,
and shall until so disbursed pursuant to this paragraph constitute additional
security for the payment of the Debt. Upon the occurrence of an Event of
Default, Lender shall have the right to apply the undisbursed balance of any Net
Award Deficiency deposit, together with interest thereon, to the payment of the
Debt whether or not then due and payable in such order, priority and proportions
as Lender shall deem to be appropriate in its discretion. The excess, if any, of
any Net Award Deficiency deposit, together with interest thereon, remaining
after the Consultant certifies to Lender that the repair and restoration of the
Taken Property have been completed in accordance with the provisions of this
paragraph, and the receipt by Lender of evidence satisfactory to Lender that all
costs incurred in connection with the repair and restoration have been paid in
full, shall be applied to the reduction of the outstanding Principal Balance of
the Note pertaining to the Taken Property (based on the allocated Loan Amount,
with any excess being applied to the Principal Balance All costs of the repair
and restoration of the Taken Property in excess of the Net Restoration Award
shall be paid for by Borrower.

                                  ARTICLE VII.

                               PROPERTY MANAGEMENT

               SECTION 7.1. The Management Agreement. At all times during the
term of the Loan, the Properties shall be managed by ARC Management Services,
Inc. or another manager approved by Lender in its sole and absolute discretion
("PROPERTY MANAGER") pursuant to the Management Agreement. Borrower shall (i)
diligently perform and observe all of the terms, covenants and conditions of the
Management Agreement on the part of Borrower to be performed and observed and
(ii) promptly notify Lender of any notice to Borrower of any default by Borrower
beyond any applicable cure period in the performance or observance of any of the
terms, covenants or conditions of the Management Agreement on the part of
Borrower to be performed and observed. If Borrower shall default in the
performance or observance of any material term, covenant or condition of the
Management Agreement on the part of Borrower to be performed or observed, then,
without limiting Lender's other rights or remedies under this Agreement or the
other Loan Documents, and without waiving or releasing Borrower from any of its
obligations hereunder or under the Management Agreement, Lender shall have the
right, but shall be under no obligation, to pay any sums and to perform any act
as may be appropriate to cause all the material terms, covenants and conditions
of the Management Agreement on the part of Borrower to be performed or observed.
Without the prior written consent of Lender, Borrower shall not (a) consent to
the assignment by Property Manager of its interest under the

                                 -45-

Management Agreement, (b) terminate, modify, change, supplement, alter or amend
the Management Agreement, (c) change, replace or terminate Property Manager as
the manager of the Properties or (d) enter into a new management agreement with
respect to the Properties. Notwithstanding the foregoing, in the event GMAC or a
Qualified Transferee shall become the managing member of ARC, Borrower may
replace ARC Management Services, Inc. with a Qualified Manager pursuant to a
Management Agreement approved by Lender and provided that such Qualified Manager
shall execute and deliver to Lender an Assignment of Management Agreement and
Subordination of Management Fee in substantially the form delivered to Lender on
the Closing Date with such changes as shall be reasonably approved by Lender.

               SECTION 7.2. Subordination of Fees; Removal of Property Manager.
Borrower agrees that all unpaid management fees shall be expressly subordinate
to the Debt and Property Manager shall not be entitled to receive any property
management fees, asset management fees or any other compensation or
reimbursements payable by Borrower with respect to any period of time during
which an Event of Default shall be continuing, it being agreed that Lender shall
be entitled to recover from Borrower, any and all property management fees,
asset management fees or any other compensation or reimbursements paid by
Borrower to Property Manager or to any Affiliate of Borrower during such period
of time. Lender shall have the right to require Borrower to replace Property
Manager with a Person chosen by Lender at any time following the occurrence of
any one or more of the following events: (i) if an Event of Default shall have
occurred, and/or (ii) if Property Manager has engaged in gross negligence, fraud
or willful misconduct.

                                 ARTICLE VIII.

                            ENVIRONMENTAL PROVISIONS

         SECTION 8.1. Environmental Provisions. Borrower hereby represents and
warrants to Lender that to the best of Borrower's knowledge (i) except for
standard cleaning products and standard lawn care products used in connection
with the landscaping of any Property and petroleum products used in connection
with the operation of equipment at the Properties, no Hazardous Material is
currently located at, on, in, under or about any Property, except as
specifically set forth in the Environmental Reports, (ii) no Hazardous Material
is currently located at, in, on, under or about any Property in a manner which
violates any Environmental Requirement, or which requires cleanup or corrective
action of any kind under any Environmental Requirement, (iii) no releasing,
emitting, discharging, leaching, dumping or disposing of any Hazardous Material
from any Property onto or into any other property or from any other property
onto or into any Property has occurred or is occurring in violation of any
Environmental Requirement, (iv) no notice of violation, lien, complaint, suit,
order or other notice with respect to any Property is presently outstanding
under any Environmental Requirement, and (v) each Property and the operation
thereof are in compliance with all Environmental Requirements. Borrower shall
comply, and shall use its best efforts to cause all tenants or other occupants
of the Properties to comply, in all respects with all Environmental
Requirements, and will not generate, store, handle, process, dispose of or
otherwise use, and will not permit any tenant or other occupant of any Property
to generate, store, handle, process, dispose of or otherwise use, Hazardous
Materials at, in, on, under or about any Property in a

                                 -46-

manner that could lead or potentially lead to the imposition on Borrower, Lender
or any Property of any liability or lien of any nature whatsoever under any
Environmental Requirement. Borrower shall notify Lender promptly in the event of
any spill or other release of any Hazardous Material at, in, on, under or about
any Property which is required to be reported to a Governmental Authority under
any Environmental Requirement, will promptly forward Lender copies of any
notices received by Borrower relating to alleged violations of any Environmental
Requirement and will promptly pay when due any fine or assessment against
Lender, any Borrower or any Property relating to any Environmental Requirement.
If at any time it is determined that the operation or use of any Property
violates any applicable Environmental Requirement or that there are Hazardous
Materials located at, in, on, under or about any Property which, under any
Environmental Requirement, require special handling in collection, storage,
treatment or disposal, or any other form of cleanup or corrective action,
Borrower shall, within sixty (60) days after receipt of notice thereof from any
Governmental Authority or from Lender (or such shorter period of time as may be
required by any such Governmental Authority or under applicable Environmental
Requirements), take, at Borrower's sole cost and expense, such actions as may be
necessary to fully comply in all respects with all Environmental Requirements;
provided, however, that if such compliance cannot reasonably be completed within
such sixty (60) day period, Borrower shall commence such necessary action within
such sixty (60) day period and shall thereafter diligently and expeditiously
proceed to fully comply in all respects and in a timely fashion with all
Environmental Requirements. If Borrower fails to timely take, or to diligently
and expeditiously proceed to complete in a timely fashion, any such action,
Lender may, in its sole and absolute discretion, make advances or payments
towards the performance or satisfaction of the same, but shall in no event be
under any obligation to do so. All sums so advanced or paid by Lender
(including, without limitation, counsel and consultant fees and expenses,
investigation and laboratory fees and expenses, and fines or other penalty
payments) and all sums advanced or paid in connection with any judicial or
administrative investigation or proceeding relating thereto, will immediately,
upon demand, become due and payable from Borrower and shall bear interest at the
Default Rate from the date any such sums are so advanced or paid by Lender until
the date any such sums are repaid by Borrower to Lender. Borrower will execute
and deliver, promptly upon request, such instruments as Lender may deem useful
or necessary to permit Lender to take any such action, and such additional
notes, as Lender may require to secure all sums so advanced or paid by Lender.
If a lien is filed against any Property by any Governmental Authority resulting
from the need to expend or the actual expending of monies arising from an action
or omission, whether intentional or unintentional, of Borrower or for which
Borrower is responsible, resulting in the releasing, spilling, leaking,
leaching, pumping, emitting, pouring, emptying or dumping of any Hazardous
Material into the waters or onto land located within or without the State in
which any Property is located, then Borrower will, within thirty (30) days from
the date that Borrower is first given notice that such lien has been placed
against such Property (or within such shorter period of time as may be specified
by Lender if such Governmental Authority has commenced steps to cause such
Property to be sold pursuant to such lien) either (a) pay the claim and remove
the lien, or (b) furnish a cash deposit, bond, or such other security with
respect thereto as is satisfactory in all respects to Lender and is sufficient
to effect a complete discharge of such lien on such Property. Notwithstanding
the foregoing, in the case of any material item, Borrower, at its own expense,
may contest by appropriate legal proceedings, promptly initiated and conducted
in good faith and with due diligence, the validity or enforceability, in whole
or in part, of any Environmental Requirement,

                                 -47-

provided that (i) Borrower shall have given prior notice of such contest to
Lender, (ii) no default shall have occurred and be continuing under the Note,
the Mortgages, this Agreement or any of the other Loan Documents, (iii) such
proceeding shall suspend the obligation of Borrower to comply with any such
Environmental Requirement, (iv) such proceeding shall be permitted under and be
conducted in accordance with the provisions of any other instrument to which
Borrower, or the Properties, are subject and shall not constitute a default
thereunder, (v) failure to immediately comply with any such law, order,
ordinance, rule or regulation will not invalidate or vitiate any Insurance
Policies, in whole or in part, and will not in the opinion of Lender constitute
a present danger to the Properties or any portion thereof, or to the individuals
using and entering upon the Properties, (vi) neither the Properties nor any part
thereof nor any interest therein will in the opinion of Lender be in danger of
being sold, forfeited, confiscated, terminated, canceled or lost, (vii) delay in
the compliance with any Environmental Requirement will not, in the opinion of
Lender, result in a worsening or deterioration in the condition requiring
remediation, (viii) Borrower shall have delivered to Lender in escrow all sums
necessary to insure the payment by Borrower of all costs of compliance, fines
and penalties, together with interest thereon, as may be incurred by Borrower in
the event of a determination in such proceeding adverse to Borrower, and (ix)
neither Borrower nor Lender will in the opinion of Lender be subject to any
criminal or civil liability as the result of such contestment by Borrower.
Lender may, at its option, at intervals of not more frequently than once a year,
or more frequently if Lender reasonably believes that a Hazardous Material or
other environmental condition violates or threatens to violate any Environmental
Requirement applicable to a Property, cause an environmental audit of such
Property to be conducted to confirm Borrower's compliance with the provisions of
this paragraph in respect of such Property, and Borrower shall cooperate in all
reasonable ways with Lender in connection with any such audit. Borrower shall
pay all costs and expenses incurred in connection with such audit. If any of the
Mortgages is foreclosed, or if any Property is sold pursuant to the provisions
of the Mortgages, or if Borrower tenders a deed or assignment in lieu of
foreclosure or sale, Borrower shall deliver such Properties to the purchaser at
foreclosure or sale or to Lender, its nominee, or wholly owned subsidiary, as
the case may be, in a condition that complies in all respects with all
Environmental Requirements. Borrower will defend, indemnify, and hold harmless
Lender, its employees, agents, officers, and directors, from and against any and
all claims, demands, penalties, causes of action, fines, liabilities,
settlements, damages, costs, or expenses of whatever kind or nature, known or
unknown, foreseen or unforeseen, contingent or otherwise (including, without
limitation, counsel and consultant fees and expenses, investigation and
laboratory fees and expenses, court costs, and litigation expenses) arising out
of, or in any way related to, (i) any breach by Borrower of any of the
provisions of this Section, (ii) the presence, disposal, spillage, discharge,
emission, leakage, release, or threatened release of any Hazardous Material
which is at, in, on, under, about, from or affecting any Property, including,
without limitation, any damage or injury resulting from any such Hazardous
Material to or affecting any Property or the soil, water, air, vegetation,
buildings, personal property, individuals or animals located on any Property or
on any other property or otherwise, (iii) any personal injury (including
wrongful death) or property damage (real or personal) arising out of or related
to any such Hazardous Material, (iv) any lawsuit brought or threatened,
settlement reached, or order or directive of or by any Governmental Authority
relating to such Hazardous Material, or (v) any violation of any Environmental
Requirement. The obligations and liabilities of Borrower under this Section
shall survive and continue in full force and effect and shall not be terminated,
discharged or released,

                                 -48-

in whole or in part, irrespective of whether the Debt has been paid in full and
irrespective of any foreclosure of any of the Mortgages, sale of any one or more
of the Properties pursuant to the provisions of the Mortgages or acceptance by
Lender, its nominees or wholly owned subsidiaries of one or more deeds or
assignments in lieu of foreclosure or sale and irrespective of any other fact or
circumstance of any nature whatsoever.

                                  ARTICLE IX.

                                  RESERVE FUNDS

         SECTION 9.1. Tax Funds.

               9.1.1. Deposits of Tax Funds. Borrower shall deposit with Lender
on the Monthly Payment Date an amount (the "MONTHLY TAX DEPOSIT") equal to
one-twelfth of the Taxes that Lender estimates will be payable during the next
ensuing twelve (12) months in order to accumulate with Lender sufficient funds
to pay all such Taxes at least ten (10) days prior to their respective due dates
(such amounts so deposited shall hereinafter be referred to as the "TAX FUNDS").
If at any time Lender reasonably determines that the Tax Funds will not be
sufficient to pay the Taxes, Lender shall notify Borrower of such determination
and Borrower shall increase its monthly payments to Lender by the amount that
Lender estimates is sufficient to make up the deficiency at least ten (10) days
prior to the respective due dates for the Taxes; provided that if Borrower
receives notice of any deficiency after the date that is ten (10) days prior to
the date that Taxes are due, Borrower will deposit such amount within two (2)
Business Day after its receipt of such notice.

               9.1.2. Release of Tax Funds. Lender shall, provided no Event of
Default shall have occurred and be continuing, and the Debt Service Coverage
Ratio shall not be less than 1.05:1, release Tax Funds to Borrower for payments
of Taxes prior to the date such Taxes are due or paid by Borrower, upon delivery
to Lender of an Officer's Certificate, certifying as to the actual amount of the
Taxes due and owing (the "CERTIFIED TAX AMOUNT") on the date thereof or within
thirty (30) days from the date thereof. Lender shall advance to Borrower for
same from the Tax Funds, within five (5) business days from the date Lender
receives such Officer's Certificate, an amount equal to the Certified Tax
Amount. In all other cases, provided no Event of Default shall have occurred and
be continuing, Lender shall either (i) release Tax Funds to Borrower for Taxes
paid by Borrower or (ii) apply the Tax Funds to the payment of Taxes. In making
any payment relating to Taxes, Lender may do so according to any bill, statement
or estimate procured from the appropriate public office (with respect to Taxes)
without inquiry into the accuracy of such bill, statement or estimate or into
the validity of any tax, assessment, sale, forfeiture, tax lien or title or
claim thereof. If the amount of the Tax Funds shall exceed the amounts due for
Taxes, Lender shall, in its sole discretion, return any excess to Borrower or
credit such excess against future payments to be made to the Tax Funds. Any Tax
Funds remaining after the Debt has been paid in full shall be returned to
Borrower.

               9.1.3. Application of Tax Funds. Upon the occurrence of an Event
of Default, Lender, at its option, may withdraw all the Tax Funds from the Tax
Account and may apply the Tax Funds either to the payment of Taxes or to payment
of the Debt in such order,

                                 -49-

proportion and priority as Lender may determine in its sole discretion. Lender's
right to withdraw and apply the Tax Funds shall be in addition to all other
rights and remedies provided to Lender under the Loan Documents.

         SECTION 9.2.   Insurance Premium Funds.

               9.2.1. Deposits of Insurance Premium Funds. Borrower shall
deposit with Lender on each Monthly Payment Date an amount (the "MONTHLY
INSURANCE PREMIUM DEPOSIT") equal to one-twelfth of the Insurance Premiums that
Lender estimates will be payable for the renewal of the coverage afforded by the
Policies upon the expiration thereof in order to accumulate with Lender
sufficient funds to pay all such Insurance Premiums at least thirty (30) days
prior to the expiration of the Policies (such amounts so deposited shall
hereinafter be referred to as the "INSURANCE PREMIUM FUNDS"). If at any time
Lender reasonably determines that the Insurance Premium Funds will not be
sufficient to pay the Insurance Premiums, Lender shall notify Borrower of such
determination and Borrower shall increase its monthly payments to Lender by the
amount that Lender estimates is sufficient to make up the deficiency at least
thirty (30) days prior to expiration of the Policies.

               9.2.2. Release of Insurance Premium Funds. Lender shall, provided
no Event of Default shall have occurred and be continuing, and the Debt Service
Coverage Ratio shall not be less than 1.05:1, release the Insurance Premium
Funds to Borrower for payment of Insurance Premiums prior to the date such
Insurance Premiums are due or paid by Borrower, upon delivery to Lender of an
Officer's Certificate, certifying as to the actual amount of the Insurance
Premiums then due and owing (the "CERTIFIED INSURANCE AMOUNT") on the date
thereof or within sixty (60) days from the date thereof. Lender shall advance to
Borrower for same from the Insurance Funds, within five (5) business days from
the date Lender receives such Officer's Certificate, an amount equal to the
Certified Insurance Amount. In all other cases, provided no Event of Default
shall have occurred and be continuing, Lender shall either (i) release the
Insurance Premium Funds to Borrower for Insurance Premiums paid by Borrower or
(ii) apply the Insurance Funds to the payment of Insurance Premiums. In making
any payment relating to Insurance Premiums, Lender may do so according to any
bill, statement or estimate procured from the insurer or its agent, without
inquiry into the accuracy of such bill, statement or estimate. If the amount of
the Insurance Premium Funds shall exceed the amounts due for Insurance Premiums,
Lender shall, in its sole discretion, return any excess to Borrower or credit
such excess against future payments to be made to the Insurance Premium Funds.
Any Insurance Premium Funds remaining after the Debt has been paid in full shall
be returned to Borrower.

               9.2.3. Application of Insurance Premium Funds. Upon the
occurrence of an Event of Default, Lender at its option may withdraw the
Insurance Premium Funds from the Insurance Premium Account and may apply the
Insurance Premium Funds to the payment of Insurance Premiums or to the payment
of the Debt in such order, proportion and priority as Lender shall determine in
its sole discretion. Lender's right to withdraw and apply the Insurance Premium
Funds shall be in addition to all other rights and remedies provided to Lender
under the Loan Documents.

                                 -50-

         SECTION 9.3.   Ordinary Capital Expenditures Funds.

               9.3.1. Deposits of Ordinary Capital Expenditures Funds. Borrower
shall deposit with Lender on each Monthly Payment Date with respect to each
Property constituting collateral for the Loan on such Monthly Payment Date an
amount (the "MONTHLY ORDINARY CAPITAL EXPENDITURES DEPOSIT") equal to
one-twelfth of the product of (x) $50.00 multiplied by (y) the number of
manufactured home sites located at such Property (such amounts so deposited
shall hereinafter be referred to as the "ORDINARY CAPITAL EXPENDITURES FUNDS"),
provided, however, Borrower shall not be required to make a Monthly Ordinary
Capital Expenditure Deposit with respect to a particular Property if on the
Monthly Payment Date, the balance held in the Ordinary Capital Expenditures
Account with respect to such Property is equal to or in excess of $25.00
multiplied by the number of manufactured home sites located at such Property.
Lender may reassess its estimate of the amount necessary for Capital Work from
time to time, and may require Borrower to amend the Ordinary Capital
Expenditures Budget and to increase the Monthly Ordinary Capital Expenditures
Deposit upon thirty (30) days notice to Borrower if Lender determines in its
reasonable discretion that an increase is necessary to maintain proper operation
of the Properties.

               9.3.2. Release of Ordinary Capital Expenditure Funds. Lender
shall disburse Ordinary Capital Reserve Funds with respect to a particular
Property only for Capital Work with respect to such Property. Lender shall
disburse to Borrower the Ordinary Capital Expenditures Funds to reimburse
Borrower for the actual costs incurred in connection with Capital Work at the
Properties upon satisfaction of each of the following conditions: (i) no default
shall have occurred and be continuing under the Loan Documents, (ii) Borrower
shall submit a request for disbursement to Lender at least ten (10) days prior
to the date on which Borrower requests such disbursement be made, which request
shall be accompanied by a certificate of Borrower (A) describing by category the
Capital Work to be funded by the requested disbursement and the amount requested
to be funded with respect to each category of Capital Work, it being agreed that
the categories to be utilized in connection with such requests shall be
consistent with those utilized for purposes of preparing the annual capital
expenditure budgets submitted to Lender in accordance with SECTION 5.1.8(iii)
hereof, (B) stating that all Capital Work to be funded by the requested
disbursement has been completed in good and workmanlike manner and in accordance
with all legal requirements, (C) stating that each Person who has supplied
materials or labor in connection with such Capital Work has been paid all sums
due and owing or will be paid all such sums upon such disbursement, (D) stating
that Borrower has obtained lien waiver from all Persons supplying materials or
labor in connection with any Capital Work having a cost in excess of $10,000 and
(iii) Lender shall have received such other evidence as Lender shall reasonably
request that the Capital Work to be funded by the requested disbursement has
been completed and is paid for or will be paid upon such disbursement to
Borrower, it being agreed that Lender shall have the right, but not the
obligation, at any time, for Capital Work having a cost in excess of $10,000, to
request copies of licenses, permits or approvals, plans and specifications,
contracts, invoices, lien waivers, title searches that such Capital Work has
been completed and paid for. In addition, Lender shall have the right, but not
the obligation, at any time to require an inspection report from Consultant with
respect to any Capital Work, provided, however, that such inspection report
shall not be a condition precedent to disbursement unless required by Lender and
the cost of a particular item of Capital Work is in

                                 -51-

excess of $150,000. Lender shall not be required to disburse Ordinary Capital
Expenditure Funds more frequently than once each calendar month or in amounts
less than $25,000.

               9.3.3. Application of Ordinary Capital Expenditure Funds. Upon
the occurrence of an Event of Default, Lender, at its option, may withdraw the
Ordinary Capital Expenditure Funds from the Ordinary Capital Expenditures
Account and apply the Ordinary Capital Expenditure Funds to completion of the
Capital Work or to payment of the Debt in such order, proportion and priority as
Lender may determine in its sole discretion. Lender's right to withdraw and
apply the Ordinary Capital Expenditure Funds shall be in addition to all other
rights and remedies provided to Lender under the Loan Documents.

         SECTION 9.4.   Capital Improvement Funds.

               9.4.1. Capital Improvement Funds. Borrower shall, on the date
hereof, deposit with Lender the amounts shown on Schedule 2 attached hereto with
respect to each Property (the "CAPITAL IMPROVEMENT FUNDS").

               9.4.2. Release of Capital Improvement Funds. Lender shall
disburse the Capital Improvement Funds with respect to a particular Property
only for the costs of those items set forth on the Capital Improvement Plan
approved by Lender with respect to such Property as the same may be revised from
time to time with the approval of Lender. Lender shall disburse to Borrower the
Capital Improvement Funds with respect to a particular Property to reimburse
Borrower for the actual costs incurred in connection with the Capital
Improvement Plan at such Property upon satisfaction of each of the following
conditions: (i) no default shall have occurred and be continuing under the Loan
Documents, (ii) Borrower shall submit a request for disbursement to Lender at
least ten (10) days prior to the date on which Borrower requests such
disbursement be made, which request shall be accompanied by, with respect to
each Property for which a disbursement from the Capital Improvement Funds is
being requested, a certificate of Borrower (A) describing by category the
Capital Work to be funded by the requested disbursement and the amount requested
to be funded with respect to each category of Capital Work, it being agreed that
the categories to be utilized in connection with such requests shall be
consistent with those categories set forth in the reconciliation statement in
EXHIBIT V attached hereto, (B) stating that all Capital Work to be funded by the
requested disbursement has been completed in good and workmanlike manner and in
accordance with all legal requirements, (C) stating that each Person who has
supplied materials or labor in connection with such Capital Work has been paid
all sums due and owing or will be paid all such sums upon such disbursement, (D)
stating that Borrower has obtained lien waiver from all Persons supplying
materials or labor in connection with any Capital Work having a cost in excess
of $10,000 and (iii) Lender shall have received such other evidence as Lender
shall reasonably request that the Capital Work to be funded by the requested
disbursement has been completed and is paid for or will be paid upon such
disbursement to Borrower, it being agreed that Lender shall have the right, but
not the obligation, at any time to request copies of licenses, permits or
approvals, plans and specifications, contracts, invoices, lien waivers, title
searches that such Capital Work has been completed and paid for. In addition, at
the time of each request Borrower shall submit to Lender, for informational
purposes, a statement of capital expenditures in the form of EXHIBIT X which
shall be certified by Borrower to the best of its knowledge to be true and
complete. In addition, Lender shall have the right, but not the obligation, at
any time to require an inspection

                                 -52-

report from Consultant with respect to any Capital Work, provided, however, that
such inspection report shall not be a condition precedent to disbursement unless
required by Lender and the cost of a particular item of Capital Work is in
excess of $150,000. At such time as seventy percent (70%) of the amount
originally budgeted with respect to the Capital Improvement Funds for a
particular Property (exclusive of the 25% contingency funded in connection
therewith) has been disbursed to Borrower, Lender shall not be required to make
further disbursements of the Capital Improvement Funds with respect to such
Property until Borrower has submitted to Lender a category by category
reconciliation of the Capital Work done to date with the Capital Work originally
planned and budgeted for in the Capital Improvement Plan for such Property in
the form of EXHIBIT V attached hereto and Lender shall be satisfied in its
reasonable judgment that the balance of the Capital Improvement Funds with
respect to such Property remaining in the Capital Improvement Account with
respect to such Property is sufficient to complete the remaining items of the
Capital Improvement Plan, as the same may be revised with the reasonable
approval of Lender (the amount by which such account balance is less than the
amount necessary to complete, the "DEFICIENCY"). At the option of Lender, Lender
may require Borrower to deposit into the Capital Improvement Funds Account an
amount equal to the Deficiency or to invest in the Capital Work amounts equal to
the Deficiency prior to further disbursements of the Capital Improvement Funds
with respect to such Property. Upon satisfaction by Lender that sufficient funds
remain to complete all necessary Capital Work in the Capital Improvement Plan
with respect to such Property, Lender shall continue to disburse funds from the
Capital Improvement Account with respect to such Property in accordance with the
foregoing procedures, provided, however, that a second reconciliation and
revision of the Capital Improvement Plan, if necessary, shall be completed at
such time as 95% of the amount originally budgeted in the Capital Improvement
Plan for such Property has been disbursed. In no event shall Lender be required
to disburse the 25% contingency funded in connection with such Property until
such time as all Capital Work in connection with the Capital Improvement Plan,
as the same may have been revised from time to time with the approval of Lender,
shall have been completed exclusive of punch list items. Upon completion of all
of the Capital Work set forth in such Capital Improvement Plan with respect to a
particular Property and upon satisfaction of the conditions for disbursement set
forth herein, any remaining funds held in the subaccount of the Capital
Improvement Funds Account with respect to such Property shall be released to
Borrower. Lender shall not be required to disburse Capital Improvement Funds
more frequently than once each calendar month or in amounts less than $25,000 in
the aggregate, provided, however, that the final disbursement from the Capital
Improvement Account may be in an amount less than $25,000. Notwithstanding the
foregoing, Borrower shall, subject to compliance with the terms hereof, be
entitled to up to, but not in excess of, three (3) additional disbursements from
the Capital Improvement Funds. Disbursements of Capital Improvement Funds shall
be deposited into the Cash Management Account.

               9.4.3. Application of Capital Improvement Funds. Upon the
occurrence of an Event of Default, Lender, at its option, may withdraw the
Capital Improvement Funds from the Capital Improvements Account and apply the
Capital Improvement Funds to completion of the Capital Work or to the payment of
the Debt in such order, proportion and priority as Lender may determine in its
sole discretion. Lender's right to withdraw and apply the Capital Improvement
Funds shall be in addition to all other rights and remedies provided to Lender
under the Loan Documents.

                                 -53-

         SECTION 9.5. Additional Provisions relating to Ordinary Capital
Expenditure Funds and Capital Improvement Funds.

               9.5.1. No Obligations. Nothing in SECTION 9.3 or 9.4 shall (i)
make Lender responsible for making or completing any item of work specified in
the Ordinary Capital Expenditure Budget or the Capital Improvement Plan
(collectively, "CAPITAL WORK"); (ii) require Lender to expend funds in addition
to the Ordinary Capital Expenditures Funds or the Capital Improvement Funds to
complete any Capital Work; (iii) obligate Lender to proceed with the Capital
Work; or (iv) obligate Lender to demand from Borrower additional sums to
complete any Capital Work.

               9.5.2. Right of Inspection. Upon reasonable prior notice by
Lender to Borrower, Borrower shall permit Lender and Lender's agents and
representatives (including, without limitation, any Consultant) or third parties
to enter onto each Property during normal business hours (subject to the rights
of tenants under their Leases) to inspect the progress of any Capital Work and
all materials being used in connection therewith and to examine all plans and
shop drawings relating to such Capital Work. Borrower shall use reasonable
efforts to cause all contractors and subcontractors to cooperate with Lender or
Lender's representatives or such other Persons described above in connection
with inspections described in this SECTION 9.5.2. Borrower shall not be
obligated to pay costs and expenses of Lender in connection with such
inspections in excess of $100,000 over the term of the Loan, provided, however,
if any such inspection reveals that there has been a material deviation in the
Capital Work completed from that certified to have been completed by Borrower,
Borrower shall pay the cost of such inspection regardless of such cap.

               9.5.3. Intentionally Deleted.

               9.5.4. Insurance. In addition to any insurance required under the
Loan Documents, Borrower shall provide or cause to be provided workmen's
compensation insurance, builder's risk, and public liability insurance and other
insurance to the extent required under applicable law in connection with all
Capital Work. All such policies shall be in form and amount reasonably
satisfactory to Lender.

               9.5.5. Compliance; Plans and Specifications and Contractors. All
Capital Work shall be done and completed by Borrower in an expeditious and
diligent fashion and in compliance with all applicable governmental laws, rules
and regulations (including, without limitation, all applicable Environmental
Requirements) and all plans and specifications required in connection with any
Capital Work shall, if the cost of same is estimated to exceed $150,000, be
subject to review and acceptance in all respects by Lender and Consultant. Upon
the occurrence of an Event of Default, Lender shall have the use of such plans
and specifications and all permits, licenses and approvals required or obtained
in connection with the Capital Work. If Lender fails to respond within ten (10)
Business Days following a request and submission of plans and specifications,
such plans and specifications shall be deemed approved by Lender.

               SECTION 9.6. Intentionally Omitted.

               SECTION 9.7. Prepaid Rent Funds.

                                 -54-

               9.7.1. Prepaid Rent Funds. Borrower shall, on the date hereof,
deposit with Lender the amount specified on Schedule 5 attached hereto with
respect to the Properties (such amount, together with any additional amounts
deposited pursuant to this Section with respect to the Properties, the "PREPAID
RENT FUNDS"). Borrower hereby represents and warrants to Lender that all Prepaid
Rents in existence as of March 31, 2002, have been deposited with Lender on the
Closing Date pursuant to this SECTION 9.7. From and after the Closing Date,
Borrower shall, by no later than the 30th day of each month following the end of
each calendar quarter (including the 30th day of the month following the quarter
in which the Closing Date shall have occurred) deliver to Lender a certificate
(the "PREPAID RENT CERTIFICATE"), in the form attached hereto as EXHIBIT Y,
setting forth the amount of Prepaid Rents in the Cash Management Account as of
the last day of the preceding calendar quarter. Lender shall direct the Agent
Bank to (x) deposit into the Prepaid Rent Account an amount equal to the excess,
if any, of the Prepaid Rents indicated on the Prepaid Rent Certificate over the
amount currently on deposit in the Prepaid Rent Account, and (y) allocate an
amount equal to the excess, if any, of the amounts currently on deposit in the
Prepaid Rent Account over the amount of the Prepaid Rents indicated on the
Prepaid Rent Certificate as provided in the Cash Management Agreement, as may be
applicable.

               9.7.2. Application of Funds. Upon the occurrence of an Event of
Default, Lender shall have no obligation to make any disbursement of funds from
the Prepaid Rent Account, and Lender shall have the immediate and continuing
right to exercise all rights and remedies afforded to Lender under this
Agreement and the other Loan Documents, or otherwise at law or in equity in
respect of the security for the Debt, including, without limitation, the right
to withdraw and apply the Prepaid Rent Funds on deposit in the Prepaid Rent
Account to the Debt, including, without limitation, to any costs or expenses
relating to the Properties.

         SECTION 9.8.   Security Interest in Funds.

               9.8.1. Grant of Security Interest. Borrower shall be the owner of
the Required Reserve Funds. Borrower hereby pledges, assigns and grants a
security interest to Lender, as security for payment of the Debt and the
performance of all other terms, conditions and covenants of the Loan Documents
on Borrower's part to be paid and performed, in all of Borrower's right, title
and interest in and to the Required Reserve Funds. The Required Reserve Funds
shall be under the sole dominion and control of Lender.

               9.8.2. Income Taxes. Borrower shall report on its federal, state
and local income tax returns all interest or income accrued on the Required
Reserve Funds.

               9.8.3. Prohibition Against Further Encumbrance. Borrower shall
not, without the prior consent of Lender, further pledge, assign or grant any
security interest in the Required Reserve Funds, or permit any lien or
encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Statements, except those naming Lender as the secured party, to be
filed with respect thereto.

         SECTION 9.9. Cash Management. On or before the Closing Date, Borrower
shall establish in accordance with the terms and provisions of the Cash
Management Agreement (i) with Deposit Bank an account for the deposit of all
Rents (the "DEPOSIT ACCOUNT"), the

                                 -55-

Prepaid Rent Funds (the "PREPAID RENT ACCOUNT"), an operating account (the
"OPERATING ACCOUNT") from which, provided no Event of Default shall have
occurred, Borrower shall be entitled to withdraw monies for uses permitted under
this Credit Agreement and the Cash Management Agreement, and (ii) with Agent an
account into which balances held in the Deposit Account will be swept (the "CASH
MANAGEMENT ACCOUNT") and separate accounts for each of the Tax Funds (the "TAX
ACCOUNT"), Insurance Premium Funds (the "INSURANCE PREMIUM ACCOUNT"), the
Ordinary Capital Expenditure Funds (the "ORDINARY CAPITAL EXPENDITURE FUNDS
ACCOUNT"), the Capital Improvement Funds (the "CAPITAL IMPROVEMENT ACCOUNT"),
the Prepaid Rent Funds (the "PREPAID RENT ACCOUNT") and the Monthly Debt Service
Payment Amount and any fees, late charges, default interest and other charges,
expenses or reimbursements due to Lender under any of the Loan Documents (the
"DEBT SERVICE ACCOUNT"). All of the Accounts shall be held and maintained,
invested and governed by the terms of the Cash Management Agreement. Lender
shall have no liability for any loss resulting from the investments of funds in
the Accounts that are invested in Permitted Investments and no such loss shall
affect Borrower's obligations to pay the Debt or to make the deposits required
under ARTICLE IX hereof. Borrower shall report on its federal, state and local
income tax reports all interest or income accrued on funds in the Accounts. Any
reference in this Agreement to the "TAX ACCOUNT," the "INSURANCE PREMIUM
ACCOUNT," the "ORDINARY CAPITAL EXPENDITURES ACCOUNT," the "CAPITAL IMPROVEMENT
ACCOUNT," the PREPAID RENT ACCOUNT," and the "DEBT SERVICE ACCOUNT," shall be
deemed to refer to the funds on deposit in the Cash Management Account which
constitute, respectively, the Tax Funds, Insurance Premium Funds, Ordinary
Capital Expenditure Funds, Capital Improvement Funds, the Prepaid Rent Funds,
Monthly Debt Service Payment Amount (and other sums due under the Loan
Documents), as calculated and determined by Lender or Servicer, it being
understood that the foregoing funds are to remain in and be commingled with each
other in the Cash Management Account until such time as they are withdrawn for
the purposes for which they were intended in accordance with the terms of this
Agreement and the Cash Management Agreement.

                                   ARTICLE X.

                                    DEFAULTS

         SECTION 10.1. Events of Default. The Debt shall become due at the
option of Lender upon the occurrence of any one or more of the following events
(collectively, "EVENTS OF DEFAULT"):

                    (a) if any regularly scheduled payment of interest or
          amortization is not paid on or before the fifth calendar day of the
          month or if the fifth calendar day of the month is not a Business Day,
          then on or before the first Business Day following the fifth calendar
          day of the month;

                    (b) if any tax lien is filed against Borrower, any Guarantor
          or any Property and the same is not discharged of record within thirty
          (30) days after Borrower or such Guarantor has been notified that the
          same has been filed, subject to Borrower's right to contest liens as
          provided herein;

                                      -56-

                    (c) if any Property shall become subject (i) to any tax
          lien, other than a lien for local real estate taxes and assessments
          not due and payable, or (ii) to any lis pendens, notice of pendency,
          stop order, the filing of a mechanic's or materialman's lien, or other
          lien of any nature whatsoever, and the same shall neither be
          discharged of record nor in the alternative insured over to the
          satisfaction of Lender by the title company insuring the lien of the
          Mortgage pertaining to the Property in question within a period of
          thirty (30) days after the date upon which Borrower has been notified
          that the same is filed or recorded, and irrespective of whether the
          same is superior or subordinate in lien or other priority to the lien
          of the Mortgages and irrespective of whether the same constitutes a
          perfected or inchoate lien or encumbrance on the Properties or any
          portion thereof or is only a matter of record or notice, subject to
          Borrower's right to contest Taxes as provided herein;

                    (d) if the Insurance Policies are not kept in full force and
          effect and Borrower fails to cure within ten (10) days after notice
          from Lender, or if the Insurance Policies or certificates of insurance
          are not delivered to Lender within ten (10) business days after
          request for same provided, however, that Lender shall have the right
          to place the required Insurance Policies any time after the first
          three (3) days of such ten (10) day period at the sole cost and
          expense of the Borrower;

                    (e) if Borrower shall solicit payment of any portion of the
          Rents for a period of more than one (1) month in advance or if any of
          the Rents are further assigned;

                    (f) if any of the covenants contained in SECTION 5.2 of this
          Agreement entitled "Negative Covenants" shall be breached;

                    (g) if any representation or warranty of any Borrower or any
          Guarantor made in this Agreement or any of the other Loan Documents,
          or in any certificate, report, financial statement or other instrument
          furnished in connection with the making of the Note, the Mortgages,
          this Agreement or any other Loan Document or the extension of the Loan
          by Lender to Borrower shall prove false or misleading in any material
          respect;

                    (h) if any Borrower or other Person shall be in default of a
          material obligation beyond any applicable notice and cure periods
          under any mortgage, deed of trust, pledge or other security agreement
          (including, without limitation, any such agreement now or hereafter
          held by Lender) affecting or relating to any Property, or any portion
          thereof;

                    (i) if for any reason any of the covenants set forth in
          SECTIONS 5.1.11 and 5.1.12 entitled "Single Purpose" and "Ownership of
          Borrower" shall at any time during the term of the Loan cease to be
          satisfied and complied with in all material respects or if any
          representation or warranty set forth in SECTION 4.1 entitled "Borrower
          Representations" or elsewhere in this

                                      -57-

          Agreement or the Loan Documents shall at any time cease to be true and
          accurate in all material respects;

                    (j) Intentionally Omitted;

                    (k) if Borrower or any Guarantor shall make an assignment
          for the benefit of creditors;

                    (l) (1) if a court of competent jurisdiction enters a decree
          or order for relief with respect to Borrower or any Guarantor under
          Title 11 of the United States Code as now constituted or hereafter
          amended or under any other applicable Federal or state bankruptcy,
          insolvency or other similar law, rule or regulation; (2) if such court
          enters a decree or order appointing a receiver, liquidator, assignee,
          trustee, custodian, examiner, magistrate, arbitrator, sequestrator (or
          similar official) of Borrower or any Guarantor, or of any substantial
          part of their respective properties; or (3) if such court decrees or
          orders the winding up or liquidation of the affairs of Borrower or any
          Guarantor, and such order or decree is not dismissed, discharged or
          vacated of record within sixty (60) days after the same has been
          entered;

                    (m) if Borrower or any Guarantor files a petition for relief
          or answer or consent seeking relief under Title 11 of the United
          States Code as now constituted or hereafter amended, or under any
          other applicable Federal or state bankruptcy, insolvency or other
          similar law, rule or regulation, or if Borrower or any Guarantor fails
          to vigorously and diligently oppose or shall otherwise consent to the
          commencement or prosecution of an involuntary case under Title 11 of
          the United States Code as now constituted or hereafter amended, or
          under any other applicable Federal or state bankruptcy, insolvency or
          similar law, rule or regulation, or to the appointment of or taking
          possession by a receiver, liquidator, assignee, trustee, custodian,
          examiner, magistrate, arbitrator, sequestrator (or other similar
          official) of Borrower or any Guarantor or of any substantial part of
          their respective properties, or if Borrower or any Guarantor fails
          generally to pay its respective debts as such debts become due, or if
          Borrower or any Guarantor takes any action in furtherance of any
          action described in this subparagraph;

                    (n) if Borrower or any other Person which is a party to any
          of the Loan Documents (other than Lender or its agents) shall be in
          default of a material obligation beyond the expiration of any
          applicable notice and cure periods under the Note, the Mortgages, this
          Agreement or any other Loan Document or any other document or
          instrument otherwise executed and delivered in connection therewith or
          in connection with the extension of the Loan by Lender to Borrower or
          if any other such event shall occur or condition shall exist, if the
          effect of such event or condition is to accelerate the maturity of any
          portion of the Debt or to permit Lender to accelerate the maturity of
          all or any portion of the Debt;

                                      -58-

                    (o) if Borrower shall fail to furnish or cause to be
          furnished to Lender, any financial or other information required to be
          provided in accordance with the provisions of this Agreement or the
          other Loan Documents or otherwise reasonably requested by Lender or
          shall fail to permit, or to arrange for, the inspection by Lender (or
          its employees and agents) of any books or records of Borrower and such
          default shall continue for five (5) business days after written notice
          by Lender to Borrower provided, however, that with respect to any
          annual or quarterly statements which are required to be furnished to
          Lender, Borrower shall have a total of thirty (30) days (which thirty
          (30) days shall be deemed to include the initial cure period) to cure
          the same provided that (i) the failure to furnish such annual or
          quarterly statements to Lender within the initial cure period was not
          due, in whole or part, to any act or inability to act on the part of
          the Borrower and (ii) such additional cure period shall only be
          applicable one (1) time in any given calendar year;

                    (p) if a material adverse change shall occur with respect to
          Borrower or any Guarantor or with respect to the Properties taken as a
          whole, or if the Property Manager is an Affiliate of Borrower, if a
          material adverse change shall occur with respect to the Property
          Manager; or

                    (q) if Borrower shall continue to be in default under any of
          the other terms, covenants or conditions of this Agreement not
          specifically identified in (a)-(p) above for five (5) days after
          written notice from Lender in the case of any default which can be
          cured by the payment of a sum of money, or for thirty (30) days after
          written notice from Lender in the case of any other default, provided
          that if such default cannot reasonably be cured within such thirty
          (30) day period and Borrower shall have commenced to cure such default
          within such thirty (30) day period and thereafter diligently and
          expeditiously proceeds to cure the same, such thirty (30) day period
          shall be extended for so long as it shall require Borrower in the
          exercise of due diligence to cure such default, it being agreed,
          however, that no such extension shall be for a period in excess of an
          additional sixty (60) days after the expiration of such thirty (30)
          day period.

          SECTION 10.2.  Remedies.

                    (i) Upon the occurrence of an Event of Default, and for so
          long as any such Event of Default continues, Lender (a) shall have the
          absolute and unconditional right in its sole and absolute discretion
          to declare the Debt or any portion thereof immediately due and
          payable, and (b) shall have the right to pursue any and all remedies
          provided for in this Agreement, the Note, the Mortgages, or any of the
          other Loan Documents or otherwise available to Lender, at law or in
          equity or otherwise, including but not limited to foreclosure of the
          Mortgages and any UCC liens.

                    (ii) Upon the occurrence of an Event of Default, all or any
          one or more of the rights, powers, privileges and other remedies

                                      -59-

          available to Lender against Borrower under this Agreement or any of
          the other Loan Documents executed and delivered by, or applicable to,
          Borrower or at law or in equity may be exercised by Lender at any time
          and from time to time, whether or not all or any of the Debt shall be
          declared due and payable, and whether or not Lender shall have
          commenced any foreclosure proceeding or other action for the
          enforcement of its rights and remedies under any of the Loan Documents
          with respect to all or any of the Properties. Any such actions taken
          by Lender shall be cumulative and concurrent and may be pursued
          independently, singly, successively, together or otherwise, at such
          time and in such order as Lender may determine in its sole discretion,
          to the fullest extent permitted by law, without impairing or otherwise
          affecting the other rights and remedies of Lender permitted by law,
          equity or contract or as set forth herein or in the other Loan
          Documents. Without limiting the generality of the foregoing, Borrower
          agrees that if an Event of Default is continuing (i) Lender is not
          subject to any "one action" or "election of remedies" law or rule, and
          (ii) all liens and other rights, remedies or privileges provided to
          Lender shall remain in full force and effect until Lender has
          exhausted all of its remedies against the Properties and each Mortgage
          has been foreclosed, sold and/or otherwise realized upon in
          satisfaction of the Debt or the Debt has been paid in full.

                    (iii) With respect to Borrower and the Properties, nothing
          contained herein or in any other Loan Document shall be construed as
          requiring Lender to resort to any Property for the satisfaction of any
          of the Debt in preference or priority to any other Property, and
          Lender may seek satisfaction out of all of the Properties or any part
          thereof, in its absolute discretion in respect of the Debt. In
          addition, Lender shall have the right from time to time to partially
          foreclose the Mortgages in any manner and for any amounts secured by
          the Mortgages then due and payable as determined by Lender in its sole
          discretion including, without limitation, the following circumstances
          in the event Borrower defaults beyond any applicable grace period in
          the payment of one or more scheduled payments of principal and
          interest, Lender may foreclose one or more of the Mortgages to recover
          such delinquent payments. Notwithstanding one or more partial
          foreclosures, the Properties shall remain subject to the Mortgages to
          secure payment of sums secured by the Mortgages and not previously
          recovered.

                    (iv) In addition to any rights and remedies of Lender
          provided by this Loan Agreement and by law, the Lender shall have the
          right, without prior notice to Borrower, any such notice being
          expressly waived by Borrower to the extent permitted by applicable
          law, upon any amount becoming due and payable by Borrower hereunder
          (whether at the stated maturity, by acceleration or otherwise
          following an Event of Default) to set-off and appropriate and apply
          against such amount any and all deposits (general or special, time or
          demand, provisional or final), in

                                      -60-

          any currency, and any other credits, indebtedness or claims, in any
          currency, in each case whether direct or indirect, absolute or
          contingent, matured or unmatured, at any time held or owing by Lender
          to or for the credit or the account of Borrower. Lender agrees
          promptly to notify Borrower after any such set-off and application
          made by Lender; provided that the failure to give such notice shall
          not affect the validity of such set-off and application. The
          provisions of this Section 10.2(iv) shall be applicable only during
          such time as this Loan shall be held by Morgan Stanley Bank.

         SECTION 10.3. Application of Moneys. All moneys received or collected
by Lender in respect of the Loan after an Event of Default shall be applied by
Lender to the payment of the Debt in such order, priority and proportions as
Lender may in its sole and absolute discretion determine. The balance, if any,
of such moneys remaining after payment in full of such costs and the Debt shall
be remitted to Borrower or as otherwise directed by a court of competent
jurisdiction.

         SECTION 10.4. Remedies Cumulative. The rights, powers and remedies of
Lender under this Agreement shall be cumulative and not exclusive of any other
right, power or remedy which Lender may have against Borrower pursuant to this
Agreement or the other Loan Documents, or existing at law or in equity or
otherwise. Lender's rights, powers and remedies may be pursued singly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender's sole discretion. No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may be
deemed expedient. A waiver of one Default or Event of Default with respect to
Borrower shall not be construed to be a waiver of any subsequent Default or
Event of Default by Borrower or to impair any remedy, right or power consequent
thereon.

         SECTION 10.5. Right to Cure Defaults. If default beyond any applicable
notice and cure period in the performance of any of the covenants of Borrower
shall occur and be continuing, Lender may, at its discretion, remedy the same
and for such purpose shall have the right to enter upon the Properties or any
portion thereof without thereby being liable to Borrower or any Person in
possession thereof holding under Borrower, and to pay all sums as may be
necessary to cure any such default (including, without limitation any default by
Borrower in the payment of any Insurance Premiums or any Taxes or other liens or
encumbrances covering the Properties or any part thereof). If Lender shall
remedy such a default (including, without limitation, any default by Borrower in
the payment of any Insurance Premiums or any Taxes or other liens or
encumbrances covering the Properties or any part thereof) or appear in, defend
or bring any action or proceeding to protect the interest of Lender in the
Properties, or any portion thereof, or to foreclose any of the Mortgages or
collect the Debt, the costs and expenses thereof (including reasonable
attorneys' fees to the extent permitted by law) with interest as provided in
this paragraph, shall be paid by Borrower to Lender upon demand, and shall be
added to and constitute part of the Debt secured by the Mortgages. All such
costs and expenses incurred by Lender in remedying such default or in appearing
in, defending or bringing any such action or proceeding, shall be paid by
Borrower to Lender upon demand, with interest at a rate per annum equal to the
Default Rate.

                                      -61-

                                  ARTICLE XI.

                              Intentionally Omitted

                                  ARTICLE XII.

                      SALE AND SECURITIZATION AND SERVICER

         SECTION 12.1. Syndication of the Loan. Lender shall have the absolute
and unconditional right at any time after the date of this Agreement and at any
time during the term of the Loan without requiring any consent or approval from
Borrower or any Guarantor or indemnitor or any other person, party or entity
associated with or connected with the Loan or the collateral therefor (i) to
sell and assign the Loan in whole or in part, or (ii) to place one or more
participation interests therein in one or more separate transactions, or (iii)
to effect a syndication or securitization of the Loan or of any interest therein
in one or more transactions and in a single asset securitization or a pooled
loan securitization, in each case to or with such persons, parties, entities or
investors (including, without limitation, domestic or foreign banks, insurance
companies, pension funds, trusts, other institutional lenders or investors,
natural persons, grantor trusts, owner trusts, special purpose corporations,
REMICs, FASITS, real estate investment trusts or other similar or comparable
investment vehicles) and on such terms and conditions as Lender shall deem to be
appropriate in the exercise of its sole and absolute discretion. (The
transaction referred to in clauses (i), (ii) and (iii) shall hereinafter be
referred to collectively as "SECONDARY MARKET TRANSACTIONS" and the transactions
referred to in clause (iii) shall hereinafter be referred to as a
"SECURITIZATION." Any certificate, notes or other securities issued in
connection with a Securitization are hereinafter referred to as "SECURITIES").
In connection with any such Secondary Market Transaction, Lender shall have the
absolute and unconditional right without obtaining the prior approval of
Borrower, any Guarantor or indemnitor or any other person, party or entity
associated or connected with the Loan or the collateral therefor to disclose,
deliver and to share, on a confidential basis, with any prospective purchaser of
the Loan or of any participation or other interest therein (including any such
interest to be acquired in connection with a syndication or securitization of
the Loan) such information (financial or otherwise), documents and instruments
pertaining to the Loan, the Properties, Borrower or any Guarantor or indemnitor
or any other person, party or entity associated or connected with the Loan or
the collateral therefor as Lender shall deem to be appropriate in the exercise
of its sole and absolute discretion. Except as provided otherwise in SECTION
12.1.1 or as may otherwise be agreed upon by the Borrower in writing, Borrower
shall not be responsible for the payment of any costs and expenses in connection
with any Secondary Market Transaction.

               SECTION 12.1.1 Borrower's Costs and Expenses of a Secondary
Market Transaction. Borrower shall be responsible for the payment of any costs
and expenses in connection with any Secondary Market Transaction associated with
the cost of obtaining:

                         (i) a current phase one level environmental audit
               report with respect to certain Properties, (and such additional
               reports as may be required by Lender if any environmental
               problems are disclosed by the phase one level reports) prepared
               by qualified environmental consultant(s)

                                      -62-

               or firm(s) designated and retained by Borrower and approved by
               Lender, and shall otherwise be in form and substance satisfactory
               in all respects to Lender;

                         (ii) a detailed structural and physical inspection
               report ("PROPERTY INSPECTION REPORT"), with respect to certain
               Properties, prepared by Borrower unless otherwise required by
               Lender to retain a third party inspecting engineer, which shall
               give a detailed description of the physical condition of such
               Property and shall otherwise be in form and substance acceptable
               to Lender; and

                         (iii) a comprehensive current written appraisal report
               with respect to certain Properties prepared by an MAI appraiser
               designated by Lender and complying with FIRREA standards.

Borrower shall only be required to submit a (i) current phase one level
environmental audit report pursuant to SECTION 12.1.1(i) if, at the time of
closing the Loan, the phase one level environmental audit report for those
Properties submitted to Lender was dated earlier than one (1) year prior to the
closing of the Loan, (ii) Property Inspection Report pursuant to SECTION
12.1.1(ii) with respect to those Properties which Borrower did not deliver such
Property Inspection Report to Lender after the date which was three months prior
to the closing of the Loan, and (iii) current appraisal report pursuant to
SECTION 12.1.1(iii) if the appraisal report for those Properties submitted to
Lender was dated earlier than one (1) year before the closing of the Loan.

               SECTION 12.2. Cooperation. If requested by Lender, Borrower
shall, assist Lender in satisfying the market standards to which Lender
customarily adheres or which may be reasonably required in the marketplace or by
the Rating Agencies in connection with any Secondary Market Transactions,
including, without limitation, to:

                         (i) (A) provide updated financial and other information
               with respect to the Properties, the business operated at the
               Properties, Borrower and the Property Manager, (B) provide
               updated budgets relating to the Properties and (C) provide
               updated appraisals, market studies, environmental reviews (Phase
               I's and, if appropriate, Phase II's), property condition reports,
               ALTA/ACSM, surveys and other due diligence investigations of the
               Properties together, if customary, with appropriate verification
               of such updated information through letters of auditors or
               opinions of counsel acceptable to Lender and the Rating Agencies;

                         (ii) provide access and entry to the Properties during
               normal business hours and upon prior notice to Lender, any
               prospective purchaser of the Loan or of any participation or
               other interest therein (including any such interest to be
               acquired in connection with a syndicate or securitization of the
               Loan, the Rating Agencies or any other Person authorized by
               Lender);

                                      -63-

                         (iii) use best efforts to provide opinions of counsel,
               which may be relied upon by Lender, the Rating Agencies and their
               respective counsel, agents and representatives, as to
               non-consolidation, fraudulent conveyance, and true sale or any
               other opinion customary in Secondary Market Transactions or
               required by the Rating Agencies with respect to the Properties
               and Borrower and Affiliates, which counsel and opinions shall be
               satisfactory to Lender and the Rating Agencies;

                         (iv) provide updated, as of the closing date of the
               Secondary Market Transaction (the "SECONDARY MARKET CLOSING
               DATE"), representations and warranties made in the Loan Documents
               and such additional representations and warranties as the Rating
               Agencies may reasonably require;

                         (v) execute amendments to the Loan Documents and
               Borrower's organizational documents reasonably requested by
               Lender, provided, however, that Borrower shall not be required to
               modify or amend any Loan Document if such modification or
               amendment would (A) change the interest rate, the stated maturity
               or the amortization of principal as set forth herein or in the
               Note, or (B) modify or amend any other material economic term of
               the Loan;

                         (vi) provide any additional financial statements or
               other information as may be required to satisfy all requirements
               of the Securities Act (defined below); and

                         (vii) transfer ownership of Properties to newly formed
               single-purpose entities acceptable to Lender and the Rating
               Agencies.

               Except as expressly set forth in Section 12.1.1, or as may
otherwise be agreed upon by the Borrower in writing, Lender shall be responsible
for all costs and expenses associated with this ARTICLE XII.

                                      -64-

         SECTION 12.3.  Securitization Indemnification.

         (a) Borrower understands that information provided to Lender by
Borrower and its agents, counsel and representatives may be included in
disclosure documents in connection with the Securitization, including, without
limitation, an offering circular, a prospectus, prospectus supplement, private
placement memorandum or other offering document (each, a "DISCLOSURE DOCUMENT")
and may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "SECURITIES ACT"), or
the Securities and Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and
may be made available to investors or prospective investors in the Securities,
the Rating Agencies, and service providers relating to the Securitization.
Lender shall provide Borrower adequate opportunity to review any such Disclosure
Document and to provide any such comment to Lender as Borrower deems necessary.

         (b) Borrower agrees to provide in connection with each of (i) a
preliminary and a final private placement memorandum or (ii) a preliminary and
final prospectus or prospectus supplement, as applicable, an agreement (A)
certifying that Borrower has examined such Disclosure Documents specified by
Lender and that each such Disclosure Document, as it relates to Borrower,
Borrower Affiliates, the Properties, the Property Manager and all other aspects
of the Loan, does not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in the
light of the circumstances under which they were made, not misleading, (B)
indemnifying (and for purposes of this SECTION 12.3, Lender hereunder shall
include its officers and directors), the Affiliate of Lender that has filed the
registration statement relating to the Securitization (the "REGISTRATION
STATEMENT"), each of its directors, each of its officers who have signed the
Registration Statement and each Person that controls the Affiliate within the
meaning of SECTION 15 of the Securities Act or Section 20 of the Exchange Act
(collectively, the "LENDER GROUP"), and Lender, each of its directors and each
Person who controls Lender within the meaning of Section 15 of the Securities
Act and Section 20 of the Exchange Act (collectively, the "UNDERWRITER GROUP")
for any losses, claims, damages or liabilities (collectively, the "LIABILITIES")
to which Lender, the Lender Group or the Underwriter Group may become subject
insofar as the Liabilities arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in such sections or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated in such sections or necessary in order to
make the statements in such sections, in light of the circumstances under which
they were made, not misleading to the extent that Borrower failed to timely
notify the Lender, Lender Group and/or the Underwriter Group with respect to the
same and (C) agreeing to reimburse Lender, the Lender Group and/or the
Underwriter Group for any legal or other expenses reasonably incurred by Lender,
the Lender Group and the Underwriter Group in connection with investigating or
defending the Liabilities; provided, however, that Borrower will be liable in
any such case under clause (B) or (C) above only to the extent that any such
loss claim, damage or liability arises out of or is based upon any such untrue
statement or omission made therein in reliance upon and in conformity with
information furnished to Lender by or on behalf of Borrower in connection with
the preparation of the Disclosure Document or in connection with the
underwriting or closing of the Loan, including, without limitation, financial
statements of Borrower, operating statements, rent rolls, appraisals, market
studies, environmental site

                                      -65-

assessment reports and property condition reports with respect to the
Properties. This indemnity agreement will be in addition to any liability which
Borrower may otherwise have.

         (c) In connection with Exchange Act filings, Borrower shall (i)
indemnify Lender, the Lender Group and the Underwriter Group for Liabilities to
which Lender, the Lender Group or the Underwriter Group may become subject
insofar as the Liabilities arise out of or are based upon the omission or
alleged omission to state in the Disclosure Document a material fact required to
be stated in the Disclosure Document in order to make the statements in the
Disclosure Document, in light of the circumstances under which they were made,
not misleading to the extent that Borrower failed to timely notify the Lender,
Lender Group and/or the Underwriter Group with respect to the same and (ii)
reimburse Lender, the Lender Group or the Underwriter Group for any legal or
other expenses reasonably incurred by Lender, the Lender Group or the
Underwriter Group in connection with defending or investigating the Liabilities.

         (d) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof,
but the omission to so notify the indemnifying party will not relieve the
indemnifying party from any liability which the indemnifying party may have to
any indemnified party hereunder except to the extent that failure to notify
causes prejudice to the indemnifying party. In the event that any action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled, jointly with
any other indemnifying party, to participate therein and, to the extent that it
(or they) may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel satisfactory to such indemnified party.
After notice from the indemnifying party to such indemnified party under this
Section, such indemnified party shall pay for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there are any legal defenses available to it and/or other indemnified
parties that are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party at
the cost of the indemnifying party. The indemnifying party shall not be liable
for the expenses of more than one separate counsel unless an indemnified party
shall have reasonably concluded that there may be legal defenses available to it
that are different from or additional to those available to another indemnified
party.

         (e) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in this Section is
for any reason held to be unenforceable as to an indemnified party in respect of
any losses, claims, damages or liabilities (or action in respect thereof)
referred to therein which would otherwise be indemnifiable under this Section,
the indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages or liabilities (or
action in respect thereof); provided, however, that 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

                                      -66-

who was not guilty of such fraudulent misrepresentation. In determining the
amount of contribution to which the respective parties are entitled, the
following factors shall be considered: (i) Lender's and Borrower's relative
knowledge and access to information concerning the matter with respect to which
the claim was asserted; (ii) the opportunity to correct and prevent any
statement or omission; and (iii) any other equitable considerations appropriate
in the circumstances. Lender and Borrower hereby agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation.

         (f) The liabilities and obligations of both Borrower and Lender under
this SECTION 12.3 shall survive the termination of this Agreement and the
satisfaction and discharge of the Debt.

         SECTION 12.4. Rating Surveillance. Lender will retain, at its sole
costs, the Rating Agencies to provide rating surveillance services on any
certificates issued in a Securitization.

         SECTION 12.5. Component Notes. At no cost or expense to Borrower,
Lender shall have the right to modify the Note in order to create one or more
"component notes" provided that (a) the total principal balance of such notes as
of the effective date of such modification equals the total principal balance of
the Loan immediately prior to such modification, (b) the total weighted average
of the Interest Rates of all of the component notes as of the effective date of
such modification equals the weighted average of the Interest Rate of the Note
immediately prior to such modification and (c) the aggregate monthly debt
service on such component notes immediately after such modification equals the
monthly debt service immediately prior to such modification. Lender shall have
the right to modify the Notes in the accordance with this Section upon notice to
Borrower (in which event such modification shall then be deemed effective).

         SECTION 12.6. Event of Default. It shall be an Event of Default if
either Borrower or Guarantors shall fail to comply with any of the terms,
covenants or conditions of this Article XII for three (3) Business Days after
notice from Lender provided, however, that if Borrower shall have commenced to
cure such default, and thereafter diligently and expeditiously proceeds to cure
the same, such three (3) day period will be extended for an additional five (5)
business days.

         SECTION 12.7. Servicer. Lender reserves the right to retain a servicer
(the "SERVICER") to act as its agent under the Loan with such powers as are
specifically delegated to the servicer by Lender including, without limitation,
(x) general administration of the Loan, including, without limitation, the
collection and remittance of payments, the maintaining of tax and insurance
escrows, the review of the monthly and quarterly reports required to be
submitted by Borrower and the issuance of periodic reports of available
borrowing capacity under the Loan, (y) the granting or withholding of any and
all consents or approvals which may be requested or given pursuant to the Loan
Documents, and (z) the exercise of, or determination to refrain from exercising,
rights and remedies under the Loan Documents. In the event Lender retains a
Servicer as aforesaid, Borrower shall recognize that the Servicer shall have all
the rights and obligations of the Lender hereunder and Borrower irrevocably
consents to the matters set forth in this SECTION 12.7 and agrees to cooperate
with the Servicer in all respects as if Servicer

                                      -67-

were the Lender named herein. Lender shall be responsible for the payment of all
fees and expenses of Servicer.

         SECTION 12.8. Creation of Security Interest. Notwithstanding any other
provision set forth in this Loan Agreement, the Note, the Mortgage or any of the
other Loan Documents, Lender may at any time create a security interest in all
or any portion of its rights under this Agreement, the Note, the Mortgage and
any other Loan Document (including, without limitation, the advances owing to
it) in favor of any Federal Reserve Bank in accordance with Regulation A of the
Board of Governors of the Federal Reserve System.

                                 ARTICLE XIII.

                          PARTIAL RELEASE OF PROPERTIES

         SECTION 13.1. Partial Release of Properties. Borrower shall have the
right to obtain releases of individual Properties from the lien of the Mortgages
and the other Loan Documents (and to obtain a release of any Ordinary Capital
Expenditure Funds, Capital Improvement Funds, Tax Funds and Insurance Premium
Funds held in connection therewith) upon the following terms and conditions:

                         (i) no default shall have occurred and be continuing
               under the Loan Documents;

                         (ii) the covenant set forth in SECTION 5.1.11 entitled
               "Single Purpose" shall be fully satisfied, such that the Borrower
               will no longer own the released Property;

                         (iii) Borrower shall deliver to Lender the Defeasance
               Collateral required under SECTION 2.5 with respect to such
               Property, which amount shall be applied in reduction of the
               Principal Balance of the Note in such manner as Lender shall
               determine;

                         (iv) Borrower shall deposit the Defeasance Collateral
               into the Defeasance Collateral Account in an amount equivalent to
               125% of the Allocated Loan Amount with respect to such property
               in such manner as Lender shall determine;

                         (v) the aggregate Allocated Loan Amount of all
               Properties released in accordance with this SECTION 13.1 shall
               not exceed 25% of the Principal Balance of the Loan;

                         (vi) Lender shall be satisfied that the Debt Service
               Coverage Ratio of the Properties after such release shall not be
               less than the Debt Service Coverage Ratio immediately preceding
               such release and repayment;

                                      -68-

                         (vii) Borrower shall deliver to Lender such other
               certificates, documents or instruments as Lender may reasonably
               request; and

                         (viii) Borrower shall have satisfied the other
               conditions and requirements set forth in SECTION 2.5.

         SECTION 13.2. [Intentionally Reserved]

         SECTION 13.3. Allocated Loan Amounts. SCHEDULE 1 sets forth the
allocation of the Principal Balance of the Loan amongst the Properties (such
allocation with respect to each Property, the "ALLOCATED LOAN AMOUNT"). The
Allocated Loan Amounts shall not be subject to adjustment or reallocation as a
result of any prepayments of the Principal Balance.

                                  ARTICLE XIV.

                                  MISCELLANEOUS

         SECTION 14.1. Non-Waiver. The failure of Lender to insist upon strict
performance of any term of this Agreement shall not be deemed to be a waiver of
any term of this Agreement. Borrower shall not be relieved of Borrower's
obligation to pay the Debt at the time and in the manner provided for its
payment in the Note, the Mortgages and this Agreement by reason of (i) failure
of Lender to comply with any request of Borrower to take any action to foreclose
any one or more of the Mortgages or otherwise enforce any of the provisions of
this Agreement, the Mortgages, the Note or any of the other Loan Documents, (ii)
the release, regardless of consideration, of the whole or any part of the
Properties or any other collateral or security for the Debt, or (iii) any
agreement or stipulation between Lender and any subsequent owner or owners of
the Properties or other Person extending the time of payment or otherwise
modifying or supplementing the terms of the Note, the Mortgages, this Agreement
or any of the other Loan Documents without first having obtained the consent of
Borrower, and in the latter event, Borrower shall continue to be obligated to
pay the Debt at the time and in the manner provided in the Note, the Mortgages
and this Agreement, as so extended, modified and supplemented, unless, expressly
released and discharged from such obligation by Lender in writing. Regardless of
consideration, and without the necessity for any notice to or consent by the
holder of any subordinate lien, encumbrance, right, title or interest in or to
the Properties, Lender may release any Person at any time liable for the payment
of the Debt or any portion thereof or any part of the security held for the Debt
and may extend the time of payment or otherwise modify the terms of the Note,
the Mortgages, this Agreement or any of the other Loan Documents, including,
without limitation, a modification of the interest rate payable on the Principal
Balance, without in any manner impairing or affecting the Mortgages or the
respective liens thereof or the priority of the Mortgages, as so extended and
modified, as security for the Debt over any such subordinate lien, encumbrance,
right, title or interest. Lender may resort for the payment of the Debt to any
other security held by Lender in such order and manner as Lender in its
discretion, may elect. Lender may take action to recover the Debt, or any
portion thereof, or to enforce any covenant hereof without prejudice to the
right of Lender thereafter to foreclose any one or more of the Mortgages. Lender
shall not be limited exclusively to the rights and

                                      -69-

remedies herein stated but shall be entitled to every additional right and
remedy set forth in the Loan Documents or now or hereafter afforded by law. The
rights of Lender under this Agreement and the other Loan Documents shall be
separate, distinct and cumulative and none shall be given effect to the
exclusion of the others. No act of Lender shall be construed as an election to
proceed under any one provision of this Agreement or of the other Loan Documents
to the exclusion of any other provision set forth in this Agreement or the other
Loan Documents.

         SECTION 14.2. Sole Discretion. Except as may otherwise be expressly
provided to the contrary, wherever pursuant to the Note, the Mortgages, this
Agreement, or any of the other Loan Documents, Lender exercises any right given
to it to consent or not consent, or to approve or disapprove, or any arrangement
or term is to be satisfactory to Lender, the decision of Lender shall be in the
sole and absolute discretion of Lender and shall be final and conclusive.

         SECTION 14.3. Absolute and Unconditional Obligation. Borrower
acknowledges that Borrower's obligation to pay the Debt in accordance with the
provisions of the Note, the Mortgages and this Agreement is and shall at all
times continue to be absolute and unconditional in all respects, and shall at
all times be valid and enforceable irrespective of any other agreements or
circumstances of any nature whatsoever which might otherwise constitute a
defense to the Note, the Mortgages or this Agreement or the obligation of
Borrower thereunder to pay the Debt or the obligations of any other Person
relating to the Note, the Mortgages or this Agreement or the obligations of
Borrower under the Note, the Mortgages or this Agreement or otherwise with
respect to the Loan, and Borrower absolutely, unconditionally and irrevocably
waives any and all right to assert any defense (other than the defense of
payment), setoff, counterclaim or crossclaim of any nature whatsoever with
respect to the obligation of Borrower to pay the Debt in accordance with the
provisions of the Note, the Mortgages and this Agreement or the obligations of
any other Person relating to the Note, the Mortgages or this Agreement or the
obligations of Borrower under the Note, the Mortgages or this Agreement or
otherwise with respect to the Loan in any action, case or proceeding brought by
Lender to collect the Debt, or any portion thereof, or to enforce, foreclose and
realize upon the lien and security interest created by the Mortgages or any
other document or instrument securing repayment of the Debt, in whole or in part
(provided, however, that the foregoing provisions of this sentence shall not be
deemed a waiver of the right of Borrower to assert any compulsory counterclaim
in any such action, case or proceeding brought by Lender in any state court if
such counterclaim is compelled under local law or rule or procedure, or in any
such action, case or proceeding brought by Lender in a court of the United
States, nor shall the foregoing provisions of this sentence be deemed a waiver
of the right of Borrower to assert any claim which would otherwise constitute a
defense, setoff, counterclaim or crossclaim of any nature whatsoever against
Lender in any separate action, case or proceeding brought by Borrower against
Lender).

         SECTION 14.4. Relationship. The relationship of Lender to Borrower
hereunder is strictly and solely that of lender and borrower and nothing
contained in the Note, the Mortgages, this Agreement or any of the other Loan
Documents is intended to create, or shall in any event or under any circumstance
be construed as creating, a partnership, joint venture, tenancy-in-common, joint
tenancy or other relationship of any nature whatsoever between Lender and
Borrower other than as lender and borrower.

                                      -70-

         SECTION 14.5. Anti-Forfeiture. Borrower hereby covenants and agrees not
to commit, permit or suffer to exist any act or omission affording the Federal
government or any state or local government the right of forfeiture under any
Federal or state RICO or similar law as against the Properties or any part
thereof or interest therein or any monies paid in performance of Borrower's
obligations under this Agreement, the Mortgages, the Note or any of the other
Loan Documents. In furtherance thereof, Borrower hereby indemnifies Lender and
agrees to defend and hold Lender harmless from and against any loss, damage or
injury by reason of the breach of the covenants and agreements set forth in this
paragraph. Without limiting the generality of the foregoing, the filing of
formal charges or the commencement of proceedings against Borrower or against
the Properties or any part thereof or interest therein under any Federal or
state law for which forfeiture of the Properties or any part thereof or of any
monies paid in performance of Borrower's obligations under the Loan Documents is
a potential result, shall, at the election of Lender, but otherwise subject to
the immediately following sentence, constitute an Event of Default hereunder
without notice or opportunity to cure. Notwithstanding the foregoing, after
prior notice to Lender, Borrower, at its own cost and expense, may contest the
validity of or application of any such law affording such forfeiture, provided
that (i) no default shall have occurred and shall be continuing under the Note,
the Mortgages, this Agreement or any of the other Loan Documents, (ii) such
proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower, or the Properties, are
subject and shall not constitute a default thereunder, (iii) neither the
Properties nor any portion thereof nor any interest therein will in the opinion
of Lender be in danger of being sold, forfeited, terminated, canceled or lost,
and (iv) Borrower shall have deposited with Lender cash, cash equivalent or
letter of credit satisfactory to Lender in an amount sufficient to discharge any
lien together with interest and penalties thereon arising out of such law.
Notwithstanding the foregoing, Borrower shall not be required to make any
deposit with Lender pursuant to clause (iv) of the preceding sentence, if Lender
is reasonably satisfied that (a) the act or omission affording such forfeiture
was committed by a Person other than Borrower or an Affiliate or subsidiary of
Borrower, (b) Borrower is diligently pursuing its rights and remedies against
such Person, (c) neither the Properties nor any portion thereof or interest
therein will be in danger of being sold, forfeited, terminated, canceled or
lost, and (d) the respective liens and priorities of the Mortgages will not be
in danger of being primed, diminished or forfeited.

         SECTION 14.6. Deposits. Whenever in this Agreement, Borrower is
required to deposit monies with Lender to secure obligations of Borrower under
this Agreement or as a condition precedent to Borrower's right to contest
certain obligations, such monies shall (unless otherwise specifically provided
to the contrary in this Agreement) be held in an interest-bearing account
selected by Lender. All such accrued interest shall be held, disbursed and
applied in accordance with the provisions applicable to such deposits, it being
agreed that interest earned on the Tax Fund Account and the Insurance Premium
Account shall be credited against future required monthly deposits. From time to
time, at the request of Borrower, Lender shall disburse interest earned on the
Capital Improvement Account to the Borrower for deposit into the Operating
Account provided Lender is reasonably satisfied that sufficient funds remain in
such Accounts to complete all Capital Work required hereunder. In order to
secure the payment of the Debt and the performance by Borrower of its
obligations under the Loan Documents, Borrower hereby grants and assigns to
Lender a security interest in and to all monies from time to time on deposit in
any such account. Upon the occurrence of an Event of Default and for so long as
such

                                      -71-

Event of Default shall continue, Lender shall have the absolute right to apply
all or any portion of the balances held in any such accounts to the payment of
the Debt whether or not due and payable in such order, priority and proportions
as Lender in its discretion shall deem appropriate.

         SECTION 14.7. No Brokers. Lender shall not be required to pay any
brokerage fees or commissions or other remuneration of any nature whatsoever
arising from the extension of the Loan or the funding of the Loan and Borrower
agrees to defend, indemnify and hold Lender harmless, from and against any and
all claims made against, or liabilities, obligations, damages, costs and
expenses (including reasonable attorneys' fees and disbursements) incurred by
Lender in connection with any claims which are asserted by any broker with whom
Borrower has, or is alleged to have, dealt in connection with the Loan or any
other Person claiming by, through or under Borrower in connection with the Loan.

         SECTION 14.8. Submission to Jurisdiction. Borrower agrees to submit to
personal jurisdiction in the State of New York in any action, case or proceeding
arising out of the Note, this Agreement or the other Loan Documents (other than
the Mortgages and the Assignments of Leases and Rents), and, in furtherance of
such agreement, Borrower hereby agrees and consents that without limiting other
methods of obtaining jurisdiction, personal jurisdiction over Borrower in any
such action, case or proceeding may be obtained within or without the
jurisdiction of any court located in the State of New York and that any process
or notice of motion or other application to any such court in connection with
any such action, case or proceeding may be served upon Borrower by registered or
certified mail to or by personal service at the last known address of Borrower,
as the case may be, whether such address be within or without the jurisdiction
of any such court. Borrower also agrees that the venue of any litigation arising
in connection with the Debt or in respect of any of the obligations of Borrower
under the Note, this Agreement or the other Loan Documents (other than
enforcement actions brought under the Mortgages and the Assignments of Leases
and Rents) shall, to the extent permitted by law, be in New York County, New
York.

         SECTION 14.9. Retention of Counsel and Consultants. If Lender deems it
to be in its best interests to retain the assistance of any Person (including,
but not limited to, attorneys, title insurance companies, third party escrow
agents, appraisers, accountants, engineers and surveyors) with respect to any
request for consent or approval by Lender relating to the Loan Documents,
Borrower shall reimburse Lender within ten (10) days of its demand for all
reasonable costs incurred by them in connection with the employment of such
Persons.

SECTION 14.10. Waiver of Notice. Borrower shall not be entitled to any notices
of any nature whatsoever from Lender except as required by applicable law and
except with respect to matters for which this Agreement specifically and
expressly provides for the giving of notice by Lender to Borrower, and Borrower
hereby expressly waives the right to receive any notice from Lender with respect
to any matter for which applicable law or this Agreement does not specifically
and expressly provide for the giving of notice by Lender to Borrower.

         SECTION 14.11. Indemnification of Lender. Borrower shall indemnify
Lender and its respective affiliates, subsidiaries, directors, officers and
employees against all losses, claims, damages, penalties, judgments, liabilities
and reasonable expenses (including, without limitation, all expenses of
litigation or preparation therefor whether or not Lender is a party

                                      -72-

thereto) which any of them may pay or incur arising out of or relating to this
Agreement, the other Loan Documents, the transactions contemplated hereby or the
direct or indirect application or proposed application of the proceeds of any
Loan hereunder; provided, however, that nothing herein shall obligate Borrower
to indemnify Lender from and against any losses, claims, damages, penalties,
judgments, liabilities and expenses, imposed on or incurred by Lender by reason
of Lender's willful misconduct or gross negligence. The obligations of Borrower
under this paragraph shall survive the termination of this Agreement.

         SECTION 14.12. Construction of Agreement. The titles and headings
preceding the Sections of this Agreement have been inserted for convenience of
reference only and are not intended to summarize or otherwise describe the
subject matter of such Section and shall not be given any consideration in the
construction of this Agreement.

         SECTION 14.13. Parties Bound, etc. All of the terms, covenants and
provisions of this Agreement shall be binding upon and inure to the benefit of
Borrower and Lender and their respective successors and assigns. Borrower shall
not have the right without the prior consent of Lender (which consent may be
withheld in the sole and absolute discretion of Lender) to assign or transfer
its rights under this Agreement or under any of the other Loan Documents, in
whole or in part, by agreement, operation of law or otherwise to any other
Person, it being agreed that any such assignment or transfer without the prior
consent of Lender shall be void and of no force and effect and shall constitute
an immediate Event of Default under this Agreement.

         SECTION 14.14. COMPLETE AGREEMENT. NO STATEMENTS, AGREEMENTS OR
REPRESENTATIONS, ORAL OR WRITTEN, WHICH MAY HAVE BEEN MADE BY LENDER, OR BY ANY
EMPLOYEE, AGENT OR BROKER ACTING ON BEHALF OF LENDER, WITH RESPECT TO THIS
AGREEMENT OR THE LOAN SHALL BE OF ANY FURTHER FORCE OR EFFECT, EXCEPT TO THE
EXTENT SPECIFICALLY SET FORTH IN THIS AGREEMENT OR IN THE OTHER LOAN DOCUMENTS,
AND ALL PRIOR AGREEMENTS AND REPRESENTATIONS IN RESPECT OF THIS AGREEMENT AND
THE LOAN ARE MERGED IN THIS AGREEMENT SO THAT THIS AGREEMENT SHALL CONSTITUTE
THE ENTIRE AGREEMENT BETWEEN LENDER AND BORROWER WITH RESPECT TO THE LOAN.

         SECTION 14.15. Governing Law. This Agreement shall in all respects be
governed, construed, applied and enforced in accordance with the laws of the
State of New York.

         SECTION 14.16. Severability. If any term, covenant, provision or
condition of this Agreement shall be held to be invalid, illegal or
unenforceable in any respect, this Agreement shall be construed without such
term, covenant, provision or condition.

         SECTION 14.17. Notices. Any notice, request, demand, statement,
authorization, direction, approval or consent made under this Agreement or under
the other Loan Documents shall be in writing and shall be sent by Federal
Express or other reputable national overnight courier service, or by postage
prepaid registered or certified mail, return receipt requested, and shall be
deemed given when received at the following addresses if sent by Federal
Express, or other reputable national courier service, and three (3) Business
Days after

                                      -73-

being postmarked and addressed as follows if sent by postage prepaid registered
or certified mail, return receipt requested:

               If to Lender:

               GMAC Commercial Mortgage Corporation
               200 Witmer Road
               Horsham, Pennsylvania  19044-0809
               Attention:  Mr. Robin Odland

               With a copy to:

               Paul, Hastings, Janofsky & Walker LLP
               Park Avenue Tower
               75 East 55th Street
               New York, New York  10022
               Attention:  John A. Cahill, Esq.

               If to Borrower, Property Manager, any Guarantor or any Affiliate
               of Borrower, Property Manager or any Guarantor:

               c/o Affordable Residential Communities
               600 Grant Street,  Suite 900
               Denver, CO 80203
               Attention: Frank LoFrisco, Vice President
                          and
                          Scott Gesell, Vice President and
                          General Counsel
                          and
                          Larry Kreider, Chief Financial Officer

               With a copy to:

               GMAC Commercial Mortgage Corporation
               200 Witmer Road
               Horsham, Pennsylvania  19044-0809
               Attention: Loan Servicing

               And an additional copy to:

               Skadden, Arps, Slate, Meagher & Flom LLP
               4 Times Square
               New York, New York  10036
               Attention:  Fred B. White III, Esq.

                                      -74-

               And an additional copy to:

               Proskauer Rose LLP
               1585 Broadway
               New York, New York  10036
               Attention:  Steven L. Lichtenfeld, Esq.

Each party may designate a change of address by notice to the other parties,
given at least fifteen (15) days before such change of address is to become
effective. In no event shall GMAC be removed as a notice party without its prior
written approval.

         SECTION 14.18. Modification. This Agreement may not be modified,
amended or terminated, in whole or in part, except by an agreement in writing
executed by the parties hereto.

         SECTION 14.19. Waivers. Lender may at any time and from time to time
waive any one or more of the terms, covenants, provisions or conditions
contained in this Agreement or in the other Loan Documents, but any such waiver
shall be deemed made in pursuance hereof or thereof and not in modification
thereof, and any such waiver in any particular instance or circumstance shall in
no event or under any circumstance be considered a waiver of any such term,
covenant, provision or condition in any other instance or any other
circumstance.

         SECTION 14.20. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, SUIT OR COUNTERCLAIM ARISING IN CONNECTION WITH, OUT OF OR OTHERWISE
RELATING TO THE NOTE, THE MORTGAGES, THIS AGREEMENT OR ANY OTHER DOCUMENT OR
INSTRUMENT NOW OR HEREAFTER EXECUTED AND DELIVERED IN CONNECTION THEREWITH OR
WITH THE LOAN.

                            [SIGNATURE PAGE FOLLOWS]

                                      -75-

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

                          GMAC COMMERCIAL MORTGAGE CORPORATION, a
                          California corporation

                          By:   /s/ Robin Odland
                                --------------------------------------------
                                Name: Robin Odland
                                Title: Vice President

                          ARC COMMUNITIES 1 LLC, a Delaware limited
                          liability company

                          By:   /s/ Scott L. Gesell
                                --------------------------------------------
                                Name: Scott L. Gesell
                                Title: Vice President

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