Document:

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                                                                    EXHIBIT 10.1

                        CONFIDENTIAL TREATMENT REQUESTED.
          CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND
                 HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.

                                MASTER AGREEMENT

      THIS MASTER AGREEMENT (this "Agreement"), dated as of May 10, 2005, is
made by and between Crescent Real Estate Capital, L.P., a Delaware limited
partnership ("Crescent Capital") and CMC Real Estate Capital, L.P., a Delaware
limited partnership ("Capstead").

                                    RECITALS

      WHEREAS, Crescent Capital and Capstead desire to combine Crescent
Capital's real estate operating and investment experience with Capstead's
capital markets and investment experience to invest jointly in high quality real
estate debt that meets specified criteria;

      WHEREAS, Crescent Capital and Capstead desire to form one or more
investment partnerships through which they will make certain investments; and

      WHEREAS, Crescent Capital and Capstead desire to set forth their agreement
regarding certain of the terms under which they will invest in and through the
investment partnerships.

      NOW, THEREFORE, in consideration of the promises and upon the terms and
conditions set forth below, the parties hereto agree as follows.

                                   ARTICLE I.
                                 INTERPRETATION

      SECTION 1.01 DEFINITIONS

      "Additional Capital Contributions" means the additional Capital
Contributions to be made to any Investment Partnership pursuant to Section 2.05
hereof.

      "Additional Investor" has the meaning set forth in Section 2.03 hereof.

      "Advance Leverage Ratio" means, with respect to any Target Investment, the
ratio of acquisition debt to the investment amount of such Target Investment.

      "Advisory Committee" means the advisory committee to be established by any
Investment Partnership pursuant to Section 4.02 hereof.

      "Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such Person.

      "Agreement" has the meaning set forth in the Preamble of this Agreement.

      "Appraised Value" means the value assigned to collateral by the applicable
lender(s) to an Investment Partnership, or in the absence of such, a third party
appraisal prepared by a

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nationally recognized appraisal company within the preceding four (4) months. If
the above noted indications of value are not available, a value assigned by
Crescent may be used, provided however, that such investment shall not be
considered a Target Investment.

      "Business Day" means any day other than a Saturday, Sunday or any other
day on which federal banks are authorized by law to close.

      "Buy-Sell Election" has the meaning set forth in Section 6.02 hereof.

      "Buy-Sell Price" has the meaning set forth in Section 6.02 hereof.

      "Buy-Sell Terms" has the meaning set forth in Section 6.02 hereof.

      "Capital Commitment" means, with respect to any Limited Partner, the
obligation to make the Capital Contributions to an Investment Partnership that
are specified in the Partnership Agreement of such Investment Partnership.

      "Capital Contributions" means, with respect to any Limited Partner, any
cash, cash equivalents or the book value of any Target Investment contributed to
an Investment Partnership by such Partner. "Capital Contributions" shall include
any Additional Capital Contributions.

      "Capstead" has the meaning set forth in the Preamble of this Agreement.

      "Capstead Veto Right" has the meaning set forth in Section 5.03 hereof.

      "Change In Control" means (i) the acquisition by any "person," as such
term is used in Sections 13(d) and 14(d) of the Exchange Act (other than a
Formation Partner, any trustee or other fiduciary holding securities under any
employee benefit plan of a Formation Partner, or any company owned, directly or
indirectly, by the equity holders of a Formation Partner), directly or
indirectly, of securities of a Formation Partner representing fifty percent
(50%) or more of the combined voting power of a Formation Partner's then
outstanding securities; (ii) the approval by the equity holders or general
partner of a Formation Partner of a merger or consolidation of the Formation
Partner with any other entity, other than a merger or consolidation that would
result in the voting securities of a Formation Partner outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than eighty
percent (80%) of the combined voting power of the voting securities of a
Formation Partner or such surviving entity outstanding immediately after such
merger or consolidation; provided, however, that a merger or consolidation
effected to implement a reorganization or recapitalization of a Formation
Partner, or a similar transaction, in which no "person" acquires more than
twenty percent (20%) of the combined voting power of a Formation Partner's then
outstanding securities shall not constitute a Change in Control of a Formation
Partner; or (iii) the approval of the equity holders or general partner of a
Formation Partner of a plan of complete liquidation of a Formation Partner or an
agreement for the sale or disposition by a Formation Partner of all or
substantially all of the Formation Partner's assets.

      "Crescent" means Crescent GP and Crescent Capital.

      "Crescent Capital" has the meaning set forth in the Preamble of this
Agreement.

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      "Crescent GP" means the entity that Crescent Capital or its Affiliates
shall caused to be formed to serve as General Partner of the Investment
Partnerships.

      "Debt Service Coverage Ratio" means the ratio obtained by dividing (i) the
sum of the underwritten measure of the net operating income of any Target
Investment, but including leasing commissions, tenant improvements, interest
reserves, reserves for leasing commissions, reserves for tenant improvements,
reserves for capital expenditures and any guarantees of any such reserves, over
the initial term of such Target Investment, by (ii) the sum of all interest
payments including capitalized interest and mandatory principal payments due and
payable by such Target Investment during such applicable measurement period
excluding any payments due upon maturity of any indebtedness.

      "Declined Additional Capital Contribution" has the meaning set forth in
Section 2.05 hereof.

      "Election Notice" has the meaning set forth in Section 6.03(b) hereof.

      "Election Period" has the meaning set forth in Section 6.02 hereof.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      "Exercising Partner" has the meaning set forth in Section 6.02 hereof.

      "Fair Market Value" has the meaning set forth in Section 6.03(f) hereof.

      "Formation Partner" means Crescent or Capstead. Crescent GP and Crescent
Capital shall be treated as one consolidated entity in all matters involving the
Formation Partners, with Crescent GP controlling all decisions and actions to be
taken by Crescent in respect thereto.

      "Fully Invested" means, with respect to any Investment Partnership, the
point at which such Investment Partnership has invested the Investment
Partnership's maximum Capital Commitment.

      "Initial Investment Partnership" has the meaning set forth in Section 2.01
hereof.

      "Investment Partnership" has the meaning set forth in Section 2.01 hereof.

      "Investment Period" has the meaning set forth in Section 2.07 hereof.

      "Limited Partner" means any Person that is a limited partner of any
Investment Partnership and shall initially include Crescent Capital and
Capstead.

      "Loan to Value Ratio" means the ratio of the unpaid principal balance of
the Target Investment plus all indebtedness senior thereto, divided by the
Appraised Value.

      "Major Decision" means any of the decisions set forth in Section 4.03
hereof.

      "Minimum Monthly Management Fee" means the minimum monthly management fee
payable by each Investment Partnership to Crescent GP for Crescent GP's service
as general

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partner of such Investment Partnership. During each Investment Partnership's
Investment Period, the related Minimum Monthly Management Fee shall equal
[CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION]. After
the termination of each Investment Partnership's Investment Period, the related
Minimum Monthly Management Fee shall be reduced to [CONFIDENTIAL MATERIAL
REDACTED AND FILED SEPARATELY WITH THE COMMISSION].

      "Mortgage" has the meaning set forth in Section 5.04 hereof.

      "Net Cash Flow" means, with respect to any Investment Partnership, any
excess of (i) the sum of (A) cash receipts of the Investment Partnership during
a given calendar month from all sources whatsoever (including the net cash
proceeds received by the Investment Partnership from the sale of an Investment
Partnership asset) other than Unused Capital Contributions or repayments during
an Investment Partnership's Reinvestment Period, plus (B) the amount of any
reduction during the applicable calendar month in Investment Partnership
reserves for anticipated expenses previously established pursuant to (ii)(C)
below, over (ii) the sum of (A) all operational expenditures of the Investment
Partnership, including all financing and hedging expenses, during such related
calendar month, plus (B) in the case of refinancing proceeds, the amount applied
in payment or reduction of the refinanced obligation(s), plus (C) the amount of
any increase during the calendar month in Investment Partnership reserves for
reasonably anticipated expenses to provide for accrued or anticipated expenses
of the Partnership.

      "Non-Cash Consideration" has the meaning set forth in Section 6.03(d)
hereof.

      "Non-Exercising Partner" has the meaning set forth in Section 6.02 hereof.

      "Non-Selling Partner" has the meaning set forth in Section 6.03(a) hereof.

      "Notice of Buy-Sell" has the meaning set forth in Section 6.02 hereof.

      "Offer Notice" has the meaning set forth in Section 6.03(a) hereof.

      "Offer Period" means a period commencing upon delivery of an Offer Notice
and expiring at 5:00 p.m., Fort Worth time, on the tenth (10th) Business Day
following delivery of such Offer Notice; provided, however, if the Proposed
Transfer involves Non-Cash Consideration, the Offer Period shall not expire
until the tenth (10th) Business Day after a binding determination of the Fair
Market Value of such Non-Cash Consideration has been made in accordance with
Section 6.03(f) hereof.

      "Original Closing Date" means, with respect to any Investment Partnership,
the date on which one or more of the Formation Partners are first admitted to
such Investment Partnership.

      "Partner" means any Person that is admitted to an Investment Partnership
as a limited partner or a general partner.

      "Partnership Agreement" means, with respect to any Investment Partnership,
the agreement among the Investment Partnership and its Partners that sets forth
the terms governing the relationship among such Partners and the Investment
Partnership. The Partnership

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Agreement of the Initial Investment Partnership shall be in substantially the
form attached hereto as Exhibit B.

      "Partnership Interest" means, with respect to any Investment Partnership,
an ownership interest in the Investment Partnership representing a Capital
Contribution by a Partner and includes any and all benefits to which the holder
of such a Partnership Interest may be entitled as provided in the relevant
Partnership Agreement, together with all obligations of such Person to comply
with the terms and provisions of such Partnership Agreement.

      "Percentage Interest" means, with respect to any Partner in any Investment
Partnership, the ratio of such Partner's Capital Commitment to the total Capital
Commitments of all of the Partners in such Investment Partnership.

      "Person" means any individual, general partnership, limited partnership,
limited liability company, corporation, trust, estate, association, nominee or
other entity.

      "Prime Rate" means the prime rate reported from time to time in The Wall
Street Journal under "Money Rates" as of the relevant date(s), and if more than
one prime rate shall be reported therein, the average of all such rates.

      "Proposed Transfer" has the meaning set forth in Section 6.03(a) hereof.

      "Reinvestment Period" has the meaning set forth in Section 2.08 hereof.

      "Right of First Refusal" has the meaning set forth in Section 6.03(a)
hereof.

      "Selling Partner" has the meaning set forth in Section 6.03(a) hereof.

      "Successor Investment Partnership" has the meaning set forth in Section
2.01 hereof.

      "Take-down Notice" has the meaning set forth in Section 2.04 hereof.

      "Target Investments" has the meaning set forth in Section 2.02(b) hereof.

      "Target IRR" has the meaning set forth in Section 2.02(c) hereof.

      "Third Party Purchaser" has the meaning set forth in Section 6.03(c)
hereof.

      "Transfer" means a sale, assignment, transfer or other disposition, gift,
hypothecation or encumbrance by a partner in an Investment Partnership of its
partnership interest.

      "Trigger Event" means (i) any change in any law, rule or regulation
applicable to a Formation Partner, including any change made by governing
authorities of tax, regulatory or accounting rules and procedures, (ii) any
significant market liquidity event, (iii) any other event the occurrence of
which would make an investment by the Formation Partner in an Investment
Partnership ill-advised from a legal or economic perspective, or (iv) a Change
In Control of a Formation Partner.

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      "Unresolved Deadlock" means an inability of the members of the Advisory
Committee to reach unanimous agreement on a Major Decision, which inability
continues for a period of one hundred twenty (120) calendar days (except with
respect to the inability to elect a replacement General Partner pursuant to
Section 4.04, which shall only be subject to a thirty (30) calendar day
resolution period) after written notice by a representative of the Advisory
Committee to the General Partner. The Formation Partners shall cause their
respective designees to the Advisory Committee to negotiate in good faith and
use their respective commercially reasonable efforts to reach agreement on any
Major Decision.

      "Unused Capital Contributions" has the meaning set forth in Section 2.04
hereof.

      SECTION 1.02 CONSTRUCTION.

  (a) The Recitals set forth at the beginning of this Agreement are incorporated
      in and made a part of this Agreement.

  (b) Unless the language specifies or the context implies that a term of this
      Agreement is a condition, all of the terms of this Agreement shall be
      deemed and construed to be covenants to be performed by the designated
      party.

  (c) Unless the context clearly indicates otherwise, in this Agreement the use
      of the terms "including," "include," and "includes" followed by one or
      more examples is intended to be illustrative and shall not be deemed or
      construed to limit the scope of the classification or category to the
      examples listed.

  (d) Unless the context clearly indicates otherwise, in this Agreement
      references to Sections shall be construed as references to Sections of
      this Agreement.

  (e) Titles and captions are inserted for convenience of reference only and
      shall not affect the interpretation of this Agreement.

  (f) Terms stated in either the singular or plural shall include the singular
      and the plural, and pronouns stated in either the masculine or the neuter
      gender shall include the masculine, the feminine and the neuter genders.

  (g) Unless the context clearly indicates otherwise, in this Agreement, words
      such as "herein," "hereinafter," "hereof," "hereto," and "hereunder" refer
      to this Agreement as a whole.

  (h) Unless the context clearly indicates otherwise, references to any statute
      or any provision thereof shall be deemed to include a reference to any
      statute that amends, extends, consolidates or replaces the same and shall
      include any orders, regulations, instruments, official government
      interpretations or other subordinate legislation made under the relevant
      statute.

  (i) References to "General Partner" herein shall be deemed to include any
      successor general partner of the Investment Partnerships.

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                                  ARTICLE II.
                             INVESTMENT PARTNERSHIPS

SECTION 2.01 FORMATION OF INVESTMENT PARTNERSHIPS.

      The parties hereto shall form one or more limited partnerships (the first
of which shall be referred to herein as the "Initial Investment Partnership,"
the second of which shall be referred to herein as the "Successor Investment
Partnership," and each sometimes shall be referred to herein as an "Investment
Partnership") under the Delaware Revised Uniform Limited Partnership Act, as
amended, for the purpose of investing in certain investments as hereinafter
defined. If the Formation Partners do not agree to form the Successor Investment
Partnership within thirty (30) calendar days after the Initial Investment
Partnership has become Fully Invested, then either of the Formation Partners may
immediately elect to terminate this Agreement, subject to the survival
provisions as set forth in Section 10.12. The Successor Investment Partnership
shall not be formed until after the Initial Investment Partnership has become
Fully Invested, unless otherwise agreed to by the Formation Partners.

SECTION 2.02 INVESTMENT OBJECTIVE; TARGET INVESTMENTS.

   (a) It shall be the objective of each of the Investment Partnerships to
utilize leverage prudently in an effort to achieve optimal returns on its
investments. Crescent Capital shall cause the General Partner to seek to
mitigate the Investment Partnerships' exposure to credit risk through prudent
underwriting practices and by diversifying the Target Investments by property
type, borrower and geographic region. In addition, Crescent Capital shall cause
the General Partner to seek to mitigate the Investment Partnerships' exposure to
interest rate risk by attempting to match the Investment Partnerships' assets
and liabilities or otherwise hedge such risk where and to the extent practicable
taking into consideration, among other things, costs and desired returns.

   (b) The Investment Partnerships shall target investments consisting of
B-notes, first mortgages (excluding residential), subordinated notes, mezzanine
loans and bridge loans, or participations thereof, other than notes or other
loans related to Crescent-owned assets and healthcare facilities (the "Target
Investments"). Target Investments shall specifically exclude preferred equity,
bonds and securities offered pursuant to Rule 144A under the Securities Act of
1933, as amended. Each of the Target Investments shall have (i) a minimum dollar
value of Ten Million Dollars ($10,000,000), (ii) a maximum dollar value of Fifty
Million Dollars ($50,000,000), (iii) a Loan to Value Ratio that is less than or
equal to eighty percent (80%), and (iv) a term of not more than five (5) years,
including extensions. Target Investments shall constitute "real estate assets,"
within the meaning of Section 856(c)(5)(B) of the Internal Revenue Code of 1986,
as amended. The Investment Partnerships may, from time to time, acquire assets
that do not constitute Target Investments.

   (c) Target Investments may be collateralized by office, hotel, retail,
multi-family, industrial and residential properties, as well as unimproved land.
Each Target Investment shall have a targeted internal rate of return of at least
[CONFIDENTIAL MATERIAL REDACTED

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AND FILED SEPARATELY WITH THE COMMISSION] for the term of the investment
(including extensions), which return shall be calculated by including the amount
of the origination fee associated with such investment and the management fee
payable by the Investment Partnership (the "Target IRR"). In addition, the
minimum Debt Service Coverage Ratio for each Target Investment shall be 1.10.
The Advance Leverage Ratio shall not exceed seventy-five percent (75%) for any
Target Investment.

SECTION 2.03 CAPITAL COMMITMENTS TO THE INVESTMENT PARTNERSHIPS.

      Except as otherwise provided in this Section 2.03, the maximum Capital
Commitment to each Investment Partnership shall be One Hundred Million Dollars
($100,000,000). Capstead and Crescent Capital shall have Capital Commitments of
Seventy-five Million Dollars ($75,000,000) and Twenty-five Million Dollars
($25,000,000), respectively, to the Initial Investment Partnership. The General
Partner shall make no Capital Contribution to the Investment Partnerships.

      Capstead and Crescent Capital shall have Capital Commitments of
Seventy-five Million Dollars ($75,000,000) and Twenty-five Million Dollars
($25,000,000), respectively, to the Successor Investment Partnership; provided,
that this Agreement has not terminated pursuant to Section 7.01.

      Crescent may, at its option, cause the Successor Investment Partnership to
admit an additional equity investor (an "Additional Investor") whose Capital
Commitment shall not exceed One Hundred Fifty Million Dollars ($150,000,000), in
which case the maximum Capital Commitment to the Successor Investment
Partnership may be increased to Two Hundred Fifty Million Dollars
($250,000,000). The Additional Investor shall be permitted to invest in the
Successor Investment Partnership only if the admission of such investor would
not be expected to delay significantly the investment of the Capital
Contributions that Crescent Capital and Capstead have committed to make to the
Successor Investment Partnership during its Investment Period. Capstead shall
have the right to opt out of such participation in the Successor Investment
Partnership or may elect to invest in the Successor Investment Partnership on
proportionally the same terms and conditions as Capstead's investment in the
Initial Investment Partnership, taking into account any admission of an
Additional Investor to the Successor Investment Partnership; provided, that if
the Additional Investor invests in the Successor Investment Partnership on terms
that Capstead reasonably believes would be more favorable economically to
Capstead than the terms on which Capstead has invested or proposes to invest,
Capstead shall be entitled to invest on exactly the same economic terms as the
Additional Investor, taking into account their relative Capital Commitments. The
Partnership Agreement of the Successor Investment Partnership shall be modified
to reflect the modified structure that includes the Additional Investor and the
terms on which the Additional Investor and Capstead have elected to invest.

SECTION 2.04 CAPITAL CONTRIBUTIONS.

         At any time after the Original Closing Date of an Investment
Partnership, the Limited Partners in such Investment Partnership shall make
Capital Contributions from time to time on the date specified by the General
Partner in a written notice requesting the same (a "Takedown Notice"). The date
specified for the payment of the requested Capital Contributions shall not be

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less than three (3) Business Days after the Takedown Notice is deemed delivered
as required by the applicable Partnership Agreement. Capital Contributions shall
be requested from all Limited Partners on the basis of their relative Capital
Commitments. The Limited Partners' Capital Contributions shall be payable in
cash; provided, however, that Crescent Capital may pay its Capital Contributions
in cash or with property that meets the criteria for Target Investments. Any
such property shall be valued at Crescent Capital's adjusted cost (to be defined
in the Partnership Agreements) for purposes of determining the value of Crescent
Capital's Capital Contributions. To the extent that Capital Contributions
(excluding Additional Capital Contributions) are not used to acquire investments
within forty-five (45) calendar days of the payment date specified in the
Takedown Notice calling for such Capital Contributions, Crescent Capital shall
cause the General Partner to cause the Investment Partnership to return to the
Limited Partners the amount of the unused Capital Contributions (the "Unused
Capital Contributions"), which amounts shall (as of the date such return of
Unused Capital Contributions is made) be deemed to reduce the amount of Capital
Contributions made by such Limited Partners and correspondingly increase the
amounts of such Limited Partners' unpaid Capital Commitments.

SECTION 2.05 ADDITIONAL FUNDING FOR INVESTMENT PARTNERSHIPS.

      If at any time or from time to time after all Capital Commitments to an
Investment Partnership have been called and paid, the General Partner determines
that such Investment Partnership requires additional capital to satisfy the
obligations of the Investment Partnership to third parties, the General Partner
may request Additional Capital Contributions from the Limited Partners. Any
Additional Capital Contributions shall be called on a pro rata basis, based upon
the Limited Partners' total Capital Contributions to the Investment Partnership
as of the date on which the Additional Capital Contributions are requested by
the General Partner. In the event that a Limited Partner notifies the General
Partner in writing that it declines to make an Additional Capital Contribution
(the "Declined Additional Capital Contribution"), Crescent Capital shall cause
the General Partner to send a written notice to any contributing Limited Partner
informing such Limited Partner of its right to make (i) a further Additional
Capital Contribution in an amount equal to the amount of the Declined Additional
Capital Contribution, or (ii) a loan to the Investment Partnership in the amount
of such Declined Additional Capital Contribution. To the extent that the Limited
Partner makes a further Additional Capital Contribution pursuant to the
immediately preceding sentence (and the other Limited Partner declines to make
an Additional Capital Contribution), the contributing Limited Partner's
Percentage Interest shall be increased and the Percentage Interest of the
declining Limited Partner shall be proportionately decreased as provided in the
applicable Partnership Agreement. In addition, the General Partner shall be
permitted, but shall not be obligated, to make one or more loans to any
Investment Partnership if the General Partner determines that the Investment
partnership requires capital and both Limited Partners have declined to make
Additional Capital Contributions. Any loan made by a Limited Partner to an
Investment Partnership shall accrue interest at the Prime Rate plus five percent
(5%) per annum and shall be made on such other terms as shall be agreed at such
time.

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SECTION 2.06 DEFAULT IN PAYMENT OF CAPITAL CONTRIBUTIONS.

      Upon any Limited Partner's failure to make any installment of its Capital
Commitment or Additional Capital Contributions when due, such installment shall
bear interest at the Prime Rate plus five percent (5%) per annum from the date
on which such installment was due up to the date of actual payment, and in
addition, such Limited Partner shall be liable for any costs incurred by the
Investment Partnership or the General Partner in collecting or attempting to
collect such late payment. Each Limited Partner shall grant each Investment
Partnership in which it owns a Partnership Interest a security interest in such
Partnership Interest to secure the payment of amounts owed by such Limited
Partner to the Investment Partnership.

SECTION 2.07 INVESTMENT PERIOD.

      The investment period for any Investment Partnership shall commence with
the closing of the Investment Partnership's initial investment and end on the
second anniversary thereof (the "Investment Period"); provided, however, that in
any event the Investment Period shall commence no later than sixty (60) calendar
days after the date on which the certificate of limited partnership for such
Investment Partnership is filed with the Secretary of State of the State of
Delaware and; provided further that the Investment Period shall end eighteen
months following the closing of the Investment Partnership's initial investment
if all of the Capital Commitments to the Investment Partnership shall have been
paid as of such date and the Investment Partnership is Fully Invested. The
Investment Period for any Investment Partnership may be extended upon the mutual
agreement of the Formation Partners. In the event an Investment Partnership is
not Fully Invested upon the termination of the Investment Period (as the same
may be extended by the Formation Partners), the Limited Partners' unpaid Capital
Commitments shall terminate as of the end of the Investment Period and the
Formation Partners shall then elect to invest in the Successor Investment
Partnership or terminate this Agreement. Following the termination of the
Investment Period, no further investments or reinvestments shall be made by the
Investment Partnership, unless otherwise agreed to by the Formation Partners.

SECTION 2.08 REINVESTMENTS AND THE REINVESTMENT PERIOD.

      The reinvestment period for any Investment Partnership shall commence with
the closing of the Investment Partnership's initial investment and end eighteen
(18) months thereafter (the "Reinvestment Period"). During the Reinvestment
Period, any amounts received from the repayment of an investment shall be
reinvested; provided, however, that any such reinvestment shall be made after
the repayment of all related debt and shall be made or otherwise committed to be
made within ninety (90) calendar days following receipt of any repayment,
otherwise such repayment shall be returned to the Limited Partners, pro rata, in
accordance with their respective Percentage Interests. Notwithstanding the
return of any repayment to the Limited Partners in an Investment Partnership,
that Investment Partnership shall remain obligated to reinvest any such amount
during the remaining Investment Period. During the remaining Investment Period,
repayment amounts that have been distributed to the Partners in an Investment
Partnership shall be added back to any Limited Partner's unpaid Capital
Commitment and the Investment Partnership shall not be deemed to be Fully
Invested until such time as all such repayments are reinvested, except where the
Advisory Committee determines that there are no further feasible opportunities
for the applicable Investment Partnership to invest in Target Investments.

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SECTION 2.09 TERM OF THE INVESTMENT PARTNERSHIPS.

      Each Investment Partnership shall terminate on the seventh (7th)
anniversary of the closing of such Investment Partnership's initial investment,
which date may be extended by the General Partner for up to two (2) consecutive
one (1)-year periods.

                                  ARTICLE III.
                        INVESTMENT PARTNERSHIP ECONOMICS

SECTION 3.01 DISTRIBUTIONS.

      Crescent Capital shall cause the General Partner of each of the Investment
Partnerships to distribute Net Cash Flow to the Limited Partners within fifteen
(15) calendar days following the end of any calendar month. The Net Cash Flow of
the Initial Investment Partnership shall be distributed in the following order
of priority. All distributions shall be made on a cumulative basis, taking into
account any and all previous distributions.

  (a) First, one hundred percent (100%) to Crescent Capital and Capstead, pro
      rata, based upon their relative Percentage Interests, until Capstead has
      achieved an internal rate of return equal to [CONFIDENTIAL MATERIAL
      REDACTED AND FILED SEPARATELY WITH THE COMMISSION];

  (b) Second, [CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
      COMMISSION] to Crescent Capital and [CONFIDENTIAL MATERIAL REDACTED AND
      FILED SEPARATELY WITH THE COMMISSION] to Capstead until Capstead has
      received an internal rate of return equal to [CONFIDENTIAL MATERIAL
      REDACTED AND FILED SEPARATELY WITH THE COMMISSION];

  (c) Thereafter, [CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
      COMMISSION] to Crescent Capital and [CONFIDENTIAL MATERIAL REDACTED AND
      FILED SEPARATELY WITH THE COMMISSION] to Capstead.

      Any proceeds from the repayment of investments or from any other source
that are not reinvested shall be distributed in accordance with the distribution
provisions set forth in subsections (a) through (c) above.

      The Net Cash Flow of the Successor Investment Partnership shall be
distributed in accordance with the provisions set forth in this Section 3.01,
unless Crescent has exercised its option to admit an Additional Investor
pursuant to Section 2.03, whereby the distributions shall be modified to reflect
the structure that includes the Additional Investor and the terms on which the
Additional Investor and Capstead have elected to invest.

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SECTION 3.02 INTENTIONALLY LEFT BLANK.

SECTION 3.03 MANAGEMENT FEES.

      Each Investment Partnership shall pay the Minimum Monthly Management Fee
to the General Partner. Each Investment Partnership also shall pay to the
General Partner an additional monthly management fee, which amount shall be
calculated by multiplying the cumulative weighted average daily Capital
Contributions (calculated consistently with a 30/360 convention) made to such
Investment Partnership by an annualized rate of [CONFIDENTIAL MATERIAL REDACTED
AND FILED SEPARATELY WITH THE COMMISSION] basis points, and subtracting
therefrom cumulative amounts previously paid to the General Partner in respect
of its services (including previous cumulative payments of the Minimum Monthly
Management Fee and the additional monthly management fee paid during such
previous twelve (12) month period). The Minimum Monthly Management Fee and the
additional monthly management fee shall accrue daily and shall be paid to the
General Partner as provided in the Partnership Agreements.

SECTION 3.04 INVESTMENT PARTNERSHIP COSTS.

      Each Investment Partnership shall bear its own funding, administrative and
transaction costs; provided, that in the event Crescent or Capstead invests in
an asset or entity along with an Investment Partnership, all expenses associated
with the investment shall be allocated between Crescent or Capstead and the
Investment Partnership on a pro rata basis, based upon the relative amounts
invested by Crescent or Capstead and the Investment Partnership in such
investment. The General Partner shall prepare, for unanimous approval by the
Advisory Committee, an annual budget for each Investment Partnership's
administrative expenses, which shall include the annual management fee,
franchise taxes and third-party payments for audit, tax preparation,
non-transaction-related legal fees and investor reporting expenses. Transaction
costs shall include third-party payments for legal, due diligence and other
costs, including the General Partner's out-of-pocket travel and other expenses.
The General Partner's out of pocket travel expenses shall not exceed $7,500 per
transaction, unless approved unanimously by the Advisory Committee.

      Crescent and Capstead shall each bear its own costs in connection with the
negotiation and drafting of this Agreement and the Partnership Agreement for the
Initial Investment Partnership. The Successor Investment Partnership shall bear
the costs associated with structuring and negotiating the terms of an investment
therein and drafting the Partnership Agreement for the Successor Investment
Partnership.

                                  ARTICLE IV.
           RESPONSIBILITIES OF GENERAL PARTNER AND ADVISORY COMMITTEE

SECTION 4.01 RESPONSIBILITIES OF THE GENERAL PARTNER.

      Except as otherwise expressly provided in any Partnership Agreement, the
General Partner shall be vested with the full, exclusive and complete right,
power and discretion to operate, manage and control the affairs of the
Investment Partnerships and to make all decisions affecting the affairs of the
Investment Partnerships. Among other matters, the General Partner shall be
responsible for (i) identifying investment opportunities for the Investment
Partnerships, (ii) making recommendations regarding prospective investments and
divestitures by the

                                       12
<PAGE>

Investment Partnerships and providing underwriting and other documentation with
respect thereto, (iii) managing the Investment Partnerships' portfolio of
investments, (iv) identifying, negotiating and entering into authorized
financing and hedging arrangements on behalf of the Investment Partnerships, (v)
entering into authorized transactions and agreements on behalf of the Investment
Partnerships, and (vi) overseeing the general administration of the Investment
Partnerships. The General Partner shall have the authority to delegate any or
all of its duties under this Section 4.01 to any of its Affiliates, without the
consent of any other Partner.

SECTION 4.02 ADVISORY COMMITTEE.

      Each of the Formation Partners shall appoint two Persons to act as an
advisory committee (the "Advisory Committee") to oversee the operations of each
of the Investment Partnerships. Except as otherwise expressly provided in this
Agreement and the Partnership Agreements, the Advisory Committee shall have no
power to vote, approve, disapprove or otherwise influence the management of the
Investment Partnerships.

      Members of the Advisory Committee shall be entitled to receive on at least
a monthly basis information regarding the investments and operations of the
Investment Partnerships and shall meet at least once every three (3) months to
discuss matters relating to the Investment Partnerships. The times and locations
of such meetings shall be determined by the members of the Advisory Committee in
their sole discretion. The Advisory Committee also shall hold special meetings
as required to consider Major Decisions in a timely manner. Members of the
Advisory Committee shall consult with and receive voting instructions from the
Partners they represent prior to making any Major Decision and shall notify the
General Partner, who shall then notify the Partners, in writing of actions taken
by the Advisory Committee within two (2) Business Days after any such action has
been taken.

      The Partnership Agreements may set forth processes and procedures, as
necessary, for the operation of the Advisory Committee.

SECTION 4.03 MAJOR DECISIONS.

      The following major decisions relating to an Investment Partnership shall
require the unanimous approval of the Advisory Committee before becoming
effective: (i) the bifurcation of investments, (ii) the sale or other
disposition of investments, (iii) the conversion of an Investment Partnership
into a different legal form, including, but not limited to, a real estate
investment trust, (iv) the incurrence of indebtedness or hedging arrangements
and the terms thereof, (v) the approval of each annual budget of the Investment
Partnership, (vi) the engagement or replacement of the Investment Partnership's
audit firm, (vii) the sale or other Transfer by Crescent or Capstead of any
portion of its interest in the Investment Partnership to an entity that is not
its Affiliate (other than in connection with a Change in Control), (viii) the
sale, merger or other business combination of the Investment Partnership and
(ix) the replacement of the General Partner. Prior to approving or declining to
approve any of the aforementioned actions, the Advisory Committee shall be
provided (i) any material information that is in the possession of or reasonably
attainable by the General Partner and that would assist the Advisory Committee
in rendering a decision in respect of such action and (ii) a recommendation from
the General Partner regarding such action. The Advisory Committee shall notify
the General Partner of the

                                       13
<PAGE>

approval or disapproval of any action within five (5) Business Days of the
Advisory Committee's receipt of the General Partner's recommendation.

SECTION 4.04 BREACH BY THE GENERAL PARTNER; REMOVAL OF THE GENERAL PARTNER FOR
BREACH.

      The General Partner shall be in breach of its obligations to an Investment
Partnership upon a final determination by a court of competent jurisdiction or
an admission by the General Partner that it has (i) committed a material breach
of this Agreement or the Partnership Agreement of the Investment Partnership,
(ii) engaged in willful misconduct, (iii) acted in bad faith, (iv) beached its
fiduciary duty to the Partners in the Investment Partnership, or (v) managed the
Investment Partnership in a grossly negligent manner. In the event a court
determines that any such breach can be remedied, or if the Formation Partners
otherwise mutually agree upon a remedy, the General Partner shall have a
reasonable period (to be agreed by the Formation Partners) in which to cure such
breach. In the event a court determines that a breach cannot be remedied, or if
the General Partner fails to cure the breach within the agreed-upon time period
or a time period established by the court, the Advisory Committee shall remove
the General Partner and elect a replacement General Partner by unanimous
consent.

SECTION 4.05 REMOVAL OF THE GENERAL PARTNER FOR OTHER THAN BREACH.

      In the event the General Partner and/or its Affiliates cease to own and
control at least fifty-one percent (51%) of the Partnership Interest in an
Investment Partnership that was initially issued to the General Partner and/or
its Affiliates, the General Partner shall be removed and the Capstead Advisory
Committee members shall elect a replacement General Partner, unless the Capstead
Advisory Committee members elect to waive such removal right.

                                   ARTICLE V.
                          TRANSACTION APPROVAL PROCESS

SECTION 5.01 INVESTMENT PARTNERSHIP OPPORTUNITIES.

      Except as otherwise provided in Section 5.04 hereof, neither the General
Partner nor Capstead shall pursue a Target Investment unless such Target
Investment is first offered to the Investment Partnerships and the Investment
Partnerships determine not to pursue such investment. Such opportunities shall
be presented pursuant to Sections 5.02 and 5.03 hereof.

      Crescent and Capstead hereby agree that, throughout the term of this
Agreement, each Limited Partner shall be entitled to invest in and maintain for
its own account or jointly with other Persons, and without restriction, an
active portfolio of B-notes, first mortgages, subordinated notes, mezzanine
loans and bridge loans, or participations thereof, that have a loan to value
ratio in excess of eighty percent (80%). Crescent and Capstead further agree
that, from time to time each Limited Partner shall be entitled to, but shall
have no obligation to, offer to the Investment Partnerships opportunities to
invest, or participate, in assets with a loan to value ratio in excess of eighty
percent (80%).

                                       14
<PAGE>

SECTION 5.02 APPROVAL PROCESS FOR INVESTMENTS.

   (a) Investments Proposed by the General Partner. Before an Investment
Partnership shall be permitted to acquire an investment that is proposed by the
General Partner, Crescent Capital shall cause the General Partner to submit a
written proposal to Capstead recommending the acquisition of the investment by
the Investment Partnership. Crescent Capital shall cause the General Partner to
provide Capstead such documentation relating to the proposed investment as
Capstead shall reasonably request. With respect to investments by the Investment
Partnerships in Target Investments, the General Partner shall be permitted to
submit a recommendation to Capstead for its approval prior to obtaining the
approval of the General Partner's investment committee (or other Persons
authorized by the General Partner to approve its investment decisions). Such
written recommendation shall evidence the approval of the Target Investment by
at least two members of the General Partner's investment committee, as such
individuals may be identified from time-to-time. Within three (3) Business Days
following receipt from the General Partner of its written recommendation to
acquire a Target Investment, Capstead shall notify the General Partner in
writing of its decision to accept or reject such recommendation. If Capstead
does not approve the recommended investment, Crescent and its Affiliates shall
have the right to acquire the investment for its own account, or jointly with
another Person on terms not materially different from those presented to the
Investment Partnership. If Capstead notifies Crescent in writing of its approval
of a recommended Target Investment, Crescent shall have five (5) Business Days
following such notification from Capstead to submit and receive all necessary
approvals from Crescent for the Investment Partnership to proceed with such
investment.

      With respect to the recommendation of investments that are not Target
Investments, Crescent Capital shall cause the General Partner to provide
Capstead formal notice that such investment has been approved by the General
Partner's investment committee (or other Persons authorized by the General
Partner to approve its investment decisions) at the time that the General
Partner makes a written recommendation in favor of the investment. Within five
(5) Business Days following receipt from the General Partner of such written
recommendation and notice of approval, Capstead's designees to the Advisory
Committee shall notify the General Partner in writing of the decision to accept
or reject such recommendation. If the Capstead designees do not approve the
investment, Crescent and its Affiliates shall have the right to acquire the
investment for its own account or jointly with another Person on terms not
materially different from those presented to the Investment Partnership.

      The parties hereto agree that, with respect to an investment to be
acquired by Crescent or its Affiliates, an increase in the Target IRR in an
amount that is less than four percent (4%) shall not be deemed a material
difference in the terms of the proposed acquisition.

      Any failure by the Capstead designees to provide notice in the time period
provided herein shall be deemed to indicate such designee's rejection of the
proposed investment, after which Crescent or its Affiliates may individually
pursue such proposed investment without recourse under this Agreement.

                                       15
<PAGE>

   (b) Investments Proposed by Capstead. Before an Investment Partnership
shall be permitted to acquire an investment that is proposed by Capstead,
Capstead shall submit a written proposal to the General Partner recommending the
acquisition of the investment by the Investment Partnership. Capstead shall
provide the General Partner such documentation relating to the proposed
investment as the General Partner shall reasonably request. Within three (3)
Business Days following receipt from Capstead of its written recommendation to
acquire a Target Investment, Crescent Capital shall cause the General Partner to
notify Capstead in writing of its decision to accept or reject such
recommendation. If the General Partner does not approve the recommended
investment, Capstead and its Affiliates shall have the right to acquire the
investment for its own account, or jointly with another Person, on terms not
materially different from those presented to the Investment Partnership.

      With respect to the recommendation of investments that are not Target
Investments, Capstead shall provide the General Partner formal notice that such
investment has been approved by Capstead's investment committee (or other
Persons authorized by Capstead to approve its investment decisions) at the time
that Capstead makes a written recommendation in favor of the investment. Within
five (5) Business Days following receipt from Capstead of such written
recommendation and the notice of approval, Crescent Capital shall cause the
General Partner to notify Capstead in writing of its decision to accept or
reject such recommendation. If the General Partner does not approve the
investment, Capstead and its Affiliates shall be entitled to acquire the
investment for its own account or with another Person on terms not materially
different from those presented to the Investment Partnership.

      The parties hereto agree that, with respect to an investment to be
acquired by Capstead or its Affiliates, an increase in the Target IRR in an
amount that is less than four percent (4%) shall not be deemed a material
difference in the terms of the proposed acquisition.

      Any failure by Crescent to provide notice of its decision to accept or
reject a recommendation in the time period provided herein shall be deemed to
indicate Crescent's designee's rejection of the proposed investment, after which
Capstead or its Affiliates may individually pursue such proposed investment
without recourse under this Agreement.

      No Partner other than the General Partner or Capstead shall be permitted
to propose investments to be made by any Investment Partnership.

SECTION 5.03 CAPSTEAD'S VETO RIGHT.

      In connection with the approval process set forth in Section 5.02,
Capstead shall have the right to reject any investments proposed by the General
Partner, as such right may be limited below (the "Capstead Veto Right"). In the
event that Capstead exercises the Capstead Veto Right [CONFIDENTIAL MATERIAL
REDACTED AND FILED SEPARATELY WITH THE COMMISSION] times during any consecutive
twelve (12)-month period with respect to Target Investments, Crescent GP shall
have the immediate right to terminate this Agreement and Crescent shall have no
further obligation to offer Target Investments to the Investment Partnerships.
Capstead's veto of an investment that is not a Target Investment, or of an
in-kind contribution (other than cash or cash equivalents) to any Investment
Partnership, shall not be considered in connection with any

                                       16
<PAGE>

limitation set forth in this Section 5.03. Capstead shall notify the General
Partner of the exercise of the Capstead Veto Right within the time period set
forth in Section 5.02.

SECTION 5.04 CAPSTEAD'S UNILATERAL RIGHT TO FORECLOSE ON CERTAIN INVESTMENTS.

      Capstead shall have the unilateral right to foreclose on any investment
held by an Investment Partnership (excluding any investment that is secured by
the equity interest in any Person) that is in default under the terms of a
mortgage, deed of trust or similar instrument where real property secures the
indebtedness to which the investment is subject (each, a "Mortgage"). The
"unilateral right to foreclose," as referenced herein shall mean, with respect
to a defaulted investment that is subject to a Mortgage, the right to (i) make
the sole determination to commence foreclosure proceedings, (ii) establish the
bid price upon foreclosure on the investment and (iii) make the sole
determination as to the disposition of any third party disputes related to the
foreclosure. Upon commencement of foreclosure, Crescent Capital shall cause the
General Partner to assume all other ministerial and procedural rights and duties
related to the foreclosure proceedings. For purposes of determining whether a
unilateral right to foreclose exists, an investment shall be in default if one
or more scheduled payments on the Mortgage to which such investment is subject
is not paid within thirty (30) days after the date on which such payment is due
and such nonpayment shall have not been cured prior to the time that notice of
commencement of foreclosure is given by the General Partner.

      At any time after an investment goes into default, either Crescent or
Capstead may submit an offer to purchase the defaulted investment from the
Investment Partnership at a price and on the terms specified by the offering
Partner (which price shall include the amount necessary to repay indebtedness
relating to the defaulted investment being purchased) and the non-offering
Partner shall have the right to authorize the General Partner to accept such
offer on behalf of the Partnership or the non-offering Partner may submit an
offer to purchase the defaulted investment from the Partnership at the price and
on the terms offered by the offering Partner, which offer Crescent Capital shall
be required to cause the General Partner to accept. Either Crescent or Capstead
shall have the right to consummate the purchase of the defaulted investment as
set forth herein prior to the consummation of the foreclosure on such
investment; provided, however, that any such purchase shall be conditioned upon
the purchasing Partner's satisfaction of the Investment Partnership's
outstanding indebtedness relating to the defaulted investment. The purchase
price of any defaulted investment shall be paid to the Partnership by the
purchasing Partner in cash upon the consummation of the closing of the purchase,
which closing shall occur on such date as shall be determined by the General
Partner and the purchasing Partner.

SECTION 5.05 FORMATION PARTNERS' RIGHT TO INVEST IN SAME ENTITIES AS INVESTMENT
PARTNERSHIPS.

      Capstead and Crescent hereby acknowledge and agree that, subject to the
right of first offer set forth in Section 5.01 of this Agreement, each Formation
Partner shall have the right to acquire the debt securities of any entity in
which an Investment Partnership invests, where appropriate opportunities exist
and such investment would not be detrimental to the interests of any Investment
Partnership. In the event any Formation Partner and an Investment Partnership
acquire debt securities in the same transaction, all expenses associated with
the acquisition shall

                                       17
<PAGE>

be allocated between the Formation Partner and the Investment Partnership on a
pro rata basis, based upon the relative amounts of securities purchased by the
Formation Partner and the Investment Partnership.

                                  ARTICLE VI.
                               TRANSFER PROVISIONS

SECTION 6.01 RESTRICTIONS ON TRANSFER OF PARTNERSHIP INTERESTS.

      Except as otherwise provided herein, no Partner may Transfer all or any
portion of its Partnership Interest without the prior unanimous written consent
of the Advisory Committee. Notwithstanding the foregoing, each Partner shall be
permitted to Transfer all or any portion of its Partnership Interest to an
Affiliate of such Partner. In addition, any Formation Partner shall be entitled
to Transfer all or any portion of its Partnership Interest to the other
Formation Partner. A Change in Control of a Formation Partner shall not be
deemed a Transfer for purposes of this Agreement.

SECTION 6.02 BUY-SELL RIGHTS - UNRESOLVED DEADLOCK.

      If there is an Unresolved Deadlock, either Formation Partner (the
"Exercising Partner") may exercise a buy-sell right by delivering to the other
Formation Partner (the "Non-Exercising Partner") a written notice (the "Notice
of Buy-Sell"), which shall state (a) the price at which the Exercising Partner
is willing to sell its Partnership Interest (the "Buy-Sell Price") and (b) the
other terms on which the Exercising Partner is willing to sell its Partnership
Interest (the "Buy-Sell Terms"). Upon receipt of the Notice of Buy-Sell, the
Non-Exercising Partner shall have the right, in its sole discretion and at such
Non-Exercising Partner's option, to either (a) purchase the Exercising Partner's
Partnership Interest at the Buy-Sell Price and on the Buy-Sell Terms or (b) sell
to the Exercising Partner the Non-Exercising Partner's Partnership Interest at
the Buy-Sell Price and on the Buy-Sell Terms, as adjusted to reflect any
differences in relative distribution rights. The Non-Exercising Partner shall
deliver to the Exercising Partner within fifteen (15) Business Days after
receipt of the Notice of Buy-Sell (the "Election Period"), a written notice of
its election to either purchase the Exercising Partner's Partnership Interest or
to sell to the Exercising Partner the Non-Exercising Partner's Partnership
Interest (the "Buy-Sell Election"). The purchase or sale of such Partnership
Interest shall be consummated no later than thirty (30) Business Days after
receipt by the Exercising Partner of the Buy-Sell Election. Settlement of a sale
pursuant to this Section 6.02 shall be in cash, to the extent that settlement
terms are not otherwise specified in the Buy-Sell Terms. If the Non-Exercising
Partner fails to deliver a Buy-Sell Election to the Exercising Partner within
the Election Period, the Non-Exercising Partner shall be deemed to have given
notice of its election to sell all of its Partnership Interest to the Exercising
Partner pursuant to the provisions hereof. If the purchase or sale of such
Partnership Interest is (without breach by the selling Partner) not consummated
as provided herein, the action as to which the Unresolved Deadlock relates shall
be deemed to have been approved if the Partner required to sell its Partnership
Interest pursuant hereto had voted to approve such action, and shall be deemed
to have been disapproved if such selling Partner had voted to disapprove such
action, and in such case, the Unresolved Deadlock will be resolved in favor of
the Partner required to sell its Partnership Interest and the Investment
Partnership shall continue without interruption.

                                       18
<PAGE>

SECTION 6.03 RIGHT OF FIRST REFUSAL - TRIGGER EVENT.

   (a) In the event that any Formation Partner has a binding, written offer
from any Person to acquire all or a portion of such Formation Partner's
Partnership Interest in connection with the occurrence of a Trigger Event and a
determination by such Formation Partner that a sale of all or a portion of its
Partnership Interest is necessary or advisable under the circumstances (a
"Proposed Transfer"), such Formation Partner (the "Selling Partner") shall
deliver to the Investment Partnership and the other Formation Partner (the
"Non-Selling Partner") written notice of the material terms of such Proposed
Transfer, including the proposed purchaser thereof, the amount, nature and
payment schedule of the consideration to be received, the conditions, if any,
associated therewith and any other material terms of such offer (an "Offer
Notice"). The Offer Notice shall constitute an irrevocable offer by the Selling
Partner to sell its Partnership Interest (or portion thereof) on the terms of
the Proposed Transfer to the Non-Selling Partner (the "Right of First Refusal"),
except that a purchaser under this Section 6.03 shall have the right to pay cash
in an amount equal to the Fair Market Value of any Non-Cash Consideration (as
hereafter defined).

   (b) During the Offer Period, the Non-Selling Partner may elect to purchase
all, but not less than all of the Partnership Interest that is the subject of
the Proposed Transfer by delivering written notice of such election (an
"Election Notice") to the Investment Partnership and the Selling Partner prior
to the expiration of the Offer Period. The failure by the Non-Selling Partner to
deliver an Election Notice during the Offer Period shall be deemed to be an
election by such Partner not to purchase the Partnership Interest subject to the
Proposed Transfer.

   (c) If the Non-Selling Partner does not elect to purchase all of the
Partnership Interest (or portion thereof) that is the subject of the Proposed
Transfer, the Selling Partner may Transfer to the purchaser named in the Offer
Notice (the "Third Party Purchaser") all (but not less than all) of the
Partnership Interest (or portion thereof) that is the subject of the Proposed
Transfer on terms and conditions that are not materially different from those
set forth in the Offer Notice; provided, however, that if the Selling Partner
has not consummated the Transfer of such Partnership Interest within ninety (90)
calendar days following the end of the Offer Period (subject to extension in
accordance with Section 6.03(f)), all of the restrictions on Transfer contained
in this Agreement shall again be in effect with respect to such Partnership
Interest. For purposes of this Section 6.03, a five percent (5%) reduction in
the price at which a Percentage Interest will be sold shall not be deemed a
material difference in the terms of the Proposed Transfer.

   (d) If the consideration for the sale of a Partnership Interest pursuant
to this Right of First Refusal is cash consideration, the purchase price to be
paid by the Non-Selling Partner shall be equal to the total consideration set
forth in the Offer Notice. If the consideration for the Proposed Transfer
consists of consideration that is other than cash consideration payable in
immediately available funds at the closing thereunder ("Non-Cash Consideration")
or consists of a combination of cash consideration and Non-Cash Consideration,
the purchase price shall be payable in cash in an amount equal to the sum

                                       19
<PAGE>

of (i) the total of the cash consideration, if any, and (ii) the Fair Market
Value of the Non-Cash Consideration as determined in accordance with Section
6.03(f) hereof.

   (e) The purchase and sale of all or any portion of a Formation Partner's
Partnership Interest pursuant to this Right of First Refusal shall be
consummated at a closing that shall occur at the principal business office of
the Investment Partnership within twenty (20) Business Days following the
expiration of the Offer Period (subject to extension in accordance with Section
6.03(f)), or at such other place or time as may be mutually acceptable to the
parties. At such closing, the Selling Partner shall Transfer the Partnership
Interest being purchased, free and clear of all liens, claims, encumbrances
(other than as a result of this Agreement or the relevant Partnership Agreement)
and defects in title and duly endorsed for Transfer to the appropriate purchaser
and, in exchange therefor, the purchaser of such Partnership Interest shall pay
the purchase price at such closing by bank wire transfer of immediately
available funds to a bank account designated in writing by the Selling Partner
at least three Business Days prior to such closing.

   (f) In the event that a determination of the fair market value of Non-Cash
Consideration is required pursuant to the Right of First Refusal, the Selling
Partner shall specify in the applicable Offer Notice its good faith estimate of
the fair market value of any Non-Cash Consideration to be paid in connection
with the Proposed Transfer. If the Formation Partners are in agreement on the
estimated fair market value of such Non-Cash Consideration, the estimate shall
be deemed to be the Fair Market Value (the "Fair Market Value") thereof for
purposes of this Agreement. If the Formation Partners do not agree on the
estimated fair market value, the Formation Partners shall for a period of five
(5) Business Days negotiate with each other for the purpose of determining the
fair market value of the Non-Cash Consideration that is acceptable to each of
them. If the Formation Partners are unable to agree on a fair market value
during such five (5)-day negotiation period and there is a variance of ten
percent (10%) or less in the estimates of the fair market value prior to the
commencement of such five (5)-day negotiation period, the average of such
estimates shall be the Fair Market Value of such Non-Cash Consideration and
shall be final and binding on the Partners. If there is a variance of more than
ten percent (10%) in such estimates, then the Formation Partners shall within
twenty (20) Business Days after the date of the Offer Notice submit their
respective estimates, together with all supporting data upon which such
estimates were based, to a mutually agreeable arbitrator; provided that if they
cannot agree upon a mutually agreeable arbitrator within twenty (20) calendar
days after the date of the Offer Notice they shall each select one arbitrator
with recognized standing and experience and who is a member of the American
Arbitration Association and those two arbitrators shall select a third such
arbitrator and such third arbitrator acting alone shall determine such
arbitrator's estimate of the fair market value of the Non-Cash Consideration and
shall select from the estimates presented by the Formation Partners the estimate
that is closest to such arbitrator's estimate, and such selected estimate shall
be the Fair Market Value of the Non-Cash Compensation. The foregoing arbitration
proceedings, including any discovery and any hearings, shall be conducted in
accordance with the rules of the American Arbitration Association then in
effect, and the Formation Partners shall cooperate fully in promptly furnishing
any relevant information requested by the

                                       20
<PAGE>

arbitrator. If a party fails to timely select an arbitrator as provided herein,
the other party's estimate shall be deemed to be the Fair Market Value of the
Non-Cash Consideration. If the two selected arbitrators cannot agree upon a
third arbitrator, the third shall be selected in accordance with the rules of
the American Arbitration Association. The determination of Fair Market Value
pursuant to this Section 6.03(f) shall be final and binding on the Partners and
may be enforced by a court of competent jurisdiction. The cost of the
arbitrators and the arbitration proceeding shall be paid by the party whose
estimate was not selected. The time period for any closing pursuant to this
Section 6.03 shall be extended by the number of Business Days required to
establish the Fair Market Value of any Non-Cash Consideration pursuant to this
Section 6.03(f). The General Partner shall keep the Non-Selling Partner
reasonably informed of the status of the determination of such Fair Market
Value.

                                  ARTICLE VII.
                             TERMINATION PROVISIONS

SECTION 7.01 TERMINATION.

   (a) This Agreement and each of Crescent's and Capstead's rights and
obligations hereunder shall terminate and be of no further force and effect upon
the earlier to occur of (i) the fourth anniversary of the closing of the Initial
Investment Partnership, (ii) the date on which the total Capital Contributions
made to the Initial Investment Partnership and the Successor Investment
Partnership equals Two Hundred Million Dollars ($200,000,000), or, if an
Additional Investor is admitted to the Successor Investment Partnership, up to
Three Hundred Fifty Million Dollars ($350,000,000), (iii) the date on which
either Formation Partner delivers written notice to the other of its termination
of this Agreement pursuant to Section 2.01, following the date on which Crescent
and Capstead have fulfilled their respective Capital Commitments to the Initial
Investment Partnership, or (iv) such other date determined by mutual agreement
of the Formation Partners. For purposes of clause (ii) of this Section 7.01,
amounts reinvested during the Reinvestment Period of any Investment Partnership
shall not be included in the Capital Contributions made to such Investment
Partnership.

   (b) In the event either of the Formation Partners (i) exercises its right
to terminate this Agreement pursuant to Section 7.01(a)(iii), (ii) enters into
negotiations for the acquisition of Target Investments with a different capital
partner within the 6-month period following the date on which written notice of
termination is given by the terminating Formation Partner to the non-terminating
Formation Partner and (iii) enters into a definitive agreement for the
acquisition of one or more Target Investments with such different capital
partner within nine (9) months following the date such written notice of
termination is given, then the non-terminating party would have the right to
participate in the new venture.

   (c) In the event that, within twelve (12) months following the termination
of this Agreement by Crescent GP pursuant to Section 7.01(a)(iii), Crescent
conducts a public offering of interests in an investment fund or an offering of
such interests under Rule 144 A under the Securities Act of 1933, as amended (a
"Public Offering"), and the investment

                                       21
<PAGE>

strategy of the investment fund or other investment vehicle includes, to a
material extent, investments in Target Investments, then Capstead shall have the
right to purchase common equity interests in such Public Offering, subject to
any ownership limits that shall be determined prior to the closing of the
offering.

                                 ARTICLE VIII.
                                 INDEMNIFICATION

SECTION 8.01 INDEMNIFICATION OF THE GENERAL PARTNER.

      To the fullest extent permitted by law but limited to the assets of each
Investment Partnership, each Investment Partnership shall indemnify the General
Partner (including the owners, officers, partners, and agents of the General
Partner) (the "Indemnified Parties"), and save and hold each Indemnified Party
harmless from and in respect of (i) all claims, actions, demands or threats
thereof, against the Investment Partnership or such Indemnified Party that arise
out of, or in any way relate to the Investment Partnership, the business of the
Investment Partnership or the assets of the Investment Partnership, and any
losses or damages resulting therefrom, including amounts paid in settlement or
compromise of any such claim, action, demand or threat thereof, and (ii) all
fees, costs, and expenses, including reasonable attorneys' fees, incurred in
connection with, or resulting from, any such claim, action, demand or threat
thereof; provided, however, that this indemnification shall not extend to acts
of gross negligence, breach of fiduciary duty, a material, uncured breach of
this Agreement or any Partnership Agreement or willful misconduct of such
Indemnified Party. This indemnity is intended to apply regardless of the
negligence of any Indemnified Party. The right to indemnification set forth in
this Section 8.01 shall be a contract right and shall include the right of each
indemnitee to be paid by the applicable Investment Partnership the expenses
incurred in defending any such proceeding in advance of its final disposition;
provided, however, that the payment of such expenses in advance of the final
disposition of a proceeding shall be made only upon delivery to the Investment
Partnership of (i) a written affirmation of the indemnitee of his or her good
faith belief that the standard of conduct necessary for indemnification by the
Investment Partnership has been met, and (ii) a written undertaking by or on
behalf of the indemnitee to repay all amounts so advanced if it shall ultimately
be determined that the standard of conduct has not been met.

SECTION 8.02 INDEMNIFICATION OF MEMBERS OF THE ADVISORY COMMITTEE.

      Each member of the Advisory Committee shall be entitled, to the fullest
extent permitted by law, to exculpation from liability and indemnification from
the assets of the relevant Investment Partnership with respect to the activities
of such member on the Advisory Committee, if such member's activities are
carried out in good faith. To the fullest extent permitted by applicable law, no
member of the Advisory Committee shall have any fiduciary duties to any
Investment Partnership or any Partner, but shall be required to act in
accordance with the contractual covenant of good faith and fair dealing.

                                       22
<PAGE>

                                  ARTICLE IX.
                     PARTNER REPRESENTATIONS AND WARRANTIES

SECTION 9.01 REPRESENTATIONS AND WARRANTIES.

      Each Formation Partner represents and warrants, severally and not jointly,
solely on behalf of itself, to the other Partner as follows:

   (a) Organization. Such Partner is duly formed and validly existing and is
qualified to do business and in good standing in the jurisdictions in which it
does business.

   (b) Due Authorization; Binding Agreement. This Agreement has been duly
executed and delivered by such Partner, or an authorized representative of such
Partner, and constitutes a legal, valid and binding obligation of such Partner,
enforceable against such Partner in accordance with the terms hereof.

   (c) Consents and Approvals. No consent, waiver, approval or authorization of,
or filing, registration or qualification with, or notice to, any governmental
unit or any other Person is required to be made, obtained or given by such
Partner in connection with the execution, delivery and performance of this
Agreement other than consents, waivers, approvals, authorizations, filings,
registrations, qualifications or notices which have been obtained prior to the
date hereof.

   (d) No Conflict with Other Documents or Violation of Law. The execution of
this Agreement by such Partner and such Partner's performance of the
transactions contemplated herein will not violate any document, instrument,
agreement, stipulation, judgment, order, or any applicable federal, state or
local law, ordinance or regulation to which such Partner is a party or by which
such Partner is bound.

                                   ARTICLE X.
                            MISCELLANEOUS PROVISIONS

SECTION 10.01 ADDRESSES AND NOTICE.

      All notices, requests, demands and other communications hereunder to a
Partner shall be in writing and shall be deemed to have been duly given if
delivered by hand or if sent by certified mail, return receipt requested,
properly addressed and postage prepaid, or transmitted by commercial overnight
courier to the Partner at the address set forth in Exhibit A to the Partnership
Agreement of the Initial Investment Partnership or at such other address as the
Partner shall notify the General Partner in writing, or sent by facsimile to the
facsimile number set forth in Exhibit A to the Partnership Agreement of the
Initial Investment Partnership or to such other facsimile number as the Partner
shall notify the General Partner in writing. Such communications shall be deemed
sufficiently given, served, sent or received for all purposes at such time as
delivered to the addressee (with the return receipt, facsimile confirmation or
delivery receipt being deemed conclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.

                                       23
<PAGE>

SECTION 10.02 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 purpose of this Agreement.

SECTION 10.03 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 10.04 CREDITORS.

      None of the provisions of this Agreement shall be for the benefit of, or
shall be enforceable by, any creditor of any Investment Partnership.

SECTION 10.05 WAIVER.

      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.

SECTION 10.06 NO AGENCY.

      Nothing contained herein shall be construed to constitute any Partner the
agent of another Partner, except as specifically provided herein, or in any
manner to limit the Partners in the carrying on of their own respective
businesses or activities.

SECTION 10.07 ENTIRE UNDERSTANDING.

      This Agreement and the Partnership Agreements shall constitute the entire
agreement and understanding among the Partners relating to the subject matter
hereof and supersedes any prior understanding and/or written or oral agreements
among them respecting the subject matter herein. In the event of any conflict
between this Agreement and any Partnership Agreement, the terms of such
Partnership Agreement shall govern.

SECTION 10.08 COUNTERPARTS.

      This Agreement may be executed in counterparts, all of which together
shall constitute one agreement binding on all of 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 10.09 APPLICABLE LAW.

      This Agreement shall be construed in accordance with and governed by the
laws of the State of Delaware, without regard to the principles of conflicts of
law.

                                       24
<PAGE>

SECTION 10.10 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 10.11 TELEGRAMS AND FACSIMILE SIGNATURES.

      A telegram, telex, cablegram or similar transmission by a Person, or a
photographic, photostatic, facsimile or similar reproduction of a writing signed
by a Person, shall be regarded as signed by the Person for all purposes of this
Agreement.

SECTION 10.12 SURVIVAL.

      The following provisions shall survive the termination or expiration of
this Agreement: Section 7.01(b) and Section 7.01(c).

                                       25
<PAGE>

      IN WITNESS WHEREOF, the parties have signed and delivered this Agreement
as of the date first above written.

                                     CRESCENT:

                                     Crescent Real Estate Capital, L.P.,
                                     a Delaware limited partnership

                                     By: Crescent Real Estate Capital GP, LLC
                                         a Delaware limited liability company
                                         its general partner

                                         By: Crescent Real Estate Equities, Ltd.
                                             a Delaware corporation,
                                             its manager

                                             By: _______________________________
                                                 Name:
                                                 Title:

                                     CAPSTEAD:

                                     CMC Real Estate Capital, L.P.
                                     a Delaware limited partnership

                                     By: CMC Real Estate Capital GP, LLC
                                         its general partner

                                         By: Capstead Mortgage Corporation,
                                             its sole member

                                             By: _______________________________
                                             Andrew F. Jacobs
                                             President and Chief Executive
                                             Officer

<PAGE>

                                                                       EXHIBIT A

                            Intentionally Left Blank

<PAGE>

                                                                       EXHIBIT B

                      Form of Limited Partnership Agreement

                              [Begins on Next Page]

<PAGE>

                          LIMITED PARTNERSHIP AGREEMENT

                                       OF

                              [NAME OF PARTNERSHIP]

                               DATED AS OF [DATE]

<PAGE>

                               TABLE OF CONTENTS

                                     - i -
<PAGE>

                          LIMITED PARTNERSHIP AGREEMENT
                                       OF
                              [NAME OF PARTNERSHIP]

      THIS LIMITED PARTNERSHIP AGREEMENT (the "Agreement"), dated as of [DATE],
is entered into by and among Crescent Redtail Management, LLC, a Delaware
limited liability company ("Crescent Redtail" or the "General Partner"),
Crescent Real Estate Capital, L.P., a Delaware limited partnership ("Crescent
Capital," and together with Crescent Redtail, "Crescent") and CMC Real Estate
Capital, L.P., a Delaware limited partnership ("Capstead").

                                   WITNESSETH

      WHEREAS, Crescent and Capstead desire to combine Crescent's real estate
operating and investment experience with Capstead's capital markets and
investment experience to invest jointly in high quality real estate debt that
meets specified criteria;

      WHEREAS, Crescent and Capstead desire to form an investment partnership
through which they will make certain investments; and

      WHEREAS, Crescent and Capstead desire to set forth their agreement
regarding the terms under which they will invest in and through the investment
partnership.

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

                                  DEFINED TERMS

      Except as otherwise herein expressly provided, the following terms and
phrases shall have the meanings set forth below:

      "Act" means the Delaware Revised Uniform Limited Partnership Act, as
amended from time to time (or any corresponding provisions of succeeding law).

      "Adjusted Capital Account" means the Capital Account of a Partner,
increased by such Partner's share of any "minimum gain," as defined in
Regulations sections 1.704-2(g)(1) and 1.704-2(i)(5).

      "Additional Capital Contribution" means any additional Capital
Contribution to be made by the Limited Partners pursuant to Section 3.2.E
hereof.

      "Adjusted Cost" means, with respect to any contributed investment, the
adjusted acquisition cost of such investment as reflected on the tax books and
records of the contributing Partner.

<PAGE>

      "Advance Leverage Ratio" means, with respect to any Target Investment, the
ratio of acquisition debt to the investment amount of such Target Investment.

      "Advisory Committee" means the Advisory Committee established pursuant to
Section 6.2.A hereof.

      "Affiliate" means, with respect to any Person, any Person directly or
indirectly Controlling, Controlled by or under common Control with such Person.

      "Agreement" means this Limited Partnership Agreement, as it may be
amended, supplemented or restated from time to time.

      "Appraised Value" means the value assigned to collateral by the applicable
lender(s) to the Partnership, or in the absence of such, a third party appraisal
prepared by a nationally recognized appraisal company within the preceding four
(4) months. If the above noted indications of value are not available, a value
assigned by Crescent may be used, provided however, that such investment shall
not be considered a Target Investment.

      "Book Value" means the adjusted basis of an investment for federal income
tax purposes; provided, however, that in the event that such investment is
revalued pursuant to Regulations Section 1.704-1(b)(2)(iv)(f), Book Value means
the fair market value of the property at the time that the investment is
revalued, as subsequently adjusted (e.g., for depreciation or amortization) in
accordance with federal income tax principles.

      "Business Day" means any day other than a Saturday, Sunday or any other
day on which federal banks are authorized by law to close.

      "Buy-Sell Election" has the meaning set forth in Section 10.2 hereof.

      "Buy-Sell Price" has the meaning set forth in Section 10.2 hereof.

      "Buy-Sell Terms" has the meaning set forth in Section 10.2 hereof.

      "Capital Account" means the Capital Account maintained for a Partner in
accordance with the provisions of Regulations section 1.704-1(b)(2)(iv).

      "Capital Commitment" means, with respect to any Limited Partner, the
obligation to make the Capital Contributions to the Partnership that are
specified in Exhibit A to this Agreement.

      "Capital Contribution" means, with respect to any Limited Partner, any
cash, cash equivalents or the Adjusted Cost of any investment contributed to the
Partnership by such Partner. "Capital Contribution" shall include any Additional
Capital Contribution that a Limited Partner makes.

      "Capstead" means CMC Real Estate Capital, L.P., a Delaware limited
partnership.

                                     - 2 -
<PAGE>

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

      "Change In Control" means (i) the acquisition by any "person," as such
term is used in Sections 13(d) and 14(d) of the Exchange Act (other than a
Formation Partner, any trustee or other fiduciary holding securities under any
employee benefit plan of a Formation Partner, or any company owned, directly or
indirectly, by the equity holders of a Formation Partner), directly or
indirectly, of securities of a Formation Partner representing fifty percent
(50%) or more of the combined voting power of a Formation Partner's then
outstanding securities; (ii) the approval by the equity holders or general
partner of a Formation Partner of a merger or consolidation of the Formation
Partner with any other entity, other than a merger or consolidation that would
result in the voting securities of a Formation Partner outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than eighty
percent (80%) of the combined voting power of the voting securities of a
Formation Partner or such surviving entity outstanding immediately after such
merger or consolidation; provided, however, that a merger or consolidation
effected to implement a reorganization or recapitalization of a Formation
Partner, or a similar transaction, in which no "person" acquires more than
twenty percent (20%) of the combined voting power of a Formation Partner's then
outstanding securities shall not constitute a Change In Control of a Formation
Partner; or (iii) the approval of the equity holders or general partner of a
Formation Partner of a plan of complete liquidation of a Formation Partner or an
agreement for the sale or disposition by a Formation Partner of all or
substantially all of the Formation Partner's assets.

      "Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, 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.

      "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether by ownership of voting securities, by contract or otherwise.

      "Crescent" means Crescent Capital and Crescent Redtail.

      "Crescent Capital" means Crescent Real Estate Capital, L.P., a Delaware
limited partnership.

      "Crescent Redtail" means Crescent Redtail Management, LLC, a Delaware
limited liability company, the general partner of the Partnership.

      "Debt Service Coverage Ratio" means the ratio obtained by dividing (i) the
sum of the underwritten measure of the net operating income of any Target
Investment, subtracting or adding back, as applicable, leasing commissions,
tenant improvements, interest reserves, reserves for leasing commissions,
reserves for tenant improvements, reserves for capital expenditures and any
guarantees of any such reserves, over the initial term of such Target
Investment, by (ii) the sum of all interest payments including capitalized
interest and mandatory

                                     - 3 -
<PAGE>

principal payments due and payable by such Target Investment during such
applicable measurement period excluding any payments due upon maturity of any
indebtedness.

      "Declined Additional Capital Contribution" has the meaning set forth in
Section 3.2.E hereof.

      "Delinquent Limited Partner" has the meaning set forth in Section 3.3.A
hereof.

      "Election Notice" has the meaning set forth in Section 10.3.B hereof.

      "Election Period" has the meaning set forth in Section 10.2 hereof.

      "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      "Exercising Partner" has the meaning set forth in Section 10.2 hereof.

      "Fair Market Value" has the meaning set forth in Section 10.3.F hereof.

      "Formation Partner" means Crescent or Capstead. Crescent Redtail and
Crescent Capital shall be treated as one consolidated entity in all matters
involving the Formation Partners, with Crescent Redtail controlling all
decisions and actions to be taken by Crescent in respect thereto.

      "Fully Invested" means the point at which the Partnership has invested the
Partnership's maximum Capital Commitment less amounts expended or reserved for
the Minimum Monthly Management Fee and other Partnership Expenses.

      "General Partner" means Crescent Redtail and includes any Person that
becomes an additional or successor general partner of the Partnership pursuant
to the provisions of this Agreement, each in its capacity as a general partner
of the Partnership.

      "ICA" means the Investment Company Act of 1940, as it may be amended from
time to time.

      "Indemnified Party" and "Indemnified Parties" have the meaning set forth
in Section 6.13.A hereof.

      "Investment Period" means the period during which the Partnership is
permitted to acquire new investments.

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

      "Limited Partner" means any Person listed as a Limited Partner in Exhibit
A or any Person admitted to the Partnership as a Limited Partner as provided in
this Agreement, in each case, solely in such Person's capacity as a limited
partner of the Partnership.

      "Liquidating Event(s)" has the meaning set forth in Section 12.1 hereof.

      "Liquidator" means the General Partner or, in the event there is no
remaining General Partner, any Person selected by the Limited Partners, as set
forth in Section 12.2. hereof.

                                     - 4 -
<PAGE>

      "Loan to Value Ratio" means the ratio of the unpaid principal balance of
the Target Investment plus all indebtedness senior thereto, divided by the
Appraised Value.

      "Major Decision" means any of the decisions set forth in Section 6.3
hereof.

      "Master Agreement" means that certain Master Agreement, dated as of May
10, 2005, by and among the parties hereto.

      "Minimum Monthly Management Fee" means the minimum monthly management fee
payable by the Partnership to Crescent Redtail for Crescent Redtail's service as
general partner of the Partnership. During the Investment Period, the Minimum
Monthly Management Fee shall equal $___________. After the termination of the
Investment Period, the Minimum Monthly Management Fee shall be reduced to
$____________.

      "Mortgage" has the meaning set forth in Section 6.12.A hereof.

      "Net Cash Flow" means any excess of (i) the sum of (A) cash receipts of
the Partnership during a given calendar month from all sources whatsoever
(including the net cash proceeds received by the Partnership from the sale of a
Partnership asset), other than Unused Capital Contributions or repayments during
the Reinvestment Period, plus (B) the amount of any reduction during the
applicable calendar month in Partnership reserves for anticipated expenses
previously established pursuant to (ii)(C) below, over (ii) the sum of (A) all
operational expenditures of the Partnership, including all financing and hedging
expenses, during such related calendar month, plus (B) in the case of
refinancing proceeds, the amount applied in payment or reduction of the
refinanced obligation(s), plus (C) the amount of any increase during the
calendar month in Partnership reserves for reasonably anticipated expenses to
provide for accrued or anticipated expenses of the Partnership.

      "Non-Cash Consideration" has the meaning set forth in Section 10.3.D
hereof.

      "Non-Exercising Partner" has the meaning set forth in Section 10.2 hereof.

      "Non-Selling Partner" has the meaning set forth in Section 10.3.A hereof.

      "Notice of Buy-Sell" has the meaning set forth in Section 10.2 hereof.

      "Offer Notice" has the meaning set forth in Section 10.3.A hereof.

      "Offer Period" means a period commencing upon delivery of an Offer Notice
and expiring at 5:00 p.m., Fort Worth time, on the tenth (10th) Business Day
following delivery of such Offer Notice; provided, however, if the Proposed
Transfer involves Non-Cash Consideration, the Offer Period shall not expire
until the tenth (10th) Business Day after a binding determination of the Fair
Market Value of such Non-Cash Consideration has been made in accordance with
Section 10.3.F hereof.

      "Original Closing Date" means July 26, 2005.

      "Partner" means any General Partner or Limited Partner, and "Partners"
refers to all of the partners in the Partnership.

                                     - 5 -
<PAGE>

      "Partnership" means the limited partnership formed hereby, as such limited
partnership may from time to time be constituted.

      "Partnership Expenses" has the meaning set forth in Section 6.8 hereof.

      "Partnership Interest" means an ownership interest in the Partnership
representing a Capital Contribution by a Partner and includes any and all
benefits to which the holder of such a Partnership Interest may be entitled as
provided herein, together with all obligations of such Person to comply with the
terms and provisions hereof.

      "Percentage Interest" means, with respect to any Partner, the ratio of
such Partner's Capital Commitment to the total Capital Commitments of all of the
Partners.

      "Person" means any individual, general partnership, limited partnership,
limited liability company, corporation, trust, estate, association, nominee or
other entity.

      "Prime Rate" means the prime rate reported from time to time in The Wall
Street Journal under "Money Rates" as of the relevant date(s), and if more than
one prime rate shall be reported therein, the average of all such rates.

      "Proposed Transfer" has the meaning set forth in Section 10.3.A hereof.

      "Reinvestment Period" means the period during which the Partnership is
permitted to reinvest repayments it receives in respect of its investments.

      "Right of First Refusal" has the meaning set forth in Section 10.3.A
hereof.

      "Regulations" means the income tax regulations promulgated under the Code,
as such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).

      "Securities Act" means the Securities Act of 1933, as it may be amended
from time to time.

      "Selling Partner" has the meaning set forth in Section 10.3 hereof.

      "Short-term Investment" means commercial paper, government obligations,
money market instruments, certificates of deposit and other similar obligations
and securities, in each case maturing in ninety (90) days or less at the time of
investment by the Partnership.

      "Successor Partnership" means any partnership that is formed by the
Formation Partners after the Original Closing Date and that has substantially
identical investment strategies and objectives as the Partnership.

      "Take-down Notice" has the meaning set forth in Section 3.2.C hereof.

      "Target Investments" has the meaning set forth in Section 2.1.A hereof.

      "Target IRR" has the meaning set forth in Section 2.1C hereof.

                                     - 6 -
<PAGE>

      "Termination Date" means the seventh anniversary of the closing of the
Partnership's initial investment, which date may be extended by the General
Partner for up to two (2) consecutive one-year periods.

      "Third Party Purchaser" has the meaning set forth in Section 10.3.C
hereof.

      "Transfer" means a sale, assignment, transfer or other disposition, gift,
hypothecation or encumbrance by a Partner of its Partnership Interest.

      "Trigger Event" means (i) any change in any law, rule or regulation
applicable to a Formation Partner, including any change made by governing
authorities of tax, regulatory or accounting rules and procedures (e.g., the
IRS, Securities and Exchange Commission or the Public Company Accounting
Oversight Board), (ii) any significant market liquidity event, (iii) any other
event the occurrence of which would make an investment by the Formation Partner
in the Partnership ill-advised from a legal or economic perspective, or (iv) a
Change In Control of a Formation Partner.

      "UCC" has the meaning set forth in Section 3.3.B hereof.

      "Unresolved Deadlock" means an inability of the members of the Advisory
Committee to reach unanimous agreement on a Major Decision, which inability
continues for a period of one hundred twenty (120) calendar days (except with
respect to the inability to elect a replacement General Partner pursuant to
Section 6.15.C or Section 12.1.B, which shall only be subject to a thirty (30)
calendar day resolution period) after written notice by a representative of the
Advisory Committee to the General Partner. The Formation Partners shall cause
their respective designees to the Advisory Committee to negotiate in good faith
and use their respective commercially reasonable efforts to reach agreement on
any Major Decision.

      "Unused Capital Contributions" has the meaning set forth in Section 3.2.F
hereof.

                                   ARTICLE I
                             ORGANIZATIONAL MATTERS

Section 1.1 Formation of Partnership

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

Section 1.2 Name

      The name of the Partnership is [NAME OF PARTNERSHIP]. The Partnership's
business may be conducted under any other name or names deemed advisable by the
General Partner.

                                     - 7 -
<PAGE>

Section 1.3 Principal Office and Registered Agent

      The initial principal office of the Partnership is 777 Main Street, Fort
Worth, Texas 76102, or such other place as the General Partner may from time to
time designate by notice to the Limited Partners. The registered agent of the
Partnership is Corporation Service Company, and the registered office of the
Partnership within the State of Delaware is 2711 Centerville Road, Suite 400,
Wilmington, Delaware 19808. 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 1.4 Term

      The term of the Partnership commenced upon filing of the Certificate in
the Office of the Secretary of State of Delaware, and shall continue until the
Termination Date, unless it is dissolved sooner pursuant to the provisions of
Article XII or as otherwise provided by law.

                                   ARTICLE II
                                     PURPOSE

Section 2.1 Purpose and Business

            A. The purpose and nature of the business to be conducted by the
Partnership is to (a) acquire, invest in, own, manage, enter into participation
arrangements with respect to, transfer, sell or otherwise dispose of B-notes,
first mortgages (excluding residential), subordinated notes, mezzanine loans and
bridge loans ("Target Investments") and (b) engage in any other lawful
activities determined by the General Partner to be necessary or appropriate.

            B. Target Investments shall specifically exclude preferred equity,
bonds and securities offered pursuant to Rule 144A under the Securities Act and
notes or other loans related to Crescent-owned assets and healthcare facilities.
Each of the Target Investments shall have (i) a minimum dollar value of Ten
Million Dollars ($10,000,000), (ii) a maximum dollar value of Fifty Million
Dollars ($50,000,000), (iii) a Loan to Value Ratio that is less than or equal to
eighty percent (80%), and (iv) a term of not more than five (5) years, including
extensions. Target Investments shall constitute "real estate assets," within the
meaning of Section 856(c)(5)(B) of the Code. The Partnership may, from time to
time, acquire assets that do not constitute Target Investments.

            C. Target Investments may be collateralized by office, hotel,
retail, multi-family, industrial and residential properties, as well as
unimproved land. Each Target Investment shall have a target internal rate of
return of at least __________ percent (___%) for the term of the investment
(including extensions), which return shall be calculated by taking into
consideration the amount of the origination fee associated with such investment,
the Partnership's projected unreimbursed legal and due diligence costs and the
management fee payable by the Partnership, and further defined to be the
discount rate at which the present value of a Target Investment's future cash
flows equals the Capital Contributions associated with such Target Investment
(the "Target IRR"). The Target IRR shall be computed in accordance with the
following formula:

                                      - 8 -

<PAGE>

      NPV = 0 = -Capital Contribution + origination fee (if any) - unreimbursed
      legal and due diligence costs (if any) + [cash flow year 1 / (1+Target
      IRR)1] + [cash flow year 2 / (1+Target IRR) 2] + ... + [cash flow year n
      / (1+Target IRR) n]

The current applicable reset index at the time of acquisition will be used for
purposes of estimating future annual interest revenues and expenses. In
addition, the minimum Debt Service Coverage Ratio for each Target Investment
shall be 1.10. The Advance Leverage Ratio shall not exceed seventy-five percent
(75%) for any Target Investment. An investment shall not be deemed a Target
Investment if it does not meet the criteria for Target Investments set forth in
this Agreement.

            D. The Partnership shall conduct its acquisitions and operations so
as not to adversely affect the ability of Crescent Real Estate Equities Company,
an indirect owner of Crescent, and Capstead Mortgage Corporation, an indirect
owner of Capstead, to qualify as real estate investment trusts under Section 856
of the Code and so as to eliminate or minimize any additional taxes under
Sections 857 or 4981 or otherwise to which they could become subject.

            E. The Partners acknowledge and agree that, in determining whether
to approve investments to be made by the Partnership, the Partners shall
consider whether the investment is suitable in light of (i) the Partnership's
exposure to credit risk, (ii) the degree of diversification of the Target
Investments by property type, borrower and geographic region and (iii) the
Partnership's exposure to interest rate risk and the degree to which the
Partnership is able to hedge such risk.

Section 2.2 Powers

      Subject to all of the terms, covenants, conditions and limitations
contained in this Agreement or the Master Agreement, the Partnership shall have
full power and authority to do any and all acts and things necessary,
appropriate, proper, advisable, desirable, 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, including, without
limitation, full power and authority, directly or through its ownership interest
in other entities, to enter into, perform and carry out contracts of any kind,
borrow money and provide guarantees in connection with a borrowing by or other
transaction involving an entity in which the Partnership has a direct or
indirect interest.

                                  ARTICLE III
                      CAPITAL COMMITMENTS AND CONTRIBUTIONS

Section 3.1 Total Committed Capital

            The total Capital Commitments to the Partnership shall equal One
Hundred Million Dollars ($100,000,000). No additional Partnership Interests may
be offered, sold or issued by the Partnership after the date hereof.

                                     - 9 -
<PAGE>

Section 3.2 Capital Contributions of the Partners

            A. The General Partner is hereby admitted as the general partner of
the Partnership. The name and address of the General Partner are as set forth in
Exhibit A hereto. The General Partner shall not make any Capital Contribution to
the Partnership.

            B. Each of the Persons listed in Exhibit A as a Limited Partner is
hereby admitted as a limited partner of the Partnership. The name, address,
Capital Commitment and Percentage Interest of each Limited Partner are set out
in Exhibit A hereto.

            C. At any time after the Original Closing Date, the Limited Partners
shall make Capital Contributions from time to time on the date specified by the
General Partner in a written notice requesting the same (a "Takedown Notice").
Each Takedown Notice shall describe the proposed use of the funds requested and
shall specify the date on which the Capital Contribution is due. Each Takedown
Notice also shall indicate the aggregate amount being drawn and the amount of
each Limited Partner's Capital Contribution in respect thereof. The date
specified for the payment of the requested Capital Contributions shall not be
less than three (3) Business Days after the Takedown Notice is deemed delivered
in accordance with Section 14.2 hereof.

            D. Capital Contributions shall be requested from all Limited
Partners on the basis of their relative Capital Commitments. Capital
Contributions shall be payable in cash; provided, however, that Crescent Capital
may pay its Capital Contributions in cash or by contributing certain of its
existing investments that meet the criteria for Target Investments. Any such
contributed investments shall be valued at Crescent Capital's Adjusted Cost,
determined as of the date that the Target Investment is contributed to the
Partnership by Crescent Capital.

            E. If at any time or from time to time after all Capital Commitments
have been called and paid, the General Partner determines that the Partnership
requires additional capital to satisfy the Partnership's obligations to third
parties, the General Partner may request Additional Capital Contributions from
the Limited Partners. Any Additional Capital Contributions shall be called on a
pro rata basis, based upon the Limited Partners' total Capital Contributions as
of the date on which the Additional Capital Contributions are requested by the
General Partner. In the event that a Limited Partner fails to make an Additional
Capital Contribution when due (the "Declined Additional Capital Contribution"),
the General Partner shall send a written notice to any contributing Limited
Partner informing such Limited Partner of its right to make a loan to the
Partnership in the amount of such Declined Additional Capital Contribution and
in addition that the Additional Capital Contribution made by such contributing
Limited Partner shall also be converted into a loan to the Partnership from such
contributing Limited Partner. Any loan made by a Limited Partner to the
Partnership shall accrue interest at the lesser of the Prime Rate plus five
percent (5%) per annum and the maximum interest rate permitted by applicable law
and shall be made on such other terms as shall be agreed by the General Partner
and the lending Limited Partner at such time.

                                     - 10 -

<PAGE>

            F. To the extent that Capital Contributions (excluding Additional
Capital Contributions) are not used to acquire investments or to fund the
Minimum Monthly Management Fee or other expenses of the Partnership within
forty-five (45) calendar days of the payment date specified in the Takedown
Notice calling for such Capital Contributions, the General Partner shall cause
the Partnership to return to the Limited Partners the amount of the unused
Capital Contributions (the "Unused Capital Contributions"), which amounts shall
(as of the date such return of Unused Capital Contributions is made) be deemed
to reduce the amount of Capital Contributions made by such Limited Partners and
correspondingly increase the amounts of such Limited Partners' unpaid Capital
Commitments. All amounts returned in accordance with this Section 3.2.F shall be
distributed to the Limited Partners based upon the amount of such Capital
Contributions made by each Limited Partner.

            G. The General Partner may cause the Partnership to invest Capital
Contributions in Short-Term Investments pending use.

Section 3.3 Failure to Make Required Capital Contributions

            A. Upon any Limited Partner's failure to make any installment of its
Capital Commitment or any Additional Capital Contributions when due, the
Advisory Committee members appointed by the non-defaulting Limited Partner may
cause the General Partner to cause the Partnership to exercise, on notice to
that defaulting Limited Partner (the "Delinquent Limited Partner"), one or more
of the following remedies:

                    (1)  taking such action (including court proceedings), at
                         the cost and expense of the Delinquent Limited Partner,
                         as the General Partner may deem appropriate to obtain
                         payment by the Delinquent Limited Partner of the
                         portion of the Delinquent Limited Partner's Capital
                         Commitment and/or Additional Capital Contribution that
                         is in default, together with interest thereon from the
                         date that the payment was due until the date that it is
                         made, at a rate per annum equal to the lesser of (A)
                         the maximum rate permitted by applicable law and (B)
                         the Prime Rate plus five percent (5%), plus costs
                         incurred by the Partnership or the General Partner in
                         collecting or attempting to collect amounts due,
                         including reasonable attorney's fees and expenses;

                    (2)  exercising the rights of a secured party under the
                         Uniform Commercial Code of Delaware, as more fully set
                         forth in Section 3.3.B below; or

                    (3)  exercising any other rights and remedies available at
                         law or in equity or under this Agreement.

            B. Each Limited Partner hereby grants to the Partnership, as
security for the payment of all Capital Contributions and Additional Capital
Contributions that such Limited Partner is required to make, a security interest
in and a general lien on such Limited Partner's Partnership Interest and the
proceeds thereof, all under the Uniform

                                     - 11 -
<PAGE>

Commercial Code of Delaware (the "UCC"). On any default in the payment of a
Capital Contribution or Additional Capital Contribution, the Partnership is
entitled to all the rights and remedies of a secured party under the UCC with
respect to the security interest granted in this Section 3.3.B. Each Limited
Partner shall execute and deliver to the Partnership all other instruments that
the General Partner may request to effectuate and carry out the preceding
provisions of this Section 3.3.B. This Agreement or a photographic, or other
copy hereof may serve as a financing statement. Each Partnership Interest shall
be a security governed by Article 8 of the UCC, and the General Partner, on
behalf of the Partnership, shall register the Partnership as a registered owner
for purposes of Article 8-301 of the UCC upon each original issue or Transfer of
any Partnership Interest.

Section 3.4 Additional Funding

      If the Partnership requires funds for any Partnership purpose in excess of
any other funds determined by the General Partner to be available to the
Partnership, the General Partner (i) may cause the Partnership to borrow such
funds from third parties, (ii) may cause the Partnership to borrow such funds
from the General Partner at the Prime Rate plus five percent (5%) (or, if less,
the maximum rate permitted by applicable law), or (iii) may obtain such funds
through Additional Capital Contributions from one or more Limited Partners as
provided in Section 3.2.E hereof.

Section 3.5 Withdrawal of Capital

      A Limited Partner shall not be entitled to withdraw any part of such
Limited Partner's Capital Account or to receive any distribution from the
Partnership, except as provided in this Agreement.

Section 3.6 Additional Capital Contributions

      Except as provided in Section 3.2.E above, no Limited Partner shall be
required to make any Capital Contribution (other than the Additional Capital
Contribution as provided in Section 3.2.E) to the Partnership in excess of its
Capital Commitment.

Section 3.7 Interest on Capital Contributions

      No interest shall be due from the Partnership on any Capital Contribution
of any Limited Partner.

                                   ARTICLE IV
                                  DISTRIBUTIONS

Section 4.1 Distribution Policy

            A. Except as otherwise provided in this Section 4.1 and subject to
the availability of cash after paying Partnership Expenses and setting aside
appropriate reserves for reasonably anticipated liabilities, obligations and
commitments of the Partnership, the General Partner shall cause Net Cash Flow to
be distributed to the

                                     - 12 -

<PAGE>

Limited Partners within fifteen (15) calendar days following the end of any
calendar month.

            B. All distributions of Net Cash Flow shall be made to the Limited
Partners as follows:

               (1)   First, one hundred percent (100%) to the Limited Partners,
                     in proportion to their Percentage Interests, until Capstead
                     has received distributions pursuant to this Section
                     4.1.B(1) in amount sufficient to achieve an internal rate
                     of return equal to _____ percent (___%);

               (2)   Second, _____ percent (___%) to Crescent Capital and _____
                     percent (___%) to Capstead until Capstead has received
                     distributions pursuant to Section 4.1.B(1) and this Section
                     4.1.B(2) in an amount sufficient to achieve an internal
                     rate of return equal to _____ percent (___%); and

               (3)   Thereafter, _____ percent (___%) to Crescent Capital and
                     _____ percent (___%) to Capstead.

            C. Any proceeds from the repayment of investments or from any other
source that are not reinvested shall be distributed in accordance with the
distribution provisions set forth in Section 4.1(B) above, subject to such
reasonable reserves as may be established in the discretion of the General
Partner.

            D. For purposes of Section 4.1.B, "internal rate of return" shall be
defined and computed as follows:

      The internal rate of return is defined as the discount rate at which the
      present value of all distributions of Net Cash Flow to Capstead equals the
      present value of all Capital Contributions made by Capstead. The internal
      rate of return shall be a cumulative calculation computed monthly
      (annualized using a factor of 12). The calculation shall be computed by
      the General Partner commencing with the first day of the Investment Period
      and ending on the date on which the Partnership is dissolved.

Section 4.2 Distributions Upon Liquidation

      Liquidating proceeds shall be distributed to the Limited Partners in
accordance with Section 12.2 below.

                                    ARTICLE V
                                   ALLOCATIONS

Section 5.1 Allocations of Profits and Losses - General

            A. The terms "net profits" and "net losses" of the Partnership shall
mean the net profits or net losses of the Partnership as determined in
accordance with Regulations section 1.704-1(b)(2)(iv).

                                     - 13 -

<PAGE>

            B. After giving effect to the special allocations set forth below in
this Article V, the Partnership's net profits and net losses shall be allocated
among the Partners in each taxable year (or portion thereof) in a manner so as
to cause the Adjusted Capital Account balance of each Partner to equal, to the
maximum extent possible, the amount that would be payable to such Partner (or
for which such Partner would be liable to the Partnership) if the Partnership
(i) sold the assets of the Partnership for an amount equal to their respective
Book Values (or, in the case of any asset subject to a liability for which the
creditor's right is limited to such asset, the amount of such liability, if
greater than the Book Value of such asset, (ii) paid off all outstanding debts
and liabilities of the Partnership, and (iii) distributed the net proceeds as
provided in Section 4.1.B hereof.

            C. The Partners hereby acknowledge that it is their intent that,
prior to a distribution of liquidating proceeds pursuant to Section 12.2, the
positive Capital Account balance of each Partner shall be equal to the amount
such Partner would receive if such liquidating proceeds were distributed as
provided in Section 4.1.B, and that the allocations set forth in Section 5.1.B
above are intended and shall be interpreted, to the maximum extent possible, to
accomplish this result. In no event shall Section 4.1.B or 4.1.C be interpreted
to allow a modification of an allocation of net profits, net losses or any item
thereof with respect to a taxable year for which the federal income tax return
has already been filed with the IRS, unless such modification has been consented
to by each of the Partners.

Section 5.2 Book/Tax Differences

      Notwithstanding anything to the contrary contained in this Article V, any
portion of any income, gain, loss or deduction with respect to property revalued
by the Partnership pursuant to Regulations section 1.704-1(b)(2)(iv)(f) shall,
solely for tax purposes, be allocated among the Partners in accordance with Code
section 704(c) and Regulations section 1.704-3 so as to take account of the
variation, if any, between the adjusted tax basis of such property to the
Partnership and its fair market value at the time of the revaluation.

Section 5.3 Nonrecourse Debt Allocations

      Notwithstanding anything to the contrary contained above in this Article
V, the Partnership shall comply with Regulations section 1.704-2, as amended,
with respect to the allocation of deductions and the chargeback of minimum gain
on nonrecourse debts of the Partnership. For purposes of allocating Partnership
nonrecourse liabilities among the Partners pursuant to Regulations section
1.752-3, the Partners' interests in Partnership profits shall be determined
based on their respective Percentage Interests.

Section 5.4 Limitation on Loss Allocations; Qualified Income Offset

      Notwithstanding anything to the contrary contained in Section 5.1 hereof,
no Partner shall be allocated net losses which would cause or increase a deficit
balance in its Capital Account in excess of any actual or deemed obligation of
such Partner to restore deficits (as defined in Regulations section
1.704-1(b)(2)(ii)(c)). If any Partner shall receive with respect to the
Partnership an adjustment, allocation or distribution in the nature described in
Regulations section 1.704-1(b)(2)(ii)(d)(4)-(6) which causes or increases a
deficit in such Partner's Capital

                                     - 14 -

<PAGE>

Account in excess of any actual or deemed obligation of such Partner to restore
deficits (as defined in Regulations section 1.704-1(b)(2)(ii)(c)), such Partner
shall be allocated items of income and gain in an amount and manner as will
eliminate such deficit balance as quickly as possible; it being intended that
this Section 5.4 shall constitute a "qualified income offset" within the meaning
of Regulations section 1.704-1(b)(2)(ii)(d)(3).

Section 5.5 Transfer During Year

      In the event of the Transfer of all or any part of a Partnership Interest
(in accordance with the provisions of this Agreement) at any time other than the
end of a fiscal year, the share of income or loss (in respect of the Partnership
Interest so Transferred) shall be allocated between the transferor and the
transferee in the same ratio as the number of days in such fiscal year before
and after such Transfer. The provisions of this Section 5.5 shall not apply to
any profit or loss attributable to a sale or other disposition of all or
substantially all of the Partnership's assets, or to other extraordinary
non-recurring items. Such profit and loss shall be allocated to the owner of the
Partnership Interest as of the date of closing of the sale or other disposition,
or, with respect to other extraordinary non-recurring items, the date the profit
is realized or the loss is incurred, as the case may be.

                                   ARTICLE VI
                      MANAGEMENT AND OPERATIONS OF BUSINESS

Section 6.1 Powers of General Partner

            A. Except as otherwise expressly provided in this Agreement,
including without limitation the provisions of Section 6.3 of this Agreement,
which require the prior approval of the Advisory Committee for certain actions,
the General Partner shall be vested with the full, exclusive and complete right,
power and discretion to operate, manage and control the affairs of the
Partnership and to make all decisions affecting the affairs of the Partnership.
Subject to the terms of this Agreement and to limitations imposed by law,
including, without limiting the foregoing, the Act, and provided the same shall
not be prohibited under this Agreement, the General Partner shall have full
power and authority to do all things and perform all acts specified in this
Agreement or otherwise deemed necessary or desirable by it to conduct the
business of the Partnership, to exercise all Partnership powers set forth in
Section 2.2 hereof and to effectuate the Partnership purposes set forth in
Section 2.1 hereof.

            B. Among other matters, the General Partner shall be responsible for
(i) identifying investment opportunities for the Partnership, (ii) making
recommendations regarding prospective investments and divestitures by the
Partnership and providing underwriting and other documentation with respect
thereto, (iii) managing the Partnership's portfolio of investments, (iv)
identifying, negotiating and entering into authorized financing and hedging
arrangements on behalf of the Partnership, (v) entering into authorized
transactions and agreements on behalf of the Partnership, and (vi) overseeing
the general administration of the Partnership. The General Partner shall have

                                     - 15 -
<PAGE>

the authority to delegate any or all of its duties under this Section 6.1.B to
any of its Affiliates, without the consent of any other Partner.

            C. It shall be an objective of the Partnership to utilize leverage
prudently in an effort to achieve maximum returns on its investments.

Section 6.2 Advisory Committee

            A. The Partnership shall have an advisory committee to oversee the
operations of the Partnership (the "Advisory Committee"). The Advisory Committee
shall consist of four (4) members. Crescent Redtail and Capstead each shall be
entitled to appoint, from time to time, two of the members of the Advisory
Committee. The initial Crescent Redtail representatives will be ______________
and _____________. The initial Capstead representatives will be ______________
and ______________. Any Advisory Committee member appointed by Crescent Redtail
may be removed and replaced by Crescent Redtail (and only by Crescent Redtail)
for any reason or no reason. Any Advisory Committee member appointed by Capstead
may be removed and replaced by Capstead (and only by Capstead) for any reason or
no reason.

            B. Crescent Redtail and Capstead shall fill any vacancy created by
the departure of their respective Advisory Committee members within ten (10)
Business Days following the date on which the vacancy occurs.

            C. Except as otherwise expressly provided in this Agreement, the
Advisory Committee shall have no power to vote, approve, disapprove or otherwise
influence the management of the Partnership.

            D. Members of the Advisory Committee shall be entitled to receive on
at least a monthly basis information regarding the investments and operations of
the Partnership and shall meet (in person or telephonically) at least once every
three (3) months to discuss matters relating to the Partnership. The times and
locations of such meetings shall be determined by the members of the Advisory
Committee in their sole discretion. The Advisory Committee also shall hold
special meetings as required to consider Major Decisions in a timely manner.
Members of the Advisory Committee shall consult with and receive voting
instructions from the Partners they represent prior to making any Major Decision
and shall notify the General Partner, who shall notify the Partners, in writing
of actions taken by the Advisory Committee within five (5) Business Days after
any such action has been taken.

            E. Notice of all Advisory Committee meetings shall be given to each
member not less than five (5) calendar days before the date of such meeting.
Notice of any meeting may be waived in writing, either before or after the
meeting and shall be deemed to be waived by any member in attendance. Members of
the Advisory Committee may vote and participate in meetings in person, by proxy
or delegate, or by means of conference telephone or similar communications
equipment.

            F. Any action that may be taken at a meeting of the Advisory
Committee may be taken without a meeting, if a consent in writing setting forth
the action so taken is signed and delivered to the General Partner by all of the
Advisory

                                     - 16 -

<PAGE>

Committee members. Any such unanimous written consent of the Advisory Committee
members shall be fully effective and notice of such written consent shall be
provided to all Partners as soon as reasonably practicable after the consent has
been duly executed.

            G. The Partnership shall reimburse each Advisory Committee member
for his or her reasonable out-of-pocket expenses incurred in connection with the
member's duties relating to the proceedings of the Advisory Committee.

            H. No member of the Advisory Committee shall, except as required by
law, owe any fiduciary duty to the Partnership or any of the Partners in
connection with such member's discharge of his or her responsibilities as a
member of the Advisory Committee. Neither the Advisory Committee nor any member
of the Advisory Committee shall have the power to bind or act for or on behalf
of the Partnership in any manner. In no event shall a member of the Advisory
Committee be considered a general partner of the Partnership by agreement,
estoppel, or otherwise.

Section 6.3 Major Decisions Requiring Unanimous Approval of the Advisory
Committee Members

      Notwithstanding the provisions of Section 6.1, the following major
decisions relating to the Partnership shall require the unanimous approval of
the Advisory Committee before becoming effective: (i) the bifurcation of
investments, (ii) the sale or other disposition of investments, (iii) the
conversion of the Partnership into a different legal form, including, but not
limited to, a real estate investment trust, (iv) the incurrence of indebtedness
or entrance into hedging arrangements and the terms thereof, (v) the approval of
each annual budget of the Partnership, (vi) the engagement or replacement of the
Partnership's audit firm, (vii) the sale or other Transfer by Crescent or
Capstead of any portion of its Partnership Interest to an entity that is not its
Affiliate (other than in connection with a Change In Control), (viii) the sale,
merger or other business combination of the Partnership and (ix) the replacement
of the General Partner. Prior to approving or declining to approve any of the
aforementioned actions, the Advisory Committee shall be provided (y) any
material information that is in the possession of or reasonably attainable by
the General Partner and that would assist the Advisory Committee in rendering a
decision in respect of such action and (z) a recommendation from the General
Partner regarding such action. The Advisory Committee shall notify the General
Partner of the approval or disapproval of any action within five (5) Business
Days of the Advisory Committee's receipt of the General Partner's recommendation
and the other material regarding such action.

Section 6.4 Certificate of Limited Partnership

      To the extent that such action is determined by the General Partner to be
necessary or appropriate, the Partnership shall file amendments to and
restatements of the Certificate and do all things necessary or appropriate to
maintain the Partnership as a limited partnership under the laws of the State of
Delaware and each other jurisdiction in which the Partnership may elect to do
business or own property. 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.

Section 6.5 Investment Period

                                     - 17 -

<PAGE>

      The Investment Period shall commence on the earlier to occur of (i) the
closing of the Partnership's initial investment and (ii) the sixtieth (60th)
calendar day after the date on which the Certificate is filed with the Secretary
of State of the State of Delaware. The Investment Period shall end on the second
anniversary of the closing of the Partnership's initial investment; provided,
however, that the Investment Period shall end eighteen (18) months following the
closing of the Partnership's initial investment if all of the Capital
Commitments to the Partnership shall have been paid as of such date and the
Partnership is Fully Invested. The Investment Period for the Partnership may be
extended upon the mutual agreement of the Formation Partners. In the event the
Partnership is not Fully Invested upon the termination of the Investment Period
(as the same may be extended by the Formation Partners), the Limited Partners'
unpaid Capital Commitments shall terminate as of the end of the Investment
Period. Following the termination of the Investment Period, no further
investments or reinvestments shall be made by the Partnership, unless otherwise
agreed to by the Formation Partners.

Section 6.6 Reinvestments and the Reinvestment Period

      The Reinvestment Period shall commence with the closing of the
Partnership's initial investment and end eighteen (18) months thereafter. During
the Reinvestment Period, any amounts received from the repayment of the
principal or sale of an investment shall be reinvested; provided, however, that
any such reinvestment shall be made after the repayment of all related debt and
shall be made or otherwise committed to be made within ninety (90) calendar days
following receipt of any repayment, otherwise such repayment shall be returned
to the Limited Partners, pro rata, in accordance with their respective
Percentage Interests. Notwithstanding the return of any repayment to the Limited
Partners, the Partnership shall remain obligated to reinvest any such amount
during the remaining Reinvestment Period. During the remaining Investment
Period, repayment amounts that have been distributed to the Partners shall be
added back to the Limited Partners' unpaid Capital Commitments and the
Partnership shall not be deemed to be Fully Invested until such time as all such
repayments are reinvested, except where the Advisory Committee determines that
there are no further feasible opportunities for the Partnership to invest in
Target Investments. Any such determination shall be made only with the approval
of at least a majority of the Advisory Committee members, upon recommendation of
the General Partner.

Section 6.7 Remuneration

            A. Except as provided in Section 6.2.G, this Section 6.7 and
elsewhere in this Agreement (including the provisions of Articles IV and V
regarding distributions, payments, and allocations to which they may be
entitled) and except with respect to services rendered by the General Partner,
the Partners and Advisory Committee members shall not be compensated for their
services as such.

            B. The General Partner shall be reimbursed on a monthly basis for
all expenses it incurs pursuant to the provisions of this Agreement in its
capacity as General Partner or otherwise relating to the operation of, or for
the benefit of, the Partnership, including all Partnership Expenses; provided,
however, that the General Partner shall not be reimbursed for ordinary overhead
and operating administrative expenses of the General Partner in connection with
maintaining its offices (including salaries and other

                                     - 18 -

<PAGE>

compensation, rent, utilities, routine office equipment expenses and liability
and other insurance premiums).

            C. The Partnership shall pay the Minimum Monthly Management Fee to
the General Partner. The Partnership also shall pay to the General Partner an
additional monthly management fee, which amount shall be calculated by
multiplying the cumulative weighted average daily Capital Contributions
(calculated consistently with a 30/360 convention) made to the Partnership by an
annualized rate of ____ basis points, and subtracting therefrom cumulative
amounts previously paid to the General Partner in respect of its services
(including previous cumulative payments of the Minimum Monthly Management Fee
and the additional monthly management fee paid during such previous twelve (12)
month period). The Minimum Monthly Management Fee and the additional monthly
management fee shall accrue daily and shall be paid to the General Partner in
arrears on the first day of each calendar month of the fiscal year (except in
the first year of the Partnership, in which case such payments shall commence on
the first day of the calendar month following the Original Closing Date), based
upon information in existence as of the last day of the immediately preceding
calendar month. The Partners acknowledge and agree that the General Partner
shall be entitled to restructure the Minimum Monthly Management Fee and any
additional management fee as a priority special distribution to the General
Partner, if such restructuring would not place Capstead in a less favorable
economic position than it would be in if the Minimum Monthly Management Fee and
any additional management fee were not treated as a priority special
distribution.

Section 6.8 Partnership Expenses

      The Partnership shall bear its own funding, administrative and transaction
costs (collectively, the "Partnership Expenses"). The General Partner shall
prepare, for unanimous approval by the Advisory Committee, an annual budget for
the Partnership's administrative expenses, which shall include the annual
management fee, franchise taxes and third-party payments for audit, tax
preparation, non-transaction-related legal fees and investor reporting expenses.
Transaction costs shall include third-party payments for legal, due diligence
and other costs, including the General Partner's out-of-pocket travel and other
expenses. The General Partner's out-of-pocket travel expenses shall not exceed
$7,500 per transaction, unless approved unanimously by the Advisory Committee.
Crescent and Capstead shall each bear its own expenses incurred in connection
with the negotiation and drafting of this Agreement and the Master Agreement.

Section 6.9 Partnership Opportunities

      Neither the General Partner nor Capstead shall pursue a Target Investment
unless such Target Investment is first offered to the Partnership and the
Partnership determines not to pursue such investment. Such opportunities shall
be presented pursuant to Section 6.10 hereof.

      Crescent and Capstead hereby agree that, throughout the term of this
Agreement, each Limited Partner shall be entitled to invest in and maintain for
its own account or jointly with other Persons, and without restriction, an
active portfolio of B-notes, first mortgages, subordinated notes, mezzanine
loans and bridge loans, or participations thereof, that do not meet

                                     - 19 -

<PAGE>

the criteria of Target Investments. Crescent and Capstead further agree that,
from time to time each Limited Partner shall be entitled to, but shall not have
an obligation to, offer to the Partnership opportunities to invest, or
participate, in assets that do not meet the criteria of Target Investments.

Section 6.10 Approval Process for Investments

            A. Before the Partnership shall be permitted to acquire an
investment that is proposed by the General Partner, the General Partner shall
submit a written proposal to Capstead recommending the acquisition of the
investment by the Partnership. The General Partner shall provide Capstead such
documentation relating to the proposed investment as Capstead shall reasonably
request. With respect to investments in Target Investments, the General Partner
shall be permitted to submit a recommendation to Capstead for its approval prior
to obtaining the approval of the General Partner's investment committee (or
other Persons authorized by the General Partner to approve its investment
decisions). Such written recommendation shall evidence the approval of the
Target Investment by at least two members of the General Partner's investment
committee (or other Persons authorized by the General Partner to approve its
investment decisions), as such individuals may be identified from time to time.
Within three (3) Business Days following receipt from the General Partner of its
written recommendation to acquire a Target Investment, Capstead shall notify the
General Partner in writing of its decision to accept or reject such
recommendation. If Capstead does not approve the recommended investment,
Crescent and its Affiliates shall have the right to acquire the investment for
its own account, or jointly with another Person on terms not materially
different from those presented to the Partnership. If Capstead notifies Crescent
in writing of its approval of a recommended Target Investment, Crescent shall
have five (5) Business Days following such notification from Capstead to submit
and receive all necessary approvals from Crescent for the Partnership to proceed
with such investment.

            B. With respect to the recommendation of investments that are not
Target Investments, the General Partner shall provide Capstead formal notice
that such investment has been approved by the General Partner's investment
committee (or other Persons authorized by the General Partner to approve its
investment decisions) at the time that the General Partner makes a written
recommendation in favor of the investment. Within five (5) Business Days
following receipt from the General Partner of such written recommendation and
notice of approval, Capstead's designees to the Advisory Committee shall notify
the General Partner in writing of the decision to accept or reject such
recommendation. If the Capstead designees do not approve the investment,
Crescent and its Affiliates shall have the right to acquire the investment for
its own account or jointly with another Person on terms not materially different
from those presented to the Partnership.

            C. The parties hereto agree that, with respect to an investment to
be acquired by Crescent or its Affiliates, an increase in the Target IRR in an
amount that is less than four percent (4%) shall not be deemed a material
difference in the terms of the proposed acquisition.

                                     - 20 -

<PAGE>

      Any failure by the Capstead designees to provide notice within the time
period provided herein shall be deemed to indicate such designee's rejection of
the proposed investment, after which Crescent or its Affiliates may individually
pursue such proposed investment without recourse under this Agreement.

            D. If Capstead wishes to present an investment opportunity to the
Partnership, Capstead shall submit a written proposal to the General Partner
recommending the acquisition of the investment by the Partnership. Capstead
shall provide the General Partner such documentation relating to the proposed
investment as the General Partner shall reasonably request. Within three (3)
Business Days following receipt from Capstead of its written recommendation to
acquire a Target Investment, the General Partner shall notify Capstead in
writing of its decision to accept or reject such recommendation. If the General
Partner does not approve the recommended investment, Capstead and its Affiliates
shall have the right to acquire the investment for its own account, or jointly
with another Person, on terms not materially different from those presented to
the Partnership.

            E. With respect to the recommendation of investments that are not
Target Investments, Capstead shall provide the General Partner formal notice
that such investment has been approved by Capstead's investment committee (or
other Persons authorized by Capstead to approve its investment decisions) at the
time that Capstead makes a written recommendation in favor of the investment.
Within five (5) Business Days following receipt from Capstead of such written
recommendation and the notice of approval, the General Partner shall notify
Capstead in writing of its decision to accept or reject such recommendation. If
the General Partner does not approve the investment, Capstead and its Affiliates
shall be entitled to acquire the investment for its own account or with another
Person on terms not materially different from those presented to the
Partnership.

            F. The parties hereto agree that, with respect to an investment to
be acquired by Capstead or its Affiliates, an increase in the Target IRR in an
amount that is less than four (4%) shall not be deemed a material difference in
the terms of a proposed acquisition.

            G. Any failure by Crescent to provide notice of its decision to
accept or reject a recommendation in the time period provided herein shall be
deemed to indicate Crescent's designee's rejection of the proposed investment,
after which Capstead or its Affiliates may individually pursue such proposed
investment without recourse under this Agreement.

Section 6.11 Capstead's Veto Right

      If Capstead fails to accept a proposed Target Investment as contemplated
by Section 6.10 hereof ________ times during any consecutive twelve (12)-month
period, Crescent shall have the immediate right to terminate the Master
Agreement and Crescent shall no longer be obligated to offer any Target
Investments to the Partnership. Capstead's failure to approve an investment that
is not a Target Investment, or an in-kind contribution (other than cash or cash
equivalents) to

                                     - 21 -

<PAGE>

the Partnership, shall not be considered in connection with any limitation set
forth in this Section 6.11.

Section 6.12 Capstead's Unilateral Right to Foreclose on Certain Investments

            A. Capstead shall have the unilateral right to foreclose on any
investment held by the Partnership (excluding any investment that is secured by
the equity interest in any Person) that is in default under the terms of a
mortgage, deed of trust or similar instrument where real property secures the
indebtedness to which the investment is subject (each, a "Mortgage"). The
"unilateral right to foreclose," as referenced herein shall mean, with respect
to a defaulted investment that is debt secured by a Mortgage, the right to (i)
make the sole determination to commence foreclosure proceedings, (ii) establish
the bid price upon foreclosure on the investment and (iii) make the sole
determination as to the disposition of any third party disputes related to the
foreclosure. Upon commencement of foreclosure, the General Partner shall assume
all other ministerial and procedural rights and duties related to the
foreclosure proceedings. For purposes of determining whether a unilateral right
to foreclose exists, an investment shall be in default if a default exists under
the applicable documentation and one or more scheduled payments on the Mortgage
to which such investment is subject is not paid within thirty (30) days after
the date on which such payment is due and such nonpayment shall have not been
cured prior to the time that notice of default is given by the General Partner.

            B. At any time after an investment that is secured by a Mortgage
goes into default, either Crescent Capital or Capstead may submit an offer to
purchase the defaulted investment from the Partnership at a price and on the
terms specified by the offering Partner (which price shall include the amount
necessary to repay indebtedness relating to the defaulted investment being
purchased) and the non-offering Partner shall have the right to authorize the
General Partner to accept such offer on behalf of the Partnership, or the
non-offering Partner may submit an offer to purchase the defaulted investment
from the Partnership at the price and on the terms offered by the offering
Partner, which offer the General Partner shall be required to accept. Either
Crescent Capital or Capstead shall have the right to consummate the purchase of
the defaulted investment as set forth herein prior to the consummation of the
foreclosure on such investment; provided, however, that any such purchase shall
be conditioned upon the purchasing Partner's satisfaction of the Partnership's
outstanding indebtedness relating to the defaulted investment. The purchase
price of any defaulted investment shall be paid to the Partnership by the
purchasing Partner in cash upon the consummation of the closing of the purchase,
which closing shall occur on such date as shall be determined by the General
Partner and the purchasing Partner.

Section 6.13 Indemnification

            A. To the fullest extent permitted by law but limited to the assets
of the Partnership, the Partnership shall indemnify the General Partner
(including the owners, officers, partners, and agents of the General Partner)
(each, an "Indemnified Party" and together, the "Indemnified Parties"), and save
and hold each Indemnified Party harmless from and in respect of (i) all claims,
actions, demands or threats thereof,

                                     - 22 -

<PAGE>

against the Partnership or such Indemnified Party that arise out of, or in any
way relate to the Partnership, the business of the Partnership or the assets of
the Partnership, and any losses or damages resulting therefrom, including
amounts paid in settlement or compromise of any such claim, action, demand or
threat thereof, and (ii) all fees, costs, and expenses, including reasonable
attorneys' fees, incurred in connection with, or resulting from, any such claim,
action, demand or threat thereof; provided, however, that this indemnification
shall not extend to acts of gross negligence, breach of fiduciary duty, a
material, uncured breach of this Agreement or the Master Agreement or willful
misconduct of such Indemnified Party. This indemnity is intended to apply
regardless of the negligence of any Indemnified Party.

            B. Each member of the Advisory Committee shall be entitled, to the
fullest extent permitted by law, to exculpation from liability and
indemnification from the assets of the Partnership with respect to the
activities of such member on the Advisory Committee, if such member's activities
are carried out in good faith. To the fullest extent permitted by applicable
law, no member of the Advisory Committee shall have any fiduciary duties to the
Partnership or any Partner, but shall be required to act in accordance with the
contractual covenant of good faith and fair dealing.

            C. The right to indemnification conferred in this Section 6.13 shall
be a contract right and shall include the right of each indemnitee to be paid by
the Partnership the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that the payment of such
expenses in advance of the final disposition of a proceeding shall be made only
upon delivery to the Partnership of (i) a written affirmation of the indemnitee
of his or her good faith belief that the standard of conduct necessary for
indemnification by the Partnership pursuant to this Section 6.13 has been met,
and (ii) a written undertaking by or on behalf of the indemnitee to repay all
amounts so advanced if it shall ultimately be determined that the standard of
conduct has not been met.

            D. The Partnership may purchase and maintain insurance, at its
expense, on its own behalf and on behalf of any indemnitee provided for in this
Agreement and of such other Persons as the General Partner shall determine,
against any liability (including expenses) that may be asserted against and
incurred by such Person in connection with the Partnership's activities pursuant
to this Agreement, whether or not the Partnership would have the power to
indemnify such Person against such liability under the terms of this Agreement.
In addition, the Partnership may enter into indemnification agreements with one
or more of the indemnitees pursuant to which the Partnership shall agree to
indemnify such indemnitee(s) to the fullest extent permitted by law, and advance
to such indemnitee(s) all related expenses, subject to reimbursement if it is
subsequently determined that indemnification is not permitted.

            E. In no event may an indemnitee subject any Limited Partner to
personal liability by reason of the indemnification provisions set forth in this
Agreement.

            F. An indemnitee shall not be denied indemnification in whole or in
part pursuant to this Section 6.13 because such indemnitee has an interest in
the

                                     - 23 -

<PAGE>

transaction to which the indemnification relates if the transaction otherwise
was permitted by the terms of this Agreement.

            G. The provisions of this Section 6.13 are for the benefit of the
indemnitees, their heirs, successors, assigns, executors and administrators, and
shall not be deemed to create any rights for the benefit of any other Person.
Any amendment, modification or repeal of this Section 6.13 or any provision
hereof shall be prospective only and shall not in any way affect the limitations
of the Partnership's liability to any indemnitee under this Section 6.13 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 6.14 Liability of Certain Parties

            A. Notwithstanding anything to the contrary set forth in this
Agreement, no Limited Partner, Advisory Committee member, nor any officer,
employee or agent of the Partnership or the General Partner acting in such
capacity shall be liable for monetary damages to the Partnership or any Limited
Partner for losses sustained or liabilities incurred as a result of errors in
judgment or of any act or omission unless such Person acted in bad faith.

            B. 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 officers, employees, and agents. The General
Partner shall not be responsible for any misconduct or negligence on the part of
any such agent appointed by the General Partner in good faith.

            C. Any amendment, modification or repeal of this Section 6.14 or any
provision hereof shall be prospective only and shall not in any way affect the
limitations on the liability of any Person to the Partnership and the Partners
under this Section 6.14 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 6.15 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 to be genuine and to have been signed or
presented by the proper party or parties.

            B. In accordance with Section 6.15.A hereof, the General Partner may
consult with legal counsel, accountants, appraisers, management consultants,
investment bankers and other consultants and advisers selected by the General
Partner, and any act taken or omitted to be taken in reliance upon the opinion
of such Persons as to matters which the General Partner reasonably believes to
be within such Person's professional or

                                     - 24 -

<PAGE>

expert competence shall be conclusively presumed to have been done or omitted in
good faith.

            C. The General Partner shall be in breach of its obligations to the
Partnership upon a final determination by a court of competent jurisdiction or
an admission by the General Partner that it has (i) committed a material breach
of this Agreement or the Master Agreement, (ii) engaged in willful misconduct,
(iii) acted in bad faith, (iv) beached its fiduciary duty to the Partners, or
(v) managed the Partnership in a grossly negligent manner. In the event a court
determines that any such breach can be remedied, or if the Formation Partners
otherwise mutually agree upon a remedy, the General Partner shall have a
reasonable period (to be agreed by the Formation Partners) in which to cure such
breach. In the event a court determines that a breach cannot be remedied, or if
the General Partner fails to cure the breach within the agreed-upon time period
or a time period established by the court, the Advisory Committee shall remove
the General Partner and elect a replacement General Partner by unanimous
consent.

            D. In the event the General Partner and/or its Affiliates cease to
own and control at least fifty-one percent (51%) of the Partnership Interest
that was initially issued to the General Partner and/or its Affiliates, the
General Partner shall be removed and the Capstead Advisory Committee members
shall elect a replacement General Partner, unless the Capstead Advisory
Committee members elect to waive such removal right.

Section 6.16 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, shall have any ownership
interest in such Partnership assets or any portion thereof. Title to any or all
of the Partnership assets shall be held in the name of the Partnership.

Section 6.17 Reliance by Third Parties

      Any Person dealing with the Partnership shall be entitled to assume that
the General Partner has full power and authority to acquire, sell or otherwise
deal with the assets of the Partnership and to enter into any contracts on
behalf of the Partnership. Each and every certificate, document or other
instrument executed on behalf of the Partnership by the General Partner shall be
conclusive evidence in favor of any and every Person relying 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 VII
                       RIGHTS AND OBLIGATIONS OF PARTNERS

                                     - 25 -

<PAGE>

Section 7.1 Limitation of Liability

      The Limited Partners shall have no liability under this Agreement except
as expressly provided in this Agreement, including Section 9.4 hereof, or under
the Act.

Section 7.2 Management of Business

      No Partner (other than the General Partner or an officer, employee or
agent of the Partnership or the General Partner acting in such capacity) shall
take part in the operation, 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 or any officer,
employee or agent of the Partnership or the General Partner, in their capacity
as such, shall not affect, impair or eliminate the limitations on the liability
of the Limited Partners under this Agreement.

Section 7.3 Duties and Conflicts

            A. Crescent and Capstead hereby acknowledge and agree that, subject
to the right of first offer set forth in Section 6.9 hereof, the Formation
Partners shall not be restricted in their ability to acquire the debt securities
of any entity in which the Partnership invests, so long as such investment would
not be detrimental to the interests of the Partnership. In the event any
Formation Partner and the Partnership acquire debt securities in the same
transaction, all expenses associated with the acquisition shall be allocated
between the Formation Partner and the Partnership on a pro rata basis, based
upon the relative amounts of securities purchased by the Formation Partner and
the Partnership.

            B. The General Partner will commit such time as is reasonably
necessary, in its judgment, to effectively manage the Partnership.

                                  ARTICLE VIII
                     BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 8.1 Records and Accounting

      The General Partner shall keep or cause to be kept at the principal office
of the Partnership appropriate books and records with respect to the
Partnership's business, including, without limitation, all books and records
necessary to provide to the Partners any information, lists and copies of
documents required to be provided pursuant to the Act.

Section 8.2 Fiscal Year

      The fiscal year of the Partnership shall be the calendar year.

Section 8.3 Financial Statements and Reports

      The General Partner shall cause to be provided to the Limited Partners:

                                     - 26 -

<PAGE>

            A. As soon as available, and in any event within ten (10) days after
the end of each month, the unaudited balance sheet as of the end of such period
and the related unaudited statement of income, statement of capital accounts and
statement of cash flows for such period and for the portion of the calendar year
through the end of such period setting forth in each case in comparative form
the figures for the corresponding periods in the previous fiscal year;

            B. As soon as available and in any event within twenty-five (25)
days after the end of each calendar quarter (including the fourth quarter) the
unaudited balance sheet as of the end of such period and the related unaudited
statement of income, statement of capital accounts and statement of cash flows
for such period and the portion of the calendar year through the end of such
period, setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year;

            C. As soon as available and in any event within fifty (50) days
after the end of each calendar year, commencing with the period from inception
of the Partnership to _______________, the financial statements as of the end of
such calendar year, prepared in accordance with generally accepted accounting
principles, including the balance sheets and related statement of income,
statement of capital accounts and statement of cash flows for the Partnership
for such year, setting forth in each case in comparative form the figures for
the previous fiscal year, if applicable, accompanied by the appropriate
financial statement notes and by an opinion thereon of independent certified
public accountants of recognized national standing, which opinion shall not be
qualified as to scope of audit or going concern, and shall state that said
annual financial statements fairly present the financial condition and results
of operations of the Partnership as of the end of, and for, such fiscal year in
accordance with generally accepted accounting principles;

            D. Concurrent with submissions of reports required to be provided by
the Partnership to any lender, a copy of any and all such reports; and

            E. Any additional reports as may reasonably be required to meet
management, financial reporting and/or regulatory requirements of the Limited
Partners.

                                   ARTICLE IX
                                   TAX MATTERS

Section 9.1 Preparation of Tax Returns

      The General Partner shall arrange for the preparation and timely filing of
all returns required of the Partnership for federal, state and local income tax
purposes, and the delivery to the Limited Partners of all tax information
reasonably required by the Limited Partners for federal, state and local income
tax reporting purposes.

Section 9.2 Tax Elections

      The General Partner shall, in its sole and absolute discretion, determine
whether to make any available election (including, without limitation, the
election under section 754 of the Code) or choose any available reporting method
pursuant to the Code or state or local tax law. The

                                     - 27 -

<PAGE>

General Partner shall in its sole and absolute discretion have the right to seek
to revoke any such election (including, without limitation, the election under
section 754 of the Code) or change any reporting method.

Section 9.3 Tax Matters Partner

            A. The General Partner shall be the initial "tax matters partner" of
the Partnership for federal income tax purposes. Pursuant to section 6223(c)(3)
of the Code, upon receipt of notice from the IRS of the beginning of an
administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address and profits interest of
each of the Partners, provided that such information is provided to the
Partnership by the Partners.

            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 section 6231 of
                              the Code) or a member of a "notice group" (as
                              defined in section 6223(b)(2) of the Code);

                        (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 Tax Court or the United
                              States Claims Court, or the filing of a complaint
                              for refund with the District Court of the United
                              States for the district in which the Partnership's
                              principal place of business is located;

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

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

                                     - 28 -

<PAGE>

                        (5)   to enter into an agreement with the IRS to extend
                              the period for assessing any tax which 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
                              of the Partnership 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 set forth in
Section 6.13 of this Agreement shall be fully applicable to the tax matters
partner in its capacity as such.

            C. 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) shall be
borne by the Partnership. 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.

Section 9.4 Withholding

      Each Partner hereby authorizes the Partnership to withhold from or pay on
behalf of or with respect to such 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 Partner pursuant to this Agreement, including, without
limitation, any taxes required to be withheld or paid by the Partnership
pursuant to sections 1441, 1442, 1445, or 1446 of the Code. Any amount paid on
behalf of or with respect to a Partner shall constitute a loan by the
Partnership to such Partner, which loan shall be repaid by such Partner within
ten (10) days after notice from the General Partner that such payment must be
made unless (i) the Partnership withholds such payment from a distribution which
would otherwise be made to the 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 which would, but for such payment, be
distributed to the Partner. Any amounts withheld pursuant to the foregoing
clauses (i) or (ii) shall be treated as having been distributed to such Partner.
Each Partner hereby unconditionally and irrevocably grants to the Partnership a
security interest in such Partner's Partnership Interest to secure such
Partner's obligation to pay to the Partnership any amounts required to be paid
pursuant to this Section 9.4 and agrees to take such actions as the General
Partner shall request in order to perfect or enforce the security interest
created hereunder. In the event that a Partner fails to pay any amounts owed to
the Partnership pursuant to this Section 9.4 when due (i.e., ten (10) days after
demand), the Partnership may exercise any and all rights and remedies the
Partnership may have against such Partner, including foreclosing on its security
interest and/or instituting a lawsuit to collect the unpaid amount (together
with interest thereon from the date such amount is due (i.e., ten (10) days
after demand) calculated at five percentage points over the Prime Rate, but not
in excess of the highest rate permitted by law).

                                     - 29 -

<PAGE>

                                    ARTICLE X
                        TRANSFER OF PARTNERSHIP INTERESTS

Section 10.1 Restrictions on Transfer of Partnership Interests

      Except as otherwise provided herein, no Partner may Transfer all or any
portion of its Partnership Interest without the prior unanimous written consent
of the Advisory Committee. Notwithstanding the foregoing, each Partner shall be
permitted to Transfer all or any portion of its Partnership Interest to an
Affiliate of such Partner. In addition, any Formation Partner shall be entitled
to Transfer all or any portion of its Partnership Interest to any other
Formation Partner. A Change In Control of a Formation Partner shall not be
deemed a Transfer for purposes of this Agreement. The General Partner shall have
the authority to impose additional limits on Transfers of Partnership Interests
to the extent that the General Partner deems such limitations to be necessary or
desirable in order to ensure that the Partnership will not (a) be treated as a
"publicly traded partnership" within the meaning of Code section 7704 and the
Regulations issued thereunder, (b) be treated as terminated for income tax
purposes under Section 708 of the Code and the Regulations issued thereunder or
(c) become subject to registration under the ICA or any other federal, state or
local securities statutes and the rules and regulations issued thereunder. Any
Transfer of a Partnership Interest shall comply with applicable federal, state
and local securities laws.

Section 10.2 Buy-Sell Rights-Unresolved Deadlock

      If there is an Unresolved Deadlock, any Formation Partner (the "Exercising
Partner") may exercise a buy-sell right by delivering to the other Formation
Partner (the "Non-Exercising Partner") a written notice (the "Notice of
Buy-Sell"), which shall state (a) the price at which the Exercising Partner is
willing to sell its Partnership Interest (the "Buy-Sell Price") and (b) the
other terms on which the Exercising Partner is willing to sell its Partnership
Interest (the "Buy-Sell Terms"). Upon receipt of the Notice of Buy-Sell, the
Non-Exercising Partner shall have the right, in its sole discretion and at such
Non-Exercising Partner's option, to either (a) purchase the Exercising Partner's
Partnership Interest at the Buy-Sell Price and on the Buy-Sell Terms or (b) sell
to the Exercising Partner the Non-Exercising Partner's Partnership Interest at
the Buy-Sell Price and on the Buy-Sell Terms, as adjusted to reflect any
differences in relative distribution rights. The Non-Exercising Partner shall
deliver to the Exercising Partner within fifteen (15) Business Days after
receipt of the Notice of Buy-Sell (the "Election Period"), a written notice of
its election to either purchase the Exercising Partner's Partnership Interest or
to sell to the Exercising Partner the Non-Exercising Partner's Partnership
Interest (the "Buy-Sell Election"). The purchase or sale of such Partnership
Interest shall be consummated no later than thirty (30) Business Days after
receipt by the Exercising Partner of the Buy-Sell Election. If the
Non-Exercising Partner fails to deliver a Buy-Sell Election to the Exercising
Partner within the Election Period, the Non-Exercising Partner shall be deemed
to have given notice of its election to sell all of its Partnership Interest to
the Exercising Partner pursuant to the provisions hereof. If the purchase or
sale of such Partnership Interest is (without breach by the selling Partner) not
consummated as provided herein, the action as to which the Unresolved Deadlock
relates shall be deemed to have been approved if the Partner required to sell
its Partnership Interest pursuant hereto had voted to approve such action, and
shall be deemed to have been disapproved if such selling Partner had voted to
disapprove such action, and in such case, the Unresolved Deadlock will be
resolved in favor of the Partner required to sell its Partnership Interest and
the Partnership

                                     - 30 -

<PAGE>

shall continue without interruption. Settlement of a sale pursuant to this
Section 10.2 shall be in cash, to the extent that settlement terms are not
otherwise specified in the Buy-Sell Terms.

Section 10.3 Right of First Refusal - Trigger Event

            A. If a Trigger Event occurs with respect to a Formation Partner and
the Formation Partner notifies the General Partner of the occurrence of the
Trigger Event within twenty (20) Business Days after the Formation Partner has
knowledge of the Trigger Event, such Formation Partner shall be entitled to
Transfer its Partnership Interest in accordance with the provisions of this
Section 10.3. If such Formation Partner does not satisfy the notice requirement
set forth in the immediately preceding sentence, the Formation Partner shall
only be authorized to Transfer its interest in the Partnership with the express
written consent of the General Partner, which consent may be given or withheld
in its reasonable discretion. Following the occurrence of a Trigger Event and a
determination by such Formation Partner that a sale of all or a portion of its
Partnership Interest is necessary or advisable under the circumstances (a
"Proposed Transfer"), in the event that any Formation Partner has a binding,
written offer from any Person to acquire all or a portion of such Formation
Partner's Partnership Interest , such Formation Partner (the "Selling Partner")
shall deliver to the Partnership and the other Formation Partner (the
"Non-Selling Partner") written notice of the material terms of such Proposed
Transfer, including the proposed purchaser thereof, the amount, nature and
payment schedule of the consideration to be received, the conditions, if any,
associated therewith and any other material terms of such offer (an "Offer
Notice"). The Offer Notice shall constitute an irrevocable offer by the Selling
Partner to sell its Partnership Interest (or portion thereof) on the terms of
the Proposed Transfer to the Non-Selling Partner (the "Right of First Refusal"),
except that a purchaser under this Section 10.3 shall have the right to pay cash
in an amount equal to the Fair Market Value of any Non-Cash Consideration (as
hereafter defined).

            B. During the Offer Period, the Non-Selling Partner may elect to
purchase all, but not less than all of the Partnership Interest that is the
subject of the Proposed Transfer by delivering written notice of such election
(an "Election Notice") to the Partnership and the Selling Partner prior to the
expiration of the Offer Period. The failure by the Non-Selling Partner to
deliver an Election Notice during the Offer Period shall be deemed to be an
election by such Partner not to purchase the Partnership Interest subject to the
Proposed Transfer.

            C. If the Non-Selling Partner does not elect to purchase all of the
Partnership Interest (or portion thereof) that is the subject of the Proposed
Transfer, the Selling Partner may Transfer to the purchaser named in the Offer
Notice (the "Third Party Purchaser") all (but not less than all) of the
Partnership Interest (or portion thereof) that is the subject of the Proposed
Transfer on terms and conditions that are not materially different from those
set forth in the Offer Notice; provided, however, that if the Selling Partner
has not consummated the Transfer of such Partnership Interest within ninety (90)
calendar days following the end of the Offer Period (subject to extension in
accordance with Section 10.3.F), all of the restrictions on and conditions to
Transfer contained in this Agreement shall again be in effect with respect to
such Partnership Interest. For purposes of this Section 10.3, a five percent
(5%) reduction in the price at

                                     - 31 -

<PAGE>

which a Percentage Interest will be sold shall not be deemed a material
difference in the terms of the Proposed Transfer.

            D. If the consideration for the sale of a Partnership Interest
pursuant to this Right of First Refusal is cash consideration, the purchase
price to be paid by the Non-Selling Partner shall be equal to the total
consideration set forth in the Offer Notice. If the consideration for the
Proposed Transfer consists of consideration that is other than cash
consideration payable in immediately available funds at the closing thereunder
("Non-Cash Consideration") or consists of a combination of cash consideration
and Non-Cash Consideration, the purchase price shall be payable in cash in an
amount equal to the sum of (i) the total of the cash consideration, if any, and
(ii) the Fair Market Value of the Non-Cash Consideration as determined in
accordance with Section 10.3.F hereof.

            E. The purchase of all or any portion of a Formation Partner's
Partnership Interest by the Non-Selling Partner pursuant to this Right of First
Refusal shall be consummated at a closing that shall occur at the principal
business office of the Partnership within twenty (20) Business Days following
the Non-Selling Partner's notification to the Selling Partner of the Non-Selling
Partner's election to exercise its Right of First Refusal, or at such other
place or time as may be mutually acceptable to the parties. At such closing, the
Selling Partner shall Transfer the Partnership Interest being purchased, free
and clear of all liens, claims, encumbrances (other than as a result of this
Agreement or the Master Agreement) and defects in title and duly endorsed for
Transfer to the appropriate purchaser and, in exchange therefor, the purchaser
of such Partnership Interest shall pay the purchase price at such closing by
bank wire transfer of immediately available funds to a bank account designated
in writing by the Selling Partner at least three Business Days prior to such
closing.

            F. In the event that a determination of the fair market value of
Non-Cash Consideration is required pursuant to the Right of First Refusal, the
Selling Partner shall specify in the applicable Offer Notice its good faith
estimate of the fair market value of any Non-Cash Consideration to be paid in
connection with the Proposed Transfer. If the Formation Partners are in
agreement on the estimated fair market value of such Non-Cash Consideration, the
estimate shall be deemed to be the Fair Market Value (the "Fair Market Value")
thereof for purposes of this Agreement. If the Formation Partners do not agree
on the estimated fair market value, each of the Formation Partners shall provide
the other its estimate of the fair market value and any and all materials
reasonably requested by the other Formation Partner in support of the proposed
fair market values. For a period of five (5) Business Days, the Formation
Partners shall negotiate with each other for the purpose of determining the fair
market value of the Non-Cash Consideration that is acceptable to each of them.
If the Formation Partners are unable to agree on a fair market value during such
five (5)-day negotiation period and there is a variance of ten percent (10%) or
less in the estimates of the fair market value prior to the commencement of such
five (5)-day negotiation period, the average of such estimates shall be the Fair
Market Value of such Non-Cash Consideration and shall be final and binding on
the Partners. If there is a variance of more than ten percent (10%) in such
estimates, then the Formation Partners shall within twenty (20) Business Days
after the date of the Offer Notice submit their respective estimates, together
with all supporting data upon which such estimates were based, to a mutually
agreeable arbitrator; provided that if they cannot

                                     - 32 -

<PAGE>

agree upon a mutually agreeable arbitrator within twenty (20) calendar days
after the date of the Offer Notice they shall each select one arbitrator with
recognized standing and experience and who is a member of the American
Arbitration Association and those two arbitrators shall select a third such
arbitrator and such third arbitrator acting alone shall determine such
arbitrator's estimate of the fair market value of the Non-Cash Consideration and
shall select from the estimates presented by the Formation Partners the estimate
that is closest to such arbitrator's estimate, and such selected estimate shall
be the Fair Market Value of the Non-Cash Compensation. The foregoing arbitration
proceedings, including any discovery and any hearings, shall be conducted in
accordance with the rules of the American Arbitration Association then in
effect, and the Formation Partners shall cooperate fully in promptly furnishing
any relevant information requested by the arbitrator. If a party fails to timely
select an arbitrator as provided herein, the other party's estimate shall be
deemed to be the Fair Market Value of the Non-Cash Consideration. If the two
selected arbitrators cannot agree upon a third arbitrator, the third shall be
selected in accordance with the rules of the American Arbitration Association.
The determination of Fair Market Value pursuant to this Section 10.3.F shall be
final and binding on the Partners and may be enforced by a court of competent
jurisdiction. The cost of the arbitrators and the arbitration proceeding shall
be paid by the party whose estimate was not selected. The time period for any
closing pursuant to this Section 10.3 shall be extended by the number of
Business Days required to establish the Fair Market Value of any Non-Cash
Consideration pursuant to this Section 10.3.F. The General Partner shall keep
the Non-Selling Partner reasonably informed of the status of the determination
of such Fair Market Value.

Section 10.4 Withdrawal or Resignation of a Partner

      No Partner has the right to withdraw or otherwise resign from the
Partnership, unless such withdrawal or resignation is in connection with a
Transfer in accordance with the preceding sections of this Article X.

                                   ARTICLE XI
                              ADMISSION OF PARTNERS

Section 11.1 Admission of Substituted or Additional Partners

      No Person not a Partner on the date of this Agreement shall become a
Partner hereunder under any of the provisions hereof unless such Person shall
expressly assume and agree to be bound by all of the terms and conditions of
this Agreement. Each such Person shall also cause to be delivered to the
Partnership, at his, her or its sole cost and expense such documents or
instruments as may be required in the discretion of the General Partner in order
to effect such Person's admission as an additional Partner. Upon compliance with
all provisions hereof applicable to such Person becoming a Partner, the General
Partner is authorized to execute and deliver such amendments hereto as are
necessary to constitute such Person or entity a Partner of the Partner. Any
transferee of a Partnership Interest that has not been admitted as a substituted
Partner shall be an "assignee," entitled only to allocations of net profits, net
losses and other tax items of the Partnership and to distributions from the
Partnership, and shall not be entitled to vote or participate in the affairs and
management of the Partnership. The Partnership Interest of

                                     - 33 -

<PAGE>

any assignee shall be deemed to be voted on all matters in the same proportion
as the remaining Partnership Interests were voted.

Section 11.2 Amendment of Agreement and Certificate

      For the admission to the Partnership of any Partner in accordance with the
provisions of this Agreement, 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 practicable 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.

                                  ARTICLE XII
                           DISSOLUTION AND LIQUIDATION

Section 12.1 Dissolution

      The Partnership shall not be dissolved by the withdrawal of any Partner or
by the admission of any additional or substituted Partner in accordance with the
terms of this Agreement. The Partnership shall dissolve, and its affairs shall
be wound up, upon the first to occur of any of the following ("Liquidating
Events"):

            A. the Termination Date;

            B. the bankruptcy or termination of the General Partner, but only if
the Limited Partners unanimously elect in writing to dissolve the Partnership
(otherwise, the Partnership shall not be dissolved but shall continue provided
that the Advisory Committee elects a new General Partner within thirty (30) days
after the bankruptcy or termination of the General Partner);

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

            D. the sale of all or substantially all of the assets and properties
of the Partnership (including without limitation the merger or other
consolidation of the Partnership into another Person or a roll-up into a
corporate form), unless the General Partner elects to continue the Partnership
business for the purpose of the receipt and the collection of indebtedness or
the collection of other consideration to be received in exchange for the assets
of the Partnership (which activities shall be deemed to be part of the winding
up of the Partnership).

Section 12.2 Winding Up

      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.
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 there is no remaining General Partner, any
Person selected by the Limited Partners) (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

                                     - 34 -

<PAGE>

property. The Partnership property shall be liquidated as promptly as is
consistent with obtaining the fair market value thereof (provided that the
Liquidator in its discretion may distribute assets in kind in lieu of
liquidating the assets of the Partnership), and the proceeds therefrom shall be
applied and distributed in the following order:

                        (1)   First, to the payment and discharge of all of the
                              Partnership's debts and liabilities to creditors
                              other than the Partners;

                        (2)   Second, to the payment and discharge of all of the
                              Partnership's debts and liabilities to the
                              Partners; and

                        (3)   The balance, if any, to the Partners in accordance
                              with their positive Capital Account balances,
                              after giving effect to all contributions,
                              distributions and allocations for all periods.

Section 12.3 Compliance with Timing Requirements of Regulations

      In the event 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 XII to the Partners who have positive Capital Accounts in
compliance with Regulations section 1.704-1(b)(2)(ii)(b)(2). If any 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), such Partner shall have no
obligation to make any contribution to the capital of the Partnership with
respect to such deficit, and such deficit shall not be considered a debt owed to
the Partnership or to any other Person for any purpose whatsoever. In the
discretion of the Liquidator, a pro rata portion of the distributions that would
otherwise be made to the Partners pursuant to this Article XII may be:

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

            B. withheld 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
amounts shall be distributed to the Partners as soon as practicable.

Section 12.4 Rights of Partners

      Except as otherwise provided in this Agreement, each Partner shall look
solely to the assets of the Partnership for the return of its Capital
Contribution and shall have no right or power to demand or receive property
other than cash from the Partnership. No Partner shall have priority over any
other Partner as to the return of its Capital Contributions, distributions, or
allocations, except as expressly provided in this Agreement.

                                     - 35 -

<PAGE>

Section 12.5 Documentation of Liquidation

      Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 12.2 hereof, the Partnership shall be terminated
and the Certificate and all qualifications of the Partnership as a foreign
Partnership in jurisdictions shall be canceled and such other actions as may be
necessary to terminate the Partnership shall be taken. The Liquidator shall have
the authority to execute and record any and all documents or instruments
required to effect the dissolution, liquidation and termination of the
Partnership.

Section 12.6 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 12.2 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.

Section 12.7 Liability of the Liquidator

      The Liquidator shall be indemnified and held harmless by the Partnership
from and against any and all claims, demands, liabilities, costs, damages and
causes of action of any nature whatsoever arising out of or incidental to the
Liquidator's taking of any action authorized under or within the scope of this
Agreement; provided, however, that the Liquidator shall not be entitled to
indemnification, and shall not be held harmless, where the claim, demand,
liability, cost, damage or cause of action at issue arises out of:

                        (1)   a matter entirely unrelated to the Liquidator's
                              action or conduct pursuant to the provisions of
                              this Agreement; or

                        (2)   the proven willful misconduct or gross negligence
                              of the Liquidator.

Section 12.8 Waiver of Partition

      Each Partner hereby waives any right to partition of the Partnership
property.

                                  ARTICLE XIII
                       AMENDMENT OF PARTNERSHIP AGREEMENT

Section 13.1 Amendments

      This Agreement shall not be amended without the prior written consent of
each Partner; provided, however, that this Agreement may be amended by the
General Partner without the approval of any other Partner to (i) reflect the
admission, substitution, termination or withdrawal of Partners made in
accordance with the provisions of this Agreement (including without limitation
amendments to the tax allocation and distribution provisions made in connection
with any such admission, substitution, termination or withdrawal of Partners),
(ii) reflect changes made to the name of the Partnership, (iii) make changes to
ensure that the Partnership will not be treated as an association taxable as a
corporation for federal income tax purposes or to prevent the Partnership from
in any manner being deemed an "investment company" subject to the

                                     - 36 -

<PAGE>

requirements of the ICA, (iv) make a change that is necessary or desirable to
cure any ambiguity or inconsistency in this Agreement, or (v) satisfy any
requirements, conditions, or guidelines contained in any opinion, directive,
order, ruling, regulation, or statute of any governmental body.

                                  ARTICLE XIV
                               GENERAL PROVISIONS

Section 14.1 Other Activities

      Except as expressly provided otherwise in this Agreement or in the Master
Agreement, any of the Partners or their Affiliates may engage in, or possess an
interest in, other business ventures of every nature and description,
independently or with others, whether or not such other enterprises shall be in
competition with any activities of the Partnership; and neither the Partnership
nor the other Partners shall have any right by virtue of this Agreement in and
to such independent ventures or to the income or profits derived therefrom.
Nothing herein shall be construed to constitute any Partner hereof the agent of
any other Partner hereof or to limit the Partners in any manner in the carrying
on of their own respective businesses or activities.

Section 14.2 Addresses and Notice

      All notices, requests, demands and other communications hereunder to a
Partner shall be in writing and shall be deemed to have been duly given if
delivered by hand or if sent by certified mail, return receipt requested,
properly addressed and postage prepaid, or transmitted by commercial overnight
courier to the Partner at the address set forth in Exhibit A or at such other
address as the Partner shall notify the General Partner in writing, or sent by
facsimile to the facsimile number set forth in Exhibit A or to such other
facsimile number as the Partner shall notify the General Partner in writing.
Such communications shall be deemed sufficiently given, served, sent or received
for all purposes at such time as delivered to the addressee (with the return
receipt or delivery receipt being deemed conclusive evidence of such delivery)
or at such time as delivery is refused by the addressee upon presentation.

Section 14.3 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, (i) references to "Articles" and
"Sections" are to Articles and Sections of this Agreement, and (ii) references
to "Exhibits" are to the Exhibits attached to this Agreement. Each Exhibit
attached hereto and referred to herein is hereby incorporated by reference.

Section 14.4 Pronouns and Plurals

      Whenever the context may require, any pronoun 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. Any
references in this Agreement to "including" shall be deemed to mean "including
without limitation."

                                     - 37 -

<PAGE>

Section 14.5 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 purpose of this Agreement.

Section 14.6 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 14.7 Creditors

      None of the provisions of this Agreement shall be for the benefit of, or
shall be enforceable by, any creditor of the Partnership.

Section 14.8 Waiver

      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.

Section 14.9 No Agency

      Nothing contained herein shall be construed to constitute any Partner the
agent of another Partner, except as specifically provided herein, or in any
manner to limit the Partners in the carrying on of their own respective
businesses or activities.

Section 14.10 Entire Understanding

      This Agreement and the Master Agreement constitute the entire agreement
and understanding among the Partners and supersedes any prior understanding
and/or written or oral agreements among them respecting the subject matter
herein. To the extent that there is any inconsistency between this Agreement and
the Master Agreement, the terms of this Agreement shall govern.

Section 14.11 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 14.12 Applicable Law

      This Agreement shall be construed in accordance with and governed by the
laws of the State of Delaware, without regard to the principles of conflicts of
law.

                                      - 38 -

<PAGE>

Section 14.13 Invalidity of Provisions

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

Section 14.14 Securities Law Representations, Warranties and Agreements

            A. Each Partner represents and warrants to the Partnership and the
other Partners as follows:

                        (1)   Such Partner has such knowledge and experience in
                              financial and business matters that he, she or it
                              is capable of evaluating the merits and risks of
                              the investment involved in the purchase of a
                              Partnership Interest in the Partnership and he,
                              she or it has so evaluated this purchase.

                        (2)   Such Partner is able to bear the economic risk of
                              this investment.

                        (3)   In connection with the purchase of its Partnership
                              Interest, such Partner has been fully informed as
                              to the circumstances under which it is required to
                              take and hold the Partnership Interest pursuant to
                              the requirements of the Securities Act and
                              applicable state securities laws.

                        (4)   Such Partner understands that the Partnership
                              Interest is not registered under the Securities
                              Act or any state securities laws and may not be
                              transferred, assigned or otherwise disposed of
                              unless the Partnership Interest is so registered
                              or unless an exemption from registration is
                              available.

                        (5)   Such Partner understands that the Partnership will
                              not register under the ICA in reliance on the
                              exception provided under Section 3(c)(7) of the
                              ICA, which requires that all Partners be
                              "qualified purchasers" as defined under Section
                              2(a)(51) of the ICA.

            B. Each Partner agrees as follows:

                        (1)   The Partnership is not under any obligation to
                              register any Partnership Interest under the
                              Securities Act or any state securities laws.

                        (2)   The Partnership will not be required to supply any
                              Partner or other Person with any information
                              necessary to enable any Partner to make a sale of
                              its Partnership Interest under Rule 144 under the
                              Securities Act or any corresponding rule under any
                              state securities law.

                                     - 39 -
<PAGE>

            C. Each Partner shall indemnify and hold harmless the Partnership
and the other Partners from and against any and all loss, damage, liability,
cost or expense, including costs of defense and attorneys' fees, arising or
resulting from or attributable to any breach of his representations, warranties
or agreements set forth in this Section 14.14.

Section 14.15 Certification of Nonforeign Status

      Each Partner hereby acknowledges that the Partnership will be obligated to
pay a withholding tax to the IRS with respect to a Partner if the Partner is not
able to certify to the Partnership that it is not a foreign person. Each Partner
hereby agrees to provide a certification as to its foreign status to the
Partnership from time to time upon the request of the General Partner.

                          [Signatures on attached page]

                                     - 40 -
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.

                         GENERAL PARTNER:
                         ---------------

                         Crescent Redtail Management, LLC,
                         a Delaware limited liability company

                         By:  Crescent Real Estate Equities, Ltd, a Delaware
                         corporation, its manager

                         By:    ______________________________________________
                         Name:  ______________________________________________
                         Title: ______________________________________________

                         LIMITED PARTNERS:
                         ----------------

                         Crescent Real Estate Capital, L.P.,
                         a Delaware limited partnership

                         By:  Crescent Real Estate Capital GP, LLC, a Delaware
                         limited liability company, its general partner

                              By:  Crescent Real Estate Equities, Ltd., a
                         Delaware corporation, its manager

                         By:    ______________________________________________
                         Name:  ______________________________________________
                         Title: ______________________________________________

                         CMC Real Estate Capital, L.P.,
                         a Delaware limited partnership

                         By: CMC Real Estate Capital GP, LLC

                              By: Capstead Mortgage Corporation, its sole member

                         By:    ______________________________________________
                         Name:  ______________________________________________
                         Title: ______________________________________________

<PAGE>

                                    EXHIBIT A
             PARTNERS, CAPITAL COMMITMENTS AND PERCENTAGE INTERESTS

<TABLE>
<CAPTION>
                                             Total Capital   Percentage
      Name and Address of Partner             Commitment      Interests
----------------------------------------     -------------   ----------
<S>                                          <C>             <C>
GENERAL PARTNER:

Crescent Redtail Management, LLC,                 N/A             0%
a Delaware limited liability company
777 Main Street, Fort Worth, Texas 76102

LIMITED PARTNERS:

Crescent Real Estate Capital, L.P.,          $  25,000,000       25%
a Delaware limited partnership
777 Main Street, Fort Worth, Texas 76102

CMC Real Estate Capital, L.P.,               $  75,000,000       75%
a Delaware limited partnership
[8401 N. Central Expressway
Suite 800
Dallas, TX 75225-4410
</TABLE>

                                      A-1exv10w2

 

EXHIBIT 10.2

CAPSTEAD MORTGAGE CORPORATION

NONQUALIFIED STOCK OPTION AGREEMENT

FOR NON-EMPLOYEE DIRECTORS

     THIS AGREEMENT, made as of this [___]day of [_________], 20[___] (hereinafter called the “Date of
Grant”), between Capstead Mortgage Corporation, a Maryland corporation (hereinafter called the
“Company”), and [____________] (hereinafter called the “Optionee”):

R E C I T A L S:

     The Company has adopted the 2004 Flexible Long-Term Incentive Plan (the “Plan”), which Plan is
incorporated herein by reference and made a part of this Agreement. Capitalized terms not
otherwise defined herein shall have the same meanings as in the Plan.

     The Company has determined that it is in the best interests of the Company and its
stockholders to grant the option provided for herein to the Optionee pursuant to the Plan on the
terms set forth herein as an inducement to become or remain a director of the Company, to enable
the Optionee to participate in the long-term growth and financial success of the Company and as an
increased incentive to contribute to the Company’s future success and prosperity.

     NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties
hereto agree as follows:

     1. Grant of the Option. (a) The Company hereby grants to the Optionee the right and
option to purchase, on the terms and conditions hereinafter set forth, [___] Shares (the
“Option”). The purchase price of the Shares subject to this Option shall be $[___] per Share (the
“Exercise Price”). This Option is not intended to be treated as an option that complies with
Section 422 of the Code, or any successor provision thereto.

     2. Option Term. The term of the Option shall begin immediately and continue until the
tenth anniversary of the Date of Grant, subject to earlier termination as hereinafter provided.

     (a) If the Optionee ceases to be a director of the Company or any Affiliate by reason of the
Optionee’s discharge for cause, all rights of the Optionee to exercise the Option shall terminate,
lapse and be forfeited immediately at the time of the Optionee’s discharge for cause.

     (b) If the Optionee ceases to be a director of the Company or any Affiliate by reason of
death, the personal representatives, heirs, legatees or distributees of the Optionee, as
appropriate, shall have the right to exercise the Option up to the earlier of (i) six months from
the Optionee’s death or (ii) the remaining term of the Option.

     (c) If the Optionee ceases to be a director of the Company or any Affiliate by reason of the
Optionee’s resignation, Retirement, Disability or for any reason other than the Optionee’s death or
discharge for cause, all rights of the Optionee to exercise the Option shall terminate,

 

 

lapse, and be forfeited upon the earlier of (i) six months after the date Optionee’s service
as a director of the Company terminates by reason of such director’s resignation, Retirement,
Disability or such other reason or (ii) the remaining term of the Option, except that in case the
Optionee shall die within six months after the date Optionee’s service as an Eligible Director of
the Company terminates by reason of such director’s resignation, Retirement, Disability or such
other reason, the personal representatives, heirs, legatees or distributees of the Optionee, as
appropriate, shall have the right up to an additional three months from the date of the Optionee’s
death to exercise the Option.

     3. Exercise of Option.

     (a) This Option is immediately exercisable. Each exercise of the Option, or any part thereof,
shall be evidenced by a notice in writing to the Company. The Exercise Price of the Shares as to
which the Option shall be exercised shall be paid in full at the time of exercise, and may be paid
to the Company either:

     (1) in cash (including check, bank draft or money order); or

     (2) by the delivery of Shares having a Fair Market Value equal to the aggregate
Exercise Price; provided, however, that such Shares, if acquired by the exercise of an
Option shall have been owned by the Optionee for more than six months prior to exercise; or

     (3) by a combination of cash and Shares as described above; or

     (4) by arrangement with a broker acceptable to the Committee in which payment of the
Exercise Price is made pursuant to an irrevocable direction from the Optionee to the broker
to deliver the Company proceeds from the sale of the option Shares in an amount equal to the
exercise price of the Shares.

     (b) The Optionee shall not have any of the rights of a stockholder of the Company with respect
to the Shares covered by this Agreement except to the extent that one or more certificates of such
Shares shall have been delivered to the Optionee, or the Optionee has been determined to be a
stockholder of record by the Company’s Transfer Agent, upon due exercise of the Option granted
hereunder.

     4. Adjustments Upon Changes in Capitalization or Reorganization. The number of Shares
subject to the Option shall be adjusted from time to time as follows:

     (a) Subject to any required action by stockholders, the number of Shares subject to the option
granted hereunder, and the Exercise Price, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares of the Company resulting from a subdivision or
consolidation of Shares or the payment of a stock dividend (but only in Shares) or any other
increase or decrease in the number of Shares effected without receipt of consideration by the
Company.

2

 

     (b) Subject to any required action by stockholders, if the Company shall be the surviving
corporation in any Reorganization, merger or consolidation, the Option granted hereunder shall
pertain to and apply to the securities to which a holder of the number of Shares subject to the
Option granted hereunder would have been entitled, and if a plan or agreement reflecting any such
event is in effect that specifically provides for the change, conversion or exchange of Shares,
then any adjustment to Shares subject to the Option granted hereunder shall not be inconsistent
with the terms of any such plan or agreement.

     (c) In the event of a change in the Shares of the Company as presently constituted, which is
limited to a change of par value into the same number of Shares with a different par value or
without par value, the Shares resulting from any such change shall be deemed to be the Shares
within the meaning of the Plan.

     To the extent that the foregoing adjustments relate to stock or securities of the Company,
such adjustments shall be made by the Committee, whose determination shall be final, binding and
conclusive.

     Except as otherwise specifically provided in this Agreement, the Optionee shall have no rights
by reason of any subdivision or consolidation of stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of any class or by
reason of any dissolution, liquidation, reorganization, merger or consolidation or spin-off of
assets or stock of another corporation, and any issued by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares
subject to the Option granted hereunder.

     5. Non-Transferability of the Option. This Agreement, and the Option granted
hereunder, shall not be transferable otherwise than by will or the laws of descent and distribution
and may be exercised, during the lifetime of the Optionee, only by the Optionee; provided, however,
that this Agreement, and the Option granted hereunder, may be transferred to one or more members of
the immediate family of the Optionee or to a trust for the benefit of such person or as directed
under a qualified domestic relations order. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of this Agreement and the Option granted hereunder contrary to
the provisions hereof, or the levy of any execution, attachment or similar process upon this
Agreement, and the Option granted hereunder, shall be null and void and without effect.

     6. Compliance with Securities and other Laws. In no event shall the Company be
required to issue Shares under the Option granted hereunder, if the issuance thereof would
constitute a violation of applicable federal or state securities laws or regulations or a violation
of any other law or regulation of any governmental or regulatory agency or authority or any
national securities exchange. As a condition to any issuance of Shares, the Company may place
legends on shares, issue stop transfer orders and require such agreements or undertakings as the
Company may deem necessary or advisable to assure compliance with any such laws or regulations,
including, if the Company or its counsel deems it appropriate, representations from the Optionee
that the Optionee is acquiring the Shares solely for investment and not with a view to distribution

3

 

and that no distribution of the Shares will be made unless such shares are registered pursuant
to applicable federal and state securities laws, or in the opinion of counsel of the Company, such
registration is unnecessary.

     7. Issuance of Shares. Upon the Company’s determination that the Option granted
hereunder has been validly exercised as to any of the Shares, the Committee shall, at its sole
discretion, cause the Secretary of the Company to issue certificates in the Optionee’s name for
such Shares. The Company shall not be liable to the Optionee for damages relating to any delays in
issuing the certificates, if any, to the Optionee, any loss of the certificates, or any mistakes or
errors in the issuance of the certificates or in the certificates themselves.

     8. Alternative Award for Cancellation of the Option. For purposes of this Agreement,
the payment to the Optionee of an alternative award or an amount in cash pursuant to the terms of
Section 16 of the Plan in consideration of the cancellation of the Option granted hereunder shall
extinguish any rights of the Optionee in connection with this Agreement.

     9. Notices. Any notice necessary under this Agreement shall be in writing, signed by
the party giving or making the same, and addressed (a) to the Company in the care of its President
or Secretary at the principal executive office of the Company in Dallas, Texas, (b) to the Optionee
at the address appearing in the personnel records of the Company for such Optionee or (c) to either
party at such other address as either party hereto may hereafter designate in writing to the other.
Except as otherwise provided herein, any such notice shall be deemed effective upon receipt
thereof by the addressee.

     10. Choice of Law. THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MARYLAND.

     11. Option Subject to Plan. The Option is subject to the Plan. The terms and
provisions of the Plan as it may be amended from time to time are hereby incorporated herein by
reference. In the event of a conflict between any term or provision contained herein and a term or
provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

     12. Amendment of Agreement. This Agreement may be amended, altered, suspended,
discontinued or terminated by the Committee; provided that no such amendment, alteration suspension
or termination shall materially impair the rights of the Optionee hereunder without the consent of
the Optionee.

     13. Administration of Plan and Agreement. Any determinations or decisions made or
actions taken arising out of or in connection with the interpretation and administration of the
Plan and this Agreement by the Committee shall be final and conclusive.

     14. Execution in Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original for all purposes and both of which taken together shall
constitute but one and the same instrument.

[Signature Page Follows]

4

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Date of Grant.
By execution of this Agreement, the Optionee acknowledges receipt of a copy of the Plan, the
Company’s Annual Report on Form 10-K for the year ended December 31, 20[___] and the informational
supplement required by Rule 428(b)(1) under the Securities Act of 1933.

	 	 	 	 	 
	 	CAPSTEAD MORTGAGE CORPORATION

 	 
	 	By:  	 	 
	 	 	Andrew F. Jacobs 	 
	 	 	President and Chief Executive Officer 	 
	 

	 	 	 	 	 
	 	[OPTIONEE]	 
	 	 	 
	 	 	 	 
	 	 	   [_____________________]	 

5

 

	 	 	 	 	 

CAPSTEAD MORTGAGE CORPORATION

RESTRICTED STOCK AGREEMENT

FOR NON-EMPLOYEE DIRECTORS

     THIS AGREEMENT made and entered into as of the [___] day of [______], 20[___] (hereinafter called
the “Award Date”), by and between Capstead Mortgage Corporation, a Maryland corporation (the
“Company”), and [____________] (the “Grantee”).

     WHEREAS, the Company, having determined that its interests will be advanced by providing an
incentive to the Grantee to increase the performance of the Company and its Affiliates, has awarded
to the grantee a restricted stock award conditioned upon the execution by the Company and the
Grantee of a Restricted Stock Agreement.

     THEREFORE, in consideration of the mutual promise(s) and covenant(s) contained herein, the
parties hereby agree as follows:

     SECTION 1. GRANT.

     1.1 Grant and Acceptance. The Company does hereby grant and transfer to the Grantee,
for no cash consideration from the Grantee, and the Grantee does hereby accept from the Company, an
aggregate of [___] shares (the “Award Shares”) of the Common Stock, $0.01 par value per share, of
the Company (the “Common Stock”) according to the terms and conditions and subject to the
restrictions hereinafter set forth.

     1.2 Effect of Plan. The Award Shares shall constitute Restricted Stock and this grant
shall constitute an Award, each as defined in the Company’s 2004 Flexible Long-Term Incentive Plan
(the “Plan”). This Agreement is expressly subject to the terms and provisions of the Plan and in
the event there is a conflict between the terms of the Plan and this Agreement, the terms of the
Plan shall control. All undefined capitalized terms used herein shall have the meanings assigned
in the Plan. The Award is subject to all laws, approvals, requirements and regulations of any
governmental authority which may be applicable thereto.

     SECTION 2. RIGHTS IN SHARES. The Grantee, for the duration of this Agreement, shall
be the record owner of, and shall be entitled to vote, the Award Shares and shall be entitled to
receive all dividends and any other distributions declared on the Award Shares (provided, however,
that nothing contained herein shall cause the Company to declare any such dividends or to make any
such distributions).

     SECTION 3. VESTING.

     3.1 Vesting. The Award Shares shall vest (become nonforfeitable) in accordance with
the schedule set forth below:

 

 

	 	 	 	 	 
	 	 	Percentage of Shares	 	Cumulative
	Date	 	Vested on Specified Date	 	Percentage of Shares
	[_________]

	 	[___]
	 	[___]
	[_________]

	 	[___]
	 	[___]
	[_________]

	 	[___]
	 	[___]
	[_________]

	 	[___]
	 	[___]

provided, however, that notwithstanding the foregoing schedule, and except as otherwise provided in
Sections 3.2, 3.3 and 3.4 below, no additional Award Shares shall vest after termination of
Grantee’s directorship with the Company or any Affiliate for any reason (including termination by
reason of voluntary or involuntary discharge, Disability or Retirement) in which case the Grantee
shall, at the time of termination, forfeit all right, title and interest in and to any Award Shares
not then vested.

     3.2 Effect of Grantee’s Death. If the Grantee ceases to be a director of the Company
or any Affiliate by reason of death, any and all outstanding Award Shares not fully vested shall
automatically vest in full and the personal representatives heirs, legatees or distributees of the
Grantee, as appropriate, shall become fully vested in the Award Shares effective on the date of the
Grantee’s death.

     3.3 Effect of Dissolution or Liquidation. In the event of the dissolution or
liquidation of the Company, any and all outstanding Award Shares not fully vested shall
automatically vest in full immediately prior to such dissolution or liquidation.

     3.4 Effect of Change of Control. In the event of a Change in Control (as defined in
the Plan), any and all outstanding Award Shares not fully vested shall automatically vest in full.
The date on which such accelerated vesting shall occur shall be the date of the occurrence of the
Change in Control.

     3.5 Effect of Forfeiture. Any Award Shares forfeited pursuant to Section 3.1 shall
revert to the Company.

     SECTION 4. STOCK CERTIFICATES. Upon grant of the Award Shares, the Company shall
cause its Transfer Agent to record Grantee’s ownership of such Award Shares in book entry form. As
Award Shares vest hereunder, such Award Shares shall be transferred into an unrestricted account in
the name of the Grantee or, at the request of the Grantee, issued in stock certificate form. Any
such certificates shall be unencumbered by any of the restrictions enumerated herein other than
such restrictions as may be imposed by applicable federal or state securities laws and regulations.

     SECTION 5. TRANSFER AND REPURCHASES UPON TERMINATION.

     5.1 The unvested Award Shares shall not be offered, sold, transferred, assigned, exchanged,
pledged, encumbered or otherwise disposed of (each, a “Transfer”) for any purpose whatsoever, other
than to the Company, and shall not be subject, in whole or in part, to execution, attachment, or
similar process in all such cases until the date of vesting. Any attempted Transfer of

2

 

the unvested Award Shares, other than in accordance with the terms set forth herein, shall be
void and of no effect.

     5.2 Grantee acknowledges that any sale, assignment, transfer or other disposition of vested
Award Shares may be subject to restrictions contained in applicable federal or state securities
laws and regulations and that any such sale, assignment, transfer or other disposition of Award
Shares by him or her will be in compliance with such laws and regulations.

     SECTION 6. WITHHOLDINGS. The Company and each Affiliate shall have the right to
retain and withhold from any payment (including the vesting) of Award Shares (and any dividends on
Award Shares) any amounts required to be withheld or otherwise deducted and paid with respect to
such payment (including the vesting thereof). At its discretion, the Company and each Affiliate
may require the Grantee receiving Award Shares to reimburse the Company or any Affiliate for any
such taxes required to be withheld by the Company or the Affiliate and withhold any distribution in
whole or in part until the Company and each Affiliate is so reimbursed. In lieu thereof, the
Company and each Affiliate shall have the right to withhold from any other cash amounts due or to
become due from the Company or the Affiliate to the Grantee an amount equal to such taxes required
to be withheld by the Company or the Affiliate as reimbursement for any such taxes or retain and
withhold a number of shares having a market value not less than the amount of such taxes in order
to reimburse the Company or the Affiliate for any such taxes.

     SECTION 7. ADJUSTMENTS TO AWARD SHARES.

     7.1 Stock Dividends and Splits and Similar Transactions. Subject to any required
action by the Company’s Board of Directors and stockholders, the number of Award Shares shall be
proportionately adjusted for any increase or decrease in the number of issued Shares of the Company
resulting from the payment of a Share dividend, a Share split, a Share reverse-split or any similar
transaction.

     7.2 Change in Par Value. In the event of a change in the Company’s Shares which is
limited to a change of all of its authorized shares with par value into the same number of shares
with a different par value or without par value, the shares resulting from any such change shall be
deemed to be shares within the meaning of the Plan.

     7.3 Other Capital Adjustments. Except as hereinbefore expressly provided in Section
7.1 and except for rights that all holders of Common Stock shall have, Grantee shall have no rights
by reason of any subdivision or consolidation of Shares of any class or payment of any share
dividend or any other increase or decrease in the number of shares of any class or by reason of any
dissolution, liquidation, merger or consolidation or spin-off of assets or stock of another
corporation; any issuance by the Company of Shares of any class, or securities convertible into
Shares of any class, shall not affect the Award, and no adjustment by reason thereof shall be made
with respect to the number or price of the Company’s Shares subject to the Award. An Award of
Restricted Stock shall not affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell or transfer all or any part of its business or
assets.

3

 

     SECTION 8. GRANTEE’S REPRESENTATIONS AND WARRANTIES. Grantee represents and warrants
that:

     (a) such Grantee has not and will not, directly or indirectly, Transfer any Award Shares
except in accordance with the terms of this Agreement;

     (b) such Grantee has, or such Grantee together with such Grantee’s advisors, if any, have such
knowledge and experience in financial, business and tax matters that such Grantee is, or such
Grantee together with such Grantee’s advisors, if any, are capable of evaluating the merits and
risks relating to such Grantee’s investment in the Award Shares and making an investment decision
with respect to the Company;

     (c) such Grantee has been given the opportunity to obtain information and documents relating
to the Company and to ask questions of and receive answers from representatives of the Company
concerning the Company and such Grantee’s investment in the Award Shares; and

     (d) such Grantee realizes that there are substantial risks incident to an investment in the
Award Shares.

     SECTION 9. IMPACT ON OTHER BENEFITS. The value of the Award Shares (either on the
Award Date or at the time the shares are vested) shall not be includable as compensation or
earnings for purposes of any other benefit plan offered by the Company.

     SECTION 10. ADMINISTRATION. The Committee shall have full authority and discretion
(subject only to the express provisions of the Plan) to decide all matters relating to the
administration and interpretation of the Plan and this Agreement. All such Committee
determinations shall be final, conclusive, and binding upon the Company, the Grantee, and any and
all interested parties.

     SECTION 11. AMENDMENT(S). This Agreement shall be subject to the terms of the Plan,
as amended from time to time, except that the Award that is the subject of this Agreement may not
in any way be restricted or limited by any amendment or termination approved after the Award Date
without the Grantee’s written consent.

     SECTION 12. FORCE AND EFFECT. The various provisions of this Agreement are severable
in their entirety. Any determination of invalidity or unenforceability of any one provision shall
have no effect on the continuing force and effect of the remaining provisions.

     SECTION 13. GOVERNING LAWS. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Maryland.

     SECTION 14. MISCELLANEOUS.

     14.1 Any notice necessary under this Agreement shall be in writing, signed by the party
giving or making the same, and addressed (a) to the Company in the care of its President or
Secretary at the principal executive office of the Company in Dallas, Texas, (b) to the Grantee at
the address appearing in the personnel records of the Company for such Grantee or (c) to either
party at

4

 

such other address as either party hereto may hereafter designate in writing to the other.
Except as otherwise provided herein, any such notice shall be deemed effective upon receipt thereof
by the addressee.

     14.2 This Agreement may be executed in counterparts, each of which shall be deemed an
original for all purposes and both of which taken together shall constitute but one and the same
instrument.

[Signature Page Follows]

5

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date hereof. By
execution of this Agreement, the Grantee acknowledges receipt of a copy of the Plan, the Company’s
Annual Report on Form 10-K for the year ended December 31, 20[___] and the informational supplement
required by Rule 428(b)(1) under the Securities Act of 1933.

	 	 	 	 	 
	 	CAPSTEAD MORTGAGE CORPORATION

 	 
	 	By:  	 	 
	 	 	Andrew F. Jacobs 	 
	 	 	President and Chief Executive Officer 	 
	 

	 	 	 	 	 
	 	[GRANTEE]	 
	 	 	 
	 	 	 	 
	 	 	   [_____________________]	 

6

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