BAY APARTMENT COMMUNITIES INC, 8-K/A, 1996-07-05

BAY APARTMENT COMMUNITIES INC
8-K/A, 1996-07-05
OPERATORS OF NONRESIDENTIAL BUILDINGS

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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

-------------------------------

FORM 8-K/A

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

----------------------------------

Date of Report (Date of earliest event reported): MAY 23, 1996

BAY APARTMENT COMMUNITIES, INC.
(Exact name of Registrant as specified in charter)

MARYLAND 1-72612 77-0404318
- ---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification no.)

4340 STEVENS CREEK BOULEVARD, SUITE 275, SAN JOSE, CA 95129
-----------------------------------------------------------
(Address of principal executive offices) (Zip Code)

(408) 983-1500
---------------
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS

On May 16, 1996, Bay Apartment Communities, Inc. (the "Company")
purchased from C. Gemma Hwang and K. Philip Hwang a 208 apartment home community
located in Union City, California ("Park Centre Apartments") for approximately
$11.4 million. The Company plans to invest approximately $2.9 million in a major
redevelopment program which will include exterior repairs (such as a new roof,
entry gate and exterior painting) and upgrades of apartment interiors (including
new appliances, plumbing fixtures, cabinet faces and floor and wall coverings).
In addition, the Company intends to add a new fitness center and upgrade the
community's leasing office, landscaping and lighting. The occupancy rate of Park
Centre Apartments was approximately 94% as of May 16, 1996.

On May 16, 1996, the Company purchased from TCR #706 Parkside,
Limited, a Texas limited partnership, a 192 apartment home community located in
Sunnyvale, California ("Parkside Commons") for approximately $25.5 million. The
occupancy rate of Parkside Commons was approximately 100% as of May 16, 1996.

On May 23, 1996, the Company purchased from Consolidated Sunset
Limited Partnership a 243 apartment home community located in San Francisco,
California ("Sunset Towers") for approximately $24.3 million. The Company plans
to invest approximately $2 million in a major redevelopment program which will
include upgrading of apartment interiors, community lobbies and hallways, the
replacement of some mechanical systems and the repair and improvement of the
structure's exterior. The occupancy rate of Sunset Towers was approximately
99% as of May 23, 1996.

The Company financed the acquisitions of Park Centre Apartments,
Parkside Commons and Sunset Towers through draws in the aggregate of
approximately $61.2 million from the Company's $150 million unsecured line of
credit (the "UBS Acquisition Loan") provided by Union Bank of Switzerland for
acquisition and construction purposes. The UBS Acquisition Loan is for a term
of three years and bears interest at the rate of 1.55% over LIBOR.

The Company has entered into contracts to acquire two apartment home
communities, Countrybrook in San Jose, CA and Villa Marguerite in Mission
Viejo, CA. Countrybrook has 360 apartment homes and Villa Marguerite has 166
apartment homes. There can be no assurance that the Company will acquire these
communities.

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements under Rule 3-14 of Regulation S-X

Financial Statements of Businesses Acquired. See Index to Financial
Statements (page F- 1).

(b) Pro Forma Financial Statements

Pro Forma Financial Information. See Index to Financial Statements
(page F-1).

10.1 Purchase and Sale Agreement and Escrow Instructions, dated as
of March 22, 1996, by and between K. Philip Hwang and C. Gemma
Hwang and Bay Apartment Communities, Inc. The exhibits and
schedules to this Agreement are listed in, but not filed with,
this exhibit. Such exhibits and schedules have been omitted
for purposes of this filing, but will be furnished to the
Commission supplementally upon request.

10.2 Purchase and Sale Agreement and Escrow Instructions, dated as
of April 24, 1996, by and between TCR #706 Parkside Limited
Partnership and Bay Apartment Communities, Inc. The exhibits
and schedules to this Agreement are listed in, but not filed
with, this exhibit. Such exhibits and schedules have been
omitted for purposes of this filing, but will be furnished to
the Commission supplementally upon request.

10.3 Purchase and Sale Agreement and Escrow Instructions, dated as
of April 20, 1996, by and between Consolidated Sunset
Limited Partnership and Bay Apartment Communities, Inc. The
exhibits and schedules to this Agreement are listed in, but
not filed with, this exhibit. Such exhibits and schedules have
been omitted for purposes of this filing, but will be
furnished to the Commission supplementally upon request.

10.4 Revolving Loan Agreement, dated as of May 8, 1996, among Bay
Apartment Communities, Inc. as Borrower, Union Bank of
Switzerland (New York Branch) as Co-Agent and Bank, and Union
Bank of Switzerland (New York Branch) as Administrative Agent.
The exhibits and schedules to this Agreement are listed in,
but not filed with, this exhibit. Such exhibits and schedules
have been omitted for purposes of this filing, but will be
furnished to the Commission supplementally upon request.

10.5 Form of Agreement of Limited Partnership of Bay Countrybrook,
L.P., by and among, Bay GP, Inc., Bay Apartment
Communities, Inc. and certain other defined Persons. The
exhibits and schedules to this Agreement are listed in, but
not filed with, this exhibit. Such exhibits and schedules
have been omitted for purposes of this filing, but will be
furnished in the Commission supplementally upon request.

10.6 Agreement to Contribute, dated as of March 27, 1996, by
and between Countrybrook of Berryessa Associates and Bay
Apartment Communities, Inc. The exhibits and schedules to
this Agreement are listed in, but not filed with, this
exhibit. Such exhibits and schedules have been omitted for
purposes of this filing, but will be furnished to the
Commission supplementally upon request.

23.1 Independent Accountants Consent

<PAGE> 3
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be filed on its behalf by the
undersigned thereunto duly authorized.

BAY APARTMENT COMMUNITIES, INC.

Dated: July 5, 1996 By: /s/ Gilbert M. Meyer
-----------------------------------------
Gilbert M. Meyer
Chairman of the Board and President
<PAGE> 4

BAY APARTMENT COMMUNITIES, INC.
_______________

C O N T E N T S

<TABLE>
<CAPTION>
PAGE
<S> <C>
PRO FORMA FINANCIAL STATEMENTS:

Unaudited pro forma consolidated balance sheet
as of March 31, 1996 F-3

Unaudited pro forma consolidated statement of operations
for the three months ended March 31, 1996 F-4

Unaudited pro forma consolidated statement of operations
for the year ended December 31, 1995 F-5

Notes to the pro forma financial statements F-6

HISTORICAL SUMMARY OF REVENUES AND DIRECT OPERATING EXPENSES STATEMENTS
FOR COUNTRYBROOK APARTMENTS:

Report of independent accountants F-9

Historical summary of revenues and direct operating expenses
for the year ended December 31,1995 and
for the three months ended March 31, 1996 F-10

Note to historical summary of revenues and direct operating expenses F-11

HISTORICAL SUMMARY OF REVENUES AND DIRECT OPERATING EXPENSES STATEMENTS
FOR PARKSIDE COMMONS APARTMENTS:

Report of independent accountants F-12

Historical summary of revenues and direct operating expenses
for the year ended December 31,1995 and
for the three months ended March 31, 1996 F-13

Note to historical summary of revenues and direct operating expenses F-14
</TABLE>
<PAGE> 5
BAY APARTMENT COMMUNITIES, INC.
_______________

C O N T E N T S, Continued

<TABLE>
<S> <C>
HISTORICAL SUMMARY OF REVENUES AND DIRECT OPERATING EXPENSES STATEMENTS
FOR VILLA MARGUERITE APARTMENTS:

Report of independent accountants F-15

Historical summary of revenues and direct operating expenses
for the year ended December 31,1995 and
for the three months ended March 31, 1996 F-16

Note to historical summary of revenues and direct operating expenses F-17

HISTORICAL SUMMARY OF REVENUES AND DIRECT OPERATING EXPENSES STATEMENTS
FOR SUNSET TOWERS APARTMENTS:

Report of independent accountants F-18

Historical summary of revenues and direct operating expenses
for the year ended December 31,1995 and
for the three months ended March 31, 1996 F-19

Note to historical summary of revenues and direct operating expenses F-20
</TABLE>

See notes to the pro forma financial statements

F-2
<PAGE> 6
BAY APARTMENT COMMUNITIES, INC.

PRO FORMA CONSOLIDATED BALANCE SHEET

MARCH 31, 1996

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)

_______________

<TABLE>
<CAPTION>
1996 OTHER
ACQUISI- TRANSAC-
ASSETS HISTORICAL TIONS TIONS PRO FORMA
------------ --------- ------------ ---------------
<S> <C> <C> <C> <C>
Real estate assets $ 493,564 $ 128,390 $ - $ 621,954
Less accumulated depreciation (38,280) - (38,280)
------------ --------- ------------ --------------
Real estate assets, net 455,284 128,390 A - 583,674

Construction in progress 11,676 - - 11,676
------------ --------- ------------ --------------
466,960 128,390 - 595,350

Cash and cash equivalents 1,214 (2,651)B 8,002 G 6,565
Other assets 13,408 71 C (288)H 13,191
------------ --------- ------------ --------------
Total assets $ 481,582 $ 125,810 $ 7,714 $ 615,106
============ ========= ============ =============

LIABILITIES AND SHAREHOLDERS' EQUITY

Notes payable $ 233,934 $ 117,932 D $ (41,500)I $ 310,366
Accounts payable and accrued expenses 4,130 - - 4,130
Dividends payable 5,574 - - 5,574
Other liabilities 2,560 578 E - 3,138
------------ --------- ------------ --------------
Total liabilities 246,198 118,510 (41,500) 323,208

Minority interest - 7,300 F - 7,300

Preferred stock, $.01 par value; 25,000,000
shares authorized; 2,308,800 shares of Series A
outstanding at March 31, 1996 and March 31, 1996
pro forma, respectively; no shares and 405,022
shares of Series B outstanding at
March 31, 1996, and March 31, 1996
pro forma, respectively 23 - 4 J 27

Common stock, $.01 par value; 40,000,000 shares
authorized; 11,558,087 shares outstanding at
March 31, 1996; 13,219,501 shares outstanding
at March 31, 1996 pro forma 116 - 17 J 133

Paid-in capital 251,345 - 49,481 K 300,826
Dividends in excess of accumulated earnings (16,100) - (288)H (16,388)
------------ --------- ------------ --------------
Total shareholders' equity 235,384 - 49,214 284,598

Total liabilities and shareholders' equity $ 481,582 $ 125,810 $ 7,714 $ 615,106
============ ========= ============ =============
</TABLE>

See notes to the pro forma financial statements

F-3
<PAGE> 7
BAY APARTMENT COMMUNITIES, INC.

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 1996

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)

_______________

<TABLE>
<CAPTION>
1996 OTHER
ACQUISI- TRANSAC-
HISTORICAL TIONS TIONS PRO FORMA
---------- -------- -------- ---------
<S> <C> <C> <C> <C>
Revenues:
Rental $ 16,094 $ 3,388 L $ - $ 19,482
Other 378 105 L - 483
---------- -------- -------- ---------
Total revenue 16,472 3,493 - 19,965

Expenses:
Property operating 3,737 798 M - 4,535
Property taxes 1,222 286 N - 1,508
General and administrative 860 122 O - 982
Interest and financing 3,472 1,724 P (437)R 4,759
Depreciation and amortization 3,971 802 Q - 4,773
---------- --------- -------- ---------
13,262 3,732 (437) 16,557
---------- --------- -------- ---------

Income before minority interest 3,210 (239) 437 3,408

Minority interest 15 - - 15
---------- --------- -------- ---------

Net income $ 3,195 $ (239) $ 437 $ 3,393
========== ========= ======== =========

Net income per share $ .17
=========
</TABLE>

See notes to the pro forma financial statements

F-4
<PAGE> 8
BAY APARTMENT COMMUNITIES, INC.

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1995

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)

_______________

<TABLE>
<CAPTION>
1996 OTHER
ACQUISI- TRANSAC-
HISTORICAL TIONS TIONS PRO FORMA
---------- --------- -------- ---------
<S> <C> <C> <C> <C>
Revenues:
Rental $ 52,110 $ 12,797 L $ - $ 64,907
Other 1,411 374 L - 1,785
---------- --------- -------- ---------
Total revenue 53,521 13,171 - 66,692

Expenses:
Property operating 12,452 2,962 M - 15,414
Property taxes 4,349 1,120 N - 5,469
General and administrative 2,467 600 O - 3,067
Interest and financing 11,472 6,896 P (64)R 18,304
Depreciation and amortization 13,714 3,224 Q - 16,938
---------- --------- -------- ---------
Total expenses 44,454 14,802 (64) 59,192
---------- --------- -------- ---------
Income before minority interest 9,067 (1,631) 64 7,500

Minority interest 19 - - 19

Income before gain on sale 9,048 (1,631) 64 7,481

Gain on sale 2,412 - - 2,412
---------- --------- -------- ---------
Net income $ 11,460 $ (1,631) $ 64 $ 9,893
========== ========= ======== =========

Net income per share $ .63
=========
</TABLE>

See notes to the pro forma financial statements

F-5
<PAGE> 9
BAY APARTMENT COMMUNITIES, INC.

NOTES TO THE PRO FORMA FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)

_______________

1. BASIS OF PRESENTATION:

The pro forma financial statements of Bay Apartment Communities (the
"Company"), which are unaudited, have been prepared based on the
historical financial statements of the Company. The pro forma
consolidated balance sheet has been prepared as if the acquisition of
the three apartment communities in May, 1996 (the "1996 Acquired
Communities"), the closing of the three probable acquisitions (the
"Acquisition Communities"), the acquisition of a land parcel (the
"Land Parcel"), the Company's private placement offering in May, 1996
(the "May 1996 Offering"), borrowings under the $150 million unsecured
line of credit (the "1996 Credit Facility"), and the retirement of the
$80 million and $47 million lines of credit (the "Acquisition Loans")
had occurred on March 31, 1996. The pro forma consolidated statements
of operations for the three months ended March 31, 1996, and the year
ended December 31, 1995, have been prepared as if the above mentioned
events had occurred on January 1, 1995. In management's opinion, all
adjustments necessary to reflect the effects of these transactions
have been made. The pro forma financial statements should be read in
conjunction with the historical financial statements of the Company.

The pro forma financial statements are not necessarily indicative of
what the actual results of operations of the Company would have been
for the three months ended March 31, 1996 or for the year ended
December 31, 1995 had the 1996 Acquired Communities, the Acquisition
Communities, the May 1996 Offering, and the borrowings under the 1996
Credit Facility and corresponding retirement of the Acquisition Loans
occurred on January 1, 1995, nor do they purport to represent the
results of operations for future periods.

2. PRO FORMA ADJUSTMENTS:

A. Additional real estate assets are attributable to the 1996 Acquired
Communities, the Acquisition Communities, and the Land Parcel. The
1996 Acquired Communities consists of the $11.4 million acquisition of
the Park Centre Apartments, the $25.5 acquisition of Parkside
Apartments, and the $24.3 acquisition of Sunset Apartments. The
Acquisition Communities consists of the probable acquisitions of
Martinique Gardens for approximately $7.5 million, Countrybrook
Apartments for approximately $28.8 million, and Villa Marguerite
Apartments for approximately $10.1 million. The Land Parcel was
purchased in May, 1996 for approximately $20.7 million.

B. Decrease in cash and cash equivalents is attributable to cash used to
acquire the 1996 Acquired Communities, the Acquisition Communities,
and the Land Parcel.

F-6
<PAGE> 10
BAY APARTMENT COMMUNITIES, INC.

NOTES TO THE PRO FORMA FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)

_______________

2. PRO FORMA ADJUSTMENTS, continued:

C. Increase in other assets, net is attributable to prepaid property
taxes from the 1996 Acquired Communities.

D. Increase in notes payable is attributable to the $90 million draw on
the 1996 Credit Line and the $28 million increase in tax exempt debt
from the acquisition of the 1996 Acquired Communities, the Acquisition
Communities, and the Land Parcel. Two of the communities in the
Acquisition Communities are encumbered by first deeds of trust which
collateralize housing bond issues, totaling $28 million in aggregate.

E. Increase in other liabilities is attributable to resident deposits
from the 1996 Acquired Communities and the Acquisition Communities.

F. Increase due to partnership units issued to seller in acquisition of
Countrybrook Apartments.

G. Increase in cash and cash equivalents is attributable to $49.5 million
in net proceeds from the May, 1996 Offering offset by the $41.5
million retirement of the Acquisition Loans.

H. Decrease in other assets, net and corresponding increase in dividends
in excess of accumulated earnings is attributable to write-off of
capitalized loan fees related to the retirement of the Acquisition
Loans.

I. Decrease in notes payable is attributable to the retirement of the
Acquisition Loans.

J. Increase in preferred and common stock is attributable to the issuance
of shares from the May, 1996 Offering.

K. Additional paid in capital is attributable to the net proceeds from
the May 1996 Offering.

L. Additional rental and other revenue is attributable to the 1996
Acquired Communities and the Acquisition Communities.

M. Additional property operating expense is attributable to the 1996
Acquired Communities and the Acquisition Communities.

N. Additional property taxes expense is attributable to the 1996 Acquired
Communities, the Acquisition Communities, and the Land Parcel.

F-7
<PAGE> 11
BAY APARTMENT COMMUNITIES, INC.

NOTES TO THE PRO FORMA FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)

_______________

2. PRO FORMA ADJUSTMENTS, continued:

O. General and administrative expense is adjusted to reflect an increase
in staff at the corporate level as well as additional expense at the
1996 Acquired Communities and the Acquisition Communities.

P. Additional interest expense relating to the debt incurred in
connection with the acquisition of the 1996 Acquired Communities, the
Acquisition Communities, and the Land Parcel has been computed based
upon the 30-day London Interbank Offered Rate ("LIBOR") plus a 1.55%
margin on the $90 million aggregate draw on the Company's 1996 Credit
Facility.

Q. Depreciation expense attributable to the 1996 Acquired Communities and
the Acquisition Communities has been computed using the straight-line
method of cost recovery over 30 years for buildings and 7 years for
furniture, fixtures and equipment.

R. Decrease in interest expense reflects the reduction in historical
interest from the assumed retirement of the Acquisition Loans.

F-8
<PAGE> 12
REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors
Bay Apartment Communities, Inc.:

We have audited the accompanying Historical Summary of Revenues and Direct
Operating Expenses (the Historical Summary) of Countrybrook Apartments, San
Jose, California (the Property) for the year ended December 31, 1995 and for
the three-month period ended March 31, 1996. The Historical Summary is the
responsibility of the Property's owner. Our responsibility is to express an
opinion on the Historical Summary based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Historical Summary is free of
material misstatement. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the Historical Summary. An audit
also includes assessing the basis of accounting used and significant estimates
made by management, as well as evaluating the overall presentation of the
Historical Summary. We believe that our audit provides a reasonable basis for
our opinion.

The accompanying Historical Summary was prepared for the purpose of complying
with rules and regulations of the Securities and Exchange Commission, as
described in Note A, and is not intended to be a complete presentation of the
Property's revenues and expenses and may not be comparable to results from
proposed future operations of the Property.

In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the revenues and direct operating expenses, described in
Note A, of Countrybrook Apartments, San Jose, California, for the year ended
December 31, 1995 and for the three-month period ended March 31, 1996, in
conformity with generally accepted accounting principles.

San Francisco, California
July 3, 1996

F-9
<PAGE> 13
COUNTRYBROOK APARTMENTS

HISTORICAL SUMMARY OF REVENUES AND
DIRECT OPERATING EXPENSES

<TABLE>
<CAPTION>
Year Ended Three Months
December 31, Ended
1995 March 31, 1996
------------ --------------
<S> <C> <C>
Revenues:
Rental income $3,512,640 $927,130
Other 33,708 14,024
---------- --------
3,546,348 941,154
---------- --------

Direct operating expenses:
On-site management 270,228 72,541
Real property tax 355,020 90,139
Utilities 171,987 39,185
Repairs and maintenance 406,973 128,443
Other 148,546 21,578
---------- --------
1,352,754 351,886
---------- --------
Revenue in excess of direct
operating expenses $2,193,594 $589,268
========== ========
</TABLE>

The accompanying note is an integral
part of this Historical Summary.

F-10
<PAGE> 14
COUNTRYBROOK APARTMENTS

NOTE TO HISTORICAL SUMMARY OF REVENUES
AND DIRECT OPERATING EXPENSES

A. Property and Basis of Accounting:

The accompanying Historical Summary of Revenues and Direct Operating
Expenses has been prepared in accordance with Rule 3-14 of Regulation S-X
of the Securities and Exchange Commission and relates to the operations of
Countrybrook Apartments, an apartment community, located in San Jose,
California with 208 apartment homes.

In accordance with Rule 3-14, direct operating expenses are presented
exclusive of depreciation, interest, management fees, and income taxes.

Rental income attributable to residential leases is recorded when due from
tenants.

F-11
<PAGE> 15
REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors
Bay Apartment Communities, Inc.:

We have audited the accompanying Historical Summary of Revenues and Direct
Operating Expenses (the Historical Summary) of Parkside Commons Apartments,
Sunnyvale, California (the Property) for the year ended December 31, 1995 and
for the three-month period ended March 31, 1996. The Historical Summary is the
responsibility of the Property's owner. Our responsibility is to express an
opinion on the Historical Summary based on our audit.

In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the revenues and direct operating expenses, described in
Note A, of Parkside Commons Apartments, Sunnyvale, California, for the year
ended December 31, 1995 and for the three-month period ended March 31, 1996, in
conformity with generally accepted accounting principles.

San Francisco, California
July 3, 1996

F-12
<PAGE> 16
PARKSIDE COMMONS APARTMENTS

HISTORICAL SUMMARY OF REVENUES AND
DIRECT OPERATING EXPENSES

<TABLE>
<CAPTION>
Year Ended Three Months
December 31, Ended
1995 March 31, 1996
------------ --------------
<S> <C> <C>
Revenues:
Rental income $2,722,758 $ 729,247
Other 87,194 29,002
---------- ----------
2,809,952 758,249
---------- ----------

Direct operating expenses:
On-site management 112,478 23,096
Real property tax 151,012 46,761
Utilities 116,381 28,470
Repairs and maintenance 212,883 51,011
Other 82,754 27,058
---------- ----------
675,508 176,396
---------- ----------
Revenue in excess of direct
operating expenses $2,134,444 $ 581,853
========== ==========
</TABLE>

The accompanying note is an integral
part of this Historical Summary.

F-13
<PAGE> 17
PARKSIDE COMMONS APARTMENTS

NOTE TO HISTORICAL SUMMARY OF REVENUES
AND DIRECT OPERATING EXPENSES

A. Property and Basis of Accounting:

The accompanying Historical Summary of Revenues and Direct Operating
Expenses has been prepared in accordance with Rule 3-14 of Regulation S-X
of the Securities and Exchange Commission and relates to the operations of
Parkside Commons Apartments, an apartment community, located in Sunnyvale,
California with 192 apartment homes.

In accordance with Rule 3-14, direct operating expenses are presented
exclusive of depreciation, interest, management fees, and income taxes.

Rental income attributable to residential leases is recorded when due from
tenants.

F-14
<PAGE> 18
REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors
Bay Apartment Communities, Inc.:

We have audited the accompanying Historical Summary of Revenues and Direct
Operating Expenses (the Historical Summary) of Villa Marguerite Apartments,
Mission Viejo, California (the Property) for the year ended December 31, 1995
and for the three-month period ended March 31, 1996. The Historical Summary is
the responsibility of the Property's owner. Our responsibility is to express
an opinion on the Historical Summary based on our audit.

In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the revenues and direct operating expenses, described in
Note A, of Villa Marguerite Apartments, Mission Viejo, California, for the year
ended December 31, 1995 and for the three-month period ended March 31, 1996, in
conformity with generally accepted accounting principles.

San Francisco, California
July 3, 1996

F-15
<PAGE> 19
VILLA MARGUERITE APARTMENTS

HISTORICAL SUMMARY OF REVENUES AND
DIRECT OPERATING EXPENSES

<TABLE>
<CAPTION>
Year Ended Three Months
December 31, Ended
1995 March 31, 1996
------------ --------------
<S> <C> <C>
Revenues:
Rental income $1,191,365 $317,688
Other 28,870 9,529
---------- --------
1,220,235 327,217
---------- --------

Direct operating expenses:
On-site management 63,882 17,757
Real property tax 121,745 25,937
Utilities 108,938 27,573
Repairs and maintenance 203,856 59,438
Other 75,805 18,154
---------- --------
574,226 148,859
---------- --------
Revenues in excess of direct
operating expenses $ 646,009 $178,358
========== ========
</TABLE>

The accompanying note is an integral
part of this Historical Summary.

F-16
<PAGE> 20
VILLA MARGUERITE APARTMENTS

NOTE TO HISTORICAL SUMMARY OF REVENUES
AND DIRECT OPERATING EXPENSES

A. Property and Basis of Accounting:

The accompanying Historical Summary of Revenues and Direct Operating
Expenses has been prepared in accordance with Rule 3-14 of Regulation S-X
of the Securities and Exchange Commission and relates to the operations of
Villa Marguerite Apartments, an apartment community, located in Mission
Viejo, California with 208 apartment homes.

In accordance with Rule 3-14, direct operating expenses are presented
exclusive of depreciation, interest, management fees, and income taxes.

Rental income attributable to residential leases is recorded when due from
tenants.

F-17
<PAGE> 21
REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors
Bay Apartment Communities, Inc.:

We have audited the accompanying Historical Summary of Revenues and Direct
Operating Expenses (the Historical Summary) of Sunset Towers Apartments, San
Francisco, California (the Property) for the year ended December 31, 1995 and
for the three-month period ended March 31, 1996. The Historical Summary is the
responsibility of the Property's owner. Our responsibility is to express an
opinion on the Historical Summary based on our audit.

In our opinion, the Historical Summary referred to above presents fairly, in
all material respects, the revenues and direct operating expenses, described in
Note A, of Sunset Towers Apartments, San Francisco, California, for the year
ended December 31, 1995 and for the three-month period ended March 31, 1996, in
conformity with generally accepted accounting principles.

San Francisco, California
July 3, 1996

F-18
<PAGE> 22
SUNSET TOWERS APARTMENTS

HISTORICAL SUMMARY OF REVENUES AND
DIRECT OPERATING EXPENSES

<TABLE>
<CAPTION>
Year Ended Three Months
December 31, Ended
1995 March 31, 1996
------------ --------------
<S> <C> <C>
Revenues:
Rental income $2,795,189 $722,901
Other 125,844 27,621
---------- --------
2,921,033 750,522
---------- --------

Direct operating expenses:
On-site management 114,689 24,393
Real property tax 210,419 52,894
Utilities 349,786 90,216
Repairs and maintenance 246,512 84,065
Other 208,574 32,296
---------- --------
1,129,980 283,864
---------- --------
Revenue in excess of direct
operating expenses $1,791,053 $466,658
========== ========
</TABLE>

The accompanying note is an integral
part of this Historical Summary.

F-19
<PAGE> 23
SUNSET TOWERS APARTMENTS

NOTE TO HISTORICAL SUMMARY OF REVENUES
AND DIRECT OPERATING EXPENSES

A. Property and Basis of Accounting:

The accompanying Historical Summary of Revenues and Direct Operating
Expenses has been prepared in accordance with Rule 3-14 of Regulation S-X
of the Securities and Exchange Commission and relates to the operations of
Sunset Towers Apartments, an apartment community, located in San
Francisco, California with 243 apartment homes.

In accordance with Rule 3-14, direct operating expenses are presented
exclusive of depreciation, interest, management fees, and income taxes.

Rental income attributable to residential leases is recorded when due from
tenants.

F-20

<PAGE> 1
EXHIBIT 10.1

PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS

THIS PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (this
"Agreement") is made and entered into as of the 22nd day of March, 1996, by and
between K. PHILIP HWANG and C. GEMMA HWANG, husband and wife, jointly and
severally (collectively, "Seller"), and BAY APARTMENT COMMUNITIES, INC., a
Maryland corporation, or its nominee ("Buyer").

IN CONSIDERATION of the respective agreements hereinafter set forth,
Seller and Buyer hereby agree as follows:

1. Property. Seller hereby agrees to sell and convey to Buyer, and
Buyer hereby agrees to purchase from Seller, subject to the terms and conditions
set forth herein, the following:

(a) that certain real property located at 2175 Decoto Road,
Union City, California, more particularly described in Schedule 1 to the "Deed"
(as hereinafter defined) attached hereto as Exhibit A and incorporated herein by
this reference (the "Land");

(b) all rights, privileges and easements appurtenant to the
Land, including, without limitation, all minerals, oil, gas and other
hydrocarbon substances on and under and that may be produced from the Land, as
well as all development rights, land use entitlements, including without
limitation building permits, licenses, permits and certificates, utilities
commitments, air rights, water, water rights, riparian rights, and water stock
relating to the Land and any rights-of-way or other appurtenances used in
connection with the beneficial use and enjoyment of the Land and all of Seller's
right, title and interest in and to all roads, easements, rights of way and
alleys adjoining or servicing the Land (collectively, the "Appurtenances");

(c) all improvements and fixtures located on the Land and
Appurtenances, including, without limitation, the building(s) located on the
Land, containing two hundred eight (208) units, and all apparatus, equipment and
appliances used in connection with the operation or occupancy of the Land and
Appurtenances, such as heating and air conditioning systems and facilities used
to provide any utility, refrigeration, ventilation, garbage disposal, recreation
or other services on the Land and Appurtenances, and along with all on-site
parking (collectively, the "Improvements", and together with the Land and
Appurtenances, the "Real Property");

(d) all tangible personal property owned by Seller located on
or in or used in connection with the Real Property as of the date hereof and as
of the "Closing Date" (as defined in Para graph 8(b) below) including, without
limitation, (i) all laundry equipment, recreation equipment, pool and spa
furniture and equipment, furnishings in the on-site leasing facility, clubhouse
and fitness center, and all air conditioners, refrigerators, dishwashers,
ovens/ranges, microwaves and washer/dryer units located in the rental units, and
(ii) all those items described in Schedule 2 to the "Bill of Sale" (as
hereinafter defined) attached hereto as Exhibit B (collectively, the "Tangible
Personal Property"); and

(e) any intangible personal property now or hereafter owned by
Seller and used in the ownership, use or operation or development of the Real
Property, and Tangible Personal Property, including, without limitation, the
right to use the names "Park Centre Apartments" and "Cherrywood Apartments" and
any other trade name now used in connection with the Real Property and, to the
extent approved by Buyer pursuant to this Agreement, any contract or lease
rights (including, without limitation,
<PAGE> 2
the lessor's interest in and to all tenant leases, rental agreements, subleases
and tenancies, including all amendments, modifications, agreements, records,
substantive correspondence, and other documents affecting in any way a right to
occupy any portion of the Real Property (individually and collectively, the
"Leases"), and Seller's interest in all security deposits and prepaid rent, if
any, under the Leases (provided that Seller's interest in such security deposits
and prepaid rent shall not be paid in cash to Buyer upon the Closing but instead
shall be transferred in the form of a credit against the Purchase Price pursuant
to Paragraph 8(f) below) and any and all guaranties of the Leases, utility
contracts or other agreements or rights relating to the ownership, use and
operation of the Real Property or Tangible Personal Property (collectively, the
"Intangible Property", and together with the Tangible Personal Property, the
"Personal Property").

All of the items referred to in Subparagraphs (a), (b), (c), (d) and
(e) above are collectively referred to herein as the "Property".

2. Purchase Price.

(a) The purchase price of the Property is Eleven Million Four
Hundred Thousand Dollars ($11,400,000.00), subject to reduction by any credits
due Buyer hereunder (the "Purchase Price").

(b) The Purchase Price shall be paid as follows:

(i) Concurrently with the execution of this Agreement
and the opening of an escrow in connection herewith ("Escrow"), which will be
opened at Commonwealth Land Title Company, 888 W. 6th Street, Los Angeles, CA
90017 ("Escrow Holder"), Buyer shall deposit into Escrow cash in the amount of
One Hundred Thousand Dollars ($100,000.00) (the "Initial Deposit"). The Initial
Deposit shall be held by Escrow Holder in an interest-bearing account for
Buyer's benefit. Upon the expiration of the Due Diligence Period, if this
Agreement is not earlier terminated, Buyer shall deposit into Escrow cash in the
amount of Fifty Thousand Dollars ($50,000.00) (the "Additional Deposit"). The
Additional Deposit shall be held by Escrow Holder in an interest-bearing account
for Buyer's benefit. As used in this Agreement, the "Deposit" shall mean the
Initial Deposit, plus, if and when made pursuant hereto, the Additional Deposit.
The Deposit and all interest earned thereon shall be applied towards the
Purchase Price at Closing; provided, however, if this Agreement is terminated
for any reason other than a default by Buyer, the Deposit along with all
interest earned thereon shall be returned to Buyer.

(ii) On or before the Closing, if this Agreement has
not been earlier terminated, Buyer shall deposit into Escrow cash in the amount
of the balance of the Purchase price, less any credits due Buyer hereunder (the
"Closing Amount"). The Closing Amount shall be applied towards the Purchase
Price at Closing; provided, however, that if this Agreement is terminated for
any reason other than a default by Buyer, the Closing Amount shall be returned
to Buyer.

3. Title to the Property.

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<PAGE> 3
Paragraph 4 below and without boundary, encroachment or survey exceptions (the
"Title Policy"). The Title Policy shall provide full coverage against mechanics'
and materialmen's liens and shall contain such special endorsements as Buyer may
reasonably require, including, without limitation, any endorsements required as
a condition to Buyer's approval of any title exceptions pursuant to Paragraph 4
below (the "Endorsements").

(b) At the Closing, Seller shall transfer title to the
Tangible Personal Property by a bill of sale in the form attached hereto as
Exhibit B and incorporated herein by this reference (the "Bill of Sale"), such
title to be free of any liens, encumbrances or interests.

(c) At the Closing (i) Seller shall transfer title to the
Intangible Property, the "Assigned Contracts" (as hereinafter defined) and the
"Permits" (as hereinafter defined) by an assignment of intangible property in
the form attached hereto as Exhibit C and incorporated herein by this reference
(the "Assignment of Intangible Property") and (ii) Seller shall transfer title
to the Leases by an assignment of Leases in the form attached hereto as Exhibit
D and incorporated herein by this reference (the "Assignment of Leases"), such
title in each case to be free of any liens, encumbrances or interests.

4. Due Diligence. As used herein, the term "Due Diligence Period" shall
refer to a period of time to expire thirty (30) days after the date of this
Agreement, provided that such thirty (30) day period shall be extended on a day
for day basis for each day following the date of this Agreement until the
delivery by Seller to Buyer of all of the items specified for Seller's delivery
in Paragraph 5 below (excluding the Other Documents referenced in the last
paragraph of Paragraph 5 below). Buyer may elect, by written notice to Seller at
any time prior to the expiration of the Due Diligence Period, to terminate this
Agreement, which election shall be in Buyer's sole and absolute discretion. If
Buyer desires to proceed with the purchase of the Property subject to the
remaining conditions set forth in this Agreement (including, without limitation,
pursuant to Paragraph 6 below), then on or before the expiration of the Due
Diligence Period, Buyer shall deliver written notice to Seller of such election
to proceed (the "Buyer's Notice to Proceed"), electing to waive Buyer's right of
termination pursuant to this Paragraph 4 and proceed with the Closing subject to
the remaining conditions set forth in this Agreement. Buyer's Notice to Proceed
shall specify in writing the requirements for the Title Policy (including,
without limitation, approved exceptions and any required Endorsements), and
Title Company's unconditional commitment to issue the Title Policy in such
approved form at the Closing shall be a Condition Precedent to Buyer's
obligation to proceed with the Closing in addition to the other Conditions
Precedent set forth in Paragraph 6 below. In any event, Seller, at Seller's sole
cost (including, without limitation, costs of any prepayment and/or yield
maintenance fees), covenants to cause to be released and reconveyed from the
Property, and to remove as exceptions to title prior to the Closing, any
mortgages, deeds of trust, or other monetary encumbrances, assessments or
indebtedness shown on the Preliminary Report except for real property taxes not
delinquent. In addition, Seller shall reasonably cooperate with Buyer and use
Seller's reasonable efforts to cause the removal as exceptions to the Title
Policy of any items identified in the Preliminary Report or any survey and
specified by Buyer to Seller during the Due Diligence Period as items which
shall be disapproved by Buyer. If Buyer fails to deliver Buyer's Notice to
Proceed to Seller prior to the expiration of the Due Diligence Period electing
to waive Buyer's right of termination pursuant to this Paragraph 4, then Buyer
shall be deemed to have elected to terminate this Agreement. In the event of the
termination of this Agreement pursuant to this Paragraph 4, the Deposit plus all
interest accrued thereon shall be returned to Buyer and neither party shall have
any further obligations to the other hereunder (except under provisions of this
Agreement which specifically state that they survive termination).

3
<PAGE> 4
5. Seller's Deliveries. Seller shall deliver or cause to be delivered
to Buyer all of the following (collectively, the "Due Diligence Materials") at
Seller's sole cost and expense prior to the date of this Agreement:

(a) a current extended coverage preliminary title report on
the Real Property, issued by Title Company, accompanied by copies of all
documents referred to in the report (collectively, the "Preliminary Report");

(b) copies of any and all existing and proposed easements,
covenants, restrictions, agreements or other documents which affect title to the
Property and which are not disclosed by the Preliminary Report;

(c) to the extent in Seller's possession or control: any
existing survey(s) of the Real Property (including, without limitation, any
"as-built" survey of the Real Property;

(d) copies of the most recent property tax bills and
assessments for the Property;

(e) to the extent in Seller's possession or control: all
presently effective warranties or guaranties from any contractors,
subcontractors, suppliers, servicemen or materialmen in connection with any of
the Tangible Personal Property or any construction, renovation, repairs or
alterations of the Improvements or any tenant improvements (collectively, the
"Warranties");

(f) a schedule (the "Schedule of Agreements") setting forth a
list of all of the service contracts, utility contracts, maintenance contracts,
management contracts, leasing contracts, equipment leases, and brokerage and
leasing commission agreements in any way related to the Property (collectively,
the "Service Contracts"), together with copies of all such Service Contracts.
From this Schedule of Agree ments, Buyer shall designate those contracts that
Seller shall assign to Buyer as of Closing (such designated Service Contracts
together with the Warranties and any "Other Documents" (as hereinafter defined)
designated by Buyer for assignment are collectively referred to herein as the
"Assigned Contracts"). Without limiting the effectiveness of the foregoing
general provisions with respect to such Service Contracts, unless Buyer
specifically provides Seller with "written notice to the contrary" (as
hereinafter defined), in the event of the Closing of the purchase of the
Property, Buyer shall not retain the existing employees and management agents of
Seller for the Property, and, accordingly, on or prior to the Closing, Seller
shall (i) cause all employment and management agreements respecting the Property
to be terminated, and deliver evidence of such termination to Buyer, (ii) remove
all employees and management personnel from the Property, and (iii) deliver any
rental units within the Property previously occupied by such employees and/or
management personnel in a vacant and tenant-ready condition. Buyer's "written
notice to the contrary" pursuant hereto shall be made only by delivery to Seller
of a copy of a written agreement or letter of employment with or to such
employee and/or management agent executed by Buyer;

(g) to the extent in Seller's possession or control: reports
of insurance carriers insuring the Property, and each portion thereof,
respecting the claims history of the Property, if any, certificates of insurance
and insurance policies; insurance claims history for the three (3) most recent
calendar years prior to Closing and, to the extent available, for the current
year;

(h) to the extent in Seller's possession or control:
environmental reports, environmental audits, soils reports, site plans (with
dimensions), engineering reports and plans, traffic reports, demographic
information, landscape plans, structural calculations, floor plans (identifying
tenant and vacancy locations), certified copies of the as-built plans and
specifications, without limiting any of the

4
<PAGE> 5
foregoing, all items with respect to any remodeling or renovation of the
Property, construction contracts, a current inspection report by a licensed
Structural Pest Control Operator, and other reports or documents of significance
to the Property, copies of the zoning description applicable to the Property,
and copies of final certificates of occupancy for all improvements;

(i) a complete inventory of all Tangible Personal Property
used at or in connection with the Property;

(j) a complete list of Seller's and/or Seller's property
manager's employees at the Property, specifying the current compensation of
each;

(k) all income and expense statements, year-end financial and
monthly operating statements and year to date statements for the three (3) most
recent calendar years prior to Closing and, to the extent available, the current
year, all of which shall either be (i) certified by an independent certified
public accountant as having been prepared in accordance with generally accepted
accounting principles (except to the extent specified as prepared on a cash
basis), or (ii) certified by Seller as true and correct and an accurate
representation of the financial condition of the Property;

(l) a copy of the budget for the current year;

(m) (i) copies of all existing and pending Leases, and, to the
extent in Seller's possession or control, lease files and tenant correspondence;
(ii) a schedule of leasing commissions on a space by space basis; (iii) a copy
of the current standard lease form; and (iv) a current rent roll of the
Property, listing for each tenant the name, location of leased premises, rent,
obligation for reimbursement of expenses, amount of security deposit and rent
paid more than thirty (30) days in advance, lease commencement date, lease
termination date, lease extension options, any free rent, or other unexpired
concessions, if any, any refurbishment or renovation obligations owed to
tenants, and a description of any uncured defaults (the "Rent Roll"),
specifically identifying any changes from the Rent Roll attached hereto as
Exhibit E and incorporated herein by this reference, or a certificate of Seller
that there have been no such changes; and

(n) to the extent in Seller's possession or control: all
governmental permits and approvals relating to the construction, operation, use
or occupancy of the Property, including without limitation, all certificates of
occupancy (individually and collectively "Permits").

In addition, Seller shall promptly deliver to Buyer such other
information relating to the Property that is specifically requested by Buyer of
Seller in writing during the Due Diligence Period to the extent such information
either is in the possession or control of Seller, or any affiliate of Seller, or
may be obtained by Seller, or any affiliate of Seller, through the exercise of
commercially reasonable efforts (collectively, the "Other Documents").

6. Conditions Precedent to Closing. The following are conditions
precedent to Buyer's obligation to purchase the Property (the "Conditions
Precedent"). The Conditions Precedent are intended solely for the benefit of
Buyer and may be waived only by Buyer in writing. In the event any condition
precedent is not satisfied, Buyer may, in its sole and absolute discretion,
terminate this Agreement, and, subject to the provisions of Paragraphs 4 and 7,
all obligations of Buyer and Seller hereunder (except provisions of this
Agreement which recite that they survive termination) shall terminate and be of
no further force or effect.

5
<PAGE> 6
(a) Buyer's inspection, review and approval, within the Due
Diligence Period, of all of the following:

(i) The structural, mechanical, electrical and other
physical characteristics and condition of the Property (including without
limitation the condition of the soils);

(ii) The Due Diligence Materials and the Other
Documents;

(iii) An examination for the presence or absence of
"Hazardous Materials" (as hereinafter defined), which shall be performed or
arranged by Buyer at Buyer's sole expense;

(iv) All housing, zoning, land-use, subdivision,
environmental, life safety, handicapped codes (including without limitation the
Americans With Disabilities Act of 1990 ("ADA") and the Fair Housing Amendments
Act of 1988 ("FHAA")), building and construction laws and regulations
restricting or regulating or otherwise affecting the use, occupancy or enjoyment
of the Property; and

(v) Three (3) years' audited financial statements of
the Seller, which (if the same do not exist) may, at Buyer's option, be
performed or arranged at Buyer's cost (provided that Seller shall and hereby
agrees to fully cooperate with Buyer and its representatives and provide them
with all necessary or desirable information and materials in connection
therewith).

(b) All of Seller's representations and warranties contained
in or made pursuant to this Agreement shall have been true and correct when made
and shall be true and correct as of the Closing Date.

(c) The physical condition of the Property shall be
substantially the same on the day of Closing as on the date of Buyer's execution
of this Agreement, reasonable wear and tear and loss by casualty (subject to the
provisions of Paragraph 13 below) excepted.

(d) As of the Closing Date, there shall be no litigation or
administrative agency or other governmental proceeding of any kind whatsoever,
pending or threatened, which after Closing would, in Buyer's sole discretion,
materially adversely affect the value of the Property or the ability of Buyer to
operate the Property in the manner in which it is currently being operated, and
no proceedings shall be pending or threatened which could or would cause the
redesignation or other modification of the zoning classification of, or of any
building or environmental code requirements applicable to, any of the Property.

(e) Seller shall have provided Buyer with an accurate and
current updated Rent Roll dated within five (5) days prior to Closing, which
updated Rent Roll will be used to identify all Leases of space at the Property
for purposes of this Agreement Seller shall specifically identify any changes
from the Rent Roll attached hereto as Exhibit E, and a certificate executed by
Seller and the property manager for the Property certifying that such updated
Rent Roll is true and correct (including, without limitation, the amount of
Security Deposits and description of uncured tenant defaults and delinquencies
listed thereon), and stating whether there exist any events which with the
passage of time and/or the giving of notice would constitute a tenant default
under a Lease.

(f) Seller shall have fully complied with all of Seller's
duties and obligations contained in this Agreement.

6
<PAGE> 7
(g) There shall have been no material adverse change, in
Buyer's determination, in the information or items reviewed and approved by
Buyer during the Due Diligence Period.

(h) Buyer shall have confirmed that at least ninety percent
(90%) of the apartment units on the Property are physically occupied by tenants
("Qualified Tenants") who (1) are not in default under their respective Leases,
(2) meet Seller's reasonable credit standards for tenancy at the Property, and
(3) are paying rental at commercially reasonable rates without any special
concessions.

7. Remedies.

(a) IN THE EVENT THE SALE OF THE PROPERTY IS NOT CONSUMMATED
BECAUSE OF THE FAILURE OF ANY CONDITION OR ANY OTHER REASON EXCEPT A DEFAULT
UNDER THIS AGREEMENT SOLELY ON THE PART OF BUYER, THE DEPOSIT PLUS INTEREST
ACCRUED THEREON SHALL IMMEDIATELY BE RETURNED TO BUYER. IF SAID SALE IS NOT
CONSUMMATED SOLELY BECAUSE OF A DEFAULT UNDER THIS AGREEMENT ON THE PART OF
BUYER, THE DEPOSIT (BUT NOT THE INTEREST ACCRUED THEREON) SHALL BE PAID TO AND
RETAINED BY SELLER AS LIQUIDATED DAMAGES (WITH ANY ACCRUED INTEREST THEREON TO
BE PAID TO BUYER). THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN THE
EVENT OF A DEFAULT BY BUYER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO
DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE
THAT THE DEPOSIT HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'
REASONABLE ESTIMATE OF SELLER'S DAMAGES AND AS SELLER'S SOLE AND EXCLUSIVE
REMEDY AGAINST BUYER, AT LAW OR IN EQUITY, IN THE EVENT OF A DEFAULT UNDER THIS
AGREEMENT ON THE PART OF BUYER. SELLER HEREBY WAIVES ANY AND ALL BENEFITS IT MAY
HAVE UNDER CALIFORNIA CIVIL CODE SECTION 3389.

INITIALS: Seller _________ Buyer __________

(b) In the event the sale of the Property is not consummated
due to Seller's default under this Agreement, Buyer may, in its sole and
absolute discretion, avail itself of any and all other legal and equitable
remedies available under California law to a buyer of real property upon a
default by a seller, including, without limitation, the right to terminate the
contract and recover all damages and the right to continue this Agreement
pending Buyer's action for specific performance and/or damages hereunder, and no
such remedy shall be deemed exclusive or to preclude the pursuit of any other
remedy.

8. Escrow; Closing.

(a) Upon mutual execution of this Agreement, the parties
hereto shall deposit an executed counterpart of this Agreement with Escrow
Holder and this Agreement shall serve as instructions to Escrow Holder for
consummation of the purchase and sale contemplated hereby. Seller and Buyer
shall execute such supplemental Escrow instructions as may be appropriate to
enable Escrow Holder to comply with the terms of this Agreement, provided such
supplemental Escrow instructions are not in conflict with this Agreement as it
may be amended in writing from time to time. In the event of any conflict
between the provisions of this Agreement and any supplementary Escrow
instructions signed by Buyer and Seller, the terms of this Agreement shall
control.

(b) The parties intend for the Closing to take place on a date
mutually reasonably agreed upon by the parties within twenty (20) days following
the expiration of the Due Diligence Period

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<PAGE> 8
(the "Closing Date"). In the event the Closing does not occur on or before the
Closing Date, Escrow Holder shall, unless it is notified by both parties to the
contrary within five (5) days after the Closing Date, return to the depositor
thereof items which were deposited hereunder. Any such return shall not,
however, relieve either party of any liability it may have for its wrongful
failure to Close.

(i) a duly executed and acknowledged Deed;

(ii) a duly executed Bill of Sale;

(iii) originals of all Leases and a duly executed and
acknowledged Assignment of Leases;

(iv) originals of the Assigned Contracts and a duly
executed Assignment of Intangible Property;

(v) a duly executed affidavit that Seller is not a
"foreign person" within the meaning of Section 1445(e)(3) of the Internal
Revenue Code of 1986 in the form attached as Exhibit F and incorporated herein
by this reference together with a duly executed California Franchise Tax Board
Form 590;

(vi) originals of the building permits and
certificates of occupancy for the Improvements and all tenant-occupied space
included within the Improvements not previously delivered to Buyer;

(vii) notices to the Tenants of the occurrence of the
sale of the Property in a form designated by Buyer and reasonably approved by
Seller during the Due Diligence Period;

(viii) such resolutions, authorizations, bylaws or
other corporate and/or partnership documents or agreements relating to Seller
and its partners as shall be reasonably required by Buyer;

(ix) a full release and reconveyance of all monetary
encumbrances affecting the Property and of any mechanics' liens, and such bond,
indemnity or other arrangements as shall be necessary to cause the Title Company
to insure title to the Property as vested in Buyer without any exception for
such matters;

(x) a closing statement in form and content
satisfactory to Buyer and Seller (the "Closing Statement") duly executed by
Seller;

(xi) any documents or agreements required by the
Title Company to issue the Title Policy; and

(xii) any other instruments, records or
correspondence called for hereunder which have not previously been delivered.

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<PAGE> 9
(xiii) Buyer may waive compliance on Seller's part
under any of the foregoing items by an instrument in writing.

(d) At or before the Closing, Buyer shall deliver to Escrow
Holder or Seller the following:

(i) the Closing Statement, duly executed by Buyer;
and

(ii) the Closing Amount.

(e) Seller and Buyer shall each deposit such other instruments
as are reasonably required by Escrow Holder or otherwise required to close the
escrow and consummate the purchase of the Property in accordance with the terms
hereof.

(f) (i) The following are to be apportioned as of the
Closing Date, as follows:

(1) Rent. Rent under the Leases shall be
apportioned as of the Closing Date, regardless of whether or not such rent has
been received by Seller. With respect to any rent arrearages arising under the
Leases, after Closing, Buyer shall pay to Seller any rent actually collected
which is applicable to the period preceding the Closing Date; provided, however,
that all rent collected by Buyer shall be applied first to all unpaid rent
accruing after the Closing Date, and then to unpaid rent accruing prior to the
Closing Date. Buyer shall not be obligated to take any steps to recover any rent
arrearages. Seller shall be permitted to pursue its own remedies for collection
of any rent arrearages applicable to the period prior to the Closing Date
against tenants no longer in occupancy of the Property provided that Buyer shall
incur no cost, expense or liability in connection therewith, but Seller shall
not be permitted to take any action or enforce any legal or equitable remedies
(specifically including com mencing eviction procedures) against tenants
remaining in occupancy of the Property.

(2) Leasing Costs. Seller shall pay as of the
Closing all leasing commission and tenant improvement costs, if any, in
connection with any Lease executed on or before the Closing that are or will
become due and payable as of the Closing. Buyer shall be entitled to a credit
against the Purchase Price for any such commissions or costs incurred in
connection with any lease executed on or before the Closing.

(3) Security Deposits. Buyer shall be entitled
to a credit against the Purchase Price for the total sum of all security
deposits paid to Seller by tenants under any Leases, and any interest earned
thereon.

(4) Free Rent, Abatements or Other Unexpired
Concessions. Buyer shall be entitled to a credit against the Purchase Price for
any free rent, abatements, or other unexpired concessions under any Leases to
the extent they apply to any period after the Closing.

(5) Utility Charges. Seller shall provide
written notice to the utility companies of the pending change of ownership of
the Property not less five (5) days prior to the Closing and shall concurrently
therewith delivery copies of such notices to Buyer. Seller shall cause all the
utility meters to be read on the Closing Date, and will be responsible for the
cost of all utilities used prior to the Closing Date, except to the extent such
utility charges are billed to and paid by tenants directly.

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<PAGE> 10
(6) Real Estate Taxes and Special Assessments.
General real estate taxes payable for the fiscal year in which the Closing
occurs shall be prorated by Seller and Buyer as of the day following the Closing
Date. Seller shall pay on or before Closing the full amount of any bonds or
assessments against the Property including interest payable therewith, including
any bonds or assessments that may be payable after the Closing Date as a result
of or in relation to the construction or operation of any Improvements or any
public improvements that took place or for which any assessment was levied prior
to the Closing Date. Buyer shall pay the full amount of any bonds or assessments
incurred after the Closing Date that are not subject to the immediately
preceding sentence.

(7) Other Apportionments. Amounts payable
under the Assigned Contracts, annual or periodic permit and/or inspection fees
(calculated on the basis of the period covered), and liability for other
Property operation and maintenance expenses and other recurring costs shall be
apportioned as of the Closing Date. Seller shall provide Buyer with written
notice of amounts to be so apportioned not less than five (5) days prior to the
Closing.

(8) Preliminary Closing Statement. Not less
than two (2) business days prior to the Closing, Seller and Buyer shall jointly
prepare and approve a preliminary Closing Statement on the basis of the Leases
and other sources of income and expenses, and shall deliver such computation to
Escrow Holder prior to Closing.

(9) Post-Closing Reconciliation. If any of the
aforesaid prorations cannot be definitely calculated on the Closing Date, then
they shall be estimated at the Closing and definitely calculated as soon after
the Closing Date as feasible. As soon as the necessary information is available,
Buyer shall conduct a post-Closing audit to determine the accuracy of all
prorations made to the Purchase Price (the "Post-Closing Audit"). Either party
owing the other party a sum of money based on such subsequent proration(s) or
the Post-Closing Audit shall promptly pay said sum to the other party, together
with interest thereon at the rate of two percent over the "prime rate" (as
announced from time to time in the Wall Street Journal) per annum from the
Closing Date to the date of payment if payment is not made within ten (10) days
after delivery of a bill therefor.

(ii) Closing Costs. Seller shall pay any City and/or
County transfer taxes and/or transfer fees applicable to the sale of the
Property. In addition, Seller shall be liable for any prepayment fee or other
charge payable in connection with the payoff of any existing indebtedness. Buyer
shall pay the premium for the Title Policy, the cost of the ALTA survey,
recording fees for recording of the Deed and fees of Escrow Holder. All other
costs and charges in connection with the purchase and sale of the Property
contemplated by this Agreement not otherwise provided for in this Agreement
shall be allo cated in accordance with the closing customs for the County where
the Property is located. Buyer and Seller shall each be responsible for their
respective legal fees to negotiate and execute this Agreement.

(iii) Occupancy Credit. In the event that the "Actual
Occupancy Level" (as hereinafter defined) of the Property as of the Closing is
less than ninety-three percent (93%) (193 units), Buyer shall be entitled to a
credit (the "Occupancy Credit") against the Purchase Price in an amount equal to
the product obtained by multiplying the "Vacant Unit Rental Amount" (as
hereinafter defined) by a fraction, the numerator of which is the amount by
which the Actual Occupancy Level is less than ninety-three percent (93%) and the
denominator of which is the amount by which the Actual Occupancy Level is less
than one hundred percent (100%). As used herein, the "Actual Occupancy Level"
shall mean the percentage of the total apartment units on the Property that as
of the Closing are physically occupied by Qualified Tenants. As used herein, the
"Vacant Unit Rental Amount" shall mean the aggregate sum of one month's rental
for each apartment unit on the Property that as of the Closing is not physically
occupied by

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<PAGE> 11
a Qualified Tenant, which rental amount shall be based on the monthly rental
last payable under a lease for each such apartment unit.

(iv) Survival. The provisions of this Subparagraph
(f) shall survive the Closing.

9. Representations, Warranties and Covenants of Seller. As of the date
hereof and again as of Closing, Seller represents and warrants to, and covenants
with, Buyer as follows:

(a) Seller has not received written notice of, and otherwise
has no actual knowledge of, any material physical or mechanical defects of the
Property, including, without limitation, the structural and load-bearing
components of the Property, the parking lots, the plumbing, heating, air
conditioning and electrical and life safety systems and building roofs.

(b) Seller has not received written notice of, and otherwise
has no actual knowledge of, (i) any non-compliance of the Property or the
operation thereof with applicable housing and building codes, environmental,
zoning, life safety, laws, rules and regulations related to handicapped or
disabled (including without limitation the ADA and the FHAA), land use laws and
regulations, and other applicable local, state and federal laws and regulations
(collectively, the "Laws"), or (ii) any order or directive of the applicable
Department of Building and Safety, Health Department or any other municipal,
county, state or federal authority that any work or repair, maintenance or
improvement is required to be performed on the Property.

(c) To Seller's actual knowledge, the Property is not subject
to any applicable rent control ordinance or law and no such ordinance or law is
pending by any governmental authority, agency or quasi-governmental entity with
jurisdiction over the Property.

(d) Seller has not received written notice of, and otherwise
has no actual knowledge of, any inaccuracy or misstatement contained in any of
the Due Diligence Materials or Other Documents. Seller has not received written
notice of, and otherwise has no actual knowledge of, any defaults by any of the
parties to any of the contracts or agreements respecting the Property to be
assigned to Buyer at Closing, except as set forth on Exhibit G attached hereto.

(e) Seller has not received written notice of, and otherwise
has no actual knowledge of, (i) any condemnation, environmental, zoning or other
land-use regulation proceedings, either instituted or planned to be instituted,
which would materially and adversely affect the use, operation or value of the
Property, or (ii) any special assessment proceedings affecting the Property.
Seller shall notify Buyer promptly of any such proceedings of which Seller
becomes aware.

(f) To Seller's actual knowledge, all water, sewer, gas,
electric, telephone, and drainage facilities and all other utilities required by
law or by the normal use and operation of the Property are installed to the
property lines of the Land pursuant to valid permits.

(g) There is no litigation pending or, to Seller's actual
knowledge, threatened in writing, against Seller arising out of the ownership or
operation of the Property or that might detrimentally affect the value or the
use or operation of the Property for its intended purpose or the ability of
Seller to perform its obligations under this Agreement. Seller shall notify
Buyer promptly of any such litigation of which Seller becomes aware.

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<PAGE> 12
(h) There are no outstanding written or oral contracts made by
Seller for any improvements to the Property which have not been fully paid.

(i) Seller has disclosed to Buyer that there was previously
located at the Property an underground diesel fuel storage tank (the "Tank")
toward the creek side of the Property, which Tank has been removed by Seller.
The parties agree that the indemnity and hold harmless provisions of this
Agreement shall not apply with respect to any further investigative or curative
action required (whether by individual or governmental action) with respect to
the Tank, provided that the parties shall retain and rights and remedies with
respect thereto at law and/or in equity. Except as provided above with respect
to the Tank, neither Seller nor, to Seller's actual knowledge, any prior owner
or occupant of the Property has engaged in or permitted any activity on the
Property involving the handling, manufacture, treatment, storage, use, release,
or disposal of any "Hazardous Materials" (as hereinafter defined). Seller has
not received written notice, and otherwise has no actual knowledge, that removal
or other remedial action with respect to Hazardous Materials in, on, under or
about the Property is required by any governmental authority having jurisdiction
over the Property. For purposes of this Agreement, the term "Hazardous
Materials" shall mean any toxic or hazardous waste, material or substance,
including, without limitation, asbestos, petroleum, petroleum products,
underground storage tanks now or previously containing any other Hazardous
Materials, substances defined as "hazardous substances", "hazardous waste" or
"toxic substances" in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Sec. 9601, et seq.; Hazardous
Materials Transportation Act, 49 U.S.C. Sec. 1801; and Resource Conservation and
Recovery Act, 42 U.S.C. Sec. 6901 et seq.; and other substances defined as
hazardous waste and hazardous substances in applicable state or local laws
and/or in any regulations and publications promulgated pursuant to said laws.

(j) Seller has not received written notice of, and otherwise
has no actual knowledge of any existing or proposed easements, covenants,
restrictions, agreements or other documents which affect title to the Property
and which are not disclosed by the Preliminary Report.

(k) The Land is a separate and distinct legal parcel. Such
parcel has been created by way of a subdivision of land completed in accordance
with all applicable laws, rules and regulations. Such parcel contains no
property which is part of a real property tax parcel which is not entirely
included in the Real Property.

(l) There are no free rent, abatements, incomplete tenant
improvements, rebates, allowances, or other unexpired concessions or rights
under any existing or pending Leases (with the exception of those specifically
excepted in Exhibit E attached hereto and incorporated herein by this
reference). Seller has paid in full any of landlord's leasing costs or
obligations.

(m) No brokerage, finder's fee or commission or similar fee or
commission is due or unpaid by Seller with respect to any Lease.

(n) The copies of the Leases delivered by Seller to Buyer
contain all of the information pertaining to any rights of any parties to occupy
the Property, including without limitation all information regarding any rent
concessions, tenant improvements, or other inducements to lease.

(o) The Rent Roll is true, complete and accurate and there
exist no defaults or events which, with the giving of notice or passage of time,
or both, would constitute a default by Seller as landlord under the Leases
listed thereon. To Seller's actual knowledge, except as specifically provided in
Exhibit

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<PAGE> 13
E, there exist no defaults and no events which, with the giving of notice or
passage of time, or both, would constitute a default by any tenants thereon.

(p) To Seller's actual knowledge, the Property is properly
zoned for its intended use, all Improvements comply with applicable building
codes, all final certificates of occupancy for the Improvements have been
issued, and the Property is not dependent on any other property for compliance
with zoning regulations.

(q) This Agreement and all documents executed by Seller which
are to be delivered to Buyer at the Closing are and at the time of Closing will
be duly executed and delivered by Seller, are and at the time of Closing will be
legal, valid and binding obligations of Seller enforceable against Seller in
accordance with their respective terms, are and at the time of Closing will be
sufficient to convey title (if they purport to do so), and do not and at the
time of Closing will not violate any provision of any agreement or judicial
order to which Seller or the Property is subject. Seller has obtained all
necessary authorizations, approvals and consents to the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby.

(r) Seller is the legal and equitable owner of the Property,
with full right to convey the same, and without limiting the generality of the
foregoing, Seller has not granted any option or right of first refusal or first
opportunity to any party to acquire any interest in any of the Property.

For purposes of this Agreement, whenever the phrase "to
Seller's actual knowledge" or words of similar import are used, they shall be
deemed to refer to the actual knowledge, after due inquiry, of K. Philip Hwang
and Gemma Hwang, and such of Seller's and its property manager's employees,
agents and management personnel who would, in the ordinary course of their
responsibilities, receive notice from other persons of any of the matters
described in the representations and warranties in this Agreement which are
limited by the knowledge of Seller.

10. Representations and Warranties of Buyer. Buyer hereby represents
and warrants to Seller as follows: Buyer is a corporation duly organized and
validly existing and in good standing under the laws of the State of Maryland
and in good standing under the laws of the State of California; this Agreement
and all documents executed by Buyer which are to be delivered to Seller at the
Closing are or at the time of Closing will be duly authorized, executed and
delivered by Buyer, and are or at the Closing will be legal, valid and binding
obligations of Buyer, and do not and at the time of Closing will not violate any
provisions of any agreement or judicial order to which Buyer is subject.

11. Continuation and Survival. All representations, warranties and
covenants by the respective parties contained herein or made in writing pursuant
to this Agreement are intended to and shall be deemed made as of the date of
this Agreement or such writing and again at the Closing, shall be deemed to be
material, and unless expressly provided to the contrary shall survive the
execution and delivery of this Agreement, the Deed and the Closing.

12. Indemnity.

(a) Except for "Losses and Liabilities" (as hereinafter
defined) arising directly or indirectly from a breach of any of Buyer's
representations or warranties, Seller shall hold harmless, indemnify and defend
Buyer, its successors and assigns and their respective agents, employees,
officers and directors, and the Property from and against any and all
obligations, liabilities, claims, liens, encumbrances, demands, losses, damages,
causes of action, judgments, costs and expenses (including,

13
<PAGE> 14
without limitation, attorneys' fees and expenses), whether direct, contingent or
consequential and no matter how arising ("Losses and Liabilities") in any way
(i) related to the Property and arising or accruing with respect to the period
prior to the Closing (except to the extent arising as a result of the acts of
Buyer and/or any of Buyer's employees, agents or representatives); and/or (ii)
resulting from any misrepresentation of Seller or any inaccuracy in or breach of
any representations and warranties by Seller.

(b) Except for Losses and Liabilities arising directly or
indirectly from a breach of any of Seller's representations or warranties, Buyer
shall hold harmless, indemnify and defend Seller, its successors and assigns and
their respective agents, employees, officers and partners, from and against any
and all Losses and Liabilities in any way (i) related to the Property and
arising or accruing with respect to the period from and after the Closing during
Buyer's period of ownership of the Property (except to the extent arising as a
result of the acts of Seller and/or any of Seller's employees, agents or
representatives); or (ii) resulting from any misrepresentation of Buyer or any
inaccuracy in or breach of any representation or warranty of Buyer.

13. Casualty or Condemnation.

(a) In the event any of the Property is damaged and/or
destroyed by fire or other casualty prior to the Closing Date, and the cost to
repair and/or restore such damage and/or destruction (which cost, for purposes
of this Paragraph 13, shall be deemed to include reasonably anticipated
postClosing rental loss through to completion of such repair and/or restoration)
exceeds One Hundred Thousand Dollars ($100,000.00), then Buyer shall have the
right to terminate this Agreement by written notice to Seller within ten (10)
business days after Buyer's first learning of the occurrence of such casualty
and the cost of such repair and/or restoration. In the event of any such
termination, the Deposit, together with all interest accrued thereon, shall be
returned to Buyer, Buyer and Seller shall each be liable for one-half of any
escrow fees or charges, and neither party shall have any further liability or
obligation under this Agreement.

(b) In the event any of the Property is damaged and/or
destroyed by fire or other casualty prior to the Closing Date where (i) the cost
to repair and/or restore such damage and/or destruction does not exceed One
Hundred Thousand Dollars ($100,000.00), or (ii) the cost to repair and/or
restore such damage and/or destruction exceeds One Hundred Thousand Dollars
($100,000.00) but this Agreement is not terminated pursuant to Paragraph 13(a)
above as a result thereof, then the Closing Date shall occur as scheduled
notwithstanding such damage; provided, however, that Seller's interest in all
proceeds of insurance payable by reason of such casualty shall be assigned to
Buyer as of the Closing Date or credited to Buyer if previously received by
Seller, and Seller shall be responsible for any cost of repair not covered by
such insurance (whether by reason of insurance deductible, uninsured casualty or
otherwise). Seller's obligations pursuant to the immediately preceding sentence
shall survive the Closing.

(c) In the event a governmental entity commences eminent
domain proceedings to take any portion of the Property after the date hereof and
prior to the Closing Date, then Buyer shall have the option to terminate this
Agreement by written notice to Seller within ten (10) business days after Buyer
first learns of such commencement. In the event of any such termination, the
Deposit, together with all interest accrued thereon, shall be returned to Buyer,
Buyer and Seller shall each be liable for one-half of any escrow fees or
charges, and neither party shall have any further liability or obligation under
this Agreement.

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<PAGE> 15
(d) In the event a governmental entity commences eminent
domain proceedings to take any part of the Property after the date hereof and
prior to the Closing Date and this Agreement is not terminated pursuant to
Paragraph 13(c) above as a result thereof, then the Closing Date shall occur as
scheduled notwithstanding such proceeding; provided, however, that Seller's
interest in all awards arising out of such proceedings shall be assigned to
Buyer as of the Closing Date or credited to Buyer if previously received by
Seller. Seller's obligations pursuant to the immediately preceding sentence
shall survive the Closing.

14. Possession. Possession of the Property (together with all keys to
the Property) shall be delivered to Buyer on the Closing Date, provided,
however, that prior to the Closing Date Seller shall afford authorized
representatives of Buyer access to the Property for purposes of satisfying Buyer
with respect to the representations, warranties and covenants of Seller
contained herein and with respect to satisfaction of any Conditions Precedent to
the Closing contained herein, including without limitation an environmental
investigation.

15. Maintenance of the Property and Property Personnel. Between
Seller's execution of this Agreement and the Closing, Seller shall maintain the
Property in good order, condition and repair, reasonable wear and tear excepted,
shall perform all work required to be performed by the landlord under the terms
of any Lease, and shall make all repairs, maintenance and replacements of the
Improvements and any Tangible Personal Property and otherwise operate the
Property in the same manner as before the making of this Agreement, as if Seller
were retaining the Property. Prior to and as of the Closing Date, Seller shall
cause all vacant units vacated more than five (5) days prior to the Closing to
be made tenant ready and available for occupancy, with carpet and vinyl
replaced, if appropriate in accordance with Seller's reasonable operating
policies. After full execution of this Agreement and until the Closing, Seller
shall maintain all existing personnel on the Property in their current
employment positions at their current (or an increased) rate of compensation.
Except as otherwise provided in this Agreement, the Property is being sold on an
"as is" basis, and the reference above to Seller's obligation to "otherwise
operate the Property in the same manner as before the making of this Agreement,
as if Seller were retaining the Property" shall be defined to mean usual daily
maintenance not involving capital expenditures for such items as roof
replacement or structural repairs.

16. Leasing; Buyer's Consent to New Contracts Affecting the Property;
Termination of Existing Contracts. Seller shall use commercially reasonable
efforts until Closing to lease any vacant space, or space becoming vacant, in
the Real Property to tenants utilizing the criteria Seller used prior to
execution of this Agreement. Seller shall not, after the date of Seller's
execution of this Agreement, enter into any lease (other than a lease of
apartment space in accordance with the immediately preceding sen tence) or
contract affecting the Property, or any amendment thereof, or permit any Tenant
to enter into any sublease, assignment or agreement pertaining to the Property,
or waive, compromise or settle any rights of Seller under any contract or Lease,
or agree to return any security deposit, or modify, amend, or terminate any
Assigned Contract, without in each case obtaining Buyer's prior written consent
thereto. Seller shall terminate prior to the Closing, at no cost or expense to
Buyer, any and all management agreements or contracts affecting the Property
that are not Assigned Contracts and deliver evidence of such termination to
Buyer.

17. Insurance. Through the Closing Date, Seller shall maintain or cause
to be maintained, at Seller's sole cost and expense:

(a) a policy or policies of insurance in amounts equal to the
full replacement value of the Improvements and the Tangible Personal Property,
insuring against all insurable risks, including,

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<PAGE> 16
without limitation, fire, vandalism, malicious mischief, lightning, windstorm,
water, earthquake and other perils customarily covered by casualty insurance and
the costs of demolition and debris removal; and

(b) a policy or policies of workers' compensation and
employers' liability insurance, commercial general liability insurance, and
automobile liability insurance, each in the amount and form maintained by Seller
prior to the date of this Agreement.

18. Cooperation with Buyer. Seller shall cooperate and do all acts as
may be reasonably required or requested by Buyer with regard to the fulfillment
of any Condition Precedent but Seller's representations and warranties to Buyer
shall not be affected or released by Buyer's waiver or fulfillment of any
Condition Precedent. Seller hereby irrevocably authorizes Buyer and its agents
to make all inquiries with and applications to any third party, including any
governmental authority, as Buyer may reasonably require to complete its due
diligence.

19. Brokers and Finders. Neither party has had any contact or dealings
regarding the Property, or any communication in connection with the subject
matter of this transaction, through any real estate broker or other person who
can claim a right to a commission or finder's fee in connection with the sale
contemplated herein except for Realty Investments ("Broker"), whose entire
commission shall be the responsibility of Seller (pursuant to separate agreement
between Seller and Broker). In the event that any other broker or finder claims
a commission or finder's fee based upon any contact, dealings or communication,
the party through whom the broker or finder makes its claim shall be responsible
for said commission or fee and all costs and expenses (including, without
limitation, reasonable attorneys' fees) in curred by the other party in
defending against the same. The party through whom any other broker or finder
makes a claim shall hold harmless, indemnify and defend the other party hereto,
its successors and assigns, agents, employees, officers and directors, and the
Property from and against any and all obliga tions, liabilities, claims,
demands, liens, encumbrances and losses (including, without limitation,
attorneys' fees), whether direct, contingent or consequential, arising out of,
based on, or incurred as a result of such claim. The provisions of this
Paragraph shall survive the Closing or termination of this Agreement.

20. Marketing. Seller agrees not to market or show the Property to any
other prospective purchasers during the term of this Agreement.

21. Publicity and Confidentiality. Seller and the Title Company each
agree that the terms of the transaction contemplated by this Agreement, the
identity of Buyer and all information made available by Buyer to Seller or the
Title Company or in any way relating to the Buyer's interest in that
transaction, shall be maintained in strict confidence and no disclosure of such
information will be made by Seller or the Title Company, whether or not the
transaction contemplated by this Agreement shall close, except to such
attorneys, accountants, investment advisors, lenders and others as are
reasonably required to evaluate and consummate that transaction. Seller and the
Title Company for themselves each further agree that nothing in this Paragraph
shall prevent Buyer, Seller or the Title Company from disclosing or accessing
any information otherwise deemed confidential under this Paragraph (a) in
connection with that party's enforcement of its rights hereunder; (b) pursuant
to any legal requirement, any statutory reporting requirement or any accounting
or auditing disclosure requirement; (c) in connection with performance by either
party of its obligations under this Agreement (including, but not limited to,
the delivery and recordation of instruments, notices or other documents required
hereunder); or (d) to potential investors, participants or assignees in or of
the transaction contemplated by this Agreement or such party's rights therein.

22. Miscellaneous.

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<PAGE> 17
(a) Notices. Any notice, consent or approval required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given upon (i) hand delivery, (ii) one business day after
being deposited with Federal Express or another reliable overnight courier
service or next day delivery or transmitted by facsimile transmission, or (iii)
two business days after being deposited in the United States mail, registered or
certified mail, postage prepaid, return receipt required, and ad dressed as
follows:

If to Seller: K. Philip Hwang and C. Gemma Hwang
- ------------ 21070 Homestead Road, Suite 105
Cupertino, CA 95014
Attention:____________________
Phone: ( ) -
Fax: ( ) -

If to Buyer: Bay Apartment Communities, Inc.
- ------------ 4340 Stevens Creek Boulevard, Suite 275
San Jose, California 95129
Attention: Mr. Gilbert M. Meyer, President
Phone: (408) 983-1500
Fax: (408) 984-7060

With a copy to: Cox, Castle & Nicholson
2049 Century Park East, Suite 2800
Los Angeles, California 90067
Attention: Scott D. Brooks, Esq.
Phone: (310) 284-2295
Fax: (310) 277-7889

or such other address as either party may from time to time specify in writing
to the other.

(b) Successors and Assigns. Buyer shall have the right to
assign this Agreement without the consent or approval of Seller. This Agreement
shall be binding upon, and inure to the benefit of, the parties hereto and their
respective successors, heirs, administrators and assigns.

(c) Amendments. Except as otherwise provided herein, this
Agreement may be amended or modified only by a written instrument executed by
Seller and Buyer.

(d) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.

(e) Merger of Prior Agreements. This Agreement and the
exhibits hereto constitute the entire agreement between the parties and
supersede all prior agreements and understandings between the parties relating
to the subject matter hereof, including without limitation, that certain Letter
of Intent dated February 6, 1996 (the "Letter of Intent") which shall be of no
further force or effect upon execution of this Agreement by Buyer.

(f) Time of the Essence. Time is of the essence of this
Agreement.

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<PAGE> 18
(g) Severability. If any provision of this Agreement, or the
application thereof to any person, place, or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect.

(h) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but any number
of which, taken together, shall be deemed to constitute one and the same
instrument.

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

BUYER: SELLER:

BAY APARTMENT COMMUNITIES, INC., /s/ K. Philip Hwang
a Maryland corporation -----------------------------------
K. PHILIP HWANG

By:/s/ Geoffrey L. Baker /s/ C. Gemma Hwang
- ---------------------------------- -----------------------------------
GEOFFREY L. BAKER, C. GEMMA HWANG
Chief Development & Acquisition Officer

[BUYER AND SELLER TO INITIAL SUB-PARAGRAPH 7(a)]

<PAGE> 1
EXHIBIT 10.2

PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS

THIS PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (this
"Agreement") is made and entered into as of the 24th day of April, 1996, by and
between TCR #706 PARKSIDE LIMITED PARTNERSHIP, a Texas limited partnership
("Seller"), and BAY APARTMENT COMMUNITIES, INC., a Maryland corporation
("Buyer").

IN CONSIDERATION of the respective agreements hereinafter set forth,
Seller and Buyer hereby agree as follows:

1. Property. Seller hereby agrees to sell and convey to Buyer, and
Buyer hereby agrees to purchase from Seller, subject to the terms and conditions
set forth herein, the following:

(a) that certain real property located at 355 N. Wolfe Road,
Sunnyvale, California, more particularly described in Schedule 1 to the "Deed"
(as hereinafter defined) attached hereto as Exhibit A and incorporated herein by
this reference (the "Land");

(b) all rights, privileges and easements appurtenant to the
Land, including, without limitation, all minerals, oil, gas and other
hydrocarbon substances on and under and that may be produced from the Land, as
well as Seller's interest in all development rights, land use entitlements,
including without limitation building permits, licenses, permits and
certificates, utilities commitments, air rights, water, water rights, riparian
rights, and water stock relating to the Land and all of Seller's right, title
and interest in and to all roads, easements, rights of way and alleys adjoining
or servicing the Land (collec tively, the "Appurtenances");

(c) all improvements and fixtures located on the Land,
including, without limitation, the building(s) located on the Land, containing
one hundred ninety-two (192) units, and all Seller's right, title and interest
in and to all apparatus, equipment and appliances used in connection with the
operation or occupancy of the Land, such as heating and air conditioning systems
and facilities used to provide any utility, refrigeration, ventilation, garbage
disposal, recreation or other services on the Land, and along with all on-site
parking (collectively, the "Improvements", and together with the Land and
Appurtenances, the "Real Property");

(d) all tangible personal property owned by Seller located on
or in or used in connection with the Real Property as of the date hereof and as
of the "Closing Date" (as defined in Paragraph 8(b) below) including, without
limitation, (i) all laundry equipment (to the extent owned and not leased),
recreation equipment, pool and spa furniture and equipment, furnishings in the
on-site leasing facility, clubhouse and fitness center, and all air
conditioners, refrigerators, dishwashers, ovens/ranges, microwaves and
washer/dryer units located in the rental units, and (ii) all those items
described in Schedule 2 to the "Bill of Sale" (as hereinafter defined) attached
hereto as Exhibit B (collectively, the "Tangible Personal Property"); and

(e) Seller's right, title and interest in and to the right to
use the name "Parkside Commons Apartments", the lessor's interest in and to all
tenant leases, rental agreements, subleases and tenancies granting a right to
use or occupy any portion of the Real Property and all amendments,
modifications, agreements, records, substantive correspondence, and other
documents affecting the same in any way (individually and collectively, the
"Leases"), and Seller's interest in all security deposits and
<PAGE> 2
prepaid rent, if any, under the Leases (provided that Seller's interest in such
security deposits and prepaid rent shall not be paid in cash to Buyer upon the
Closing but instead shall be transferred in the form of a credit against the
Purchase Price pursuant to Paragraph 8(e) below) and any and all guaranties of
the Leases, and Seller's interest under all "Warranties", "Service Contracts"
and assignable "Permits", as such terms are hereinafter defined (collectively,
the "Intangible Property", and together with the Tangible Personal Property, the
"Personal Property").

All of the items referred to in Subparagraphs (a), (b), (c), (d) and
(e) above are collectively referred to herein as the "Property".

2. Purchase Price.

(a) The purchase price of the Property is Twenty-Five Million
Five Hundred Thousand Dollars ($25,500,000.00), subject to reduction by any
credits due Buyer hereunder (the "Purchase Price").

(b) The Purchase Price shall be paid as follows:

(i) Within three (3) business days following the
execution of this Agreement. Buyer shall open an escrow in connection herewith
("Escrow"), at First American Title Guaranty Company, at 1850 Mt. Diablo
Boulevard, Suite 300, Walnut Creek, California 94596 ("Escrow Holder"), and
deposit into Escrow cash in the amount of Two Hundred Thousand Dollars
($200,000.00) (the "Initial Deposit"). Upon the expiration of the Due Diligence
Period, if this Agreement is not earlier terminated, Buyer shall deposit into
Escrow cash in the amount of One Hundred Thousand Dollars ($100,000.00) (the
"Additional Deposit"). As used in this Agreement, the "Deposit" shall mean the
Initial Deposit, plus, if and when made pursuant hereto, the Additional Deposit.
The Deposit shall be held by Escrow Holder in an interest-bearing account for
Buyer's benefit. The Deposit and all interest earned thereon shall be applied
towards the Purchase Price at Closing; provided, however, if this Agreement is
terminated for any reason other than a default by Buyer, the Deposit along with
all interest earned thereon shall be returned to Buyer.

(ii) On or before the Closing, if this Agreement has
not been earlier terminated, Buyer shall deposit into Escrow cash in the amount
of the balance of the Purchase Price, less any credits due Buyer hereunder (the
"Closing Amount"). The Closing Amount shall be applied towards the Purchase
Price at Closing; provided, however, that if this Agreement is terminated for
any reason other than a default by Buyer, the Closing Amount shall be returned
to Buyer.

3. Title to the Property.

(a) At the Closing, Seller shall convey to Buyer marketable
and insurable fee simple title to the Real Property and Improvements, by duly
executed and acknowledged grant deed substantially in the form attached hereto
as Exhibit A and incorporated herein by this reference (the "Deed"). Evidence of
delivery of marketable and insurable fee simple title shall be the issuance by
First American Title Guaranty Company (the "Title Company") to Buyer of an ALTA
Owner's Policy of Title Insurance (Form B, rev. 10/17/70) in the amount of the
Purchase Price, insuring fee simple title to the Real Property and Improvements
in Buyer, subject only to such exceptions as allowed by Paragraph 4 below and
without boundary, encroachment or survey exceptions (the "Title Policy"). The
Title Policy shall provide full coverage against mechanics' and materialmen's
liens and shall contain such special endorsements as Buyer may reasonably
require, including, without limitation, any endorsements required as a condition
to Buyer's approval of any title exceptions pursuant to Paragraph 4 below,
provided that the Title Company will issue such endorsements (the
"Endorsements").

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(b) At the Closing, Seller shall transfer title to the
Tangible Personal Property by a bill of sale in the form attached hereto as
Exhibit B and incorporated herein by this reference (the "Bill of Sale"), such
title to be free of any liens, encumbrances or interests.

(c) At the Closing (i) Seller shall transfer title to the
Intangible Property (except the Leases) by an assignment of intangible property
in the form attached hereto as Exhibit C and incorporated herein by this
reference (the "Assignment of Intangible Property") and (ii) Seller shall
transfer title to the Leases by an assignment of Leases in the form attached
hereto as Exhibit D and incorporated herein by this reference (the "Assignment
of Leases"), such title in each case to be free of any liens, encumbrances or
interests.

4. Due Diligence. As used herein, the term "Due Diligence Period" shall
refer to a period of time to expire thirty (30) days after the date of this
Agreement. Buyer may elect, by written notice to Seller at any time prior to the
expiration of the Due Diligence Period, to terminate this Agreement, which
election shall be in Buyer's sole and absolute discretion. If Buyer desires to
proceed with the purchase of the Property subject to the remaining conditions
set forth in this Agreement (including, without limitation, pursuant to
Paragraph 6 below), then on or before the expiration of the Due Diligence
Period, Buyer shall deliver written notice to Seller of such election to proceed
(the "Buyer's Notice to Proceed"), electing to waive Buyer's right of
termination pursuant to this Paragraph 4 and proceed with the Closing subject to
the remaining conditions set forth in this Agreement. Buyer's Notice to Proceed
shall specify in writing the terms for the Title Policy (including, without
limitation, approved exceptions and any required Endorsements) consistent with
this Agreement. In any event, Seller, at Seller's sole cost (including, without
limitation, costs of any prepayment and/or yield maintenance fees), covenants to
cause to be released and reconveyed from the Property, and to remove as
exceptions to title prior to the Closing, any mortgages, deeds of trust, or
other monetary encumbrances or indebtedness shown on the Preliminary Report
except for real property taxes and assessments not delinquent. If Buyer fails to
deliver Buyer's Notice to Proceed to Seller prior to the expiration of the Due
Diligence Period electing to waive Buyer's right of termination pursuant to this
Paragraph 4, then Buyer shall be deemed to have elected to terminate this
Agreement. In the event of the termination of this Agreement pursuant to this
Paragraph 4, the Deposit plus all interest accrued thereon shall be returned to
Buyer and neither party shall have any further obligations to the other
hereunder (except under provisions of this Agreement which specifically state
that they survive termination).

5. Seller's Deliveries. Seller shall deliver or cause to be delivered
to Buyer all of the following (collectively, the "Due Diligence Materials") at
Seller's sole cost and expense by not later than three (3) days after the date
of this Agreement:

(b) to the extent in Seller's possession or control and to the
extent Seller has actual knowledge of the existence of any of the same, copies
of any and all existing and proposed easements, covenants, restrictions,
agreements or other documents which affect title to the Property and which are
not disclosed by the Preliminary Report;

(c) any existing survey(s) of the Real Property in Seller's
possession or control, including, without limitation, any "as-built" survey of
the Real Property (the parties agreeing that to the extent that Seller does not
have a survey within its possession or control sufficient to provide the basis
for

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<PAGE> 4
the issuance of the Title Policy, Buyer shall promptly obtain any necessary
update or new survey required to provide the basis for the issuance of the Title
Policy, and Seller and Buyer shall each be responsible for fifty percent (50%)
of the costs thereof);

(d) copies of the most recent property tax and assessment
bills for the Property;

(e) all presently effective warranties or guaranties from any
contractors, subcontractors, suppliers, servicemen or materialmen not affiliated
with Seller in connection with any of the Tangible Personal Property or any
construction, renovation, repairs or alterations of the Improvements that can be
assigned by Seller (collectively, the "Warranties");

(f) a schedule (the "Schedule of Agreements") setting forth a
list of all of the service contracts, utility contracts, maintenance contracts,
equipment leases, and brokerage and leasing commission agreements in any way
related to the Property (collectively, the "Service Contracts"), together with
copies of all such Service Contracts. Unless Buyer specifically provides Seller
with "written notice to the contrary" (as hereinafter defined), in the event of
the Closing of the purchase of the Property, Buyer shall not retain the existing
employees and leasing and management agents of Seller for the Property, and,
accordingly, on or prior to the Closing, Seller shall (i) cause all employment,
management and leasing agreements respecting the Property to be terminated, and
deliver evidence of such termination to Buyer, (ii) remove all employees and
management and leasing personnel from the Property, and (iii) deliver any rental
units within the Property previously occupied by such employees and/or
management and/or leasing personnel in a vacant and tenant-ready condition.
Buyer's "written notice to the contrary" pursuant hereto shall be made only by
delivery to Seller of a copy of a written agreement or letter of employment with
or to such employee and/or management and/or leasing agent executed by Buyer;

(g) to the extent available, insurance claims history for the
three (3) most recent calendar years prior to Closing and for the current year;

(h) to the extent in Seller's possession or control,
environmental reports, environmental audits, soils reports, site plans (with
dimensions), engineering reports and plans, traffic reports, landscape plans,
structural calculations, floor plans, as-built plans and specifications, and
copies of final certificates of occupancy for all improvements;

(i) a complete inventory of all Tangible Personal Property;

(j) a complete list of Seller's and/or Seller's property
manager's employees at the Property, specifying the current compensation of
each;

(k) operating statements for the three (3) most recent
calendar years prior to Closing and, to the extent available, the current year
through March 31, 1996, all of which shall be certified by Seller as true and
correct in all material respects;

(l) a copy of the budget for the current year;

(m) (i) a copy of the current standard lease form; and (ii) a
current rent roll of the Property, listing for each tenant the name, unit number
of leased premises, rent, amount of security deposit and rent paid more than
thirty (30) days in advance, lease commencement date, lease termination date,
any free rent or other unexpired concessions, if any, any refurbishment or
renovation obligations owed to tenants, and a description of any uncured
monetary defaults (the "Rent Roll"); and, in addition to the

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<PAGE> 5
foregoing, Buyer shall have the right to review at Seller's management office
for the Property, copies of all existing and pending Leases, lease files and
tenant correspondence; and

(n) all governmental permits and approvals held by Seller
relating to the construction, operation, use or occupancy of the Property,
including without limitation, all certificates of occupancy (in dividually and
collectively "Permits").

In addition, Seller shall promptly deliver to Buyer such other
non-confidential information relating to the Property that is specifically
requested by Buyer of Seller in writing during the Due Diligence Period to the
extent such information is in the possession or control of Seller (collectively,
the "Other Documents").

(a) Buyer's inspection, review and approval, within the Due
Diligence Period, of all of the following:

(i) The structural, mechanical, electrical and other
physical characteristics and condition of the Property (including without
limitation the condition of the soils);

(ii) The Due Diligence Materials and the Other
Documents;

(iii) An examination for the presence or absence of
"Hazardous Materials" (as hereinafter defined), which shall be performed or
arranged by Buyer at Buyer's sole expense;

(iv) All housing, zoning, land-use, subdivision,
environmental, life safety, handicapped, building and construction laws and
regulations restricting or regulating or otherwise affecting the use, occupancy
or enjoyment of the Property (including without limitation the Americans With
Dis abilities Act of 1990 ("ADA") and the Fair Housing Amendments Act of 1988
("FHAA")); and

(v) Three (3) years' audited financial statements of
the Seller, which (if the same do not exist) may, at Buyer's option, be
performed or arranged by Buyer at Buyer's cost (provided that Seller shall and
hereby agrees to provide reasonable cooperation with Buyer and its
representatives and provide them with access to Seller's records containing
necessary information in connection therewith).

By delivery of the Notice to Proceed, Buyer shall be deemed to have
satisfied the Condition Precedent set forth in this subparagraph (a).

(b) The physical condition of the Property shall be
substantially the same on the day of Closing as on the date of Buyer's execution
of this Agreement, reasonable wear and tear and loss by casualty (subject to the
provisions of Paragraph 13 below) excepted.

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<PAGE> 6
(c) As of the Closing Date, there shall be no litigation or
administrative agency or other governmental proceeding of any kind whatsoever,
pending or threatened against Seller or the Property, which after Closing would,
in Buyer's reasonable judgment, materially adversely affect the value of the
Property or the ability of Buyer to operate the Property in the manner in which
it is currently being operated, and no proceedings shall be pending or
threatened which could or would cause the redesignation or other modification of
the zoning classification of, or of any building or environmental code
requirements applicable to, any of the Property.

(d) Seller shall have provided Buyer with an accurate and
current updated Rent Roll dated within five (5) days prior to Closing, which
updated Rent Roll will be used to identify all Leases of space at the Property
for purposes of this Agreement, and a certificate executed by Seller certifying
that such updated Rent Roll is true and correct in all material respects
(including, without limitation, the amount of Security Deposits and description
of uncured tenant defaults in payment of rent listed thereon).

(e) Seller shall have fully complied with all of Seller's
duties and obligations contained in this Agreement.

(f) All of Seller's representations and warranties contained
in or made pursuant to this Agreement shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects as of the Closing Date and Seller shall have delivered to Buyer a
certificate to such effect.

(g) Title Company shall have unconditionally committed to
issue the Title Policy at the Closing in the form approved by Buyer during the
Due Diligence Period in accordance with this Agreement.

7. Remedies.

(a) IN THE EVENT THE SALE OF THE PROPERTY IS NOT CONSUMMATED
BECAUSE OF THE FAILURE OF ANY CONDITION OR ANY OTHER REASON EXCEPT A DEFAULT
UNDER THIS AGREEMENT SOLELY ON THE PART OF BUYER, THE DEPOSIT PLUS INTEREST
ACCRUED THEREON SHALL IMMEDIATELY BE RETURNED TO BUYER. IF SAID SALE IS NOT
CONSUMMATED SOLELY BECAUSE OF A DEFAULT UNDER THIS AGREEMENT ON THE PART OF
BUYER, THE DEPOSIT AND THE INTEREST ACCRUED THEREON SHALL BE PAID TO AND
RETAINED BY SELLER AS LIQUIDATED DAMAGES. THE PARTIES HAVE AGREED THAT SELLER'S
ACTUAL DAMAGES, IN THE EVENT THE SALE OF THE PROPERTY IS NOT CONSUMMATED BECAUSE
OF A DEFAULT BY BUYER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO
DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE
THAT THE DEPOSIT PLUS INTEREST ACCRUED THEREON HAS BEEN AGREED UPON, AFTER
NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES AND AS
SELLER'S SOLE AND EXCLUSIVE REMEDY AGAINST BUYER, AT LAW OR IN EQUITY, IN THE
EVENT THE SALE OF THE PROPERTY IS NOT CONSUMMATED BECAUSE OF A DEFAULT UNDER
THIS AGREEMENT ON THE PART OF BUYER. SELLER HEREBY WAIVES ANY AND ALL BENEFITS
IT MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 3389.

INITIALS: Seller _________ Buyer __________

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(b) In the event the sale of the Property is not consummated
due to Seller's default under this Agreement, Buyer may, in its sole and
absolute discretion, avail itself of any and all other legal and equitable
remedies available under California law to a buyer of real property upon a
default by a seller, including, without limitation, the right to terminate the
contract and recover all damages and the right to continue this Agreement
pending Buyer's action for specific performance and/or damages hereunder, and no
such remedy shall be deemed exclusive or to preclude the pursuit of any other
remedy.

(c) Buyer agrees that under no circumstance shall Buyer be
entitled to have recovery in respect of Seller's obligations under this
Agreement from the limited partners of Seller or, except to the extent of their
obligations for funding under promissory notes issued to Seller's general
partner, the shareholders of Seller's general partner. Buyer hereby waives any
right that it otherwise would have to proceed for recovery in respect of
Seller's obligations under this Agreement against the limited partners of Seller
or, except as specifically provided above, the shareholders of Seller's general
partner.

8. Escrow; Closing.

(b) The parties intend for the Closing to take place on May
21, 1996 or an earlier date mutually agreed upon by the parties (the "Closing
Date"). Subject to the provisions of Paragraph 7 above, in the event the Closing
does not occur on or before the Closing Date, Escrow Holder shall, unless it is
notified by both parties to the contrary within five (5) days after the Closing
Date, return to the depositor thereof items which were deposited hereunder
(except that the Deposit shall be applied or refunded, as applicable, as
otherwise provided in this Agreement). Any such return shall not, however,
relieve either party of any liability it may have for its wrongful failure to
Close.

(i) a duly executed and acknowledged Deed;

(ii) a duly executed Bill of Sale;

(iii) originals of all Leases and two duly executed
and acknowledged counterpart originals of the Assignment of Leases;

(iv) originals of the Assigned Contracts and two duly
executed counterpart originals of the Assignment of Intangible Property;

(v) a duly executed affidavit that Seller is not a
"foreign person" within the meaning of Section 1445(e)(3) of the Internal
Revenue Code of 1986 in the form attached as Exhibit F and

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<PAGE> 8
incorporated herein by this reference together with a duly executed California
Franchise Tax Board Form 590;

(vi) originals of the certificates of occupancy for
the Improvements and, to the extent existing in Seller's possession or control,
originals of the building permits for the Improvements;

(vii) notices to the Tenants of the occurrence of the
sale of the Property in a form designated by Buyer and reasonably approved by
Seller during the Due Diligence Period;

(viii) such resolutions, authorizations, bylaws or
other corporate and/or partnership documents or agreements relating to Seller
and its partners as shall be reasonably required by the Title Company;

(x) a closing statement in form and content
satisfactory to Buyer and Seller (the "Closing Statement") duly executed by
Seller; and

(xi) any other instruments, records or correspondence
called for hereunder which have not previously been delivered.

Buyer may waive compliance on Seller's part under any of the foregoing items by
an instrument in writing.

(d) At or before the Closing, Buyer shall deliver to Escrow
Holder or Seller the following:

(i) the Closing Statement, duly executed by Buyer;

(ii) the Closing Amount;

(iii) two duly executed counterpart originals of the
Assignment of Leases; and

(iv) two duly executed counterpart originals of the
Assignment of Intangible Property.

(e) (i) The following are to be apportioned as of the
Closing Date, with Buyer being deemed to own the Property for the entire day of
the Closing Date, as follows:

(1) Rent. Rent under the Leases shall be
apportioned as of the Closing Date, based upon actual collections. With respect
to any rent arrearages arising under the Leases, after Closing, Buyer shall pay
to Seller any rent actually collected which is applicable to the period
preceding the Closing Date; provided, however, that all rent collected by Buyer
shall be applied first to all unpaid rent accruing after the Closing Date, and
then to unpaid rent accruing prior to the Closing Date. Buyer shall not be
obligated to take any steps to recover any rent arrearages. Seller shall be
permitted to pursue its own remedies for collection of any rent arrearages
applicable to the period prior to the Closing Date against tenants no longer in
occupancy of the Property provided that Buyer shall incur no cost, expense

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<PAGE> 9
or liability in connection therewith, but Seller shall not be permitted to take
any action or enforce any legal or equitable remedies (specifically including
commencing eviction procedures) against tenants remaining in occupancy of the
Property.

(3) Security Deposits. Buyer shall be entitled
to a credit against the Purchase Price for the total sum of all refundable
security deposits paid to Seller by tenants under any Leases, and any interest
earned thereon, less the portion thereof, if any, which has theretofore been
returned to the applicable tenants or applied against the applicable tenants'
obligations in accordance with their respective Leases.

(6) Real Estate Taxes and Special Assessments.
General real estate taxes and assessments payable for the fiscal year in which
the Closing occurs shall be prorated by Seller and Buyer as of the Closing Date,
with Seller being liable for all such real estate taxes and assessments with
respect to the period before the Closing Date and Buyer being liable for all
such real estate taxes and assessments with respect to the period on or after
the Closing Date.

(9) Post-Closing Reconciliation. If any of the
aforesaid prorations cannot be definitely calculated on the Closing Date, or if
after the Closing Date any error in prorations is discovered, then they shall be
estimated at the Closing and definitely calculated as soon after the Closing
Date as feasible. As soon as the necessary information is available, Buyer shall
conduct a post-Closing audit to determine the accuracy of all prorations (the
"Post-Closing Audit"). Either party owing the other party a sum of money based
on such subsequent proration(s) or the Post-Closing Audit shall promptly pay

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<PAGE> 10
said sum to the other party, together with interest thereon at the rate of two
percent over the "prime rate" (as announced from time to time in the Wall Street
Journal) per annum from the Closing Date to the date of payment if payment is
not made within ten (10) days after delivery of a bill therefor.

(ii) Closing Costs. Seller shall pay any City and/or
County transfer taxes and/or transfer fees applicable to the sale of the
Property, and the portion of the premium for the Title Policy allocable to CLTA
coverage (with no endorsements). Buyer shall pay the portion of the premium for
the Title Policy allocable to ALTA coverage and the cost of any Endorsements
requested by Buyer. Buyer and Seller shall each pay fifty percent (50%) of the
cost of the ALTA survey or survey update (as applicable) in connection with the
issuance of the Title Policy, the fees of Escrow Holder, and recording fees for
recording of the Deed. In addition, Seller shall be liable for any prepayment
fee or other charge payable in connection with the payoff of any existing
indebtedness. All other costs and charges in connection with the purchase and
sale of the Property contemplated by this Agreement not otherwise provided for
in this Agreement shall be allocated in accordance with the closing customs for
Santa Clara County. Buyer and Seller shall each be responsible for their
respective legal fees to negotiate and execute this Agreement, to complete the
transfer of the Property and, in the case of Buyer, to perform its due diligence
review.

(iii) Survival. The provisions of this Subparagraph
(e) shall survive the Closing.

9. Representations, Warranties and Covenants of Seller.

(a) As of the date hereof, Seller represents and warrants to,
and covenants with, Buyer as follows:

(i) Seller has not received written notice of, and
otherwise has no actual knowledge of, any material structural, building-system
or mechanical defects of the Property, including, without limitation, the
load-bearing components of the Property, the parking lots, the plumbing,
heating, air conditioning and electrical and life safety systems and building
roofs.

(ii) Seller has not received written notice of, and
otherwise has no actual knowledge of, (A) any non-compliance of the Property or
the operation thereof with applicable housing and building codes, environmental,
zoning and life safety laws, laws, rules and regulations related to handicapped
or disabled (including without limitation the ADA and the FHAA), land use laws
and regulations, and other applicable local, state and federal laws, codes,
requirements and/or regulations (collectively, the "Laws"), or (B) any order or
directive of the applicable Department of Building and Safety, Health Department
or any other municipal, county, state or federal authority that any work or
repair, maintenance or improvement is required to be performed on the Property.

(iii) Seller has not received written notice of, and
otherwise has no actual knowledge of, any material misstatement contained in any
of the Due Diligence Materials provided by Seller for Buyer's review. Except as
set forth on Exhibit E attached hereto, Seller has not received written notice
of, and otherwise has no actual knowledge of any default in payment of rent
under the Leases or any material defaults by any of the parties to any of the
contracts or agreements respecting the Property to be assigned to Buyer at
Closing. The Rent Roll is true and correct in all material respects and there
are no free rent, abatements, rebates, allowances, or other unexpired
concessions or rights under any existing Leases except as specifically set forth
in the Rent Roll. No brokerage, finder's or similar fee or commission is due or
unpaid by Seller with respect to any Lease of the Property. The Lease files

<PAGE> 11
maintained at the Property contain all of the information pertaining to any
rights of any parties to occupy all or any part of the Property.

(iv) Seller has not received written notice of, and otherwise
has no actual knowledge of, (A) any litigation or condemnation, environmental,
zoning or other land-use regulation proceedings, either instituted or planned to
be instituted, against Seller or the Property which would materially and
adversely affect the ownership, use, operation or value of the Property, or (B)
any special assessment proceedings affecting the Property. Seller shall notify
Buyer promptly of any such litigation or proceedings of which Seller becomes
aware prior to the Closing.

(v) Except as disclosed in the reports listed on Exhibit G,
neither Seller nor, to Seller's actual knowledge, any prior owner or occupant of
the Property has engaged in or permitted any activity on the Property involving
the handling, manufacture, treatment, storage, use, release, or disposal of any
"Hazardous Materials" (as hereinafter defined) in violation of applicable
federal, state or local Laws relating to the protection of the environment.
Except as disclosed in the reports listed on Exhibit G, Seller has not received
written notice, and otherwise has no actual knowledge, that removal or other
remedial action with respect to Hazardous Materials in, on, under or about the
Property is required by any governmental authority having jurisdiction over the
Property. For purposes of this Agreement, the term "Hazardous Materials" shall
mean any asbestos, petroleum, petroleum products, underground storage tanks now
or previously containing Hazardous Materials, substances defined as "hazardous
substances", "hazardous waste" or "toxic substances" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Sec. 9601, et seq.; Hazardous Materials Transportation Act, 49 U.S.C.
Sec. 1801; and Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6901 et
seq.; and other substances defined as hazardous waste and hazardous substances
in applicable state or local laws relating to the protection of the environment
and/or in any regulations and publications promulgated pursuant to said laws.

(vi) Seller is a limited partnership, duly organized and
validly existing and in good standing under the laws of the State of Texas and
in good standing under the laws of the State of California; this Agreement and
all documents executed by Seller which are to be delivered to Buyer at the
Closing are and at the time of Closing will be duly executed and delivered by
Seller, and do not and at the time of Closing will not violate any provision of
any material agreement or any judicial order to which Seller or the Property is
subject. Seller has obtained all necessary authorizations, approvals and
consents to the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby.

(vii) Seller has not granted any option or right of first
refusal or first opportunity to any party to acquire any interest in any of the
Property.

(b) For purposes of this Agreement, whenever the phrase "to Seller's
actual knowledge" or words of similar import are used, they shall be deemed to
refer to the actual knowledge of Bruce Dorfman, William W. Thompson and Bob
Talbott.

(c) BUYER ACKNOWLEDGES THAT, EXCEPT FOR THE REPRESENTATIONS, WARRANTIES
AND COVENANTS OF SELLER SET FORTH IN THIS AGREEMENT, THE PROPERTY IS BEING
PURCHASED ON AN "AS IS" BASIS, AND THAT NO REPRESENTATIONS OR WARRANTIES HAVE
BEEN MADE BY SELLER EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT. IN
CONNECTION WITH THE PURCHASE OF THE PROPERTY, BUYER WAIVES ALL IMPLIED
WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY AND

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FITNESS FOR A PARTICULAR USE OR PURPOSE. EXCEPT TO THE EXTENT RELATING TO (A)
ANY BREACH OF ANY OF SELLER'S REPRESENTATIONS, WARRANTIES AND/OR COVENANTS UNDER
THIS AGREEMENT AND/OR (B) ANY GOVERNMENTAL OR OTHER THIRD PARTY CLAIMS OR
ACTIONS AGAINST BUYER, BUYER (ON BEHALF OF ITSELF AND ALL SUCCESSOR OWNERS OF
THE PROPERTY) WAIVES ALL RECOURSE (INCLUDING, WITHOUT LIMITATION, RIGHTS TO
INDEMNITY, CONTRIBUTION, REIMBURSEMENT, EQUITABLE APPORTIONMENT AND RECOVERY FOR
DIMINUTION IN VALUE OF THE PROPERTY, REGARDLESS OF WHETHER SUCH RIGHTS OTHERWISE
WOULD BE AVAILABLE BY STATUTE, AS A MATTER OF COMMON LAW, BASED UPON TORT
PRINCIPLES OR OTHERWISE) AGAINST SELLER AND ITS AFFILIATES (INCLUDING THE
GENERAL CONTRACTOR FOR THE ORIGINAL CONSTRUCTION OF THE PROPERTY), FOR LOSSES,
DAMAGES, COSTS, EXPENSES AND OTHER MATTERS ARISING OUT OF OR RELATING TO (1) THE
CONDITION OF THE PROPERTY OR ANY LATENT DEFECTS IN THE PROPERTY OR (2) HAZARDOUS
MATERIALS OR ENVIRONMENTALLY-SENSITIVE CONDITIONS EXISTING IN, ON, UNDER OR
ABOUT THE PROPERTY (INCLUDING IN THE SOIL, SOIL VAPOR OR GROUND WATER UNDER THE
PROPERTY) OR VIOLATIONS OF APPLICABLE FEDERAL, STATE OR LOCAL LAWS RELATING TO
THE PROTECTION OF THE ENVIRONMENT. BUYER WAIVES APPLICATION OF CALIFORNIA CIVIL
CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR EXPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."

THE PERSON EXECUTING THIS AGREEMENT ON BEHALF OF BUYER HAS INITIALED BELOW, ON
BEHALF OF BUYER, TO SPECIFICALLY INDICATE SUCH WAIVER.

Initials of Buyer

10. Representations and Warranties of Buyer. Buyer hereby represents
and warrants to Seller as follows: Buyer is a corporation duly organized and
validly existing and in good standing under the laws of the State of Maryland
and in good standing under the laws of the State of California; this Agreement
and all documents executed by Buyer which are to be delivered to Seller at the
Closing are or at the time of Closing will be duly authorized, executed and
delivered by Buyer, and do not and at the time of Closing will not violate any
provisions of any agreement or judicial order to which Buyer is subject; and
Buyer has obtained all necessary authorizations, approvals and consents to the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.

11. Continuation and Survival. All representations, warranties and
covenants by the respective parties contained herein are intended to and shall
be deemed made as of the date of this Agreement, shall be deemed to be material,
and unless expressly provided to the contrary shall survive the execution and
delivery of this Agreement and the Deed and the Closing but only for a period of
twelve (12) months after the Closing Date.

12. Indemnity.

(a) Except for "Losses and Liabilities" (as hereinafter defined)
arising directly or indirectly from a breach of any of Buyer's representations
or warranties and subject to the provisions of

12
<PAGE> 13
Paragraph 9(c) above, Seller shall hold harmless, indemnify and defend Buyer,
its successors and assigns and their respective agents, employees, officers and
directors, from and against any and all obligations, liabilities, claims, liens,
encumbrances, demands, losses, damages, causes of action, judgments, costs and
expenses (including, without limitation, attorneys' fees and expenses), whether
direct, contingent or consequential and no matter how arising ("Losses and
Liabilities") in any way (i) related to the Property and attributable to the
period prior to the Closing (except to the extent arising as a result of the
acts of Buyer and/or any of Buyer's employees, agents or representatives);
and/or (ii) resulting from any breach of any representations and warranties by
Seller set forth in this Agreement.

(b) Except for Losses and Liabilities arising directly or
indirectly from a breach of any of Seller's representations or warranties, Buyer
shall hold harmless, indemnify and defend Seller and each person who holds a
direct or indirect ownership interest in Seller, their respective successors and
assigns, and their respective agents, employees, officers and directors, from
and against any and all Losses and Liabilities in any way (i) related to the
Property and attributable to the period from and after the Closing during
Buyer's period of ownership of the Property (except to the extent arising as a
result of the acts from and after the Closing of Seller and/or any of Seller's
employees, agents or representatives); (ii) resulting from any breach of any
representations and warranties by Buyer set forth in this Agreement; and/or
(iii) resulting from the entry onto the Property prior to the Closing by Buyer,
its contractors and/or their respective employees, agents, and/or
representatives (other than as to the discovery of pre-existing conditions).

(c) As a condition to the obligation of a party (an "Indemnitor")
to provide indemnity, defense or reimbursement of defense-related costs pursuant
to this Agreement (including, without limitation, under Paragraph 12(a) or
Paragraph 12(b) above), the person seeking indemnity, defense or reimbursement
(an "Indemnitee") shall give the Indemnitor prompt notice of any claim or
proceeding in respect of which indemnity, defense or reimbursement will be
sought; provided that the failure to provide such notice will excuse performance
by the Indemnitor only to the extent that the Indemnitor's defense against the
related claim is prejudiced. An Indemnitor will have the right to assume and
control (with counsel selected by Indemnitor, subject to the reasonable approval
of the Indemnitee) the investigation, defense and settlement of any claim in
respect of which the Indemnitor is obligated to provide indemnity, defense or
reimbursement of defense-related costs. In any case, an Indemnitor will not be
liable for any settlement made without its consent.

(d) The provisions of this Paragraph 12 shall survive the Closing
or earlier termination of this Agreement.

13. Casualty or Condemnation.

(a) In the event any of the Property is damaged and/or destroyed by
fire or other casualty prior to the Closing Date, and the cost to repair and/or
restore such damage and/or destruction (which cost, for purposes of this
Paragraph 13, shall be deemed to include reasonably anticipated post-Closing
rental loss not compensated by insurance through completion of such repair
and/or restoration) exceeds One Hundred Thousand Dollars ($100,000.00), then
Buyer shall have the right to terminate this Agreement by written notice to
Seller within ten (10) business days after Buyer's first learning of the
occurrence of such casualty. In the event of any such termination, the Deposit,
together with all interest accrued thereon, shall be returned to Buyer, Buyer
and Seller shall each be liable for one-half of any escrow fees or charges, and
neither party shall have any further liability or obligation under this
Agreement (except under provisions of this Agreement which specifically state
that they survive termination).

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<PAGE> 14
(b) In the event any of the Property is damaged and/or destroyed by
fire or other casualty prior to the Closing Date where (i) the cost to repair
and/or restore such damage and/or destruction does not exceed One Hundred
Thousand Dollars ($100,000.00), or (ii) the cost to repair and/or restore such
damage and/or destruction exceeds One Hundred Thousand Dollars ($100,000.00) but
this Agreement is not terminated pursuant to Paragraph 13(a) above as a result
thereof, then the Closing Date shall occur as scheduled notwithstanding such
damage; provided, however, that Seller's interest in all proceeds of insurance
payable by reason of such casualty (except proceeds applied to the repair or
restoration of the Property and rental loss insurance proceeds attributable to
the period prior to the Closing) shall be assigned to Buyer as of the Closing
Date or credited to Buyer if previously received by Seller, and Seller shall be
responsible for any insurance deductible (but not any uninsured casualty).
Seller's obligations pursuant to the immediately preceding sentence shall
survive the Closing.

(c) In the event a governmental entity commences eminent domain
proceedings to take any portion of the Property after the date hereof and prior
to the Closing Date, then Buyer shall have the option to terminate this
Agreement by written notice to Seller within ten (10) business days after Buyer
first learns of such commencement. In the event of any such termination, the
Deposit, together with all interest accrued thereon, shall be returned to Buyer,
Buyer and Seller shall each be liable for one-half of any escrow fees or
charges, and neither party shall have any further liability or obligation under
this Agreement (except under provisions of this Agreement which specifically
state that they survive termination).

(d) In the event a governmental entity commences eminent domain
proceedings to take any part of the Property after the date hereof and prior to
the Closing Date and this Agreement is not terminated pursuant to Paragraph
13(c) above as a result thereof, then the Closing Date shall occur as scheduled
notwithstanding such proceeding; provided, however, that Seller's interest in
all awards arising out of such proceedings shall be assigned to Buyer as of the
Closing Date or credited to Buyer if previously received by Seller. Seller's
obligations pursuant to the immediately preceding sentence shall survive the
Closing.

14. Possession. Possession of the Property (together with all keys to
the Property in Seller's possession or control) shall be delivered to Buyer on
the Closing Date, subject to the rights of tenants under the Leases. Prior to
the Closing Date Seller shall afford authorized representatives of Buyer access
to the Property for purposes of satisfying Buyer with respect to the
representations, warranties and covenants of Seller contained herein and with
respect to satisfaction of any Conditions Precedent to the Closing contained
herein, including without limitation an environmental investigation, provided
that any intrusive or destructive testing (including any soil borings in
connection with Buyer's environmental review) must be approved by Seller in
advance.

15. Maintenance of the Property and Property Personnel. Between
Seller's execution of this Agreement and the Closing, Seller shall maintain the
Property in good order, condition and repair, reasonable wear and tear and
casualty losses excepted, shall perform all work required to be performed by the
landlord under the terms of any Lease, and shall make all repairs, maintenance
and replacements of the Improvements and any Tangible Personal Property and
otherwise operate the Property in a manner consistent with Seller's operating
policies as before the making of this Agreement, as if Seller were retaining the
Property. Prior to and as of the Closing Date, Seller shall cause all vacant
units vacated more than five (5) days prior to the Closing to be made tenant
ready and available for occupancy, with carpet and vinyl replaced, if
appropriate, in accordance with Seller's operating policies. After full
execution of this Agreement and until the Closing, Seller shall maintain all
existing personnel on the Property (except personnel who resign) in their
current employment positions at their current (or an increased) rate of
compensation.

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<PAGE> 15
16. Leasing; Buyer's Consent to New Contracts Affecting the Property.
Seller shall not, after the date of Seller's execution of this Agreement, enter
into any lease (other than a lease of apartment space on terms consistent with
Seller's current leasing policies) or contract affecting the Property, or any
amendment thereof, or waive, compromise or settle any rights of Seller under any
contract or Lease, or agree to return any security deposit (except as required
by the applicable Lease), or modify, amend, or terminate any Service Contract,
without in each case obtaining Buyer's prior written consent thereto.

17. Insurance. Through the Closing Date, Seller shall maintain or cause
to be maintained, its current insurance coverage at Seller's sole cost and
expense.

18. Cooperation with Buyer. Seller shall reasonably cooperate and do
all acts as may be reasonably required or requested by Buyer with regard to the
fulfillment of any Condition Precedent, without cost to Seller, but Seller's
representations and warranties to Buyer shall not be affected or released by
Buyer's waiver or fulfillment of any Condition Precedent. Seller hereby
authorizes Buyer and its agents to make all reasonable inquiries with and
applications to any third party, including any governmental authority, as Buyer
may reasonably require to complete its due diligence.

19. Brokers and Finders. In the event that any broker or finder claims
a commission or finder's fee based upon any contact, dealings or communication
with a party, the party through whom the broker or finder makes its claim shall
be responsible for said commission or fee and all costs and expenses (including,
without limitation, reasonable attorneys' fees) incurred by the other party in
defending against the same. The party through whom any broker or finder makes a
claim shall hold harmless, indemnify and defend the other party hereto, its
successors and assigns, and their respective agents, employees, officers and
directors, from and against any and all obligations, liabilities, claims,
demands, liens, encumbrances and losses (including, without limitation,
attorneys' fees), whether direct, contingent or consequential, arising out of,
based on, or incurred as a result of such claim. The provisions of this
Paragraph shall survive the Closing or termination of this Agreement.

20. Marketing. During the term of this Agreement, Seller agrees not to
market or show the Property to any other prospective purchasers or accept any
back-up offers for the Property from any other prospective purchasers.

21. Publicity and Confidentiality. Seller and Buyer each agrees that
the terms of the transaction contemplated by this Agreement, the existence of
this Agreement and all information made available by one party to the other
shall be maintained in strict confidence and no disclosure of such information
will be made by Seller or Buyer, whether or not the transaction contemplated by
this Agreement shall close, except to such attorneys, accountants, investment
advisors, lenders and others as are reasonably required to evaluate and
consummate that transaction. Nothing in this Paragraph shall prevent Seller or
Buyer from disclosing or accessing any information otherwise deemed confidential
under this Paragraph (a) in connection with that party's enforcement of its
rights hereunder; (b) pursuant to any legal requirement, any statutory reporting
requirement or any accounting or auditing disclosure requirement; (c) in
connection with performance by either party of its obligations under this
Agreement (including, but not limited to, the delivery and recordation of
instruments, notices or other documents required hereunder); or (d) to potential
investors, participants or assignees in or of the transaction contemplated by
this Agreement.

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<PAGE> 16
22. Miscellaneous.

(a) Notices. Any notice, consent or approval required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been given upon (i) actual delivery, (ii) one business day after being deposited
with Federal Express or another reliable overnight courier service for next day
delivery, (iii) upon facsimile transmission (except that if the date of such
transmission is not a business day, then such notice shall be deemed to be given
on the first business day following such transmission), or (iv) two business
days after being deposited in the United States mail, registered or certified
mail, postage prepaid, return receipt required, and addressed as follows:

If to Seller: TCR #706 Parkside Limited Partnership
c/o Thompson Residential Company
591 Redwood Highway, Suite 5275
Mill Valley, California 94941
Attention: Mr. Bruce Dorfman
Phone: (415) 381-3001
Fax: (415) 381-3046

with a copy to: Jones, Day, Reavis & Pogue
2001 Ross Avenue, Suite 2300
Dallas, Texas 75201
Attn: Michael K. Ording, Esq.
Phone: (214) 220-3939
Fax: (214) 969-5100

If to Buyer: Bay Apartment Communities, Inc.
4340 Stevens Creek Boulevard, Suite 275
San Jose, California 95129
Attention: Mr. Gilbert M. Meyer, President
Phone: (408) 983-1500
Fax: (408) 984-7060

With a copy to: Cox, Castle & Nicholson, LLP
2049 Century Park East, Suite 2800
Los Angeles, California 90067
Attention: Scott D. Brooks, Esq.
Phone: (310) 284-2295
Fax: (310) 277-7889

or such other address as either party may from time to time specify in writing
to the other.

(b) Successors and Assigns. Buyer shall have the right to assign
this Agreement prior to Closing to any entity controlling, controlled by or
under common control with Buyer without Seller's consent or approval, and Buyer
shall have the right to assign this Agreement prior to Closing to any other
person or entity subject to Seller's prior written consent, which consent shall
not be unreasonably withheld or delayed. Except as allowed by the preceding
sentence, neither this Agreement nor the rights of either party hereunder may be
assigned by either party. This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors, heirs,
administrators and permitted assigns.

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<PAGE> 17
(c) Amendments. This Agreement may be amended or modified only by a
written in strument executed by Seller and Buyer.

(d) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.

(e) Merger of Prior Agreements. This Agreement and the exhibits
hereto constitute the entire agreement between the parties and supersede all
prior agreements and understandings between the parties relating to the subject
matter hereof, including without limitation, that certain Letter of Intent dated
March 25, 1996 (the "Letter of Intent") which shall be of no further force or
effect upon full execution and delivery of this Agreement by the parties.

(f) Time of the Essence. Time is of the essence of this Agreement.

(g) Severability. If any provision of this Agreement, or the
application thereof to any person, place, or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect.

(h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but any number of
which, taken together, shall be deemed to constitute one and the same
instrument.

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

BUYER: SELLER:

BAY APARTMENT COMMUNITIES, INC., TCR #706 PARKSIDE LIMITED
a Maryland corporation PARTNERSHIP, a Texas
limited partnership

By: /s/ Gilbert M. Meyer By: TC RESIDENTIAL SOUTH BAY ASSOCIATES,
--------------------------- INC., a Texas corporation,
GILBERT M. MEYER, President its general partner

By: /s/ Clifford Brerring
---------------------------------

Print Name: Clifford Brerring
-------------------------

Its: Vice President
--------------------------------

[BUYER AND SELLER TO INITIAL SUB-PARAGRAPH 7(a)
AND BUYER TO INITIAL SUB-PARAGRAPH 9(c)]

<PAGE> 1
EXHIBIT 10.3

AGREEMENT FOR PURCHASE AND SALE

AGREEMENT made this day of April, 1996, between CONSOLIDATED SUNSET
LIMITED PARTNERSHIP, a California limited partnership, with offices at 10670
North Central Expressway, Dallas, Texas 75231 ("Seller"), and BAY APARTMENT
COMMUNITIES, INC., a Maryland corporation, with offices at 4340 Stevens Creek
Blvd., Ste. 275, San Jose, California 95129 ("Purchaser");

WITNESSETH THAT PURCHASER AND SELLER HAVE AGREED AS FOLLOWS:

ARTICLE I

AGREEMENT FOR PURCHASE AND SALE

Seller agrees to sell and cause to be conveyed to Purchaser, and Purchaser
agrees to purchase, the following property (collectively, the "Project"):

(a) The real property located in the City and County of San Francisco,
State of California, described on EXHIBIT 1.1 (the "Land") together with the
existing improvements thereon situated and all appurtenances thereto (together,
the "Property");

(b) The Seller's interest in any leases affecting the Property;

(d) All fixtures and articles of personal property attached or appurtenant
to or used in connection with the Property which are owned by Seller and located
at the Property.

ARTICLE 2

PURCHASE PRICE

2.1 The purchase price (the "Purchase Price") for the Project is Twenty
Four Million One Hundred Thousand AND 00/100 DOLLARS ($24,100,000.00), payable
in federal funds for immediate credit to Seller on the Closing Date, in such
manner, place and account as Seller may, by prior notice, instruct.

2.2 (a) Within three (3) business days after the execution of this
Agreement, Purchaser shall deliver the sum of $150,000 (the "Initial Deposit")
to the Title Company named in Article 5 below ("Escrow Agent") to be held in
escrow pursuant to the terms of this Agreement pending the Closing. Upon the
expiration of the Inspection Period, Purchaser shall deliver an additional
$250,000 (the "Additional Deposit") to the Escrow Agent to be held as part of
the Deposit pursuant to the terms of this Agreement pending the Closing.

(b) As used in this Agreement, the term "Deposit" shall mean, when made
pursuant hereto, the Initial Deposit and the Additional Deposit and accrued
interest thereon, if any, held by Escrow Agent hereunder. Except as otherwise
provided in this Agreement, if Purchaser desires to terminate this Agreement
pursuant to a specific right granted to Purchaser in any section of this
Agreement, Purchaser shall effect such termination by giving written notice
thereof to Seller and Escrow Agent within any applicable time period provided
therefore in this Agreement, and upon receipt of such notice, the Escrow Agent
shall return the Deposit to Purchaser, this Agreement shall wholly cease and
terminate, no party to this Agreement shall have any further claim against, or
obligation to, any other party to this Agreement, and the lien, if any, of
Purchaser against the Project shall automatically cease and terminate.

ARTICLE 3

PHYSICAL CONDITION OF PROJECT

Purchaser has inspected the Project and will continue to inspect the
Project during the hereinafter described Inspection Period to the extent
Purchaser deems necessary in connection with the transactions contemplated by
this Agreement. Purchaser acknowledges that Seller has not made and does not
make and is
<PAGE> 2

unwilling to make any express or implied representations or warranties as to the
present, past or future physical condition, income, expenses, operation,
legality of occupancy or any other matter affecting or related to the Project
except as specifically set forth in this Agreement. No representation, warranty
or covenant made by Seller in this Agreement or any document delivered pursuant
hereto shall survive the Closing except as expressly provided in this Agreement.
Purchaser agrees to purchase the Project in its "AS IS" condition on the Closing
Date. Purchaser has not relied upon, and Seller is not liable or bound in any
manner, by any verbal or written statements, representations, real estate
brokers' "setups"or information pertaining to the Project furnished by any real
estate broker, agent, employee, servant or other persons unless the same are
expressly set forth in this Agreement. The delivery of the deed by Seller, and
the acceptance of the deed by Purchaser, shall be deemed to be the full
performance and discharge of every obligation of Seller to be performed under
this Agreement prior to the Closing Date and the truth or waiver of every
representation or warranty made by Seller in this Agreement or in any Exhibit
attached hereto or in any document, certificate, affidavit or other instrument
delivered by Seller or its agents at or in connection with the Closing, except
for those warranties, representations and obligations of Seller which this
Agreement expressly provides are to survive the Closing.

Seller represents to Purchaser as follows:

(a) to Seller's knowledge, the Project has no material structural
defects;

(b) to Seller's knowledge, Seller has not received any notices of
violation of any laws, statutes, ordinances, rules or regulations with
respect to the Project that remain uncured;

(c) the Project is not subject to any outstanding agreements of sale,
rights of first refusals, or other rights of third parties to acquire the
Project;

(d) Seller is the legal and equitable owner of fee simple title to the
Project;

(e) Seller is not a party to any litigation, arbitration or
administrative proceeding relating to the Project other than litigation
which has been turned over to Seller's insurance carrier and in which such
carrier has accepted defense of such action without reservation of right;

(f) Seller is duly organized, validly existing and in good standing
under the laws of the state of California;

(g) Seller has all requisite power and authority, has taken all
actions required by its organizational documents and applicable law, and
has obtained all consents which are necessary to authorize or enable it to
execute and deliver this Agreement, and upon obtaining the approval
described in Section 15.12 to consummate the transactions contemplated in
this Agreement, and to perform all of its obligations under this Agreement;

(h) to Seller's knowledge, Seller has not received any notices of
violation (and Seller has no knowledge of any violation) of any laws,
statutes, ordinances, rules or regulations with respect to the
environmental condition of the Project; and

(i) all management contracts and employment contracts with respect to
the Project will be terminated as of Closing.

As used herein, the term "Seller's knowledge" shall mean the current actual
knowledge, without investigation other than reasonable inquiry of the property
manager, of the Seller's "asset manager" for the Project, being the officer of
Seller's general partner with direct oversight responsibility for the Project.

ARTICLE 4

PERMITTED ENCUMBRANCES TO TITLE

Purchaser agrees to accept title to the Property subject to the following
matters (collectively, the "Permitted Encumbrances"):

(a) written leases for apartment space within the Property.

(b) Liens securing payment of all non-delinquent ad valorem,
intangible and other non-delinquent real and personal property taxes,
special and general assessments, school taxes, and water and sewer

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<PAGE> 3

charges against the Property or the personal property covered by this
Agreement for the tax year in which the Closing Date occurs and subsequent
years.

(c) Zoning ordinances and regulations and building restrictions and
regulations affecting the Property on the Closing Date.

ARTICLE 5

CONDITION OF TITLE, TITLE INSURANCE

5.1 Seller shall promptly deliver a copy of its existing survey for the
Project, if any, to Purchaser. Seller shall promptly obtain from Commonwealth
Land Title Insurance Company or its agent, (the "Title Company") a preliminary
title report or commitment (the "Title Commitment") to issue an ALTA Owner's
Extended Coverage Policy of Title Insurance (1970 Form B, Rev. 10/17/70) (the
"Title Policy") insuring Purchaser's title to the Property in the amount of the
Purchase Price, subject only to the Permitted Encumbrances and other liens and
encumbrances not constituting objections to title in accordance herewith. A copy
of the Title Commitment and the documents of record reflected therein shall be
furnished to the Purchaser. On or before the expiration of the Inspection
Period, Purchaser shall give written notice (the "Objection Notice"), which may
be included in Purchaser's Ratification Notice (defined in Article 14), to the
attorneys for Seller of any conditions of title which Purchaser is not obligated
to take the Property subject to pursuant to the provisions of this Agreement
(the "Objections") separately specifying and setting forth each of such
Objections. If Purchaser timely gives Seller an Objection Notice, then all
matters disclosed on the Title Commitment which are not objected to in such
Objection Notice shall be deemed to be Permitted Encumbrances. If Purchaser
fails to timely give Seller an Objection Notice, then all matters disclosed on
the Title Commitment shall be deemed to be Permitted Encumbrances.

5.2 Seller shall not be required, however, to expend any money or bring any
action or proceeding or do any other thing in order to deliver the Project or
title to the Property as required by this Agreement; provided, however, that
Seller agrees to pay off any deeds of trust and satisfy or caused to be released
any other monetary liens on or before Closing. If Seller gives Purchaser notice
(the "Response Notice") that Seller is unable to convey the Project or title to
the Property as required by this Agreement, Purchaser may, as its exclusive
remedy, elect by written notice given to Seller within five (5) days after the
Response Notice is given, either (a) to accept such title as Seller is able to
convey without any reduction or abatement of the Purchase Price, or (b) to
terminate this Agreement in which event the Deposit shall be returned to
Purchaser.

If Purchaser fails to give notice of its election to accept Seller's title
within such five (5) day period, Purchaser shall be deemed to have elected to
terminate this Agreement and the Deposit shall be returned to Purchaser.

5.3 The existence of liens or encumbrances other than the Permitted
Encumbrances or those which are permitted by this Agreement shall be deemed to
be Permitted Encumbrances if the Title Company will insure Purchaser's title
clear of the matter or will insure against the enforcement of such matter out of
the Property in a manner reasonably acceptable to Purchaser. Unpaid liens for
real estate and personal property taxes for years prior to the fiscal year in
which the Closing Date occurs and any other matter which Seller is obligated to
pay and discharge at the Closing shall not be deemed objections to title, but
the amount thereof chargeable to Seller, plus interest and penalties thereon, if
any, shall be deducted from the Purchase Price on the Closing Date and paid to
the Title Company for the payment of such matters.

5.4 Seller shall pay the deed transfer tax and one half of the escrow fees
of the Title Company. Purchaser shall pay the cost of obtaining the Title
Commitment, Title Policy, and the recording costs and expenses in connection
with the Closing.

ARTICLE 6

CLOSING

6.1 The consummation of the transactions described in this Agreement (the
"Closing") shall occur on June 14, 1996, provided, however, that if such date
falls on a Saturday, Sunday, or holiday on which banks

3
<PAGE> 4

located in the vicinity of the Property are closed, the Closing shall occur on
the second business day thereafter (the "Closing Date") commencing at 10:00 A.M.
local time, at the offices of the Escrow Agent. TIME IS OF THE ESSENCE IN REGARD
TO THE PERFORMANCE BY PURCHASER AND SELLER OF ALL OF THE PROVISIONS Of THIS
AGREEMENT.

6.2 Upon Purchaser's delivery of all required documents and instruments and
its payment of the Purchase Price and other amounts required herein, Purchaser
and Seller shall prepare and sign a closing statement reflecting the adjustments
and payments made and agreements in connection therewith. The parties shall
deliver a copy of the closing statement and all of the aforesaid documents to
the Title Company which shall do the following:

(a) Record the deed.

(b) Deliver to Seller and Purchaser or other appropriate party the
documents and payments delivered to it as escrow holder for delivery to
such party.

6.3. It is a condition to Purchaser's obligation to close that at Closing
(i) the Purchaser receives the Title Company's commitment to insure Purchaser's
title subject only to the Permitted Encumbrances and other matters not deemed
objections to title hereunder, and (ii) Seller is not in default under this
Agreement.

ARTICLE 7

DOCUMENTS REQUIRED ON CLOSING DATE

7.1 At or prior to the Closing, Seller shall execute and/or deliver the
following to Purchaser:

(a) Grant Deed.

(b) Bill of Sale and Assignment of Leases, Warranties and Service
Contracts, pursuant to which Seller assigns and conveys to Purchaser (i)
all personal property covered by this Agreement, (ii) all service contracts
and all other service agreements relating to the Project, (iii) Seller's
interest as landlord in and to all tenant leases of portions of the
Property, and (iv) to the extent transferable, any warranties, operating
permits, and the Seller's right, if any, to the use of the name "Sunset
Towers" in connection with the Property.

(c) Plans and specifications for the Property, if in the possession of
Seller, which shall be delivered to Purchaser at the Property.

(d) A rent roll for the Property certified by Seller (the "Rent Roll")
listing each tenant, the monthly base rent payable, lease expiration date
and unapplied security deposit as of the Closing Date, and any unexpired
tenant concessions.

(e) The originals or copies (to the extent the originals cannot be
located) of the leases described in the Rent Roll, and all tenant files,
which shall be delivered to Purchaser at the Property.

(f) Authority documents of Seller authorizing the execution, delivery
and performance by Seller of this Agreement and each document to be
executed and delivered by Seller in connection with this Agreement and
designating one or more officers to execute documents in the Seller's name
in connection herewith, certified as correct and complete by Seller
together with an incumbency certificate for each person executing documents
on behalf of Seller.

(g) All costs and fees required to be paid by Seller pursuant to
ARTICLE 8.

(h) Such other documents and instruments as may be required by this
Agreement or by the Title Company in order to consummate the transactions
described in this Agreement and to issue the Title Policy to Purchaser.

(i) A non foreign affidavit for Seller complying with the requirements
of Internal Revenue Code Section 1445(f)(3) and the regulations promulgated
thereunder, and California withholding Form 590.

(j) A written notice of the acquisition of the Property by Purchaser,
originally executed by Seller and Purchaser, which Seller shall transmit to
all tenants and to other parties affected by the sale and

4
<PAGE> 5

purchase of the Property. Such notice shall be prepared by the Seller and
shall be subject to Purchaser's reasonable approval, and shall inform the
addressees of the sale and transfer of the Property to Purchaser and
contain appropriate instructions relating to the payment of future rentals,
the giving of future notices, and other matters reasonably required by
Purchaser. The said notices shall specify that unapplied security deposits
under the tenant leases have been delivered to the Purchaser and that the
Purchaser is responsible for the refund thereof and shall be adequate under
local law to relieve Seller of all liability for return of such deposits.

7.2 At or prior to the Closing, Purchaser shall execute and/or deliver the
following to Seller:

(a) The Purchase Price.

(b) Assumption by Purchaser of Seller's obligations under the leases
and service contracts with respect to the period from and after Closing.

(c) Authority documents of Purchaser authorizing the execution,
delivery and performance by Purchaser of this Agreement and each document
to be executed and delivered by Purchaser in connection with this Agreement
and designating one or more officers to execute documents in the
Purchaser's name in connection herewith, certified as correct and complete
by Purchaser together with an incumbency certificate for each person
executing documents on behalf of Purchaser.

(d) All costs and fees required to be paid by Purchaser pursuant to
ARTICLE 8.

(e) A written notice of the acquisition of the Property by Purchaser,
originally executed by Seller and Purchaser, which Seller shall transmit to
all tenants and to other parties affected by the sale and purchase of the
Property. Such notice shall be prepared by the Seller and shall be subject
to Purchaser's reasonable approval, and shall inform the addressees of the
sale and transfer of the Property to Purchaser and contain appropriate
instructions relating to the payment of future rentals, the giving of
future notices, and other matters reasonably required by Purchaser. The
said notices shall specify that unapplied security deposits under the
tenant leases have been delivered to the Purchaser and that the Purchaser
is responsible for the refund thereof and shall be adequate under local law
to relieve Seller of all liability for return of such deposits.

(f) Such other documents and instruments as may be required in this
Agreement or by the Title Company in order to consummate the transactions
described in this Agreement.

(g) Such other instruments, affidavits and tax returns as are
customarily executed by the purchaser of an interest in real property in
connection with the recording of a deed.

ARTICLE 8

APPORTIONMENTS AND ADJUSTMENTS

8.1 Seller shall be responsible for and pay all accrued expenses with
respect to the Project accruing up to 11:59 P.M. on the day prior to the Closing
Date (the "Adjustment Date") and shall be entitled to receive and retain all
revenue from the Project with respect to the period accruing up to the
Adjustment Date. Purchaser shall be responsible for and pay all accrued expenses
with respect to the Project accruing after the Adjustment Date and shall be
entitled to receive and retain all revenue from the Project with respect to the
period accruing after the Adjustment Date.

8.2 On the Closing Date, the following adjustments and apportionments shall
be made in cash as of the Adjustment Date:

(a) (i) Rents for the month in which the Closing Date occurs (the
"Closing Month"). If past due rents are owing by tenants for any period
prior to the Closing Month (the "Rent Arrearages"), then promptly after
the Closing Date Purchaser shall bill all tenants for such sums and
shall use its reasonable efforts to collect all Rent Arrearages. Rents
collected by Purchaser after the Closing shall be applied first to
current rents due and then to Rent Arrearages. In determining the
amounts required to be paid to Seller, Purchaser shall not be permitted
to accept any rentals or other amounts from tenants in advance of the
due dates therefor. If, as and when the Purchaser collects payments

5
<PAGE> 6

from a tenant on account of Rent Arrearages, Purchaser shall hold such
funds as trustee for Seller and shall pay an amount equal to the Rent
Arrearages collected during a given month to Seller on or before the
tenth day of the next following month.

(ii) After the Closing, Purchaser shall deliver to Seller a monthly
collection report for any month in which Rent Arrearages were collected
or after Seller's request, showing the sum, if any, paid by each tenant
at the Property and the unpaid balance owed by such tenant pursuant to
its lease through the end of such calendar month; such collection report
shall be delivered to Seller within ten (10) days after the last day of
any month in which Rent Arrearages, were collected or within ten days
after Seller's request until Seller has received all Rent Arrearages.
The Seller shall have the right to review and audit the Purchaser's
records with respect to the tenants who have Rent Arrearages at Closing.

(b) Real estate taxes, ad valorem taxes, school taxes, assessments and
personal property, intangible and use taxes, in any.

(c) Charges under service contracts affecting the Project on the
Closing Date and utility charges and deposits relating to the Project.

(d) Water and sewer charges on the basis of the period for which
assessed.

8.3 At the Closing, Purchaser will receive a credit against the Purchase
Price in an amount equal to all unapplied security deposits payable to tenants
and interest thereon, if required by applicable law or the terms of the leases,
and prepaid rents paid by tenants under leases in effect on the Closing Date
against Purchaser's receipt and indemnification therefor. Upon making such
credit, Purchaser will be deemed to have received all such security deposits and
shall be fully responsible for the same as if a cash amount equal to such
security deposits were actually delivered to Purchaser. Prior to the Closing,
Seller reserves the right to apply all security deposits as provided under the
respective leases.

8.4 The provisions of this ARTICLE 8 shall survive the Closing.

ARTICLE 9

REMEDIES

9.1 IN THE EVENT THE SALE OF THE PROJECT IS NOT CONSUMMATED BECAUSE OF A
DEFAULT UNDER THIS AGREEMENT ON THE PART OF PURCHASER, THE DEPOSIT SHALL BE PAID
TO AND RETAINED BY SELLER AS LIQUIDATED DAMAGES. THE PARTIES HAVE AGREED THAT
SELLER'S ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE
EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. THEREFORE, BY PLACING THEIR
INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE DEPOSIT HAS BEEN AGREED UPON,
AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES AND
AS SELLER'S SOLE AND EXCLUSIVE REMEDY AGAINST BUYER, AT LAW OR IN EQUITY, IN THE
EVENT OF A DEFAULT UNDER THIS AGREEMENT ON THE PART OF PURCHASER. SELLER HEREBY
WAIVES ANY AND ALL BENEFITS IT MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION
3389.

<TABLE>
<S> <C>
/s/ BAE /s/ GMM
- ------------------------- -------------------------
Seller's Initials Purchaser's Initials
</TABLE>

9.2 If the sale contemplated by this Agreement is not consummated because
of Seller's failure to perform its obligations hereunder, Purchaser shall be
entitled, as its exclusive remedies, to elect either (a) to terminate this
Agreement and have the Deposit returned to it or (b) to enforce specific
performance of Seller's obligations under this Agreement; provided, however,
that Seller shall not be required to expend any money other than the amounts
provided in ARTICLE 8, or take any action other than delivery of the items
provided in ARTICLE 7, in connection with such specific performance, or (c) to
terminate this Agreement

6
<PAGE> 7

and have the Deposit returned to it and seek damages for reimbursement of
Purchaser's actual out-of-pocket expenses not in excess of $50,000.

9.3 The non breaching party shall also be entitled to recover against the
breaching party its costs and expenses, including reasonable attorneys fees and
court costs, incurred by such non breaching party in enforcing any of the its
remedies hereunder.

ARTICLE 10

DAMAGE, DESTRUCTION OR CONDEMNATION

10.1 Seller agrees to maintain its present policies of fire insurance
covering the Project in full force and effect from the date of this Agreement
through and including the Closing Date.

10.2 If on or before the Closing Date either (a) all or a substantial part
of the improvements on the Land is damaged or destroyed by fire or the elements
or by any other cause, or (b) all or a substantial part of the Property is taken
by condemnation or other power of eminent domain, Purchaser may, by written
notice given to the Seller within ten (10) days after Purchaser shall have
notice of the occurrence or the taking (but in no event after the Closing Date),
elect to terminate this Agreement.

10.3 If either (a) a substantial part of the improvements on the Land is
damaged or destroyed or a substantial part of the Property is taken by
condemnation or other power of eminent domain but this Agreement is not canceled
as provided in Section 10.2, or (b) on or before the Closing Date, an
insubstantial part of the improvements on the Land is damaged or destroyed or an
insubstantial part of the Property is so taken, then neither Seller nor
Purchaser shall have the right to terminate this Agreement based upon such
damage, destruction or taking, and on the Closing Date,

(i) Seller shall credit the Purchase Price with an amount equal to any
sums of money collected by Seller under its policies of insurance or
renewals thereof insuring against the loss in question (after deducting (1)
any expenses incurred by Seller in collecting such insurance and (2) any
amount that Seller shall have paid, agreed to pay, or shall have been
obligated to pay for repairs or restoration of the damage), and Seller
shall assign, transfer and set over to Purchaser all of Seller's right,
title and interest in and to said policies with respect to the Property and
any further sums payable under said policies, and

(ii) Seller shall assign, transfer and set over to Purchaser all of
Seller's right, title and interest in and to any awards that may be made
for any taking by condemnation or other power of eminent domain.

10.4 For the purposes of this Article, a substantial part of the Property
or the improvements on the Land shall be deemed to mean a portion having a value
of $100,000 or more or which would require expenditure of $100,000 or more for
repair or restoration.

ARTICLE 11

BROKER

11.1 Purchaser represents and warrants to Seller that neither Purchaser nor
any entity related to Purchaser has dealt with any broker or other person or
entity claiming by, through or under Purchaser, who would be entitled to a
commission or other brokerage fee from Seller in connection with the
transactions described in this Agreement. Purchaser agrees to indemnify, defend
and hold the Seller harmless of and from any loss, cost, damage or expense
(including reasonable attorneys' fees and court costs) arising out of any
inaccuracy in the representation or warranty made by Purchaser in this Section
11.1.

11.2 Seller represents and warrants to Purchaser that neither Seller nor
any entity related to Seller has dealt with any broker or other person or entity
claiming by, through or under Seller who would be entitled to a commission or
other brokerage fee from Purchaser in connection with the transactions described
in this Agreement. Seller agrees to indemnify, defend and hold the Purchaser
harmless of and from any loss, cost, damage or expense (including reasonable
attorneys' fees and court costs) arising out of any inaccuracy in the
representation or warranty made by Seller in this Section 11.2.

7
<PAGE> 8

11.3 Notwithstanding any other provision of this Agreement to the contrary,
the provisions of this Article shall survive the Closing and any prior
termination of this Agreement for any reason whatsoever.

ARTICLE 12

NOTICES

Any notice given or required to be given pursuant to any provision of this
Agreement shall be in writing and shall either be personally delivered or sent
by facsimile or reputable commercial courier service guaranteeing overnight
delivery, and shall be deemed to have been given upon receipt if personally
delivered or sent by facsimile, or, upon delivery to such courier, with delivery
charges prepaid, if sent by such a courier, in either case addressed as follows:

Purchaser: Bay Apartment Communities, Inc.
4340 Stevens Creek Blvd., Ste. 275
San Jose, California 95129
Attn: Geoffrey Baker
Fax: 408-984-7060
Phone: 408-983-1500

with a copy to: Scott Brooks, Esq.
Cox, Castle & Nicholson
2327 Green Street, #2
San Francisco, California 94123
Fax: 415-775-5053
Phone: 415-775-3937

Seller: Consolidated Sunset Limited Partnership
10670 North Central Expressway
Dallas, Texas 75231
Attn: Mark Nardizzi
Fax: 214-696-2567
Phone: 214-692-4788

with a copy to: Cary L. Newburger, Esq.
333 East 49th Street, #3T
New York, New York 10017
Fax: 212-317-0725
Phone: 212-355-3135

Either party may, by giving notice to the other in the manner set forth
above, change the address to which notices shall be sent to it, provided that
any such change of address shall be effective three (3) days after it is given.
The attorney for each party to this Agreement may give notices on behalf of his
client with the same force and effect as if such notice was given directly by
such party.

ARTICLE 13

ASSIGNMENT

Neither the rights of Purchaser hereunder, nor any portion thereof, may be
assigned; provided, however, that upon not less than ten (10) days' prior
written notice, which notice to be effective must be accompanied by an executed
instrument of assignment and assumption, Purchaser may assign all of its
interest in this Agreement and the Deposit to a partnership, corporation or
limited liability company owned by the Purchaser.

8
<PAGE> 9

ARTICLE 14

INSPECTION PERIOD

Purchaser intends to continue its physical inspection of the Project
through and including May 9, 1996 ("Inspection Period"), which inspection shall
be at the sole cost and expense of Purchaser. Seller shall assist with such
inspection and shall deliver to Purchaser copies of rent rolls, service
contracts, and other materials in Seller's possession that Purchaser reasonably
requests. Leases, tenant files and certain other information will be made
available for Purchaser's inspection at the Project or other place where such
information is maintained. Seller shall not be obligated to incur any material
cost or expense in obtaining items for Purchaser's inspection. All information
received by Purchaser relating to the Project, Seller or its affiliates shall be
kept in strict confidence and used solely for the purpose of determining the
advisability of proceeding with the transaction described in this Agreement.
Purchaser shall have the right to terminate this Agreement if Purchaser, in its
sole and absolute discretion, deems the Project or any aspect thereof, to be
unsatisfactory. Purchaser may exercise such right to terminate on or before the
last day of the Inspection Period (i) by giving Seller written notice of such
termination or (ii) by failing to give Seller notice that Purchaser has approved
the purchase of the Project and has elected to ratify this Agreement
("Ratification Notice").

If Purchaser does not give Seller a Ratification Notice on or before the
last day of the Inspection Period, Purchaser shall be deemed to have irrevocably
and absolutely terminated this Agreement pursuant to the provisions of this
Article.

ARTICLE 15

MISCELLANEOUS

15.1 This Agreement is binding upon and shall inure to the benefit of the
parties hereto, their respective heirs, successors, legal representatives and
permitted assigns.

15.2 Wherever under the terms and provisions of this Agreement the time for
performance falls upon a Saturday, Sunday or legal holiday, such time for
performance shall be extended to the second business day thereafter.

15.3 This Agreement may be executed in one or more counterparts, all of
which when taken together shall constitute one and the same agreement, and shall
become effective when one or more counterparts have been executed by each of the
parties hereto and delivered to each of the other parties hereto.

15.4 The captions at the beginning of the several paragraphs, Sections and
Articles are for convenience in locating the context, but are not part of the
context. Unless otherwise specifically set forth in this Agreement to the
contrary, all references to Exhibits contained in this Agreement refer to the
Exhibits which are attached to this Agreement, all of which Exhibits are
incorporated in, and made a part of, this Agreement by reference. Unless
otherwise specifically set forth in this Agreement to the contrary, all
references to Articles, Sections, paragraphs and clauses refer to portions of
this Agreement.

15.5 If any term or provision of this Agreement shall be held to be
illegal, invalid, unenforceable or inoperative as a matter of law, the remaining
terms and provisions of this Agreement shall not be affected thereby, but each
such remaining term and provision shall be valid and shall remain in full force
and effect.

15.6 This Agreement and the other writings referred to in, or delivered
pursuant to, this Agreement, embody the entire understanding and contract
between the parties hereto with respect to the Project and supersede any and all
prior agreements and understandings between the parties hereto, whether written
or oral, formal or informal, with respect to the subject matter of this
Agreement. This Agreement has been entered into after full investigation by each
party and its professional advisors, and neither party is relying upon any
statement, representation or warranty made by or on behalf of the other which is
not expressly set forth in this Agreement.

15.7 No extensions, changes, waivers, modifications or amendments to or of
this Agreement, of any kind whatsoever, shall be made or claimed by Seller or
Purchaser, and no notices of any extension, change, waiver, modification or
amendment made or claimed by Seller or Purchaser shall have any force or effect
whatsoever,

9
<PAGE> 10

unless the same is contained in a writing and is fully executed by the party
against whom such matter is asserted.

15.8 This Agreement shall be governed and interpreted in accordance with
the laws of the State of California.

15.9 Each party hereto shall pay all charges specified to be paid by them
pursuant to the provisions of this Agreement and their own attorney's fees in
connection with the negotiation, drafting and closing of this Agreement.

15.10 Purchaser warrants and represents to Seller that, subject to any
provisions hereof to the contrary, Purchaser has full power and authority to
enter into this Agreement and to perform all of Purchaser's obligations under
this Agreement, and that the person executing this Agreement on Purchaser's
behalf has been duly authorized and is empowered to bind Purchaser to this
Agreement.

15.11 Purchaser and Seller agree that this Agreement has been entered into
solely for the benefit of Purchaser and Seller and no other person or entity, it
being the intention of Purchaser and Seller that no person or entity not a party
to this Agreement shall have any right or standing to (a) bring any action
against Purchaser or Seller based on this Agreement, or (b) assume that any
provision of this Agreement will be enforced or remain unmodified or unwaived,
or (c) assert that it or he is or should be or was intended to be a beneficiary
of any provision of this Agreement.

15.12 This Agreement is subject to the approval of the Board of Trustees of
Seller's general partner. If such approval is not obtained on or before April
26, 1996, then this Agreement shall be terminated and the Deposit returned to
Purchaser.

15.13 Seller agrees not to market or show the Project to any other
prospective purchasers during the term of this Agreement.

15.14 Purchaser and Seller each agree that prior to Closing, the terms of
the transaction contemplated by this Agreement, the identity of the parties and
all information made available by Purchaser to Seller or by Seller to Purchaser
or in any way relating to the Purchaser's or Seller's interest in the
transaction, shall be maintained in strict confidence and prior to Closing, no
disclosure of such information will be made by Purchaser or Seller, whether or
not the transaction contemplated by this Agreement shall close, except to such
attorneys, accountants, investment advisors, lenders and others as are
reasonably required to evaluate and consummate this transaction. Purchaser and
Seller further agree that nothing in this Section shall prevent them from
disclosing or accessing any information otherwise deemed confidential under this
Section (a) in conjunction with that parties enforcement of its rights
hereunder; (b) pursuant to any legal requirement, any statutory reporting
requirement or any accounting or auditing disclosure requirement; (c) in
connection with performance by either party of its obligations under this
Agreement (including, but not limited to, the delivery and recordation of
instruments, notices or other documents required hereunder); or (d) to potential
investors, participants or permitted assignees in or of the transaction
contemplated by this Agreement or such party's rights therein.

10
<PAGE> 11

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names by their respective duly authorized representatives on
the day and year first above written.

SELLER: Consolidated Sunset Limited Partnership,
a California limited partnership

By: Continental Mortgage and Equity Trust,
a California business trust,
its general partner

By: /s/ BRUCE A. ENDENDYLE
---------------------------------
Name: Bruce A. Endendyle
Title: Executive Vice President

PURCHASER: Bay Apartment Communities, Inc.,
a Maryland corporation

By: /s/ GILBERT M. MEYER
------------------------------------
Name: Gilbert M. Meyer
Title: President

11
<PAGE> 12

SUNSET TOWER

FIRST AMENDMENT
TO
AGREEMENT FOR PURCHASE AND SALE

THIS FIRST AMENDMENT AGREEMENT (this "Amendment") dated effective as of
April 26, 1996, is made between CONSOLIDATED SUNSET LIMITED PARTNERSHIP, a
California limited partnership, with offices at 10670 North Central Expressway,
Dallas, Texas 75231 ("Seller"), and BAY APARTMENT COMMUNITIES, INC., a Maryland
corporation, with offices at 4340 Stevens Creek Blvd., Ste. 275, San Jose,
California 95129 ("Purchaser").

WITNESSETH:

Whereas, Purchaser and Seller have entered into a certain Agreement for
Purchase and Sale dated April , 1996 (the "Agreement") for the sale and
purchase of an apartment project known as Sunset Towers, San Francisco,
California (the "Project"); and

Whereas, the parties, have agreed to modify the Agreement, as set forth
herein.

Now, therefore, the Purchaser and Seller agree as follows:

1. Seller has received the approval of the Board of Trustees of
Seller's general partner pursuant to the provisions of Section 15.12.

2. At Purchaser's request, Seller agrees not to rent apartment units
at the Project to new tenants following May 9, 1996. Nothing herein shall
prohibit the renewal of any existing lease. Purchaser shall pay Seller the
market rent shown on Seller's Rent Roll for each such unrented unit
covering the period from the date the unit became available for rental to
the earlier of (a) the Closing Date, or (b) the termination of the
Agreement. Such payment shall be due and payable on the earlier of the
Closing Date or the date of termination of the Agreement. Purchaser's
obligations in this paragraph shall survive any termination of the
Agreement.

C-2
<PAGE> 13

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names by their respective duly authorized representatives.

SELLER: Consolidated Sunset Limited Partnership,
a California limited partnership

By: Continental Mortgage and Equity Trust,
a California business trust,
its general partner

By:
-----------------------------------

Name:
---------------------------------

Title:
---------------------------------

PURCHASER: Bay Apartment Communities, Inc.,
a Maryland corporation

By: /s/ GEOFFREY L. BAKER
-----------------------------------------
Name: Geoffrey L. Baker
Title: Chief Development and
Acquisition Officer

C-3
<PAGE> 14

SECOND AMENDMENT
TO
AGREEMENT FOR PURCHASE AND SALE

THIS SECOND AMENDMENT TO AGREEMENT (this "Amendment") dated effective as of
May 7, 1996, is made between CONSOLIDATED SUNSET LIMITED PARTNERSHIP, a
California limited partnership, with offices at 10670 North Central Expressway,
Dallas, Texas 75231 ("Seller"), and BAY APARTMENT COMMUNITIES, INC., a Maryland
corporation, with offices at 4340 Stevens Creek Blvd., Ste. 275, San Jose,
California 95129 ("Purchaser").

WITNESSETH:

Whereas, Purchaser and Seller have entered into a certain Agreement for
Purchase and Sale dated April , 1996 as amended by First Amendment to
Agreement for Purchase and Sale (as amended, the "Agreement") for the sale and
purchase of an apartment project known as Sunset Towers, San Francisco,
California (the "Project"); and

Whereas, the parties have agreed to modify the Agreement, as set forth
herein.

Now, therefore, the Purchaser and Seller agree as follows:

1. The Inspection Period (as defined in Article 14 of the Agreement)
shall expire at 5:00 P.M. Dallas, Texas time on May 10, 1996.

IN WITNESS WEREOF, the parties hereto have caused this Agreement to be
executed in their names by their respective duly authorized representatives.

SELLER: Consolidated Sunset Limited Partnership,
a California limited partnership

By: Continental Mortgage and Equity Trust,
its general partner

By: /s/ BRUCE A. ENDENDYLE
----------------------------------

PURCHASER: Bay Apartment Communities, Inc.,
a Maryland corporation

By: /s/ GILBERT M. MEYERS
----------------------------------
President

C-4

<PAGE> 1
EXHIBIT 10.4

REVOLVING LOAN AGREEMENT

dated as of May 8, 1996

among

BAY APARTMENT COMMUNITIES, INC.,
as Borrower,

UNION BANK OF SWITZERLAND
(New York Branch),
as Co-Agent and Bank

and

UNION BANK OF SWITZERLAND
(New York Branch),
as Administrative Agent
<PAGE> 2

TABLE OF CONTENTS

Page

ARTICLE I. DEFINITIONS; ETC................................................ 1
Section 1.01 Definitions......................................... .1
Section 1.02 Accounting Terms.................................... 13
Section 1.03 Computation of Time Periods......................... 13
Section 1.04 Rules of Construction............................... 13

ARTICLE II. THE LOANS...................................................... 13
Section 2.01 The Loans........................................... 13
Section 2.02 Purpose............................................. 14
Section 2.03 Advances, Generally................................. 14
Section 2.04 Procedures for Advances............................. 15
Section 2.05 Interest Periods; Renewals.......................... 15
Section 2.06 Interest............................................ 15
Section 2.07 Fees................................................ 16
Section 2.08 Notes............................................... 16
Section 2.09 Prepayments......................................... 16
Section 2.10 Cancellation of Commitments......................... 17
Section 2.11 Method of Payment................................... 17
Section 2.12 Elections, Conversions or Continuation of Loans..... 17
Section 2.13 Minimum Amounts..................................... 18
Section 2.14 Certain Notices Regarding Elections, Conversions
and Continuations of Loans.......................... 18
Section 2.15 Late Payment Premium................................ 18
Section 2.16 Letters of Credit................................... 19
Section 2.17 Special Provisions Regarding Advances in
Connection with Acquisitions........................ 20

ARTICLE III. YIELD PROTECTION; ILLEGALITY; ETC............................. 21
Section 3.01 Additional Costs.................................... 21
Section 3.02 Limitation on Types of Loans........................ 22
Section 3.03 Illegality.......................................... 23
Section 3.04 Treatment of Affected Loans......................... 23
Section 3.05 Certain Compensation................................ 23
Section 3.06 Capital Adequacy.................................... 24
Section 3.07 Substitution of Banks............................... 25
Section 3.08 Applicability....................................... 26

(i)
<PAGE> 3
Page

ARTICLE IV. CONDITIONS PRECEDENT........................................... 26
Section 4.01 Conditions Precedent to the Initial Advance......... 26
Section 4.02 Conditions Precedent to Advances After the
Initial Advance..................................... 28
Section 4.03 Deemed Representations.............................. 28

ARTICLE V. REPRESENTATIONS AND WARRANTIES.................................. 28
Section 5.01 Due Organization.................................... 29
Section 5.02 Power and Authority; No Conflicts; Compliance
With Laws........................................... 29
Section 5.03 Legally Enforceable Agreements...................... 29
Section 5.04 Litigation......................................... 29
Section 5.05 Good Title to Properties........................... 29
Section 5.06 Taxes.............................................. 30
Section 5.07 ERISA.............................................. 30
Section 5.08 No Default on Outstanding Judgments or Orders...... 30
Section 5.09 No Defaults on Other Agreements.................... 30
Section 5.10 Government Regulation.............................. 31
Section 5.11 Environmental Protection........................... 31
Section 5.12 Solvency........................................... 31
Section 5.13 Financial Statements............................... 31
Section 5.14 Valid Existence of Affiliates...................... 31
Section 5.15 Insurance.......................................... 31
Section 5.16 Accuracy of Information; Full Disclosure........... 32

ARTICLE VI. AFFIRMATIVE COVENANTS......................................... 32
Section 6.01 Maintenance of Existence........................... 32
Section 6.02 Maintenance of Records............................. 32
Section 6.03 Maintenance of Insurance........................... 32
Section 6.04 Compliance with Laws; Payment of Taxes............. 32
Section 6.05 Right of Inspection................................ 33
Section 6.06 Compliance With Environmental Laws................. 33
Section 6.07 Maintenance of Properties.......................... 33
Section 6.08 Payment of Costs................................... 33
Section 6.09 Reporting and Miscellaneous Document
Requirements........................................ 33
Section 6.10 Principal Prepayments as a Result of
Reduction in Available Loan Commitment.............. 35

ARTICLE VII. NEGATIVE COVENANTS............................................ 36
Section 7.01 Mergers Etc......................................... 36
Section 7.02 Investments......................................... 36
Section 7.03 Sale of Assets...................................... 36
Section 7.04 Encumbrance of Restricted Properties................ 36

ARTICLE VIII. FINANCIAL COVENANTS.......................................... 36

(ii)

<PAGE> 4

Page

Section 8.01 Equity Value........................................ 36
Section 8.02 Relationship of Total Outstanding Indebtedness
to Capitalization Value............................. 37
Section 8.03 Relationship of Combined EBITDA to Interest
Expense............................................. 37
Section 8.04 Relationship of Combined EBITDA to Combined
Debt Service........................................ 37
Section 8.05 Relationship of Combined EBITDA to Total
Outstanding Indebtedness............................ 37
Section 8.06 Unsecured Debt Yield................................ 37
Section 8.07 Relationship of Unencumbered Combined EBITDA
to Unsecured Interest Expense....................... 37
Section 8.08 Relationship of Dividends to Funds From
Operations.......................................... 37

ARTICLE IX. EVENTS OF DEFAULT.............................................. 37
Section 9.01 Events of Default................................... 37
Section 9.02 Remedies............................................ 39

ARTICLE X. ADMINISTRATIVE AGENT; RELATIONS AMONG BANKS..................... 40
Section 10.01 Appointment, Powers and Immunities of
Administrative Agent................................ 40
Section 10.02 Reliance by Administrative Agent.................... 40
Section 10.03 Defaults............................................ 41
Section 10.04 Rights of Administrative Agent as a Bank............ 41
Section 10.05 Indemnification of Administrative Agent............. 41
Section 10.06 Non-Reliance on Administrative Agent and
Other Banks......................................... 42
Section 10.07 Failure of Administrative Agent to Act.............. 42
Section 10.08 Resignation or Removal of Administrative Agent...... 42
Section 10.09 Amendments Concerning Agency Function............... 43
Section 10.10 Liability of Administrative Agent................... 43
Section 10.11 Transfer of Agency Function......................... 43
Section 10.12 Non-Receipt of Funds by Administrative Agent........ 43
Section 10.13 Withholding Taxes................................... 44
Section 10.14 Minimum Commitment by Co-Agents..................... 44
Section 10.15 Pro Rata Treatment.................................. 44
Section 10.16 Sharing of Payments Among Banks..................... 44
Section 10.17 Possession of Documents............................. 45

ARTICLE XI. NATURE OF OBLIGATIONS.......................................... 45
Section 11.01 Absolute and Unconditional Obligations.............. 45
Section 11.02 Non-Recourse to Borrower's Principals............... 45

ARTICLE XII. MISCELLANEOUS................................................. 46
Section 12.01 Binding Effect of Request for Advance............... 46
Section 12.02 Amendments and Waivers.............................. 46
Section 12.03 Usury............................................... 47

(iii)

<PAGE> 5
Page

Section 12.04 Expenses; Indemnification......................... 47
Section 12.05 Assignment; Participation......................... 47
Section 12.06 Documentation Satisfactory........................ 49
Section 12.07 Notices........................................... 49
Section 12.08 Setoff............................................ 49
Section 12.09 Table of Contents; Headings....................... 50
Section 12.10 Severability...................................... 50
Section 12.11 Counterparts...................................... 50
Section 12.12 Integration....................................... 50
Section 12.13 Governing Law..................................... 50
Section 12.14 Waivers........................................... 50
Section 12.15 Jurisdiction; Immunities.......................... 50

EXHIBIT A - Authorization Letter

EXHIBIT B - Note

EXHIBIT C - Information Regarding Material Affiliates

EXHIBIT D - Solvency Certificate

EXHIBIT E - Assignment and Assumption Agreement

EXHIBIT F - Restricted Properties

(iv)
<PAGE> 6
REVOLVING LOAN AGREEMENT dated as of May 8, 1996 among BAY APARTMENT
COMMUNITIES, INC., a corporation organized and existing under the laws of the
State of Maryland ("Borrower"), UNION BANK OF SWITZERLAND (New York Branch), (in
its individual capacity and not as Administrative Agent, "UBS") and UNION BANK
OF SWITZERLAND (New York Branch), as administrative agent for the Banks (in such
capacity, together with its successors in such capacity, "Administrative Agent";
UBS and the other lenders who from time to time become Banks pursuant to Section
3.07 or 12.05, each a "Bank" and collectively, the "Banks").

Borrower desires that each Co-Agent (as hereinafter defined) and the
other Banks extend credit as provided herein, and each Co-Agent and the other
Banks are prepared to extend such credit. Accordingly, Borrower, each Co-Agent,
each other Bank and Administrative Agent agree as follows:

ARTICLE I. DEFINITIONS; ETC.

Section 1.01 Definitions. As used in this Agreement the following terms
have the following meanings (except as otherwise provided, terms defined in the
singular to have a correlative meaning when used in the plural and vice versa):

"Acquisition" means the acquisition by Borrower, directly or
indirectly, of an interest in real estate.

"Administrative Agent" has the meaning specified in the preamble.

"Administrative Agent's Office" means Administrative Agent's address
located at 299 Park Avenue, New York, NY 10171, or such other address in the
United States as Administrative Agent may designate by written notice to
Borrower and the Banks.

"Affiliate" means, with respect to any Person (the "first Person"), any
other Person (1) which directly or indirectly controls, or is controlled by, or
is under common control with the first Person; or (2) 10% or more of the
beneficial interest in which is directly or indirectly owned or held by the
first Person. The term "control" means the possession, directly or indirectly,
of the power, alone, to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.

"Agreement" means this Revolving Loan Agreement.

"Applicable Lending Office" means, for each Bank and for its LIBOR Loan
or Base Rate Loan, as applicable, the lending office of such Bank (or of an
Affiliate of such Bank) designated as such on its signature page hereof or in
the applicable Assignment and Assumption Agreement, or such other office of such
Bank (or of an Affiliate of such Bank) as such Bank may from time to time
specify to Administrative Agent and Borrower as the office by which its LIBOR
Loan or Base Rate Loan, as applicable, is to be made and maintained.

<PAGE> 7
"Applicable Margin" means, with respect to the LIBOR Interest Rate and
LIBOR Loans (and for purposes of determining the Banks' L/C Fee Rate under
Section 2.16(f)), the respective rates per annum determined at any time, based
on the range into which Borrower's Credit Rating then falls, in accordance with
the following table (any change in Borrower's Credit Rating causing it to move
to a different range on the table shall effect an immediate change in the
Applicable Margin):

Range of Borrower's
Credit Rating
(S+P/Moody's/ Applicable Margin
Other Agency Ratings) (% per annum)
--------------------- -------------

<S> <C>
below BBB-/below Baa3/ 1.55
other agency equivalent
(or unrated)

BBB-/Baa3/ 1.45
other agency equivalent

BBB/Baa2/ 1.30
other agency equivalent

BBB+/Baa1/ 1.15
other agency equivalent

A-or higher/A3 or higher/ 1.00.
other agency equivalent
</TABLE>

"Assignee" has the meaning specified in Section 12.05.

"Assignment and Assumption Agreement" means an Assignment and
Assumption Agreement, substantially in the form of EXHIBIT E, pursuant to which
a Bank assigns and an Assignee assumes rights and obligations in accordance with
Section 12.05.

"Authorization Letter" means a letter agreement executed by Borrower in
the form of EXHIBIT A.

"Available Loan Commitment" means with respect to each Bank, at any
time, such Bank's Pro Rata Share of the Available Total Loan Commitment.

"Available Total Loan Commitment" means (1) the lesser of the Total
Loan Commitment or the Borrowing Base less (2) the Mark Apartments Holdback.

"Bank" and "Banks" have the respective meanings specified in the
preamble.

2
<PAGE> 8
"Bank Parties" means Administrative Agent and the Banks.

"Banking Day" means (1) any day on which commercial banks are not
authorized or required to close in New York City and (2) whenever such day
relates to a LIBOR Loan, an Interest Period with respect to a LIBOR Loan, or
notice with respect to any LIBOR Loan, a day on which dealings in Dollar
deposits are also carried out in the London interbank market and banks are open
for business in London.

"Base Rate" means, for any day, the higher of (1) the Federal Funds
Rate for such day plus .50%, or (2) the Prime Rate for such day.

"Base Rate Loan" means all or any portion (as the context requires) of
a Bank's Loan which shall accrue interest at a rate determined in relation to
the Base Rate.

"Borrower" has the meaning specified in the preamble.

"Borrower's Accountants" means Coopers & Lybrand, or such other
accounting firm(s) selected by Borrower and reasonably acceptable to the
Required Banks.

"Borrower's Consolidated Financial Statements" means the consolidated
balance sheet and related consolidated statement of operations, accumulated
deficiency in assets and cash flows, and footnotes thereto, of Borrower,
prepared in accordance with GAAP.

"Borrower's Credit Rating" means the rating (or, if more than one, the
lower of the ratings) assigned from time to time to Borrower's unsecured and
unsubordinated long-term indebtedness by, respectively, S+P, Moody's and/or
another rating agency acceptable to Administrative Agent in its sole discretion.

"Borrower's Principals" means the officers and directors of Borrower at
any applicable time.

"Borrower's Share of UJV Combined Outstanding Indebtedness" means the
sum of the indebtedness of each of the UJVs contributing to UJV Combined
Outstanding Indebtedness multiplied by Borrower's respective beneficial
fractional interests in each such UJV.

"Borrowing Base" means, at any time, Combined EBITDA from Restricted
Properties at such time divided by (1) in the event Unencumbered Combined EBITDA
for the most recently ended calendar quarter for which Borrower is required to
have reported financial results pursuant to Section 6.09, annualized (i.e.,
multiplied by four (4)) is less than $10,000,000, 15% or (2) otherwise, 12%;
provided, however, that the Borrowing Base shall be recalculated from time to
time pursuant to Section 2.17, and such recalculated Borrowing Base shall be
effective until the next regular quarterly calculation thereof.

3
<PAGE> 9
"Capitalization Value" means, as of the end of any calendar quarter,
the sum of (1) Combined EBITDA (less all leasing commissions and management and
development fees, net of any expenses applicable thereto, contributing to
Combined EBITDA) for such quarter annualized (i.e., multiplied by four (4)),
capitalized at a rate of 8.25% per annum (i.e., divided by 8.25%), and (2) such
leasing commissions and management and development fees for such quarter,
annualized, (i.e., multiplied by four (4)), capitalized at a rate of 25% per
annum (i.e., divided by 25%), (3) cash and marketable securities of Borrower and
its Consolidated Businesses, as of the end of such quarter, as reflected in
Borrower's Consolidated Financial Statements, and (4) the lesser of (a) the
aggregate book value (on a cost basis) of the properties of Borrower and its
Consolidated Businesses under development plus Borrower's beneficial interest in
the book value (on a cost basis) of the properties of the UJVs under development
or (b) 25% of the sum of the amounts determined pursuant to clauses (1), (2) and
(3) of this definition.

"Capital Lease" means any lease which has been or should be capitalized
on the books of the lessee in accordance with GAAP.

"Closing Date" means the date this Agreement has been executed by all
parties.

"Co-Agent" means UBS, and following such time as Union Bank of
California, N.A. ("UBC") becomes a Bank in accordance with Section 12.05 with a
Loan Commitment of $50,000,000, means each of UBS and UBC and "Co-Agents" means
UBS and UBC collectively.

"Code" means the Internal Revenue Code of 1986.

"Combined Debt Service" means, for any period of time, (1) total debt
service (including principal) paid or payable by Borrower and its Consolidated
Businesses during such period (other than debt service on construction loans
until completion of the relevant construction) plus a deemed annual capital
expense charge of $150 per apartment unit owned by Borrower or its Consolidated
Businesses plus (2) Borrower's beneficial interest in (a) total debt service
(including principal) paid or payable by the UJVs during such period (other than
debt service on construction loans until completion of the relevant construction
plus (b) a deemed annual capital expense charge of $150 per apartment unit owned
by the UJVs.

"Combined EBITDA" means, for any period of time, the sum, without
duplication, of (1) revenues less operating expenses and property taxes before
Interest Expense, general and administrative expenses (for purposes of this
calculation, such general and administrative expenses not to exceed 5% of total
revenues), income taxes, gains or losses on the sale of real estate and/or
marketable securities, depreciation and amortization and extraordinary items for
Borrower and its Consolidated Businesses, and (2) Borrower's beneficial interest
in revenues less operating expenses and property taxes before Interest Expense,
general and administrative expenses (for purposes of this calculation, such
general and administrative expenses not to exceed 5% of total revenues), income
taxes, gains or losses

4
<PAGE> 10
on the sale of real estate and/or marketable securities, depreciation and
amortization and extraordinary items (after eliminating appropriate intercompany
amounts) applicable to each of the UJVs, in all cases as reflected in Borrower's
Consolidated Financial Statements.

"Combined EBITDA from Restricted Properties" means, at any time, the
contribution by the Restricted Properties to Combined EBITDA for the most
recently ended calendar quarter for which Borrower is required to have delivered
the certificate required by paragraph (3) of Section 6.09, annualized (i.e.,
multiplied by four (4)).

"Consolidated Businesses" means, collectively, each Affiliate of
Borrower who is or should be included in Borrower's Consolidated Financial
Statements in accordance with GAAP.

"Consolidated Outstanding Indebtedness" means, as of any time, all
indebtedness and liability for borrowed money, secured or unsecured, of Borrower
and its Consolidated Businesses, including mortgage and other notes payable but
excluding any indebtedness which is margin indebtedness on cash and cash
equivalent securities, all as reflected in Borrower's Consolidated Financial
Statements.

"Continue", "Continuation" and "Continued" refer to the continuation
pursuant to Section 2.12 of a LIBOR Loan as a LIBOR Loan from one Interest
Period to the next Interest Period.

"Convert", "Conversion" and "Converted" refer to a conversion pursuant
to Section 2.12 of a Base Rate Loan into a LIBOR Loan or a LIBOR Loan into a
Base Rate Loan, each of which may be accompanied by the transfer by a Bank (at
its sole discretion) of all or a portion of its Loan from one Applicable Lending
Office to another.

"Debt" means (1) indebtedness or liability for borrowed money, or for
the deferred purchase price of property or services (including trade
obligations); (2) obligations as lessee under Capital Leases; (3) current
liabilities in respect of unfunded vested benefits under any Plan; (4)
obligations under letters of credit issued for the account of any Person; (5)
all obligations arising under bankers' or trade acceptance facilities; (6) all
guarantees, endorsements (other than for collection or deposit in the ordinary
course of business), and other contingent obligations to purchase any of the
items included in this definition, to provide funds for payment, to supply funds
to invest in any Person, or otherwise to assure a creditor against loss; (7) all
obligations secured by any Lien on property owned by the Person whose Debt is
being measured, whether or not the obligations have been assumed; and (8) all
obligations under any agreement providing for contingent participation or other
hedging mechanisms with respect to interest payable on any of the items
described above in this definition.

"Default" means any event which with the giving of notice or lapse of
time, or both, would become an Event of Default.

5
<PAGE> 11
"Default Rate" means a rate per annum equal to: (1) with respect to
Base Rate Loans, a variable rate 3% above the rate of interest then in effect
thereon; and (2) with respect to LIBOR Loans, a fixed rate 3% above the rate(s)
of interest in effect thereon (including the Applicable Margin) at the time of
Default until the end of the then current Interest Period therefor and,
thereafter, a variable rate 3% above the rate of interest for a Base Rate Loan.

"Disposition" means a sale (whether by assignment, transfer or Capital
Lease) of an asset.

"Dollars" and the sign "$" mean lawful money of the United States of
America.

"Elect", "Election" and "Elected" refer to election, if any, by
Borrower pursuant to Section 2.12 to have all or a portion of an advance of the
Loans be outstanding as LIBOR Loans.

"Environmental Discharge" means any discharge or release of any
Hazardous Materials in violation of any applicable Environmental Law.

"Environmental Law" means any applicable Law relating to pollution or
the environment, including Laws relating to noise or to emissions, discharges,
releases or threatened releases of Hazardous Materials into the work place, the
community or the environment, or otherwise relating to the generation,
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.

"Environmental Notice" means any written complaint, order, citation or
notice from any Person (1) affecting or relating to Borrower's compliance with
any Environmental Law in connection with any activity or operations at any time
conducted by Borrower, (2) relating to (a) the existence of any Hazardous
Materials contamination or Environmental Discharges or threatened Hazardous
Materials contamination or Environmental Discharges at any of Borrower's
locations or facilities or (b) remediation of any Environmental Discharge or
Hazardous Materials at any such location or facility or any part thereof; or (3)
any violation or alleged violation by Borrower of any relevant Environmental
Law.

"Equity Value" means, at any time, (1) Capitalization Value less (2)
Total Outstanding Indebtedness.

"ERISA" means the Employee Retirement Income Security Act of 1974,
including the rules and regulations promulgated thereunder.

"ERISA Affiliate" means any corporation which is a member of
the same controlled group of corporations (within the meaning of Section 414(b)
of the Code) as Borrower, or any trade or business which is under common control
(within the meaning of Section 414(c) of the Code) with Borrower, or any
organization which is required to be treated as a single employer with Borrower
under Section 414(m) or 414(o) of the Code.

6
<PAGE> 12
"Event of Default" has the meaning specified in Section 9.01.

"Federal Funds Rate" means, for any day, the rate per annum (expressed
on a 360-day basis of calculation) equal to the weighted average of the rates on
overnight federal funds transactions as published by the Federal Reserve Bank of
New York for such day provided that (1) if such day is not a Banking Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
immediately preceding Banking Day as so published on the next succeeding Banking
Day; and (2) if no such rate is so published on such next succeeding Banking
Day, the Federal Funds Rate for such day shall be the average of the rates
quoted by three (3) Federal Funds brokers to Administrative Agent on such day on
such transactions.

"Fiscal Year" means each period from January 1 to December 31.

"Funds From Operations" means Combined EBITDA less the sum of Interest
Expense and income taxes included in Combined EBITDA.

"GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time, applied on a basis consistent
with those used in the preparation of the financial statements referred to in
Section 5.13 (except for changes concurred in by Borrower's Accountants).

"Good Faith Contest" means the contest of an item if: (1) the item is
diligently contested in good faith, and, if appropriate, by proceedings timely
instituted; (2) reserves that are adequate based on reasonably foreseeable
likely outcomes are established with respect to the contested item; (3) during
the period of such contest, the enforcement of any contested item is effectively
stayed, delayed or postponed; and (4) the failure to pay or comply with the
contested item during the period of the contest is not likely to result in a
Material Adverse Change.

"Governmental Approvals" means any authorization, consent, approval,
license, permit, certification, or exemption of, registration or filing with or
report or notice to, any Governmental Authority.

"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

"Hazardous Materials" means any pollutant, effluents, emissions,
contaminants, toxic or hazardous wastes or substances, as any of those terms are
defined from time to time in or for the purposes of any relevant Environmental
Law, including asbestos fibers and friable asbestos, polychlorinated biphenyls,
and any petroleum or hydrocarbon-based products or derivatives.

7
<PAGE> 13
"Initial Advance" means the first advance of proceeds of the Loans.

"Interest Expense" means, for any period of time, the consolidated
interest expense (without deduction of consolidated interest income, and
excluding (x) interest expense on construction loans and (y) other capitalized
interest expense in respect of construction loans, in any such case under
clauses (x) or (y), only until completion of the relevant construction) of
Borrower and its Consolidated Businesses, including, without limitation or
duplication (or, to the extent not so included, with the addition of), (1) the
portion of any rental obligation in respect of any Capital Lease obligation
allocable to interest expense in accordance with GAAP; (2) the amortization of
Debt discounts; (3) any payments or fees (other than up-front fees) with respect
to interest rate swap or similar agreements; and (4) the interest expense and
items listed in clauses (1) through (3) above applicable to each of the UJVs
multiplied by Borrower's respective beneficial interests in the UJVs, in all
cases as reflected in Borrower's Consolidated Financial Statements.

"Interest Period" means, with respect to any LIBOR Loan, the period
commencing on the date the same is advanced, converted from a Base Rate Loan or
Continued, as the case may be, and ending, as Borrower may select pursuant to
Section 2.05, on the numerically corresponding day in the first, second or third
calendar month thereafter, provided that each such Interest Period which
commences on the last Banking Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Banking Day of the appropriate calendar month.

"Law" means any federal, state or local statute, law, rule, regulation,
ordinance, order, code, or rule of common law, now or hereafter in effect, and
in each case as amended, and any judicial or administrative order, consent
decree or judgment.

"LIBOR Base Rate" means, with respect to any Interest Period therefor,
the rate per annum (rounded upwards if necessary to the nearest 1/16 of 1%)
quoted at approximately 11:00 a.m., New York time, by the principal New York
branch of UBS two (2) Banking Days prior to the first day of such Interest
Period for the offering to leading banks in the London interbank market of
Dollar deposits in immediately available funds, for a period, and in an amount,
comparable to such Interest Period and principal amount of the LIBOR Loan in
question outstanding during such Interest Period.

"LIBOR Interest Rate" means, for any LIBOR Loan, a rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by
Administrative Agent to be equal to the quotient of (1) the LIBOR Base Rate for
such LIBOR Loan for the Interest Period therefor divided by (2) one minus the
LIBOR Reserve Requirement for such LIBOR Loan for such Interest Period.

"LIBOR Loan" means all or any portion (as the context requires) of any
Bank's Loan which shall accrue interest at rate(s) determined in relation to
LIBOR Interest Rate(s).

8
<PAGE> 14
"LIBOR Reserve Requirement" means, for any LIBOR Loan, the average
maximum rate at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during the Interest Period for
such LIBOR Loan under Regulation D by member banks of the Federal Reserve System
in New York City with deposits exceeding $1,000,000,000 against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the LIBOR Reserve Requirement shall also reflect any other
reserves required to be maintained by such member banks by reason of any
Regulatory Change against (1) any category of liabilities which includes
deposits by reference to which the LIBOR Base Rate is to be determined as
provided in the definition of "LIBOR Base Rate" in this Section 1.01 or (2) any
category of extensions of credit or other assets which include loans the
interest rate on which is determined on the basis of rates referred to in said
definition of "LIBOR Base Rate".

"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment for collateral purposes, deposit arrangement, lien
(statutory or other), or other security agreement or charge of any kind or
nature whatsoever of any third party (excluding any right of setoff but
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction to evidence any of
the foregoing).

"Loan" and "Loans" have the respective meanings specified in Section
2.01.

"Loan Commitment" means, with respect to each Bank, the obligation to
make a Loan in the principal amount set forth below:

<TABLE>
<CAPTION>
Loan
Bank Commitment
---- ----------
<S> <C>
UBS $150,000,000

Total $150,000,000
</TABLE>

(subject, however, to the provisions of the third paragraph of Section 2.01)

"Loan Documents" means this Agreement, the Notes, the Authorization
Letter and the Solvency Certificate.

"Majority Banks" means at any time the Banks holding at least 51% of
the then aggregate unpaid principal amount of the Loans.

"Mark Apartments" means the 709-unit apartment project owned by
Borrower, known as the Mark Apartments, currently under construction on an
approximately 17.8-acre parcel of land in Sunnyvale, California.

9
<PAGE> 15
"Mark Apartments Holdback" means, at any time (1) prior to completion
of the Mark Apartments, the amount by which the estimated costs to complete the
Mark Apartments (as determined by Administrative Agent) exceeds the budget for
such costs submitted to and approved by Administrative Agent pursuant to Section
4.01(13) and (2) after such completion, zero.

"Material Adverse Change" means either (1) a material adverse change in
the status of the business, results of operations or financial condition of
Borrower or (2) any event or occurrence of whatever nature which is likely to
have a material adverse effect on the ability of Borrower to repay the Loans and
otherwise perform its obligations under the Loan Documents.

"Material Affiliates" means the Affiliates of Borrower described on
EXHIBIT C, together with (or excluding) any Affiliates of Borrower which are
hereafter from time to time reasonably determined by Administrative Agent to be
material (or no longer material), upon written notice to Borrower, based on the
most recent Borrower's Consolidated Financial Statements.

"Maturity Date" means May 1, 1999.

"Moody's" means Moody's Investor Service, Inc.

"Multiemployer Plan" means a Plan defined as such in Section 3(37) of
ERISA to which contributions have been made by Borrower or any ERISA Affiliate
and which is covered by Title IV of ERISA.

"Note" and "Notes" have the respective meanings specified in Section
2.08.

"Obligations" means each and every obligation, covenant and agreement
of Borrower, now or hereafter existing, contained in this Agreement, and any of
the other Loan Documents, whether for principal, reimbursement obligations,
interest, fees, expenses, indemnities or otherwise, and any amendments or
supplements thereto, extensions or renewals thereof or replacements therefor,
including but not limited to all indebtedness, obligations and liabilities of
Borrower to Administrative Agent and any Bank now existing or hereafter incurred
under or arising out of or in connection with the Notes, this Agreement, the
other Loan Documents, and any documents or instruments executed in connection
therewith; in each case whether direct or indirect, joint or several, absolute
or contingent, liquidated or unliquidated, now or hereafter existing, renewed or
restructured, whether or not from time to time decreased or extinguished and
later increased, created or incurred, and including all indebtedness of
Borrower, under any instrument now or hereafter evidencing or securing any of
the foregoing.

"Parent" means, with respect to any Bank, any Person controlling such
Bank.

10
<PAGE> 16
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.

"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.

"Plan" means any employee benefit or other plan established or
maintained, or to which contributions have been made, by Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA or to which Section 412 of
the Code applies.

"presence", when used in connection with any Environmental Discharge or
Hazardous Materials, means and includes presence, generation, manufacture,
installation, treatment, use, storage, handling, repair, encapsulation,
disposal, transportation, spill, discharge and release.

"Prime Rate" means that rate of interest from time to time announced by
UBS at its Principal Office as its prime commercial lending rate.

"Principal Office" means the principal office of UBS in the United
States, presently located at 299 Park Avenue, New York, New York 10171.

"Pro Rata Share" means, for purposes of this Agreement and with respect
to each Bank, a fraction, the numerator of which is the amount of such Bank's
Loan Commitment and the denominator of which is the Total Loan Commitment.

"Prohibited Transaction" means any transaction proscribed by Section
406 of ERISA or Section 4975 of the Code and to which no statutory or
administrative exemption applies.

"Recourse Debt" means Debt, recourse for the satisfaction of which is
not limited to specified collateral.

"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be amended or supplemented from time to
time, or any similar Law from time to time in effect.

"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as the same may be amended or supplemented from time to
time.

"Regulatory Change" means, with respect to any Bank, any change after
the date of this Agreement in United States federal, state, municipal or foreign
laws or regulations (including Regulation D) or the adoption or making after
such date of any interpretations, directives or requests applying to a class of
banks including such Bank of or under any United

11
<PAGE> 17
States, federal, state, municipal or foreign laws or regulations (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.

"Reportable Event" means any of the events set forth in Section 4043(c)
of ERISA, other than those events as to which the thirty (30) day notice period
is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
Section2615.

"Required Banks" means at any time the Banks holding at least 66 2/3%
of the then aggregate unpaid principal amount of the Loans.

"Restricted Properties" means those properties listed in EXHIBIT F.

"Secured Indebtedness" means that portion of Total Outstanding
Indebtedness that is secured.

"Solvency Certificate" means a certificate in the form of EXHIBIT D, to
be delivered by Borrower pursuant to the terms of this Agreement.

"Solvent" means, when used with respect to any Person, that the fair
value of the property of such Person, on a going concern basis, is greater than
the total amount of liabilities (including, without limitation, contingent
liabilities) of such Person.

"S+P" means Standard and Poor's Corporation.

"Supplemental Fee Letter" means that certain letter, dated the date
hereof, between Administrative Agent and Borrower.

"Total Loan Commitment" means an amount equal to the aggregate amount
of all Loan Commitments.

"Total Outstanding Indebtedness" means the sum, without duplication, of
(1) Consolidated Outstanding Indebtedness and (2) Borrower's Share of UJV
Combined Outstanding Indebtedness.

"UJV Combined Outstanding Indebtedness" means, as of any time, all
indebtedness and liability for borrowed money, secured or unsecured, of the
UJV's, on a combined basis, including mortgage and other notes payable but
excluding any indebtedness which is margin indebtedness on cash and cash
equivalent securities, all as reflected in the balance sheets of each of the
UJVs, prepared in accordance with GAAP.

"UJVs" means the unconsolidated joint ventures (including general and
limited partnerships) in which Borrower owns a beneficial interest and which are
accounted for under the equity method in Borrower's Consolidated Financial
Statements.

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<PAGE> 18
"Unencumbered Combined EBITDA" means that portion of Combined EBITDA
attributable to Unencumbered Wholly-Owned Assets (assuming corporate overhead is
allocated proportionately to Unencumbered Wholly-Owned Assets).

"Unencumbered Wholly-Owned Assets" means assets, reflected on
Borrower's Consolidated Financial Statements, wholly owned, directly or
indirectly, by Borrower and not subject to any Lien to secure all or any portion
of Secured Indebtedness.

"Unsecured Debt Yield" means, for any calendar quarter, the ratio of
(1) Unencumbered Combined EBITDA for such quarter, annualized (i.e., multiplied
by four (4)) to (2) Unsecured Indebtedness as of the end of such calendar
quarter.

"Unsecured Indebtedness" means that portion of Total Outstanding
Indebtedness that is unsecured.

"Unsecured Interest Expense" means that portion of Interest Expense
relating to Unsecured Indebtedness.

Section 1.02 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.

Section 1.03 Computation of Time Periods. Except as otherwise provided
herein, in this Agreement, in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and words "to" and "until" each means "to but excluding".

Section 1.04 Rules of Construction. Except as provided otherwise, when
used in this Agreement (1) "or" is not exclusive; (2) a reference to a law
includes any amendment or modification to such law; (3) a reference to a Person
includes its permitted successors and permitted assigns; (4) all references to
the singular shall include the plural and vice versa; (5) a reference to an
agreement, instrument or document shall include such agreement, instrument or
document as the same may be amended, modified or supplemented from time to time
in accordance with its terms and as permitted by the Loan Documents; (6) all
references to Articles, Sections or Exhibits shall be to Articles, Sections and
Exhibits of this Agreement unless otherwise indicated; (7) "hereunder",
"herein", "hereof" and the like refer to this Agreement as a whole; and (8) all
Exhibits to this Agreement shall be incorporated into this Agreement.

ARTICLE II. THE LOANS

Section 2.01 The Loans. Subject to the terms and conditions of this
Agreement, each of the Banks severally agrees to make a loan to Borrower (each
such loan by

13
<PAGE> 19
a Bank, a "Loan"; such loans, collectively, the "Loans") pursuant to which the
Bank shall from time to time advance and re-advance to Borrower an amount equal
to the excess of such Bank's Available Loan Commitment over all previous
advances made by such Bank which remain unpaid. Within the limits set forth
herein, Borrower may borrow from time to time under this Section 2.01 and prepay
from time to time pursuant to Section 2.09 (subject, however, to the
restrictions on prepayment set forth in said Section), and thereafter re-borrow
pursuant to this Section 2.01. The Loans may be outstanding as (1) Base Rate
Loans; (2) LIBOR Loans; or (3) a combination of the foregoing, as Borrower shall
elect and notify Administrative Agent in accordance with Section 2.14. The LIBOR
Loan and Base Rate Loan of each Bank shall be maintained at such Bank's
Applicable Lending Office for its LIBOR Loan and Base Rate Loan, respectively.

The obligations of the Banks under this Agreement are several, and no
Bank shall be responsible for the failure of any other Bank to make any advance
of a Loan to be made by such other Bank. However, the failure of any Bank to
make any advance of the Loan to be made by it hereunder on the date specified
therefor shall not relieve any other Bank of its obligation to make any advance
of its Loan specified hereby to be made on such date.

Notwithstanding anything to the contrary contained in this Agreement,
UBS shall have no obligation hereunder in respect of a Loan Commitment in excess
of $100,000,000. It is anticipated by UBS and Borrower that, within a short
period of time following the Closing Date, UBC will become a Bank pursuant to
Section 12.05 with a $50,000,000 Loan Commitment. Until such time, the Total
Loan Commitment hereunder shall be deemed to be $100,000,000, and at such time
the respective Loan Commitments of UBS and UBC shall be $100,000,000 and
$50,000,000. It is understood that the foregoing does not constitute a
commitment by UBC to become a Bank hereunder.

Section 2.02 Purpose. Borrower shall use the proceeds of the Loans for
general capital and working capital requirements of Borrower and its
Consolidated Businesses and UJVs and for Acquisitions or real estate
development, construction or reconstruction costs. In no event shall proceeds of
the Loans be used in a manner that would violate Regulation U.

Section 2.03 Advances, Generally. The Initial Advance shall be in the
minimum amount of $1,000,000 and in integral multiples of $100,000 above such
amount and shall be made upon satisfaction of the conditions set forth in
Section 4.01. Subsequent advances shall be made no more frequently than weekly
thereafter, upon satisfaction of the conditions set forth in Section 4.02. The
amount of each advance subsequent to the Initial Advance shall be in the minimum
amount of $1,000,000 (unless less than $1,000,000 is available for disbursement
pursuant to the terms hereof at the time of any subsequent advance, in which
case the amount of such subsequent advance shall be equal to such remaining
availability) and in integral multiples of $100,000 above such amount.

14
<PAGE> 20
Section 2.04 Procedures for Advances. Borrower shall submit to
Administrative Agent a request for each advance hereunder, stating the amount
requested and certifying the purpose, in reasonable detail, for which such
advance is to be used, no later than 11:00 a.m. (New York time) on the date, in
the case of advances of Base Rate Loans, which is one (1) Banking Day, and, in
the case of advances of LIBOR Loans, which is three (3) Banking Days, prior to
the date the advance is to be made. Administrative Agent, upon its receipt and
approval of the request for advance, will so notify the Banks. Not later than
11:00 a.m. (New York time) on the date of each advance, each Bank shall, through
its Applicable Lending Office and subject to the conditions of this Agreement,
make the amount to be advanced by it on such day available to Administrative
Agent, at Administrative Agent's Office and in immediately available funds for
the account of Borrower. The amount so received by Administrative Agent shall,
subject to the conditions of this Agreement, be made available to Borrower, in
immediately available funds, by Administrative Agent's crediting an account of
Borrower designated by Borrower and maintained with Administrative Agent at
Administrative Agent's Office.

Section 2.05 Interest Periods; Renewals. In the case of the LIBOR
Loans, Borrower shall select an Interest Period of any duration in accordance
with the definition of Interest Period in Section 1.01, subject to the following
limitations: (1) no Interest Period may extend beyond the Maturity Date; (2) if
an Interest Period would end on a day which is not a Banking Day, such Interest
Period shall be extended to the next Banking Day, unless such Banking Day would
fall in the next calendar month, in which event such Interest Period shall end
on the immediately preceding Banking Day; and (3) only five (5) discrete
segments of a Bank's Loan bearing interest at a LIBOR Interest Rate, for a
designated Interest Period, pursuant to a particular Election, Conversion or
Continuation, may be outstanding at any one time (each such segment of each
Bank's Loan corresponding to a proportionate segment of each of the other Banks'
Loans).

Upon notice to Administrative Agent as provided in Section 2.14,
Borrower may Continue any LIBOR Loan on the last day of the Interest Period of
the same or different duration in accordance with the limitations provided
above. If Borrower shall fail to give notice to Administrative Agent of such a
Continuation, such LIBOR Loan shall automatically become a LIBOR Loan with an
Interest Period of one (1) month on the last day of the current Interest Period.

Section 2.06 Interest. Borrower shall pay interest to Administrative
Agent for the account of the applicable Bank on the outstanding and unpaid
principal amount of the Loans, at a rate per annum as follows: (1) for Base Rate
Loans at a rate equal to the Base Rate; and (2) for LIBOR Loans at a rate equal
to the applicable LIBOR Interest Rate plus the Applicable Margin. Any principal
amount not paid when due (when scheduled, at acceleration or otherwise) shall
bear interest thereafter, payable on demand, at the Default Rate.

The interest rate on Base Rate Loans shall change when the Base Rate
changes. Interest on Base Rate Loans and LIBOR Loans shall not exceed the
maximum amount

15
<PAGE> 21
permitted under applicable law. Interest shall be calculated for the actual
number of days elapsed on the basis of, in the case of both Base Rate Loans and
LIBOR Loans, three hundred sixty (360) days.

Accrued interest shall be due and payable in arrears upon and with
respect to any payment or prepayment of principal and, for both Base Rate Loans
and LIBOR Loans, on the first Banking Day of each calendar month; provided,
however, that interest accruing at the Default Rate shall be due and payable on
demand.

Section 2.07 Fees. (a) Borrower agrees to pay to Administrative Agent,
for the accounts of the parties specified therein, the fees provided for in the
Supplemental Fee Letter.

(b) Borrower shall, during the term of the Loans, pay to Administrative
Agent for the account of each Bank a commitment fee computed on the daily unused
Loan Commitment of such Bank, at a rate per annum equal to .15%, calculated on
the basis of a year of three hundred sixty (360) days for the actual number of
days elapsed. The accrued commitment fee shall be due and payable quarterly in
arrears on the tenth (10th) day of August, November, February and May of each
year, commencing on the first such date after the Closing Date, and upon the
Maturity Date or earlier termination of the Loan Commitments.

Section 2.08 Notes. The Loan made by each Bank under this Agreement
shall be evidenced by, and repaid with interest in accordance with, a single
promissory note of Borrower in the form of EXHIBIT B duly completed and executed
by Borrower, in the principal amount equal to such Bank's Loan Commitment,
payable to such Bank for the account of its Applicable Lending Office (each such
note, as the same may hereafter be amended, modified, extended, severed,
assigned, renewed or restated from time to time, including any substitute notes
pursuant to Section 3.07 or 12.05, a "Note"; all such notes, as so amended,
modified, extended, severed, assigned, renewed, restated and substituted,
collectively, the "Notes"). Each Note shall mature, and all outstanding
principal and other sums thereunder shall be paid in full, on the Maturity Date.

Each Bank is hereby authorized by Borrower to endorse on the schedule
attached to the Note held by it, the amount of each advance and each payment of
principal received by such Bank for the account of its Applicable Lending
Office(s) on account of its Loan, which endorsement shall, in the absence of
manifest error, be conclusive as to the outstanding balance of the Loan made by
such Bank; provided, however, that the failure to make such notation with
respect to the Loan or each advance or payment shall not limit or otherwise
affect the obligations of Borrower under this Agreement or the Note held by such
Bank.

Section 2.09 Prepayments. Without prepayment premium or penalty but
subject to Section 3.05, Borrower may, upon at least one (1) Banking Day's
notice to

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<PAGE> 22
Administrative Agent in the case of the Base Rate Loans, and at least three (3)
Banking Days' notice to Administrative Agent in the case of LIBOR Loans, prepay
the Loans, provided that (1) any partial prepayment under this Section shall be
in integral multiples of $1,000,000; (2) a LIBOR Loan may be prepaid only on the
last day of the applicable Interest Period for such LIBOR Loan; and (3) each
prepayment under this Section shall include all interest accrued on the amount
of principal prepaid through the date of prepayment.

Section 2.10 Cancellation of Commitments. (a) At any time, Borrower
shall have the right, without premium or penalty, to terminate any unused Loan
Commitments, in whole or in part, from time to time, provided that: (1) Borrower
shall give notice of each such termination to Administrative Agent no later then
10:00 a.m. (New York time) on the date which is fifteen (15) Banking Days prior
to the effectiveness of such termination; (2) the Loan Commitments of each of
the Banks must be terminated ratably and simultaneously with those of the other
Banks; and (3) each partial termination of the Loan Commitments as a whole (and
corresponding reduction of the Total Loan Commitment) shall be in an integral
multiple of $1,000,000.

(b) The Loan Commitments, to the extent terminated, may not be
reinstated.

Section 2.11 Method of Payment. Borrower shall make each payment under
this Agreement and under the Notes not later than 11:00 A.M. (New York time) on
the date when due in Dollars to Administrative Agent at Administrative Agent's
Office in immediately available funds. Administrative Agent will thereafter, on
the day of its receipt of each such payment, cause to be distributed to each
Bank (1) such Bank's ratable share (based upon the respective outstanding
principal amounts and rate(s) of interest under the Notes of the Banks) of the
payments of principal and interest in like funds for the account of such Bank's
Applicable Lending Office; and (2) fees payable to such Bank in accordance with
the terms of this Agreement. Borrower hereby authorizes Administrative Agent and
the Banks, if and to the extent payment by Borrower is not made when due under
this Agreement or under the Notes, to charge from time to time against any
account Borrower maintains with Administrative Agent or any Bank any amount so
due to Administrative Agent and/or the Banks.

Except to the extent provided in this Agreement, whenever any payment
to be made under this Agreement or under the Notes is due on any day other than
a Banking Day, such payment shall be made on the next succeeding Banking Day,
and such extension of time shall in such case be included in the computation of
the payment of interest and other fees, as the case may be.

Section 2.12 Elections, Conversions or Continuation of Loans. Subject
to the provisions of Article III and Sections 2.05 and 2.13, Borrower shall have
the right to Elect to have all or a portion of any advance of the Loans be LIBOR
Loans, to Convert Base Rate Loans into LIBOR Loans, to Convert LIBOR Loans into
Base Rate Loans, or to Continue LIBOR Loans as LIBOR Loans, at any time or from
time to time, provided that (1) Borrower

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<PAGE> 23
shall give Administrative Agent notice of each such Election, Conversion or
Continuation as provided in Section 2.14; and (2) a LIBOR Loan may be Converted
or Continued only on the last day of the applicable Interest Period for such
LIBOR Loan. Except as otherwise provided in this Agreement, each Election,
Continuation and Conversion shall be applicable to each Bank's Loan in
accordance with its Pro Rata Share.

Section 2.13 Minimum Amounts. With respect to the Loans as a whole,
each Election and each Conversion shall be in an amount at least equal to
$1,000,000 and in integral multiples of $100,000.

Section 2.14 Certain Notices Regarding Elections, Conversions and
Continuations of Loans. Notices by Borrower to Administrative Agent of
Elections, Conversions and Continuations of LIBOR Loans shall be irrevocable and
shall be effective only if received by Administrative Agent not later than 10:00
a.m. (New York time) on the number of Banking Days prior to the date of the
relevant Election, Conversion or Continuation specified below:

Number of Banking
Notice Days Prior
------ ----------

Conversions into Base Rate two (2)
Loans

Elections of, Conversions into or Continuations three (3)
as, LIBOR Loans

Promptly following its receipt of any such notice, Administrative Agent shall so
advise the Banks. Each such notice of Election shall specify the portion of the
amount of the advance that is to be LIBOR Loans (subject to Section 2.13) and
the duration of the Interest Period applicable thereto (subject to Section
2.05); each such notice of Conversion shall specify the LIBOR Loans or Base Rate
Loans to be Converted; and each such notice of Conversion or Continuation shall
specify the date of Conversion or Continuation (which shall be a Banking Day),
the amount thereof (subject to Section 2.13) and the duration of the Interest
Period applicable thereto (subject to Section 2.05). In the event that Borrower
fails to Elect to have any portion of an advance be LIBOR Loans, the entire
amount of such advance shall constitute Base Rate Loans. In the event that
Borrower fails to Continue LIBOR Loans within the time period and as otherwise
provided in this Section, such LIBOR Loans will automatically become LIBOR Loans
with an Interest Period of one (1) month on the last day of the then current
applicable Interest Period for such LIBOR Loans.

Section 2.15 Late Payment Premium. Borrower shall, at Administrative
Agent's option, pay to Administrative Agent for the account of the Banks a late
payment

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<PAGE> 24
premium in the amount of 4% of any payments of interest under the Loans made
more than ten (10) days after the due date thereof, which shall be due with any
such late payment.

Section 2.16 Letters of Credit. (a) Borrower, by notice to
Administrative Agent, may request, in lieu of advances of proceeds of the Loans,
that Administrative Agent issue unconditional, irrevocable standby letters of
credit (each, a "Letter of Credit") for the account of Borrower, payable by
sight drafts, for such beneficiaries and with such other terms as Borrower shall
specify. Promptly upon issuance of a Letter of Credit, Administrative Agent
shall notify each of the Banks.

(b) The amount of any Letter of Credit shall be limited to the lesser
of (x) $50,000,000 less the aggregate amount of all Letters of Credit
theretofore issued or (y) the amount of proceeds of the Loans available to be
advanced pursuant to Section 2.01 (including taking into account the Mark
Apartments Holdback), it being understood that the amount of each Letter of
Credit issued and outstanding shall (1) effect a reduction, by an equal amount,
of proceeds available to Borrower under the Loans as a whole (such reduction to
be allocated to each Bank's Loan ratably in accordance with the Banks'
respective Pro Rata Shares) and (2) be treated as advanced as of the date of
issuance of the Letter of Credit for purposes of calculating the commitment fee
under Section 2.07(b).

(c) The amount of each Letter of Credit shall be further subject to the
limitations applicable to amounts of advances set forth in Section 2.03 and the
procedures for the issuance of each Letter of Credit shall be the same as the
procedures applicable to the making of advances as set forth in the first
sentence of Section 2.04. Administrative Agent's issuance of each Letter of
Credit shall be subject to Administrative Agent's determination that Borrower
has satisfied all conditions precedent to its entitlement to an advance of
proceeds of the Loans.

(d) Each Letter of Credit shall expire no later than one (1) month
prior to the Maturity Date.

(e) In connection with, and as a further condition to the issuance of,
each Letter of Credit, Borrower shall execute and deliver to Administrative
Agent an application for the Letter of Credit on Administrative Agent's standard
form therefor, together with such other documents, opinions and assurances as
Administrative Agent shall reasonably require.

(f) In connection with each Letter of Credit, Borrower hereby covenants
to pay to Administrative Agent the following fees each payable quarterly in
arrears (on the first Banking Day of each calendar quarter following the
issuance of the Letter of Credit): (1) a fee for the account of the Banks,
computed daily on the amount of the Letter of Credit issued and outstanding at a
rate per annum equal to the "Banks' L/C Fee Rate" (as hereinafter defined) and
(2) a fee, for Administrative Agent's own account, computed daily on the amount
of the Letter of Credit issued and outstanding at a rate per annum equal to
0.125%. For purposes of this Agreement, the "Banks' L/C Fee Rate" shall mean, at
any time, a rate per annum equal to

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<PAGE> 25
the Applicable Margin less 0.125% per annum. It is understood and agreed that
the last installment of the fees provided for in this paragraph (f) with respect
to any particular Letter of Credit shall be due and payable on the first day of
the calendar quarter following the return, undrawn, or cancellation of such
Letter of Credit.

(g) The parties hereto acknowledge and agree that, immediately upon
notice from Administrative Agent of any drawing under a Letter of Credit, each
Bank shall, notwithstanding the existence of a Default or Event of Default or
the non-satisfaction of any conditions precedent to the making of an advance of
the Loans, advance proceeds of its Loan, in an amount equal to its Pro Rata
Share of such drawing, which advance shall be made to Administrative Agent to
reimburse Administrative Agent, for its own account, for such drawing. Each of
the Banks further acknowledges that its obligation to fund its Pro Rata Share of
drawings under Letters of Credit as aforesaid shall survive the Banks'
termination of this Agreement or enforcement of remedies hereunder or under the
other Loan Documents.

(h) Borrower agrees, upon the occurrence of an Event of Default and at
the written request of Administrative Agent, (1) to deposit with Administrative
Agent cash collateral in the amount of all the outstanding Letters of Credit,
which cash collateral shall be held by Administrative Agent as security for
Borrower's obligations in connection with the Letters of Credit and (2) to
execute and deliver to Administrative Agent such documents as Administrative
Agent reasonably requests to confirm and perfect the assignment of such cash
collateral to Administrative Agent.

Section 2.17 Special Provisions Regarding Advances in Connection with
Acquisitions. In the case of each advance relating to an Acquisition, the
Borrowing Base shall be recalculated, and adjustments shall be made with respect
to determinations of compliance with the covenants contained in Article VIII,
all as set forth in this Section, and the making of the advance shall be
subject, in addition to the limitations and conditions applicable to advances of
the Loans generally, to the satisfaction of the conditions set forth in this
Section. As conditions to each advance relating to an Acquisition, Borrower
shall be required to submit to Administrative Agent, no later than five (5)
Banking Days prior to the date such advance is to be made: (1) a certificate,
from the officer of Borrower specified in paragraph (3) of Section 6.09,
containing (x) a computation of the Borrowing Base and the Available Total Loan
Commitment as specified in clause (b) of said paragraph (3) and (y) covenant
compliance calculations as specified in clause (c) of said paragraph (3), except
including, in each case, the pro-forma adjustments described below, which
certificate shall (a) indicate that the outstanding principal amount under the
Notes, together with the amount of the requested advance, does not exceed the
Available Total Loan Commitment and (b) demonstrate Borrower's compliance, as of
the end of the most recently ended calendar quarter for which financial results
are required under Section 6.09 to have been reported by Borrower (the
"Reference Date"), with all covenants enumerated in said clause (c) of said
paragraph (3), and (2) a certificate by the same officer setting forth the
income projected to be generated from such Acquisition for purposes of
determining Combined EBITDA and the type of income so generated.

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<PAGE> 26
In connection with each advance of Loan proceeds relating to an
Acquisition, the following pro-forma adjustments shall be made to the Borrowing
Base/Available Total Loan Commitment and covenant compliance calculations:

(i) Total Outstanding Indebtedness shall be adjusted by adding thereto
all indebtedness that is assumed or incurred by Borrower in connection with
the Acquisition (and any other Acquisition since the Reference Date);

(ii) Combined EBITDA, for the relevant period(s), shall be adjusted by
adding thereto (or subtracting therefrom, in the case of a loss) actual
revenues less operating costs before interest expense, income taxes,
depreciation, amortization and extraordinary items, for the same period(s),
from the acquired property (and any other property acquired since the
Reference Date);

(iii) If, upon its Acquisition, the acquired property would become (or
any other property acquired since the Reference Date shall have become)
part of Unencumbered Wholly-Owned Assets, Unencumbered Combined EBITDA, for
the relevant period(s), shall be adjusted by adding thereto (or subtracting
therefrom, in the case of a loss) actual income before interest expense,
income taxes, depreciation, amortization and extraordinary items, for the
same period(s), from the acquired property (and such other acquired
property); and

(iv) Interest Expense, Unsecured Interest Expense and Combined Debt
Service for the relevant period(s), shall be adjusted by adding thereto
interest expense incurred on, respectively, all indebtedness and unsecured
indebtedness that is assumed and/or incurred by Borrower in connection with
the Acquisition (and any other property acquired since the Reference Date),
assuming, for purposes of this calculation, that such indebtedness were to
bear interest for the entire relevant period(s) at a rate per annum equal
to the LIBOR Interest Rate for an Interest Period of one (1) month, plus
1.55% per annum, as of the date of the Acquisition and would be amortized
over a twenty-five (25)-year period.

ARTICLE III. YIELD PROTECTION; ILLEGALITY; ETC.

Section 3.01 Additional Costs. Borrower shall pay directly to each Bank
from time to time on demand such amounts as such Bank may determine to be
necessary to compensate it for any increased costs which such Bank determines
are attributable to its making or maintaining a LIBOR Loan, or its obligation to
make or maintain a LIBOR Loan, or its obligation to Convert a Base Rate Loan to
a LIBOR Loan hereunder, or any reduction in any amount receivable by such Bank
hereunder in respect of its LIBOR Loan or such obligations (such increases in
costs and reductions in amounts receivable being herein called "Additional
Costs"), in each case resulting from any Regulatory Change which:

<PAGE> 27
(1) changes the basis of taxation of any amounts payable to
such Bank under this Agreement or the Notes in respect of any such
LIBOR Loan (other than changes in the rate of general corporate,
franchise, branch profit, net income or other income tax imposed on
such Bank or its Applicable Lending Office by the jurisdiction in which
such Bank has its principal office or such Applicable Lending Office);
or

(2) (other than to the extent the LIBOR Reserve Requirement is
taken into account in determining the LIBOR Rate at the commencement of
the applicable Interest Period) imposes or modifies any reserve,
special deposit, deposit insurance or assessment, minimum capital,
capital ratio or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or other liabilities
of, such Bank (including any LIBOR Loan or any deposits referred to in
the definition of "LIBOR Interest Rate" in Section 1.01), or any
commitment of such Bank (including such Bank's Loan Commitment
hereunder); or

(3) imposes any other condition affecting this Agreement or
the Notes (or any of such extensions of credit or liabilities).

Without limiting the effect of the provisions of the first
paragraph of this Section, in the event that, by reason of any Regulatory
Change, any Bank either (1) incurs Additional Costs based on or measured by the
excess above a specified level of the amount of a category of deposits of other
liabilities of such Bank which includes deposits by reference to which the LIBOR
Interest Rate is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes loans based on
the LIBOR Interest Rate or (2) becomes subject to restrictions on the amount of
such a category of liabilities or assets which it may hold, then, if such Bank
so elects by notice to Borrower (with a copy to Administrative Agent), the
obligation of such Bank to permit Elections of, to Continue, or to Convert Base
Rate Loans into, LIBOR Loans shall be suspended (in which case the provisions of
Section 3.04 shall be applicable) until such Regulatory Change ceases to be in
effect.

Determinations and allocations by a Bank for purposes of this
Section of the effect of any Regulatory Change pursuant to the first or second
paragraph of this Section, on its costs or rate of return of making or
maintaining its Loan or portions thereof or on amounts receivable by it in
respect of its Loan or portions thereof, and the amounts required to compensate
such Bank under this Section, shall be included in a calculation of such amounts
given to Borrower and shall be conclusive absent manifest error.

Section 3.02 Limitation on Types of Loans. Anything herein to
the contrary notwithstanding, if, on or prior to the determination of the LIBOR
Interest Rate for any Interest Period:

(1) Administrative Agent reasonably determines (which
determination shall be conclusive) that quotations of interest rates
for the relevant deposits referred to in the

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<PAGE> 28
definition of "LIBOR Interest Rate" in Section 1.01 are not being
provided in the relevant amounts or for the relevant maturities for
purposes of determining rates of interest for the LIBOR Loans as
provided in this Agreement; or

(2) a Bank reasonably determines (which determination shall be
conclusive) and promptly notifies Administrative Agent that the
relevant rates of interest referred to in the definition of "LIBOR
Interest Rate" in Section 1.01 upon the basis of which the rate of
interest for LIBOR Loans for such Interest Period is to be determined
do not adequately cover the cost to such Bank of making or maintaining
such LIBOR Loan for such Interest Period;

then Administrative Agent shall give Borrower prompt notice thereof, and so long
as such condition remains in effect, the Banks (or, in the case of the
circumstances described in clause (2) above, the affected Bank) shall be under
no obligation to permit Elections of LIBOR Loans, to Convert Base Rate Loans
into LIBOR Loans or to Continue LIBOR Loans and Borrower shall, on the last
day(s) of the then current Interest Period(s) for the affected outstanding LIBOR
Loans, either prepay the affected LIBOR Loans or Convert the affected LIBOR
Loans into Base Rate Loans in accordance with Section 2.12.

Section 3.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to honor its obligation to make or maintain a LIBOR Loan
hereunder, to allow Elections of a LIBOR Loan or to Convert a Base Rate Loan
into a LIBOR Loan, then such Bank shall promptly notify Administrative Agent and
Borrower thereof and such Bank's obligation to make or maintain, to permit
Elections of, to Continue, or to Convert its Base Rate Loan into, a LIBOR Loan
shall be suspended (in which case the provisions of Section 3.04 shall be
applicable) until such time as such Bank may again make and maintain a LIBOR
Loan.

Section 3.04 Treatment of Affected Loans. If the obligations of any
Bank to permit an Election of a LIBOR Loan, to Continue its LIBOR Loan, or to
Convert its Base Rate Loan into a LIBOR Loan, are suspended pursuant to Sections
3.01 or 3.03 (each LIBOR Loan so affected being herein called an "Affected
Loan"), such Bank's Affected Loan shall be automatically Converted into a Base
Rate Loan on the last day of the then current Interest Period for the Affected
Loan (or, in the case of a Conversion required by Sections 3.01 or 3.03, on such
earlier date as such Bank may specify to Borrower).

To the extent that such Bank's Affected Loan has been so Converted, all
payments and prepayments of principal which would otherwise be applied to such
Bank's Affected Loan shall be applied instead to its Base Rate Loan and such
Bank shall have no obligation to Convert its Base Rate Loan into a LIBOR Loan.

Section 3.05 Certain Compensation. Other than in connection with a
Conversion of an Affected Loan, Borrower shall pay to Administrative Agent for
the account

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of the applicable Bank, upon the request of such Bank through Administrative
Agent which request includes a calculation of the amount(s) due, such amount or
amounts as shall be sufficient (in the reasonable opinion of such Bank) to
compensate it for any loss, cost or expense which such Bank reasonably
determines is attributable to:

(1) any payment, prepayment, Conversion or Continuation of a
LIBOR Loan made by such Bank on a date other than the last day of an
applicable Interest Period for such LIBOR Loan whether by reason of
acceleration or otherwise; or

(2) any failure by Borrower for any reason to Convert or
Continue a LIBOR Loan to be Converted or Continued by such Bank on the
date specified therefor in the relevant notice under Section 2.14; or

(3) any failure by Borrower to borrow (or to qualify for a
borrowing of) a LIBOR Loan which would otherwise be made hereunder on
the date specified in the relevant Election notice under Section 2.14
given or submitted by Borrower.

Without limiting the foregoing, such compensation shall
include an amount equal to the present value (using as the discount rate an
interest rate equal to the rate determined under (2) below) of the excess, if
any, of (1) the amount of interest which otherwise would have accrued on the
principal amount so paid, prepaid, Converted or Continued (or not Converted,
Continued or borrowed) for the period from the date of such payment, prepayment,
Conversion or Continuation (or failure to Convert, Continue or borrow) to the
last day of the then current applicable Interest Period for the LIBOR Loan (or,
in the case of a failure to Convert, Continue or borrow, to the last day of the
applicable Interest Period for the LIBOR Loan which would have commenced on the
date specified therefor in the relevant notice) at the applicable rate of
interest for the LIBOR Loan provided for herein, over (2) the amount of interest
(as reasonably determined by such Bank) based upon the interest rate which such
Bank would have bid in the London interbank market for Dollar deposits, for
amounts comparable to such principal amount and maturities comparable to such
period. A determination of any Bank as to the amounts payable pursuant to this
Section shall be conclusive absent manifest error.

Section 3.06 Capital Adequacy. If any Bank shall have
determined that, after the date hereof, the adoption of any applicable law, rule
or regulation regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such Governmental Authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on capital of such Bank (or its Parent) as a consequence of such
Bank's obligations hereunder to a level below that which such Bank (or its
Parent) could have achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within
fifteen (15)

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<PAGE> 30
days after demand by such Bank (with a copy to Administrative Agent), Borrower
shall pay to such Bank such additional amount or amounts as will compensate such
Bank (or its Parent) for such reduction. A certificate of any Bank claiming
compensation under this Section, setting forth in reasonable detail the basis
therefor, shall be conclusive absent manifest error.

Section 3.07 Substitution of Banks. If any Bank (an "Affected
Bank") (1) makes demand upon Borrower for (or if Borrower is otherwise required
to pay) Additional Costs pursuant to Section 3.01 or (2) is unable to make or
maintain its LIBOR Loan as a result of a condition described in Section 3.03 or
clause (2) of Section 3.02, Borrower may, within ninety (90) days of receipt of
such demand or notice (or the occurrence of such other event causing Borrower to
be required to pay Additional Costs or causing said Section 3.03 or clause (2)
of Section 3.02 to be applicable), as the case may be, give written notice (a
"Replacement Notice") to Administrative Agent and to each Bank of Borrower's
intention either (x) to prepay in full the Affected Bank's Note and to terminate
the Affected Bank's entire Loan Commitment or (y) to replace the Affected Bank
with another financial institution (the "Replacement Bank") designated in such
Replacement Notice.

In the event Borrower opts to give the notice provided for in
clause (x) above, and if the Affected Bank shall not agree within thirty (30)
days of its receipt thereof to waive the payment of the Additional Costs in
question or the effect of the circumstances described in Section 3.03 or clause
(2) of Section 3.02, then, so long as no Default or Event of Default shall
exist, Borrower may (notwithstanding the provisions of clause (2) of Section
2.10(a)) terminate the Affected Bank's entire Loan Commitment, provided that in
connection therewith it pays to the Affected Bank all outstanding principal and
accrued and unpaid interest under the Affected Bank's Note, together with all
other amounts, if any, due from Borrower to the Affected Bank, including all
amounts properly demanded and unreimbursed under Section 3.01.

In the event Borrower opts to give the notice provided for in
clause (y) above, and if (i) Administrative Agent shall, within thirty (30) days
of its receipt of the Replacement Notice, notify Borrower and each Bank in
writing that the Replacement Bank is reasonably satisfactory to Administrative
Agent and (ii) the Affected Bank shall not, prior to the end of such thirty
(30)-day period, agree to waive the payment of the Additional Costs in question
or the effect of the circumstances described in Section 3.03 or clause (2) of
Section 3.02, then the Affected Bank shall, so long as no Default or Event of
Default shall exist, assign its Note and all of its rights and obligations under
this Agreement to the Replacement Bank, and the Replacement Bank shall assume
all of the Affected Bank's rights and obligations, pursuant to an agreement,
substantially in the form of an Assignment and Assumption Agreement, executed by
the Affected Bank and the Replacement Bank. In connection with such assignment
and assumption, the Replacement Bank shall pay to the Affected Bank an amount
equal to the outstanding principal amount under the Affected Bank's Note plus
all interest accrued thereon, plus all other amounts, if any (other than the
Additional Costs in question), then due and payable to the Affected Bank;
provided, however, that prior to or simultaneously with any such assignment and
assumption, Borrower shall have paid to such Affected Bank all

25
<PAGE> 31
amounts properly demanded and unreimbursed under Section 3.01. Upon the
effective date of such assignment and assumption, the Replacement Bank shall
become a Bank Party to this Agreement and shall have all the rights and
obligations of a Bank as set forth in such Assignment and Assumption Agreement,
and the Affected Bank shall be released from its obligations hereunder, and no
further consent or action by any party shall be required. Upon the consummation
of any assignment pursuant to this Section, a substitute note shall be issued to
the Replacement Bank by Borrower, in exchange for the return of the Affected
Bank's Note. Such substitute note shall constitute a "Note" and the obligations
evidenced by such substitute note shall constitute "Obligations" for all
purposes of this Agreement and the other Loan Documents. In connection with
Borrower's execution of substitute notes as aforesaid, Borrower shall deliver to
Administrative Agent evidence, satisfactory to Administrative Agent, of all
requisite corporate action to authorize Borrower's execution and delivery of the
substitute notes and any related documents. If the Replacement Bank is not
incorporated under the laws of the United States of America or a state thereof,
it shall, prior to the first date on which interest or fees are payable
hereunder for its account, deliver to Borrower and Administrative Agent
certification as to exemption from deduction or withholding of any United States
federal income taxes in accordance with Section 10.13. Each Replacement Bank
shall be deemed to have made the representations contained in, and shall be
bound by the provisions of, Section 10.13.

Borrower, Administrative Agent and the Banks shall execute
such modifications to the Loan Documents as shall be reasonably required in
connection with and to effectuate the foregoing.

Section 3.08 Applicability. The provisions of this Article III
shall be applied to Borrower so as not to discriminate against Borrower
vis-a-vis similarly situated customers of the Banks.

ARTICLE IV. CONDITIONS PRECEDENT

Section 4.01 Conditions Precedent to the Initial Advance. The
obligations of the Banks hereunder and the obligation of each Bank to make the
Initial Advance are subject to the condition precedent that Co-Agents shall have
received and approved on or before the Closing Date (other than with respect to
paragraph (10) below which shall be required prior to the Initial Advance) each
of the following documents, and each of the following requirements shall have
been fulfilled:

(1) Fees and Expenses. The payment of (A) all fees and
expenses incurred by Co-Agents and Administrative Agent (including,
without limitation, the reasonable fees and expenses of legal counsel);
and (B) those fees specified in the Supplemental Fee Letter to be paid
by Borrower on or before the Closing Date;

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<PAGE> 32
(2) Notes. The Note in the amount of $150,000,000 for UBS,
duly executed by Borrower;

(3) Financials of Borrower. Audited Borrower's Consolidated
Financial Statements as of and for the year ended December 31, 1995;

(4) Evidence of Formation of Borrower. Certified (as of the
Closing Date) copies of Borrower's certificate of incorporation and
by-laws, with all amendments thereto, and a certificate of the
Secretary of State of the jurisdiction of formation as to its good
standing therein;

(5) Evidence of All Corporate Action. Certified (as of the
Closing Date) copies of all documents evidencing the corporate action
taken by Borrower authorizing the execution, delivery and performance
of the Loan Documents and each other document to be delivered by or on
behalf of Borrower pursuant to this Agreement;

(6) Incumbency and Signature Certificate of Borrower. A
certificate (dated as of the Closing Date) of the secretary of Borrower
certifying the names and true signatures of each person authorized to
sign on behalf of Borrower;

(7) Solvency Certificate. A duly executed Solvency
Certificate;

(8) Opinion of Counsel for Borrower. A favorable opinion,
dated the Closing Date, of Goodwin, Procter & Hoar, counsel for
Borrower, as to such matters as Administrative Agent may reasonably
request;

(9) Authorization Letter. The Authorization Letter, duly
executed by Borrower;

(10) Request for Advance. A request for an advance in
accordance with Section 2.04;

(11) Certificate. The following statements shall be true and
Administrative Agent shall have received a certificate dated the
Closing Date signed by a duly authorized signatory of Borrower stating,
to the best of the certifying party's knowledge, the following:

(a) All representations and warranties contained in
this Agreement and in each of the other Loan Documents are
true and correct on and as of the Closing Date as though made
on and as of such date, and

(b) No Default or Event of Default has occurred and
is continuing, or could result from the transactions
contemplated by this Agreement and the other Loan Documents;

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<PAGE> 33
(12) Supplemental Fee Letter. The Supplemental Fee Letter,
duly executed by Borrower;

(13) Mark Apartments. A complete project budget regarding the
construction of the Mark Apartments;

(14) Covenant Compliance. A covenant compliance certificate of
the sort required by paragraph (3) of Section 6.09; and

(15) Additional Materials. Such other approvals, documents,
instruments or opinions as Administrative Agent or either Co-Agent may
reasonably request.

Section 4.02 Conditions Precedent to Advances After the
Initial Advance. The obligation of each Bank to make advances of the Loans
subsequent to the Initial Advance shall be subject to satisfaction of the
following conditions precedent:

(1) All conditions of Section 4.01 shall have been and remain
satisfied as of the date of the advance;

(2) No Default or Event of Default shall have occurred and be
continuing as of the date of the advance;

(3) Each of the representations and warranties contained in
this Agreement and in each of the other Loan Documents shall be true
and correct as of the date of the advance;

(4) Administrative Agent shall have received a request for an
advance in accordance with Section 2.04; and

(5) In the case of each advance in connection with an
Acquisition, the conditions set forth in Section 2.17 shall have been
satisfied.

Section 4.03 Deemed Representations. Each request by Borrower
for, and acceptance by Borrower of, an advance of proceeds of the Loans shall
constitute a representation and warranty by Borrower that, as of both the date
of such request and the date of the advance (1) no Default or Event of Default
has occurred and is continuing and (2) each representation or warranty contained
in this Agreement or the other Loan Documents is true and correct in all
material respects.

ARTICLE V. REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Administrative Agent and
each Bank as follows:

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Section 5.01 Due Organization. Borrower is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, has the power and authority to own its assets and to transact the
business in which it is now engaged, and, if applicable, is duly qualified for
the conduct of business and in good standing under the laws of each other
jurisdiction in which such qualification is required and where the failure to be
so qualified would cause a Material Adverse Change.

Section 5.02 Power and Authority; No Conflicts; Compliance
With Laws. The execution, delivery and performance of the obligations required
to be performed by Borrower of the Loan Documents does not and will not (a)
require the consent or approval of its shareholders or such consent or approval
has been obtained, (b) contravene either its certificate of incorporation or
by-laws, (c) to the best of Borrower's knowledge, violate any provision of, or
require any filing, registration, consent or approval under, any Law (including,
without limitation, Regulation U), order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to it, (d)
result in a breach of or constitute a default under or require any consent under
any indenture or loan or credit agreement or any other agreement, lease or
instrument to which it may be a party or by which it or its properties may be
bound or affected except for consents which have been obtained, (e) result in,
or require, the creation or imposition of any Lien, upon or with respect to any
of its properties now owned or hereafter acquired, or (f) to the best of
Borrower's knowledge, cause it to be in default under any such Law, order, writ,
judgment, injunction, decree, determination or award or any such indenture,
agreement, lease or instrument; to the best of its knowledge, Borrower is in
material compliance with all Laws applicable to it and its properties.

Section 5.03 Legally Enforceable Agreements. Each Loan
Document is a legal, valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally.

Section 5.04 Litigation. There are no actions, suits or
proceedings pending or, to its knowledge, threatened against Borrower or any of
its Affiliates before any court or arbitrator or any Governmental Authority
which are reasonably likely to result in a Material Adverse Change.

Section 5.05 Good Title to Properties. Borrower and each of
its Material Affiliates have good, marketable and legal title to all of the
properties and assets each of them purports to own (including, without
limitation, those reflected in the December 31, 1995 financial statements
referred to in Section 5.13), only with exceptions which do not materially
detract from the value of such property or assets or the use thereof in
Borrower's and such Material Affiliate's business, and except to the extent that
any such properties and assets have been encumbered or disposed of since the
date of such financial statements without violating any of the covenants
contained in Article VII or elsewhere in this Agreement. Borrower and its
Material Affiliates enjoy peaceful and undisturbed possession of all leased
property

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<PAGE> 35
necessary in any material respect in the conduct of their respective businesses.
All such leases are valid and subsisting and are in full force and effect.

Section 5.06 Taxes. Borrower has filed all tax returns
(federal, state and local) required to be filed and has paid all taxes,
assessments and governmental charges and levies due and payable without the
imposition of a penalty, including interest and penalties, except to the extent
they are the subject of a Good Faith Contest.

Section 5.07 ERISA. Borrower is in compliance in all material
respects with all applicable provisions of ERISA. Neither a Reportable Event nor
a Prohibited Transaction has occurred with respect to any Plan which could
result in liability of Borrower; no notice of intent to terminate a Plan has
been filed nor has any Plan been terminated within the past five (5) years; no
circumstance exists which constitutes grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administer, a Plan, nor has the PBGC instituted any such proceedings;
Borrower and the ERISA Affiliates have not completely or partially withdrawn
under Sections 4201 or 4204 of ERISA from a Multiemployer Plan; Borrower and the
ERISA Affiliates have met the minimum funding requirements of Section 412 of the
Code and Section 302 of ERISA of each with respect to the Plans of each and
there is no material "Unfunded Current Liability" (as such quoted term is
defined in ERISA) with respect to any Plan established or maintained by each;
and Borrower and the ERISA Affiliates have not incurred any liability to the
PBGC under ERISA (other than for the payment of premiums under Section 4007 of
ERISA). No part of the funds to be used by Borrower in satisfaction of its
obligations under this Agreement constitute "plan assets" of any "employee
benefit plan" within the meaning of ERISA or of any "plan" within the meaning of
Section 4975(e)(1) of the Code, as interpreted by the Internal Revenue Service
and the U.S. Department of Labor in rules, regulations, releases, bulletins or
as interpreted under applicable case law.

Section 5.08 No Default on Outstanding Judgments or Orders.
Borrower and each of its Material Affiliates have satisfied all judgments which
are not being appealed or which are not fully covered by insurance, and are not
in default with respect to any judgment, order, writ, injunction, decree, rule
or regulation of any court, arbitrator or federal, state, municipal or other
Governmental Authority, commission, board, bureau, agency or instrumentality,
domestic or foreign.

Section 5.09 No Defaults on Other Agreements. Except as
disclosed to Co-Agents and Administrative Agent in writing, Borrower is not a
party to any indenture, loan or credit agreement or any lease or other agreement
or instrument or subject to any partnership, trust or other restriction which is
likely to result in a Material Adverse Change. Borrower is not in default in any
respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument which is likely
to result in a Material Adverse Change.

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Section 5.10 Government Regulation. Borrower is not subject to
regulation under the Investment Company Act of 1940 or any statute or regulation
limiting its ability to incur indebtedness for money borrowed as contemplated
hereby.

Section 5.11 Environmental Protection. To the best of
Borrower's knowledge, none of Borrower's or its Material Affiliates' properties
contains any Hazardous Materials that, under any Environmental Law currently in
effect, (1) would impose liability on Borrower that is likely to result in a
Material Adverse Change, or (2) is likely to result in the imposition of a Lien
on any assets of Borrower or its Material Affiliates, in each case if not
properly handled in accordance with applicable Law. To the best of Borrower's
knowledge, neither it nor any of its Material Affiliates is in material
violation of, or subject to any existing, pending or threatened material
investigation or proceeding by any Governmental Authority under any
Environmental Law.

Section 5.12 Solvency. Borrower is, and upon consummation of
the transactions contemplated by this Agreement, the other Loan Documents and
any other documents, instruments or agreements relating thereto, will be,
Solvent.

Section 5.13 Financial Statements. Borrower's Consolidated
Financial Statements most recently delivered to the Banks pursuant to the terms
of this Agreement are in all material respects complete and correct and fairly
present the financial condition of the subjects thereof as of the dates of and
for the periods covered by such statements, all in accordance with GAAP. There
has been no Material Adverse Change since the date of such most recently
delivered Borrower's Consolidated Financial Statements.

Section 5.14 Valid Existence of Affiliates. At the Closing
Date, the only Material Affiliates of Borrower are listed on EXHIBIT C. Each
Material Affiliate is a corporation duly organized and existing in good standing
under the laws of the jurisdiction of its formation. As to each Material
Affiliate, its correct name, the jurisdiction of its formation, Borrower's
percentage of beneficial interest therein, and the type of business in which it
is primarily engaged, are set forth on said EXHIBIT C. Borrower and each of its
Material Affiliates have the power to own their respective properties and to
carry on their respective businesses now being conducted. Each Material
Affiliate is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the respective
businesses conducted by it or its respective properties, owned or held under
lease, make such qualification necessary and where the failure to be so
qualified would cause a Material Adverse Change.

Section 5.15 Insurance. Borrower and each of its Material
Affiliates have in force paid insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in the same type of business and
similarly situated.

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Section 5.16 Accuracy of Information; Full Disclosure. Neither
this Agreement nor any documents, financial statements, reports, notices,
schedules, certificates, statements or other writings furnished by or on behalf
of Borrower to Administrative Agent or any Bank in connection with the
negotiation of this Agreement or the consummation of the transactions
contemplated hereby, or required herein to be furnished by or on behalf of
Borrower (other than projections which are made by Borrower in good faith),
contains any untrue or misleading statement of a material fact or omits a
material fact necessary to make the statements herein or therein not misleading.
To the best of Borrower's knowledge, there is no fact which Borrower has not
disclosed to Administrative Agent and the Banks in writing which materially
affects adversely nor, so far as Borrower can now foresee, will materially
affect adversely the business affairs or financial condition of Borrower or the
ability of Borrower to perform this Agreement and the other Loan Documents.

ARTICLE VI. AFFIRMATIVE COVENANTS

So long as any of the Notes shall remain unpaid or the Loan
Commitments remain in effect, or any other amount is owing by Borrower to any
Bank hereunder or under any other Loan Document, Borrower shall, and, in the
case of Sections 6.01 through 6.07, inclusive, shall cause each of its Material
Affiliates to:

Section 6.01 Maintenance of Existence. Preserve and maintain
its legal existence and good standing in the jurisdiction of its organization,
and qualify and remain qualified as a corporation in each other jurisdiction in
which such qualification is required except to the extent that failure to be so
qualified in such other jurisdictions is not likely to result in a Material
Adverse Change.

Section 6.02 Maintenance of Records. Keep adequate records and
books of account, in which complete entries will be made reflecting all of its
financial transactions, in accordance with GAAP.

Section 6.03 Maintenance of Insurance. At all times, maintain
and keep in force insurance with financially sound and reputable insurance
companies or associations in such amounts and covering such risks as are usually
carried by companies engaged in the same type of business and similarly
situated, which insurance shall be acceptable to Administrative Agent and may
provide for reasonable deductibility from coverage thereof. In connection with
the foregoing, it is understood that Borrower's earthquake insurance coverage in
place as of the Closing Date is acceptable to Administrative Agent.

Section 6.04 Compliance with Laws; Payment of Taxes. Comply in
all material respects with all Laws applicable to it or to any of its properties
or any part thereof, such compliance to include, without limitation, paying
before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property, except to the extent they are the
subject of a Good Faith Contest.

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Section 6.05 Right of Inspection. At any reasonable time and
from time to time upon reasonable notice, permit Administrative Agent or any
Bank or any agent or representative thereof to examine and make copies and
abstracts from its records and books of account and visit its properties and to
discuss its affairs, finances and accounts with the independent accountants of
Borrower. The foregoing shall include, without limitation, the right of
inspection and review by Administrative Agent, its agents and representatives
(including an engineering firm selected by it) of the Mark Apartments and of all
project work and budget compliance in respect thereof.

Section 6.06 Compliance With Environmental Laws. Comply in all
material respects with all applicable Environmental Laws and timely pay or cause
to be paid all costs and expenses incurred in connection with such compliance,
except to the extent there is a Good Faith Contest.

Section 6.07 Maintenance of Properties. Do all things
reasonably necessary to maintain, preserve, protect and keep its properties in
good repair, working order and condition except where the cost thereof is not in
Borrower's best interests and the failure to do so would not result in a
Material Adverse Change.

Section 6.08 Payment of Costs. Pay all costs and expenses
required for the satisfaction of the conditions of this Agreement.

Section 6.09 Reporting and Miscellaneous Document
Requirements. Furnish directly to each of the Banks:

(1) Annual Financial Statements. As soon as available and in
any event within ninety (90) days after the end of each Fiscal Year, Borrower's
Consolidated Financial Statements as of the end of and for such Fiscal Year, in
reasonable detail and stating in comparative form the respective figures for the
corresponding date and period in the prior Fiscal Year and audited by Borrower's
Accountants;

(2) Quarterly Financial Statements. As soon as available and
in any event within forty-five (45) days after the end of each calendar quarter
(other than the last quarter of the Fiscal Year), the unaudited Borrower's
Consolidated Financial Statements as of the end of and for such calendar
quarter, in reasonable detail and stating in comparative form the respective
figures for the corresponding date and period in the prior Fiscal Year;

(3) Certificate of No Default and Financial Compliance. Within
forty-five (45) days after the end of each calendar quarter, a certificate of
Borrower's chief financial officer or treasurer (a) stating that, to the best of
his or her knowledge, no Default or Event of Default has occurred and is
continuing, or if a Default or Event of Default has occurred and is continuing,
specifying the nature thereof and the action which is proposed to be taken with
respect thereto; (b) setting forth the computation of the Borrowing Base and the
Available Total Loan Commitment; (c) stating that the covenants contained in
Sections 7.02, 7.03 and

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7.04 and in Article VIII have been complied with (or specifying those that have
not been complied with) and including computations demonstrating such compliance
(or non-compliance); (d) setting forth the details of all items comprising Total
Outstanding Indebtedness (including amount, maturity, interest rate and
amortization requirements), Secured Indebtedness, Unencumbered Combined EBITDA,
Interest Expense and Unsecured Indebtedness; (e) containing a schedule of the
calculation, prepared by property, of Combined EBITDA for Restricted Properties;
and (f) only at the end of each Fiscal Year, stating Borrower's taxable income;

(4) Certificate of Borrower's Accountants. Simultaneously with
the delivery of the annual financial statements required by paragraph (1) of
this Section, (a) a statement of Borrower's Accountants who audited such
financial statements comparing the computations set forth in the financial
compliance certificate required by paragraph (3) of this Section to the audited
financial statements required by paragraph (1) of this Section and (b) when the
audited financial statements required by paragraph (1) of this Section have a
qualified auditor's opinion, a statement of Borrower's Accountants who audited
such financial statements of whether any Default or Event of Default has
occurred and is continuing;

(5) Notice of Litigation. Promptly after the commencement and
knowledge thereof, notice of all actions, suits, and proceedings before any
court or arbitrator, affecting Borrower which, if determined adversely to
Borrower is likely to result in a Material Adverse Change;

(6) Notices of Defaults and Events of Default. As soon as
possible and in any event within ten (10) days after Borrower becomes aware of
the occurrence of a material Default or any Event of Default, a written notice
setting forth the details of such Default or Event of Default and the action
which is proposed to be taken with respect thereto;

(7) Sales or Acquisitions of Assets. Promptly after the
occurrence thereof, written notice of any Disposition or acquisition (including
Acquisitions) of assets (other than acquisitions or Dispositions of investments
such as certificates of deposit, Treasury securities, money market deposits and
other similar financial instruments in the ordinary course of Borrower's cash
management) in excess of $25,000,000 together with, in the case of any
acquisition of such an asset, copies of all material agreements governing the
acquisition and historical financial information and Borrower's projections with
respect to the property acquired;

(8) Material Adverse Change. As soon as is practicable and in
any event within five (5) days after knowledge of the occurrence of any event or
circumstance which is likely to result in or has resulted in a Material Adverse
Change, written notice thereof;

(9) Intentionally Omitted.

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(10) Offices. Thirty (30) days' prior written notice of any
change in the chief executive office or principal place of business of Borrower;

(11) Environmental and Other Notices. As soon as possible and
in any event within ten (10) days after receipt, copies of all Environmental
Notices received by Borrower which are not received in the ordinary course of
business and which relate to a situation which is likely to result in a Material
Adverse Change;

(12) Insurance Coverage. Promptly, such information concerning
Borrower's insurance coverage as Administrative Agent may reasonably request;

(13) Proxy Statements, Etc. Promptly after the sending or
filing thereof, copies of all proxy statements, financial statements and reports
which Borrower or its Material Affiliates sends to its shareholders, and copies
of all regular, periodic and special reports, and all registration statements
which Borrower or its Material Affiliates files with the Securities and Exchange
Commission or any Governmental Authority which may be substituted therefor, or
with any national securities exchange;

(14) Rent Rolls, Etc.. As soon as available and in any event
within forty-five (45) days after the end of each calendar quarter, a rent roll
and operating statement for each property directly or indirectly owned in whole
or in part by Borrower;

(15) Capital Expenditures. As soon as available and in any
event within forty- five (45) days after the end of each Fiscal Year, a schedule
of such Fiscal Year's capital expenditures and a budget for the next Fiscal
Year's planned capital expenditures for each property directly or indirectly
owned in whole or in part by Borrower;

(16) Mark Apartments. As soon as available and in any event
within fifteen (15) days after the end of each calendar quarter, construction
progress and budget compliance reports in respect of the Mark Apartments,
certified by Borrower to be accurate and complete; and

(17) General Information. Promptly, such other information
respecting the condition or operations, financial or otherwise, of Borrower or
any properties of Borrower as Administrative Agent may from time to time
reasonably request.

Section 6.10 Principal Prepayments as a Result of Reduction in
Available Loan Commitment. If, as a result of a reduction in the Available Total
Loan Commitment, the outstanding principal amount under the Notes at any time
exceeds the Available Total Loan Commitment, Borrower shall, within ten (10)
days of Administration Agent's written demand, make a payment in the amount of
such excess in reduction of such outstanding principal balance.

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ARTICLE VII. NEGATIVE COVENANTS

So long as any of the Notes shall remain unpaid, or the Loan
Commitments remain in effect, or any other amount is owing by Borrower to
Administrative Agent or any Bank hereunder or under any other Loan Document,
Borrower shall not do any or all of the following:

Section 7.01 Mergers Etc. Merge or consolidate with (except
where Borrower is the surviving entity), or sell, assign, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) (or
enter into any agreement to do any of the foregoing).

Section 7.02 Investments. Directly or indirectly, make any
loan or advance to any Person or purchase or otherwise acquire any capital
stock, assets, obligations or other securities of, make any capital contribution
to, or otherwise invest in, or acquire any interest in, any Person (any such
transaction, an "Investment") if such Investment constitutes the acquisition of
a minority interest in a Person (a "Minority Interest") and the amount of such
Investment, together with the value of all other Minority Interests acquired
after the Closing Date, would exceed 15% of Capitalization Value, determined as
of the end of the most recent calendar quarter for which Borrower is required to
have reported financial results pursuant to Section 6.09. A 50% beneficial
interest in a Person, in connection with which the holder thereof exercises
joint control over such Person with the holder(s) of the other 50% beneficial
interest, shall not constitute a "Minority Interest" for purposes of this
Section.

Section 7.03 Sale of Assets. Effect a Disposition of any of
its now owned or hereafter acquired assets, including assets in which Borrower
owns a beneficial interest through its ownership of interests in joint ventures,
aggregating more than 25% of Capitalization Value.

Section 7.04 Encumbrance of Restricted Properties. At any
time, (1) effect a Disposition of, mortgage, hypothecate or otherwise encumber
to secure a Debt any of the Restricted Properties or (2) enter into a pledge or
agreement not to encumber any of the Restricted Properties.

ARTICLE VIII. FINANCIAL COVENANTS

So long as any of the Notes shall remain unpaid, or the Loan
Commitments remain in effect, or any other amount is owing by Borrower to
Administrative Agent or any Bank under this Agreement or under any other Loan
Document, Borrower shall not permit or suffer any or all of the following:

Section 8.01 Equity Value. At any time, Equity Value to be
less than $225,000,000.

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Section 8.02 Relationship of Total Outstanding Indebtedness to
Capitalization Value. At any time, Total Outstanding Indebtedness to exceed 50%
of Capitalization Value.

Section 8.03 Relationship of Combined EBITDA to Interest
Expense. For any calendar quarter, the ratio of (1) Combined EBITDA to (2)
Interest Expense (each for such calendar quarter and annualized, i.e.,
multiplied by four (4)), to be less than 2.50 to 1.00.

Section 8.04 Relationship of Combined EBITDA to Combined Debt
Service. For any calendar quarter, the ratio of (1) Combined EBITDA to (2)
Combined Debt Service (each for such quarter and annualized, i.e., multiplied by
four (4)), to be less than 2.00 to 1.00.

Section 8.05 Relationship of Combined EBITDA to Total
Outstanding Indebtedness. For any calendar quarter, the ratio of (1) Combined
EBITDA for such calendar quarter annualized (i.e., multiplied by four (4)) to
(2) Total Outstanding Indebtedness as of the end of such calendar quarter to be
less than 15%.

Section 8.06 Unsecured Debt Yield. For any calendar quarter,
Unsecured Debt Yield for such calendar quarter to be less than 12%.

Section 8.07 Relationship of Unencumbered Combined EBITDA to
Unsecured Interest Expense. For any calendar quarter, the ratio of (1)
Unencumbered Combined EBITDA to (2) Unsecured Interest Expense (each for such
calendar quarter and annualized, i.e., multiplied by four (4)), to be less than
1.50 to 1.00.

Section 8.08 Relationship of Dividends to Funds From
Operations. For any calendar year, dividends declared by Borrower to exceed 95%
of Funds From Operations, each for such calendar year.

ARTICLE IX. EVENTS OF DEFAULT

Section 9.01 Events of Default. Any of the following events
shall be an "Event of Default":

(1) If Borrower shall: fail to pay the principal of any Notes
or fail to pay interest accruing on any Notes as and when due, and such failure
to pay shall continue unremedied for five (5) days after the due date of such
amount; or fail to make any payment required under Section 6.10 as and when due;
or fail to pay any fee or any other amount due under this Agreement, any other
Loan Document or the Supplemental Fee Letter as and when due and such failure to
pay shall continue unremedied for two (2) Banking Days after written notice by
Administrative Agent of such failure to pay; or

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(2) If any representation or warranty made by Borrower in this
Agreement or in any other Loan Document or which is contained in any
certificate, document, opinion, financial or other statement furnished at any
time under or in connection with a Loan Document shall prove to have been
incorrect in any material respect on or as of the date made; or

(3) If Borrower shall fail (a) to perform or observe any term,
covenant or agreement contained in Article VII or Article VIII; or (b) to
perform or observe any term, covenant or agreement contained in this Agreement
(other than obligations specifically referred to elsewhere in this Section 9.01)
or any Loan Document, or any other document executed by Borrower and delivered
to Administrative Agent or the Banks in connection with the transactions
contemplated hereby and such failure under this clause (b) shall remain
unremedied for thirty (30) consecutive calendar days after notice thereof (or
such shorter cure period as may be expressly prescribed in the applicable
document); provided, however, that if any such default under clause (b) above
cannot by its nature be cured within such thirty (30) day, or shorter, as the
case may be, grace period and so long as Borrower shall have commenced cure
within such thirty (30) day, or shorter, as the case may be, grace period and
shall, at all times thereafter, diligently prosecute the same to completion,
Borrower shall have an additional period, not to exceed sixty (60) days, to cure
such default; in no event, however, is the foregoing intended to effect an
extension of the Maturity Date; or

(4) If Borrower shall fail (a) to pay any Recourse Debt (other
than the payment obligations described in paragraph (1) of this Section) in any
amount, or any Debt (other than Recourse Debt) in an amount equal to or greater
than $10,000,000, in any such case when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) after the expiration of
any applicable grace period, or (b) to perform or observe any material term,
covenant, or condition under any agreement or instrument relating to any such
Debt, when required to be performed or observed, if the effect of such failure
to perform or observe is to accelerate, or to permit the acceleration of, after
the giving of notice or the lapse of time, or both (other than in cases where,
in the judgment of the Required Banks, meaningful discussions likely to result
in (i) a waiver or cure of the failure to perform or observe, or (ii) otherwise
averting such acceleration are in progress between Borrower and the obligee of
such Debt), the maturity of such Debt, or any such Debt shall be declared to be
due and payable, or required to be prepaid (other than by a regularly scheduled
or otherwise required prepayment), prior to the stated maturity thereof; or

(5) If Borrower, or any Affiliate of Borrower to which
$50,000,000 or more of Capitalization Value is attributable, shall (a) generally
not, or be unable to, or shall admit in writing its inability to, pay its debts
as such debts become due; or (b) make an assignment for the benefit of
creditors, petition or apply to any tribunal for the appointment of a custodian,
receiver or trustee for it or a substantial part of its assets; or (c) commence
any proceeding under any bankruptcy, reorganization, arrangement, readjustment
of debt, dissolution or liquidation Law of any jurisdiction, whether now or
hereafter in effect; or (d) have had any such petition or application filed or
any such proceeding shall have been commenced, against

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it, in which an adjudication or appointment is made or order for relief is
entered, or which petition, application or proceeding remains undismissed or
unstayed for a period of sixty (60) days or more; or (e) be the subject of any
proceeding under which all or a substantial part of its assets may be subject to
seizure, forfeiture or divestiture; or (f) by any act or omission indicate its
consent to, approval of or acquiescence in any such petition, application or
proceeding or order for relief or the appointment of a custodian, receiver or
trustee for all or any substantial part of its property; or (g) suffer any such
custodianship, receivership or trusteeship for all or any substantial part of
its property, to continue undischarged for a period of sixty (60) days or more;
or

(6) If one or more judgments, decrees or orders for the
payment of money in excess of $10,000,000 (excluding any such judgments, decrees
or orders which are fully covered by insurance) in the aggregate shall be
rendered against Borrower or any of its Material Affiliates, and any such
judgments, decrees or orders shall continue unsatisfied and in effect for a
period of thirty (30) consecutive days without being vacated, discharged,
satisfied or stayed or bonded pending appeal; or

(7) If any of the following events shall occur or exist with
respect to Borrower or any ERISA Affiliate: (a) any Prohibited Transaction
involving any Plan; (b) any Reportable Event with respect to any Plan; (c) the
filing under Section 4041 of ERISA of a notice of intent to terminate any Plan
or the termination of any Plan; (d) any event or circumstance which would
constitute grounds for the termination of, or for the appointment of a trustee
to administer, any Plan under Section 4042 of ERISA, or the institution by the
PBGC of proceedings for any such termination or appointment under Section 4042
of ERISA; or (e) complete or partial withdrawal under Section 4201 or 4204 of
ERISA from a Multiemployer Plan or the reorganization, insolvency, or
termination of any Multiemployer Plan; and in each case above, if such event or
conditions, if any, could in the reasonable opinion of any Bank subject Borrower
to any tax, penalty, or other liability to a Plan, Multiemployer Plan, the PBGC
or otherwise (or any combination thereof) which in the aggregate exceeds or is
likely to exceed $50,000; or

(8) If at any time Borrower is not a qualified real estate
investment trust under Sections 856 through 860 of the Code or is not a publicly
traded company listed on the New York Stock Exchange; or

(9) If at any time any portion of Borrower's assets constitute
plan assets for ERISA purposes (within the meaning of C.F.R. Section
2510.3-101); or

(10) If there shall occur a Material Adverse Change.

Section 9.02 Remedies. If any Event of Default shall occur and
be continuing, Administrative Agent shall, upon request of the Majority Banks,
by notice to Borrower, (1) declare the outstanding balance of the Notes, all
interest thereon, and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon such balance, all

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such interest, and all such amounts due under this Agreement and under any other
Loan Document shall become and be forthwith due and payable, without
presentment, demand, protest, or further notice of any kind, all of which are
hereby expressly waived by Borrower; and/or (2) exercise any remedies provided
in any of the Loan Documents or by law.

ARTICLE X. ADMINISTRATIVE AGENT; RELATIONS AMONG BANKS

Section 10.01 Appointment, Powers and Immunities of
Administrative Agent. Each Bank hereby irrevocably appoints and authorizes
Administrative Agent to act as its agent hereunder and under any other Loan
Document with such powers as are specifically delegated to Administrative Agent
by the terms of this Agreement and any other Loan Document, together with such
other powers as are reasonably incidental thereto. Administrative Agent shall
have no duties or responsibilities except those expressly set forth in this
Agreement and any other Loan Document or required by law, and shall not by
reason of this Agreement be a fiduciary or trustee for any Bank except to the
extent that Administrative Agent acts as an agent with respect to the receipt or
payment of funds. Administrative Agent shall not be responsible to the Banks for
any recitals, statements, representations or warranties made by Borrower or any
officer, partner or official of Borrower or any other Person contained in this
Agreement or any other Loan Document, or in any certificate or other document or
instrument referred to or provided for in, or received by any of them under,
this Agreement or any other Loan Document, or for the value, legality, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or any other document or instrument referred to or
provided for herein or therein, for the perfection or priority of any Lien
securing the Obligations or for any failure by Borrower to perform any of its
obligations hereunder or thereunder. Administrative Agent may employ agents and
attorneys-in-fact and shall not be responsible, except as to money or securities
received by it or its authorized agents, for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. Neither
Administrative Agent nor any of its directors, officers, employees or agents
shall be liable or responsible for any action taken or omitted to be taken by it
or them hereunder or under any other Loan Document or in connection herewith or
therewith, except for its or their own gross negligence or willful misconduct.
Borrower shall pay any fee agreed to by Borrower and Administrative Agent with
respect to Administrative Agent's services hereunder.

Section 10.02 Reliance by Administrative Agent. Administrative
Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by
Administrative Agent. Administrative Agent may deem and treat each Bank as the
holder of the Loan made by it for all purposes hereof and shall not be required
to deal with any Person who has acquired a participation in any Loan or
participation from a Bank. As to any matters not expressly provided for by this
Agreement or any other Loan Document, Administrative

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Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder in accordance with instructions signed by the Required Banks,
and such instructions of the Required Banks and any action taken or failure to
act pursuant thereto shall be binding on all of the Banks and any other holder
of all or any portion of any Loan or participation.

Section 10.03 Defaults. Administrative Agent shall not be
deemed to have knowledge of the occurrence of a Default or Event of Default
unless Administrative Agent has received notice from a Bank or Borrower
specifying such Default or Event of Default and stating that such notice is a
"Notice of Default." In the event that Administrative Agent receives such a
notice of the occurrence of a Default or Event of Default, Administrative Agent
shall give prompt notice thereof to the Banks. Administrative Agent, following
consultation with the Banks, shall (subject to Section 10.07) take such action
with respect to such Default or Event of Default which is continuing as shall be
directed by the Majority Banks; provided that, unless and until Administrative
Agent shall have received such directions, Administrative Agent may take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interest of the Banks;
and provided further that Administrative Agent shall not send a notice of
Default or acceleration to Borrower without the approval of the Majority Banks.
In no event shall Administrative Agent be required to take any such action which
it determines to be contrary to law.

Section 10.04 Rights of Administrative Agent as a Bank. With
respect to its Loan Commitment and the Loan provided by it, Administrative Agent
in its capacity as a Bank hereunder shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though it were not
acting as Administrative Agent, and the term "Bank" or "Banks" shall, unless the
context otherwise indicates, include Administrative Agent in its capacity as a
Bank. Administrative Agent and its Affiliates may (without having to account
therefor to any Bank) accept deposits from, lend money to (on a secured or
unsecured basis), and generally engage in any kind of banking, trust or other
business with Borrower (and any Affiliates of Borrower) as if it were not acting
as Administrative Agent.

Section 10.05 Indemnification of Administrative Agent. Each
Bank agrees to indemnify Administrative Agent (to the extent not reimbursed
under Section 12.04 or under the applicable provisions of any other Loan
Document, but without limiting the obligations of Borrower under Section 12.04
or such provisions), for its Pro Rata Share of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against Administrative Agent in any way relating to
or arising out of this Agreement, any other Loan Document or any other documents
contemplated by or referred to herein or the transactions contemplated hereby or
thereby (including, without limitation, the costs and expenses which Borrower is
obligated to pay under Section 12.04) or under the applicable provisions of any
other Loan Document or the enforcement of any of the terms hereof or thereof or
of any such other documents or instruments; provided that no Bank shall be
liable for (1) any of the foregoing to the extent they arise from the gross
negligence or willful

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misconduct of the party to be indemnified, (2) any loss of principal or interest
with respect to Administrative Agent's Loan or (3) any loss suffered by
Administrative Agent in connection with a swap or other interest rate hedging
arrangement entered into with Borrower.

Section 10.06 Non-Reliance on Administrative Agent and Other
Banks. Each Bank agrees that it has, independently and without reliance on
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of
Borrower and the decision to enter into this Agreement and that it will,
independently and without reliance upon Administrative Agent or any other Bank,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under this Agreement or any other Loan Document. Administrative Agent
shall not be required to keep itself informed as to the performance or
observance by Borrower of this Agreement or any other Loan Document or any other
document referred to or provided for herein or therein or to inspect the
properties or books of Borrower. Except for notices, reports and other documents
and information expressly required to be furnished to the Banks by
Administrative Agent hereunder, Administrative Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of Borrower (or any
Affiliate of Borrower) which may come into the possession of Administrative
Agent or any of its Affiliates. Administrative Agent shall not be required to
file this Agreement, any other Loan Document or any document or instrument
referred to herein or therein, for record or give notice of this Agreement, any
other Loan Document or any document or instrument referred to herein or therein,
to anyone.

Section 10.07 Failure of Administrative Agent to Act. Except
for action expressly required of Administrative Agent hereunder, Administrative
Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have received further assurances (which may include
cash collateral) of the indemnification obligations of the Banks under Section
10.05 in respect of any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.

Section 10.08 Resignation or Removal of Administrative Agent.
Administrative Agent hereby agrees not to unilaterally resign except in the
event it becomes an Affected Bank and is removed or replaced as a Bank pursuant
to Section 3.07, in which event it shall have the right to resign.
Administrative Agent may be removed at any time with cause by the Required
Banks, provided that Borrower and the other Banks shall be promptly notified
thereof. Upon any such removal, the Required Banks shall have the right to
appoint a successor Administrative Agent which successor Administrative Agent,
so long as it is reasonably acceptable to the Required Banks, shall be that Bank
then having the greatest Loan Commitment. If no successor Administrative Agent
shall have been so appointed by the Required Banks and shall have accepted such
appointment within thirty (30) days after the Required Banks' removal of the
retiring Administrative Agent, then the retiring Administrative Agent may, on
behalf of the Banks, appoint a successor Administrative Agent, which shall be
one of the Banks. The Required Banks or the retiring Administrative Agent, as
the case may

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be, shall upon the appointment of a successor Administrative Agent promptly so
notify Borrower and the other Banks. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations hereunder. After any retiring Administrative Agent's removal
hereunder as Administrative Agent, the provisions of this Article X shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Administrative Agent.

Section 10.09 Amendments Concerning Agency Function.
Notwithstanding anything to the contrary contained herein, Administrative Agent
shall not be bound by any waiver, amendment, supplement or modification hereof
or of any other Loan Document which affects its duties, rights, and/or function
hereunder or thereunder unless it shall have given its prior written consent
thereto.

Section 10.10 Liability of Administrative Agent.
Administrative Agent shall not have any liabilities or responsibilities to
Borrower on account of the failure of any Bank to perform its obligations
hereunder or to any Bank on account of the failure of Borrower to perform its
obligations hereunder or under any other Loan Document.

Section 10.11 Transfer of Agency Function. Without the consent
of Borrower or any Bank, Administrative Agent may at any time or from time to
time transfer its functions as Administrative Agent hereunder to any of its
offices wherever located in the United States, provided that Administrative
Agent shall promptly notify Borrower and the Banks thereof.

Section 10.12 Non-Receipt of Funds by Administrative Agent.
Unless Administrative Agent shall have received notice from a Bank or Borrower
(either one as appropriate being the "Payor") prior to the date on which such
Bank is to make payment hereunder to Administrative Agent of the proceeds of a
Loan or Borrower is to make payment to Administrative Agent, as the case may be
(either such payment being a "Required Payment"), which notice shall be
effective upon receipt, that the Payor will not make the Required Payment in
full to Administrative Agent, Administrative Agent may assume that the Required
Payment has been made in full to Administrative Agent on such date, and
Administrative Agent in its sole discretion may, but shall not be obligated to,
in reliance upon such assumption, make the amount thereof available to the
intended recipient on such date. If and to the extent the Payor shall not have
in fact so made the Required Payment in full to Administrative Agent, the
recipient of such payment shall repay to Administrative Agent forthwith on
demand such amount made available to it together with interest thereon, for each
day from the date such amount was so made available by Administrative Agent
until the date Administrative Agent recovers such amount, at the customary rate
set by Administrative Agent for the correction of errors among Banks for three
(3) Banking Days and thereafter at the Base Rate.

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Section 10.13 Withholding Taxes. Each Bank represents that it
is entitled to receive any payments to be made to it hereunder without the
withholding of any tax and will furnish to Administrative Agent such forms,
certifications, statements and other documents as Administrative Agent may
request from time to time to evidence such Bank's exemption from the withholding
of any tax imposed by any jurisdiction or to enable Administrative Agent or
Borrower to comply with any applicable Laws or regulations relating thereto.
Without limiting the effect of the foregoing, if any Bank is not created or
organized under the laws of the United States of America or any state thereof,
such Bank will furnish to Administrative Agent a United States Internal Revenue
Service Form 4224 in respect of all payments to be made to such Bank by Borrower
or Administrative Agent under this Agreement or any other Loan Document or a
United States Internal Revenue Service Form 1001 establishing such Bank's
complete exemption from United States withholding tax in respect of payments to
be made to such Bank by Borrower or Administrative Agent under this Agreement or
any other Loan Document, or such other forms, certifications, statements or
documents, duly executed and completed by such Bank as evidence of such Bank's
exemption from the withholding of U.S. tax with respect thereto. Administrative
Agent shall not be obligated to make any payments hereunder to such Bank in
respect of any Loan or participation or such Bank's Loan Commitment or
obligation to purchase participations until such Bank shall have furnished to
Administrative Agent the requested form, certification, statement or document.

Section 10.14 Minimum Commitment by Co-Agents. Subsequent to
the Closing Date, each of the Co-Agents hereby agrees to maintain a Loan
Commitment in an amount no less than 16.67% of the Total Loan Commitment, as the
same may be decreased from time to time in accordance with the provisions
hereof, and further agrees to hold and not to participate or assign any of such
amount other than an assignment to a Federal Reserve Bank or to the Parent or a
majority-owned subsidiary of such Co-Agent.

Section 10.15 Pro Rata Treatment. Except to the extent
otherwise provided, (1) each advance of proceeds of the Loans shall be made by
the Banks; (2) each reduction of the amount of the Total Loan Commitment under
Section 2.10 shall be applied to the Loan Commitments of the Banks; and (3) each
payment of the commitment fee accruing under Section 2.07(b) and clause (i) of
Section 2.16(f) shall be made for the account of the Banks, ratably according to
the amounts of their respective Loan Commitments.

Section 10.16 Sharing of Payments Among Banks. If a Bank shall
obtain payment of any principal of or interest on any Loan made by it through
the exercise of any right of setoff, banker's lien, counterclaim, or by any
other means (including direct payment), and such payment results in such Bank
receiving a greater payment than it would have been entitled to had such payment
been paid directly to Administrative Agent for disbursement to the Banks, then
such Bank shall promptly purchase for cash from the other Banks participations
in the Loans made by the other Banks in such amounts, and make such other
adjustments from time to time as shall be equitable to the end that all the
Banks shall share ratably the benefit of such payment. To such end the Banks
shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if such

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payment is rescinded or must otherwise be restored. Borrower agrees that any
Bank so purchasing a participation in the Loans made by other Banks may exercise
all rights of setoff, banker's lien, counterclaim or similar rights with respect
to such participation. Nothing contained herein shall require any Bank to
exercise any such right or shall affect the right of any Bank to exercise, and
retain the benefits of exercising, any such right with respect to any other
indebtedness of Borrower.

Section 10.17 Possession of Documents. Each Bank shall keep
possession of its own Note. Administrative Agent shall hold all the other Loan
Documents and related documents in its possession and maintain separate records
and accounts with respect thereto, and shall permit the Banks and their
representatives access at all reasonable times to inspect such Loan Documents,
related documents, records and accounts.

ARTICLE XI. NATURE OF OBLIGATIONS

Section 11.01 Absolute and Unconditional Obligations. Borrower
acknowledges and agrees that its obligations and liabilities under this
Agreement and under the other Loan Documents shall be absolute and unconditional
irrespective of (1) any lack of validity or enforceability of any of the
Obligations, any Loan Documents, or any agreement or instrument relating
thereto; (2) any change in the time, manner or place of payment of, or in any
other term in respect of, all or any of the Obligations, or any other amendment
or waiver of or consent to any departure from any Loan Documents or any other
documents or instruments executed in connection with or related to the
Obligations; (3) any exchange or release of any collateral, if any, or of any
other Person from all or any of the Obligations; or (4) any other circumstances
which might otherwise constitute a defense available to, or a discharge of,
Borrower or any other Person in respect of the Obligations.

The obligations and liabilities of Borrower under this
Agreement and other Loan Documents shall not be conditioned or contingent upon
the pursuit by any Bank or any other Person at any time of any right or remedy
against Borrower or any other Person which may be or become liable in respect of
all or any part of the Obligations or against any collateral or security or
guarantee therefor or right of setoff with respect thereto.

Section 11.02 Non-Recourse to Borrower's Principals.
Notwithstanding anything to the contrary contained herein, in any of the other
Loan Documents, or in any other instruments, certificates, documents or
agreements executed in connection with the Loans (all of the foregoing, for
purposes of this Section, hereinafter referred to, individually and
collectively, as the "Relevant Documents"), no recourse under or upon any
Obligation, representation, warranty, promise or other matter whatsoever shall
be had against any of Borrower's Principals and each Bank expressly waives and
releases, on behalf of itself and its successors and assigns, all right to
assert any liability whatsoever under or with respect to the Relevant Documents
against, or to satisfy any claim or obligation arising thereunder against, any
of Borrower's Principals or out of any assets of Borrower's Principals,
provided,

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however, that nothing in this Section shall be deemed to (1) release Borrower
from any personal liability pursuant to, or from any of its respective
obligations under, the Relevant Documents, or from personal liability for its
fraudulent actions or fraudulent omissions; (2) release any of Borrower's
Principals from personal liability for its or his own fraudulent actions or
fraudulent omissions; (3) constitute a waiver of any obligation evidenced or
secured by, or contained in, the Relevant Documents or affect in any way the
validity or enforceability of the Relevant Documents; or (4) limit the right of
Administrative Agent and/or the Banks to proceed against or realize upon any
collateral hereafter given for the Loans or any and all of the assets of
Borrower (notwithstanding the fact that any or all of Borrower's Principals have
an ownership interest in Borrower and, thereby, an interest in the assets of
Borrower) or to name Borrower (or, to the extent that the same are required by
applicable law or are determined by a court to be necessary parties in
connection with an action or suit against Borrower or any collateral hereafter
given for the Loans, any of Borrower's Principals) as a party defendant in, and
to enforce against any collateral hereafter given for the Loans and/or assets of
Borrower any judgment obtained by Administrative Agent and/or the Banks with
respect to, any action or suit under the Relevant Documents so long as no
judgment shall be taken (except to the extent taking a judgment is required by
applicable law or determined by a court to be necessary to preserve
Administrative Agent's and/or Banks' rights against any collateral hereafter
given for the Loans or Borrower, but not otherwise) or shall be enforced against
Borrower's Principals or their assets.

ARTICLE XII. MISCELLANEOUS

Section 12.01 Binding Effect of Request for Advance. Borrower
agrees that, by its acceptance of any advance of proceeds of the Loans under
this Agreement, it shall be bound in all respects by the request for advance
submitted on its behalf in connection therewith with the same force and effect
as if Borrower had itself executed and submitted the request for advance and
whether or not the request for advance is executed and/or submitted by an
authorized person.

Section 12.02 Amendments and Waivers. Amendments to EXHIBIT F
may be made by written agreement among Borrower and Co-Agents. No other
amendment or any material waiver of any provision of this Agreement or any other
Loan Document nor consent to any material departure by Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Required Banks and, solely for purposes of its acknowledgment thereof,
Administrative Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given, provided,
however, that no amendment, waiver or consent shall, unless in writing and
signed by all the Banks do any of the following: (1) reduce the principal of, or
interest on, the Notes or any fees due hereunder or any other amount due
hereunder or under any Loan Document; (2) postpone any date fixed for any
payment of principal of, or interest on, the Notes or any fees due hereunder or
under any Loan Document; (3) change the definition of Required Banks; (4) amend
this Section or any other provision requiring the consent of all the Banks; or
(5) waive any default under paragraph (5) of Section 9.01. Any advance of
proceeds of the Loans made prior to or without the fulfillment by Borrower of
all of the conditions precedent thereto,

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<PAGE> 52
whether or not known to Administrative Agent and the Banks, shall not constitute
a waiver of the requirement that all conditions, including the non-performed
conditions, shall be required with respect to all future advances. No failure on
the part of Administrative Agent or any Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof or preclude
any other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.

Section 12.03 Usury. Anything herein to the contrary
notwithstanding, the obligations of Borrower under this Agreement and the Notes
shall be subject to the limitation that payments of interest shall not be
required to the extent that receipt thereof would be contrary to provisions of
law applicable to a Bank limiting rates of interest which may be charged or
collected by such Bank.

Section 12.04 Expenses; Indemnification. Borrower agrees to
reimburse Co- Agents and Administrative Agent on demand for all costs, expenses,
and charges (including, without limitation, all reasonable fees and charges of
engineers, appraisers and legal counsel) incurred by any of them in connection
with the Loans and to reimburse each of the Banks for reasonable legal costs,
expenses and charges incurred by each of the Banks in connection with the
performance or enforcement of this Agreement, the Notes, or any other Loan
Documents; provided, however, that Borrower is not responsible for costs,
expenses and charges incurred by the Bank Parties in connection with the
administration or syndication of the Loans (other than the fees required by the
Supplemental Fee Letter and other than reasonable legal and other costs, fees
and charges in connection with the addition of UBC and/or other lenders as Banks
pursuant to Section 12.05 having, in the aggregate, a Loan Commitment of
$50,000,000). Borrower agrees to indemnify Administrative Agent and each Bank
and their respective directors, officers, employees and agents from, and hold
each of them harmless against, any and all losses, liabilities, claims, damages
or expenses incurred by any of them arising out of or by reason of (x) any
claims by brokers due to acts or omissions by Borrower, or (y) any investigation
or litigation or other proceedings (including any threatened investigation or
litigation or other proceedings) relating to any actual or proposed use by
Borrower of the proceeds of the Loans, including without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation or litigation or other proceedings (but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified).

The obligations of Borrower under this Section shall survive
the repayment of all amounts due under or in connection with any of the Loan
Documents and the termination of the Loans.

Section 12.05 Assignment; Participation. This Agreement shall
be binding upon, and shall inure to the benefit of, Borrower, Administrative
Agent, the Banks and their respective successors and permitted assigns. Borrower
may not assign or transfer its rights or obligations hereunder.

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<PAGE> 53
Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Loan (the
"Participations"), provided, however, that each Participation shall be in the
minimum amount of $10,000,000. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not Borrower or
Administrative Agent was given notice, such Bank shall remain responsible for
the performance of its obligations hereunder, and Borrower and Administrative
Agent shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations hereunder. Any agreement pursuant to
which any Bank may grant such a participating interest shall provide that such
Bank shall retain the sole right and responsibility to enforce the obligations
of Borrower hereunder and under any other Loan Document including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement or any other Loan Document; provided that such
participation agreement may provide that such Bank will not agree to any
modification, amendment or waiver of this Agreement described in clause (1)
through (5) of Section 12.02 without the consent of the Participant.

Subject to the provisions of Section 10.14, any Bank having a
Loan Commitment in an amount of $30,000,000 or more may at any time assign to
any bank or other institution with the acknowledgment of Administrative Agent
and the consent of Co- Agents and Borrower, which consent shall not be
unreasonably withheld or delayed (such assignee, a "Consented Assignee"), or to
one or more banks or other institutions which are majority owned subsidiaries of
a Bank or to the Parent of a Bank (each Consented Assignee or subsidiary bank or
institution, an "Assignee") all, or a proportionate part of all, of its rights
and obligations under this Agreement and its Note, and such Assignee shall
assume rights and obligations, pursuant to an Assignment and Assumption
Agreement executed by such Assignee and the Bank, provided that, in each case,
after giving effect to such assignment each Bank's and each Assignee's portion
of the Loan will be equal to or greater than $15,000,000. Upon execution and
delivery of such instrument and payment by such Assignee to the Bank of an
amount equal to the purchase price agreed between the Bank and such Assignee,
such Assignee shall be a Bank Party to this Agreement and shall have all the
rights and obligations of a Bank as set forth in such Assignment and Assumption
Agreement, and the Bank shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party shall be
required. Upon the consummation of any assignment pursuant to this paragraph,
substitute notes shall be issued to the assigning Bank and Assignee by Borrower,
in exchange for the return of the original Note. All such substitute notes shall
constitute "Notes" and the obligations evidenced by such substitute notes shall
constitute "Obligations" for all purposes of this Agreement and the other Loan
Documents. In connection with Borrower's execution of substitute notes as
aforesaid, Borrower shall deliver to Administrative Agent evidence, satisfactory
to Administrative Agent, of all requisite corporate action to authorize
Borrower's execution and delivery of the substitute notes and any related
documents. If the Assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall, prior to the first date on which
interest or fees are payable hereunder for its account, deliver to Borrower and
Administrative Agent certification as to exemption from deduction or withholding
of any United States federal income taxes in

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<PAGE> 54
accordance with Section 10.13. Each Assignee shall be deemed to have made the
representations contained in, and shall be bound by the provisions of, Section
10.13.

Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.

Borrower recognizes that in connection with a Bank's selling
of Participations or making of assignments, any or all documentation, financial
statements, appraisals and other data, or copies thereof, relevant to Borrower
or the Loans may be exhibited to and retained by any such Participant or
assignee or prospective Participant or assignee. In connection with a Bank's
delivery of any financial statements and appraisals to any such Participant or
assignee or prospective Participant or assignee, such Bank shall also indicate
that the same are delivered on a confidential basis. Borrower agrees to provide
all assistance reasonably requested by a Bank to enable such Bank to sell
Participations or make assignments of its Loan as permitted by this Section.
Each Bank agrees to provide Borrower with notice of all Participations sold by
such Bank.

Section 12.06 Documentation Satisfactory. All documentation
required from or to be submitted on behalf of Borrower in connection with this
Agreement and the documents relating hereto shall be subject to the prior
approval of, and be satisfactory in form and substance to, Administrative Agent,
its counsel and, where specifically provided herein, the Banks. In addition, the
persons or parties responsible for the execution and delivery of, and
signatories to, all of such documentation, shall be acceptable to, and subject
to the approval of, Administrative Agent and its counsel and the Banks.

Section 12.07 Notices. Unless the party to be notified
otherwise notifies the other party in writing as provided in this Section, and
except as otherwise provided in this Agreement, notices shall be given to
Administrative Agent by telephone, confirmed by writing, and to the Banks and to
Borrower by ordinary mail or overnight courier, receipt confirmed, addressed to
such party at its address on the signature page of this Agreement. Notices shall
be effective (1) if by telephone, at the time of such telephone conversation,
(2) if given by mail, three (3) days after mailing; and (3) if given by
overnight courier, upon receipt.

Section 12.08 Setoff. Borrower agrees that, in addition to
(and without limitation of) any right of setoff, bankers' lien or counterclaim a
Bank may otherwise have, each Bank shall be entitled, at its option, to offset
balances (general or special, time or demand, provisional or final) held by it
for the account of Borrower at any of such Bank's offices, in Dollars or in any
other currency, against any amount payable by Borrower to such Bank under this
Agreement or such Bank's Note, or any other Loan Document which is not paid when
due (regardless of whether such balances are then due to Borrower), in which
case it shall promptly notify Borrower and Administrative Agent thereof;
provided that such Bank's failure to give such notice shall not affect the
validity thereof. Payments by Borrower hereunder or under the other Loan
Documents shall be made without setoff or counterclaim.

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Section 12.09 Table of Contents; Headings. Any table of
contents and the headings and captions hereunder are for convenience only and
shall not affect the interpretation or construction of this Agreement.

Section 12.10 Severability. The provisions of this Agreement
are intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.

Section 12.11 Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument, and any party hereto may execute this Agreement by signing
any such counterpart.

Section 12.12 Integration. The Loan Documents and Supplemental
Fee Letter set forth the entire agreement among the parties hereto relating to
the transactions contemplated thereby and supersede any prior oral or written
statements or agreements with respect to such transactions.

Section 12.13 Governing Law. This Agreement shall be governed
by, and interpreted and construed in accordance with, the laws of the State of
New York.

Section 12.14 Waivers. In connection with the obligations and
liabilities as aforesaid, Borrower hereby waives (1) promptness and diligence;
(2) notice of any actions taken by any Bank Party under this Agreement, any
other Loan Document or any other agreement or instrument relating thereto except
to the extent otherwise provided herein; (3) all other notices, demands and
protests, and all other formalities of every kind in connection with the
enforcement of the Obligations, the omission of or delay in which, but for the
provisions of this Section, might constitute grounds for relieving Borrower of
its obligations hereunder; (4) any requirement that any Bank Party protect,
secure, perfect or insure any Lien on any collateral or exhaust any right or
take any action against Borrower or any other Person or any collateral; (5) any
right or claim of right to cause a marshalling of the assets of Borrower; and
(6) all rights of subrogation or contribution, whether arising by contract or
operation of law (including, without limitation, any such right arising under
the Federal Bankruptcy Code) or otherwise by reason of payment by Borrower,
either jointly or severally, pursuant to this Agreement or other Loan Documents.

Section 12.15 Jurisdiction; Immunities. Borrower,
Administrative Agent and each Bank hereby irrevocably submit to the jurisdiction
of any New York State or United States Federal court sitting in New York City
over any action or proceeding arising out of or relating to this Agreement, the
Notes or any other Loan Document. Borrower, Administrative Agent, and each Bank
irrevocably agree that all claims in respect of such action or proceeding may be
heard and determined in such New York State or United States Federal court.
Borrower, Administrative Agent, and each Bank irrevocably consent to the service
of any and

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all process in any such action or proceeding by the mailing of copies of such
process to Borrower, Administrative Agent or each Bank, as the case may be, at
the addresses specified herein. Borrower, Administrative Agent and each Bank
agree that a final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. Borrower, Administrative Agent and each Bank
further waive any objection to venue in the State of New York and any objection
to an action or proceeding in the State of New York on the basis of forum non
conveniens. Borrower, Administrative Agent and each Bank agree that any action
or proceeding brought against Borrower, Administrative Agent or any Bank, as the
case may be, shall be brought only in a New York State court sitting in New York
City or a United States Federal court sitting in New York City, to the extent
permitted or not expressly prohibited by applicable law.

Nothing in this Section shall affect the right of Borrower,
Administrative Agent or any Bank to serve legal process in any other manner
permitted by law.

To the extent that Borrower, Administrative Agent or any Bank
have or hereafter may acquire any immunity from jurisdiction of any court or
from any legal process (whether from service or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) with respect
to itself or its property, Borrower, Administrative Agent and each Bank hereby
irrevocably waive such immunity in respect of its obligations under this
Agreement, the Notes and any other Loan Document.

BORROWER, ADMINISTRATIVE AGENT AND EACH BANK WAIVE ANY RIGHT
EACH SUCH PARTY MAY HAVE TO JURY TRIAL IN CONNECTION WITH ANY SUIT, ACTION OR
PROCEEDING BROUGHT WITH RESPECT TO THIS AGREEMENT, THE NOTES OR THE LOAN.

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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.

BAY APARTMENT COMMUNITIES, INC.

By: /s/ Gilbert M. Meyer
-------------------------
Name: Gilbert M. Meyer
Title: President

Address for Notices:

4340 Stevens Creek Blvd.
Suite 275
San Jose, CA 95129

Attention: Gilbert M. Meyer, President and CEO
Telephone: (408) 556-1815

UNION BANK OF SWITZERLAND
(New York Branch)
(as Co-Agent, Bank and Administrative Agent)

By: /s/ Joseph Bassil
-------------------------
Name: Joseph Bassil
Title: Vice President

By: /s/ Albert Rabil, III
-------------------------
Name: Albert Rabil, III
Title: Vice President

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Address for Notices and Applicable Lending Office for
Base Rate Loan and LIBOR Loan:

Union Bank of Switzerland
299 Park Avenue
38th Floor
New York, New York 10171-0026

Attention: Xiomara Martez

Telephone: (212) 821-3872

<PAGE> 1
EXHIBIT 10.5

AGREEMENT OF LIMITED PARTNERSHIP

BAY COUNTRYBROOK L.P.
<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1
DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 2
ORGANIZATIONAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.1 Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.2 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.3 Registered Office and Agent; Principal Office . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.4 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE 3
PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.1 Purpose and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE 4
CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.1 Capital Contributions of the Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.2 Issuances of Additional Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.3 General Partner's Mandatory Capital Contribution to Fund Unpaid Limited Partners'
Priority Returns and Discretionary Capital Contributions . . . . . . . . . . . . . . . . . . 16
Section 4.4 No Guaranteed Payment Within The Meaning of Section 707(c) of the Internal Revenue Code. . . . 16
Section 4.5 No Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE 5
DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.1 Requirement and Characterization of Distributions . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.2 Amounts Withheld . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE 6
ALLOCATIONS OF PROFIT AND LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.1 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.2 Profits, Losses and Distributive Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>

(i)
<PAGE> 3

<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.1 Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.2 Certificate of Limited Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.3 Restrictions on General Partner Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.4 Reimbursement of the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.5 Contracts with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.7 Liability of the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.8 Other Matters Concerning the General Partner . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.9 Title to Partnership Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.10 Reliance by Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.11 General Partner's Capital Contribution to Fund the Contributor's
Prorations and Other Expenses under the Contribution Agreement . . . . . . . . . . . . . . . . 33

ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.1 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.2 Management of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.3 Outside Activities of Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.4 Return of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.5 Exchange Rights of Qualifying Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.6 Bay's Right to Call Limited Partnership Interests . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.7 Other Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9.1 Records and Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 9.2 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.3 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

ARTICLE 10
TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 10.1 Preparation of Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 10.2 Tax Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 10.3 Tax Matters Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 10.4 Organizational Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 10.5 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

ARTICLE 11
TRANSFERS AND WITHDRAWALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>

(ii)
<PAGE> 4

<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 11.1 Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 11.2 Transfer of the General Partner Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 11.3 Limited Partners' Rights to Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.4 Substituted Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.5 Assignees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.6 Distributions to Limited Partnership Unit Holders . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.7 General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

ARTICLE 12
ADMISSION OF PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 12.1 Admission of Successor General Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 12.2 Amendment of Agreement and Certificate of Limited Partnership . . . . . . . . . . . . . . . . 48

ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 13.1 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 13.2 Winding Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 13.3 Rights of Limited Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 13.4 Notice of Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 13.5 Termination of Partnership and Cancellation of Certificate of Limited Partnership . . . . . . 51
Section 13.6 Reasonable Time for Winding-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 13.7 Waiver of Partition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 14.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 14.2 Meetings of the Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

ARTICLE 15
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 15.1 Addresses and Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 15.2 Titles and Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 15.3 Pronouns and Plurals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 15.4 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 15.5 Acknowledgment of Bay's Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 15.6 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 15.7 Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 15.8 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 15.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 15.10 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
</TABLE>

(iii)
<PAGE> 5

<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 15.11 Invalidity of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 15.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

EXHIBITS
- --------

Exhibit A - Partners Contributions and Partnership Interests
Exhibit B - Form of Notice of Exchange
Exhibit C - Form of Prospective Subscriber Questionnaire
Exhibit D - Form of Acknowledgment, Consent and Power of Attorney

APPENDICES
- ----------

Appendix A - Registration Rights Agreement
</TABLE>

(iv)
<PAGE> 6

AGREEMENT OF LIMITED PARTNERSHIP
OF
BAY COUNTRYBROOK L.P.

THIS AGREEMENT OF LIMITED PARTNERSHIP OF BAY COUNTRYBROOK L.P. (this
"Agreement"), dated as of __, 1996, is entered into by Bay GP, Inc. a Maryland
corporation (the "General Partner"), the Persons (as defined below) whose names
are set forth on Exhibit A as attached hereto (as it may be amended from time
to time) and Bay Apartment Communities, Inc., a Maryland corporation ("Bay")
(for purposes of Articles 8 and 11 and 16.5 only).

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

ARTICLE 1
DEFINED TERMS

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

"Act" means the Delaware Revised Uniform Limited Partnership Act, as
it may be amended from time to time, and any successor to such statute.

"Adjusted Capital Account" means, with respect to any Partner, such
Partner's Capital Account maintained in accordance with Section 6.1 hereof, as
of the end of the relevant fiscal year of the Partnership, after giving effect
to the following adjustments:

A. Credit to such Capital Account that portion of any deficit
Capital Account balance that such Partner is obligated to restore under the
terms of this Agreement or any other document, such Partner's share of Minimum
Gain determined in accordance with Treasury Regulations Section 1.704-2(g)(1)
and such Partner's share of Partner Nonrecourse Debt Minimum Gain determined in
accordance with Treasury Regulations Section 1.704-2(i)(5).

B. Debit to such Capital Account the items described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

The foregoing definition of "Adjusted Capital Account" is intended to
comply with the provisions of Treasury Regulations Sections 1.704-1(b)(2) and
1.704-2, and shall be interpreted consistently therewith.
<PAGE> 7

"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in that Partner's Adjusted Capital Account as of
the end of the relevant fiscal year of the Partnership.

"Adjustment Factor" means 1.0; provided, however, that in the event
Bay or its successors in interest (i) declares or pays a dividend on its
outstanding REIT Shares in REIT Shares or makes a distribution to all holders
of its outstanding REIT Shares in REIT Shares, (ii) splits or subdivides its
outstanding REIT Shares, (iii) effects a reverse stock split or otherwise
combines its outstanding REIT Shares into a smaller number of REIT Shares or
(iv) engages in any Transaction as defined in Article 11 hereof, the effect of
which results in a change in the number of outstanding REIT Shares, the
Adjustment Factor shall be adjusted by multiplying the Adjustment Factor
previously in effect by a fraction, (1) the numerator of which shall be the
number of REIT Shares issued and outstanding on the record date for such
dividend, distribution, split, subdivision, reverse split or combination
(assuming for such purposes that such dividend, distribution, split,
subdivision, reverse split or combination has occurred as of such time) and (2)
the denominator of which shall be the actual number of REIT Shares (determined
without the above assumption) issued and outstanding on the record date for
such dividend, distribution, split, subdivision, reverse split or combination.
Any adjustments to the Adjustment Factor shall become effective immediately
after the effective date of such event, retroactive to the record date, if any,
for such event; provided, however, that any Limited Partner may waive, by
written notice to the General Partner and with the consent of the General
Partner, which may be given or withheld in its sole and absolute discretion,
the effect of any adjustment to the Adjustment Factor applicable to the Limited
Partnership Units held by such Limited Partner, and, thereafter, such
adjustment will not be effective as to such Limited Partnership Units.

"Affiliate" means, with respect to any Person, (i) any Person directly
or indirectly controlling, controlled by or under common control with such
Person; (ii) any Person owning or controlling ten percent (10%) or more of the
outstanding voting interests of such Person; (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests; or
(iv) any officer, director, general partner or trustee of such Person or of any
Person referred to in clauses (i), (ii), and (iii) above.

"Agreed Value" means, in the case of any (i) one of the Contributed
Properties, the fair market value of such property at the time of contribution
as set forth on the Exhibit [-] attached hereto, and (ii) Partnership assets
other than cash or the REIT Shares (which shall be valued as provided in
Section 8.5 hereof) distributed to a Partner by the Partnership, the
Partnership's Book Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such asset is subject at the time of distribution
as determined under Code Section 752 and the Treasury Regulations thereunder.

2
<PAGE> 8

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

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

"Available Cash" means, with respect to any period for which such
calculation is being made, (a) all cash revenues and funds received by the
Partnership from whatever source (excluding the proceeds of any Capital
Contribution to the Partnership pursuant to Sections 4.1, 4.3 or 8.5 hereof and
excluding Terminating Capital Transaction proceeds) plus the amount of any
reduction (including, without limitation, a reduction resulting because the
General Partner determines in its sole and absolute discretion such amounts are
no longer necessary) in reserves of the Partnership, which reserves are
referred to in clause (b)(iv) below;

(b) less the sum of the following (except to the extent
made with the proceeds of any Capital Contribution and except to the extent
taken into account in determining Capital Transaction Proceeds):

(i) all interest, principal and other debt
payments made during such period by the Partnership,

(ii) all cash expenditures (including capital
expenditures with respect to tangible and intangible assets) made by
the Partnership during such period,

(iii) investments in any entity (including loans
made thereto) to the extent that such investments are not otherwise
described in clauses (b)(i) or (ii), and

(iv) the amount of any increase in reserves
established during such period which the General Partner determines in
its sole and absolute discretion are necessary or appropriate.

Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements made
or reserves established, after commencement of the dissolution and liquidation
of the Partnership.

"Bay" means Bay Apartment Communities, Inc., a Maryland corporation.

"Book-Tax Disparity" means, with respect to any item of the
Contributed Properties, as of the date of determination, the difference between
the Book Value of such property and the adjusted basis of such property for
federal income tax purposes.

3
<PAGE> 9

"Book Value" means, with respect to any of the Contributed Properties,
the Agreed Value of such property reduced (but not below zero) by all
Depreciation with respect to such property properly charged to the Partners'
Capital Accounts and with respect to any other Partnership asset, the asset's
adjusted basis for federal income tax purposes; provided, however, (a) the Book
Value of all Partnership assets which may be adjusted in the event of a
revaluation of Partnership assets in accordance with Treasury Regulations
Section 1.704(b)(2)(iv)(f), such fair market value as shall be determined by
the General Partner in its reasonable judgment; (b) the Book Value of any
Partnership asset other than cash distributed to any Partner shall be the fair
market value of such asset on the date of distribution as determined by the
General Partner in its reasonable judgment and (c) such Book Value of any
Partnership asset shall be adjusted by the Depreciation taken into account with
respect to such asset for purposes of computing Profits and Losses.

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

"Capital Contribution" means, with respect to any Partner, the
aggregate amount of cash and fair market value of any property which such
Partner contributes or is deemed to contribute to the Partnership pursuant to
Sections 4.1, 4.3 and 8.5 hereof, as reflected in Exhibit A hereto, which shall
be appropriately amended from time to time.

"Cash Amount" means the Value of a REIT Shares on the Valuation Date,
plus the aggregate amount of any distributions owed to such Qualifying Party
pursuant to Section 5.1 hereof with respect to each Limited Partnership Unit
tendered which are owed but unpaid.

"Cash Option" has the meaning set forth in Section 8.5.A.

"Certificate" means the Certificate of Limited Partnership relating to
the Partnership to be filed simultaneously herewith in the office of the
Delaware Secretary of State, as amended from time to time in accordance with
the terms hereof and the Act.

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

"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.

"Company" shall mean Bay GP, Inc., the General Partner of the
Partnership.

4
<PAGE> 10

"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2 hereof.

"Contributed Properties" shall mean the properties contributed to the
Partnership by the Contributor.

"Contribution Agreement" shall mean the Contribution Agreement dated
the ____ of March, 1996, by and among Bay and the Contributor.

"Contribution Date" shall mean the date of the contribution of the
Contributed Properties to the Partnership.

"Contributor" shall mean Countrybrook of Berryessa Associates, a
California limited partnership.

"Control" means the ability, whether through ownership of partnership
interests, of voting securities, or otherwise, to direct the policies and
management of any business entity.

"Delivery Date" has the meaning set forth in Section 8.5.B.

"Depreciation" means, for each fiscal year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period for federal
income tax purposes, except that if an asset has a Book- Tax Disparity at the
beginning of such year or other period (as a result of property contributions
or adjustments to such values), Depreciation shall be adjusted as necessary so
as to be an amount which bears the same ratio to such beginning Book Value as
the federal income tax depreciation, amortization or other cost recovery
deduction for such year or other period bears to the beginning adjusted tax
basis; provided, however, that if the federal income tax depreciation,
amortization or other cost recovery deduction for such year or other period is
zero, Depreciation for such year or other period shall be determined with
reference to such beginning Book Value using any reasonable method approved by
the General Partner.

"Exchange" has the meaning set forth in Section 8.5.A.

"Exchange Right" has the meaning set forth in Section 8.5.A.

"Exchange Shares" has the meaning set forth in Section 8.5.B hereof.

"Family Member" means, with respect to any natural Person, such
natural Person's spouse, children, grandchildren, parents, grandparents, aunts,
uncles, nephews and nieces, any person who receives property pursuant to a
testamentary transfer of such property or the entities in which all of the
beneficial interests are held by such individuals.

5
<PAGE> 11

"Final Adjustment" has the meaning set forth in Section 10.3.B(2).

"Fiscal Period" has the meaning set forth in Section 5.1.A.

"General Partner" means the Company, in its capacity as the general
partner of the Partnership, or its successors as general partner of the
Partnership.

"General Partner Priority Return" has the meaning set forth in the
definition of "Priority Return."

"General Partner Interest" means a Partnership Interest held by the
General Partner, in its capacity as general partner.

"Immediate Family" means, with respect to any natural Person, such
natural Person's spouse and such natural Person's natural or adoptive parents,
descendants, nephews, nieces, brothers, and sisters.

"Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating him incompetent to manage his Person or his estate;
(ii) as to any corporation which is a Partner, the filing of a certificate of
dissolution, or its equivalent, for the corporation or the revocation of its
charter; (iii) as to any partnership which is a Partner, the dissolution and
commencement of winding up of the partnership; (iv) as to any estate which is a
Partner, the distribution by the fiduciary of the estate's entire interest in
the Partnership; (v) as to any trustee of a trust which is a Partner, the
termination of the trust (but not the substitution of a new trustee); or (vi)
as to any Partner, the bankruptcy of such Partner. For purposes of this
definition, bankruptcy of a Partner shall be deemed to have occurred when (a)
the Partner commences a voluntary proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or other
similar law now or hereafter in effect; (b) the Partner is adjudged as bankrupt
or insolvent, or a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the Partner; (c) the Partner executes and delivers a general
assignment for the benefit of the Partner's creditors; (d) the Partner files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding of the
nature described in clause (b) above; (e) the Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Partner or for all or any substantial part of the Partner's properties; (f) any
proceeding seeking liquidation, reorganization or other relief of or against
such Partner under any bankruptcy, insolvency or other similar law now or
hereafter in effect has not been dismissed within one hundred twenty (120) days
after the commencement thereof; (g) the appointment without the Partner's
consent or acquiescence of a trustee, receiver or liquidator has not been
vacated or stayed within ninety (90) days of such appointment; or (h) an
appointment referred to in clause (g) which has been stayed is not vacated
within ninety (90) days after the expiration of any such stay.

6
<PAGE> 12

"Indemnitee" means (i) any Person made a party to a proceeding by
reason of (A) his status as the General Partner, or as a director, trustee or
officer of the Partnership or the General Partner, or (B) his or its
liabilities, pursuant to a loan guarantee or otherwise, for any indebtedness of
the Partnership or any Subsidiary of the Partnership (including, without
limitation, any indebtedness which the Partnership or any Subsidiary of the
Partnership has assumed or taken assets subject to); and (ii) such other
Persons (including Affiliates of the General Partner or the Partnership) as the
General Partner may designate from time to time (whether before or after the
event giving rise to potential liability) in its sole and absolute discretion.

"Initial Limited Partners" shall mean Countrybrook of Berryessa
Associates, a California limited partnership and the other Initial Limited
Partners listed in Exhibit A.

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

"Investment Documents" shall have the meaning set forth in Section
11.4 hereof.

"Limited Partner" shall mean each of the Initial Limited Partners in
its capacity as an initial Limited Partner of the Partnership, or its
successors as the Limited Partners of the Partnership, or any Substituted
Limited Partner, in such Person's capacity as a Limited Partner of the
Partnership.

"Limited Partner Interest" means a Partnership Interest of the Limited
Partner in the Partnership representing a fractional part of the Partnership
Interests of all Partners and includes any and all benefits to which the holder
of such a Partnership Interest may be entitled, as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement.

"Limited Partnership Units" means the Limited Partnership Interests
issued to the Initial Limited Partners.

"Limited Partnership Unit Holders" has the meaning set forth in
Section 11.6.

"Liquidating Event" has the meaning set forth in Section 13.1.

"Liquidator" has the meaning set forth in Section 13.2.

"Minimum Gain" shall have the meaning of such term as set forth in
Treasury Regulations Section 1.704-2(d), and shall generally mean the amount by
which the nonrecourse liabilities secured by any assets of the Partnership
exceed the adjusted tax basis of such assets as of the date of determination.
A Partner's share of Minimum Gain (and any net

7
<PAGE> 13

decrease thereof) at any time shall be determined in accordance with Treasury
Regulations Section 1,704-2(g).

"Notice of Exchange" has the meaning set forth in Section 8.5.A.

"Ownership Limit" means the applicable restriction on ownership of
shares of Bay imposed under its charter.

"Partner" means a General Partner or a Limited Partner, and "Partners"
means the General Partner and the Limited Partners collectively.

"Partner Nonrecourse Debt" shall have the meaning of such term set
forth in Treasury Regulations Section 1.704-2(b)(4).

"Partner Nonrecourse Debt Minimum Gain" shall have the meaning of such
term set forth in Treasury Regulations Section 1.704-2(i).

"Partner Nonrecourse Deductions" means, the meaning of such term set
forth in Treasury Regulations Section 1.704-2(i). Subject to the immediately
preceding sentence, Partner Nonrecourse Deductions shall consist of, with
respect to any partner nonrecourse debt (as such term is defined in Treasury
Regulations Section 1.704-2(b)(4)), the increase in Partner Nonrecourse Debt
Minimum Gain during the tax year plus any increase in Partner Nonrecourse Debt
Minimum Gain for a prior tax year which has not previously generated a Partner
Nonrecourse Deduction hereunder. The determination of which Partnership items
constitute Partner Nonrecourse Deductions shall be made in a manner consistent
with the manner in which Partnership Nonrecourse Deductions are determined
hereunder.

"Partnership" means the limited partnership formed under the Act and
pursuant to this Agreement, as it may be amended and restated, and any
successor thereto.

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

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

"Percentage Interest" with respect to a Limited Partner means the
amount determined by dividing such Limited Partner's Unrecovered Capital Amount
by the aggregate Unrecovered Capital Amounts of all Limited Partners.

8
<PAGE> 14

"Person" means an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.

"Priority Return" means with respect to any Limited Partner an annual
rate of return of 7 1/2% on the Unrecovered Capital Amount of such Partner (the
"Limited Partners Priority Return") and with respect to the General Partner an
annual rate of return of 20% on the Unrecovered Capital Amount of the General
Partner (the "General Partner Priority Return").

"Profits and Losses" means, for each fiscal year or other period, an
amount equal to the Partnership's taxable income or loss (as the case may be)
for such year or period, determined in accordance with Code Section 703(a) (for
this period, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:

(1) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing
Profits or Losses pursuant to this definition shall be added
to such taxable income or loss;

(2) Any expenditures of the Partnership described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Profits or Losses pursuant to this definition, shall
be subtracted from such taxable income or loss (including
amounts paid or incurred to organize the Partnership (unless
an election is made pursuant to Code Section 709(b)) or to
promote the sale of interests in the Partnership and by
treating deductions for any losses incurred in connection with
the sale or exchange of Partnership property disallowed
pursuant to Section 267(a)(1) or Section 707(b) of the Code as
expenditures described in Section 705(a)(2)(B) of the Code);

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

(4) In lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such
taxable income or loss, there shall be taken into account
Depreciation for such Fiscal Year or other period, computed in
accordance with the definition of "Depreciation" herein;

(5) In the event that any item of income, gain, loss or deduction
that has been included in the initial computation of Profit or
Loss is subject to the special

9
<PAGE> 15

allocation rules of Section 6.2.D hereof, Profit or Loss shall
be recomputed without regard to such item; and

(6) In the event of an adjustment of the Book Value of any
Partnership asset which requires that the Capital Accounts of
the Partnership be adjusted pursuant to Treasury Regulations
Section 1.704-1(b)(2)(iv)(e), (f) and (m), the amount of such
adjustment is to be taken into account as additional Profits
or Losses pursuant to Section 6.2 hereof.

"Qualified Assignee" has the meaning set forth in Section 11.5 hereof.

"Qualifying Party" means (i) any Limited Partner; (ii) a Substituted
Limited Partner; (iii) a Family Member who is the assignee in a permitted
transfer under Section 11.3 hereof; or (iv) a Qualified Assignee.

"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).

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

"REIT Partner" means a Partner or Assignee that is, or has made an
election to qualify as, a REIT.

"REIT Share" means a share of Bay's Common Stock, par value $.01 per
share, or a share of the common stock of a successor to Bay pursuant to a
Transaction.

"REIT Shares Amount" means a number of REIT Shares equal to the
product of (i) the number of Tendered Units and (ii) the Adjustment Factor;
provided, however, that if Bay issues to all holders of REIT Shares as of a
certain record date rights, options, warrants or convertible or exchangeable
securities entitling Bay's shareholders to subscribe for or purchase REIT
Shares, or any other securities or property (collectively, the "Rights"), with
the record date for such Rights issuance falling within the period starting on
the date of the Notice of Exchange and ending on the day immediately preceding
the Specified Exchange Date, which Rights will not be distributed before the
relevant Specified Exchange Date, then the REIT Shares Amount shall also
include such Rights that a holder of that number of REIT Shares would be
entitled to receive, expressed, where relevant hereunder, in a number of REIT
Shares determined by the General Partner in good faith.

"Related Party" means, with respect to any Person, any other Person
whose ownership of shares of the General Partner's or Bay's capital stock, as
applicable, would be attributed to the first such Person under either Code
Section 544 (as modified by Code Section 856(h)(1)(B)) or Code Section 318 (as
modified by Code 856(d)(5)).

10
<PAGE> 16

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

"SEC" means the Securities and Exchange Commission.

"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.

"Specified Exchange Date" means the date of receipt by Bay of a Notice
of Exchange from a Qualifying Party pursuant to the terms and subject to the
conditions set forth in Article 8 hereof.

"Subsidiary" means, with respect to any Person, any corporation,
partnership or other entity of which a majority of (i) the voting power of the
voting equity securities; or (ii) the outstanding equity interests, is owed,
directly or indirectly, by such Person.

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

"Tendered Units" has the meaning set forth in Section 8.5.A hereof.

"Tendering Party" has the meaning set forth in Section 8.5.A hereof.

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

"Transaction" has the meaning set forth in Section 11.2 hereof.

"Transfer," when used with respect to a Limited Partnership Unit or
all or any portion of a Partnership Interest, means any sale, assignment,
bequest, conveyance, devise, gift (outright or in trust), pledge, encumbrance,
hypothecation, mortgage, exchange, transfer or other disposition or act of
alienation, whether voluntary or involuntary or by operation of law; provided,
however, that when the term is used in Article 11 hereof, Transfer does not
include (a) any Exchange of Limited Partnership Units by the Partnership, or
acquisition of Tendered Units from the Limited Partners by the General Partner,
pursuant to Section 8.5 hereof or (b) any exchange of Limited Partnership Units
pursuant to Section 8.6 or Section 8.7 hereof. The terms "Transferred" and
"Transferring" have correlative meanings.

"Unitholder" means the Holder of Limited Partnership Units.

"Unrecovered Capital Amount" means with respect to the General Partner
or a Limited Partner, the Capital Contribution of such Partner less (i) the
aggregate distributions to such

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<PAGE> 17

Partner pursuant to Section 5.1.B(3) and (ii) with respect to any cash or other
distributions made to such Partner or the transfer of REIT Shares to such
Partner pursuant to the provisions of Article 8 hereof, an amount equal to the
initial Unrecovered Capital Amount of such Partner (or Assignee, Qualified
Assignee or Substituted Limited Partner), multiplied by a fraction the
numerator of which is the aggregate number of Limited Partnership Units which
have been transferred by such Partner (or Assignee, Qualified Assignee or
Substituted Limited Partner) to the Partnership or the General Partner in
exchange for such cash or REIT Shares and the denominator of which is the total
number of Limited Partnership Units initially owned by such Limited Partner (or
Assignee, Qualified Assignee or Substituted Limited Partner).

"Valuation Date" means (a) the Specified Exchange Date or, if such
date is not a Business Day, the immediately preceding Business Day or (b) in
any other case, the date specified in this Agreement.

"Value" means, on any Valuation Date with respect to a REIT Share, the
average of the daily market prices for ten (10) consecutive trading days
immediately preceding the Valuation Date. The market price for any such
trading day shall be the Closing price on the New York Stock Exchange, on such
day.

ARTICLE 2
ORGANIZATIONAL MATTERS

Section 2.1 Formation

The Partners hereby form a limited partnership under and pursuant to
the Act. Except as expressly provided herein to the contrary, the rights and
obligations of the Partners and the administration and termination of the
Partnership shall be governed by the Act. The Partnership Interest of each
Partner shall be personal property for all purposes.

Section 2.2 Name

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

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Section 2.3 Registered Office and Agent; Principal Office

The address of the registered office of the Partnership in the State
of Delaware and the name and address of the registered agent for service of
process on the Partnership in the State of Delaware is The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware
19801. The principal office of the Partnership shall be 4800 Hampden Lane,
Suite 500, Bethesda, MD 20814, or such other place as the General Partner may
from time to time designate by notice to the Limited Partners. The Partnership
may maintain offices at such other place or places within or outside the State
of Delaware as the General Partner deems advisable.

Section 2.4 Power of Attorney

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

(1) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (a) all
certificates, documents and other instruments
(including, without limitation, this Agreement and
the Certificate and all amendments or restatement
thereof) that the General Partner or the Liquidator
deems appropriate or necessary to form, qualify or
continue the existence or qualification of the
Partnership as a limited partnership (or a
partnership in which the Limited Partners have
limited liability) in the State of Delaware and in
all other jurisdictions in which the Partnership may
or plans to conduct business or own property; (b) all
instruments that the General Partner deems
appropriate or necessary to reflect any amendment,
change, modification or restatement of this Agreement
in accordance with its terms; (c) all conveyances and
other instruments or documents that the General
Partner or the Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation
of the Partnership pursuant to the terms of this
Agreement, including, without limitation, a
certificate of cancellation; (d) all instruments
relating to the admission, withdrawal, removal or
substitution of any Partner pursuant to, or other
events described in, Article 11, 12 or 13 hereof or
the Capital Contribution of any Partner; and (e) all
certificates, documents and other instruments
relating to the determination of the rights,
preferences and privileges of Partnership Interests;
and

(2) execute, swear to, seal, acknowledge and file all
ballots, consents, approvals, waivers, certificates
and other instruments appropriate or

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<PAGE> 19

necessary, in the sole and absolute discretion of the
General Partner or any Liquidator, to make, evidence,
give, confirm or ratify any vote, consent, approval,
agreement or other action which is made or given by
the Partners hereunder or is consistent with the
terms of this agreement or appropriate or necessary,
in the sole and absolute discretion of the General
Partner or any Liquidator, to effectuate the terms or
intent of this Agreement.

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

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

Section 2.5 Term

The term of the Partnership shall commence on the date hereof and
shall continue until December 31, 2095, unless, the Partnership is dissolved
sooner pursuant to the provisions of Article 13 or as otherwise provided by
law.

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ARTICLE 3
PURPOSE

Section 3.1 Purpose and Business

The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; (ii) to enter into any
partnership, joint venture or other similar arrangement to engage in any of the
foregoing or to own interests in any entity engaged in any of the foregoing;
and (iii) to do anything necessary or incidental to the foregoing.

Section 3.2 Powers

The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein
and for the protection and benefit of the Partnership, provided that the
Partnership shall not take any action which, in the judgment of the General
Partner, in its sole and absolute discretion, (a) could adversely affect the
ability of Bay to continue to qualify as a REIT, (b) could subject the General
Partner or Bay to any additional taxes under Section 857 or Section 4981 of the
Code, or (c) could violate any law or regulation of any governmental body or
agency having jurisdiction over its or Bay's securities or the General Partner,
unless such action (or inaction) shall have been specifically consented to by
the General Partner in writing.

ARTICLE 4
CAPITAL CONTRIBUTIONS

Section 4.1 Capital Contributions of the Partners

At the time of the execution of this Agreement of Limited Partnership,
the Partners shall make the Capital Contributions set forth in Exhibit A to
this Agreement. The Limited Partners shall own Limited Partnership Units in
the amounts set forth on Exhibit A. Except as provided in Sections 4.3, 8.5
and 10.5, the Partners shall have no obligation to make any additional Capital
Contributions or loans to the Partnership.

Section 4.2 Issuances of Additional Partnership Interests

The General Partner shall not cause the Partnership to issue
additional Partnership Interests to the Partners or other Persons.

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Section 4.3 General Partner's Mandatory Capital Contribution to
Fund Unpaid Limited Partners' Priority Returns and
Discretionary Capital Contributions.

If the Partnership is unable to pay the Limited Partners' Priority
Returns in any given fiscal year of the Partnership, the General Partner shall
make additional Capital Contributions to the Partnership to enable the
Partnership to fund such unpaid Limited Partners' Priority Returns. Except as
provided in this Section 4.3 and Section 8.5 the General Partner shall have no
obligation to make Capital Contributions to the Partnership in excess of the
amount set forth in Exhibit A. Notwithstanding the foregoing the General
Partner shall have the right to make Capital Contributions to the Partnership
in excess of the amount set forth in Exhibit A, and any such Capital
Contributions shall be, as of the date contributed, included in the General
Partner's Unrecovered Capital Amount.

Section 4.4 No Guaranteed Payment Within The Meaning of Section
707(c) of the Internal Revenue Code.

Notwithstanding the provisions of Section 4.3 the parties agree that
neither the Limited Partners' Priority nor the General Partner's Priority is
intended to be a guaranteed payment within the meaning of Section 707(c) of the
Code.

Section 4.5 No Preemptive Rights

No Person shall have any preemptive, preferential or other similar
right with respect to (i) additional Capital Contributions or loans to the
Partnership; or (ii) issuance or sale of any Partnership Interests.

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ARTICLE 5
DISTRIBUTIONS

Section 5.1 Requirement and Characterization of Distributions

A. The General Partner shall distribute at least quarterly an
amount equal to 100% of Available Cash generated by the Partnership during each
quarter or shorter period, (a "Fiscal Period") such distribution to be made
within thirty (30) days after the end of each calendar quarter. Cash
distributions pursuant to this Section 5.1 shall be made to the Partners who
are Partners of record on the record date for the regular quarterly dividend
paid by Bay to its shareholders for such quarter ("Partner Record Date") and
such distribution shall be payable to Partners on the payment date for such
dividend for such quarter. In the event that Bay does not declare a dividend
with respect to any quarter, the Partner Record Date for such quarter shall be
the last day of such quarter and such distribution shall be paid no later than
the 20th day of the next following quarter. Such distributions shall be made
to the Partners in accordance with the following order of priority:

(1) First, to the Limited Partners in proportion to the
Limited Partners aggregate accrued and unpaid
Priority Returns, until each Limited Partner has
received an amount that, when aggregated with all
previous distributions to such Limited Partner
pursuant to this Section 5.1.A(1) and Section
5.1.A(3) below is equal to (but not in excess of) the
sum of such Limited Partners' aggregate accrued but
unpaid Priority Returns, plus for any and all accrued
but unpaid Priority Returns for all previous Fiscal
Periods, interest thereon compounded quarterly at 7
1/2%;

(2) Second, to the General Partner until the General
Partner has received an amount that, when aggregated
with all previous distributions to the General
Partner pursuant to this Section 5.1.A(2) is equal to
(but not in excess of) the sum of the General
Partner's aggregate accrued but unpaid Priority
Return, plus for any and all accrued but unpaid
Priority Returns for all previous Fiscal Periods,
interest thereon compounded quarterly at 20%;

(3) Thereafter, 99% to the General Partner and 1% in the
aggregate and among the Limited Partners in
proportion to the Percentage Interests of the Limited
Partners.

B. Terminating Capital Transaction Proceeds shall be distributed
to the Partners to the extent determined in the sole and absolute discretion of
the General Partner. Distributions of Terminating Capital Transaction Proceeds
shall be made to those Partners who are

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<PAGE> 23

Partners on the date of the Terminating Capital Transaction in accordance with
the following order of priority:

(1) First, to the Limited Partners in proportion to the
Limited Partners aggregate accrued and unpaid
Priority Returns, until each Limited Partner has
received an amount that, when aggregated with all
previous distributions to such Limited Partner
pursuant to Sections 5.1.A(1) and (3) and this
Section 5.1.B(1), is equal to (but not in excess of)
the sum of such Limited Partners' Priority Returns,
plus for any and all accrued but unpaid Priority
Returns for all previous Fiscal Periods, interest
thereon compounded quarterly at 7 1/2%;

(2) Second, to the General Partner until the General
Partner has received an amount that, when aggregated
with all previous distributions to the General
Partner pursuant to 5.1.A(2) and this Section
5.1.B(2) is equal to (but not in excess of) the sum
of the General Partner's aggregate accrued but unpaid
Priority Returns, plus for any and all accrued but
unpaid Priority Returns for all previous Fiscal
Periods, interest thereon compounded quarterly at
20%;

(3) Third, to the Partners in proportion to their
Unrecovered Capital Amounts until the Partners have
received an aggregate amount equal to their aggregate
Unrecovered Capital Amounts; and

(4) Thereafter, 1% to the Limited Partners in proportion
to their Percentage Interests and 99% to the General
Partner.

Section 5.2 Amounts Withheld

All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.5 hereof with respect to any allocation,
payment or distribution to the Partners or Assignees shall be treated as
amounts distributed to the Partners or Assignees pursuant to Section 5.1 for
all purposes under this Agreement.

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ARTICLE 6
ALLOCATIONS OF PROFIT AND LOSS

Section 6.1 Capital Accounts.

A. The Partnership shall establish and maintain a separate
Capital Account for each Partner in accordance with Code Section 704 and
Treasury Regulations Section 1.704-1(b)(2)(iv). Subject to the immediately
preceding sentence, the Capital Account of each Partner shall be credited with
(i) the amount of all Capital Contributions made to the Partnership by such
Partner in accordance with this Agreement; plus (ii) all income and gain of the
Partnership allocated to such Partner pursuant to Article 6 hereof (including
for purposes of this Section 6.1 income and gain exempt from tax); and shall be
debited with the sum of: (x) all losses or deductions of the Partnership
allocated to such Partner pursuant to Article 6 hereof, (y) such Partner's
distributive share of expenditures of the Partnership described in Code Section
705(a)(2)(B), and (z) all cash and the Agreed Value of any property actually
distributed or deemed distributed by the Partnership to such Partner pursuant
to the terms of this Agreement. Any reference in any section or subsection of
this Agreement to the Capital Account of a Partner shall be deemed to refer to
such Capital Account as the same may be credited or debited from time to time
as set forth above.

B. The foregoing provisions of this Section 6.1 are intended to
comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted
and applied in a manner consistent with such Treasury Regulations. In the
event the General Partner shall determine that it is prudent to modify the
manner in which the Partners' Capital Accounts are computed hereunder in order
to comply with such Treasury Regulations, the General Partner may make such
modification if such modification will not have any effect whatsoever on the
amount distributable to any Partner under the terms of this Agreement and the
General Partner notifies the Limited Partners in writing of such modification
prior to making such modification.

Section 6.2 Profits, Losses and Distributive Shares.

A. Operating Profits. Subject to Section 6.2.C below, and after
giving effect to the special allocations, if any, provided in Sections 6.2.D
and E hereof, Profits in each fiscal year of the Partnership shall be allocated
in the following order:

(1) First, to each Partner in proportion to the
cumulative Losses allocated to such Partner under
Section 6.2.B hereof, until the cumulative Profits
allocated to such Partner under this Section 6.2.A(1)
equal the cumulative Losses allocated to such Partner
under Section 6.2.B hereof;

(2) Second, to each Limited Partner in the amount, if
any, that the cumulative prior and concurrent
distributions of the Limited Partner's Priority
Return pursuant to Section 5.1.A(1) hereof exceeds the

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<PAGE> 25

cumulative amounts of Profits previously
allocated to such Partner pursuant to this Section
6.2.A(2), and among the Limited Partners in
proportion to such amounts;

(3) Third, to the General Partner in the amount, if any,
that the cumulative prior and concurrent
distributions of the General Partner's Priority
Return pursuant to Section 5.1.A(2) hereof exceeds
the cumulative amounts of Profits previously
allocated to the General Partner pursuant to this
Section 6.2.A(3); and

(4) Thereafter, 99% to the General Partner and 1% to the
Limited Partners in the aggregate and among the
Limited Partners in proportion to their respective
Percentage Interests.

B. Operating Losses. Subject to Section 6.2.C below, and after
giving effect to the special allocations, if any, provided in Section 6.2.D and
E hereof, Losses in each fiscal year of the Partnership shall be allocated in
the following order:

(1) First, to and among those Partners having positive
balances in their Capital Accounts, in proportion to
and to the extent of, such positive Capital Account
balances; and

(2) Thereafter, 99% to the General Partner and 1% to the
Limited Partners in the aggregate and among the
Limited Partners in proportion to their respective
Percentage Interests.

C. Profits and Losses From Terminating Capital Transaction.
Notwithstanding anything contained in Sections 6.2.A and B hereof, after giving
effect to the special allocations, if any, provided in Sections 6.2.D and E
hereof, all items of Partnership Profits and Losses arising from a Terminating
Capital Transaction shall be allocated among the Partners so as to insure to
the maximum extent possible that, after giving effect to the allocation of such
Profits and Losses in the Capital Accounts of the Partners, the Capital Account
balance of each Partner is positive in the amount of cash that such Partner is
required to receive pursuant to Section 5.1.B from such Terminating Capital
Transaction.

D. Special Allocations. Except as otherwise provided in this
Agreement, the following special allocations will be made in the following
order and priority:

(1) Partnership Minimum Gain Chargeback. Notwithstanding
any other provision of this Article 6, if there is a
net decrease in Minimum Gain during any tax year or
other period for which allocations are made, the
Partners will be specially allocated items of
Partnership income and gain for that period (and, if
necessary, subsequent periods) in an amount

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<PAGE> 26

equal to such Partner's share of the net decrease in
Minimum Gain during such tax year or other period
determined in accordance with Treasury Regulations
Section 1.704-2(g)(2). Allocations pursuant to the
preceding sentence shall be made in proportion to the
respective amounts required to be allocated to each
Partner pursuant thereto. The items to be so
allocated shall be determined in accordance with
Treasury Regulations Sections 1.704-2(f)(6) and
1.704- 2(j)(2)(i). This Section 6.2.D(1) is intended
to comply with the minimum gain chargeback
requirements set forth in Treasury Regulations
Section 1.704-2(f) and shall be interpreted
consistently therewith, including the exceptions to
the minimum gain chargeback requirement set forth in
Treasury Regulations Sections 1.704-2(f)(2) and (3).

(2) Partner Nonrecourse Debt Minimum Gain Chargeback.
Notwithstanding any other provision of this Section
6.2 (other than Section 6.2.D(1) which shall be
applied before this Section 6.2.D(2)), if there is a
net decrease in Partner Nonrecourse Debt Minimum Gain
during any tax year or other period for which
allocations are made, each Partner with a share of
Partner Nonrecourse Debt Minimum Gain determined in
accordance with Treasury Regulations Section
1.704-2(i)(5) shall be specially allocated items of
Partnership income and gain for that period (and, if
necessary, subsequent periods) in an amount equal to
the Partner's share of the net decrease in the Partner
Nonrecourse Debt Minimum Gain determined in accordance
with Treasury Regulation 1.704-2(i). The items to be
so allocated shall be determined in accordance with
Treasury Regulations Sections 1.704-2(i)(4) and
1.704-2(j)(2)(ii). This Section 6.2.D(2) is intended
to comply with the minimum gain chargeback
requirements of Treasury Regulations Section
1.704-2(i)(4) and shall be interpreted consistently
therewith, including the exceptions set forth in
Treasury Regulations Section 1.704-(f)(2) and (3) to
the extent such exception apply to Treasury
Regulations Section 1.704-2(i)(4).

(3) Qualified Income Offset. A Partner who unexpectedly
receives any adjustment, allocation or distribution
described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), respectively,
will be specially allocated items of Partnership
income and gain (consisting of a pro rata portion of
each item of partnership income, including gross
income, and gain for the relevant tax year) in an
amount and manner sufficient to eliminate, to the
extent required by the Treasury Regulations, the
Adjusted Capital Account Deficit of the Partner as
quickly as possible, provided that an allocation
pursuant to this Section 6.2.D(3) shall be made only
to the extent that such Partner would have an
Adjusted

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<PAGE> 27

Capital Account Deficit after all other allocations
provided for in Section 6.2 have been made in the
first instance without regard to this Section 6.2.

(4) Partner Nonrecourse Deductions. Notwithstanding
anything to the contrary in this Agreement, any
Partner Nonrecourse Deductions for any taxable year
or other period for which allocations are made will
be allocated to the Partner who bears the economic
risk of loss with respect to the liability to which
the Partner Nonrecourse Deductions are attributable
in accordance with Treasury Regulations Section
1.704-2(i).

(5) Code Section 754 Adjustments. To the extent an
adjustment to the adjusted tax basis of any
Partnership asset under Code Section 734(b) or 743(b)
is required to be taken into account in determining
Capital Accounts under Treasury Regulations Section
1.704-1(b)(2) (iv)(m), the amount of the adjustment
to the Capital Accounts will be treated as an item of
gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases the basis
of the asset), and the gain or loss will be specially
allocated to the Partners in a manner consistent with
the manner in which their Capital Accounts are
required to be adjusted under Treasury Regulations
Section 1.704-1(b)(2)(iv)(m).

(6) Depreciation Recapture. In the event there is any
recapture of Depreciation or investment tax credit,
the allocation thereof shall be made among the
Partners in the same proportion as the deduction for
such Depreciation or investment tax credit was
allocated.

(7) Interest In Partnership. Notwithstanding any other
provision of this Agreement, no allocation of Profit
or Loss (or item of Profit or Loss) will be made to a
Partner if the allocation would not have "economic
effect" under Treasury Regulations Section
1.704-1(b)(2)(ii) or otherwise would not be in
accordance with the Partner's interest in the
Partnership within the meaning of Treasury
Regulations Section 1.704-1(b)(3) or
1.704-1(b)(4)(iv).

E. Curative Allocations. The allocations set forth in Sections
6.2.D(1) through (5) hereof (the "Regulatory Allocations") are intended to
comply with certain requirements of Treasury Regulations Sections 1.704-1(b)
and 1.704-2. The Regulatory Allocations may not be consistent with the manner
in which the Partners intend to divide Partnership distributions. Accordingly,
the General Partner is authorized to further allocate Profits, Losses, and
other items among the Partners in a reasonable manner so as to prevent the
Regulatory Allocations from distorting the manner in which Partnership
distributions would be divided among the Partners under Section 5.1 hereof, but
for application of the Regulatory Allocations. In

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<PAGE> 28

general, such reallocation will be accomplished by specially allocating other
Profits, Losses and items of income, gain, loss and deduction, to the extent
they exist, among the Partners so that the net amount of the Regulatory
Allocations and the special allocations to each Partner is zero. The General
Partner may accomplish this result in any reasonable manner that is consistent
with Code Section 704 and the related Treasury Regulations.

F. Tax Allocations - Code Section 704(c). Notwithstanding
anything contained in this Agreement to the contrary, taxable income, gain,
loss, and deduction with respect to any Partnership property (including, but
not limited to, the Contributed Properties) that is subject to Code Section
704(c), the Treasury Regulations thereunder and/or Treasury Regulations Section
1.704-1(b)(2)(iv)(f) shall be determined and allocated among the Partners, and
the Capital Accounts of the Partners shall be determined, in accordance with
such Code Section and/or the Treasury Regulations, as the case may be. The
General Partner hereby agrees that the Partnership shall elect the traditional
method under Treasury Regulation Section 1.704-3(b) to eliminate the Book-Tax
Disparity with respect to the Contributed Properties, and such election shall
be binding on all of the Partners.

G. Other Allocation Rules. The following rules will apply to the
calculation and allocation of Profits, Losses and other items:

(1) Unless otherwise determined by the General Partner,
for purposes of determining the Profits, Losses or
any other item allocable to any period, Profits,
Losses and other items will be determined on a daily
basis under Code Section 706 and the related Treasury
Regulations.

(2) Except as otherwise provided in this Agreement, all
items of Partnership income, gain, loss, deduction,
and other allocations not provided for in this
Agreement will be divided among the Partners in the
same proportions as they share Profits and Losses,
provided that any credits shall be allocated in
accordance with Treasury Regulations Section
1.704-1(b)(4)(ii).

H. Partner Acknowledgment. The Partners agree to be bound by the
provisions of this Section 6.2 in reporting their shares of Partnership income,
gain, loss, deduction and credit for income tax purposes.

I. Regulatory Compliance. The foregoing provisions of this
Section 6.2 relating to the allocation of Profits, Losses and other items for
federal income tax purposes are intended to comply with Treasury Regulations
Sections 1.704-1(b) and 1.704-2, and shall be interpreted and applied in a
manner consistent with such Treasury Regulations.

J. Effect of Treasury Regulations; Liquidation. In the event the
Partnership is "liquidated" within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g),

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<PAGE> 29

distributions shall be made pursuant to Section 5.1.B. If any Partner has a
deficit balance in his Capital Account (after giving effect to all
contributions, distributions and allocations), such Partner shall have no
obligation to make any contribution to the capital of the Partnership. In the
event the Partnership is "liquidated" within the meaning of Treasury
Regulations Section 1.704-1(b)(2)(ii)(g) but there has been no dissolution of
the Partnership, then the Partnership assets shall not be liquidated, the
Partnership's liabilities shall not be paid or discharged and the Partnership's
affairs shall not be wound up. In the event of such a liquidation there shall
be deemed to have been a distribution of Partnership assets in kind to the
Partners in accordance with their respective Capital Accounts followed by a
recontribution of the Partnership assets by the Partners also in accordance
with their respective Capital Accounts.

ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS

Section 7.1 Management

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

(1) the making of any expenditures, the lending or
borrowing of money (including, without limitation,
making prepayments on loans), the assumption or
guarantee of, or other contracting for, indebtedness
and other liabilities, the issuance of evidence of
indebtedness (including the securing of the same by
deed, mortgage, deed of trust or other lien or
encumbrance on the Partnership's assets) and the
incurring of any obligations it deems necessary for
the conduct of the activities of the Partnership;

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

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(3) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any assets
of the Partnership (including the exercise or grant
of any conversion, option, privilege, or subscription
right or other right available in connection with any
assets at any time held by the Partnership) or the
merger or other combination of the Partnership with
or into another entity (all of the foregoing subject
to any prior approval only to the extent required by
Section 7.3 hereof);

(4) the use of the assets of the Partnership (including,
without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement and on
any terms it sees fit, including, without limitation,
the financing of the conduct of the operations of the
Partnership or any of the Partnership's Subsidiaries,
the lending of funds to other Persons (including,
without limitation, the Subsidiaries of the
Partnership and the repayment of obligations of the
Partnership and its Subsidiaries and any other Person
in which it has an equity investment, and the making
of capital contributions to its Subsidiaries;

(5) the management, operation, leasing, landscaping,
repair, alteration, demolition or improvement of any
real property or improvements owed by the Partnership
or any Subsidiary of the Partnership;

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

(7) the distribution of Partnership cash or other
Partnership assets in accordance with this Agreement;

(8) holding, managing, investing and reinvesting cash and
other assets of the Partnership;

(9) the collection and receipt of revenues and income of
the Partnership;

(10) the establishment of one or more divisions of the
Partnership, the selection and dismissal of employees
of the Partnership (including, without limitation,
employees having titles such as "president," "vice
president," "secretary" and "treasurer" of the
Partnership), and agents,

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outside attorneys, accountants, consultants and
contractors of the Partnership, and the determination
of their compensation and other terms of employment
or hiring;

(11) the maintenance of such insurance for the benefit of
the Partnership and the Partners as it deems
necessary or appropriate;

(12) the formation of, or acquisition of an interest in,
and the contribution of property to, any further
limited or general partnerships, joint ventures or
other relationships that it deems desirable
(including, without limitation, the acquisition of
interests in, and the contributions of property to,
its Subsidiaries and any other Person in which it has
an equity investment from time to time);

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

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

(15) the determination of the fair market value of any
Partnership property distributed in kind using such
reasonable method of valuation as the General Partner
may adopt;

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

(17) the exercise of any of the powers of the General
Partner enumerated in this Agreement on behalf of or
in connection with any Subsidiary of the

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Partnership or any other Person in which the
Partnership has a direct or indirect interest, or
jointly with any such Subsidiary or other Person;

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

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

(20) the issuance of additional Partnership Interests, as
appropriate, in connection with additional Capital
Contributions by Partners pursuant to Article 4
hereof.

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

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

D. Except as provided in Section 7.3, in exercising its authority
under this Agreement, the General Partner may, but shall be under no obligation
to, take into account the tax consequences to any Partner of any action taken
by it. The General Partner and the Partnership shall not have liability to a
Limited Partner under any circumstances as a result of an income tax liability
incurred by such Limited Partner as a result of an action (or inaction) by the
General Partner taken pursuant to its authority under this Agreement and in
accordance with the terms of Section 7.3.

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Section 7.2 Certificate of Limited Partnership

The General Partner shall file, simultaneously herewith, the
Certificate with the Secretary of State of Delaware as required by the Act.
The General Partner shall use all reasonable efforts to cause to be filed such
other certificates or documents as may be reasonable and necessary or
appropriate for the formation, continuation, qualification and operation of a
limited partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and any other state, or the
District of Columbia, in which the Partnership may elect to do business or own
property. To the extent that such action is determined by the General Partner
to be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate and do all of the things to
maintain the Partnership as a limited partnership (or a partnership in which
the limited partners have limited liability) under the laws of the State of
Delaware and each other state, or the District of Columbia, 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 7.3 Restrictions on General Partner Authority

A. The General Partner may not take any action in contravention
of an express prohibition or limitation of this Agreement without the written
Consent of Limited Partners holding a majority of the Percentage Interests of
the Limited Partners or such other percentage of the Limited Partners as may be
specifically provided for under a provision of this Agreement.

B. Except as provided in Article 11 or 13 hereof or to the extent
that the transaction is treated as a wholly tax-free exchange with no boot
under Code Section 1031, the General Partner shall not, prior to April 1, 2002,
(i) cause the Partnership to engage in a sale or exchange with respect to any
Contributed Properties (including by way of taxable merger, consolidation or
other combination with any other Person), (ii) cause a tax termination of the
Partnership within the meaning of Section 708(b)(1)(B) of the Code; or (iii)
fail to maintain an amount of non-recourse debt secured by the Contributed
Properties which is at least equal to the principal amount of the non-recourse
debt secured by the Contributed Properties on the Contribution Date, less
regularly scheduled principal payments.

C. The General Partner agrees that neither it nor any other
Person who may be related to the General Partner under Regulation Section
1.752-4(b) will purchase or otherwise acquire the non-recourse debt secured by
the Contributed Properties such that such non-recourse debt will become Partner
Nonrecourse Debt.

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Section 7.4 Reimbursement of the General Partner

A. Except as provided in this Section 7.4 and elsewhere in this
Agreement (including the provisions of Articles 5 and 6 regarding
distributions, payments, and allocations to which it may be entitled), the
General Partner shall not be compensated for its services as general partner of
the Partnership.

B. The General Partner shall be reimbursed on a monthly basis, or
such other basis as it may determine in its sole and absolute discretion, for
all expenses that it incurs relating to the ownership and operation of, or for
the benefit of, the Partnership;

Section 7.5 Contracts with Affiliates

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

B. The Partnership may transfer assets to joint ventures, other
partnerships, corporations or other business entities in which it is or thereby
becomes a participant upon such terms and subject to such conditions consistent
with this Agreement and applicable law as the General Partner, in its sole and
absolute discretion, believes are advisable.

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

D. The General Partner and its Affiliates may perform services to
the Partnership and shall be entitled to receive compensation therefore
determined on an arms length, fair market value basis.

Section 7.6 Indemnification

A. To the fullest extent permitted by Delaware law, the
Partnership shall indemnify each Indemnitee from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including,
without limitation, attorneys fees and other legal fees and expenses),
judgments, fines, settlements, and other amounts arising from any and all
claims, demands, actions, suits or proceedings, civil, criminal, administrative
or investigative, that relate to the operations of the Partnership or the
Company as set forth in this Agreement, in which such Indemnitee may be
involved, or is threatened to be involved, as a party or

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<PAGE> 35

otherwise. Without limitation, the foregoing indemnity shall extend to any
liability of any Indemnitee, pursuant to a loan guaranty or otherwise for any
indebtedness of the Partnership or any Subsidiary of the Partnership (including
without limitation, any indebtedness which the Partnership or any Subsidiary of
the Partnership has assumed or taken subject to), and the General Partner is
hereby authorized and empowered, on behalf of the Partnership, to enter into
one or more indemnity agreements consistent with the provisions of this Section
7.6 in favor of any Indemnitee having or potentially having liability for any
such indebtedness. Any indemnification pursuant to this Section 7.6 shall be
made only out of the assets of the Partnership, and neither the General Partner
nor any Limited Partner shall have any obligation to contribute to the capital
of the Partnership, or otherwise provide funds, to enable the Partnership to
fund its obligations under this Section 7.6.

B. Reasonable expenses incurred by an Indemnitee who is a party
to a proceeding shall be paid or reimbursed by the Partnership in advance of
the final disposition of the proceeding.

C. The indemnification provided by this Section 7.6 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity unless otherwise provided in a written agreement
pursuant to which such Indemnities are indemnified.

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

E. For purposes of this Section 7.6, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute fines within the meaning of Section 7.6; and actions taken or
omitted by the Indemnitee with respect to an employee benefit plan in the
performance of its duties for a purpose reasonably believed by it to be in the
interest of the participants and beneficiaries of the plan shall be deemed to
be for a purpose which is not opposed to the best interests of the Partnership.

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

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G. An Indemnitee shall not be denied indemnification in whole or
in part under this Section 7.6 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.

H. The provisions of this Section 7.6 are for the benefit of the
Indemnities, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.6 or any provision hereof
shall be prospective only and shall not in any way affect the Partnership's
liability to any Indemnitee under this Section 7.6, as in effect immediately
prior to such amendment, modification, or repeal with respect to claims arising
from or relating to matters occurring, in whole or in part, prior to such
amendment, modification or repeal, regardless of when such claims may arise or
be asserted.

Section 7.7 Liability of the General Partner

A. Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner and its officers and directors shall not be
liable for monetary damages to the Partnership, any Partners or any Assignees
for losses sustained or liabilities incurred as a result of errors in judgment
or of any act or omission if the General Partner acted in good faith.

B. The Limited Partners expressly acknowledge that the General
Partner is acting on behalf of the Partnership and its shareholder
collectively, that the General Partner is under no obligation to consider the
separate interests of the Limited Partners (except as otherwise provided
herein) in deciding whether to cause the Partnership to take (or decline to
take) any actions, and that the General Partner shall not be liable for
monetary damages for losses sustained, liabilities incurred, or benefits not
derived by Limited Partners in connection with such decisions, provided that
the General Partner has acted in good faith.

C. Subject to its obligations and duties as General Partner set
forth in Section 7.1.A hereof, the General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its 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.

D. Any amendment, modification or repeal of this Section 7.7 or
any provision hereof shall be prospective only and shall not in any way affect
the limitations on the General Partner's and its officers' and directors'
liability to the Partnership and the Limited Partners under this Section 7.7 as
in effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in whole or in
part, prior to such amendment, modification or repeal, regardless of when such
claims may arise or be asserted.

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Section 7.8 Other Matters Concerning the General Partner

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

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

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

D. Subject to any agreements entered into by a General Partner or
its Affiliates with the Partnership or any of its Subsidiaries, the General
Partner and any officer, director, employee, agent, trustee, Affiliate or
shareholder of the General Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to
the Partnership, including business interests and activities that are in direct
competition with the Partnership or that are enhanced by the activities of the
Partnership. Neither the Partnership nor any Partners shall have any rights by
virtue of this Agreement in any business ventures of the General Partner or its
Affiliates. None of the Limited Partners nor any other Person shall have any
rights by virtue of this Agreement or the Partnership relationship established
hereby in any business ventures of any other Person and such Person shall have
no obligation pursuant to this Agreement to offer any interest in any such
business ventures to the Partnership, any Limited Partner or any such other
Person, even if such opportunity is of a character which, if presented to the
Partnership, any Limited Partner or such other Person, could be taken by such
Person.

Section 7.9 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 may be held in the name of the
Partnership, the General Partner or one or more nominees, as the General
Partner may determine, including Affiliates of the General Partner. The
General Partner hereby declares

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and warrants that any Partnership assets for which legal title is held in the
name of the General Partner or any nominee or Affiliate of the General Partner
shall be held by the General Partner for the use and benefit of the Partnership
in accordance with the provisions of this Agreement. All Partnership assets
shall be recorded as the property of the Partnership in its books and records,
irrespective of the name in which legal title to such Partnership assets is
held.

Section 7.10 Reliance by Third Parties

Notwithstanding anything to the contrary in this Agreement, any Person
dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without consent or approval of any other
Partner or Person, to encumber, sell or otherwise use in any manner any and all
assets of the Partnership and to enter into any contracts on behalf of the
Partnership, and take any and all actions on behalf of the Partnership and such
Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such
dealing. In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying 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.

Section 7.11 General Partner's Capital Contribution to Fund the
Contributor's Prorations and Other Expenses under the
Contribution Agreement.

The General Partner's Capital Contribution made at the time of the
execution of this Agreement (pursuant to Section 4.1) shall be used by the
General Partner to fund (i) the Contributor's prorations described in Article 6
of the Contribution Agreement, (ii) the brokerage commission described in
Section 9.1 of the Contribution Agreement, (iii) the Contributor's expenses
described in Section 9.4 of the Contribution Agreement, (iv) the Contributor's
title insurance, survey and UCC costs as described in Section 9.5 of the
Contribution Agreement, (v) any other adjustments which are the responsibility
of the Contributor under the Contribution Agreement, (vi) all obligations of
Bay Countrybrook under the Contribution Agreement and (vii), to the extent
there shall be funds remaining, shall be

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used by the General Partner for any other purpose in accordance with the terms
of this Agreement.

ARTICLE 8
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

Section 8.1 Limitation of Liability

Subject to any separate agreements entered into between the Limited
Partners and the Partnership or its Affiliates, the Limited Partners shall have
no liability under this Agreement except as expressly provided in this
Agreement, including Section 10.5 hereof, or under the Act.

Section 8.2 Management of Business

No Limited Partner or Assignee (other than the General Partner, any of
its Affiliates or any officer, director, employee, agent or trustee of the
General Partner, the Partnership or any of their Affiliates, in their capacity
as such) 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,
any of its Affiliates or any officer, director, employee, partner, agent or
trustee of the General Partner, the Partnership or any of their Affiliates, in
their capacity as such, shall not affect, impair or eliminate the limitations
on the liability of the Limited Partners or Assignees under this Agreement.

Section 8.3 Outside Activities of Limited Partners

Subject to any agreements entered into by a Limited Partner or its
Affiliates with the Partnership or any of its Subsidiaries, any Limited Partner
(other than the Company) and any officer, director, employee, agent, trustee,
Affiliate or shareholder of any Limited Partner (other than the Company) shall
be entitled to and may have business interests and engage in business
activities in addition to those relating to the Partnership, including business
interests and activities that are in direct competition with the Partnership or
that are enhanced by the activities of the Partnership. Neither the
Partnership nor any Partners shall have any rights by virtue of this Agreement
in any business ventures of any Limited Partner or Assignee. None of the
Limited Partners nor any other Person shall have any rights by virtue of this
Agreement or the Partnership relationship established hereby in any business
ventures of any other Person and such Person shall have no obligation pursuant
to this Agreement to offer any interest in any such business ventures to the
Partnership, any Limited Partner or any such other Person, even if such
opportunity is of a character which, if presented to the Partnership, any
Limited Partner or such other Person, could be taken by such Person.

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Section 8.4 Return of Capital

No Limited Partner shall be entitled to the withdrawal or return of
its Capital Contribution, except to the extent of distributions made pursuant
to this Agreement or upon termination of the Partnership as provided herein.
Except as otherwise expressly provided in this Agreement, including any
amendments hereto in accordance with Section 12.2, no Limited Partner or
Assignee shall have priority over any other Limited Partner or Assignee, either
as to the return of Capital Contributions or as to profits, losses or
distributions.

The General Partner may keep confidential from the Limited Partners,
for such period of time as the General Partner determines in its sole and
absolute discretion to be reasonable, any information that (i) the General
Partner reasonably believes to be in the nature of trade secrets or other
information, the disclosure of which the General Partner in good faith believes
is not in the best interests of the Partnership or could damage the Partnership
or its business; or (ii) the Partnership is required by law or by agreements
with an unaffiliated third party to keep confidential.

Section 8.5 Exchange Rights of Qualifying Parties

A. After ninety 90 days following the Closing Date (as that term
is defined in the Contribution Agreement), a Qualifying Party shall have the
right (the "Exchange Right") (subject to the terms and conditions set forth
herein) to require (except as set forth in Section 8.5.B hereof) the
Partnership to redeem all or a portion of the Limited Partnership Units held by
the Qualifying Party (such Limited Partnership Units being hereinafter call
"Tendered Units") in exchange for the Cash Amount multiplied by the REIT Shares
Amount with respect to the Tendered Units (the "Cash Option"), which product
shall be due and shall be paid within fifteen (15) Business Days following the
Specified Exchange Date relating to such Tendered Units. In such event, Bay
shall contribute to the General Partner, and the General Partner shall
contribute to the Partnership such Cash Amount, and the Tendering Party's
Tendered Units shall be redeemed in exchange for such Cash Amount in the
following manner and with the following consequences: such redemption, to the
extent it does not represent distributions required to be paid pursuant to
Section 5.1 hereof which are owed but unpaid, shall be treated as a
distribution to such Limited Partner which reduces such Limited Partner's
Unrecovered Capital Amount as of the date of the redemption by the amount set
forth in the definition of Unrecovered Capital Amount in Article 1 hereof, and
the amount of the actual cash contribution shall be added to the General
Partner's Unrecovered Capital Amount as of the date of the contribution.

Any such exchange or redemption shall be exercised pursuant to a
notice of exchange (which notice shall include (i) representations and
warranties by the Qualifying Party that the Tendered Units will be delivered
free and clear of all claims, liens and encumbrances, (ii) investment
representations and warranties by the Qualifying Party and (iii)
representations and warranties regarding the Qualifying Party's accreditation
status under state and federal

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<PAGE> 41

securities laws) in substantially the form attached hereto as Exhibit B (a
"Notice of Exchange") delivered to the Partnership and Bay by the Qualifying
Party when exercising the Exchange Right (the "Tendering Party"). A Notice of
Exchange may be given by a Qualifying Party at any time after ninety (90) days
following the date of this Agreement.

B. Notwithstanding the provisions of Section 8.5.A hereof, upon
an election by a Tendering Party of its Exchange Right, the General Partner
may, in its sole and absolute discretion but subject to the Ownership Limit,
acquire the Tendered Units from the Tendering Party in exchange for REIT
Shares. In the event Bay elects this option, (i) Bay shall send notice of such
election to the Tendering Party at the address listed on the Notice of Exchange
not later than ten (10) Business Days following the Specified Exchange Date and
(ii) within fifteen (15) Business Days following the Specified Exchange Date,
the General Partner shall deliver such number of REIT Shares as are equal to
the REIT Shares Amount (the "Exchange Shares") in exchange for such number of
Tendered Units plus any owed but unpaid distributions; provided, however, that
in lieu of any fractional REIT Share resulting from such calculation, Bay may
contribute to the General Partner and the General Partner may contribute to the
Partnership the Cash Amount attributable to such fractional REIT Share. Such
exchange shall be treated as a sale of such Limited Partnership Units to the
General Partner for federal income tax purposes and such exchange shall be
deemed to have the following consequences hereunder: the General Partner's
Unrecovered Capital Account as of the date of exchange shall be increased by
the Value of the REIT Shares Amount. In the event cash is used in lieu of
fractional REIT Shares, the consequences hereunder shall be identical to those
under Section 8.5.A. In determining whether to elect to exchange for REIT
Shares in addition to the Notice of Exchange, Bay may require, in its sole and
absolute discretion, that the Tendering Party submit to Bay (i) such
information, certification or affidavit as Bay may reasonably require in
connection with the application of the Ownership Limit or as required by the
Contribution Agreement or (ii) such other written representations, investment
letters, legal opinions or other instruments necessary, in Bay's good faith
opinion, to effect compliance with the Securities Act. The Exchange Shares
shall be delivered by Bay as duly authorized, validly issued, fully paid and
nonassessable REIT Shares, free of any pledge, lien, encumbrance or
restriction, other than the Ownership Limit and other restrictions provided in
Bay's charter, the bylaws of Bay, the Securities Act and relevant state
securities or "blue sky" laws. REIT Shares issued pursuant to this Section
8.5.B may contain such legends regarding restrictions under the Securities Act
and applicable state securities laws as Bay in good faith determines to be
necessary or advisable in order to ensure compliance with such laws. Upon
delivery by the General Partner of the REIT Shares to the Tendering Party, such
holder of REIT Shares shall automatically be entitled to the rights and be
subject to the obligations and conditions under the Registration Rights
Agreement attached hereto as Appendix A (the "Registration Rights Agreement").

C. If a Partner Record Date with respect to any Tendered Unit
precedes the date on which a Tendering Party receives cash or REIT Shares (the
"Delivery Date") pursuant to this Article 8, such Tendering Party shall be
entitled to distributions pursuant to this Agreement

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with respect to the Limited Partnership Units exchanged or redeemed. If the
Delivery Date with respect to any Tendered Unit is on or after the Partner
Record Date with respect to any such quarter, and the Tendering Party receives
REIT Shares in connection with such exchange, the Tendering Partner shall not
be entitled to distributions pursuant to this Agreement with respect to the
Limited Partnership Units exchanged but shall be entitled to any dividends
payable to any record holders of REIT Shares on or after the Delivery Date.

D. Notwithstanding anything herein to the contrary, with respect
to any exchange or redemption of Tendered Units pursuant to this Article 8
hereof:

(1) Subject to the Ownership Limit, no Tendering Party
may effect an Exchange for less than One Thousand (1,000) Limited
Partnership Units or, if such Tendering Party holds less than One
Thousand (1,000) Limited Partnership Units, all of the Limited
Partnership Units held by such Tendering Party.

(2) The consummation of any exchange or redemption of
Tendered Units shall be subject to the expiration or termination of
the applicable waiting period, if any, under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.

(3) Except as provided in Section 8.5.B hereof, the
Tendering Party shall continue to own (subject, in the case of a
Substituted Limited Partner or a Qualified Assignee, to the provisions
of Section 11.5 hereof) all Limited Partnership Units subject to any
Exchange or Cash Option, and be treated as a Limited Partner or a
Qualified Assignee, as applicable, with respect such Limited
Partnership Units for all purposes of this Agreement, until such
Limited Partnership Units are either exchanged for REIT Shares,
pursuant to Section 8.5.B hereof or redeemed for cash pursuant to
Section 8.5.A hereof. Except as otherwise provided in this Agreement,
upon the date of delivery of REIT Shares or the Cash Amount to the
Tendering Party (the "Delivery Date"), all rights and obligations of
the Tendering Party with respect to the Limited Partnership Units
exchanged or redeemed hereunder shall cease and, to the extent such
Tendering Party elects to exchange all Limited Partnership Units held
by such Tendering Party, the Tendering Party shall no longer be a
Limited Partner, Substituted Limited Partner, Qualified Assignee or an
Assignee, as the case may be, with respect to this Agreement. Except
as provided in Section 8.5.B hereof, until an exchange of the Tendered
Units by Bay pursuant to Section 8.5.B hereof and the receipt by a
Qualifying Party of REIT Shares, the Tendering Party shall have no
rights as a shareholder of Bay with respect to the REIT Shares
issuable in connection with such Exchange Right.

For purposes of determining compliance with the restrictions set forth
in this Section 8.5.D, all Limited Partnership Units beneficially
owned by a Related Party of a Tendering Party shall be considered to
be owned or held by such Tendering Party.

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E. In connection with an exercise of an Exchange Right pursuant
to this Article 8, each Tendering Party shall represent or covenant the
following to Bay, which representations and covenants shall be included within
the Notice of Exchange:

(1) A written affidavit disclosing the actual and
constructive ownership, as determined for purposes of Code Sections
856(a)(6), 856(h), 856(d)(2)(B) and 856(d)(5), of REIT Shares by (i)
such Tendering Party and (ii) any Related Party;

(2) A written representation that neither the Tendering
Party nor any Related Party has any intention to acquire any
additional REIT Shares prior to the closing of an Exchange pursuant to
Section 8.5.A following the Specified Exchange Date; and

(3) A covenant, as a condition to the closing of an
Exchange, that the actual and constructive ownership of REIT Shares by
the Tendering Party and any Related Party will remain unchanged from
that disclosed above.

F. Notwithstanding any other provisions of this Agreement, a
Qualifying Party (i) shall not be entitled to effect an exchange or redemption,
whether in REIT Shares or for cash, to the extent the ownership or right to
acquire REIT Shares pursuant to which the exercise of the Exchange Right by
such Qualifying Party would cause such Qualifying Party or any other Person to
violate the Ownership Limit and (ii) shall have no rights under this Agreement
which would otherwise be prohibited under Bay's charter. To the extent any
attempted exchange would be in violation of this Section 8.5.F, it shall be
null and void ab initio and such Qualifying Party shall not acquire any rights
or economics interests in REIT Shares otherwise issuable upon such Exchange.

G. If the General Partner or the Partnership is unable to
consummate an exchange or redemption, whether in REIT Shares or for cash,
pursuant to Sections 8.5.A or 8.5.B due to operation of law pursuant to the
terms of this Article 8 for any reason, Bay shall either pay or cause to be
paid to each Tendering Party the Cash Amount attributable to such Tendered
Units in the manner and with the consequences described in Section 8.5.A hereof
or, in Bay's sole and absolute discretion, Bay shall cause the Tendered Units
to be exchanged for REIT Shares in the manner and with the consequences
described in Section 8.5.B hereof. In addition, as long as any Limited
Partnership Units are outstanding, Bay agrees to have authorized but unissued
that number of REIT Shares equal to the number of Limited Partnership Units
outstanding.

Section 8.6 Bay's Right to Call Limited Partnership Interests

Notwithstanding any other provision of this Agreement, on and after
the earlier of April 1, 2002 or the date on which more than 75% of the Limited
Partnership Units have been exchanged, whether in REIT Shares or for cash,
pursuant to Section 8.5 hereof, Bay shall have the right, but not the
obligation, from time to time and at any time to exchange any and all

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<PAGE> 44

outstanding Limited Partnership Units by treating any Qualifying Party as a
Tendering Party who has delivered a Notice of Exchange pursuant to Section
8.5.A hereof for the amount of Limited Partnership Units to be specified by
Bay, in its sole and absolute discretion, by notice to such Qualifying Party
that Bay has elected to exercise its rights under this Section 8.6. Such
notice given by Bay to a Limited Partner pursuant to this Section 8.6 shall be
treated as if it were a Notice of Exchange delivered to Bay by such Limited
Partner. For purposes of this Section 8.6, any Limited Partner, any
Substituted Limited Partner, any Qualified Assignee or any Assignee (whether or
not otherwise a Qualifying Party) shall be treated as a Qualifying Party that
is a Tendering Party.

Section 8.7 Other Exchanges

Notwithstanding the provisions of Sections 8.5 or 8.6 hereof, nothing
in this Agreement shall preclude the exchange, whether in REIT Shares or cash,
of Limited Partnership Units by any Qualifying Party upon such terms and
conditions as may be negotiated between the Qualifying Party holding such
Limited Partnership Units, on the one hand, and Bay, on the other hand, in
their sole and absolute discretion. Such an exchange may include the payment
of cash by Bay to the Qualifying Party, in a lump sum or in installments, or
the distribution in kind of Bay assets to such Qualifying Party (which assets
may be encumbered), including assets to be designated by the Qualifying Party
and acquired (with or without debt financing) by Bay. In effecting any such
exchange by negotiated agreement, neither Bay nor the Qualifying Party, shall
incur any liability to any other holder of Limited Partnership Units or have
any duty to offer the same or similar terms for exchange of any other
Qualifying Party.

ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 9.1 Records and Accounting

The General Partner shall keep or cause to be kept at the principal
office of the Partnership those records and documents required to be maintained
by the Act and other books and records deemed by the General Partner to be
appropriate with respect to the Partnership's business, including, without
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Section 9.3 hereof. Any records maintained by or on behalf of the
Partnership in the regular course of its business may be kept on, or be in the
form of, punch cards, magnetic tape, photographs, micrographics or any other
information storage device. The books of the Partnership shall be maintained,
for financial and tax reporting purposes, on an accrual basis in accordance
with generally accepted accounting principles, or such other basis as the
General Partner determines to be necessary or appropriate.

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Section 9.2 Fiscal Year

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

Section 9.3 Reports

A. As soon as practicable, but in no event later than one hundred
twenty (120) days after the close of each Partnership Year, the General Partner
shall cause to be mailed to each Limited Partner as of the close of the
Partnership Year, an annual report containing unaudited financial statements of
the Partnership, for such Partnership Year, presented in accordance with
generally accepted accounting principles.

B. As soon as practicable, but in no event later than sixty (60)
days after the close of each calendar quarter (except the last calendar quarter
of each year), the General Partner shall cause to be mailed to each Limited
Partner as of the last day of the calendar quarter, a report containing
unaudited financial statements of the Partnership, and such other information
as may be required by applicable law or regulation, or as the General Partner
determines to be appropriate.

ARTICLE 10
TAX MATTERS

Section 10.1 Preparation of Tax Returns

The General Partner shall arrange for the preparation and timely
(including valid extensions) filing of all returns of Partnership income,
gains, deductions, losses and other items required of the Partnership for
federal and state income tax purposes and shall use all reasonable efforts to
furnish, within ninety (90) days of the close of each taxable year, the tax
information required to be furnished to the Limited Partners for federal income
tax reporting purposes.

Section 10.2 Tax Elections

Except as otherwise provided herein, the General Partner shall, in its
sole and absolute discretion, determine whether to make any available election
pursuant to the Code. The General Partner shall have the right to seek to
revoke any tax election it makes (including, without limitation, the election
under Section 754 of the Code) upon the General Partner's determination, in its
sole and absolute discretion, that such revocation is in the best interests of
the Partners.

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Section 10.3 Tax Matters Partner

A. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. Pursuant to Section 6230(e) 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, taxpayer identification
number, and profit interest of each of the Limited Partners and the Assignees;
provided, however, that such information is provided to the Partnership by the
Limited Partners and the Assignees.

B. Except to the extent any action described below conflicts with
the General Partner's prohibition on causing a tax termination of the
Partnership as described in Section 7.3.B hereof, 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(a)(8) 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 filing of
a complaint for refund with the United States Claims
Court or 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 and, if any part of such request is not
allowed by the IRS, to file an appropriate

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<PAGE> 47

pleading (petition or complaint) for judicial review
with respect to such request;

(5) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to
any item required to be taken account of 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 or
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 of the General
Partner set forth in Section 7.6 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
and expenses) 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, so long as
the compensation paid by the Partnership for such services is reasonable.

Section 10.4 Organizational Expenses

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

Section 10.5 Withholding

Each Limited Partner hereby authorizes the Partnership to withhold
from, or pay on behalf of or with respect to, such Limited Partner any amount
of federal, state, local, or foreign taxes that the General Partner determines
that the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Sections 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute
a loan by the Partnership to such Limited Partner, which loan shall be repaid
by such Limited Partner within fifteen (15) days after notice from the General
Partner that such payment must be made unless (i) the Partnership withholds
such payment from a distribution which would otherwise be made to the Limited
Partner; or (ii) the General Partner determines, in its sole and absolute
discretion, that

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such payment may be satisfied out of the available funds of the Partnership
which would, but for such payment, be distributed to the Limited Partner. Any
amounts withheld pursuant to the foregoing clauses (i) or (ii) shall be treated
as having been distributed to such Limited Partner. Each Limited Partner
hereby unconditionally and irrevocably grants to the Partnership a security
interest in such Limited Partner's Partnership Interest to secure such Limited
Partner's obligation to pay to the Partnership any amounts required to be paid
pursuant to this Section 10.5. In the event that a Limited Partner fails to
pay any amounts owed to the Partnership pursuant to this Section 10.5 when due,
the General Partner may, in its sole and absolute discretion, elect to make the
payment to the Partnership on behalf of such defaulting Limited Partner, and in
such event shall be deemed to have loaned such amount plus the amount of its
attorneys' fees incurred in connection with making and enforcing the terms of
such loan, to such defaulting Limited Partner and shall succeed to all rights
and remedies of the Partnership as against such defaulting Limited Partner.
Without limitation, in such event the General Partner shall have the right to
receive distributions that would otherwise be distributable to such defaulting
Limited Partner until such time as such loan, together with all interest
thereon, has been paid in full, and any such distributions so received by the
General Partner shall be treated as having been distributed to the defaulting
Limited Partner and immediately paid by the defaulting Limited Partner to the
General Partner in repayment of such loan. Any amounts payable by a Limited
Partner hereunder shall bear interest at the lesser of (A) the base rate on
corporate loans at large United States money center commercial banks, as
published from time to time in the Wall Street Journal, plus four (4)
percentage points, or (B) the maximum lawful rate of interest on such
obligation, such interest to accrue from the date such amount is due (i.e.,
fifteen (15) days after demand) until such amount is paid in full. Each
Limited Partner shall take such actions as the Partnership or the General
Partner shall request in order to perfect or enforce the security interest
created hereunder.

ARTICLE 11
TRANSFERS AND WITHDRAWALS

Section 11.1 Transfer

A. The term "transfer," when used in this Agreement with respect
to a Partnership Interest, shall mean a transaction in which a Partner assigns
all or any part of his, her or its Partnership Interest to another Person and
includes any sale, assignment, gift, pledge, mortgage, exchange,
hypothetication, encumbrance or other disposition required by law (such as, but
not limited to, a statutory merger) or otherwise; provided, however, that the
term "transfer" does not include any exchange of Partnership Interests by the
Partnership from a Limited Partner.

B. No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions of this Agreement.
Any transfer or purported

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transfer of a Partnership Interest not made in accordance with this Article 11
shall be null and void.

Section 11.2 Transfer of the General Partner Interest

A. The General Partner may not transfer any of its General
Partner Interest or withdraw as General Partner except as provided in this
Section 11.2 unless the Limited Partners holding a majority of the Percentage
Interests of the Limited Partners Interests consent to such transfer or
withdrawal.

B. Both the General Partner and/or Bay may engage in any merger,
consolidation or other combination with or into another Person regardless of
whether such other person is a REIT, or sell all or substantially all of their
assets, or effect any reclassification or recapitalization or change of
outstanding REIT Shares, all without the prior approval of any Limited
Partners, (a "Transaction"), provided that following any such Transaction any
Qualifying Party continues to be entitled to exchange all or any portion of the
Limited Partnership Units held by such Qualifying Parties for REIT Shares,
taking into account following such Transaction any adjustments to the
Adjustment Factor, and such REIT Shares are publicly traded on a nationally
recognized securities exchange.

C. Notwithstanding any other provision in this Agreement to the
contrary, if in connection with any Transaction described in Section 11.2.B (i)
a purchase or cash tender offer shall have been made to and accepted by the
holders of more than fifty percent (50%) of the outstanding REIT Shares, each
holder of Limited Partnership Units shall be entitled to elect to receive in
connection with (and prior to the Closing of) such Transaction the greatest of
an amount of cash or other property (other than securities of the acquiring
Person) which such holder would have received had it exercised its Exchange
rights and received REIT Shares in exchange for its Limited Partnership Units
immediately prior to the expiration of such purchase or tender offer and had
thereupon accepted such purchase or tender offer; and (ii) if in such
Transaction an exchange offer shall have been made and accepted pursuant to
which the holders of more than fifty percent of the outstanding REIT Shares
exchange their REIT Shares for equity securities of the acquiring Person, which
are publicly traded on a nationally recognized securities exchange, then the
Adjustment Factor shall be adjusted to reflect such Transaction and each holder
of Limited Partnership Units who is a Qualifying Party shall continue to be
entitled to exchange all or any portion of the Limited Partnership Units held
by such Qualifying Party for REIT Shares of such acquiring Person.

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Section 11.3 Limited Partners' Rights to Transfer

No Limited Partner shall have the right to transfer its Partnership
interest or any of such Limited Partner's economic rights without the consent
of the General Partner which consent may be withheld in its sole and absolute
discretion, except that a Limited Partner shall have the right, without the
consent of the General Partner, to assign its economic rights (but not the
right to substitute such assignee as a Substituted Limited Partner), to his/her
Family Members and such Family Member shall be a Qualified Assignee for
purposes of this Agreement.

Notwithstanding any provision of this Agreement to the contrary, a
Substituted Limited Partner or Qualifying Party shall have the right, without
the consent of the General Partner, to pledge or otherwise encumber all or any
portion of its Partnership interest, subject to any applicable securities laws,
to any recognized financial institution with assets in excess of $100,000,000.
Any such financial institution or its assignee shall upon foreclosure of any
such pledged or encumbered interest be recognized as a Qualified Assignee under
this Agreement, shall be deemed to be and have all of the rights of a
Qualifying Party under this Agreement and shall be deemed to be and have all of
the rights of a Holder for all purposes of the Registration Rights Agreement.
The General Partner and Bay agree to execute such documents in connection with
any such pledges as such financial institution may reasonably require
acknowledging the rights of such financial institution hereunder and the
obligations of the Partnership and Bay hereunder.

Section 11.4 Substituted Limited Partners

A. No Limited Partner shall have the right to substitute a
transferee (including a permitted assignee under Section 11.3) as a Limited
Partner in his place. The General Partner shall, however, have the right to
consent to the admission of a transferee of the interest of a Limited Partner
pursuant to this Section 11.4 as a Substituted Limited Partner, which consent
may be given or withheld by the General Partner in its sole and absolute
discretion, provided that such consent by the General Partner shall not be
effective until such transferee executes and delivers to the General Partner
the following investment documents (collectively, the "Investment Documents"):
(i) a signed copy of this Limited Partnership Agreement (and the Assignee
agrees to be bound to all rights and responsibilities of a Limited Partner
hereof); (ii) a Prospective Subscriber Questionnaire in the form attached
hereto as Exhibit C and (iii) a certificate representing and warranting to Bay
and the General Partner the investment representations and warranties as set
forth in Section 3.1(m) of the Contribution Agreement with respect to such
Assignee. The General Partner's failure or refusal to permit a transferee of
any such interests to become a Substituted Limited Partner shall not give rise
to any cause of action against the Partnership or any Partner.

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<PAGE> 51

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

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

Section 11.5 Assignees

If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee as a Substituted Limited
Partner, as described in Section 11.4, such transferee shall be considered an
Assignee for purposes of this Agreement. An Assignee shall be deemed to have
had assigned to it, the share of Net Income, Net Losses, Recapture Income, and
any other items, gain, loss deduction and credit of the Partnership
attributable to the Partnership Interest assigned to such transferee, but shall
not be entitled to receive distributions from the Partnership, shall not be
deemed to be a holder of a Partnership Interest for any other purpose under
this Agreement, shall not have the right to exchange or redeem its Limited
Partnership Units pursuant to Article 8 hereof (except pursuant to Section 8.6
hereof), and shall not be entitled to vote such Partnership Interest in any
matter presented to the Limited Partners for a vote (such Partnership Interest
being deemed to have been voted on such matter in the same proportion as all
other Partnership Interest held by Limited Partners are voted); provided,
however, that if an Assignee executes and delivers the Investment Documents and
if the General Partner fails to consent to the admission of such Assignee as a
Substituted Limited Partner for any reason other than a good faith belief that
the Investment Documents have not been duly executed and delivered, such
qualified Assignee (the "Qualified Assignee") shall have all rights of an
Assignee as stated above, shall be entitled to receive distributions from the
Partnership and shall have the right to exchange or redeem pursuant to Article
8 (including the rights and obligations under the Registration Rights
Agreement), but such Qualified Assignee shall not be entitled to vote as a
Limited Partner under this Agreement or be deemed a holder of Limited
Partnership Units for any other purpose under this Agreement. In the event any
such transferee desires to make a further assignment of any such Partnership
Interest, such transferee shall be subject to all of the provisions of this
Article 11 to the same extent and in the same manner as any Limited Partner
desiring to make an assignment of Partnership Interest.

Section 11.6 Distributions to Limited Partnership Unit Holders.

With respect to all Persons who are listed on the Limited Partnership
Unit Schedule to the Contribution Agreement (each, a "Limited Partnership Unit
Holder" and collectively, the

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"Limited Partnership Unit Holders"), the General Partner shall, upon notice by
Contributor of Berryessa Associates to the Partnership that it has distributed
the Limited Partnership Units pursuant to such Limited Partnership Unit
Schedule and in accordance with the terms of the Contribution Agreement,
withhold all distributions under this Agreement with respect to each Limited
Partnership Unit Holder until such time, if any, as such Limited Partnership
Unit Holder becomes a Substituted Limited Partner or a Qualified Assignee. At
such time as each Limited Partnership Unit Holder becomes a Substituted Limited
Partner or a Qualified Assignee, the General Partner shall distribute to such
Limited Partnership Unit Holder all accrued distributions withheld pursuant to
this Section. A Limited Partnership Unit Holder may become a Qualified
Assignee by executing and delivering an Acknowledgment, Consent and Power of
Attorney in the form attached hereto as Exhibit D or by following the
procedures set forth herein.

Section 11.7 General Provisions

A. No Limited Partner may withdraw from the Partnership other
than as a result of a permitted transfer of all of such Limited Partner's
Partnership Interest in accordance with this Article 11.

B. Any Limited Partner who shall transfer all of its Partnership
Interest in a transfer permitted pursuant to this Article 11 shall cease to be
a Limited Partner upon the admission of all Assignees of such Partnership
Interest as Substitute Limited Partners.

C. Transfers pursuant to this Article 11 may only be made on the
first day of a fiscal quarter of the Partnership, unless the General Partner
otherwise agrees.

D. If any Partnership Interest is transferred or assigned during
any quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article 11 on any day other than the first day of a
Partnership Year, then Net Income, Net Losses, each item thereof and all other
items attributable to such interest for such Partnership Year shall be divided
and allocated between the transferor Partner and the transferee Partner by
taking into account their varying interests during the Partnership Year in
accordance with Section 706(d) of the Code, using the interim closing of the
books method. Solely for purposes of making such allocations, each of such
items for the calendar month in which the transfer or assignment occurs shall
be allocated to the transferee Partner; provided, however, that the General
Partner may adopt such other conventions relating to allocations in connection
with transfers, assignments or exchanges as it determines are necessary or
appropriate. All distributions of Available Cash attributable to such
Partnership Interest before the date of such transfer, assignment, or
redemption shall be made to the transferor Partner, and in the case of a
transfer or assignment other than a redemption, all distributions of Available
Cash thereafter attributable to such Partnership Interest shall be made to the
transferee Partner.

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ARTICLE 12
ADMISSION OF PARTNERS

Section 12.1 Admission of Successor General Partner

A successor to all of the General Partner Interest pursuant to Section
11.2 hereof who is proposed to be admitted as a successor General Partner shall
be admitted to the Partnership as the General Partner, effective upon such
transfer. Any such transferee shall carry on the business of the Partnership
without dissolution. In each case, the admission shall be subject to the
successor General Partner executing and delivering to the Partnership an
acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the admission. In the
case of such admission on any day other than the first day of a Partnership
Year, all items attributable to the General Partner Interest for such
Partnership Year shall be allocated between the transferring General Partner
and such successor as provided in Section 11.6.D hereof.

Section 12.2 Amendment of Agreement and Certificate of Limited
Partnership

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

ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION

Section 13.1 Dissolution

The Partnership shall not be dissolved by the admission of Substituted
Limited Partners or by the admission of a successor General Partner in
accordance with the terms of this Agreement. Upon the withdrawal of the
General Partner, any successor General Partner shall continue the business of
the Partnership. The Partnership shall dissolve, and its affairs shall be
wound up, only upon the first to occur of any of the following ("Liquidating
Events"):

A. the expiration of its term as provided in Section 2.5 hereof;

B. an event of withdrawal of the General Partner, as defined in
the Act (other than an event of bankruptcy), unless, within ninety (90) days
after such event of withdrawal a majority in interest of the remaining Partners
agree in writing to continue the business of the

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Partnership and to the appointment, effective as of the date of withdrawal, of
a successor General Partner;

C. from and after the date of this Agreement through December 31,
2095 an election to dissolve the Partnership made by the General Partner with
the Consent of Partners holding 85% of the Percentage Interests of the Limited
Partners;

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

E. the sale of all or substantially all of the assets and
properties of the Partnership; or

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

Section 13.2 Winding Up

A. Upon the occurrence of a Liquidating Event, the Partnership
shall continue solely for the purposes of winding up its affairs in an orderly
manner, liquidating its assets, and satisfying the claims of its creditors and
Partners. 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 elected by a majority in interest of the Limited
Partners (the General Partner or such other Person being referred to herein as
the "Liquidator"), shall be responsible for overseeing the winding up and
dissolution of the Partnership and shall take full account of the Partnership's
liabilities and property and the Partnership property shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the
proceeds therefrom 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 General
Partner;

49
<PAGE> 55

(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the other
Partners; and

(4) The balance, if any, to the General Partner and
Limited Partners in accordance with Section 5.1.B.

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

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

C. In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article 13 may be:

(1) distributed to a trust established for the benefit of
the General Partner and Limited 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 or the General Partner
arising out of or in connection with the Partnership.
The assets of any such trust shall be distributed to
the General Partner and Limited 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 General Partner and Limited
Partners pursuant to this Agreement; or

(2) withheld or escrowed to provide a reasonable reserve
for Partnership liabilities (contingent or otherwise)
and to reflect the unrealized portion of any
installment obligations owed to the Partnership,
provided that

50
<PAGE> 56

such withheld or escrowed amounts shall be
distributed to the General Partner and Limited
Partners in the manner and order of priority set
forth in Section 13.2.A as soon as practicable.

Section 13.3 Rights of Limited Partners

Each Limited Partner shall look solely to the assets of the
Partnership for the return of its Capital Contributions and shall have no right
or power to demand or receive property other than cash from the Partnership.
Except as otherwise provided in this Agreement or an amendment to the Agreement
pursuant to Sections 4.2 and 14.1.B(3) hereof, no Limited Partner shall have
priority over any other Partner as to the return of its Capital Contributions,
distributions, or allocations.

Section 13.4 Notice of Dissolution

In the event a Liquidating Event occurs or an event occurs that would,
but for the provisions of an election or objection by one or more Partners
pursuant to Section 13.1, result in a dissolution of the Partnership, the
General Partner shall, within thirty (30) days thereafter, provide written
notice thereof to each of the Partners. Notwithstanding any provision herein
to the contrary, each Limited Partnership Unit Holder who has not become a
Qualified Assignee or a Substituted Limited Partner pursuant to the terms of
this Agreement shall have the right to redeem any Limited Partnership Units
assigned to such Limited Partnership Unit Holder for the Cash Amount pursuant
to and under the conditions set forth in Section 8.5.A hereof for a period of
thirty (30) days prior to any dissolution of the Partnership.

Section 13.5 Termination of Partnership and Cancellation of
Certificate of Limited Partnership

Upon the completion of the liquidation of the Partnership's assets, as
provided in Section 13.2 hereof, the Partnership shall be terminated, a
certificate of cancellation shall be filed, and all qualifications of the
Partnership as a foreign limited partnership in jurisdictions other than the
State of Delaware shall be cancelled and such other actions as may be necessary
to terminate the Partnership shall be taken.

Section 13.6 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 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect between the Partners during the period of liquidation.

51
<PAGE> 57

Section 13.7 Waiver of Partition

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

ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS

Section 14.1 Amendments

A. Amendments to this Agreement may be solely proposed by the
General Partner. Following such proposal, the General Partner shall submit any
proposed amendment to the Limited Partners. The General Partner shall seek the
written vote of the Limited Partners on the proposed amendment or shall call a
meeting to vote thereon and to transact any other business that it may deem
appropriate. For purposes of obtaining a written vote, the General Partner may
require a response within a reasonable specified time, but not less than
fifteen (15) days, and failure to respond in such time period shall constitute
a vote which is consistent with the General Partner's recommendation with
respect to the proposal. Except as provided in Section 7.3.A, 7.3.B, 13.1.C or
14.1.B, a proposed amendment shall be adopted and be effective as an amendment
hereto if it is approved by the General Partner and it receives the consent of
Limited Partners holding a majority of the Percentage Interests of the Limited
Partners, provided, however, no amendment shall be adopted if it would (i)
convert a Limited Partner Interest into a General Partner Interest, (ii)
increase the liability of a Limited Partner under this Agreement, (iii) except
as otherwise permitted in this Agreement, alter any of the Partners' rights to
distributions set forth in Article 5, or the allocations set forth in Article
6, (iv) alter or modify any aspect of the Limited Partners' Exchange Rights as
set forth in Article 8 hereof, (v) cause the early termination of this Limited
Partnership (other than pursuant to the terms hereof) or (vi) amend this
Section 14.A.1, in each case without the consent of each Limited Partner
adversely affected thereby.

B. Notwithstanding the foregoing, amendments may be made to this
Agreement by the General Partner, without the consent of any Limited Partner,
to (i) add to the representations, duties or obligations of the General Partner
or surrender any right or power granted to the General Partner herein; (ii)
cure any ambiguity, correct or supplement any provision herein which may be
inconsistent with any other provision herein or make any other provisions with
respect to matters or questions arising hereunder which will not be
inconsistent with any other provision hereof; (iii) reflect the admission,
substitution, termination or withdrawal of Partners in accordance with this
Agreement; or (iv) satisfy any requirements, conditions or guidelines contained
in any order, directive, opinion, ruling or regulation of a federal or state
agency or contained in federal or state law. The General Partner shall
reasonably promptly notify the Limited Partners whenever it exercises its
authority pursuant to this Section 14.1.B.

52
<PAGE> 58

C. Within ten (10) days of the making of any proposal to amend
this Agreement, the General Partner shall give all Partners notice of such
proposal (along with the text of the proposed amendment and a statement of its
purposes).

Section 14.2 Meetings of the Partners

A. Meetings of Partners may be called by the General Partner.
The General Partner shall give all Partners Notice of the purpose of such
proposed meeting not less than seven (7) days nor more than thirty (30) days
prior to the date of the meeting. Meetings shall be held at a reasonable time
and place selected by the General Partner. Whenever the vote or consent of
Limited Partners is permitted or required hereunder, such vote or consent shall
be requested by the General Partner and may be given by the Limited Partners in
the same manner as set forth for a vote with respect to an amendment to this
Agreement in Section 14.1.A.

B. Any action required or permitted to be taken at a meeting of
the Partners may be taken without a meeting if a written consent setting forth
the action to be taken is signed by the Partners owning the percentage
interests required to vote in favor of such action, which consent may be
evidenced in one or more instruments. Consents need not be solicited from any
other Partner if the written consent of a sufficient number of Partners has
been obtained to take the action for which such solicitation was required.

C. Each Limited Partner may authorize any Person or Persons,
including without limitation the General Partner, to act for him by proxy on
all matters on which a Limited Partner may participate. Every proxy (i) must
be signed by the Limited Partner or his attorney-in-fact, (ii) shall expire
eleven (11) months from the date thereof unless the proxy provides otherwise
and (iii) shall be revocable at the discretion of the Limited Partner granting
such proxy.

ARTICLE 15
GENERAL PROVISIONS

Section 15.1 Addresses and Notice

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

53
<PAGE> 59

Section 15.2 Titles and Captions

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

Section 15.3 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.

Section 15.4 Further Action

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

Section 15.5 Acknowledgment of Bay's Consideration.

Bay and the Partners hereby acknowledge and agree that Bay is a party
to this Agreement solely for purposes of Articles 8 and 11 and this Section
16.5 and that Bay derives substantial benefit in exchange for Bay's obligations
under Articles 8, 11 and 15 and this Section 16.5 from (i) the execution of the
Contribution Agreement by the Initial Limited Partner and (ii) as a result of
Bay's one hundred percent (100%) ownership of the capital stock of the General
Partner.

Section 15.6 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 15.7 Creditors

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

54
<PAGE> 60

Section 15.8 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 15.9 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 15.10 Applicable Law

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

Section 15.11 Invalidity of Provisions

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

Section 15.12 Entire Agreement

This Agreement contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes any other
prior written or oral understandings or agreements among them with respect
thereto.

55
<PAGE> 61

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

GENERAL PARTNER:

BAY GP, INC., a Maryland corporation

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

[CORPORATE SEAL]

BAY APARTMENT COMMUNITIES, INC.,
a Maryland corporation

(for purposes of Articles 8 and 11
and Section 16.5 only)

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

INITIAL LIMITED PARTNERS:

COUNTRYBROOK OF BERRYESSA
ASSOCIATES, a California limited
partnership

By:
----------------------------------
Name: Donald H. Tishman
Title: General Partner

By: HOUSING ASSOCIATES OF SAN JOSE,
INC., a California corporation

By:
------------------------------
Name: Donald H. Tishman
Title: President

<PAGE> 62

HOUSING ASSOCIATES OF SAN JOSE, INC.

By:
---------------------------------
Name: Donald H. Tishman
Title: President

____________________________________
Donald H. Tishman, an individual

<PAGE> 1
EXHIBIT 10.6

AGREEMENT TO CONTRIBUTE

BETWEEN

COUNTRYBROOK OF BERRYESSA ASSOCIATES

AND

BAY APARTMENT COMMUNITIES, INC.
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE 1- CONTRIBUTION OF PROPERTY AND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.1 Contribution of the Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.3 Capital Contribution of the General Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.4 Contributor's Ability to Distribute Limited Partnership Units. . . . . . . . . . . . . . . . . . . . . . . . 7
1.5 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.6 Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE 2 - CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Conditions to Bay's Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Conditions to the Contributor's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1 Representations and Warranties of the Contributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.2 Representations and Warranties of Bay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.3 Representations and Warranties of the General Partner and Bay . . . . . . . . . . . . . . . . . . . . . . 26

ARTICLE 4 - MAINTENANCE AND OPERATION OF THE PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.1 Maintenance and Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.2 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.3 Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.4 Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.5 Operating Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.6 Damage or Destruction; Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.7 Tests and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.8 Tax-Exempt Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.9 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.10 Availability of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.11 FNMA Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.12 Cooperation with Bay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

ARTICLE 5 -INTENTIONALLY OMITTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

ARTICLE 6 - CLOSING ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>

(i)
<PAGE> 3

<TABLE>
<CAPTION>
Page
----
<S> <C>
6.1 Taxes, Assessments and Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.2 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.3 Payments on Permitted Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.4 Operating Agreement Payments and Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.5 Post-Closing Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

ARTICLE 7 - DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.1 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

ARTICLE 8- INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.1 By the Contributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.2 By Bay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.3 Cooperation in Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

ARTICLE 9- MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.1 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.4 Certain Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.5 Title Insurance, Survey and UCC Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.6 Occupancy Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.8 No Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.10 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.12 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.15 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.16 Confidentiality; Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.17 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.18 "As-Is" Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>

(ii)
<PAGE> 4
EXHIBITS

A Permits and Other Rights
B Personal Property
C Real Property
D Tax-Exempt Debt
E Security Deposits and Other Deposits
F Rent Roll
G Form of Prospective Subscriber Questionnaire
H Good Cost/Bad Cost Certificate
I Limited Partnership Unit Holders
L Insurance

(iii)
<PAGE> 5
AGREEMENT TO CONTRIBUTE

This AGREEMENT TO CONTRIBUTE (this "Agreement") is entered into as of
this ____ day of ____________, 1996 by and among Countrybrook of Berryessa
Associates, a California limited partnership (the "Contributor") and Bay
Apartment Communities, Inc., a Maryland corporation ("Bay").

RECITALS

Bay, a real estate investment trust under the Internal Revenue Code of
1986, as amended (the "Code"), and the Contributor wish to cause a Delaware
limited partnership to be known as Bay Countrybrook, L.P. ("Bay Countrybrook")
to be formed on or before Closing (as defined below), having Bay GP, Inc., a
Maryland corporation and a subsidiary of Bay (the "General Partner") as its
general partner and the Contributor as its initial limited partner.

Bay wishes to cause the General Partner to contribute One Million
Dollars ($1,000,000) to Bay Countrybrook in exchange for the acquisition by the
General Partner of the general partnership interest in Bay Countrybrook (the
"General Partner Interest").

The Contributor wishes to contribute the Property (as defined below)
to Bay Countrybrook in exchange for limited partnership interests in Bay
Countrybrook (collectively, the "Limited Partnership Units"), as more
particularly provided below. Bay Countrybrook wishes to accept and assume the
Property and to issue to the Contributor the Limited Partnership Units in
exchange for the contribution of the Property to Bay Countrybrook.

Bay and the Contributor also desire that contemporaneously with the
Closing, the Contributor shall distribute the Limited Partnership Units to
certain partners of the Contributor, including, without limitation, to certain
portions of the Contributor (the "Partner Creditors") who hold indebtedness of
the Contributor in the amount of $[FULL AMOUNT OF INDEBTEDNESS OWED BY THE
PARTNER CREDITORS] (the "Partner Debt") in satisfaction of such indebtedness
(the "Limited Partnership Unit Holders") whose names will be furnished by the
Contributor to Bay Countrybrook no later than five (5) business days prior to
the Closing.

Bay and the Contributor also desire that, contemporaneously with the
admission of the Contributor as a limited partner of Bay Countrybrook, Bay and
the Contributor enter into a registration rights agreement (the "Registration
Rights Agreement"), as more particularly provided below.

The Contributor has been advised by Bay and acknowledges that Bay would not be
<PAGE> 6
entering into this Agreement without the representations, warranties and
covenants which are being made and agreed to herein by the Contributor and that
Bay is entering into this Agreement in reliance on such representations,
warranties and other covenants.

For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in reliance on all representations,
warranties and covenants made by each of the parties hereto, each of the
Contributor and Bay agree as follows:

DEFINITIONS

The following terms as used in this Agreement will have the meanings
attributed to them as set forth below unless the context clearly requires
another meaning. The terms set forth below do not constitute all defined terms
set forth in this Agreement. Such other defined terms shall have the meanings
ascribed to them elsewhere in this Agreement.

"Action" shall mean, by way of example, any claim, suit, litigation,
labor dispute, arbitration, investigation or other action or proceeding.

"Actual Occupancy Level" has the meaning set forth in Section 1.1.

"Adjusted Contribution Price" has the meaning set forth in Section
9.6.

"Affiliate" shall mean any entity in which Bay owns directly or
indirectly more than fifty percent (50%) of any class of securities or interest
issued by such entity or any entity controlling, controlled by or under common
control with Bay.

"As-Is Acquisition" has the meaning set forth in Section 9.19.

"Assigned Contracts" has the meaning set forth in Section 2.1(a)(vi).

"Authority" shall mean a governmental body or agency having
jurisdiction over the Property.

"Bay Documents" has the meaning set forth in Section 3.1(m)(i).

"Closing" or "Closing Date" has the meaning set forth in Section 1.5.

"Contracts" shall mean all contracts, undertakings, commitments,
guarantees and warranties relating to the Property, or any portion thereof, to
which the Contributor is a party

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<PAGE> 7
or by which it or the Property, or any portion thereof, is bound, including,
without limitation, utility contracts, management contracts, maintenance and
service contracts, parking contracts, employment contracts, leasing contracts,
equipment leases and brokerage and leasing commission agreements, excluding the
Tax-Exempt Instruments.

"Contributor Partnership Agreement" has the meaning set forth in
Section 2.1(f).

"Contribution Price" has the meaning set forth in Section 1.1.

"Conversion Shares" has the meaning set forth in Section 1.1.

"Deposit" has the meaning set forth in Section 1.6.

"Diligence Period Expiration Date" has the meaning set forth in
Section 2.1(a)(xv).

"Escrow Agent" has the meaning set forth in Section 1.6.

"Final Fiscal Year" has the meaning set forth in Section 4.10(i).

"Intangibles" shall mean all intangible property owned and used by the
Contributor in connection with the ownership, use, operation or development of
the Real Property or the Personal Property, including, without limitation: (i)
the right to use the name "Countrybrook of Berryessa" and any other trade name
used in connection with the Real Property, (ii) the Assigned Contracts (as
defined below), (iii) the Leases (as defined below), all guaranties of the
Leases, all security deposits under the Leases (unless Bay elects instead to
have them credited to Bay Countrybrook) and any rent prepaid under the Leases
and (iv) all Licenses (as defined below) and any warranties, guaranties and
other rights relating to the ownership, use, operation or development of the
Real Property to the extent transferrable (collectively, the "Other Rights"),
including, without limitation, the Other Rights listed on Exhibit A.

"Licenses" has the meaning set forth in Section 3.1(e).

"Limited Partnership Agreement" shall mean the Agreement of Limited
Partnership of Bay Countrybrook L.P. to be entered into in accordance with the
terms of Section 2.1(n) and dated as of the Closing Date by and among the
General Partner and the Contributor.

"Major Casualty" has the meaning set forth in Section 4.6.

"Major Taking" has the meaning set forth in Section 4.6.

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<PAGE> 8
"Notice to Proceed" has the meaning set forth in Section 2.1(a)(xv).

"Occupancy Credit" has the meaning set forth in Section 9.6.

"Partnership Consent" has the meaning set forth in Section 2.1(e).

"Permitted Exceptions" means, with respect to the Property, those
exceptions to title which constitute Permitted Exceptions under Section
2.1(a)(i) and any other encumbrances on the Property approved in writing by
Bay.

"Person" shall mean an individual or a corporation, partnership,
trust, unincorporated organization, association or other entity.

"Personal Property" shall mean all tangible personal property owned by
the Contributor located on or in or used in connection with the Real Property
as of the date of this Agreement or the Closing Date, including, without
limitation, all laundry equipment, recreation equipment, pool and spa furniture
and equipment and furnishings in any on-site leasing facility, clubhouse and
fitness center, all air conditioners, refrigerators, dishwashers, ovens/ranges,
microwaves and washer/dryer units located in the rental units and all other
items listed in Exhibit B hereto.

"Preliminary Report" has the meaning set forth in Section 2.1(a)(i).

"Property" shall mean all Real Property, Personal Property and
Intangibles.

"Qualified Project Costs" means all costs in connection with the
acquisition, construction and installation of the Property, but only to the
extent that (i) such costs were paid or incurred by or on account of the
Contributor or any related person on or after the applicable inducement date,
the date of the first official action by the issuer (the "Issuer") of the
Tax-Exempt Debt (as defined below) expressing its intent to issue revenue bonds
to assist in financing the Property, (ii) such costs are chargeable to the
Property's capital account or would be so chargeable either with a proper
election by the Contributor or but for a proper election by the Contributor to
deduct such costs, within the meaning of old Treasury Regulation 1.103-8(a)(1),
(iii) if any portion of the Property was constructed by a related person of the
Contributor (whether as a general contractor or a subcontractor), such costs
include only the actual out-of-pocket costs incurred by such related person in
constructing the Property (or any portion thereof) and not, for example,
intercompany profits resulting from members of an affiliated group (within the
meaning of Section 1054 of the Code) participating in the construction of the
Property or payments received by such related person due to early

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<PAGE> 9
completion of the Property (or any portion thereof), (iv) such costs do not
constitute leasing commissions, costs of advertising for the Property or other
costs related to the rental of units in the Property or management fees for the
management and operation of the Property after the completion date of such
Property, and (v) such costs are used to finance residential rental property
described in Section 103(b)(4)(A) of the Code and Section 1.103-8(b) of the
Treasury Regulations.

"Qualified Tenants" has the meaning set forth in Section 2.1(m).

"Real Property" shall mean the land located at 1895 N. Capital Avenue,
San Jose, California and more particularly described in Exhibit C (the "Land"),
together with all rights, privileges and easements appurtenant thereto and
licenses including without limitation, all minerals, oil, gas and other
hydrocarbon substances on and under and that may be produced from the Land, as
well as all development rights, land use entitlements and rights in off-site
facilities and amenities servicing the Property, including, without limitation,
building permits, licenses, permits and certificates, utilities commitments,
air rights, water, water rights, riparian rights and water stock relating to
the Land and any rights-of-way or other appurtenances used in connection with
the beneficial use and enjoyment of the Land and all of the Contributor's
right, title and interest in and to all roads, easements, rights of way, strips
or gores and alleys adjoining or servicing the Land (collectively, the
"Appurtenances") and all improvements and fixtures located on the Land or the
Appurtenances, including, without limitation, the building(s) located on the
Land, containing 360 apartment units, and all apparatus, equipment and
appliances used in connection with the operation or occupancy of the Land, such
improvements or the Appurtenances, including, without limitation, heating and
air conditioning systems and facilities used to provide any utility,
refrigeration, ventilation, garbage disposal, recreation or other services on
the land or the Appurtenances or for the improvements, and all on-site parking
(collectively, the "Improvements").

"Related Agreements" has the meaning set forth in Section 3.1(a).

"Related Documents" shall mean all documents to be executed in
connection with the transactions contemplated by this Agreement.

"Rent Roll" has the meaning set forth in Section 2.1(a)(xiii).

"Schedule of Agreements" has the meaning set forth in Section
2.1(a)(vi).

"Tax-Exempt Debt" shall mean the existing tax exempt financing
encumbering the

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<PAGE> 10
Property totaling $20,424,000, as described on Exhibit D and as reduced by
regularly scheduled payments of principal due from and after the date hereof
through the Closing Date.

"Tax-Exempt Instruments" shall mean all agreements and other
instruments entered into or evidencing the Tax-Exempt Debt.

"Tenant" shall mean a Person leasing, renting or occupying space in
the Real Property pursuant to a written or oral agreement.

"To the best of the Contributor's knowledge" has the meaning set forth
in Section 3.1.

"Vacant Unit Rental Amount" has the meaning set forth in Section 9.6.

"Warranties" has the meaning set forth in Section 2.1(a)(v).

ARTICLE 1- CONTRIBUTION OF PROPERTY AND CAPITAL

1.1 Contribution of the Property. The Contributor agrees to
contribute and transfer the Property to Bay Countrybrook on the Closing Date
(as defined below) subject to the Tax-Exempt Debt and the Partner Debt and
subject to the terms contained in this Agreement. In consideration of such
contribution and transfer and upon reliance on the representations and
warranties of the Contributor contained in this Agreement, Bay agrees to cause
Bay Countrybrook to issue to the Contributor at Closing the Limited Partnership
Units. The total value of the Limited Partnership Units to be transferred to
the Contributor in exchange for the contribution of the Property to Bay
Countrybrook, calculated as provided below, shall be equal to the following
(the "Adjusted Contribution Price"): Twenty Eight Million Eight Hundred
Thousand Dollars ($28,800,000) (the "Contribution Price"), minus all unpaid
principal of the Tax-Exempt Debt, minus any prorations described in Article 6
which are the responsibility of the Contributor (including, without limitation,
the Occupancy Credit), minus commissions due to the Broker (as defined below)
pursuant to Section 9.1, minus any amounts to be credited to Bay Countrybrook
pursuant to Section 4.6, minus any security deposits Bay elects to have
credited to Bay Countrybrook pursuant to the terms of this Agreement, plus any
prorations described in Article 6, which are the responsibility of Bay
Countrybrook. The Limited Partnership Units shall be convertible into shares
of common stock, .01 par value, of Bay or cash at the option of Bay in
accordance with the exchange feature and other rights, preferences and
privileges described in the Limited Partnership Agreement. Any shares of stock
received upon conversion of the Limited Partnership Units (collectively,
"Conversion Shares") shall be subject to the Registration Rights Agreement.

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<PAGE> 11
1.2 Calculation of Number of Limited Partnership Units. For
purposes of determining the number of Limited Partnership Units to be delivered
in satisfaction of payment of the Adjusted Contribution Price, the Adjusted
Contribution Price shall be divided by the weighted average (by daily trading
volume) of the closing price of shares of stock in Bay for the ten
(10)-business day period immediately preceding the date of this Agreement. Five
(5) days prior to Closing, Bay shall prepare a schedule (the "Limited
Partnership Unit Schedule") reflecting the aggregate number of Limited
Partnership Units to be delivered to Contributor at Closing.

1.3 Capital Contribution of the General Partner. Upon Closing,
Bay shall cause the General Partner to contribute to Bay Countrybrook as a
capital contribution the sum of One Million Dollars ($1,000,000). Such sum
shall be used to pay certain closing costs of the Contributor and Bay
Countrybrook as more particularly provided in the Limited Partnership Agreement
and as provided in Article 6.

1.4 Contributor's Ability to Distribute Limited Partnership Units.
The Contributor and Bay hereby acknowledge that the Contributor intends to
distribute its Limited Partnership Units to the Limited Partnership Unit
Holders immediately upon Closing. Five (5) business days prior to Closing, the
Contributor will furnish to Bay Countrybrook the names of the Limited
Partnership Unit Holders and each such Limited Partnership Unit Holder's
corresponding percentage ownership in the Contributor. Limited Partnership
Units calculated as provided in this Agreement equal in value to the Partner
Debt will be delivered to the Partner Creditors in satisfaction of the Partner
Debt and to the other Limited Partnership Unit Holders in proportion to their
ownership interests as set forth in such information provided by the
Contributor. The Limited Partnership Unit Holders will be admitted as limited
partners in Bay Countrybrook in accordance with the terms of the Limited
Partnership Agreement provided that each such Limited Partnership Unit Holders
(i) agrees to be bound by and comply with the Limited Partnership Agreement,
(ii) makes the investment representations and warranties as listed in Section
3.1(m) hereof and (iii) in the case of the Partner Creditors, releases all
indebtedness of the Contributor held by it pursuant to documentation reasonably
satisfactory to Bay. The Contributor agrees to cause the Partner Creditors to
duly execute and deliver such documentation.

1.5 Closing Date. Unless this Agreement is sooner terminated
pursuant to its terms, the closing of all transactions contemplated by this
Agreement (the "Closing") shall take place on the date which is fifteen (15)
days following the Diligence Period Expiration Date (as it may be extended
pursuant to the terms of Article 5, the "Closing Date"). The Closing shall
occur in the offices of ________________________, California on the Closing
Date, unless otherwise agreed in writing by the Contributor and Bay. The
Closing shall occur pursuant to

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<PAGE> 12
closing arrangements satisfactory to Bay and the Contributor.

1.6 Deposit. Upon the execution and delivery of this Agreement
by all parties, Bay shall deliver to Commonwealth Land Title Insurance Company
("Escrow Agent") the sum of Two Hundred Thousand Dollars ($200,000) (together
with all interest earned thereon, the "Deposit") to be held in escrow pursuant
to the terms of this Agreement. The Escrow Agent shall hold the Deposit in an
interest-bearing segregated account at a bank satisfactory to Bay and the
Contributor. The Deposit shall be returned to Bay upon Closing or delivered in
accordance with the terms of this Agreement if Closing does not occur in
accordance with the terms of this Agreement.

ARTICLE 2 - CONDITIONS TO CLOSING

2.1 Conditions to Bay's Obligations. The obligation of Bay to
cause consummation of the transactions contemplated hereunder shall be subject
to the satisfaction or waiver by Bay of each of the conditions set forth below.

(a) Due Diligence. Bay, its authorized representatives,
its agents and its employees shall have the right to conduct and be satisfied
with any and all due diligence relative to the Property as may be deemed
necessary or appropriate by Bay in its sole discretion. Without limiting the
foregoing, the Contributor shall make available to Bay any and all materials
and documents relating to all or any portion of the Property, including,
without limitation, Leases, management agreements, service and other contracts,
financial reports, Rent Rolls (as defined below), existing surveys permits and
other similar or dissimilar materials. The Contributor shall promptly, and in
any event within five (5) days of Bay's request therefor, deliver or otherwise
make available to Bay true, correct and complete copies of any requested
material in the possession of the Contributor or under the Contributor's
control and all of the Contributors' other materials, files, books, records and
information relating to the Property. Bay shall have the right to interview
third-parties (other than tenants) selected by Bay in the performance of its
due diligence on the Property. Without limiting the foregoing, the Contributor
shall make available to Bay, at the Contributor's sole cost and expense except
as otherwise expressly provided in this Agreement, the following:

(i) a current extended coverage preliminary title
report on the Real Property, issued by Commonwealth Land Title Company (the
"Title Company"), accompanied by complete copies of all documents referred to
in the report (collectively, the "Preliminary Report"). Within seven (7) days
of receipt of the Preliminary Report and the survey described in Section
2.1(c), Bay shall notify the Contributor of any objections it has to the
exceptions

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<PAGE> 13
listed in Schedule B-II of the Preliminary Report and such survey (such
objections, the "Initial Title Objections"). The Contributor shall provide Bay
a written proposal for addressing each Initial Title Objection within seven (7)
days of receipt of Bay's notice. Any Initial Title Objection which Bay does
not approve in writing within seven (7) days of receipt of such proposal shall
not constitute a Permitted Encumbrance.

(ii) copies of any and all existing and proposed
easements, covenants, restrictions, agreements or other documents which affect
title to the Property and which are not disclosed by the Preliminary Report;

(iii) any existing survey(s) of the Real Property
in the Contributor's possession or control, including, without limitation, any
"as-built" survey of the Real Property;

(iv) copies of the most recent property tax bills
and assessments for the Property;

(v) all presently effective warranties or
guaranties from any contractors, subcontractors, suppliers, servicemen or
materialmen in connection with any of the Personal Property or any
construction, renovation, repairs or alterations of any improvements on the
Real Property or any tenant improvements (collectively, the "Warranties");

(vi) a schedule (the "Schedule of Agreements")
setting forth a list of all of the Contracts. From this Schedule of
Agreements, Bay shall designate those Contracts that the Contributor shall
assign to Bay Countrybrook as of Closing if they are assignable (such
designated Contracts, together with the Warranties and any other information
designated by Bay for assignment are collectively referred to herein as the
"Assigned Contracts"). Without limiting, the foregoing, unless Bay
specifically informs the Contributor otherwise, Bay Countrybrook shall not
retain the existing employees and management agents of the Contributor for the
Property, and, accordingly, on or prior to the Closing, the Contributor shall
(A) cause all employment and management agreements respecting the Property to
be terminated, and deliver to Bay evidence of such termination satisfactory to
Bay, (B) remove all employees and management personnel from the Property and
(C) deliver any rental units within the Property previously occupied by such
employees and/or management personnel in a vacant and tenant-ready condition;

(vii) reports of insurance carriers insuring the
Property, and each portion thereof, respecting the claims history of the
Property, if any, certificates of insurance and insurance policies and
insurance claims history for the three (3) most recent calendar years

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<PAGE> 14
prior to Closing and, to the extent available, for the current year;

(viii) environmental reports, environmental audits,
soil reports, site plans (with dimensions), engineering reports and plans,
traffic reports, demographic information, landscape plans, structural
calculations, floor plans (identifying tenant and vacancy locations), certified
copies of the as-built plans and specifications, all items pertaining to any
remodeling or renovation of the Property, construction contracts, a current
inspection report by a licensed Structural Pest Control Operator, other reports
or documents of significance to the Property, copies of the zoning description
applicable to the Property, and copies of final certificates of occupancy for
all improvements on the Land;

(ix) a complete inventory of all Personal Property
used at or in connection with the Property;

(x) a complete list of the Contributor's and the
Contributor's property manager's employees at the Property, if any, specifying
the current compensation of each;

(xi) all income and expense statements, year-end
financial and monthly operating statements and year-to-date statements for the
three (3) most recent calendar years prior to Closing and, to the extent
available, the current year, all of which shall be certified by the Contributor
as, to the best of the Contributor's knowledge, accurately stating the income
and expenses for the Property for such period;

(xii) a copy of the budget for the Property for the
current year;

(xiii) (A) copies of all existing and pending
Leases, lease files and tenant correspondence, (B) a schedule of leasing
commissions now or hereafter payable on a space by space basis, (C) a copy of
the current standard lease form, and (D) a current rent roll of the Property in
the form currently used by the Contributor (the "Rent Roll"); and

(xiv) all Licenses;

(xv) all Tax-Exempt Instruments; and

(xvi) UCC searches from the Secretary of State of
the State of California and Santa Clara County showing any and all filings
against the Contributor or any of its general partners as debtor or lessor.

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<PAGE> 15
Bay shall have the right in its sole discretion to terminate this
Agreement at any time on or before the date which is twenty-five (25) days
following the date on which the Contributor delivers to Bay the Partnership
Consent (the "Diligence Period Expiration Date"). The Contributor shall use
diligent and good faith efforts to obtain the Partnership Consent. If the
Partnership Consent has not, despite such efforts, been obtained within forty
(40) days of the date of this Agreement, the Contributor and Bay shall each
have the right to terminate this Agreement. If Bay desires to proceed with the
acquisition of the Property subject to all other terms and conditions of this
Agreement, then on or before the Due Diligence Expiration Date, Bay shall
deliver written notice of such election to proceed (the "Notice to Proceed") to
the Contributor. In the event that Bay fails to deliver the Notice to Proceed
to the Contributor electing to waive its right of termination pursuant to this
Section prior to the Due Diligence Expiration Date, then Bay shall be deemed to
have elected to terminate this Agreement. Upon such termination (including,
without limitation, a deemed termination), the Deposit shall be promptly
delivered to Bay and all obligations of the parties under this Agreement, other
than those in Sections 4.7, 9.1 and 9.16 (collectively, the "Surviving
Obligations"), shall terminate without recourse and be of no further effect.
If Bay delivers the Notice to Proceed in accordance with the terms of this
Section, the Deposit shall become nonrefundable, subject to Bay's right to
return of the Deposit pursuant to the terms of this Agreement.

(b) Title Insurance. Bay Countrybrook shall have
received from the Contributor an original ALTA's Owner's policy of title
insurance (Form B, rev. 10/17/70) issued by the Title Company in the amount of
the Contribution Price, insuring fee simple title to the Real Property in Bay
Countrybrook, subject only to such exceptions as Bay shall have approved,
without boundary, encroachment or survey exceptions and with such endorsements
as Bay shall require (the "Title Policy"). The Title Policy shall also provide
full coverage against mechanic's and materialman's liens.

(c) Survey. Bay Countrybrook shall have received from the
Contributor within ten (10) days of the date hereof a survey of Real Property
made in accordance with ALTA standards, certified to Bay Countrybrook and any
other parties requested by Bay and in form and substance satisfactory to Bay.

(d) UCC Search. Bay Countrybrook shall have obtained the
results of a UCC Search from the Secretary of State of the State of California
and Santa Clara County dated no earlier than fifteen (15) days prior to the
Closing Date showing any and all filings against the Contributor or any of its
general partners as debtor or lessor, and the Contributor shall have removed
and released from the public records all such filings with respect to the
Property, or any portion thereof, effective as of the Closing Date, other than
those constituting Permitted Exceptions.

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<PAGE> 16
(e) Consents. The Contributor shall have obtained all
authorizations, consents, approvals and waivers from third parties and
Authorities, required to enable the Contributor to transfer the Property to Bay
Countrybrook in accordance with all agreements by which it or the Property is
bound or to which it or the Property is subject and shall have provided
evidence thereof in form and substance satisfactory to Bay. Without limiting
the foregoing, the Contributor shall have obtained (and delivered evidence
thereof in form and substance satisfactory to Bay as required under the terms
of this Agreement) approval of the transactions contemplated by this Agreement,
the Limited Partnership Agreement, the Registration Rights Agreement and all
Related Agreements (as defined below), by a majority in interest of the limited
partners and any other necessary partners of the Contributor and valid and
binding powers of attorney executed in favor of the Contributor by a majority
in interest of the limited partners and other necessary partners of the
Contributor enabling the Contributor to execute and deliver documents and
instruments relating to the transaction that is the subject of this Agreement
on their behalf (such approvals and powers, collectively, the "Partnership
Consent").

(f) Contributor Partnership Agreement. The Contributor
shall have delivered to Bay Countrybrook a true, complete and correct copy of
the Limited Partnership Agreement of Contributor (the "Contributor Partnership
Agreement"), which shall not have been amended and shall be in full force and
effect.

(g) Federal National Mortgage Association Approval. Bay
Countrybrook shall have received all approvals, consents, acknowledgments
agreements and authorizations from Federal National Mortgage Association
("FNMA"), the trustee for the Tax-Exempt Debt, and the Issuer, requested by Bay
in connection with the assumption of the Tax-Exempt Debt in form and substance
satisfactory to Bay. The Contributor and Bay shall cooperate with each other
to obtain the foregoing.

(h) Accuracy of Representations and Warranties.
Notwithstanding the terms of this item (h) below, the representations and
warranties of the Contributor contained herein shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date.
A certificate to such effect shall be executed and delivered by the general
partner of the Contributor as of the Closing Date confirming the foregoing and
containing any qualifications necessary to cause such representations and
warranties to comply with the foregoing sentence, however, it shall remain a
condition to Bay's obligations under this Agreement that all the
representations and warranties of the Contributor contained herein be true and
correct in all material respects as of the Closing Date.

(i) Opinion of Counsel. The Contributor shall have
delivered to Bay or the

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<PAGE> 17
General Partner, as requested by Bay, opinions of Rudnick & Wolfe, counsel to
the Contributor, dated as of the Closing Date, in form and substance
satisfactory to Bay regarding the due organization and authority of the
Contributor and its general partner(s), if entities, to execute and deliver
this Agreement, the Limited Partnership Agreement, the Registration Rights
Agreement and all Related Agreements executed by the Contributor or such
general partners.

(j) Authority. The Contributor and its general
partner(s) shall have delivered to Bay and Bay Countrybrook evidence of the
authority of the Contributor to execute and deliver this Agreement, the Limited
Partnership Agreement, the Registration Rights Agreement and all Related
Agreements and to consummate the transactions which are the subject of this
Agreement, in form and substance satisfactory to Bay, including, without
limitation, organizational documents of the Contributor and the general
partners certified by the Secretary of State of the state in which they were
organized, certificates of legal existence and good standing, qualifications to
do business, if applicable, and the Secretary's certificates as to resolutions
and incumbency.

(k) Absence of Litigation.

(i) No Action shall be pending or threatened
against the Contributor or the Property, which (i) questions or could
reasonably be expected to question the validity or legality of the transactions
contemplated hereunder, under the Limited Partnership Agreement, the
Registration Rights Agreement or the Related Agreements or (ii) affects or
could reasonably be expected to affect the Property or any material portion
thereof; and

(ii) No Action by any Authority shall have been
instituted or threatened which questions the validity or legality of the
transactions contemplated hereunder, under the Limited Partnership Agreement,
the Registration Rights Agreement or the Related Agreements or which could
reasonably be expected to detrimentally affect the ownership, operation,
transfer or use of any material portion of the Property or the Property in any
other way.

(iii) The general partner of the Contributor on
behalf of the Contributor shall so certify, to the best of its knowledge, as to
the foregoing items (i) and (ii) of this item (k) at Closing.

(l) Absence of Material Change and Default. Since the
date of this Agreement, there shall not have been any material, adverse change
in the condition, financial or otherwise, of the Property or the Contributor,
and the general partner of the Contributor on

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<PAGE> 18
behalf of the Contributor shall so certify at Closing. The Contributor shall
have fully complied in all material respects with all of its obligations
hereunder and shall not be in default.

(m) Qualified Tenants. At Closing at least ninety
percent (90%) of the apartment units on the Property shall be physically
occupied by tenants (collectively, "Qualified Tenants") who (i) are not in
default under their respective Leases, (ii) meet Bay's reasonable credit
standards for tenancy at the Property and (iii) are paying rent at commercially
reasonable rates without any special concessions. The Rent Roll as updated
through Closing in accordance with the term of this Agreement shall be in form
and substance satisfactory to Bay.

(n) Registration Rights Agreement and Limited Partnership
Agreement. On or before April 2, 1996, the Contributor and Bay, using
reasonable and good faith efforts to agree, shall have agreed upon the form of
Limited Partnership Agreement and Registration Rights Agreement to be executed
and delivered at Closing.

(o) Delivery of Documents. At the Closing, the
Contributor shall have executed and delivered to Bay Countrybrook the
following, in form and substance satisfactory to Bay:

(i) Deed. Warranty Deed in form and substance
reasonably satisfactory to Bay and the Contributor, executed by the
Contributor, in recordable form conveying the Property to Bay Countrybrook free
and clear of all liens, claims and encumbrances, except for the Permitted
Exceptions;

(ii) Bill of Sale. A warranty assignment and bill
of sale in form and substance reasonably satisfactory to Bay and the
Contributor, executed by the Contributor, assigning, conveying and warranting
to Bay Countrybrook title to the Personal Property, free and clear of all
encumbrances, together with the original certificates of title thereto;

(iii) General Assignment. An assignment in form
and substance reasonably satisfactory to Bay and the Contributor, executed by
the Contributor, to Bay Countrybrook of all right, title and interest of
Contributor and its agents in and to the Intangibles to the extent assignable;

(iv) Assignment of Contracts. An assignment in
form and substance reasonably satisfactory to Bay and the Contributor, executed
by the Contributor, to Bay Countrybrook of Contributor's right, title and
interest in and to the Assigned Contracts;

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(v) Assignment of Leases. An assignment,
executed by the Contributor, of the Contributor's right, title and interest in
and to the Leases (including, without limitation, all security deposits and/or
other deposits thereunder not previously applied in accordance with the terms
of the applicable Leases and reflected on Exhibit E attached hereto, which
security deposits shall be delivered or credited to Bay Countrybrook as it
elects);

(vi) Keys. Keys to all locks located at the
Property;

(vii) Letters to Tenants. A letter executed by the
Contributor and, if applicable, its management agent, addressed to all Tenants,
notifying all Tenants of the transfer of ownership of the Property and
directing payment of all rents accruing after the Closing Date to be made to
the General Partner on behalf of Bay Countrybrook or at its direction;

(viii) Original Documents and Files. To the extent
not previously delivered to Bay and in the Contributor's possession, originals
of the Leases, the Assigned Contracts, the Tax-Exempt Instruments and the
Licenses;

(ix) Tax Bills. Copies of the most currently
available tax bills;

(x) Entity Transfer Certificate. Entity transfer
certification confirming that the Contributor is a "United States Person"
within the meaning of Section 1445 of the Internal Revenue Code of 1986, as
amended;

(xi) Rent Roll. An updated Rent Roll within five
(5) days prior to Closing, which updated Rent Roll will be used to identify all
Leases of space at the Property for purposes of this Agreement as of the
Closing Date. The Contributor shall specifically identify any changes from the
Rent Roll attached hereto as Exhibit F, and a certificate executed by the
Contributor and the property manager for the Property certifying that such
updated Rent Roll is true, complete and correct (including, without limitation,
the amount of security deposits and description of uncured tenant defaults and
delinquencies listed thereon), stating whether there exist any events which
with the passage of time and/or the giving of notice would constitute a tenant
default under a Lease dated as of the Closing Date;

(xii) [Intentionally Omitted]

(xiii) Registration Rights Agreement. The
Registration Rights Agreement, dated as of the Closing Date, duly executed by
the Contributor in the form agreed to in accordance with the terms of Section
2.1(n);

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<PAGE> 20
(xiv) Title Insurance. The Title Policy;

(xv) Survey. A survey meeting the requirements of
Section 2.1(c) hereof;

(xvi) Consents. Any consents required pursuant to
Section 2.1(e);

(xvii) Certificates. A copy of the Contributor
Partnership Agreement certified by the general partner of Contributor as true,
complete and correct and any certificates required by Section 2.1(h) hereof.

(xviii) Opinion of Counsel. The opinions of the
Contributor's counsel required under pursuant to Section 2.1(i).

(xix) Prospective Subscriber Questionnaires.
Within ten (10) days of the date hereof, copies of prospective subscriber
questionnaires (including both individual and entity forms) in the form
attached hereto as Exhibit G duly authorized, executed and delivered by the
Contributor and each of the Limited Partnership Unit Holders.

(xx) Assignment and Assumption of Tax-Exempt Debt.
An Assumption Agreement under which the Contributor shall assign to Bay
Countrybrook all of its rights under the Tax-Exempt Instruments, and Bay
Countrybrook shall assume all obligations of the Contributor under the
Tax-Exempt Instruments arising on and after the Closing Date or otherwise
required in connection therewith under this Agreement, including, without
limitation, as described in Section 2.1(g).

(xxi) Tax-Exempt Instruments. All of the
Tax-Exempt Debt Instruments;

(xxii) Bond Counsel Opinion. An opinion of bond
counsel in form and substance reasonably acceptable to Bay;

(xxiii) Good Cost/Bad Cost Certificate. A
certificate regarding Qualified Project Costs substantially in the form of
Exhibit H attached hereto, with such back-up materials as requested by Bay;

(xxiv) Tax-Exempt Instruments' Compliance Reports.
All reports filed by the Contributor evidencing compliance with the Tax-Exempt
Instruments;

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<PAGE> 21
(o) Execution of the Limited Partnership Agreement. The
Contributor and the General Partner shall have executed the Limited Partnership
Agreement and made all filings relating to formation and qualification of Bay
Countrybrook as the General Partner deems appropriate.

(p) Management Agreement. Evidence of termination of all
management agreement(s) in effect prior to the Closing.

(q) Other. Such other documents, instruments, consents,
authorizations or approvals as may be required by, and reasonably satisfactory
to, Bay, its counsel or the Title Company and that may be reasonably necessary
or desirable to consummate the transactions that are the subject of this
Agreement and the Limited Partnership Agreement, the Registration Rights
Agreement and the Related Agreements and to otherwise effect the agreements of
the parties hereto, including, without limitation, as required under Section
2.1(j).

(r) Timing of Certain Document Deliveries. At least
three (3) days prior to the Closing, the Contributor shall make, or cause to be
made, all document deliveries required by Sections 2.1(b) through 2.1(m) and
Section 2.1(p).

2.2 Conditions to the Contributor's Obligations. The obligations
of the Contributor to consummate the transactions contemplated hereunder are
subject to the satisfaction or waiver by the Contributor, on or prior to the
Closing Date, of each of the conditions set forth below.

(a) Accuracy of Representations and Warranties.
Notwithstanding the terms of this item (a) below, the representations and
warranties of Bay hereunder shall be true and correct in all material respects
as of the date of this Agreement and as of the Closing Date. A certificate of
such effect shall be executed and delivered by Bay as of the Closing Date
confirming the foregoing and containing any qualifications necessary to cause
such representations and warranties to comply with the foregoing sentence,
however, it shall remain a condition to the Contributor's obligations under
this Agreement that all such representations and warranties be true and correct
in all material respects as of the Closing Date.

(b) Consents. All authorizations, consents, approvals
and waivers from Authorities and other parties necessary to permit the
Contributor to transfer the Property to Bay Countrybrook as contemplated
hereunder shall have been obtained unless (i) the failure to obtain any such
authorization, consent, approval or waiver would not have a material adverse
effect upon the Contributor or (ii) the General Partner indemnifies and holds
the Contributor harmless from and against any and all liabilities, costs and
expenses which may be attributed to

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<PAGE> 22
such failure.

(i) No Action shall be pending or threatened
against Bay, which questions or could reasonably be expected to question the
validity or legality of the transactions contemplated hereunder, under the
Limited Partnership Agreement, the Registration Rights Agreement or the Related
Agreements; and

(d) Absence of Material Change and Default. Since the
date of this Agreement, there shall not have been any material, adverse change
in the condition, financial or otherwise, of Bay Countrybrook. Bay shall have
fully complied in all material respects with all of its obligations hereunder
and shall not be in default.

(e) Execution of Limited Partnership Agreement. The
General Partner shall execute and deliver the Limited Partnership Agreement.

(f) Financial Condition of Bay. Bay has a minimum book
net worth of $200,000,000 and a minimum of ratio of earnings before interest,
taxes, depreciation and amortization ("EPITDA") over interest expense of at
least 2.0/1.0.

(g) Opinion of Counsel. The Contributor shall have
received an opinion of counsel to Bay as to the authority to execute and
deliver this Agreement, the Limited Partnership Agreement, the Registration
Rights Agreement and all Related Agreements, if any, executed by Bay and that
Bay Countrybrook will not be, as of the Closing Date, taxed as a corporation.

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Contributor. The
Contributor hereby represents and warrants to Bay as of the date of this
Agreement as follows, and the Contributor shall, as a condition to Bays'
obligations to consummate the transaction that is the subject of this
Agreement, be deemed to remake the following representations and warranties as
of the Closing Date as if made again thereon:

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<PAGE> 23
(a) Existence and Power. The Contributor has been duly
formed and is a validly existing limited partnership under the laws of the
State of California. The Contributor has all power and authority to enter into
this Agreement, the Limited Partnership Agreement, the Registration Rights
Agreement and all other documents to be executed and delivered in connection
with the transactions that are the subject of this Agreement, the Limited
Partnership Agreement and the Registration Rights Agreement, including, without
limitation, all documents referred to in Section 2.1(j), (collectively, the
"Related Agreements") to the extent to be executed by the Contributor, and to
enter into and deliver and to perform its obligations hereunder and under the
Limited Partnership Agreement, the Registration Rights Agreement and the
Related Agreements executed by the Contributor.

(b) Authorization; No Contravention. The Contributor
represents that the execution and delivery of this Agreement, the Limited
Partnership Agreement, the Registration Rights Agreement and the Related
Agreements executed by it and the performance of its obligations under all of
the foregoing will have been duly authorized by all requisite organizational
action, including, without limitation, by obtaining the consent of all
necessary partners in the Contributor. This Agreement, the Limited Partnership
Agreement, the Registration Rights Agreement and the Related Agreements
executed by it will constitute the valid, legal and binding obligations of the
Contributor. None of this Agreement, the Limited Partnership Agreement, the
Registration Rights Agreement or the Related Agreements executed by it will
violate any material term of any agreement, order or decree to which it is a
party or by which the Contributor is bound. There is no existing or, to the
best of the Contributor's knowledge, threatened legal action or governmental
proceedings of any kind involving the Contributor, which, if determined
adversely to it, would interfere with the Contributor's ability to execute or
deliver, or perform its obligations under, this Agreement, the Limited
Partnership Agreement, the Registration Rights Agreement or the Related
Agreements executed by it or have a material, adverse effect on the use,
occupancy, operation or value of the Property.

(c) Descriptive Information; Diligence. To the best of
the Contributor's knowledge, the Contributor has made all disclosures to Bay
required under applicable California Law (as defined below). To the best of
the Contributor's knowledge, all documents delivered by or on behalf of the
Contributor to Bay, or made available to Bay for review in connection with the
transactions contemplated by this Agreement, the Limited Partnership Agreement,
the Registration Rights Agreement and the Related Agreements, including,
without limitation, all leases of the Property (collectively, the "Leases") and
all other materials delivered pursuant to Section 2.1(a), are, true, correct
and complete copies of all such documents in the Contributor's possession or
control. The Contributor has delivered or made available to Bay all of the
Contributor's books, records and files and all other materials of the

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<PAGE> 24
Contributor relating to the Property.

(d) Defaults and Tax-Exempt Debt. The Contributor is not
in monetary, or, to the best of Contributor's knowledge, material nonmonetary
default under any of the documents, recorded or unrecorded, encumbering or
affecting the Property, including without limitation, the Licenses, Leases and
Contracts, any documents referred to in any title commitment delivered to Bay
by the Contributor or any documents or instruments executed in connection with
all or any of the foregoing. The Contributor has delivered to Bay true,
complete and accurate copies of all of the material documents evidencing,
securing and otherwise executed in connection with all or any portion of the
Tax-Exempt Debt.

(e) Compliance with Law. The Contributor has not
received written notice that all or any portion of the Property violates any
laws, rules, regulations, ordinances, codes, official interpretation
(collectively, "Laws") or any requirement of any insurer or board of fire
underwriters or similar entity. The Contributor has not received notice of any
special assessment proceedings affecting the Property. To the best of
Contributor's knowledge, all licenses, permits, approvals, variances, easements
and rights of way, including, without limitation, proof of dedication and
authorizations (collectively, the "Licenses") required for the ownership, use
or operation of the Property as presently used and operated or otherwise have
been validly issued and are in full force and effect, and the Contributor has
not received any written notice of proceedings relating to the revocation or
modification of any License.

(f) Leases. To the best of the Contributor's knowledge,
the Leases are in full force and effect. All brokerage commissions or
compensation in respect of any of the Leases have been, or prior to Closing
will be, paid by the Contributor. At the Closing, true, complete and correct
copies of all of the Leases shall have been provided to Bay. To the best of
the Contributor's knowledge, no person or entity has any option or right of
first refusal or first opportunity to acquire any interest in any of the
Property.

(g) Rent Roll. Attached hereto as Exhibit F is the Rent
Roll which, to the best of the Contributor's knowledge, is true, complete and
correct as of the date of this Agreement. The Rent Roll attached as Exhibit F
shall be updated through Closing. To the best of the Contributor's knowledge,
as of the Closing Date such updated Rent Roll is true and correct and in all
material respects, and, except as set forth in such updated Rent Roll, no
tenant under any of the Leases is in default of any of its material monetary
obligations under its Lease.

(h) Contracts. True, complete and correct copies of all
Contracts have been provided to Bay. To the best of the Contributor's
knowledge, the Contracts (i) are in full

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<PAGE> 25
force and effect and (ii) are terminable on not more than thirty (30) days'
prior written notice and without payment of any penalty. The Contributor
agrees to terminate prior to Closing, at its own expense, all Contracts other
than the Leases, the Assigned Contracts, the Permitted Exceptions and the
Licenses. To the best of the Contributor's knowledge, there shall be no
agreements or other obligations with respect to all or any portion of the
Property that are binding on Bay Countrybrook or the Property following
Closing, other than the Leases, the Assigned Contracts, the Permitted
Exceptions, the Licenses and other documents executed in connection with the
foregoing.

(i) Utilities. To the best of Contributor's knowledge,
all water, sewer, gas, electric, telephone and drainage facilities and all
other utilities required by Law or for the normal use and operation of the
Property are installed to the property lines of the Land, are connected
pursuant to valid Licenses. The Contributor has not received notice that any
of the foregoing facilities or utilities are inadequate to service the Property
or do not meet the requirements of applicable Law.

(j) Hazardous Substances. To the best of the
Contributor's knowledge, the Contributor has not generated, stored, released,
discharged or disposed of, used or handled Hazardous Substances or Hazardous
Wastes (as those terms are defined below) at, upon or from the Property in
violation of any Law or in connection with which remedial action would be
required under any Law. To the best of Contributor's knowledge, no Hazardous
Substances or Hazardous Wastes are or have been generated, stored, released,
located, discharged or disposed of, used or handled from, at or upon the
Property, and no Hazardous Substance or Hazardous Waste are or have been
located on the Property, except for cleaning and maintenance supplies
customarily used in connection with properties of the type of the Property and
which have been used in compliance with all applicable Laws. As used in this
Agreement, the terms "Hazardous Substances" and "Hazardous Wastes" shall have
the meanings sets forth in the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, and the regulations thereunder, the
Resource Conservation and Recovery Act, as amended, and the regulations
thereunder, and the Federal Clean Water Act, as amended, and the regulations
thereunder, and such terms shall also include asbestos, petroleum products,
radon, radioactive materials, lead paint, UFFI and any other regulated
substances under any Law.

(k) FIRPTA. The Contributor represents that it is not a
"foreign person", as defined in Section 1445(f)(3) of the Code.

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<PAGE> 26
(l) Investment Representations and Warranties. The
Contributor makes the following representations and warranties as of the date
of this Agreement and shall be deemed to remake them as to itself as of
Closing, and each Limited Partnership Unit Holder shall make the following
representations and warranties as to itself at each time as any such Limited
Partnership Unit Holder receives Limited Partnership Units:

(i) The Contributor and each Limited Partnership
Unit Holder have had an opportunity to review all registration statements and
amendments thereto filed on behalf of Bay (collectively, the "Bay Documents")
and understand the risks of, and other considerations relating to, the
acquisition of the Limited Partnership Units. The Contributor and each Limited
Partnership Unit Holder, by reason of its, his or her business and financial
experience, together with the business and financial experience of those
persons, if any, retained by it to represent or advise it with respect to its
investment in the Limited Partnership Units, has such knowledge, sophistication
and experience in financial and business matters and in making investment
decisions of this type that it, he or she (A) is capable of evaluating the
merits and risks of an investment in Bay Countrybrook and of making an informed
investment decision, (B) is capable of protecting its own interest or has
engaged representatives or advisors to assist it in protecting its interests
and (C) is capable of bearing the economic risk of such investment.

(ii) The Contributor and each Limited Partnership
Unit Holder understand that an investment in Bay Countrybrook involves
substantial risks. The Contributor and each Limited Partnership Unit Holder
have been given the opportunity to make a thorough investigation of the
proposed activities of Bay Countrybrook and have been furnished with materials
relating to Bay Countrybrook and its proposed activities, including, without
limitation, the Limited Partnership Agreement and the Registration Rights
Agreement. The Contributor and each Limited Partnership Unit Holder have been
afforded the opportunity to obtain any additional information deemed necessary
by any of them to verify the accuracy of any representations made or
information conveyed to the Contributor or any Limited Partnership Unit Holder.
The Contributor and each Limited Partnership Holder confirm that all documents,
records, and books pertaining to its investment in Bay Countrybrook and
requested by the Contributor or any Limited Partnership Unit Holder have been
made available or delivered to the Contributor or such Limited Partnership Unit
Holder, as the case may be. The Contributor and each Limited Partnership Unit
Holder have had an opportunity to ask questions of and receive answers from Bay
and the General Partner, concerning the terms and conditions of their
investment. The Contributor has relied and are making each of their investment
decisions upon Bay Countrybrook's charter documents and other written
information provided to the Contributor and each Limited Partnership Unit
Holder by or on behalf of Bay Countrybrook.

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<PAGE> 27
(iii) The Limited Partnership Units to be issued to
the Contributor and subsequently distributed to the Limited Partnership Unit
Holders will be acquired by the Contributor and each of such Limited
Partnership Unit Holders for its, his or her own account (or if the Contributor
is a trustee, for a trust account) for investment only and not with a view to,
or with any intention of, a distribution or resale thereof (except, in the case
of the Contributor, to the Limited Partnership Unit Holders in accordance with
the terms of this Agreement and the Limited Partnership Agreement), in whole or
in part, or the grant of any participation therein, without prejudice, however,
to the Contributor's and the Limited Partnership Unit Holder's right (subject
to the terms of this Agreement and the Limited Partnership Agreement) at all
times to sell or otherwise dispose of all or any part of the Limited
Partnership Units under an exemption from such registration available under the
Securities Act of 1933, as amended (the "Securities Act"), and applicable state
securities laws, and subject, nevertheless, to the disposition of its assets
being at all times within its control. Neither the Contributor nor any Limited
Partnership Unit Holder was formed for the specific purpose of acquiring an
interest in Bay Countrybrook or Bay.

(iv) The Contributor and the Limited Partnership
Unit Holders acknowledge that (A) the Limited Partnership Units to be issued to
the Contributor at Closing have not been registered under the Securities Act or
state securities laws by reason of a specific exemption or exemptions from
registration under the Securities Act and applicable state securities laws and,
if such Limited Partnership Units are represented by certificates, such
certificates will bear a legend to such effect, (B) Bay's and Bay
Countrybrook's reliance on such exemptions is predicated in part on the
accuracy and completeness of the representations and warranties of the
Contributor and each Limited Partnership Unit Holder contained herein, (C) such
Limited Partnership Units, therefore, cannot be resold unless registered under
the Securities Act and applicable state securities laws, or unless an exemption
from registration is available, (D) there is no public market for such Limited
Partnership Units and (E) Bay Countrybrook has no obligation or intention to
register such Limited Partnership Units for resale under the Securities Act or
any state securities laws or to take any action that would make available any
exemption from the registration requirements of such laws. The Contributor and
each Limited Partnership Unit Holder hereby acknowledge that because of the
restrictions on transfer or assignment of the Limited Partnership Units to be
issued hereunder which are set forth in the Limited Partnership Agreement and
the Registration Rights Agreement, the Contributor may have to bear the
economic risk of the investment commitment evidenced by this Agreement and any
Limited Partnership Units purchased hereby for an indefinite period of time.

(v) The address set forth under the Contributor's
and each Limited Partnership Unit Holder's name in Exhibit I is the
Contributor's or applicable Limited

23
<PAGE> 28
Partnership Unit Holder's principal place of business, as the case may be,
which address has not changed within the five (5) years immediately preceding
the date hereof, except as disclosed in writing to Bay prior to the date
hereof, and neither the Contributor nor any Limited Partnership Unit Holder has
any present intention of becoming a resident of any country, state or
jurisdiction other than the country and state in which such principal place of
business or residence is sited.

(m) Financial Statements. All operating statements
delivered to Bay by the Contributor were prepared by the Contributor in the
ordinary course of its business, and, to the best of the Contributor's
knowledge, in all material respects accurately set forth the results of the
operation of the Property for the periods covered. Since the date of the most
recent internally prepared operating statements referred to above, to the best
of Contributor's knowledge, (i) there has been no material adverse change in
the condition, financial or otherwise, of the Property or the Contributor
whether or not arising in the ordinary course of business and (ii) there has
been no material change in the ownership of the Contributor or any increase in
the indebtedness of the Contributor.

(n) Taxes. To the best of the Contributor's knowledge,
all tax or information returns required to be filed on or before the date
hereof by or on behalf of the Contributor (i) have been filed through the date
hereof or will be filed on or before the date when due in accordance with all
applicable laws and (ii) there is no action, suit or proceeding pending against
or with respect to the Contributor or its Property in respect of any tax nor is
any claim for additional tax asserted by any such authority. To the best of
the Contributor's knowledge, all real estate taxes and assessments relating to
the Property have been paid and copies of most recent tax bills have been
delivered to Bay.

(o) Insurance. The Contributor currently has in place
the public liability casualty and other insurance coverage with respect to its
Property set forth in Exhibit J, and each of such insurance policies, to the
best of Contributor's knowledge, is in full force and effect and all premiums
due and payable thereunder have been fully paid when due.

(p) Existence of Tax Exemption; Good Costs/Bad Costs
During Construction. To the best of the Contributor's knowledge, nothing has
come to the attention of the Contributor, and the Contributor has no knowledge
of any facts or claims, which would lead it to believe that interest on the
Tax-Exempt Debt has at any time on or prior to the Closing (i) not been
excluded from gross income for federal income tax purposes, (ii) is an item of
tax preference for purposes of the federal alternative minimum tax imposed on
individuals and corporations or (iii) is further not exempt from personal
income taxation imposed by the State of California. To the best of the
Contributor's knowledge, the

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<PAGE> 29
Contributor has complied with all covenants contained in any and all documents
and laws required to be complied with to ensure that such interest payable with
respect to the Tax-Exempt Debt is and continues to be excluded from gross
income for federal income tax purposes. To the best of the Contributor's
knowledge, at least ninety-five percent (95%) of the proceeds of the Tax-Exempt
Debt have been expended to pay for Qualified Project Costs.

(q) Authorizations, Approvals and Consents. To the best
of the Contributor's knowledge, the Contributor has obtained all
authorizations, approvals and consents necessary to enter into this Agreement
and the Related Documents, and, prior to Closing, the Contributor will have
obtained all authorizations, approvals and consents necessary to perform all
obligations associated with the transaction contemplated by this Agreement.

(r) California Blue Sky. Less than twenty-five (25%)
percent of the partnership interests in the Contributor are held by Persons who
have addresses in the State of California.

(s) Bulk Sales. There are no claims by Creditors of the
Contributor (other than claims by a governmental entity or on account of a
violation of law) that shall not on or before the Closing Date have been
satisfied in full.

For purposes of this Section 3.1, where the terms "to the best of the
Contributor's knowledge" are used, such terms shall mean that neither any
individual general partner of the Contributor nor Donald H. Tishman or Nancy
Sternberg, acting on behalf of the corporate general partner of the
Contributor, has actual knowledge of the matter in question as of the date with
respect to which the applicable representation or warranty is made. Nothing
contained herein shall require either an individual general partner of the
Contributor, or Donald Tishman or Nancy Sternberg acting on behalf of a
corporate general partner of the Contributor, to make any special inquiry or
review in connection with any representations or warranties contained herein or
in connection with any certificate or document executed or issued in connection
with the transaction that is the subject of this Agreement.

3.2 Representations and Warranties of Bay. Bay hereby represents
and warrants to the Contributor as follows:

(a) Existence and Power. Bay has been duly formed, is
validly existing as a Maryland corporation, is duly qualified to do business in
all jurisdictions where such qualification is necessary to carry on its
business as now conducted and is duly qualified or in the process of becoming
duly qualified in all jurisdictions in which the Property is located.

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<PAGE> 30
Bay has all power and authority under its organizational documents to enter
into this Agreement, the Registration Rights Agreement and the Related
Agreements executed by it.

(b) Authorization; No Contravention. The execution and
delivery of this Agreement, the Registration Rights Agreement and the Related
Agreements executed by Bay, and the performance of its obligations under this
Agreement, the Registration Rights Agreement and such Related Agreements have
been duly authorized by all requisite organizational action, and this Agreement
has been, and the Registration Rights Agreement and such Related Agreements
will on the Closing Date have been, duly executed and delivered by Bay. None
of the foregoing requires any action by or in respect of, or filing with, any
governmental body, agency or official or contravenes or constitutes a default
under any provision of applicable law or regulation, any organizational
document of Bay or any agreement, judgment, injunction, order, decree or other
instrument binding upon Bay. This Agreement, the Registration Rights Agreement
and the Related Agreements executed by Bay constitute the valid and binding
obligations of Bay enforceable in accordance with their respective terms,
subject to bankruptcy and similar laws affecting the remedies or resources of
creditors generally and principles of equity.

(c) Pending Actions. To the best of Bay's knowledge,
there is no existing, or, threatened legal action or governmental proceedings
of any kind involving Bay, any of its assets or the operation of any of the
foregoing, which, if determined adversely to Bay or its assets, would have a
material adverse effect on the consolidated financial position, stockholders'
equity, results of operations, business or prospects of Bay or its assets or
which would interfere with Bay's ability to execute or deliver, or perform its
obligations under this Agreement, the Registration Rights Agreement or any of
the Related Agreements executed by it.

(d) Taxes. Bay has filed all federal, state and local
income and franchise tax returns required to be filed through the date hereof
and has paid all taxes due thereon, and no tax deficiency has been determined
adversely to Bay which has had (nor does Bay have any knowledge of any tax
deficiency which, if determined adversely to Bay might have) a material adverse
effect on the consolidated financial position, stockholders' equity, results of
operations, business or prospects of Bay.

(e) Investment Company Act of 1940. Bay is not an
"investment company" or an entity "controlled" by an "investment company" as
such terms are defined under the Investment Company Act of 1940 and the rules
and regulations of the Commission thereunder.

(f) Bay Qualification. Bay is organized and operates, and intends to

26
<PAGE> 31
continue to operate, in a manner so as to qualify as a "real estate investment
trust" under Sections 856 through 860 of the Code.

For purposes of this Section where the terms "to the best of Bay's
knowledge" are used, such terms shall mean that ________ has no actual
knowledge of the matter in question as of the date with respect to which the
representation or warranty is made. Nothing contained herein shall require Bay
or ______ to make any special inquiry or review in connection with any of the
representations or warranties contained herein or in connection with any
certificate or document executed or issued in connection with the transaction
that is the subject of this Agreement.

3.3 Representations and Warranties of the General Partner and Bay.
It shall be a condition to the Contributor's obligations under this Agreement
that the General Partner and Bay shall make the representations and warranties
set forth below to the Contributor as of the Closing Date:

(a) Existence and Power. The General Partner has been
duly formed and is validly existing as a Maryland corporation, and is duly
qualified to do business in all jurisdictions where such qualification is
necessary to carry on its business as now conducted and is duly qualified or in
the process of becoming duly qualified in all jurisdictions in which the
Property is located. The General Partner has all power and authority under its
organizational documents to enter into the Limited Partnership Agreement and
the Related Agreements executed by it.

(b) Authorization; No Contravention. The execution and
delivery of the Limited Partnership Agreement and the Related Agreements
executed by the General Partner, and the performance of its obligations under
the Limited Partnership Agreement and such Related Agreements executed by the
General Partner will on the Closing Date have been duly authorized, executed
and delivered by the General Partner. None of the foregoing requires any
action by or in respect of, or filing with, any governmental body, agency or
official or contravenes or constitute a default under any provision of
applicable Law, any organizational document of the General Partner or any
agreement, judgment, injunction, order, decree or other instrument binding upon
the General Partner. The Limited Partnership Agreement and the Related
Agreements executed by the General Partner when executed will constitute the
valid and binding obligations of the General Partner enforceable in accordance
with their respective terms, subject to bankruptcy and similar laws affecting
the remedies or resources of creditors generally and general principals of
equity.

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<PAGE> 32
knowledge, there is no existing or threatened legal action or governmental
proceedings of any kind involving the General Partner, any of its assets or the
operation of any of the foregoing, which, if determined adversely to the
General Partner or its assets, would have a material adverse effect on the
consolidated financial position, stockholders' equity, results of operations,
business or prospects of the General Partner or its assets or which would
interfere with the General Partner's ability to execute or deliver, or perform
its obligations under the Limited Partnership Agreement or any of the Related
Agreements executed by it.

(d) Investment Company Act of 1940. The General Partner
is not an "investment company" or an entity "controlled" by an "investment
company" as such terms are defined under the Investment Company Act of 1940 and
the rules and regulations of the Commission thereunder.

For purposes of this Section where the terms "to the best of the
General Partner's knowledge" or "to the best of Bay's knowledge" are used, such
terms shall mean that Geoffrey Baker has no actual knowledge of the matter in
question as of the date with respect to which the representation or warranty is
made. Nothing contained herein shall require the General Partner, Bay or
Geoffrey Baker to make any special inquiry or review in connection with any of
the representations or warranties contained herein or in connection with any
certificate or document executed or issued in connection with the transaction
that is the subject of this Agreement.

3.4 Discovery of Breach of Representation or Warranty Prior to
Closing. If, prior to Closing, Bay discovers that any of the Contributor's
representations or warranties in this Agreement is not true, Bay shall notify
the Contributor of its finding within five (5) business days of its discovery.
Except as provided below in this Section, the Contributor shall have the right
to cure such untruth, if it is in Bay's and the Contributor's reasonable
judgement capable of cure, within ten (10) days of notice thereof but in all
events on or before the scheduled Closing Date. If in Bay's and the
Contributor's reasonable judgement it would cost more than $150,000 to cure
such untruth, the Contributor otherwise does not have the right to cure such
untruth under this Section or such untruth is not cured within the period
provided in this Section, the Contributor shall have no right, or further
right, as the case may be, to cure such untruth and Bay shall, as its sole
remedy, except as provided below in this Section, have the right or further
right, as the case may be, to deduct $150,000 from the Contribution Price or
terminate this Agreement. Upon any such termination, Bay shall, as its sole
remedy, be entitled to return of the Deposit, and the parties rights and
obligations, other than the Surviving Obligations, shall terminate without
recourse and be of no further force or effect. In the event any of the
Contributor's representations or warranties in this Agreement is not true as a
result of any act or omission by the Contributor intended to result in
termination of

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the Agreement or other misconduct of the Contributor, Bay shall have all of the
rights and remedies available to it pursuant to Article 7.

ARTICLE 4 - MAINTENANCE AND OPERATION OF THE PROPERTY

4.1 Maintenance and Operation. Through the Closing, the
Contributor agrees to maintain and operate the Property as it is currently
being operated and in accordance with reasonable operating policies and
procedures. The Contributor shall perform all work required to be performed by
the landlord under the terms of any Lease. On or before the Closing Date, the
Contributor shall cause all vacant units vacated more than five (5) days prior
to the Closing to be made tenant ready and available for occupancy, with carpet
and vinyl replaced, if appropriate in accordance with the Contributor's
reasonable operating policies. Until the Closing, the Contributor shall
maintain all existing personnel on the Property in their current employment
positions at their current (or an increased) rate of compensation.

4.2 Insurance. Through the Closing Date, the Contributor shall
maintain at its sole cost and expense all insurance in effect on the date of
this Agreement.

4.3 Personal Property. Bay acknowledges that the Contributor
shall have the right, from and after the date of this Agreement through the
Closing with respect to the Property, to remove or replace items of its
Personal Property from time to time in the normal course of operation of its
Property. Bay agrees that the Contributor may remove items of Personal
Property from its Property if such items are obsolete or replaced by Personal
Property of equal or greater utility or value. Any such Personal Property
removed shall cease to constitute "Personal Property" for all purposes under
this Agreement. Any Personal Property replaced in the Project pursuant to this
Section 4.3 shall, to the extent not thereafter removed in accordance with the
terms of this Section 4.3, constitute "Personal Property" for all purposes
under this Agreement.

4.4 Leasing. The Contributor shall lease space in the Real
Property to tenants in accordance with its leasing policies existing as of the
date of this Agreement. All Leases entered into from and after the date of
this Agreement in accordance with the terms of this Section shall constitute
Leases under this Agreement.

4.5 Operating Agreements. Except as set forth in Section 4.4, the
Contributor shall not enter into any contract or other agreement affecting the
Property, or any amendment of any contract or agreement, that will be binding
on Bay Countrybrook, the General Partner or Bay. The Contributor shall not
waive, compromise or settle any rights of the Contributor under any such
contract or agreement, or modify, amend or terminate any Assigned Contract

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<PAGE> 34
or other such contract or agreement, without in each case obtaining Bay's prior
written consent thereto.

4.6 Damage or Destruction; Condemnation. The Contributor shall
promptly deliver to Bay written notice of any casualty or taking involving the
Property. If, prior to the Closing, all or any part of the Property is damaged
or destroyed by casualty such that the cost to repair and/or restore such
damage and/or destruction (which cost, for purposes of this Section, shall be
deemed to include reasonably anticipated post-Closing rental loss through
completion of such repair and/or restoration) would exceed Two Hundred Thousand
Dollars ($200,000.00) (a "Major Casualty"), then Bay shall have the right to
terminate this Agreement by written notice to the Contributor within ten (10)
business days after Bay's first learning of the occurrence of such casualty and
the cost of such repair and/or restoration. If all or any part of the Property
is damaged and/or destroyed by fire or other casualty prior to the Closing but
(i) the event is not a Major Casualty or (ii) the event is a Major Casualty but
this Agreement is not terminated pursuant to this Section as a result thereof,
then the Closing Date shall occur as scheduled notwithstanding such damage or
destruction, and the Contributor's interest in all proceeds of insurance
payable by reason of such casualty shall be assigned to Bay Countrybrook as of
the Closing Date or credited to Bay Countrybrook if previously received by the
Contributor. The Contributor's obligations pursuant to the immediately
preceding sentence shall survive the Closing. If, prior to Closing, a
governmental entity commences any eminent domain or condemnation proceeding to
take any portion of the Property or the Contributor enters into an agreement in
lieu thereof or becomes aware that any such agreement may be offered, and the
award to be paid in connection therewith is to exceed One Hundred Thousand
Dollars ($100,000) (a "Major Taking"), Bay shall have the option to terminate
this Agreement by written notice to the Contributor within ten (10) business
days after Bay first learns of such commencement, entry or offer. If, prior to
the Closing Date, a governmental entity commences any eminent domain or
condemnation proceeding to take any portion of the Property or the Contributor
enters into an agreement in lieu thereof or becomes aware that any such
agreement may be offered and such event does not constitute a Major Taking,
then the Closing Date shall occur as scheduled notwithstanding such proceeding,
entry or offer, and the Contributor's interest in all awards or payments
arising out of such proceedings or agreement shall be assigned to Bay
Countrybrook as of the Closing Date or credited to Bay Countrybrook if
previously received by the Contributor. The Contributor's obligations under
this Section shall survive the Closing. Upon any termination of this Agreement
pursuant to the terms of this Section, the Deposit shall be returned promptly
to Bay and the rights and obligations of the parties hereto, other than the
Surviving Obligations, shall terminate without recourse and be of no further
effect.

4.7 Tests and Inspections. The Contributor hereby authorizes Bay
its authorized

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<PAGE> 35
representatives, agents and employees to enter upon the Property on one (1)
business days' notice from time to time and to perform such tests and
inspections as Bay deems necessary or appropriate in its sole discretion,
including, without limitation, such soil boring and compacting tests, test well
and water table, soil porosity and liquid absorption tests, other environmental
inspections and tests, and engineering tests. Any entry by Bay onto the
Property in connection with its due diligence shall not unreasonably interfere
with the rights of tenants under Leases. Bay hereby agrees to indemnify and
hold the Contributor harmless from and against any and all direct, but not
consequential, Losses (as defined below) arising on account of any test or
inspection performed by Bay. This provision shall survive a termination of
this Agreement or Closing.

4.8 Tax-Exempt Debt. Prior to the Closing, the Contributor will
keep all debt service payments and other payments owed in connection with the
Tax-Exempt Debt current on the Property and will not permit or suffer to exist
any default under any document or instrument executed in connection with
Tax-Exempt Debt. On or before the Closing, the Contributor will satisfy and
have released of record all debts secured by the Property or other liens or
judgments filed against the Property except for the Permitted Encumbrances.
The Contributor will not amend or in any way modify without the prior written
consent of Bay any term of the Tax-Exempt Debt or any documents or instruments
executed in connection therewith.

4.9 Employee Matters. Prior to the Closing, Bay will present to
HAI Management, Inc., the manager of the Property (the "Manager"), the names,
if any, of employees of the Manager currently employed in connection with the
on-site management of the Property which Bay wishes to hire or cause the
General Partner or Bay Countrybrook to hire for management of Property. All
employees of the Manager not named by Bay pursuant to this Section shall not be
employed by Bay, the General Partner or Bay Countrybrook. The Contributor
hereby agrees to indemnify and hold harmless Bay, the General Partner and Bay
Countrybrook from and against any and all claims made by any employee hired by
any of them for vacation, sick leave, back wages or any other benefits accruing
to and including the day immediately preceding the Closing Date with respect to
the Property and from any claims made by any employees which were not hired by
the management company.

4.10 Availability of Records. Upon written request of Bay or the
General Partner, on behalf of Bay Countrybrook, for a period of two (2) years
after the Closing, the Contributor shall (i) make its records available to Bay
and General Partner on behalf of Bay Countrybrook for inspection, copying and
audit by the General Partner's designated accountants at Bay Countrybrook's
sole cost and expense, and (ii) cooperate with the General Partner and Bay to
the extent reasonably necessary to obtain any Licenses not in existence on

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<PAGE> 36
the Closing Date and necessary for the operation of all or any portion of the
Property. Without limiting the foregoing and in addition thereto, for the
period of time commencing on the date of this Agreement and continuing through
the second (2nd) anniversary of the Closing Date, the Contributor shall, from
time to time, upon reasonable advance notice from Bay, provide Bay and its
representatives, agents and employees with access to all financial and other
information in its possession pertaining to the period of the Contributor's
ownership and operation of the Property, which information is relevant and
reasonably necessary, in the opinion of Bay's outside, third party accountants
(the "Accountants"), to enable Bay and its Accountants to prepare financial
statements in compliance with any or all of (a) Rule 3-14 of Regulation S-X of
the Securities and Exchange Commission (the "Commission"); (b) any other rule
issued by the Commission and applicable to Bay; and (c) any registration
statement, report or disclosure statement filed with the Commission by, or on
behalf of, Bay; provided, however, that in any such event(s), the General
Partner shall reimburse the Contributor for those third party, out-of-pocket
costs and expenses that the Contributor incurs in order to comply with the
foregoing requirements. The Contributor acknowledges and agrees that the
following is a representative description of the information and documentation
that Bay and the Accountants may require in order to comply with (a), (b) and
(c) above. The Contributor shall provide such information, and documentation,
if available.

(a) Rent rolls for the calendar month in which the
Closing occurs and the eleven (11) calendar months immediately preceding the
calendar month in which the Closing occurs;

(b) The Contributor's internally-prepared operating
statements;

(d) The Contributor's budgeted annual and monthly income
and expenses, and actual annual and monthly income and expenses;

(e) Access to the Contributor's cash receipt journal(s)
and bank statements for the Property;

(f) The Contributor's general ledger with respect to the
Property;

(g) The Contributor's schedule of expense reimbursements
required under Leases in effect on the Closing Date, if one exists;

(h) Schedule, if one exists, of those items of repairs and
maintenance

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<PAGE> 37
performed by, or at the direction of the Contributor, during the Contributor's
final fiscal year in which the Contributor owned and operated the Property (the
"Final Fiscal Year").

(i) Schedule, if one exists, of those capital
improvements and fixed asset additions made by, or at the direction of, the
Contributor during the Final Fiscal Year;

(j) Access to the Contributor's invoices with respect to
expenditures made during the final Fiscal Year;

(k) Access (during normal and customary business hours)
to responsible personnel to answer accounting questions; and

(l) A representation letter, signed by the individual(s)
responsible for the Contributor's financial reporting, as prescribed by
generally accepted auditing standards promulgated by the Auditing Standards
Division of the American Institute of Certified Public Accountants, which
representation letter may be required to assist the Accountants in rendering an
opinion on such financial statements.

4.11 FNMA Approval. The Contributor shall fully cooperate with Bay
in any effort to obtain and deliver the materials required in Sections
2.1(n)(xx) through (xxiv).

4.12 Cooperation with Bay. The Contributor shall cooperate and do
all acts as may be reasonably required or requested by Bay with regard to the
fulfillment of any condition to Bay's obligations hereunder but the
Contributor's representations and warranties to Bay shall not be affected or
released by Bay's waiver or fulfillment of any condition.

ARTICLE 5 - INTENTIONALLY OMITTED

ARTICLE 6 - CLOSING ADJUSTMENTS

6.1 Taxes, Assessments and Utilities. All real estate taxes,
charges and assessments affecting the Property and all charges for water,
sewer, electricity, gas, telephone and all other utilities with respect to the
Property, shall be apportioned on a per diem basis as provided below. General
real estate taxes and other assessments payable for the fiscal year in which
the Closing occurs shall be prorated by the Contributor and Bay Countrybrook as
of the Closing Date. The Contributor shall pay on or before Closing the full
amount of any bonds or assessments against the Property, including, without
limitation, interest payable therewith,

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<PAGE> 38
including, without limitation, any bonds or assessments that may be payable
after the Closing Date as a result of or in relation to the construction or
operation of any improvements on the Land or any public improvements that took
place or for which any assessment was levied prior to the Closing Date. The
Contributor shall cause all the utility meters to be read on the Closing Date
and will be responsible for the cost of all utilities used prior to the Closing
Date, except to the extent such utility charges are billed to and paid by
tenants directly. If any prorations under this Section cannot be calculated
finally on the Closing Date, then they shall be estimated at the Closing and
calculated finally as soon after the Closing Date as feasible.

6.2 Rent. Except for delinquent rent, all rent under the
Property, the Leases and other income attributable to the Property shall be
apportioned on a per diem basis as of midnight on the date immediately
preceding the Closing Date for the Property. All such rent and other income
for the period preceding the Closing Date for the Property shall be deemed to
be property of the Contributor, and all rent and other income for any period
commencing as of the Closing Date for the Property and thereafter shall be the
property of Bay Countrybrook and shall be adjusted at the Closing. Payments
received by Bay Countrybrook from Tenants of the Contributor from and after the
Closing Date with respect to the Property shall be applied first to rents then
due for any period following Closing from such tenant and then to such tenant's
delinquent rent as of the time of apportionment. Bay Countrybrook shall use
reasonable efforts to collect delinquent rents for the benefit of the
Contributor but in no event shall be obligated to evict any Tenants in order to
collect such rents. Any amounts received by the Contributor on account of rent
or other income from and after the Closing Date with respect to the Property
shall be turned over to Bay Countrybrook for application in accordance with the
terms of this Section.

6.3 Payments on Permitted Exceptions. Payments of interest on the
Tax-Exempt Debt and other payments owing under the Tax-Exempt Instruments, and
any other Permitted Exceptions shall be apportioned on a per diem basis as of
midnight on the date immediately preceding the Closing Date for the Property to
which they pertain. Such interest and other payments accruing prior to the
Closing Date shall be deemed to be the responsibility of the Contributor, and,
subject to the terms of this Agreement, any such interest and other payments
accruing on or after such Closing Date shall be deemed to be an expense of Bay
Countrybrook. The Contributor shall receive a credit for all tax escrows,
replacement reserves, insurance escrows and operating deficit reserves held by
the holder of the Tax-Exempt Debt, and those and any and all other escrows and
reserves shall become Bay Countrybrook's.

6.4 Operating Agreement Payments and Other Expenses. Payments
under all Final Operating Agreements and for the Property's operating
maintenance expenses, including,

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<PAGE> 39
without limitation, fuel, shall be apportioned on a per diem basis as of
midnight on the date immediately preceding the Closing Date to the extent
possible. All such expenses accruing prior to such Closing Date shall be
deemed to be the responsibility of the Contributor and all such expenses
accruing as of such Closing Date and thereafter shall be expenses of Bay
Countrybrook. If final bills are not available as of Closing, amount to be
prorated under this Section shall be prorated on the basis of the most current
bills then available and promptly re-prorated on receipt of final bills. All
such expenses for the period preceding such Closing Date shall be the
responsibility of the Contributor, and all such expenses commencing as of the
Closing Date with respect to the Property shall be deemed to be expenses of Bay
Countrybrook.

6.5 Payment of Prorations. The parties acknowledge that
prorations under this Agreement that all the responsibility of the Contributor
shall be paid out of the $1,000,000 capital contribution described in Section
1.3.

6.6 Post-Closing Audit. As soon as the necessary information is
available, Bay Countrybrook shall conduct a post-Closing audit to determine the
accuracy of all prorations made under this Article (the "Post-Closing Audit").
Either party owing the other party a sum of money based on post-Closing
prorations required under this Article or the Post-Closing Audit shall promptly
pay such sum to the other party, together with interest thereon at the rate of
two percent (2%) over the "prime rate" (as announced from time to time in the
Wall Street Journal) per annum from the Closing Date to the date of payment if
payment is not made within ten (10) days after delivery of a bill therefor.
The Contributor shall reserve and set aside cash of not less than $200,000 to
satisfy any obligations it may have under this Section. This Article shall
survive Closing.

ARTICLE 7 - DEFAULTS AND REMEDIES

7.1 Defaults. In the event of (i) a failure by a party to perform
its obligations hereunder, which failure is not cured prior to the earlier of
(A) the Closing Date and (B) five (5) business days following notice thereof
from Bay (ii) the material inaccuracy of any representation or warranty made by
such party hereunder, (iii) a Major Casualty, (iv) a Major Taking or (v) the
failure of any condition to any party's obligations hereunder, then the other
party may elect (except, with respect to a Major Casualty or a Major Taking,
only Bay may elect) to terminate this Agreement by written notice to the first
party so long as the terminating party has performed or is in a position to
perform all obligations to be performed by it hereunder as of the date of its
notice. Upon such a termination, the parties shall return all funds and
documents, if any, then held by them to the party delivering the same.

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<PAGE> 40
7.2 Remedies.

(a) Of Bay. In the event the Contributor fails to
perform its obligations hereunder, subject to the terms of Section 3.4 any
representation or warranty of the Contributor contained herein is materially
inaccurate or any condition to Bay's, Bay Countrybrook's or the General
Partner's obligations hereunder within the control of the Contributor is not
satisfied, and as a result thereof Bay is entitled hereunder to terminate this
Agreement, then Bay shall have the right to (i) enforce specific performance of
this Agreement; (ii) initiate an action to recover damages, including, without
limitation, its out-of-pocket costs and expenses incurred in connection with
the negotiation and administration of this Agreement, not to exceed $250,000,
except in an action to recover such damages for breach of a surviving
obligation, it being agreed by the Contributor that such limitation or recovery
shall not be applicable; (iii) receive back the Deposit; and/or (iv) exercise
any other right or remedy available at law or in equity, subject, with respect
to an action for damages, other than on account of a breach of a surviving
obligation, to the limitation set forth in item (ii) above. In the event of a
failure of a condition precedent to Bay's, Bay Countrybrook's or the General
Partner's obligations hereunder that is not within the Contributor's control,
Bay's sole remedy shall be to have the Deposit returned to it. Notwithstanding
the foregoing, nothing shall limit Bay's rights and remedies in the event of
fraud on the part of the Contributor or its general partners. Except as
provided below in this Section, no general partner of the Contributor shall be
personally liable for damages under this Agreement, including, without
limitation, for misrepresentation, and Bay shall look solely to the assets of
the Contributor to satisfy any liability of the Contributor to Bay under this
Agreement.

Nothing contained in this Agreement shall limit any such general
partner's personal liability or Bay's recovery against such general partner
personally in the event of fraud on the part of the Contributor or such general
partner.

(b) OF THE CONTRIBUTOR. IN THE EVENT BAY FAILS TO
PERFORM ITS OBLIGATIONS HEREUNDER, OR ANY REPRESENTATION OR WARRANTY OF BAY
CONTAINED HEREIN IS MATERIALLY INACCURATE, OR ANY CONDITION TO THE
CONTRIBUTOR'S OBLIGATIONS HEREUNDER IS NOT SATISFIED AND AS A RESULT THEREOF
THE CONTRIBUTOR IS ENTITLED HEREUNDER TO TERMINATE THIS AGREEMENT, THEN, UPON
SUCH TERMINATION, THE DEPOSIT SHALL BE PAID TO AND RETAINED BY THE CONTRIBUTOR
AS LIQUIDATED DAMAGES. THE PARTIES HAVE AGREED THAT THE CONTRIBUTOR'S ACTUAL
DAMAGES, IN THE EVENT THE CONTRIBUTOR BECOMES ENTITLED TO TERMINATE THIS
AGREEMENT PURSUANT TO THIS SECTION 7.2, WOULD BE EXTREMELY DIFFICULT OR
IMPRACTICABLE TO

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<PAGE> 41
DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE
THAT THE DEPOSIT HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'
REASONABLE ESTIMATE OF THE CONTRIBUTOR'S DAMAGES AND AS THE CONTRIBUTOR'S SOLE
AND EXCLUSIVE REMEDY AGAINST BAY, THE GENERAL PARTNER AND BAY COUNTRYBROOK, AT
LAW OR IN EQUITY (OTHER THAN WITH RESPECT TO THE SURVIVING OBLIGATIONS AND FOR
FRAUD BY BAY). IN THE EVENT THE CONTRIBUTOR BECOMES ENTITLED TO TERMINATE THIS
AGREEMENT AS PROVIDED IN THIS ARTICLE, THE CONTRIBUTOR HEREBY WAIVES ANY AND
ALL BENEFITS IT MAY HAVE UNDER CALIFORNIA CIVIL CODE SECTION 3389.

INITIALS: Contributor __________________ Bay _______________________

(c) Survival of Representations and Warranties. Subject
to the terms of this Section below, all representations and warranties of the
Contributor, Bay and the General Partner contained in this Agreement (other
than those contained in Sections 9.1 and 9.16) shall survive Closing for a
period of one hundred eighty (180) days and shall not be merged in any
instrument of conveyance. None of the Contributor, Bay or the General Partner
shall have any liability for any misrepresentation that is not material, and
the Contributor, Bay or the General Partner shall not have any liability on
account of any material misrepresentation contained herein (other than in
Sections 9.1 or 9.16) with respect to which it does not receive written notice
of possible claim on or before the expiration of such one hundred eighty (180)
day-period.

ARTICLE 8- INDEMNITIES

8.1 By the Contributor. Without limiting any other term of this
Agreement, the Contributor shall indemnify and hold Bay, Bay Countrybrook, and
the General Partner harmless from and against any and all claims, losses,
damages, costs, liabilities, causes of action and expenses, including, without
limitation, attorney's fees and disbursements, whether direct, contingent or
consequential, incurred by any of them on account of a breach of a
representation or warranty which has not terminated in accordance with the
terms of this Agreement or which is covered by the Contributor's issuance.
Notwithstanding the foregoing, no general partner in the Contributor shall have
personal liability under this Section.

8.2 By Bay. Bay Countrybrook shall indemnify and hold the
Contributor harmless from and against any and all losses, damages, costs,
liabilities, causes of action and expenses, including, without limitation,
attorneys' fees and disbursements, whether direct, contingent or consequential,
incurred by Contributor on account of a breach of a representation or warranty

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<PAGE> 42
by Bay or the General Partner which is not terminated in accordance with the
terms of this Agreement or which is covered by Bay Countrybrook's insurance.

8.3 Cooperation in Defense. Each party indemnified under any
indemnity contained in this Agreement shall cooperate in all reasonable
respects in the defense of the third-party claim pursuant to which the
indemnifying party is alleged to have liability.

ARTICLE 9- MISCELLANEOUS

9.1 Brokers. Neither party to this Agreement has had any contact
or dealings regarding the Property, or any communication in connection with the
subject matter of this transaction, through any real estate broker or other
person who can claim a right to a commission or finder's fee in connection with
the sale contemplated herein, except for Marcus & Millichap (the "Broker"),
whose entire commission shall be the responsibility of the Contributor
(pursuant to separate agreement between the Contributor and the Broker). In
the event that any other broker or finder claims a commission or finder's fee
based upon any contact, dealings or communication, the party through whom the
broker or finder makes its claim shall be responsible for such commission or
fee and all costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) incurred by the other party in defending
against the same. The party through whom any other broker or finder makes a
claim shall hold harmless, indemnify and defend the other party hereto, its
successors and assigns, agents, employees, officers and directors, and the
Property from and against any and all obligations, liabilities, claims,
demands, liens, encumbrances and losses (including, without limitation,
attorneys' fees and disbursements) (collectively, "Losses"), whether direct,
contingent or consequential, arising out of, based on, or incurred as a result
of such claim. The provisions of this Section shall survive the Closing or
termination of this Agreement.

9.2 Marketing. The Contributor agrees not to negotiate or execute
an agreement for the sale of the Property or any interest therein during the
term of this Agreement.

9.3 Entire Agreement; No Amendment. This Agreement represents the
entire agreement among each of the parties hereto. It is expressly understood
that no representations, warranties, guarantees or other statements shall be
valid or binding upon a party unless expressly set forth in this Agreement. It
is further understood that any prior agreements or understandings between or
among any of the parties have merged in this Agreement, which alone fully
expresses all agreements of the parties hereto and supersedes all such prior
agreements and understandings. This Agreement may not be amended, modified or
otherwise altered except by a written agreement signed by the parties hereto
against whom enforcement

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<PAGE> 43
is sought. It is agreed that no obligation under this Agreement which by its
terms is to be performed or continue to be performed after Closing and no
provision of this Agreement which is expressly to survive Closing shall merge
upon Closing, but shall survive Closing.

9.4 Certain Expenses. Each party hereto will pay all of its own
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, all costs and expenses
herein stated to be borne by such party and all of its respective accounting,
legal, investigatory and appraisal fees. Bay Countybank shall be responsible
for paying all amounts required to be paid to FNMA in connection with the
assumption of the Tax-Exempt Debt. The Contributor shall be responsible for
all County transfer taxes and/or transfer fees applicable to the sale of the
Property and recording costs. Each of Bay Countybank and the Contributor shall
be responsible for fifty percent (50%) of all City transfer taxes and/or
transfer fees applicable to the sale of the Property. Each of Bay Countybank
and the Contributor shall be responsible for fifty percent (50%) of escrow fees
due to the Escrow Agent in connection with the holding of the Deposit. All
other costs and charges in connection with the purchase and sale of the
Property contemplated by this Agreement not otherwise provided for in this
Agreement shall be allocated by standard accounting practices in accordance
with the applicable California Codes and California closing customs. Each
party to this Agreement shall bear its own costs and expenses, including,
without limitation, attorney's fees and disbursements in connection with any
litigation arising in connection with the transaction that is the subject of
this Agreement.

9.5 Title Insurance, Survey and UCC Costs. The Contributor shall
be responsible for all costs associated with obtaining and issuing the Title
Policy, including, without limitation, examination costs, commitment fees and
premiums, not to exceed such costs required to cause the Title Policy to be a
CLTA title insurance policy. Bay shall pay all additional costs associated
with causing the Title Policy to meet ALTA standards and all costs of any
endorsements desired by Bay. The Contributor shall be responsible for all
costs associated with obtaining the UCC searches required under Section 2.1(d).
Notwithstanding the foregoing, each of Bay Countybank and the Contributor shall
be responsible for fifty percent (50%) of all costs associated with obtaining a
survey as required under Section 2.1(c).

9.6 Occupancy Credit. If the Actual Occupancy level (as defined
below) of the Property as of Closing is less than eighty-four percent (84%),
Bay Countrybrook shall be entitled to a credit (the "Occupancy Credit") against
the Contribution Price in an amount equal to the product obtained by
multiplying the Vacant Unit Rental Amount (as defined below) by a fraction, the
numerator of which is the amount by which the Actual Occupancy Level is less
than eighty-four percent (84%) and the denominator of which is the amount by
which the Actual Occupancy Level is less than one hundred percent (100%). As
used herein, the "Actual

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Occupancy Level" shall mean the percentage of the total apartment units on the
Property that as of the Closing are physically occupied by Qualified Tenants.
As used herein, the "Vacant Unit Rental Amount" shall mean the aggregate sum of
one month's rental for each apartment unit on the Property that as of the
Closing is not physically occupied by a Qualified Tenant, which rental amount
shall be based on the monthly rental last payable under a lease for each
apartment unit.

9.7 Notices. Any notice, communication or writing required under
or otherwise delivered in connection with this Agreement to any of the parties
hereto will be delivered to such party at the following address:

If to the Contributor to:

Countrybrook of Berryessa Associates
c/o HAI Management, Inc.
1829 Alison Way
San Jose, CA 95132
Attn: Donald J. Tishman, President
Fax: (408) 942-0495

with copy to:

Rudnick & Wolfe
203 North LaSalle Street
Suite 1500
Chicago, IL 60601
Attn: Kenneth Hartmann, Esq.
Fax: (312) 236-7516

If to Bay to:

Bay Apartment Communities, Inc.
4340 Stevens Creek Boulevard
Suite 275
San Jose, CA 95129
Attn: Geoffrey L. Baker
Fax: (408) 984-7060

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with a copy to:

Goodwin, Procter & Hoar LLP
Exchange Place
53 State Street
Boston, MA 02109
Attn: Gilbert G. Menna, P.C.
Fax: (617) 570-1231

Each notice shall be in writing and shall be sent to the party to receive it,
postage prepaid by certified mail, return receipt requested, or by a nationally
recognized overnight courier service that provides tracking and proof of
receipt. Inclusion of fax numbers is for conveniences only, and notice by fax
shall neither be sufficient nor required. Notices shall be deemed delivered
upon receipt.

9.8 No Assignment. Except as provided in this Section below,
neither this Agreement nor any of the rights or obligations hereunder may be
assigned by either party without the prior written consent of the other party.

9.9 Governing Law. The laws of the State of California shall
govern the validity, enforcement and interpretation of this Agreement.

9.10 Multiple Counterparts. This Agreement may be executed in
multiple counterparts. If so executed, all of such counterparts shall
constitute but one agreement, and, in proving this Agreement, it shall not be
necessary to produce or account for more than one such counterpart.

9.11 Further Assurances. From and after the date of this Agreement
and after the Closing, the parties hereto shall take such further actions and
execute and deliver such further documents and instruments as may be reasonably
necessary to provide to the respective parties hereto the benefits intended to
be afforded hereby, including, without limitation, all books and records
relating to the Property and the addresses of all parties.

9.12 Miscellaneous. Whenever herein the singular number is used,
the same shall include the plural, and the plural shall include the singular
where appropriate, and words of any gender shall include the other gender when
appropriate. The headings of the Articles and the Sections contained in this
Agreement are for convenience only and shall not be taken into account in
determining the meaning of any provision of this Agreement. The words "hereof"
and "herein" refer to this entire Agreement and not merely the Section in which
such words

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appear. If the last day for performance of any obligation hereunder is not a
Business Day, then the deadline for such performance or the expiration of the
applicable period or date shall be extended to the next Business Day.

9.15 Invalid Provisions. If any provision of this Agreement
(except the provision relating to the Contributor's obligation to contribute
the Property, the invalidity of which shall cause this Agreement to be null and
void) is held to be illegal, invalid or unenforceable under present or future
laws, such provision shall be fully severable, this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part of this Agreement, and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from
this Agreement.

9.16 Confidentiality; Publicity. The Contributor agrees that this
Agreement shall not be recorded in any public real estate registry. Bay agrees
to maintain in confidence through Closing, unless otherwise required by
applicable Law, reporting requirement or accounting or auditing standard, to
disclose, all material and information received from the Contributor or
otherwise regarding the Property. In the event this Agreement is terminated,
Bay shall return to the Contributor all materials delivered to Bay by the
Contributor and Bay's obligations under the immediately preceding sentence
shall continue indefinitely. The Contributor and Bay agree that, prior to the
Closing Date, neither of them, without the prior written consent of the other,
shall publicly or privately reveal any information relating to the existence or
terms and conditions of the transactions contemplated hereby, except as
permitted below in this Section. The Contributor agrees that nothing in this
Section shall prevent Bay from disclosing or accessing any information
otherwise deemed confidential under this Section (i) in connection with Bay's
enforcement of its rights hereunder, or (ii) pursuant to any legal requirement,
including, without limitation, any securities Laws, any reporting requirement
or any accounting or auditing standard. The Contributor and Bay further agree
that nothing in this Section shall prevent either of them from disclosing or
accessing any information otherwise deemed confidential under this Section to
its agents, employees, counsel and other third parties to the extent reasonably
necessary to perform due diligence and complete the transactions contemplated
hereby, including, without limitation, to limited partners and the Contributor
for purposes of obtaining the Partnership's consent. Notwithstanding anything
to the contrary contained herein, Bay shall have the sole right to determine
the form, timing and substance of, and to issue, all publicity concerning the
transactions contemplated by this Agreement.

9.17 Time of Essence. Time is of the essence with respect to this
Agreement.

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9.18 "As-Is" Acquisition. Bay represents and warrants to the
Contributor that Bay has had an opportunity to review all information it
desires regarding the Property, that Bay understands the risks of, and other
considerations relating to, investment in the Property, that Bay has performed
all diligence desired by Bay with respect to the Property and that Bay is
acquiring the Property, subject to the Contributor's representations and
warranties contained in this Agreement, in its "as is", "with all faults"
condition as of the Diligence Period Expiration Date. Bay represents and
warrants to the Contributor that Bay has been given the opportunity to make a
thorough investigation of the Property and has been furnished with materials
relating to the Property, that Bay has had the opportunity to obtain
information deemed necessary by it, that all documents, records and books
requested by Bay in connection with the Property have been made available or
delivered to Bay, and that Bay has had an opportunity to ask questions of and
receive answers from the Contributor and its general partners concerning the
Property.

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IN WITNESS WHEREOF, the parties hereto have executed this Contribution
Agreement as an instrument under seal as of the date and year first above
written.

CONTRIBUTOR:

COUNTRYBROOK OF
BERRYESSA ASSOCIATES

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

BAY:

BAY APARTMENT COMMUNITIES, INC.

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

<PAGE> 1
Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the registration statements of
Bay Apartment Communities, Inc. on Form S-3 (File No. 33-92688) and Form S-8
(File No. 33-80249) of our reports dated July 3, 1996, on our audits of the
Historical Summary of Gross Income and Direct Operating Expenses of
Countrybrook Apartments for the three months ended March 31, 1996, and the year
ended December 31, 1995, the Historical Summary of Gross Income and Direct
Operating Expenses of Parkside Commons Apartments for the three months ended
March 31, 1996, and the year ended December 31, 1995, the Historical Summary of
Gross Income and Direct Operating Expenses of Villa Marguerite Apartments for
the three months ended March 31, 1996, and the year ended December 31, 1995,
and the Historical Summary of Gross Income and Direct Operating Expenses of
Sunset Towers Apartments for the three months ended March 31, 1996, and the
year ended December 31, 1995, which reports are included in this Current Report
on Form 8-K/A.

/s/ COOPERS & LYBRAND L.L.P.

COOPERS & LYBRAND L.L.P.

San Francisco, California
July 5, 1996