GABLES RESIDENTIAL TRUST

        FOURTH AMENDED AND RESTATED 1994 SHARE OPTION AND INCENTIVE PLAN*


SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS

The name of the plan is the  Gables  Residential  Trust  1994  Share  Option and
Incentive Plan (the "Plan").  The purpose of the Plan is to encourage and enable
the officers, employees and Trustees of Gables Residential Trust (the "Company")
and its  Subsidiaries  upon whose  judgment,  initiative and efforts the Company
largely  depends  for the  successful  conduct  of its  business  to  acquire  a
proprietary  interest in the Company.  It is  anticipated  that  providing  such
persons  with a  direct  stake in the  Company's  welfare  will  assure a closer
identification of their interests with those of the Company, thereby stimulating
their efforts on the Company's behalf and  strengthening  their desire to remain
with the Company.

     The following terms shall be defined as set forth below:

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

     "Award" or  "Awards,"  except where  referring to a particular  category of
     grant under the Plan, shall include Incentive Share Options,  Non-Qualified
     Share Options, Restricted Share Awards and Unrestricted Share Awards.

     "Board" means the Board of Trustees of the Company.

     "Cause"  means and  shall be  limited  to a vote of the  Board of  Trustees
     resolving that the  participant  should be dismissed as a result of (i) any
     material   breach  by  the  participant  of  any  agreement  to  which  the
     participant  and  the  Company  are  parties,  (ii)  any  act  (other  than
     retirement) or omission to act by the participant which may have a material
     and adverse  effect on the business of the Company or any  Subsidiary or on
     the  participant's  ability  to  perform  services  for the  Company or any
     Subsidiary,  including,  without  limitation,  the  commission of any crime
     (other than ordinary traffic violations),  or (iii) any material misconduct
     or neglect of duties by the  participant in connection with the business or
     affairs of the Company or any Subsidiary.

     "Change of Control" is defined in Section 12.
<PAGE>

     "Code"  means  the  Internal  Revenue  Code of 1986,  as  amended,  and any
     successor  Code,  and  related  rules,   regulations  and  interpretations.

     "Committee"  means the Board or any  Committee of the Board  referred to in
     Section 2.

     "Disability" means disability as set forth in Section 22(e)(3) of the Code.

     "Effective  Date"  means  the  date  on  which  the  Plan  is  approved  by
     shareholders as set forth in Section 14.

     "Fair Market Value" on any given date means the last reported sale price at
     which the  Shares  are  traded on such date or, if no Shares  are traded on
     such  date,  the most  recent  date on which the  Shares  were  traded,  as
     reflected  on the New York  Stock  Exchange  or, if  applicable,  any other
     national stock exchange on which the Shares are traded. Notwithstanding the
     foregoing,  the Fair Market Value on the first day of the Company's initial
     public offering shall mean the initial public price.

     "Incentive Share Option" means any Share Option designated and qualified as
     an "incentive stock option" as defined in Section 422 of the Code.

     "Independent  Trustee"  means a  member  of the  Board  who is not  also an
     employee of the Company or any Subsidiary.

     "Non-Qualified  Share  Option"  means  any  Share  Option  that  is  not an
     Incentive Share Option.

     "Option"  or "Share  Option"  means any option to purchase  Shares  granted
     pursuant to Section 5.

     "Restricted Share Award" means Awards granted pursuant to Section 6.

     "Share" or "Shares" means one or more,  respectively,  of the Common Shares
     of beneficial interest,  par value $.01 per share, of the Company,  subject
     to adjustments pursuant to Section 3.

     "Subsidiary"  means Gables Realty Limited  Partnership,  Central  Apartment
     Management,   Inc.,  East  Apartment   Management,   Inc.,  Gables  Central
     Construction, Inc., and Gables East Construction, Inc., and any corporation
     or  other  entity  (other  than  the  Company)  in any  unbroken  chain  of
     corporations or other  entities,  beginning with the Company if each of the
     corporations or entities (other than the last  corporation or entity in the
     unbroken chain) owns stock or other interests possessing 50% or more of the
     economic  interest  or the total  combined  voting  power of all classes of
     stock or other  interests in one of the other  corporations  or entities in
     the chain.

     "Unit" or "Units" means a unit or units of limited partnership  interest in
     Gables Realty Limited  Partnership,  a Delaware limited partnership and the
     entity through which the Company principally conducts its business.

     "Unrestricted Share Award" means Awards granted pursuant to Section 7.
<PAGE>

     SECTION  2.   ADMINISTRATION  OF  PLAN;   COMMITTEE   AUTHORITY  TO  SELECT
     PARTICIPANTS AND DETERMINE AWARDS

(a)  COMMITTEE.  Prior to the closing of the Company's  initial public  offering
     and  the  appointment  of the  Independent  Trustees,  the  Plan  shall  be
     administered  by the  Board.  After the  closing of the  Company's  initial
     public offering and the appointment of the Independent  Trustees,  the Plan
     shall be  administered  by all of the  Independent  Trustee  members of the
     Compensation  Committee  of the Board,  or any other  committee of not less
     than two Independent Trustees performing similar functions, as appointed by
     the Board from time to time.

(b)  POWERS OF COMMITTEE.  The  Committee  shall have the power and authority to
     grant Awards consistent with the terms of the Plan, including the power and
     authority:

     (i)  to select the  officers  and other  employees  of the  Company and its
          Subsidiaries to whom Awards may from time to time be granted;

     (ii) to determine  the time or times of grant,  and the extent,  if any, of
          Incentive Share Options, Non-Qualified Share Options, Restricted Share
          Awards  and  Unrestricted  Share  Awards,  or any  combination  of the
          foregoing, granted to any one or more participants;

     (iii) to determine the number of Shares to be covered by any Award;

     (iv) to  determine   and  modify  the  terms  and   conditions,   including
          restrictions,  not  inconsistent  with the terms of the  Plan,  of any
          Award,  which terms and conditions may differ among individual  Awards
          and  participants,  and to  approve  the form of  written  instruments
          evidencing the Awards;

     (v)  to accelerate the  exercisability  or vesting of all or any portion of
          any Award;

     (vi) subject to the provisions of Section  5(a)(iii),  to extend the period
          in which Share Options may be exercised;

     (vii)to determine  whether,  to what extent,  and under what  circumstances
          Shares and other  amounts  payable  with  respect to an Award shall be
          deferred  either  automatically  or at the election of the participant
          and whether and to what extent the Company shall pay or credit amounts
          constituting  interest  (at  rates  determined  by the  Committee)  or
          dividends or deemed dividends on such deferrals; and

     (viii) to adopt, alter and repeal such rules,  guidelines and practices for
          administration  of the Plan and for its own acts and proceedings as it
          shall deem  advisable;  to interpret  the terms and  provisions of the
          Plan and any Award (including  related written  instruments);  to make
          all  determinations  it deems advisable for the  administration of the
          Plan; to decide all disputes  arising in connection with the Plan; and
          to otherwise supervise the administration of the Plan.

All  decisions  and  interpretations  of the  Committee  shall be binding on all
persons, including the Company and Plan participants.
<PAGE>

SECTION 3.        SHARES ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION

     (a)  SHARES  ISSUABLE.  At any time, the maximum number of Shares issued or
          available for issuance under the Plan shall be equal to the sum of (i)
          2,952,895  (the  "Minimum  Shares")1  and  (ii)  9%  of  the  positive
          difference,  if any, of (A) the sum of (x) the total  number of Shares
          outstanding  at such time  (which  limit shall be  determined  without
          considering  as  outstanding  any Shares  that are the  subject of any
          unexercised  options  under the Plan or any other  option  plan of the
          Company or any Shares owned by the Company or any of its subsidiaries)
          and (y) the total number of Shares issuable upon the exchange of Units
          that are  outstanding  at such time  (other  than  Units  owned by the
          Company or any of its  subsidiaries)  over (B)  32,809,949  (the "Base
          Amount")2;  provided,  however,  that the maximum number of Shares for
          which  Incentive Share Options may be granted under the Plan shall not
          exceed 2,622,860 Shares (which number  represents 9% of such sum as of
          May 19, 1998 and which number is subject to  adjustment as provided in
          paragraph (b) below);  provided,  further,  that at any time the total
          number of Shares  issued or available  for issuance  under the Plan in
          respect of Restricted Share Awards or Unrestricted  Share Awards shall
          not exceed 50% of the total  number of Shares  available  for issuance
          under the Plan at such  time;  provided,  further,  that the number of
          Shares for which Share  Options  may be granted to any one  individual
          participant  during any one  calendar  year period shall be limited to
          200,000 Shares.  The Shares underlying any Awards which are forfeited,
          cancelled,  reacquired by the Company,  satisfied without the issuance
          of Shares or otherwise  terminated  (other than by exercise)  shall be
          added back to the Shares available for issuance under the Plan. Shares
          issued under the Plan may be authorized but unissued  Shares or Shares
          reacquired by the Company.

     (b)  SHARE DIVIDENDS, MERGERS, ETC. In the event of a share dividend, share
          split or similar change in  capitalization  affecting the Shares,  the
          Committee  shall make  appropriate  adjustments  in (i) the number and
          kind of  shares  or  securities  on which  Awards  may  thereafter  be
          granted,  (ii) the  number  and kind of shares  remaining  subject  to
          outstanding  Awards, and (iii) the option or purchase price in respect
          of such shares. In the event of any merger, consolidation, dissolution
          or liquidation  of the Company or Gables Realty  Limited  Partnership,
          the  Committee  in its  sole  discretion  may,  as to any  outstanding
          Awards,  make such  substitution or adjustment in the aggregate number
          of shares  reserved  for  issuance  under the Plan and the  number and
          purchase  price (if any) of shares  subject  to such  Awards as it may
          determine and as may be permitted by the terms of such transaction, or
          amend or terminate  such Awards upon such terms and  conditions  as it
          shall provide  (which,  in the case of the  termination  of the vested
          portion of any Award,  shall  require  payment or other  consideration
          which the Committee deems equitable in the circumstances).

     (c)  SUBSTITUTE  AWARDS.  The  Committee may grant Awards under the Plan in
          substitution  for stock and stock based  awards held by  employees  of
          another  corporation who concurrently  become employees of the Company
          or a  Subsidiary  as the  result of a merger or  consolidation  of the
          employing  corporation  with  the  Company  or  a  Subsidiary  or  the
          acquisition by the Company or a Subsidiary of property or stock of the
          employing  corporation.  The Committee may direct that the  substitute
          awards be  granted  on such  terms  and  conditions  as the  Committee
          considers appropriate in the circumstances.
<PAGE>

SECTION 4. ELIGIBILITY

Participants  in the Plan  will be such  full or  part-time  officers  and other
employees  of the  Company  and  its  Subsidiaries  who are  responsible  for or
contribute to the  management,  growth or  profitability  of the Company and its
Subsidiaries  and who are selected  from time to time by the  Committee,  in its
sole discretion. Notwithstanding anything to the contrary set forth in the Plan,
Independent  Trustees,  in  addition to their  specific  rights set forth in the
Plan,  are also  eligible  to  participate  in the Plan to the  same  extent  as
employees of the Company or any Subsidiary, except that Independent Trustees are
not eligible to receive  grants of Incentive  Share  Options.  Accordingly,  any
references in the Plan to "employees" of the Company or any Subsidiary  shall be
deemed to include the  Independent  Trustees  (except to the extent set forth in
the preceding sentence), and any references to "employment" by the Company shall
also mean, with respect to an Independent Trustee, service as a trustee.

SECTION 5. SHARE OPTIONS

Any Share Option  granted  under the Plan shall be in such form as the Committee
may from time to time approve.

Share Options  granted under the Plan may be either  Incentive  Share Options or
Non-Qualified  Share Options.  To the extent that any Option does not qualify as
an Incentive Share Option, it shall constitute a Non-Qualified Share Option.

No Incentive Share Option shall be granted under the Plan after May 18, 2008.

     (a)  SHARE OPTIONS  GRANTED TO EMPLOYEES.  The Committee in its  discretion
          may grant Share Options to employees of the Company or any Subsidiary.
          Share Options granted to employees pursuant to this Section 5(a) shall
          be subject to the  following  terms and  conditions  and shall contain
          such additional terms and conditions,  not inconsistent with the terms
          of the Plan, as the Committee shall deem desirable:

          (i)  Exercise  Price.  The  exercise  price per  share for the  Shares
               covered by a Share Option  granted  pursuant to this Section 5(a)
               shall be  determined  by the  Committee  at the time of grant but
               shall not be less than 100% of Fair  Market  Value on the date of
               grant.   Notwithstanding   the   foregoing,   with   respect   to
               Non-Qualified  Share  Options  which are  granted in lieu of cash
               bonus, the exercise price per share shall not be less than 50% of
               the Fair Market Value on the date of grant.  If an employee  owns
               or  is  deemed  to  own  (by  reason  of  the  attribution  rules
               applicable under Section 424(d) of the Code) more than 10% of the
               combined  voting  power of all classes of stock of the Company or
               any  Subsidiary  or parent  corporation  and an  Incentive  Share
               Option is granted  to such  employee,  the  option  price of such
               Incentive Share Option shall be not less than 110% of Fair Market
               Value on the grant date.

          (ii) GRANT OF DISCOUNT OPTIONS IN LIEU OF CASH BONUS. Upon the request
               of an  employee  and  with the  consent  of the  Committee,  such
               employee may elect each calendar year to receive a  Non-Qualified
               Share  Option  in lieu of  cash  bonus  to  which  he may  become
               entitled during the following calendar year pursuant to any other
               plan  of  the  Company,  but  only  if  such  employee  makes  an
               irrevocable election to waive receipt of all or a portion of such
               cash bonus. Such election shall be made on or before the date set
               by the  Committee  which  date  shall  be no  later  than 15 days
               preceding  January 1 of the calendar year in which the cash bonus
               would  otherwise be paid. A  Non-Qualified  Share Option shall be
               granted to each employee who made such an irrevocable election on
               the date the  waived  cash bonus  would  otherwise  be paid.  The
               exercise  price  per  Share  Option  shall be  determined  by the
               Committee but shall not be less than 50% of the Fair Market Value
               of a single  Share on the date the Share  Option is granted.  The
               number of Shares  subject to the Share Option shall be determined
               by dividing the amount of the waived cash bonus by the difference
               between the Fair Market  Value of a single  Share on the date the
               Share Option is granted and the exercise  price per Share Option.
               The Share  Option  shall be granted for whole number of Shares so
               determined;  the value of any  fractional  share shall be paid in
               cash.  An employee  may revoke his  election  under this  Section
               5(a)(ii) on a prospective basis at any time.
<PAGE>

          (iii)OPTION TERM.  The term of each Share Option shall be fixed by the
               Committee,  but no Incentive  Share  Option shall be  exercisable
               more than ten years after the date the option is  granted.  If an
               employee  owns or is deemed to own (by reason of the  attribution
               rules  of  Section  424(d)  of the  Code)  more  than  10% of the
               combined  voting  power of all classes of stock of the Company or
               any  Subsidiary  or parent  corporation  and an  Incentive  Share
               Option is granted to such employee, the term of such option shall
               be no more than five years from the date of grant.

          (iv) EXERCISABILITY;  RIGHTS OF A  SHAREHOLDER.  Share  Options  shall
               become vested and  exercisable at such time or times,  whether or
               not in  installments,  as shall be determined by the Committee at
               or after the grant date;  provided,  however,  that Share Options
               granted in lieu of cash bonus shall be  exercisable  immediately.
               The Committee may at any time  accelerate the  exercisability  of
               all or any portion of any Share  Option.  An optionee  shall have
               the rights of a shareholder  only as to shares  acquired upon the
               exercise  of a  Share  Option  and  not as to  unexercised  Share
               Options.

          (v)  METHOD OF EXERCISE. Share Options may be exercised in whole or in
               part,  by giving  written  notice  of  exercise  to the  Company,
               specifying  the number of shares to be purchased.  Payment of the
               purchase  price  may be  made  by one or  more  of the  following
               methods:

                    (A)  In cash, by certified or bank check or other instrument
                         acceptable to the Committee;

                    (B)  In the form of  Shares  that are not  then  subject  to
                         restrictions  under any Company plan and that have been
                         held  by the  optionee  for at  least  six  months,  if
                         permitted  by the  Committee  in its  discretion.  Such
                         surrendered Shares shall be valued at Fair Market Value
                         on the exercise date;

                    (C)  By the  optionee  delivering  to the Company a properly
                         executed  exercise  notice  together  with  irrevocable
                         instructions  to a broker to  promptly  deliver  to the
                         Company cash or a check  payable and  acceptable to the
                         Company to pay the purchase price; provided that in the
                         event the optionee chooses to pay the purchase price as
                         so  provided,  the optionee and the broker shall comply
                         with such  procedures and enter into such agreements of
                         indemnity and other  agreements as the Committee  shall
                         prescribe  as a condition  of such  payment  procedure.
                         Payment   instruments   will  be  received  subject  to
                         collection; or

                    (D)  By  the  optionee  delivering  to  the  Company  a full
                         recourse  promissory  note,  provided that the Board or
                         the Compensation  Committee has (i) authorized the loan
                         of funds to the optionee for the purpose of enabling or
                         assisting  the  optionee to effect the  exercise of the
                         optionee's Share Options and (ii) established the terms
                         of  such  note.  Such  promissory  note  shall,  at the
                         Company's  discretion,   be  accompanied  by  a  pledge
                         agreement of the Common Shares  issued  pursuant to the
                         exercise of such Share Options.

The delivery of certificates representing the Shares to be purchased pursuant to
the exercise of a Share Option will be contingent upon receipt from the optionee
<PAGE>


(or a purchaser  acting in his stead in  accordance  with the  provisions of the
Share Option) by the Company of the full purchase  price for such Shares and the
fulfillment  of  any  other  requirements  contained  in  the  Share  Option  or
applicable  provisions of laws. 

          (vi) NON-TRANSFERABILITY   OF  OPTIONS.   No  Share  Option  shall  be
               transferable  by the  optionee  otherwise  than by will or by the
               laws of descent and  distribution  and all Share Options shall be
               exercisable,   during  the  optionee's  lifetime,   only  by  the
               optionee.

          (vii)TERMINATION BY REASON OF DEATH.  If any optionee's  employment by
               the Company and its  Subsidiaries  terminates by reason of death,
               the Share  Option  may  thereafter  be  exercised,  to the extent
               exercisable at the date of death, by the legal  representative or
               legatee  of the  optionee,  for a period of six  months  (or such
               longer  period as the  Committee  shall specify at any time) from
               the date of death,  or until the expiration of the stated term of
               the Option, if earlier.

          (viii) TERMINATION BY REASON OF DISABILITY.

               (A)  Any Share Option held by an optionee whose employment by the
                    Company and its  Subsidiaries  has  terminated  by reason of
                    Disability may thereafter be exercised, to the extent it was
                    exercisable at the time of such termination, for a period of
                    twelve months (or such longer period as the Committee  shall
                    specify  at any time) from the date of such  termination  of
                    employment,  or until the  expiration  of the stated term of
                    the Option, if earlier.

               (B)  The Committee  shall have sole  authority and  discretion to
                    determine  whether  a  participant's   employment  has  been
                    terminated by reason of Disability.

               (C)  Except as otherwise provided by the Committee at the time of
                    grant,  the death of an optionee during a period provided in
                    this Section  5(a)(viii) for the exercise of a Non-Qualified
                    Share  Option,  shall extend such period for six months from
                    the date of death,  subject to termination on the expiration
                    of the stated term of the Option, if earlier.

          (ix) TERMINATION  FOR  CAUSE.  If  any  optionee's  employment  by the
               Company and its  Subsidiaries  has been terminated for Cause, any
               Share Option held by such optionee  shall  immediately  terminate
               and be of no further force and effect;  provided,  however,  that
               the  Committee  may, in its sole  discretion,  provide  that such
               Share Option can be exercised  for a period of up to 30 days from
               the date of  termination of employment or until the expiration of
               the stated term of the Option, if earlier.

          (x)  OTHER TERMINATION.  Unless otherwise determined by the Committee,
               if an optionee's  employment by the Company and its  Subsidiaries
               terminates  for any reason other than death,  Disability,  or for
               Cause,  any Share Option held by such optionee may  thereafter be
               exercised,  to the  extent  it was  exercisable  on the  date  of
               termination  of  employment,  for three  months  (or such  longer
               period as the Committee  shall specify at any time) from the date
               of  termination  of  employment  or until the  expiration  of the
               stated  term  of the  Option,  if  earlier.  Notwithstanding  the
               foregoing,  if an  Independent  Trustee's  service  as a  trustee
               terminates  for any reason other than for Cause,  any Option held
               by such Trustee may thereafter be exercised, to the extent it was
               exercisable on the date of termination of service, for six months
               (or such  longer  period as the  Committee  shall  specify at any
               time) after such Trustee ceases to be a Trustee of the Company or
               the specified expiration date, if earlier.
<PAGE>

          (xi) ANNUAL LIMIT ON INCENTIVE  SHARE OPTIONS.  To the extent required
               for "incentive  stock option"  treatment under Section 422 of the
               Code, the aggregate Fair Market Value  (determined as of the time
               of grant) of the Shares  with  respect to which  Incentive  Share
               Options granted under this Plan and any other plan of the Company
               or its Subsidiaries  become  exercisable for the first time by an
               optionee during any calendar year shall not exceed $100,000.

          (xii)FORM OF SETTLEMENT. Shares issued upon exercise of a Share Option
               shall be free of all  restrictions  under  the  Plan,  except  as
               otherwise provided in this Plan.

     (b)  RELOAD  OPTIONS.  At the discretion of the Committee,  Options granted
          under Section 5(a) may include a so-called  "reload"  feature pursuant
          to which an optionee  exercising an option by the delivery of a number
          of  Shares  in  accordance  with  Section   5(a)(v)(B)   hereof  would
          automatically be granted an additional  Option (with an exercise price
          equal to the Fair Market Value of the Share on the date the additional
          Option is granted and with the same  expiration  date as the  original
          Option being exercised, and with such other terms as the Committee may
          provide)  to  purchase  that  number  of  Shares  equal to the  number
          delivered to exercise the original Option.


SECTION 6. RESTRICTED SHARE AWARDS

     (a)  NATURE OF RESTRICTED  SHARE AWARD.  The Committee may grant Restricted
          Share  Awards to any  employee  of the  Company or any  Subsidiary.  A
          Restricted Share Award is an Award entitling the recipient to acquire,
          at no cost or for a purchase price determined by the Committee, Shares
          subject to such  restrictions  and  conditions  as the  Committee  may
          determine at the time of grant ("Restricted  Shares").  Conditions may
          be   based   on   continuing    employment   and/or   achievement   of
          pre-established performance goals and objectives.

     (b)  ACCEPTANCE OF AWARD. A participant  who is granted a Restricted  Share
          Award  shall have no rights  with  respect  to such  Award  unless the
          participant  shall  have  accepted  the Award  within 60 days (or such
          shorter date as the Committee may specify) following the award date by
          making payment to the Company, if required, by certified or bank check
          or other instrument or form of payment  acceptable to the Committee in
          an amount equal to the specified purchase price, if any, of the Shares
          covered by the Award and by executing and  delivering to the Company a
          written  instrument  that sets forth the terms and  conditions  of the
          Restricted Shares in such form as the Committee shall determine.

     (c)  RIGHTS AS A  SHAREHOLDER.  Upon  complying  with Section 6(b) above, a
          participant shall have all the rights of a shareholder with respect to
          the Restricted Shares including voting and dividend rights, subject to
          non-transferability  restrictions and Company repurchase or forfeiture
          rights  described  in  this  Section  6  and  subject  to  such  other
          conditions   contained  in  the  written  instrument   evidencing  the
          Restricted   Share  Award.   Unless  the  Committee   shall  otherwise
          determine,  certificates evidencing the Restricted Shares shall remain
          in the  possession  of the  Company  until  such  Shares are vested as
          provided in Section 6(e) below.

     (d)  RESTRICTIONS.   Restricted   Shares   may  not  be   sold,   assigned,
          transferred,  pledged or otherwise encumbered or disposed of except as
          specifically   provided  herein.   In  the  event  of  termination  of
          employment  by  the  Company  and  its  Subsidiaries  for  any  reason
          (including death, retirement,  Disability, and for Cause), the Company
          shall  have  the  right,  at  the  discretion  of  the  Committee,  to
          repurchase Restricted Shares with respect to which conditions have not
          lapsed at their  purchase  price,  or to  require  forfeiture  of such
          Shares to the Company if acquired at no cost,  from the participant or
          the participant's legal representative. The Company must exercise such
          right  of  repurchase  or  forfeiture  not  later  than  the  90th day
          following such termination of employment  (unless otherwise  specified
          in the written instrument evidencing the Restricted Share Award).
<PAGE>

     (e)  VESTING OF RESTRICTED SHARES. The Committee at the time of grant shall
          specify the date or dates  and/or the  attainment  of  pre-established
          performance  goals,  objectives  and  other  conditions  on which  the
          non-transferability  of the Restricted  Shares and the Company's right
          of repurchase or  forfeiture  shall lapse.  Subsequent to such date or
          dates and/or the attainment of such pre-established performance goals,
          objectives and other conditions,  the Shares on which all restrictions
          have lapsed shall no longer be  Restricted  Shares and shall be deemed
          "vested."

     (f)  WAIVER, DEFERRAL AND REINVESTMENT OF DIVIDENDS. The written instrument
          evidencing  the  Restricted  Share  Award may  require  or permit  the
          immediate payment, waiver, deferral or investment of dividends paid on
          the Restricted Shares.

SECTION 7. UNRESTRICTED SHARE AWARDS

     (a)  GRANT OR SALE OF UNRESTRICTED  SHARES.  The Committee may, in its sole
          discretion,  grant  (or sell at a  purchase  price  determined  by the
          Committee) an Unrestricted  Share Award to any employee of the Company
          or any  Subsidiary  which will entitle such employee to receive Shares
          free of any  restrictions  under  the  Plan  ("Unrestricted  Shares").
          Unrestricted  Shares  may be  granted  or  sold  as  described  in the
          preceding  sentence  in  respect  of  past  services  or  other  valid
          consideration, or in lieu of any cash compensation to such employee.

     (b)  ELECTIONS TO RECEIVE UNRESTRICTED SHARES IN LIEU OF COMPENSATION. Upon
          the request of an employee and with the consent of the Committee, each
          employee may, pursuant to an irrevocable written election delivered to
          the  Company  no  later  than  the  date  or  dates  specified  by the
          Committee, receive a portion of the cash compensation otherwise due to
          him in Unrestricted Shares (valued at Fair Market Value on the date or
          dates  the  cash  compensation  would  otherwise  be  paid,  or on the
          effective date of the election, if later).

     (c)  ELECTIONS TO RECEIVE  UNRESTRICTED  SHARES IN LIEU OF TRUSTEES'  FEES.
          Each  Independent  Trustee  may,  pursuant to an  irrevocable  written
          election  delivered  to the  Company,  receive all or a portion of his
          cash  trustee's  fees in  Unrestricted  Shares  (valued at Fair Market
          Value on the date or dates the trustee's fees would otherwise be paid,
          or on the effective date of the election, if later).

SECTION 8. TAX WITHHOLDING

     (a)  PAYMENT BY PARTICIPANT. Each participant shall, no later than the date
          as of which  the value of an Award or of any  Shares or other  amounts
          received  thereunder  first becomes  includable in the gross income of
          the participant  for Federal income tax purposes,  pay to the Company,
          or make arrangements  satisfactory to the Committee  regarding payment
          of any Federal,  state,  or local taxes of any kind required by law to
          be  withheld  with  respect  to  such  income.  The  Company  and  its
          Subsidiaries  shall, to the extent permitted by law, have the right to
          deduct any such taxes from any  payment of any kind  otherwise  due to
          the participant.

     (b)  PAYMENT IN SHARES. Subject to approval by the Committee, a participant
          may elect to have such tax withholding obligation satisfied,  in whole
          or in part, by (i)  authorizing the Company to withhold from of Shares
          to be  issued  pursuant  to any  Award  a  number  of  shares  with an
          aggregate  Fair  Market  Value  (as of the  date  the  withholding  is
          effected)  that would  satisfy  the  withholding  amount  due, or (ii)
          transferring  to the Company Shares owned by the  participant  with an
          aggregate  Fair  Market  Value  (as of the  date  the  withholding  is
          effected) that would satisfy the withholding amount due.
<PAGE>

SECTION 9. TRANSFER, LEAVE OF ABSENCE, ETC

For purposes of the Plan, the following events shall not be deemed a termination
of employment:

          (a)  a transfer to the  employment of the Company from a Subsidiary or
               from the  Company  to a  Subsidiary,  or from one  Subsidiary  to
               another; or

          (b)  an approved leave of absence for military service or sickness, or
               for any other purpose approved by the Company,  if the employee's
               right to  re-employment  is guaranteed  either by a statute or by
               contract  or under  the  policy  pursuant  to which  the leave of
               absence was granted or if the Committee  otherwise so provides in
               writing.

SECTION 10. AMENDMENTS AND TERMINATION

The Board may, at any time, amend or discontinue the Plan and the Committee may,
at any time, amend or cancel any outstanding Award (or provide substitute Awards
at the  same or  reduced  exercise  or  purchase  price or with no  exercise  or
purchase  price,  but such price,  if any, must satisfy the  requirements  which
would apply to the substitute or amended Award if it were then initially granted
under this Plan) for the purpose of  satisfying  changes in law or for any other
lawful  purpose,  but no such action  shall  adversely  affect  rights under any
outstanding  Award without the holder's  consent.  To the extent required by the
Code to ensure that Options granted hereunder qualify as Incentive Share Options
and to the extent  required by the Act to ensure that Awards and Options granted
under the Plan are  exempt  under  Rule 16b-3  promulgated  under the Act,  Plan
amendments shall be subject to approval by the Company's shareholders.

SECTION 11. STATUS OF PLAN

With  respect to the portion of any Award which has not been  exercised  and any
payments in cash, Shares or other consideration not received by a participant, a
participant shall have no rights greater than those of a general creditor of the
Company unless the Committee shall otherwise  expressly  determine in connection
with any Award or Awards.  In its sole  discretion,  the Committee may authorize
the creation of trusts or other  arrangements to meet the Company's  obligations
to deliver  Shares or make payments with respect to Awards  hereunder,  provided
that the existence of such trusts or other  arrangements  is consistent with the
provision of the foregoing sentence.

SECTION 12. CHANGE OF CONTROL PROVISIONS

Upon the occurrence of a Change of Control as defined in this Section 12:

          (a)  Each outstanding  Share Option shall  automatically  become fully
               exercisable notwithstanding any provision to the contrary herein.

          (b)  Restrictions  and  conditions  on  Restricted  Share Awards shall
               automatically be deemed waived, and the recipients of such Awards
               shall  become  entitled to receipt of the Shares  subject to such
               Awards unless the Committee shall otherwise  expressly provide at
               the time of grant.

          (c)  "Change of Control"  shall mean the  occurrence of any one of the
               following events:

     (i)  any "person," as such term is used in Sections  13(d) and 14(d) of the
          Act (other than the  Company,  any of its  Subsidiaries,  any trustee,
          fiduciary  or other  person or  entity  holding  securities  under any
          employee  benefit  plan of the  Company  or any of its  Subsidiaries),
          together with all  "affiliates"  and  "associates"  (as such terms are
          defined in Rule 12b-2 under the Act) of such person,  shall become the
          "beneficial  owner" (as such term is  defined in Rule 13d-3  under the
          Act),   directly  or   indirectly,   of   securities  of  the  Company
          representing  40% or more of either (A) the  combined  voting power of
          the Company's then outstanding  securities having the right to vote in
          an election of the Company's Board of Trustees  ("Voting  Securities")
          or (B) the then outstanding Shares of the Company (in either such case
          other than as a result of acquisition of securities  directly from the
          Company); or
<PAGE>

     (ii) persons  who, as of the date of the closing of the  Company's  initial
          public  offering,  constitute  the  Company's  Board of Trustees  (the
          "Incumbent  Trustees")  cease  for  any  reason,  including,   without
          limitation,  as a result of a tender offer,  proxy contest,  merger or
          similar  transaction,  to constitute at least a majority of the Board,
          provided that any person becoming a director of the Company subsequent
          to the closing of the Company's initial public offering whose election
          or  nomination  for  election  was  approved  by a vote of at  least a
          majority of the Incumbent  Trustees shall,  for purposes of this Plan,
          be considered an Incumbent Trustee; or

     (iii)the shareholders of the Company shall approve (A)any  consolidation or
          merger of the Company or any Subsidiary  where the shareholders of the
          Company,  immediately prior to the consolidation or merger, would not,
          immediately  after the  consolidation or merger,  beneficially own (as
          such  term is  defined  in Rule  13d-3  under the  Act),  directly  or
          indirectly,  shares  representing  in the  aggregate 50% of the voting
          shares  of  the   corporation   issuing  cash  or  securities  in  the
          consolidation  or merger (or of its ultimate  parent  corporation,  if
          any),  (B)  any  sale,  lease,  exchange  or  other  transfer  (in one
          transaction or a series of  transactions  contemplated  or arranged by
          any party as a single plan) of all or substantially  all of the assets
          of the  Company or (C) any plan or  proposal  for the  liquidation  or
          dissolution of the Company;

Notwithstanding the foregoing, a "Change of Control" shall not be deemed to have
occurred  for  purposes of the  foregoing  clause (i) solely as the result of an
acquisition of securities by the Company which, by reducing the number of Shares
or other Voting Securities  outstanding,  increases (x) the proportionate number
of Shares  beneficially  owned by any person to 40% or more of the  Shares  then
outstanding  or (y) the  proportionate  voting power  represented  by the Voting
Securities  beneficially  owned  by any  person  to 40% or more of the  combined
voting power of all then outstanding Voting Securities;  provided, however, that
if any person referred to in clause (x) or (y) of this sentence shall thereafter
become the beneficial owner of any additional  Shares or other Voting Securities
(other than pursuant to a share split, stock dividend,  or similar transaction),
then a "Change of Control"  shall be deemed to have occurred for purposes of the
foregoing clause(i).

SECTION 13.       GENERAL PROVISIONS

     (a)  No Distribution; Compliance with Legal Requirements. The Committee may
          require each person acquiring Shares pursuant to an Award to represent
          to and agree with the Company in writing that such person is acquiring
          the Shares without a view to distribution thereof.

          No Shares  shall be issued  pursuant to an Award until all  applicable
          securities  law and other legal and stock exchange  requirements  have
          been  satisfied.  The  Committee  may  require  the  placing  of  such
          stop-orders  and restrictive  legends on  certificates  for Shares and
          Awards as it deems appropriate.

     (b)  Delivery  of Share  Certificates.  Delivery of share  certificates  to
          participants under this Plan shall be deemed effected for all purposes
          when the Company or a share  transfer  agent of the Company shall have
          delivered such  certificates  in the United States mail,  addressed to
          the participant,  at the participant's last known address on file with
          the Company.
<PAGE>

     (c)  Other  Compensation   Arrangements;   No  Employment  Rights.  Nothing
          contained in this Plan shall prevent the Board from adopting  other or
          additional  compensation  arrangements,  including trusts,  subject to
          shareholder   approval  if  such   approval  is  required;   and  such
          arrangements may be either generally  applicable or applicable only in
          specific  cases.  The  adoption of the Plan and the grant of Awards do
          not confer upon any employee any right to  continued  employment  with
          the Company or any Subsidiary.

SECTION 14. EFFECTIVE DATE OF PLAN

The Plan shall become  effective  upon  approval by the holders of a majority of
the Shares of the  Company  present or  represented  and  entitled  to vote at a
meeting of shareholders.  Subject to such approval by the  shareholders,  and to
the requirement  that no Shares may be issued  hereunder prior to such approval,
Share Options and other Awards may be granted hereunder on and after adoption of
the Plan by the Board.

SECTION 15. GOVERNING LAW

This Plan shall be  governed  by  Maryland  law except to the extent such law is
preempted by federal law.



     -------- 

     *    The 1994 Share Option and Incentive  Plan was approved by the Board of
          Trustees and the shareholders on January 19, 1994; the first amendment
          thereto  was  approved  by the Board of  Trustees  at a Meeting of the
          Board of Trustees on February 20, 1995 and by the  shareholders at the
          1995  Annual  Meeting  of  Shareholders  on May 16,  1995;  the second
          amendment  thereto was  approved by the Board of Trustees at a Meeting
          of the Board of Trustees  on February 6, 1996 and by the  shareholders
          at the 1996  Annual  Meeting of  Shareholders  on May 14,  1996.  At a
          Meeting of the Board of Trustees on December  11,  1996,  the Board of
          Trustees  adopted  Amendment No. 1 to the Second  Amended and Restated
          1994 Share Option and Incentive  Plan.  The Third Amended and Restated
          1994 Share  Option and  Incentive  Plan was  approved  by the Board of
          Trustees by a  Unanimous  Written  Consent in Lieu of a Meeting  dated
          March 16, 1998 and by the  shareholders  at the 1998 Annual Meeting of
          Shareholders  on May 19, 1998.  The Fourth  Amended and Restated  1994
          Share Option and Incentive  Plan was approved by the Board of Trustees
          by a Unanimous  Written  Consent in Lieu of a Meeting  dated March 15,
          1999.


     1    The Minimum Shares amount is equal to 9% of the Base Amount (discussed
          below).


     2    The Base Amount is equal to the sum of (i) the total  number of Shares
          outstanding  as of March 15,  1999 (the date the  Fourth  Amended  and
          Restated  1994 Share  Option and  Incentive  Plan was  approved by the
          Board) and (ii) the total number of Shares  issuable upon the exchange
          of Units that were outstanding at such time (other than Units owned by
          the Company or any of its subsidiaries).